Brand and Secretary, Department of Family and Community Services

[2003] AATA 1006

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1006

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/328

GENERAL ADMINISTRATIVE DIVISION		)
Re		MARIA BRAND

Applicant

And

SECRETARY, DEPARTMENT

OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date7 October 2003 

PlaceBrisbane

Decision The Tribunal affirms the decision under review. 

....................(Sgd)....................

RG Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – family tax benefit – overpayment – debt due to the Commonwealth – write-off or waiver of debt

Family Assistance Act 1999 s 58, Schedule 1

Family Assistance (Administration) 1999 ss 71, 95, 96, 97 and 101 

Beadle v Director-General of Social Security (1985) 60 ALR 225

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Beadle and Director-General of Social Security (1984) 1 AAR 362

REASONS FOR DECISION

7 October 2003  Mr RG Kenny, Member      

Background

1.      During the financial year 2000/2001, Maria Brand (the applicant) received payments of family tax benefit which are made in accordance with the Family Assistance Act 1999 (the FA Act) and, on 21 August 2002, a delegate of the Secretary, Department of Family and Community Services (the respondent) determined that she had been overpaid an amount of $5,218.93, a portion of which totalling $1,000.00 was waived in accordance with the terms of the Family Assistance Estimate Tolerance (Transition) Determination 2001, leaving a debt of $4,218.93. 

2.      That decision was affirmed by an Authorised Review Officer on 30 September 2002 and, on 13 December 2002, the Social Security Appeals Tribunal (the SSAT) affirmed the decision in relation to the raising of the debt but also determined that the debt should be written-off in accordance with section 95 of the Family Assistance (Administration) Act 1999 (the FAA Act) because it determined that the applicant had no capacity to repay the debt.  The SSAT determined that the debt could be recovered if the applicant began to receive regular child support payments or obtained full-time employment. 

3.      In April 2003, the applicant began to receive payments from her former husband in the way of child support payments for her two children and, accordingly, the respondent began to recover the debt by making fortnightly deductions from her payments of family tax benefit and parenting payment in the amount of $20 per fortnight in each case.

4.      On 11 April 2003, the applicant sought review of the decision to raise the debt by the Administrative Appeals Tribunal (the Tribunal).

5.      The applicant attended the hearing but was not represented.  The respondent was represented by James Howard.  The following material was taken into evidence:

Exhibit 1Documents prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (the T Documents – T1 to T26);

Exhibit 2An online file note relating to the applicant dated 24 August 2000;

Exhibit 3A payment summary of the applicant’s payments for the period from 24 July 2003 until 9 October 2003; and

Exhibit 4A financial information statement completed by the applicant and dated 15 July 2003.

Issues and Legislation

6.      It is not disputed in this case by the applicant that she has a debt to the Commonwealth in the amount of $4,218.93.  However, she has submitted that the debt either be written off or waived because of her difficult circumstances.

7.      The annual rate of family tax benefit is calculated in accordance with the terms of subsection 58(1) of the FA Act and Schedule 1 of that Act.  Where there has been a payment that a person was not entitled to receive, a debt arises in accordance with section 71 of the FAA Act which reads:

“(1)  If:

(a)an amount has been paid to a person by way of family tax benefit, maternity allowance or maternity immunisation allowance (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.

(2)  If:

(a)an amount (the received amount) has been paid to a person by way of assistance; and

(b)the received amount is greater than the amount (the correct amount) of assistance that should have been paid to the person under the family assistance law;

the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.”

8.The provisions that relate to write-off and waiver of a debt are found in sections 95, 96, 97 and 101 of the FAA Act which read:

“Secretary may write off debt

95(1)    Subject to subsection (2), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

95(2)    The Secretary may decide to write off a debt under subsection (1) if, and only if:

(a)       the debt is irrecoverable at law; or

(b)       the debtor has no capacity to repay the debt; or

(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

(d)it is not cost effective for the Commonwealth to take action to recover the debt.

