BQPH and Secretary, Department of Social Services (Social services second review)

[2019] AATA 1563

BQPH and Secretary, Department of Social Services (Social services second review) [2019] AATA 1563 (26 June 2019)

Division:GENERAL DIVISION

File Number:           2018/4434

Re:BQPH  

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member Dr M Evans

Date:26 June 2019

Place:Perth

1.The Tribunal does not have jurisdiction to review the Eligibility Decision dated
17 January 2018.

2.The Reviewable Offset Decision dated 29 June 2018 is set aside and substituted with a new decision that the Applicant’s Family Tax Benefit (FTB) entitlement for the 2016/17 financial year should not be offset against her family assistance and schoolkids bonus debts from the following periods: the 2006/07 financial year; the 2007/8 financial year; and the 2015/16 financial year on the basis that there are exceptional circumstances in which the Applicant is experiencing severe financial hardship. The effect is that the $9,069.26 of FTB she was entitled to for the 2016/17 financial year (that is, the entire offset amount) should be refunded to her.

....................[sgd]....................................................

Senior Member Dr M Evans

Catchwords

SOCIAL SECURITY – Family Tax Benefit (FTB) – whether Tribunal has jurisdiction to review a decision in the absence of a written extension of time application – whether Tribunal’s jurisdiction flexible – whether Applicant’s FTB entitlement should be offset against debts already owed to the Commonwealth – whether severe financial hardship – decision under review set aside and substituted

Legislation

Administrative Appeals Tribunal Act 1975 (Cth),

s 25(1), s 29(1), s 29(2), s 29(7),
s 33(1)(b)

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), s 10(2), s 71(1),
s 82, s 82(1)(b), s 84A

Cases

Comcare v Grimes & Anor (1994) 50 FCR 60

Browne v Minister for Immigration & Multicultural Affairs [1998] FCA 566

Douglas and Secretary, Department of Families, Community Services and Indigenous Affairs and Anor [2007] AATA 1072

Jones and Secretary to the Department of Family and Community Services [2003] AATA 62

L and Department of Social Security [1995] AATA 228

Mulheron and Australian Telecommunication (1991) 23 ALD 309

Re Lumsden and Secretary Department of Social Security [1986] AATA 228

Re Stubbs and Secretary Department of Families and Community Services [2003] AATA 7

Secretary, Department of Family and Community Services and Birgden [2003] AATA 67

Solberg and Secretary, Department of Social Services [2018] AATA 1242

Secondary Materials

Guides to Social Policy Law: Family Assistance Guide, version 1.211 – Released 6 May 2019, Part 1.1.S 45, Part 7.2.3

REASONS FOR DECISION

Senior Member Dr M Evans
26 June 2019

BACKGROUND TO THE APPLICATION

Decision under review

1. The Applicant lodged a past period Family Tax Benefit (FTB) claim for the 2016/17 financial year on 22 August 2017 (T5, pages 37-42).

2. In a letter dated 4 September 2017 the Department of Human Services, known as Centrelink (the Department) advised the Applicant that although she was entitled to FTB in the amount of $9,069.26 for the 2016/17 financial year, the whole of the amount would be withheld to recover family assistance overpayments (T6, pages 43-45). That is, the amount of the Applicant’s entitlement for the 2016/17 financial year was offset against her pre-existing family assistance and schoolkids bonus debts.

3. The Applicant sought a departmental review of this decision. In a letter dated 5 October 2017 (T7, pages 46-49) an Authorised Review Officer (ARO) of the Department advised the Applicant that her review was unsuccessful.

4. On 28 May 2018, the Applicant lodged an application for review in the Tribunal’s Social Services and Child Support Division (SSCSD) (T8, pages 54-58). However, on

   
   

   29 June 2018, the SSCSD affirmed the decision of the ARO dated

   
   

   5 October 2017 (T2, pages 6-10) (the Reviewable Offset Decision).

5. The Tribunal sent this decision to the Applicant under cover of a letter dated 9 July 2018. The Applicant received this decision on 16 July 2018 (T1, page 4).

6. On 8 August 2018 the Applicant filed an application for review by the General Division of the Tribunal (T1) of the Reviewable Offset Decision of 29 June 2018.

   Jurisdiction to review an additional eligibility decision

7. The Applicant’s legal representative submitted at the Tribunal hearing that the Tribunal should also review an additional decision that was not mentioned in the Applicant’s application for review in T1. This decision will be referred to as the Eligibility Decision.

