Burke; Department of Family and Community Servies

[2001] AATA 396

DECISION AND REASONS FOR DECISION [2001] AATA 396

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   N2000/1007

GENERAL ADMINISTRATIVE  DIVISION       )       
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Applicant

And    TRACEY  BURKE            
  Respondent

DECISION

Tribunal       Senior Member M D Allen

Date11 May 2001

PlaceSydney

Decision      The decision under review is set aside and this matter remitted to the Applicant with the direction that the Respondent, Tracey Burke, is indebted to the Commonwealth in the sum of $6,680.95 being an overpayment of Family Payment/Family Allowance.    

(Sgd)                  M D ALLEN
  ..............................................
  Senior Member
CATCHWORDS
SOCIAL SECURITY  -  Overpayment of Family Allowance/Payment.  Recipient gave estimates of future income.  Was department permitted to act on those estimates.  Did special circumstances exist.

Social Security Act 1991 - ss885, 891, 1069-H15, 1069-H18, 1069-H19, 1069-H21, 1237AAD

Secretary, Department of Social Security v Ellis 24 AAR 535
Re Secretary, Department of Family and Community Services and Butt [2000] AATA 623
Re Stuart and Secretary, Department of Social Security 54 ALD 241

REASONS FOR DECISION

11 May 2001           Senior Member M D Allen

1. In Blunn v Cleaver 18 AAR 344 at 361-362 the Full Court of the Federal Court said of the so-called "plain English" Social Security Act 1991:

   "As the Senate Committee remarked, the increasingly complex society in which we all live very often demands that legislation be expressed in a complex form.  That is the factor which will so often operate to prevent simplicity in legislative drafting.  The area of social services legislation is a complex one as the terms of the previous legislation and judicial decisions upon it have demonstrated.  That is what the draftsman of this legislation may have sought to overcome.  Regrettably, the replacement consists of a maze of provisions made the more complex by prolix definitions, provisos and exceptions.  Both those who claim entitlements under it and those responsible for its administration will not always find it easy to discover whether or not a benefit is payable.  It may be expected that the Administrative Appeals Tribunal and the courts will continue to be troubled by difficult problems of construction which will be thrown up by a variety of factual circumstances which, in an increasingly complex community, will not be few."

1. This matter concerns entitlements arising under what is termed module H – Family Allowance Income Test consisting of submodules 1, 2, 2A and 3, and containing section1069-H1 through to section 1069-H38.

2. In this matter the most relevant sections are sections 1069-H5, H6, H11, H13, H14, H15, H18, H19 and H21.  Those particular sections read:

   "1069-H5     An event is an assumed notifiable event for the purposes of the application of this Module in respect of a person if a family allowance claim form approved by the Secretary that was lodged by or on behalf of the person states that the event is an assumed notifiable event for the purposes of this Module.

   1069-H6      If the Secretary gives a person notice under section 872(1) relating to the payment of family payment to the person, the Secretary may state in the notice that an event described in the notice is a notifiable event for the purposes of this Module.   (As at the time of the decision under review.)
         …
         1069-H11     A person may give the Secretary a notice setting out the person's estimate of an income component of the person for a tax year.
         …
         1069-H13     Subject to the following provisions of this Submodule, the appropriate tax year for a day is the base tax year for that day.

   1069-H14     The base tax year for a day is the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the day occurs.
   Example:  The day for which the base tax year is to be identified is 25 January 1995 – this day occurs in the calendar year 1 January 1995 to 31 December 1995 – the calendar year that came immediately before this one is the calendar year 1 January 1994 to 31 December 1994 – the base tax year is the tax year that ended on 30 June 1994 (ie the year of income that began on 1 July 1993).

   1069-H15     If:

   (a)an instalment of family allowance (the first payment) is paid to a person on a day in one calendar year; and

   (b)the next instalment of family allowance (the second payment) is paid to the person on a day in the next calendar year; and

   (c)the instalment period to which the second payment relates:

   (i)commenced immediately after the end of the instalment period to which the first payment related; and

   (ii)included the first day of the calendar year referred to in paragraph (b); and

   (d)the person's family allowance rate on the day referred to in paragraph (a) is worked out on the basis that the person's appropriate tax year is the tax year in which the day occurs (the current tax year); and

   (e)the person's family allowance rate on that day was worked out on that basis because the person had made a request under point 1069-H21; and

   (f)the person's income for the current tax year is less than the person's income for the base tax year;

   the person's appropriate tax year, as from the beginning of the later calendar year, is the current tax year and not the base tax year unless the income for the base tax year is less than the person's income free area.
           …
         1069-H18     If:

