Dawe and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 111

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 111

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/1624

GENERAL ADMINISTRATIVE DIVISION		)
Re		SUSANNA DAWE

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member, Mrs Josephine Kelly

Date13 February 2008

PlaceSydney

Decision The reviewable decision is set aside, and the matter is remitted to the Respondent for reconsideration with the direction that the matter be determined on the basis that it was not reasonable for Ms Dawe to take action to obtain maintenance during the debt period.

.....................[sgd].........................

Senior Member, Mrs Josephine Kelly

CATCHWORDS

SOCIAL SECURITY – family tax benefit – child rate - maintenance action – applicant paid full child rate – entitled to claim maintenance - debt raised – whether reasonable for applicant to take action to obtain maintenance – not reasonable – Secretary had information applicant not taking maintenance action - notification not expressly required under cl 10 - matter remitted to respondent for reconsideration – direction that not reasonable to take action to obtain maintenance during debt period

A New Tax System (Family Assistance) Act 1999 ss 58, Sh 1

A New Tax System (Family Assistance) (Administration) Act 1999 ss 97, 101, 105, 109A, 142

Administrative Appeals Tribunal Act 1975 s 43

McAdam and Secretary, Department of Family & Community Services (2004) 80 ALD 396

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

Re Drake and Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409

Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32

REASONS FOR DECISION

13 February 2008 Senior Member, Mrs Josephine Kelly     

INTRODUCTION

1.      Ms Susanna Dawe received the full rate of Family Tax Benefit (“FTB”) for her three sons for over three years before a delegate of the Secretary decided that, in fact, she was only entitled to the minimum rate, or base FTB rate, because she was entitled to claim maintenance (child support) from her former husband, but had not done so.  Debts for three years were raised.   Centrelink had not informed Ms Dawe of the consequence of not claiming maintenance at any time during the three years.  She received the full rate FTB payments in good faith and kept Centrelink informed of her circumstances at all times.  Centrelink knew from the time of her application that she had not claimed maintenance from her husband.  Both parties agreed that the alleged overpayment was attributable to a deficiency in Centrelink’s administrative procedures.

THE ISSUES

2.      The questions for the Tribunal to decide are: whether Ms Dawe owes FTB debts, and, if so, whether those debts can or should be waived.

THE DECISION UNDER REVIEW

3.      The decision under review is that made by the Social Security Appeals Tribunal (“SSAT”) on 18 October 2006, which affirmed the decision of the Centrelink Authorised Review Officer (“ARO”) to raise and recover FTB debts from Ms Dawe for $11,370.55 and $4,876.04 for the 2004/05 and 2005/06 financial years respectively.

FINDINGS OF FACT

4.      The facts of this case were not in dispute.  Ms Dawe separated from her husband on 23 August 2003 and, on 2 September 2003, she claimed, and was granted, parenting payment single.  Although it is not clear from the documents, the  FTB payments were paid at the full rate, despite her records being marked "NMA"  - no maintenance action.

5.      Various Centrelink file notes and records support Ms Dawe's evidence that she was never told that she had to claim maintenance from her husband to be entitled to a rate higher than the base rate of FTB.  She was only advised that ,she had to advise Centrelink if she received maintenance.

6.      For example, on 12 October 2005 she contacted Centrelink by telephone.  A file note of the conversation relevantly states:

also discussed that if she collects private maintenance that this needs to advise FAO immediately. cus has not received this but stated could change in the future.

7.      On 15 November 2005 Ms Dawe again contacted Centrelink about her payments. A file note of that conversation relevantly reported that Ms Dawe “wished not to take maintenance action”.

8.      On 21 February 2006 Ms Dawe contacted Centrelink in relation to her payments. As a result of this contact a Centrelink officer finally realised that she was receiving more than the “base” rate of FTB although she had not taken maintenance action.  The file note says “… as cus was paid full rate ftb and did not take maint action. looks like there was system problem”.

9.      From March 2006 to July 2006, Centrelink raised debts for each of the financial years 2003/04, 2004/05, and 2005/06 and Ms Dawe sought internal review of those decisions.

10.     On 28 July 2006 an ARO reviewed all three FTB debts.  The ARO noted the debts arose as the Applicant was not taking reasonable maintenance action from 20 September 2003 to 20 February 2006.  The ARO accepted that the Applicant received the payments in good faith.   The ARO also stated:

I am also willing to accept sole administrative error occurred as the computer system did not automatically reduce your payments 28 days after your separation when no maintenance action was recorded and you were not adequately informed of your obligations in terms of satisfying the maintenance action test.

11. The ARO waived the debt for the 2003/04 financial year pursuant to ss 97(1) and 97(3) of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the FA Administration Act”) on the basis that the debt arose from “sole administrative error”, the payments were received in “good faith” and the debt was raised more than a year after the end of the income year in which the debt arose.  The ARO affirmed the decision in relation to the remaining two financial year debts because they were raised within the allowable time and the ARO found that the Applicant would not suffer “severe financial hardship” if the debts were recovered (s 97(2) of the FA Administration Act).