8. The background to the Eligibility Decision is set out in the following paragraphs.

9. On 1 February 2017, the Applicant lodged a claim for FTB lump sum for the 2014/15 financial year (Exhibit R2, attachment B, page 6).

10. In a letter to the Applicant dated 10 March 2017, the Applicant was advised by the Department that they could not pay her FTB for the 2014/15 financial year because her claim was not received by 30 June 2016 (Exhibit R2, attachment A). This was because

    
    

    s 10(2) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) provides that any lump sum claims must be lodged by the end of the financial year following the financial year that the claim is being made for (that is, 30 June 2016).

11. The Applicant sought a departmental review of this decision. In a letter to the Applicant dated 23 March 2017 an ARO, advised the Applicant that her review was unsuccessful (Exhibit R2, attachment B).

12. The Applicant sought review in the Tribunal, and on 17 January 2018 the SSCSD affirmed the ARO’s decision (Exhibit R2, attachment C).

13. On 27 March 2018 the Applicant applied to the General Division of the Tribunal for an extension of time to make an application for review of the SSCSD decision of 17 January 2018. However, on 8 June 2018, the Tribunal refused to grant the Applicant’s application for an extension of time (Exhibit R2, attachment D).

14. An Applicant can make a further application for an extension of time after being unsuccessful in a first application for an extension of time (Wilcox J in Comcare v Grimes & Anor (1994) 50 FCR 60 at 67-68 (Grimes)). However, the Applicant has not done so. Instead, the Applicant is asking the Tribunal to consider the Eligibility Decision as part of its review of the Reviewable Offset Decision.

15. An application to extend the time for making an application to the Tribunal must be in writing (s 29(7) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act)).
    Mr Cheng (the Applicant’s legal representative) submitted that the Applicant did not need to make an application for a further extension of time in writing. He cited the following passage from the judgment of Wilcox J in Grimes, at 68:

    The Act does not require any particular form of application for an extension of time, or any particular formality. Section 29(7) leaves these matters at large. Judging by what happened in this case in February 1993, it seems that the Tribunal treats an informal approach as an application under s 29(7). Although I think it is correct to say that the first application was determined, by refusal, so that a fresh application is now required, I do not see any impediment to the Tribunal treating Ms Jude's letter of 11 October 1993 as a fresh application for an extension of time.

16. Whilst s 29(7) does not prescribe the “form of application for an extension of time”, it does expressly state that the application must be in writing. There is some latitude as to the form that such an application may take, for example the application does not need to be made using the Tribunal’s prescribed form, and instead could be made in a letter, email or other typed or handwritten note. The extension of time application referred to in the above excerpt from the judgment of Wilcox J in Grimes, was in the form of a letter from the applicant’s legal representative, Ms Jude, of 11 October 1993 requesting that a matter be relisted. That matter was an extension of time application which the Tribunal had previously refused. As indicated by these examples, regardless of the form of the application for an extension of time, it must be in writing. 

17. Mr Cheng further submitted that an extension of time application was not required, because the Eligibility Decision was not properly considered by the SSCSD, and it therefore remained an application for the Tribunal to consider in the present proceedings (transcript, pages 6-7). He referred to this as a “holistic argument” (Exhibit A1, page 5). He also submitted that (transcript, page 10): “The application for considering her [the Applicant’s] 2014/2015 family tax benefit should be taken as including an application for extension of time.” This submission appears to be suggesting that a subsequent request for an extension of time should be retrospectively implied from the initial application for review.

18. In support, Mr Cheng cited s 33(1)(b) of the AAT Act which provides that:

    In a proceeding before the Tribunal… the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit…

    Mr Cheng further cited O’Connor J in Mulheron and Australian Telecommunication Corporation (1991) 14 AAR 42 at 314 who stated that, “…the Tribunal should provide substantial review on the merits and not allow undue technicalities to prevent this happening” (cited in Grimes at 63).

