Davey and Secretary, Department of Family and Community Services

[2004] AATA 141

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 141

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No D2003/6

GENERAL ADMINISTRATIVE DIVISION		)
Re		SARAH MARGARET DAVEY

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms J Cowdroy, Member

Date13 February 2004

PlaceBrisbane

Decision The Tribunal affirms the decisions under review. 

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

J Cowdroy
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – overpayment - parenting payment (partnered), family tax benefit and child care benefit – income estimate - incorrectly processed by Department – administrative error – no severe financial hardship – no special circumstances – decisions affirmed

Social Security Act 1991
A New Tax System (Family Assistance) Act 1999

A New Tax System (Family Assistance) (Administration) Act 1999

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Beadle v Director General of Social Security (1985) 7 ALD 670
Secretary, Department of Social Security v Hales [1998] FCA 219

REASONS FOR DECISION

13 February 2004 Ms J Cowdroy, Member    

BACKGROUND TO APPLICATION

1.      By decision dated 5 December 2002, the Social Security Appeals Tribunal (“the SSAT”) affirmed a decision made by Centrelink to raise and recover three debts. The three debts are as follows:

(a)an overpayment of parenting payment in the amount of $576.20 for the period 23 January 2002 to 6 March 2002;

(b)a debt of family tax benefit for the 2001/02 financial year in the amount of $2325.88; and

(c)a debt of child care benefit for the 2001/02 financial year in the amount of $3023.61.

HEARING

2. The matter was heard in Maroochydore on 5 September 2003. The applicant appeared on her own behalf and gave evidence. The respondent was represented by Ms Dwyer, a Departmental Advocate. The T-documents, pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, were admitted into evidence as E1 and other material was admitted into evidence as exhibits E2, E3, E4 and E5. The matter was decided on the basis of the material in the exhibits, the oral evidence of the applicant, submissions of both parties, and the relevant case law and legislation.

FACTUAL BACKGROUND

3.      The following matters are not disputed and are provided by way of background to the decision.  Ms Davey received payments of parenting payment (partnered), family tax benefit and child care benefit during the 2001/02 financial year.

4.      Ms Davey has two children, Caitlin and Tristan.   Tristan was born in November 2001.  She contacted Centrelink in October 2001.  The officer sent her a form to update her income. She completed this form after the birth of Tristan and sent it back to Centrelink on 21 November 2001.  At that time she was not working and she was receiving payments of about $700 fortnightly made up of various allowances and benefits. 

5.      Ms Davey decided to go back to work in January 2002.  She put her son, Tristan, in child care.  She spoke with an officer in Centrelink on 10 January 2002 and advised that person of the child care details, as well as her anticipated income and the income of her partner.  Centrelink sent a letter to the applicant on that day stating that benefits were being assessed on the basis of the annual income of her and her partner, in the amounts of $9.88 and $20,800 respectively.

6.      Ms Davey commenced work on 23 January 2002 as a senior operations coordinator for Pearl Aviation.   

7.      Ms Davey contacted Centrelink on 15 March 2002 and was advised that she had been paid parenting payment to which she was not entitled.  She asked for her payments to be stopped.

8.      Centrelink wrote to Ms Davey on 15 March 2002 informing her that her parenting payment (partnered) had been cancelled due to her and her partner’s income exceeding the allowable limit. 

9.      On 28 June 2002, Centrelink raised the debt for the overpayment of parenting payment for the sum of $576.20. They notified Ms Davey on the same day that they were seeking to recover the debt.

10.     On 10 August 2002, Centrelink raised a debt for of family tax benefit for the 2001/02 financial year in the sum of $2,325.88 notified Ms Davey by letter of this debt.

11.     On 13 August 2002, Centrelink raised an overpayment of child care benefit for 2001/02 financial year for the sum of $3023.61 and notified Ms Davey by letter of this debt.

12.     Ms Davey requested the decision to raise the debt of parenting payment (partnered) be reviewed. On 5 September 2002, an authorised review officer affirmed the original decision.

13.     Ms Davey requested the decision to raise the family tax benefit and child care benefit debts be reviewed. An authorised review officer affirmed the original decision in relation to the child care benefit on 4 November, and affirmed the decision regarding the family tax benefit debt on 5 November 2002.

LEGISLATIVE FRAMEWORK

14.     The legislation relevant to the decision to raise and recover the overpayment of parenting payment (partnered) in this matter is the Social Security Act 1991 (the Act), specifically, sections 1223, 1236 and 1237.  Section 1223(1) of the Act provides for debts arising from overpayments in the following terms:

“1223(1)  Subject to this section, if:

(a)a social security payment is made; and

(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.”

15.     Section 1237A(1) of the Act provides for the waiver of debts arising from error as follows:

“1237A(1)  Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.”

16.     Section 1237AAD of the Act provides for waiver in special circumstances as follows:

“1237AAD  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 1947Act; 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.”