   (a)a notifiable event occurs in relation to a person; and

   (b)the person's income for the tax year in which the notifiable event occurs exceeds:

   (i)    110% of the person's income for the base tax year; and

   (ii)   110% of the person's income free area;
   the appropriate tax year, for the purpose of applying this Module to the person for the remainder of the family allowance period, is the tax year in which the notifiable event occurs.
         1069-H19     If:

   (a)   a notifiable event occurs in relation to a person; and

   (b)point 1069-H18 does not make the year in which the event occurs (the event tax year) the appropriate tax year; and

   (c)the person's income for the tax year that follows the event tax year is likely to exceed:

   (i)    110% of the person's income for the base tax year; and

   (ii)   110% of the person's income free area;

   the appropriate tax year, for the purpose of applying this Module to the person for:

   (d)the part of the family allowance period in which the event occurs that comes after the end of the event tax year; and

   (e)the next family allowance period after the one referred to in paragraph (d);

   is the year that follows the event tax year.

   …

   1069-H21If:

   (a)family allowance;

   (i)is not payable to a person because of this Module; or

   (ii)is payable at a reduced rate because of this Module; and

   (b)the person gives the Secretary an estimate of the person's income for a tax year; and

   (c)the person requests the Secretary to make a determination under this point; and

   (d)the person agrees that the person's rate of family allowance for that tax year is to be recalculated if the person's actual income for that tax year exceeds 110% of the amount estimated by the person;

   the Secretary must determine that the appropriate tax year, for the purpose of applying this Module to the person on or after the day on which the request is made, is the tax year in which the request is made."

In addition subs872(1), s885, s891 and subs1223(3) read:

"872(1)  The Secretary may give a recipient of family allowance a notice that requires the recipient to inform the Department if:

(a)   a specified event or change of circumstances occurs; or

(b)the recipient becomes aware that a specified event or change of circumstances is likely to occur.

885(1)[Recalculation of rate]    If

(a)in working out the rate of family allowance payable to a person, regard is had to the person's income for a tax year; and

(b)the income to which regard was had consisted of an amount estimated by the person; and

(c)the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family allowance was based;

the person's rate of family allowance is to be recalculated on the basis of that income.

885(2)    [Definition of income]     For the purposes of this section, a person's income for a particular tax year is the sum of:

(a)   the person's taxable income for that year; and
(b)   the person's adjusted fringe benefits value for that year; and
(c)   the person's target foreign income for that year; and
(d)   the person's net rental property loss for that year.

885(3)    [Adjusted fringe benefits value]    In this section:
'adjusted fringe benefits value' has the same meaning as in points 1069-H25 and 1069-H26 in Module H of the Family Allowance Rate Calculator in section 1069.

891     If:

(a)the Secretary makes a determination of a person's rate of family allowance; and

(b)in making the determination, the Secretary had regard to the person's income for a tax year; and

(c)the income to which regard was had included an amount or amounts estimated by the person; and

(d)the person's income for the tax year is more than 110% of the amount of the income on which the determination referred to in paragraph (a) was based; and

(e)the Secretary makes a determination varying the person's rate of family allowance, or cancelling the person's family allowance, to give effect to the recalculation required by section 885;

the later determination takes effect on the day on which the earlier determination took effect.

1223(3)    Recalculation of rate of family allowance.  Subject to subsection(4), if:

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

(b)the person's rate of family allowance is recalculated under:

(i)     section 884 (amendment of assessable income); or

(ii)     section 885 (underestimate of income); or

(iii)     section 886 (failure to notify notifiable event); or

(iv)    section 886A (overestimate of child maintenance expenditure); and

(c)the received amount is more than the amount (the 'correct amount') of the family allowance payable to the person;

the difference between the received amount and the correct amount is a debt due to the Commonwealth."

1. On 17 September 1999 a delegate of the Applicant determined that the Respondent had been overpaid Family Payment in the sum of $6,680.95 for the period 3 July 1997 to 2 July 1998.  (From 1 April 1998 "Family Payment" became known as "Family Allowance".  In these reasons the term "Family Payment is used throughout.)

2. The decision of the Applicant's delegate was set aside by a Social Security Appeals Tribunal (SSAT).  The SSAT found that special circumstances existed in the Respondent's case and directed that recovery of the said sum of $6,680.95 be waived.

3. By application made 25 June 2000, the Applicant sought review of the SSAT determination.  The said application came on for hearing before me at Sydney on 19 April 2001.  At that hearing the Respondent was unrepresented but Exhibit R1 in these proceedings is a Statement of Facts and Contentions prepared by the New South Wales Legal Aid Office on behalf of the Respondent.