19. The Tribunal disagrees with Mr Cheng’s submissions. Section 33(1)(b) of the AAT Act concerns the proceedings of the Tribunal being conducted with little formality and technicality. This means that, if the Tribunal Member considers it appropriate, he or she may decide to conduct the hearing in a more informal manner than in a Court setting, for example, by conducting the proceedings in an inquisitorial manner, by asking the parties to present in a different sequence or dispensing with titles and other such formalities. The ability to conduct the proceedings in such a manner should not be confused with the jurisdiction of the Tribunal, which is not flexible. The Tribunal only has jurisdiction if an enactment provides that an application for review can be made to the Tribunal (s 25(1) of the AAT Act), (and with the exception of applications to the SSCSD) the application must be in writing (s 29(1) of the AAT Act), and made within the prescribed time of 28 days after the decision is given to the person (s 29(2) of the AAT Act). If the application is not lodged within the 28 day prescribed time, a person must make a written application to extend the time (s 29(7) of the AAT Act). It is clear from the express wording of s 29(7) of the AAT Act – “upon application in writing by a person” - that an extension of time application has to be in writing before the Tribunal can consider it. Further, a request for an extension of time must be a specific written request. Such a request cannot be retrospectively implied from a prior application for review. Provisions of the AAT Act which provide for some procedural flexibility (namely s 33(1)(b) of the AAT Act) cannot override the express words of s 29(7) which requires such an application to be in writing.

20. The Tribunal previously considered, and declined, to exercise its discretion to grant the Applicant an extension of time on 8 June 2018 (Exhibit R2, attachment D). As noted above, it is open to the Applicant to make a further application for an extension of time, but she has not done so, and in the absence of the Tribunal granting an extension of time for the Eligibility Decision to be reviewed, the Tribunal has no jurisdiction to review it. The Tribunal has had difficulty understanding why the Applicant’s representative refused to make a further extension of time application, instead relying on a “holistic argument” when, as mentioned above, even a handwritten note comprising a one sentence request for the Tribunal to extend the time would have sufficed.

21. The Tribunal does, however, note that even if it were to receive a further extension of time application which is in writing, it is unlikely to be successful. This is primarily because the first application for an extension of time, in part, was refused on the merits
    (Browne v Minister for Immigration & Multicultural Affairs [1998] FCA 566). Specifically, paragraph [40] of the extension of time decision (Exhibit R2, attachment D) noted that the Applicant’s “whole case” was that she had received incorrect information from the Department during a conversation on 15 June 2016 which had led to a failure to file the relevant tax return. The extension of time decision further noted (at paragraph [42] of Exhibit R2, attachment D) that the Applicant stated that a moving truck containing her items was stolen in 2013 resulting in the loss of items including financial information, that she had undergone a difficult relationship breakdown, and was under financial stress. The Tribunal did not consider these factors to be sufficient to constitute “special circumstances” and concluded that the Applicant would have a poor chance of success on the merits if an extension of time was granted and the matter proceeded to a substantive hearing. In the Tribunal’s opinion, this is an accurate assessment.

22. It was further noted by the Tribunal in the extension of time decision (Exhibit R2, attachment D, paragraph [25]) that the Applicant did not read the SSCSD decision covering letter which notified her of the time frame for lodging an application for review. The Tribunal also notes from the extension of time decision made by the Tribunal on
    8 June 2018, that, the extension of time application was lodged 41 days late
    (Exhibit R2, attachment D, paragraph [20]). If the Applicant agreed to file a written application for an extension of time on the day of the Tribunal hearing the application would in fact be a further 330 days late. These factors would also weigh against the Tribunal exercising discretion to grant an extension of time if such an application was before it.

23. In conclusion, there are two separate decisions – the Eligibility Decision and the Reviewable Offset Decision. The only reviewable decision that is before the Tribunal is the Reviewable Offset Decision which was the subject of the Applicant’s application to the Tribunal in T1. The Tribunal does not have jurisdiction to review the Eligibility Decision of the SSCSD dated 17 January 2018. 

    MATERIAL BEFORE THE TRIBUNAL

24. The hearing of this application was on 21 February 2019.

25. The Applicant was represented by Mr Cheng, and the Respondent was represented by Ms Underhill. Both Mr Cheng and Ms Underhill made submissions to the Tribunal. The Applicant gave evidence to the Tribunal and was cross-examined. The Tribunal found the Applicant to be a credible witness, and accepts the evidence that she gave the Tribunal.

26. The following documents were put into evidence at the Tribunal hearing:

    (a)Applicant’s Reply to the Respondent’s Statement of Facts, Issues and Contentions, dated 11 February 2019 (Exhibit A1);

    (b)email from Applicant’s legal representative dated 20 November 2018 (Exhibit A2);

    (c)Applicant’s Statement of Facts, Issues, and Contentions, which was undated but filed with the Tribunal on 19 November 2018 (Exhibit A3);

    (d)bundle of financial documents, including bank statements which were handed up at the hearing (Exhibit A4);

    (e)s 37 documents (T-documents) dated 15 August 2018 (Exhibit R1);

    (f)Respondent’s Statement of Facts, Issues and Contentions dated 20 December 2018 including attachments A to E (Exhibit R2);

    (g)email from the Respondent dated 20 November 2018 regarding the Applicant’s Statement of Facts Issues and Contentions (Exhibit R3).