17.     The A New Tax System (Family Assistance) Act 1999 (“the Family Assistance Act”) and the A New Tax System (Family Assistance) (Administration) Act 1999 (“the Family Assistance (Administration) Act”) is of relevance to the decisions to raise and recover the debts of family tax benefit and child care benefit.

18. Section 71(2) of the Family Assistance (Administration) Act provides:

“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.”

19.     In respect to family tax benefit, section 71C of the Family Assistance (Administration) Act is relevant when considering debts. It provides:

“If:

(a)an amount (the received amount) has been paid to a person by way of child care benefit in respect of a period; and

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

the difference between the received amount and the correct amount is, subject to section 71F, a debt due to the Commonwealth by the person.”

20. Section 97 of the Family Assistance (Administration) Act applies when debts arise from an error and provides as follows:

“(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.

(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.”

21. Section 101 of the Family Assistance (Administration) Act provides for waiver in special circumstances:

“The Secretary may waiver 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.”

EVIDENCE:

22.      Ms Davey denied receiving a letter from Centrelink dated 10 January 2002 which sets out the information on which various Centrelink payments were calculated.  She did not become aware that she was still receiving significant payments until 5 March 2002.  She and her partner were both in employment, consequently there was no need for her to closely monitor their spending.    She rang Centrelink after checking her bank statements, because she wanted to make sure that she was receiving the correct payment.  

23.     It was at that time she became aware that she had been overpaid.   She asked the Centrelink officer to arrange for payments to cease.  However, she continued to receive payments, although they became less over time.    She was upset that Centrelink had seized her taxation return of about $1300 to repay some of the debt.      

24.     She contended that a strong proportion of the total debt was attributable to Centrelink.  However, she acknowledged that part of the debt in relation to family tax benefit and child care  benefit arose because she underestimated the combined household income.  The applicant pointed out the difficulty in providing estimates of income and that any under-estimation was not deliberate. 

25.     In relation to the family’s financial situation, they have the normal expenditure involved with the care of two children.  Although her husband was between jobs at the time of hearing, the estimate provided for the previous financial year was $67,000, which she acknowledged was likely to be reasonably accurate.   

26.     Ms Davey outlined the circumstances surrounding the birth of her second child, and the repercussions emanating from a difficult birth.    She underwent a number of procedures subsequently, some of which were the subject of complaint to the Health Complaints Commission.  She requires further surgery.   A medical practitioner’s letter was tendered in support, referring to the affect on the applicant’s physical and emotional wellbeing.    

FINDINGS AND CONSIDERATION

27.     The Tribunal first considered the parenting payment (partnered) issue.   The respondent concedes that Ms Davey did advise of her return to work and provided estimates of income when she contacted Centrelink on 10 January 2002.  It points to the fact that a letter dated that same day was sent to her and that it had not been returned unclaimed.  The respondent contended that, on the balance of probabilities, that letter was received by the applicant.     Ms Davey denies she received that letter.   I found her to be a truthful witness and I have no reason to doubt her evidence on this aspect. 

28.     In any event, upon receiving the updated information on 10 January 2002, it was incumbent upon the respondent to cancel her parenting payment from 23 January 2002.  This did not occur, consequently the applicant received an amount of parenting payment to which she was not entitled.  

29.     Section 1223(1) of the Act relates to the creation of a debt arising from a recipient’s lack of entitlement to a social security payment. The Tribunal is satisfied that the applicant received social security benefits to which she was not entitled, in the amount of $576.20, which is a debt due to the Commonwealth.

30.     Sections 1237A(1) and 1237A(1A) of the Act provide for waiver of the right to recover a debt in certain circumstances. It provides that waiver must occur where the debt arose solely because of administrative error on the part of the Commonwealth, and the payments which constitute the debt were received by the recipient in good faith.

31.     Despite the applicant notifying Centrelink of her income and her partner’s income in January 2002, it was not recorded accurately. Consequently, I am satisfied that the debt arose solely as an administrative error on the part of Centrelink.

32.     In relation to the issue of good faith, the applicant discovered about the middle of March 2002 that she was receiving payments, which were more than she had expected.  The Tribunal accepts that she did not have knowledge of the precise amount of her entitlement at any given time.  However, at the time that she checked to ascertain what payments she was receiving from Centrelink, (which encompassed family tax benefit and child care benefit as well as parenting payment), she discovered she had received more than she expected.   

33.     In relation to the issue of good faith, I find the applicant was not aware for about six weeks after notifying of the change in circumstances what payments Centrelink were providing.   In other words, she had no state of knowledge on that issue whatsoever.   The matter of Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 152 ALR 127 is authority for the proposition that a person cannot demonstrate good faith if that person received a payment of which he or she was ignorant. This does not mean that the Tribunal finds that the applicant was not acting honestly. Rather, it is simply reflecting case law principles that good faith must be established. Accordingly, I find she did not receive the payments of parenting payment in good faith.