95(3)  For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:

(a)       the debt cannot be recovered by means of:

(i)        deductions under section 84; or

(iaa)     deductions under section 1231 of the Social Security Act 1991; or

(ia)      setting off under section 84A arrears of family assistance; or

(ii)       application of an income tax refund under section 87; or

(iia)     setting off under section 87A against advances; or

(iii)      legal proceedings under section 88; or

(iv)      garnishee notice under section 89;

because the relevant time limit for recovery action under that section has elapsed; or

(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.

95(4)  For the purposes of paragraph (2)(b), if a debt is recoverable by means of:

(a)       deductions under section 84; or

(aa)     deductions under section 1231 of the Social Security Act 1991; or

(b)       setting off under section 84A arrears of family assistance; or

(c)       application of an income tax refund under section 87; or

(d)       setting off under section 87A against advances;

the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.

95(5)  A decision made under subsection (1) takes effect:

(a)if no day is specified in the decision—on the day on which the decision is made; or

(b)if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).

95(6)  Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.

Power to waive Commonwealth's right to recover debt

96(1) On behalf of the Commonwealth, the Secretary may waive the Commonwealth's right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 97, 98, 99, 100, 101 or 102.

96(2) A waiver takes effect:

(a)       on the day specified in the waiver (whether that day is before, after or on the day on which the decision to waive is made); or

(b)       if the waiver does not specify when it takes effect-on the day on which the decision to waive is made.

Waiver of debt arising from error

97(1)    The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.

97(2)  The Secretary must waive the administrative error proportion of a debt if:

(a)the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and

(b)       the person would suffer severe financial hardship if it were not waived.

97(3)  The Secretary must waive the administrative error proportion of a debt if:

(a)the payment or payments were made in respect of the debtor’s eligibility for family assistance for a period or event (the eligibility period or event) that occurs in an income year; and

(b)       the debt is raised after the end of:

(i)the debtor’s next income year after the one in which the eligibility period or event occurs; or

(ii)the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;

whichever ends last; and

(c)the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.

97(4)  For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt.

…

Waiver in special circumstances

101.  The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a)the debt did not result wholly or partly from the debtor or another person knowingly:

(i)        making a false statement or a false representation; or

(ii)failing or omitting to comply with a provision of the family assistance law; and

(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c)it is more appropriate to waive than to write off the debt or part of the debt.”

Applicant’s Case

9.      The applicant told the Tribunal that she was now divorced from her husband with whom she lived in the 2000/2001 financial year.  She said that she had supplied estimates of the income of herself and her husband to Centrelink in the amounts of $20,000, on 1 July 2000, and $24,000, on 24 August 2000.  She said that her ex-husband had contacted Centrelink to advise them of the amounts but had been told by the Centrelink officer that, as the monies were to be paid to her, it was she who had to contact and provide that information. She said she was not given full information by her ex-husband about his earnings and that the actual earnings in 2000/2001 were $41,562. 

10.     The applicant considered that there was unfairness in the legislation in that it was really her ex-husband who had been responsible for the incorrect level of payments.  She believed that the legislation should reflect that although she accepted that, based on the way the legislation operations, she has the debt because the monies were paid to her.

11.     The applicant said that her first husband, the father of her two children now aged 13 and 11 years, respectively, had commenced paying child support payments in April 2003 and that, currently, she receives $660 per month from him.  She also said that she is no longer in employment, having lost her part-time work which had continued for some three years, on 4 July 2003 for various reasons including a drop in her work performance because of stresses that she was under.  She said that she is currently being treated for depression and high blood pressure although she said that the general health of the children was good.  She said that she received family tax benefit payments and parenting payments totalling $837 per fortnight out of which she pays $20 in tax and $40 by way of repayments to Centrelink in relation to the recovery of the debt.

