Coyne and Secretary to the Department of Family and Community Services - [2002] AATA 1156

DECISION AND REASONS FOR DECISION [2002] AATA 1156

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2002/423
GENERAL ADMINISTRATIVE DIVISION
  Re:         TAMMY COYNE
  Applicant
  And:       SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES
  Respondent

DECISION

Tribunal:       M.J. Carstairs, Member
Date:             6 September 2002
Place:            Melbourne

Decision:For the reasons given orally at the hearing, the Tribunal varies the decision under review in the following terms. The recoverable amount of the debt of family tax benefit is $882.92. The remainder of the debt has been waived on the basis of the Family Assistance Estimate Tolerance (Transition) Determination 2001 and special circumstances within the meaning of s101 of the A New Tax System (Family Assistance) (Administration) Act 1999.

(sgd) M.J. Carstairs
Member
SOCIAL SECURITY – family tax benefit - overpayment – recovery of social security payment - whether family tax benefit debt exists in this case – – whether debt should be waived - whether special circumstances exists
A New Tax System (Family Assistance) (Administration) Act 1999
Family Assistance Estimate Tolerance (Transition) Determination 2001
Director General of Social Security v Hales (1983) 47 ALR 281
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Re Besteland Secretary, Department of Family and Community Services [1999] AATA 867