27. As the Applicant handed up Exhibit A4 at the Tribunal hearing and had not provided a copy to the Tribunal or to the Respondent prior to the hearing, the Tribunal provided the Respondent with an additional two weeks’ to provide written submissions to the Tribunal on this exhibit. The Tribunal also gave leave to the Applicant to submit a reply or to advise the Tribunal that she did not wish to do so within two weeks of receiving the Respondent’s submission.

28. Consequently, the Tribunal had before it a written submission dated 7 March 2019, from the Respondent with respect to the financial information contained in Exhibit A4. The Tribunal also received a reply submission from the Applicant on 25 March 2019.

    ISSUES

29. Whether the Tribunal has jurisdiction to review the Eligibility Decision. As concluded above, the Tribunal does not have jurisdiction to review the Eligibility Decision. 

30. The issue that remains for determination by the Tribunal is with respect to the Reviewable Offset Decision. Specifically, whether the Applicant’s FTB entitlement for the

    
    

    2016/17 financial year should be offset against her family assistance and schoolkids bonus debts from the following periods: the 2006/07 financial year; the 2007/8 financial year; and the 2015/16 financial year.  This requires a consideration of whether exceptional and/or unforeseen circumstances have arisen that may create severe financial hardship for the Applicant if the offset amount is not refunded to her. 

    LEGISLATIVE AND POLICY FRAMEWORK

31. Section 71(1) of the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (Administration Act) states:

    (1)  If:

    (a) an amount has been paid to a person by way of family tax benefit, stillborn baby payment or single income family supplement (the assistance ) in respect of a period or event; and

    (b)  the person was not entitled to the assistance in respect of that period or event;

    the amount so paid is a debt due to the Commonwealth by the person.

    The effect of this section is that if an amount of FTB is paid to a person who was not entitled to that payment, the amount paid is a debt owed to the Commonwealth.

32. Section 82 of the Administration Act sets out a number of methods of recovery by which the Secretary can recover debts owed to the Commonwealth. Section 82(1)(b) of the Administration Act is relevant because it provides that such a debt can be recovered by, “setting off family assistance to which the person is entitled against the debt”.

33. Section 84A of the Administration Act provides, in part, that:

    (1)  This section applies:

    (a)  to a person if the person is entitled to an amount of family assistance; and

    (b)to a debt owed by the person if:

    (i) under section 82, the debt is recoverable by the Commonwealth by means of setting off family assistance to which the person is entitled against the debt; or

    …

    (2)The Secretary may determine that the whole or a part of the entitlement is to be set off against the debt.

    …

    (4)If the Secretary makes a determination under subsection (2), the amount of the entitlement and the amount of the debt are reduced accordingly.

34. That is, if a person who has a debt is owed an amount of family assistance, the Secretary may determine that the whole or part of the entitlement is to be offset against the debt, and the debt will be reduced by the offset amount.

35. In the Applicant’s case, it is not in dispute that she owed FTB and schoolkids bonus debts to the Commonwealth, and she acknowledged this at the SSCSD hearing (T2, page 8 at [13]). Rather, the Applicant is disputing the offset and seeks a refund of the whole amount that was offset.  

36. Part 7.2.3 of the Guides to Social Policy Law: Family Assistance Guide,

    
    

    version 1.211 – Released 6 May 2019 (the Guide), provides that:

    The Secretary may review a decision to offset an individual's FA debts against their FTB top-up if exceptional and/or unforeseen circumstances arise that may create severe financial hardship (1.1.S.45). In that instance, the Secretary may choose to refund part or the entire offset amount. Offset amounts should not be refunded for the purposes of meeting regular living expenses, such as car registration or insurance premiums.

    (Emphasis added.)

    Although the Guide gives the Secretary discretion to refund part or the entire offset amount, the Applicant sought a refund of the whole amount, and the submissions to the Tribunal were on that basis.

1. “Severe financial hardship” is defined in Part 1.1.S.45 of the Guide as follows:

   The issue of severe financial hardship should be decided on an individual basis, taking into account the individual's circumstances. These would include:

   ·the make up of the family group (e.g. single parent, number of children etc.),

   ·current family income and expenses,

   ·minimum amount of expected debt repayment under Centrelink guidelines,

   ·standard reduction amounts for any outstanding FTB advances,

   ·available funds, and

   ·exceptional expenses (e.g. funeral or pharmaceutical costs).