12.     The applicant said that this meant that she had income of approximately $500 per week but that she had expenses which amounted to approximately $700 per week.  She detailed these as being:

Item	Amount
General Expenses
Rent	260
Contents Insurance	6
Electricity	10
Telephone	25
Transport Expenses
Car Registration	12
Car Insurance	6
Petrol	20
Car Repairs	6
Car Loan	50
Household Expense
Groceries	150
Medical	5
Dental	12
Clothing	25
Entertainment	20

Regular Payments
Credit Cards	13
Car Loan	50

13.     The applicant said that she had borrowed money to buy her car from her ex-husband’s parents and was repaying them at the amount of $50 per week and that they provided her with some assistance from week to week in meeting the shortfall of her income over her expenses.  The applicant also said that she had recently taken an ABN number and that she had prospects of obtaining employment in book-keeping and in computer work in which she has experience.

Respondent’s Submission

14.     Mr Howard submitted that, as the monies were paid to the applicant, it was she who was responsible for the debt and that this arose because the estimates that were given of income by the applicant were much lower than the actual income earned during the 2000/2001 financial year.

15.     Mr Howard referred to the waiver provisions of the Act and submitted that the only one that was potentially relevant was that pertaining to special circumstances in section 101 of the FAA Act because there had been no administrative error on the part of the Commonwealth.  Moreover, he submitted that the special circumstances waiver provision was not relevant in this case because the provision specifically provided for circumstances to be other than financial hardship alone.  In any event, Mr Howard submitted that the more appropriate remedy in this case, if either waiver or write-off were to be adopted, was for the debt to be written off under section 95 of the Act and for payments to be deferred until such time as the applicant’s financial circumstances improved such as, for example, if she were to gain employment.

16.     Mr Howard advised the Tribunal that it was open to the applicant to seek to have the withholding amount reduced if she were having difficulty making payments.  Mr Howard said that the amount of the debt which was still outstanding was $3,858.93.

Consideration

17.     I am satisfied that the debt in this case has been properly calculated and that the unwaived portion of it which is in issue totals $4,218.93.  Indeed, this has been conceded by the applicant.

18.     It is not in dispute that the monies were paid directly to the applicant and, in accordance with the terms of section 71 of the FA Act, this is a debt due by her to the Commonwealth even though the relevant income was earned by her ex-husband.

19.     A debt may be waived in accordance with section 97 of the FAA Act but a pre-condition to that is that the debt arose solely through administrative error made by the Commonwealth.  In this case, the debt arose because of incorrect estimates being made of income by the applicant and, therefore, section 97 is not applicable.

20.     Under section 101 of the FAA Act, the debt may also be waived where there are special circumstances, other than financial hardship alone, which make it desirable to waive.

21.     The Act provides no guidance as to the meaning of the term special circumstances. In Beadle v Director-General of Social Security (1985) 60 ALR 225, the Federal Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss" (at 228). There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security(1984) 1 AAR 362) where (at 364) the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances must be “unusual, uncommon or exceptional” and must have a “particular quality of unusualness that permits them to be described as special".

22.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle’s case, observed (at 545) that special circumstances:

“…would require something to distinguish… [the]… case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”

23.     The Tribunal accepts that the applicant experiences a degree of financial hardship but is also satisfied that there are no special circumstances other than financial hardship alone which would make it desirable to waive the debt.

24.      In addition, consideration must be given to the writing off of the debt in accordance with paragraph 101(c) of the FAA Act.  The requirements for writing off a debt are set out in subsection 95(2) of the FAA Act and a potentially relevant factor therein is that the debtor has no capacity to repay the debt.  In this case, the applicant’s expenses exceed her income but she is managing to make ends meet through the assistance of others and, at the same time, is making repayments in the amount of $40 per fortnight.  I have noted Mr Howard’s reference to the prospect of the applicant making contact with the respondent for the purposes of reducing the level of those payments in the event that she was finding it difficult to meet them.  As I understand it, that option is open to her.

25.     In the circumstances, I am satisfied that the applicant does have the capacity to repay the debt through deductions from her social security payments and, in that situation, I am satisfied that the debt should not be written off.

Decision

26.The decision to raise and recover a debt of $4,218.93 is affirmed.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  26 September 2003
Date of Decision  7 October 2003

The Applicant appeared in person
For the Respondent                  Mr J Howard, Departmental Advocate