REASONS FOR DECISION

6 September 2002 M.J. Carstairs, Member

This is an application by Tammy Coyne (the applicant) for review of a decision made by the Social Security Appeals Tribunal (the SSAT) on 5 April 2002. The SSAT varied a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the respondent) that an amount of family tax benefit paid to the applicant during the period 1 July 2000 to 30 June 2001 should be recovered.
At the hearing the applicant represented herself. Mr D. Perdon, Centrelink advocate, represented the respondent.
The Tribunal had before it the documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act1975, as well as documents A1 and A2 for the applicant. At the request of the applicant, documents A1 and A2 were returned to her at the conclusion of the hearing. The respondent filed its Statement of Facts and Contentions with the Tribunal on 2 September 2002.
BACKGROUND
The applicant is aged 41. She has a daughter aged 22 and two sons aged 10 and 7. During 2000/2001, she was in receipt of family tax benefit (Parts A and B) in respect of the younger two children.
In March 2001 the applicant received an arrears payment of child support of $6055.94. She told Centrelink about the receipt of the arrears (this is not disputed) in March 2001. The receipt of the arrears of child support affected the family tax benefit paid in 2000/2001. As a result of this, the respondent notified the applicant on 23 January 2002 (T15) that there was a debt of $1552.88. The letter read as follows:
…
About your Family Tax Benefit – 2000/01 ... The first year of the Family Tax Benefit has shown that some Australian families have incorrectly estimated their income or had changes to their family circumstances. This means that some families have been paid an excess amount of Family Tax Benefit.
To assist families adjust to the new system, the Government has decided that, for the 2000/01 financial year only, families do not have to repay the first $1000 of some Family Tax Benefit overpayments related to incorrect estimates of income or shared care.
How your Family Tax Benefit was assessed. Based on your annual family income and your family circumstances during the year, you received more Family Tax Benefit than you were entitled to.
The back of this letter details the range of flexible repayment options available to assist families.
01/07/2000><#TODAT=30/06/2001
Received … amount $7743.96
Entitled … $5191.08
Total Excess Payment … $2552.88.
Less waiver amount $1000.00
…Amount $1,552.88.
…The $1000 waiver amount will not apply for the 2001/2002 financial year. …
As there were several decisions made in regard to the amount of the overpayment, these will be referred to in the sequence in which they were made. The first decision was that above, that the debt was $1552.88 for the period 1 July 2000 to 30 June 2001, that is having taken out the $1000.00 allowed for in the 2000/2001 financial year as a special adjustment.
The applicant sought review of the first decision. When the decision was reviewed by an authorised review officer on 6 February 2002 (T20), he checked all figures used to reconcile the arrears payment for child support, with the received family tax benefit. He was satisfied that the correct amount of the debt was $1479.59 (T19) for the period 1 July 2000 to 30 June 2001. This is the second decision.
The applicant then sought review with the SSAT. In its decision the SSAT agreed with the authorised review officer that a debt for $1479.59 exists for the period 1 July 2000 to 30 June 2001, but decided that $617.34 of it should be waived and that the applicant should repay the remaining $862.25. This is the third decision.
The applicant sought review with this Tribunal on 24 April 2002.
EVIDENCE
The applicant said that she notified Centrelink as soon as she knew of the arrears payment of child support in March 2001. She said the SSAT had stated at paragraph 28 of its reasons, that, at the time of her notifying Centrelink in March 2001, she had received $147.59 in excess of her entitlement to family tax benefit payments. She could not understand this figure in the context of the amount she was required to repay. She also said that the SSAT had stated in its written decision that this amount, which is prior to March 2001, was not attributable to administrative error.
The applicant said that her circumstances now are that she has secured 20 hours per week contracted employment, and will have a more regular salary pattern than she has had in the past. She will receive $569.20 per fortnight as wages. Wages and parenting payment total $833.20 per fortnight. She also receives family payments for her younger two children. She has recently had to borrow $1760.76 for repairs to her car (document A1) and has arrears of rent of $672.59 (document A2). One of the children is asthmatic and approximately $15.00 per week is required for medication. The older son had surgery last year, for which she paid hospital bills. She said that some weeks are good for her, and some are not, and it can be unpredictable with young children when expenditure will arise. She said that she thought her circumstances met the test of severe financial hardship.
The documentary evidence before the Tribunal included the computer record of the applicant's advice to Centrelink in March 2001 that she had received the arrears of maintenance (T8). Also included was documentary material reconciling the receipt of the arrears of maintenance with the payment of family tax benefit (T14, T19).
CONSIDERATION OF THE ISSUES
Section 71 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Act) provides:
71.(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.
The provision for non-recovery of certain family assistance debts is made in Part IV of the Act. Sections 101 and 102 of the Act provide:
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.
102(1)     The Secretary may, on behalf of the Commonwealth, decide to waive the Commonwealth's right to recover debts, or parts of debts, arising under or as a result of this Act that are included in a class of debts specified by the Minister by determination in writing.
102(1A)   A determination by the Minister under subsection (1):
(a)may specify conditions to be met before the Secretary exercises the power to waive debts, or parts of debts, in the specified class; and
(b)may specify limits on the amounts to be waived in relation to debts in the specified class.
The Secretary must exercise the power to waive in accordance with any conditions or limits specified in the Minister's determination.
102(2)     A decision 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).
A debt may be waived on the basis of administrative error only if the person would suffer severe financial hardship if it were not waived (s97 of the Act).
The Instrument of the Minister (determined under s102 of the Act), by application of which $1000.00 was waived in the first decision on the overpayment, provides:
1.     Citation
This determination may be cited as the Family Assistance Estimate Tolerance (Transition) Determination 2001.
2.     Commencement
This determination commences on gazettal.
3.     Interpretation
(1)In this determination, unless the contrary intention appears:
the Act means the A New Tax System (Family Assistance) (Administration) Act 1999;
child care benefit debt of a person means a debt that arises under section 71B or 71C of the Act in relation to an amount paid to the person by way of child care benefit;
Family Assistance Act means the A New Tax System (Family Assistance) Act 1999;
family tax benefit advance debt of a person means a debt that arises under section 71A of the Act in relation to an amount paid to the person by way of family tax benefit advance;
family tax benefit debt of a person means a debt that arises under section 71 of the Act in relation to an amount paid to the person by way of family tax benefit;
Related Measures Act means the A New Tax System (Family Assistance and Related Measures) Act 2000.
(2)Unless the contrary intention appears, expressions used in this determination that are defined in the Act or the Family Assistance Act have the same meanings as in that Act.
…
Part 2     Waiver of debts of a particular class
4.     Class of debts
(1)Subject to this section, a debt due to the Commonwealth by a person is included in a class of debts for the purposes of section 102 of the Act (Secretary may waive debts of a particular class) if:
(a)the debt is:
(i)a family tax benefit debt of the person; or