   There must be clear evidence that severe financial hardship would result (after reasonable expenses are deducted from income) if recovery of a debt were pursued, or if the standard FTB advance reduction rate continued to apply. Reasonable expenditure includes, but is not limited to: rent, groceries, electricity, minimum loan repayments, school fees, medical costs etc.

   The rate of income support including the FA a family group would be paid (if they were eligible), may be used as a benchmark when comparing the family's income and expenditure. If the family's income is greater than this amount but their reported expenditure leaves a net income less than the minimum debt repayment or standard advance reduction amount, then it may be relevant to examine whether their expenditure is reasonable.

   For the purpose of considering a waiver or a write-off, or reducing or suspending recovery of an FTB advance a person would be subject to severe financial hardship if their net fortnightly income (after reasonable expenses are deducted from gross income) over the debt repayment period (for both debts and advance recovery) would be less than the minimum fortnightly amount the person would be allowed to repay under the flexible repayment arrangements for FA debts or the standard reduction for their outstanding FTB advance.

   Note: For decisions relating to FTB advances, a person's gross income should include FTB prior to any existing FTB advance reductions.

   (Emphasis added.)

2. In summary, the Tribunal, standing in the shoes of the Secretary, may review a decision to offset an individual's family assistance debts against their FTB top-up if exceptional and/or unforeseen circumstances arise that may create severe financial hardship.

3. In Exhibit R2, paragraph [40], the Secretary cited a number of authorities in which the Tribunal has considered the meaning of “severe financial hardship” as follows:

   Re Lumsden and Secretary Department of Social Security [1986] AATA 228 stated:

   19. The expression “severe financial hardship” is not defined. In its relevant sense, “severe” means “hard to sustain or endure; arduous” (The Shorter Oxford English Dictionary 1973, pp. 1957-8). “Financial” means “of or pertaining to finance or money matters” (ibid p. 926). “Severe financial hardship” is the equivalent of “arduous financial suffering”. The meaning of the words is not in doubt: they are a clear direction by the legislature that the section is only to be applicable when the requisite severity of financial hardship is present.

   20. In addition, pensions, benefits and allowances which the act provides for persons who fulfil the requirements of the Act are clearly designed to (inter alia) avoid severe financial hardship to persons who would otherwise be without adequate means of supports: cf. Re Reynolds and Secretary to the Department of Social Security (Decision No. 2656, 2 May 1986). In that case Deputy President Jennings said (at p 8):

   “The decision to introduce the assets test was the implementation of a policy not to subsidise the income of some persons who had sufficient resources of their own. If those resources in fact produce an income in excess of the maximum pension payable to an aged person it will be difficult for such a person to demonstrate “severe financial hardship”.  It may be possible if his or her reasonable living expenses are unusually high for some exceptional reason. But in the ordinary case “severe financial hardship” is a condition that is more likely to be demonstrated by a person whose income is materially less than the current maximum pension.

   L and Department of Social Security [1995] AATA 228 stated:

   66 …In summary, I consider that matters relating to the personal financial hardship of the individual are always relevant in any decision as to write off under subsection 1236(1). Retrospective considerations may occasionally be relevant. The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?...

   Jones and Secretary to the Department of Family and Community Services [2003] AATA 62 stated:

   25. However, the Tribunal was also satisfied that s97 could not apply as the applicant has not established severe financial hardship. The family is struggling. The Tribunal accepts that, in reality, their financial situation is not significantly different, despite their salaries, from that of people who receive social security. However, the term severe financial hardship must be seen in the context of the legislation. With income of $50,000.00 being well in excess of income support payments under the Act, severe financial hardship is not shown.

   (Original emphasis.)

   Secretary, Department of Family and Community Services and Birgden [2003] AATA 67 stated:

   77. The next question before the Tribunal is whether recovery of the debt would impose severe financial hardship on the respondent…[The applicant] submitted that it would not. He submitted that the respondent and her partner do not qualify for any income tested Centrelink payments, and earn over $73,000 per year. They currently meet all their expenses and so their situation, were the debt not waived, would not be one of financial hardship, let alone severe financial hardship. No case law was cited on this point before the Tribunal. As the applicant noted, “severe financial hardship” has not been judicially defined, and probably no inflexible definition is desirable. The Tribunal notes that the respondent and her partner have incurred many expenses in caring for their son, and that her family lives very frugally. However, they are able to make ends meet. Their income exceeds what those relying solely on government payments receive. Recovery of the debt would occasion severe inconvenience, stress, and some financial hardship, but the Tribunal is unable to find that such hardship would be “severe” in the context of the Act. The Tribunal consequently cannot find that the respondent satisfies s 97(2)(b) of the Act. Hence the Tribunal cannot waive the debt under s 97 of the Act…

   Re Stubbs and Secretary Department of Families and Community Services [2003] AATA 729 (Stubbs) stated:

   20. Severe financial hardship, while not implying destitution, goes beyond straitened [sic] financial circumstances and imports a need for the particular case of a person to include financial suffering of a sever or extreme nature.