4. In addition to Exhibit R1 above, the following documents were taken in and marked as follows, namely:

   T1–T36: Documents prepared for the Tribunal pursuant to s37 of the Administrative Appeals Tribunal Act 1975; and

Exhibit A1:     Applicant's Statement of Facts and Contentions.

1. The Respondent, being in receipt of Family Payment, was sent a notice on 27 November 1996 informing her of her current rate of payment.  That notice detailed certain events which, upon occurrence, were required to be notified to the Applicant pursuant to the Social Security Act 1991.

2. During the years 1996-1998 various documents were lodged by the Respondent at the St Marys office of Centrelink.  Those documents are set out in chronological order in Exhibit A1.

3. In addition during the years 1997 and 1998, the Respondent's employment status changed from casual, to full-time, to casual again.

4. I have no reason to doubt the Respondent's evidence to me that, because she did not understand how the forms requesting an estimate of income were to be completed, she went to the Centrelink Office at St Marys and officers at that office assisted her in filling out the forms.

5. I also accept her evidence that, because of the casual nature of her employment, she had no idea of how much she was going to earn so that her estimates were just that.  More to the point, I accept and understand her statement that "I kept going in with my pay slips and they said everything was OK."  She also added that she did not understand the forms and that at no time was it suggested to her that she need not provide estimates of her income.

6. At the outset the decision under review can be set aside because the SSAT based its decision upon the misconceived idea that the notices forwarded to the Respondent were incapable of constituting notifiable events whereas they clearly did.  See Re Stuart and Secretary, Department of Social Security 54 ALD 241.

7. When the Respondent commenced cohabitation with her partner, that was a "notifiable event" and by document lodged with Centrelink on 16 January 1997 she notified the Applicant of that event (see Document T3).  In that document she also stated that their combined income for the 1996/97 tax year was $27,000.  She also stated that her taxable income for the 1995/96 tax year was $15,334.00 and that of her partner $8,000.00.

8. No request was made to the Applicant by the Respondent at that time seeking to have her estimate of income in the tax year 1996/97 used to work out her entitlement to Family Payment.  Cf Document T11 at question 12. 

9. Document T4 is a work sheet evidencing calculations carried out by officers of the Applicant's department, pursuant to s1069-H18, following the notifiable event of 16 January 1997.  Those calculations show that as the estimate of income, namely $27,000.00, was not more than 110% of the income free area or the income for the base year, namely $23,334.00, then the rate of payment of Family Payment did not change.

10. By letter dated 10 June 1997 the Respondent was asked to supply an estimate of her and her partner's taxable incomes for the year 1997/98.  She did that by document lodged with Centrelink on 17 June 1997.  In that document she estimated her taxable income for 1997/98 as $23,000.00 and that of her partner as nil.

11. This estimate of income could not be used to calculate the rate of Family Payment paid to the Respondent.  Section 1069-H19 which states inter alia:

    "If:

    (a)   a notifiable event occurs in relation to a person; and

    (b)point 1069-H18 does not make the year in which the event occurs (the event tax year) the appropriate tax year;"

was applicable because s1069-H18, as detailed above, made the base tax year, that is to say the 1995/96 tax year, the applicable year, and the Respondent's estimate did not exceed 110% of the income for the base tax year, ie the sum of $23,334.00.

1. The Respondent then attended at the St Marys office of Centrelink on 4 September 1997.  A notifiable event had occurred, namely that the Respondent had commenced full-time work.  See Document T11 at p47.

2. On that day the Respondent produced to Centrelink notices of assessment by the Commissioner of Taxation for herself and her partner for the tax year ended 30 June 1997.  Both notices were dated 24 July 1997 (see Exhibit A1, Annexures B and C).  These Assessment Notices revealed that the Respondent's taxable income for 1996/97 was $31,436.00 and her partner's income was $7,912.00 giving a combined income amount of $39,348.00.

3. The sum of $39,348.00 was more than 110% of the base tax year and of the income free area. Section 1069-H18 therefore applied and the rate of Family Payment was reduced, and an overpayment created. See sections 885 and 891 of the Social Security Act 1991.

4. As I understand the Respondent's Statement of Facts and Contentions, the Respondent does not dispute that an overpayment occurred for the period 5 July 1997 to 3 September 1997. 

5. Question 12, in the form signed by the Respondent and lodged at Centrelink on 4 September 1997, reads (T11 p48):

   "Do you want us to use your estimate to work out how much Family Payment we can pay you?"

The Respondent conceded in evidence that she had ticked the "Yes" box to that question.