(b)the debt arose because of an amount paid:
(i)during the 2000-2001 income year; or
…
(c)the whole or a part of the debt arose because of action taken to take proper account of one or more of the following:
(i)a person's adjusted taxable income for the 2000-2001 income year; or
(ii)a person's maintenance income during the 2000-2001 income year; or
…
5.Conditions and limits on waiver
(1)Subject to subsection (2) and to section 6 (the $1,000 ceiling), a debt that is included by section 4 in a class of debts for the purposes of section 102 of the Act may be waived under section 102 of the Act to the extent to which the debt is attributable to action taken to take proper account of one or more of the matters referred to in paragraph 4(1)(c).
(2)A debt, or a part of a debt, is not to be waived as mentioned in subsection (1) if the debt, or that part of the debt, arose (wholly or partly) because a person knowingly made a false statement or false representation.
6The $1,000 ceiling
Single debt
(1)If a person has only one debt that may be waived as mentioned in section 5, the amount that may be so waived in relation to the debt is not to exceed $1,000.
Single child care benefit debt
(2)If a person has more than one debt that may be waived as mentioned in section 5 but only one child care benefit debt that may be so waived, the amount that may be so waived in relation to the child care benefit debt is not to exceed $1,000.
Multiple child care benefit debts
(3)If a person has 2 or more child care benefit debts that may be waived as mentioned in section 5, the total amount that may be so waived in relation to those debts is not to exceed $1,000.
Multiple family tax benefit or family tax benefit advance debts
(4)If a person has:
(a)2 or more family tax benefit debts, but no family tax benefit advance debts, that may be waived as mentioned in section 5; or
(b)2 or more family tax benefit advance debts, but no family tax benefit debts, that may be so waived;
the total amount that may be so waived in relation to those debts is not to exceed $1,000.
(5)       If a person has:
(a)one or more family tax benefit debts that may be waived as mentioned in section 5; and
(b)one or more family tax benefit advance debts that may be so waived;
the following rules apply:
(c)the total amount that may be so waived in relation to those debts is not to exceed $1,000;
(d)the amount that may be so waived is to be applied against the family tax benefit debts first.
Application to debts of particular kind in order in which they arise
(6)       If:
(a)a number of debts of a particular kind may be waived as mentioned in section 5; and
(b)the whole of all of those debts cannot be waived because of this section;
the amount that may be so waived is to be applied to the debts in the order in which they arose.
(7)For the purposes of subsection (6), the 3 kinds of debts are:
(a)family tax benefit debts; and
…
The first issue for the Tribunal is whether there is a debt of family tax benefit in this case. There was no dispute about the amount of, nor receipt of, the arrears of payment of child support. As the family tax benefit rate calculator in Schedule 1 of the Act requires that maintenance income be taken into account, and the Act provides for reconciliations to be made for arrears, the amount of family tax benefit paid without account being taken of the child support, should be recalculated. The Tribunal is reasonably satisfied that the calculations completed by the authorised review officer (T19) correctly reconcile the figures and the Tribunal accepts, on the basis of those figures, that the overpayment totals $2479.59. The first decision waived $1000.00 as allowed for in the Instrument of the Minister. The overpayment in the sum of $1479.59 is a debt under the Act because s71(2) of the Act requires that the difference between a received amount and a correct amount (ascertained after a reconciliation in this case) be raised as a debt. The Tribunal finds that the difference between the received amount and the correct amount, with the waiver of $1000.00 is the sum of $1479.59 and that this is a debt recoverable under the Act. For completeness, the sum of $1479.59 was the amount of the debt confirmed by the SSAT - the third decision (T2).
The Tribunal then turned to the question of whether the debt should be waived. The applicant submitted that the provision for waiver on the basis of administrative error should be exercised in her case. On the figures itemising income and expenditure, the applicant's receipts are higher than her expenditure, and in the context of the legislation that is not severe financial hardship. Additionally, receipts are well in excess of the payments received as income support under the Act, which provide a guide to the concept of hardship in these provisions. The Tribunal is satisfied that the basis of waiving the debt under s97 is not open, as the applicant has not established severe financial hardship.
The respondent submitted that the SSAT was in error to find special circumstances, and that its decision to waive that part of the debt for the period March to June 2001 was wrong. The respondent further submitted that the SSAT had incorrectly calculated the amount to be waived for special circumstances. Mr Perdon submitted that the circumstances of the applicant were not so exceptional or unusual as to warrant the application of the special circumstances provision in s101 of the Act. He also submitted that, as the provision for administrative error (s97 of the Act) was not applicable to the applicant's case, the SSAT should not have relied on a contribution of administrative error in exercising the discretion to waive for special circumstances. He submitted that this frustrated the intention of the legislation and relied on Re Besteland Secretary, Department of Family and Community Services [1999] AATA 867.
Mr Perdon additionally submitted that, as the discretion to waive $1000.00 had been exercised, this should be taken into account in regard to any further exercise of waiver in the period from March to June 2001. He submitted that under the Instrument, the discretion was available with reference to the whole of the financial year 2000/2001. Therefore, the SSAT in its decision to exercise the discretion to waive on the basis of special circumstances for part of the period, (the third decision) should have proportionalised that part of the $1000 (waived in the first decision) that was referable to the period from March to June 2001. On this submission the SSAT should have waived a lesser amount, taking into account that another discretion had been used with reference to that period.
Mr Perdon also submitted that the SSAT had made an arithmetical error in its calculations of the final debt. The Tribunal accepts that submission. The Tribunal finds that the amount of $596.67 is the amount overpaid to the applicant in March 2001 to 30 June 2001, the SSAT having miscalculated the amount by $20.67. Likewise, the SSAT appears to have made a typographical error at paragraph 28 stating that $147.59 was the sum in excess of entitlement. Elsewhere the SSAT had correctly stated the sum as $1479.59 (T2, p3). Clearly this has made the SSAT decision difficult for the applicant to understand, as set out in her evidence at paragraph 10 above. The Tribunal finds that the total recoverable amount, with the arithmetical error corrected in the SSAT decision (the third decision), was $882.92.
The Tribunal considered the respondent's submission that Re Bestel should be followed and that the special circumstances discretion should not be applied where waiver on the alternative basis of administrative error is not available to an applicant. However, taking into account the reasoning of the Tribunal in Re Bestel and the particular facts of the case, it is clear in Re Bestel that the Tribunal was influenced by the absence of good faith which was found in that case:
…
The Tribunal does not consider in the circumstances of this case, having found that Mr Bestel did not receive the additional payments of parenting allowance in good faith, that it would be appropriate to use administrative error in these circumstances as a special circumstance. …
There is no absence of good faith in the applicant's case. The absence of good faith may be a relevant consideration arising where a discretion is being considered. However Re Bestel is not authority for a broader proposition that administrative error cannot be considered amongst relevant matters arising in regard to special circumstances.