   Douglas and Secretary, Department of Families, Community Services AND Indigenous Affairs and Anor [2007] AATA 1072:

   45. As to severe financial hardship, I accept that Mr Douglas is on the disability support pension and has little, if any, assets. He has high medical expenses and must use taxis extensively because of his condition. He has provided most generously for his daughter. He gave evidence that he owes his father $10,000 which he pays back at the rate of $100 per fortnight. I do not consider that have to repay the debt to Centrelink at their current rate of

   
   

   $15 per fortnight would result in severe financial hardship.

   CONSIDERATION

4. In order to consider whether there are exceptional and/or unforeseen circumstances that may create severe financial hardship, the Tribunal will examine the evidence concerning the Applicant’s financial situation.

5. The Applicant and her current partner (jointly and severally) owe a judgment debt in the sum of $124,201.54 (Exhibit A3, para [37]), which the District Court of Western Australia ordered them to pay on 17 July 2018 in connection with a failed business. She has credit card debts of approximately $18,000 (Exhibit A4). Other debts include arrears in rent owed to her current landlord (approximately $1,350.00), a tenancy order concerning her previous home (approximately $4,000), legal fees in connection with the judgment debt (or approximately $7,400), an outstanding electricity account ($625), monies owing to the Australian Taxation Office (ATO) (approximately $19,000) and a loan from her parents to assist the Applicant to pay her bills ($20,000) (Exhibit A4 and T2, paragraph [21]).

6. The Applicant has no savings, and her evidence was that, at the time of the Tribunal hearing, the debts she was personally liable for totalled approximately $240,000, but that she only had assets of approximately $32,000 (Exhibit A4). Although the judgment debt is held jointly with her partner, the Applicant’s belief is that she is legally responsible for approximately $240,000 in debt and could be pursued personally for that debt (transcript, page 39).

7. The Applicant’s financial situation is undoubtedly stressful for her. The Applicant gave evidence that she had difficulty complying with payment arrangements and that credit agencies had become involved (transcript, page 37). If the offset monies (totalling approximately $9,000) were refunded to her, the Applicant would be able to finalise her outstanding rent, electricity bill, and settle some of her credit card debt with debt collectors. The Tribunal notes that rent for housing, and electricity are necessaries of life, and the Applicant falling into arrears with these essential payments does tend to indicate financial hardship.

8. The Applicant is supporting three dependent children, one of whom is 18 years of age, with two being minors. The Applicant is working casually, and gave evidence that her hours vary, and that she could earn anywhere from $150 to $500 per week. Although her declared income to Centrelink was approximately $42,000 per year, based on the Applicant’s evidence at the Tribunal hearing, it appears that her casual work would provide her with less of an income than this declared amount. The Tribunal found the Applicant to be a truthful witness and does not believe that she understated the amount of her income.

9. The Applicant gave evidence that her partner with whom she resides, currently earns approximately $90,000 per annum. The Tribunal notes the Respondent’s submission that the household has in excess of $90,000 per annum income, however, caution needs to be exercised by the Tribunal as to how much of her partner’s income can be attributed to the Applicant, given that they both have children to support from previous relationships and there is minimal evidence as to if and how the Applicant shares in her partner’s income. Whilst household income is relevant, the Tribunal should avoid making female applicants dependent on their partner’s income by attributing that income as being shared, especially when there is minimal to no evidence as to the nature and security of the relationship and how income is apportioned in the home. In some circumstances, income may not be shared at all (see, for example, Solberg and Secretary, Department of Social Services [2018] AATA 1242).

