Croft and Secretary, Department of Family and Community Services

[2005] AATA 1075

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1075

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/798

General Administrative Division		)
Re		Natalie Croft

Applicant

And Secretary, Department of Family and Community Services

Respondent

DECISION

Tribunal Mr M.A. Griffin, Member

Date28 October 2005

PlaceSydney

Decision The decision under review is affirmed.

[Sgd]  Mr M. A. Griffin, Member

CATCHWORDS

SOCIAL SECURITY - family tax benefit – overpayment made - administrative error - not in good faith - no special circumstances – the decision under review is affirmed.

LEGISLATION

A New Tax System (Family Assistance) (Administration) Act 1999, ss 95, 97, 101

CASE LAW

Beadle v Director General of Social Security (1984) 6 ALD 1

Dranichnikov and Centrelink [2003] FCAFC 133

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

Jazazievska v The Secretary, Department of Family and Community Services [2000] FCA 1484

Secretary Department of Education Employment Training and Youth Affairs v Prince (1997) 132 ALR 127

REASONS FOR DECISION

28 October 2005      Mr M.A. Griffin, Member          

1.      Mrs Croft seeks review of a decision of the Social Security Appeals Tribunal (“SSAT”). The SSAT decided to affirm a Centrelink decision to raise and recover a debt for overpayment of Family Tax Benefit (“FTB”) paid to Mrs Croft for the period 1 July 2001 to 30 January 2004. 

2. At the hearing of this application Ms Croft represented herself. Mr Kenny, an advocate with Centrelink represented the Secretary, Department of Family and Community Services (“the Respondent”). The Tribunal received into evidence the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T28).

History

3.        Mrs Croft has a daughter Alexis.  In late 2000 Mrs Croft’s husband took Alexis from her. It took Mrs Croft some months to get Alexis back through the courts. On 5 March 2001 Ms Croft advised Centrelink that her former partner had “kidnapped” Alexis and that she had obtained a court order for the child to be placed in her care. She asked that her payments for Alexis be restored and was told that she would have to attend Centrelink and produce documentation for this to happen (T3/p11).

4.        The next day, 6 March 2001, Centrelink wrote to Mrs Croft advising her of the dollar amount of her restored FTB payment. The notice also stated the requirement for Ms Croft to advise Centrelink if she should “…start to share the care of any of your children with another adult” (T4/p13).

5.        On 16 January 2004, Alexis’s father lodged a FTB past period lump sum claim (for the period commencing 1 July 2001) on the basis of a Court order for shared custody of Alexis dated 23 May 2001 (T7/p19).

6.        Centrelink granted that claim on the basis of a shared care percentage of 30% having regard to the terms of the Court order.

7.        On the same day, 5 February 2004, Centrelink raised the debt for overpayment to Mrs Croft; on the basis that she had been paid for 100% care of Alexis for the relevant period when, according to the Court order, her husband had 30% care of Alexis during that time.

Issues

8.        The issues for the Tribunal to decide are:

(a)Whether Mrs  Croft was overpaid FTB for the period1 July 2001 to 30 January 2004?; and if so

(b)Whether the amount of the overpayments is a debt owed to the Commonwealth?; and if so

(c)Whether these debts should be recovered?

Evidence

9.        Mrs Croft gave oral evidence to the Tribunal.

10.      Mrs Croft did not dispute the amount of the overpayments of FTB. Mrs Croft’s concern is with the fairness of the decision to recover the overpayment. It is her evidence that she personally lodged the final Court order at the Centrelink office on the day it was handed down, 23 May 2001.  There is no Centrelink record of this transaction. I accept Mrs Croft as a witness of truth and I am satisfied she did lodge the final Court order as claimed.

11       The Court order makes it plain that care of Alexis was to be shared with her father. Mrs Croft said she did not realise that this shared care would affect her FTB payment entitlement. She said she has lots of friends in similar circumstances and they do not know of it either.  Mrs Croft said she received the 6 March 2001 Centrelink notice. In cross examination she said, “I don’t read the whole letters…I didn’t even read it at the time”. She said no one explained to her the effect of shared care arrangements on FTB.

12.      Mrs Croft is employed part time 20 hours per week, from which her take home pay is $285.00 per week. She said her hours of employment were now uncertain due to recent industry changes but had not yet been reduced. Mrs Croft also receives regular social security payments in the order of $292.00 the first week and $400.00 the second week. She has some significant debts for an unpaid fine and some outstanding accounts. She said she is forced to borrow from her mother and brother to make ends meet. In cross examination she agreed that she was not being pursued for recovery of the major debts and that she was making arrangements to pay off the fine by instalments.  The evidence is that the total FTB debt was now at $623.34 and is being recovered from her social security payments at the rate of $40.00 per fortnight.

13       Mrs Croft enjoys good health. Her daughter suffers from asthma which requires expenditure on medication and special masks for school metalwork classes but does not prevent her from participating in normal activities.

Consideration of Issues

14 The legislation relevant to this review is found in sections 95, 97 and 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Act”). Section 95 provides for writing off of a debt if certain strict conditions are met, such as the debtor’s whereabouts being unknown or incapacity to repay the debt. None of those criteria are satisfied in Mrs Croft’s case. Therefore a write off of the debt is not allowed.