1. The Respondent's signature appears below a statement which reads (T11 p51):

   "If I/we have provided an estimate of my/our income, I/we agree that my Childcare Assistance and/or Family Tax Payment and/or Family Payment is to be recalculated if my/our actual income is more than 110% of my/our estimate and that I/we may have to repay any overpayment that results."  

1. The request by the Respondent on 4 September 1997 invoked the provisions of s1069-H21– see Re Secretary, Department of Family and Community Services and Butt [2000] AATA 623 at para 25.  Contrary to the Respondent's submissions regarding the effect of s1069-H21, the Respondent's base year of income is irrelevant if Family Payment is payable at a reduced rate because of Module H – see para 1069-H21(a)(ii).

2. In this matter a reduced rate of Family Payment was payable because of s1069-H18.  As explained above, a notifiable event had occurred, namely the forming of the defacto relationship.  That notifiable event occurred in the 1997 calendar year and in the 1996/97 tax year.  The Notices of Assessment dated 24 July 1997 revealed that the taxable income of the Respondent and her partner exceeded 110% of income for the base year and the income free area.  Therefore, pursuant to s1069-H18 the appropriate tax year was the tax year in which the notifiable event took place, namely the year 1996/97.

3. As pointed out above, subs885(1) then acted to reduce the rate of Family Payment payable.

4. Section 1069-H15 makes provision for the current tax year to be applied in a later calendar year if a request has been made pursuant to s1069-H21 to change the appropriate tax year.  In this matter, as the Respondent, by her 4 September 1997 document, had requested the Applicant to use the 1997/98 tax year to calculate her entitlements, s1069-H15 applied.

5. A Notice of Assessment issued by the Commissioner of Taxation on 22 July 1998 showed the Respondent's taxable income for the 1997/98 tax year as $34,018.00 (Document T30).  This sum was more than 110% of the estimate of income, namely $28,000.00, provided by the Respondent on 4 September 1997.  Subsection 885(1) therefore created an overpayment of the Family Payment.

6. I am therefore satisfied that a debt has been created by overpayments of Family Payment to the Respondent.  I can see no evidence that the creation of that debt was in any way due to administrative error on the part of the Applicant or his officers.  The quantum of the said debt was not disputed by the Respondent.

7. Whereas officers of Centrelink did assist the Respondent in completing forms, I do not regard them as in any way creating some sort of estoppel or agency for the Respondent nor incurring any liability to her.  It would be to the detriment of Social Security recipients if officers of Centrelink were to be constrained in the assistance they were able to afford to them by holding that they thereby were created the agents for the person assisted or that the said assistant excused the liability of the person where incorrect or incomplete information was given.

8. Section 1237AAD states:

   "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 this Act or the 1947 Act; 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."

The term "special circumstances" has been discussed in many cases by the Federal Court and by this Tribunal.  In Secretary, Department of Social Security v Ellis 24 AAR 535 at 539 Carr J said:

"In Beadle v Director-General of Social Security (1985) 7 ALD 670, a Full Court of this Court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s 102(1)(a) of the Act which provided for an extension of time in which to claim a family allowance '… in special circumstances …'.  At 673-674 the Full Court said:

'Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate …  It would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase 'special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss.'

In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to Beadle, said:

'… for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case.  That was, I consider, the only inquiry to be undertaken in this 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.  The inquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.'

Later (on the same page) Kiefel J expressly approved the Tribunal's reasoning in holding that Mr Groth's circumstances were not out of the ordinary when Pt 3.14 of the Act (in which ss 1168 and 1184 are to be found) had the same effect on him as it did on other persons qualified to receive a disability support pension.  Her Honour added:

'It [the Tribunal] went on to find that his circumstances and those of his family although difficult, did not constitute hardship and they could not be said to be different from other pension recipients.'"

1. In this matter, although I acknowledge that the Respondent at all times acted honestly so that no question of knowingly making a false statement arises, none of the evidence before me revealed special circumstances in the sense described in Secretary, Department of Social Security v Ellis supra.  The Respondent is, like most recipients of Social Security payments, in straightened financial circumstances but, as pointed out in Ellis supra, that of itself is not sufficient to create special circumstances.

2. The decision under review will be set aside and this matter remitted to the Applicant with the direction that the Respondent is indebted to the Commonwealth in the sum of $6,680.95, being an overpayment of Family Allowance/Payment.  The rate at which that sum is recovered is a matter to be negotiated between the Applicant and the Respondent.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of:

Senior Member M D Allen

Signed:         Kwai-Ling Wong           .....................................................................................
  Associate

Date of Hearing  19 April 2001
Date of Decision  11 May 2001
Solicitor for the Applicant         Ms S Fahey,
  Department of Family and Community Services
Solicitor for the Respondent    Applicant was self-represented