10. As noted above, at the Tribunal hearing the financial information in Exhibit A4 was handed up by the Applicant’s legal representative on the morning of the hearing. It contained copies of the Applicant’s bank statements from July through to December 2018, and a separate printout of bank transactions from December 2018 through to the end of February 2019. The Applicant was cross-examined by Ms Underhill on the content of these statements which did reveal some discretionary spending by the Applicant, for example, on alcohol, cafes, lottery and entertainment. In its written submissions dated
    7 March 2019 (at paragraph [24]) the Respondent estimated the Applicant’s discretionary spending during the period of the bank statements amounted to “at least $8,351.66”. There is a dispute between the parties regarding this amount (see paragraph [47] below), and indeed, the Tribunal’s own calculations reveal this amount to be closer to $4,500 (however, there is an element of subjectivity in determining what is discretionary which could, in part, account for some of the differences in calculation). The Respondent’s view was that discretionary spending is not indicative of severe financial hardship.

11. In paragraph [16] of the Applicant’s written submissions in Exhibit A4 dated
    25 March 2019, the Applicant disagreed with the Respondent’s submission regarding discretionary spending:

    16. As to para 20-24, the Respondent’s handling of the claim (application for 2014/15 lump sum) and its continuous errors in relation to the Applicant’s FTB entitlement had caused enormous mental, emotional and financial stress to the Applicant and her children. The Applicant did buy some drinks which was part of the family life. She also bought some items for the children and the family. The Applicant has three children (aged eight, 10, and 18) which are at various stages of lives and she has to accommodate them where possible. The child support was the first and only payments the Applicant has received since the separation. The Applicant strongly disagrees with the Respondent’s submission that those items ($8,351.66) were discretionary save the lottery tickets. The money paid to [via the home brewery debit] was to try to create business for the Applicant who has three children to support. The Applicant does not deny that due to being so stressed, that she took to drinking in lieu of eating at times. The stress has been largely caused by the Respondent’s wrong advice about the 2014/15 FTB entitlement, continuous refusal to admit its wrong doing and pushing the Applicant to the limit through the review processes.

    17. As to paras 25 and 26, the Applicant strongly objects to the submission made by the Respondent. The submission made by the Respondent implies the Applicant should neglect her three children and her family, have no drinks and social life but to pay the creditors. This submission must not be accepted.

12. Regardless of the amount, the Applicant did undertake some discretionary spending. However, the Tribunal also notes the Applicant’s evidence at the Tribunal hearing that some of this spending occurred after the Applicant received a payment of approximately $6,500 from Centrelink and had “a little bit of a lash out” (transcript, page 40). The Applicant also explained that some debits from her account, which appeared to be discretionary spending, involved contributions from others. For example, a $100 lottery debit was five persons (including the Applicant) contributing $20 each to a lottery ticket (transcript, page 42), and a $140 debit from a florist was made on behalf of her son and reimbursed by him (transcript, page 43).

13. The bank accounts also show that during the period 1 July 2018 to 31 December 2018, the Applicant received funds totalling $7,453.01 for child support, and $5,204.06 for FTB; and for the period 1 January 2019 to 21 February 2019, the Applicant received a total of $1,650 in child support and $6,513.35 in FTB payments (see Respondent’s written submissions dated 7 March 2019, paragraphs [19]-[20]). However, at the time of the SSCSD decision she was not receiving any child support payments (T2, paragraph [20]).

14. As can be noted from the discussion of relevant Tribunal decisions above, whether a person is experiencing severe financial hardship will depend on the individual facts and circumstances of the application in question. As indicated by the term, “severe”, the bar to meet severe financial hardship is very high, and has been described as “arduous” and “extreme”. However, this must also be interpreted in light of the beneficial nature of the legislation. As noted by the above authorities, the fact that an applicant is experiencing inconvenience, financial stress, is struggling with their expenses, or living frugally, may not be enough to establish severe financial hardship.

15. These descriptors could be said to apply to the Applicant. The Applicant has debts which are a burden to her, and which are causing her significant stress and worry. However, the Tribunal is of the opinion that the Applicant’s financial situation goes beyond these descriptors and into the realm of “severe”. The Applicant has court imposed judgments against her for a residential tenancy debt (although it is unclear whether this debt remains outstanding), and a judgment debt from the District Court of Western Australia for approximately $124,000. Additionally, there is a court order holding her car as security for a debt owed to her previous lawyers, and as a result, the Applicant is at risk of losing her car (paragraph [7] annexure A of the Applicant’s written submissions dated 25 March 2019) which is her only asset beside her self-disclosed home contents of $4,000. She is being pursued by debt collectors for a debt of approximately $19,000 she owes to the ATO, a bailiff’s office (jointly with her partner) for legal fees associated with the District Court of Western Australia matter (of approximately $7,400), has had to enter into payment arrangements for unpaid fines, and has entered into a monthly payment arrangement with a credit card provider (for approximately $2,000), and also a finance company (for approximately $18,000) because she has been unable to pay her credit card debts. In the Tribunal’s opinion, the Applicant appears to the Tribunal to be close to bankruptcy. That is, she appears to be insolvent and is unable to pay her debts as and when they fall due. This is an indication that the financial hardship being experienced by the Applicant is severe.