Sole Administrative Error

15. Section 97 of the Act provides for waiver of the debt arising from error in certain circumstances. It is concerned with a debt that is attributable solely to an administrative error made by the Commonwealth. The section also requires that the debtor received the payment in good faith. In certain circumstances there is a requirement that the person would suffer severe financial hardship if the debt were not waived.

16.      The evidence is that, Mrs Croft received a letter from Centrelink advising of the amount of her restored FTB payment and telling her to notify Centrelink if she started to share the care of her child. Mrs Croft said she did not read the letter.  

17.      Clearly, there was an administrative error made somewhere in Centrelink which failed to register the final Court order and identify the shared care arrangements.  However, had Mrs Croft done more than simply read the amounts of the FTB payments in the letter and paid attention to the shared care aspects of the Court order, then the error could have been rectified.  It follows that Mrs Croft’s failure to fully read the letter and to focus on its contents contributed to the overpayment and thus the error is not solely on the part of the Centrelink.

In Good Faith

18. In order for the debt to be waived under section 97, the payment must have been received “in good faith”. The Respondent contends Mrs Croft had reason to know from the terms of the Court order that she was not entitled to 100% care FTB payments.  Further, the Respondent contends that by failing to carefully read the notice sent to her, Mrs Croft effectively turned a blind eye to circumstances which raised a doubt as to her entitlement to the FTB payments she received.

20.      Mrs Croft has admitted that she did not read the any of the letters that she received from Centrelink except for noting the amount of payment. She said no one had explained the effect of shared care arrangements to her.  She says that many of her acquaintances are in similar positions with no knowledge of this aspect of their FTB payments. That may be so but their ignorance of the law can not be an excuse. The Federal Court has stated that payments cannot be said to be received in good faith where the recipient knows or has reason to know that he or she is not entitled to the payments received (Secretary Department of Education Employment Training and Youth Affairs v Prince (1997) 132 ALR 127), or where the person turns a blind eye to circumstances which raise doubt as to the entitlement of a person to receive payments and the person has failed to make reasonable enquiries where such doubt exists (Jazazievska v The Secretary, Department of Family and Community Services [2000] FCA 1484). As a consequence Mrs Croft cannot be said to have received the payments in good faith. 

Severe Financial Hardship

21. Even if there is good faith, section 97(2) also requires severe financial hardship in order to waive the debt. However, the evidence is that Mrs Croft is employed and receives approximately $570.00 net per fortnight in salary and $692.00 per fortnight in social security payments. She has some significant debts but these are not being pressed at the moment and she is making arrangements to repay by instalments. Her financial circumstances can be described as straitened but as the Respondent submits, she is financially better off than other persons reliant solely on social security payments.

Special Circumstances

22.      The right to recover debts due to the Commonwealth may also be waived in cases where there are “special circumstances”, pursuant to section 101 of the Act. Whilst the Act does not define “special circumstances”, it has long been accepted that special circumstances are circumstances which are “unusual, uncommon or exceptional” and which make them “markedly different from the usual run of cases” such as to justify the exercise of the discretion (see Beadle v Director General of Social Security (1984) 6 ALD 1).  In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court decision in Beadle, observed that special circumstances:

“… would require something to distinguish Mr Growth’s 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 an unjust had occurred that there must be some feature out of the ordinary.”

23.      In Dranichnikov and Centrelink [2003] FCAFC 133, the Federal the Court held that the circumstances in which the debt arose were themselves relevant to the special circumstances discretion.

Findings

24.      I find that the administrative error which resulted in overpayment of FTB to Mrs Croft was not solely due to the Commonwealth.

25.      I find that Mrs Croft had reason to know that she was not entitled to 100% care FTB payments and that she effectively turned a blind eye to circumstances which raised doubt as to her entitlement to receive those payments.  I find therefore, that the payments were not received in good faith.

26.      As to financial hardship, Mrs Croft is employed and receives approximately $570.00 net per fortnight in salary.  Mrs Croft receives approximately $692.00 per fortnight in social security payments.  Having considered her statement of financial circumstances, I am not satisfied that the recovery of this debt would result in severe financial hardship for Mrs Croft and her family.  As to “special circumstances”, there is nothing in the evidence about Mrs Croft’s health or the health of her family or the circumstances in which this debt arose to make them “markedly different from the usual run of cases” nor “is there something unfair, unintended or unjust” that has occurred in this particular case to make it “unusual, uncommon or exceptional”.  I find that there are no special circumstances to warrant the exercise of the discretion to waive the Commonwealth’s right to recover the overpayment.  I find that the decision under review was the correct or preferable one.  It follows that I find the overpayments to be debts to the Commonwealth which should be recovered.

27.      The decision under review is affirmed.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of M.A. Griffin

Signed:   Associate

Date of Hearing  19 September 2005 
Date of Decision                 28 October 2005
Representative  for the Applicant             Self-Represented

Advocate for the Respondent                    Mr Kenny