There are limited circumstances in which the discretion for special circumstances should be exercised (Re Beadle and Director-General of Social Services (1984) 6 ALD 1, Groth v Secretary, Department of Social Security (1996) 40 ALD 541). However, the applicant's case is an appropriate one. Her financial circumstances reflect that her financial position is difficult. Although her position is one improved by her recent employment, the Tribunal calculated that her outgoings were in excess of $27,080. The Tribunal was satisfied that this, as an overall sum, did not take into account fully all the items of expenditure that arise for her and her children. It is especially difficult for an unrepresented applicant to accurately make these estimates in a hearing.
As noted by the Federal Court in Director General of Social Security v Hales (1983) 47 ALR 281, it is relevant to take into account the way in which an overpayment arose. This confirms that possible administrative error may have relevance for the exercise of the discretion for special circumstances. The discretion is a general one, not to be fettered, but to take into account all relevant circumstances. Particularly important in the applicant's case is her submission that she was given wrong advice from Centrelink about the effect of the receipt of arrears of child support. Her evidence to the SSAT (T2, p5) was that, had she known of the potential debt while she still had the arrears of child support, she would have put the money aside to pay the debt.
In Secretary Department of Social Security v Hales (1998) 51 ALD 695, the Federal Court stated:
From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise.
The Tribunal finds that the correct or preferable decision was to waive that part of the debt arising after March 2001 on the basis of special circumstances.
As to the submission that allowance should be made for the proportion of the $1000.00 already waived (the first decision) that was applicable from March to June 2001, the Tribunal considered the wording of the Ministerial Instrument. While the Instrument is only available for the financial year 2000/2001, there is nothing in its terms that requires an apportioning exercise to be done within that financial year. In an appropriate case a decision-maker might consider that this should be taken into account, but it is not required by the Instrument. The Instrument does expressly state (at clauses 6 and 7) other requirements for the exercise of the discretion. Had apportionment been required it would have been an easy matter for this to be expressly stated in the Instrument.
DECISION
For these reasons, the Tribunal varies the decision under review in the following terms. The recoverable amount of the debt of family tax benefit is $882.92, the remainder of the debt totalling $2479.59, having been waived on the basis of the Family Assistance Estimate Tolerance (Transition) Determination 2001 and special circumstances within the meaning of s101 of the A New Tax System (Family Assistance) (Administration) Act 1999.
I certify that the twenty-nine [29] preceding paragraphs are a true copy of the reasons for the decision herein of
M.J. Carstairs, Member
(sgd)       Catherine Thomas
              Clerk
Date of Hearing:  5 September 2002
Date of Decision:  6 September 2002
Solicitor for the applicant:           Nil — IN PERSON
Advocate for the respondent:       Mr D. Perdon, Advocate with Centrelink