16. The Applicant’s self-disclosed assets are minimal when compared to her debts, although there is no independent evidence before the Tribunal of these assets, other than the

    
    

    “red book” value of the Applicant’s car (Applicant’s submissions on Exhibit A4 dated

    
    

    25 March 2019, paragraph [4]). Depending on the circumstances, having few, if any, assets in addition to debts may not be enough to constitute severe financial hardship. However, in the context of the Applicant’s circumstances, the Tribunal is of the opinion that the amount of her assets compared to her debts does tend to illustrate the serious nature of her financial position.

17. As indicated by the Guide, the hardship that would result after reasonable expenses are deducted from income is relevant, with reasonable expenditure including rent, groceries, electricity, minimum loan repayments, school fees, and medical costs (that is, the necessaries of life). The Tribunal notes that the Applicant has outstanding debts for rent and electricity which are necessaries of life.

18. Also relevant is an applicant’s specific circumstances if recovery of a debt, for example, is pursued. For example, in Stubbs, the Tribunal found that repaying a debt in the amount of $15 per week would not result in severe financial hardship. At the Tribunal hearing,

    
    

    Ms Underhill submitted that (transcript, page 46):  

    Any entitlement to family tax benefits for that 14/15 year, the Secretary submits would be modest in comparison to that significantly larger debt that is alleged on the front cover of those documents submitted today.

    The applicant’s financial circumstances would not be significantly different, is our submission, if a different outcome had been achieved in respect of family tax benefit claim that ultimately wasn’t made in a way that was able to be paid.

    If this submission is considered in reverse, it could be said that if the Applicant is successful in this application, and the amount to be refunded to her would make little difference to alleviating her financial situation due to the amount of her debt, this may itself be indicative of the severity of the Applicant’s financial situation. However, the Tribunal takes a different view. If the Applicant were to be successful, the amount payable to her (being approximately $9,000) could significantly assist to relieve her financial hardship in the interim because she would be able to pay off debts concerning rent, electricity and pay one or more of the smaller debts for which she is being pursued by debt collectors.   

1. In summary, the Tribunal finds that there are exceptional circumstances in which the Applicant is experiencing severe financial hardship. These circumstances justify refunding the amounts of FTB for the 2016/17 financial year which were offset to the Applicant.

2. However, the Applicant should treat this decision as somewhat of a pyrrhic victory – that is, with some caution. Persons should be wary of relying on receiving money from government agencies, such as Centrelink before they have received it because they may anticipate receiving a payment they are not entitled to, or the anticipated payment may be offset against existing debts to the Commonwealth (which happened in the Applicant’s case). As noted in the SSCSD decision of 29 June 2018 the debts incurred by the Applicant against which her FTB entitlement was offset relate to public monies to which she was not entitled. Consequently, whilst this decision may offer some relief to the Applicant’s current state of severe financial hardship when the monies offset against her existing debt are refunded to her, the existing debt remains and it is likely that this debt will be offset against the Applicant’s FTB entitlements in a subsequent period.

   DECISION

3. The Tribunal does not have jurisdiction to review the Eligibility Decision dated

   
   

   17 January 2018.

4. The Reviewable Offset Decision dated 29 June 2018 is set aside and substituted with a new decision that the Applicant’s FTB entitlement for the 2016/17 financial year should not be offset against her family assistance and schoolkids bonus debts from the following periods: the 2006/07 financial year; the 2007/8 financial year; and the 2015/16 financial year on the basis that there are exceptional circumstances in which the Applicant is experiencing severe financial hardship. The effect is that the $9,069.26 of FTB she was entitled to for the 2016/17 financial year (that is, the entire offset amount) should be refunded to her.

I certify that the preceding 58 (fifty-eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr M Evans

.........................[sgd]...............................................

Associate

Dated: 26 June 2019

Date of hearing:	21/02/2019
Advocate for the Applicant:	Mr C Cheng
Solicitors for the Applicant:	Ally Legal
Counsel for the Respondent:	Ms M Underhill
Solicitors for the Respondent:	Mills Oakley Lawyers