34.     The Tribunal also considered section 1237AAD of the Act, which permits waiver in special circumstances.    It is not contended that the applicant knowingly made a false statement or false representation. The decisions discussed and followed in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 are to the effect that the word “knowingly”, unless the legislation specifies to the contrary, is understood to mean actual knowledge. Applying those principles, there is no evidence in the present matter that the applicant knowingly failed or omitted to comply with a provision of the Act.

35.     In deciding whether special circumstances exist, the Tribunal has had regard to the principles outlined in Beadle v Director General of Social Security (1985) 7 ALD 670, which described special circumstances as “extremely unusual, uncommon or exceptional”. In Secretary, Department of Social Security v Hales [1998] FCA 219, French J discussed Beadle’s case and the application of section 1237AAD in the following terms:

“The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt.  It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.”

36.     The Tribunal accepts that the applicant and her partner have a variety of living expenses associated with the upbringing of two young children.   However, it must be noted that the household’s financial circumstances are reasonably buoyant compared to the majority of social security recipients, when one has regard to a combined income of $67,000 per annum.  The Tribunal also had regard to the fact that Ms Davey has had her share of health problems since the birth of her second child.    However, her circumstances are not so unusual to set her apart from other recipients of social security benefits who are overpaid, without any fault on their part.  Ultimately, the Tribunal was not satisfied that special circumstances exist.  

37.     Accordingly, the Tribunal finds that the parenting payment (partnered) debt of $576.20 for the period of 23 January 2002 to 6 March 2002 is not to be waived.

38.     The Tribunal then considered the issue of family tax benefit.

39. The relevant section in the Family Assistance Act is section 58(1) which provides the annual rate of family tax benefit is calculated taking into account actual income for the whole financial year. The overpayment was a result of the calculation using the applicant’s actual income and reconciling it against the amount to which she was entitled.

40.     The respondent contended that the estimates of income for the 2001/2002 financial year was under-estimated.  From 1 July 2001 to 17 November 2001 family tax benefit was assessed on an estimate of $34,400, which was provided on 26 April 2001.  A notice was provided to that effect on 26 April 2001, which Ms Davey did not deny receiving.   I find that she notified Centrelink in January of 2002 and in March of 2002 of a change in household income.  The actual income for the financial year was $63,062.

41.     From 23 January 2002 to 14 March 2002 the maximum amount was paid in error, in respect of which the debt component is $915.42.  I find that that component of the payment was paid as a result of administrative error.

42.     In respect to the balance of the debt, it cannot be said that it is attributable to administrative error.   That is because the process of reconciliation of the rate of family tax benefit against a person’s entitlement occurs at the end of the financial year.   When that process occurred, it was revealed that an overpayment of $2,325.88 had occurred, which is attributable to the fact that the combined income of the applicant and her partner was in excess of the combined income estimated throughout the relevant period. The applicant did not contend that the reconciliation process was flawed, and I am satisfied that the debt exists

43. I find that whilst part of the debt was attributable to administrative error, the larger proportion was not. In relation to that part of the debt that is attributable to administrative error, it can only be waived if, amongst other things the debtor received the payment in good faith. As I have determined that payments received during the period 23 January 2002 to 14 March 2002 were not received in good faith, waiver cannot occur under Section 97 of the Family Assistance (Administration) Act.

44. In relation to the remainder of the debt, Section 97 cannot have application because it is not due to administrative error. The Tribunal had regard to the provision which relates to waiver in special circumstances and I am satisfied that the applicant’s circumstances do not fall within the “special circumstances” waiver provisions contained in section 101 of the Family Assistance (Administration) Act. This section is almost identical to section 1237AAD of the Act and the same considerations apply. As indicated earlier in these reasons, the Tribunal is not satisfied that Ms Davey’s circumstances are “unusual, uncommon or exceptional” to justify waiver of the debt.

45.     The final consideration relates to the debt for childcare benefit. I find that a debt of $3,023.61 arose as a result of the applicant’s underestimation of the household income both on 10 January 2002 and 15 March 2002. Centrelink also contributed to the debt by failing to re-assess the applicant’s entitlement to childcare benefit after she notified of a change in circumstances on both those dates.  

46. I have again considered the provisions of Section 97 of the Family Assistance (Administration) Act. Irrespective of the issue of good faith, I am not satisfied that the applicant would suffer severe financial hardship if the debt were not waived. I am further satisfied that her circumstances do not fall within the “special circumstances” provisions of Section 101 of the Family Assistance (Administration) Act.

47.     Accordingly, I find that debts of $576.20 (parenting payment), $2,325.88 (family tax benefit) and $3023.61 (child care benefit) are not to be waived and I affirm the decisions under review.

I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Cowdroy, Member

Signed:         Kirsten Donnelly
  Associate

Date/s of Hearing  5 September 2003         
Date of Decision  13 February 2004

The Applicant appeared in person  
For the Respondent                  Ms Dwyer, Departmental Advocate