THE LEGAL FRAMEWORK

12. Section 58 of the A New Tax System (Family Assistance) Act 1999 (“the FA Act”) provides that the rate of FTB paid to a person is to be calculated in accordance with a Rate Calculator in Schedule 1 of the FA Act. Division 1 of Schedule 1 deals with the calculation of the rate of FTB Part A.

13. Clause 10 of Schedule 1 provides that the amount of FTB Part A will be the “base” rate if:

(a) the individual … is entitled to claim or apply for maintenance for the child; and

(b) the Secretary considers that it is reasonable for the individual… to take action to obtain maintenance; and

(c) the individual … does not take action that the Secretary considers reasonable to obtain maintenance.

14.     The policy guidelines in the Family Assistance Guide require a person to apply for a child support assessment through the Child Support Agency in order to obtain more than the “base rate” of FTB Part A.  Those guidelines are a relevant consideration but are not binding: Re Drake and Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409.

CONSIDERATION

15. The first argument put by Ms Findlay, who appeared for Ms Dawe, was that there was not "sufficient reason" within the meaning of s 105(1)(b) of the A New Tax System (Family Assistance) (Administration) Act 1999 (“the FA Administration Act”) for the Secretary to review the original decision pursuant to s 105, and that as the Tribunal stands in the shoes of the Secretary, I should determine that there was not sufficient reason to review the original decision.

16. I have some difficulty with that argument. Ms Dawe initiated the review pursuant to s 109A of the FA Administration Act which is in Part 5, Division 1, which provides for internal review. Section 105 is in Subdivision A of Division 1, which provides for review initiated by the Secretary. Section 109A is in Subdivision B which provides for review initiated by the applicant. Division 2 of Part 5 provides for review by the SSAT which was the next step taken by Ms Dawe. The final step was the application for review in this Tribunal which is dealt with in Division 4 of the FA Administration Act. In this Tribunal, the decision under review is that of the SSAT (see s 142(1)( and (2)(a) of the FA Administration Act) affirming the decision to raise debts for the two financial years. In my opinion, the Secretary's decision to review the 2003 decision made pursuant to s 105 is not the subject of review in this Tribunal and was not the subject of review by the ARO. The decision to raise debts is a different decision from the decision to review the 2003 decision. In coming to that view, I take into account the extent of the power this Tribunal exercises under s 43 of the Administrative Appeals Tribunal Act 1975, and as discussed in cases such as Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32.

17. If that view were incorrect, and I had the power to review the decision made pursuant to s 105, I would find that there was sufficient reason to review the decision to grant a higher rate of FBT than the base rate because Ms Dawe was entitled to take action for maintenance but had taken no such action (see cl 10 of Schedule 1).

18. The next argument put by Ms Findlay was that cl 10 of Schedule 1 cannot apply in this case because Ms Dawe was not notified by the Secretary that she was required to take maintenance action. It was argued that the rules of natural justice and procedural fairness require such notification of obligations before the provision is applied; that is, according to Ms Findlay, the provision cannot operate retrospectively.

19.     Ms Findlay relied on McAdam and Secretary, Department of Family & Community Services (2004) 80 ALD 396 at 401 where, after some discussion Mr Allen, Member, said:

I do not consider that clause 10 requires any particular type of formality in terms of notification, but I consider that it must be made clear to the person that there is an expectation of action and what that action involves.  

20.     However, Mr Allen, Member, did not need to decide the point in that case because he found that notice had been given.  

21. Ms Watson, who appeared for the Secretary, argued that no notification is required before the Secretary can consider whether it was reasonable not to claim maintenance. I agree that, in its terms, there is no requirement for notice in cl 10 of Schedule 1 of the FA Administration Act.

22. It is helpful to consider each of the steps set out in cl 10. The first question is: was Ms Dawe entitled to claim or apply for maintenance for her children? The answer is indisputably yes. Ms Dawe conceded that she was.

23.     The next question is: does the Secretary, or in this case, the Tribunal, consider that it was reasonable for the individual to take action to obtain maintenance?  

24.     Clearly, the delegate of the Secretary thought it was reasonable when the decision to raise the debt was made.

25.     However, do I think it was reasonable for Ms Dawe to take action to obtain maintenance during any part of the debt period when she was not told of and did not know of the consequence for the FTB payment if she did not, and when Centrelink knew that she was not taking any action but did not tell her she should have done so? For three financial years Centrelink was paying Ms Dawe the higher rate, while having the information that she was not taking any action to obtain maintenance.  In my view, in those circumstances it was not reasonable for Ms Dawe to have taken action during that time.  In addition, she believed that her husband's income was very low and that he would not have paid very much, and she wanted to keep the relationship civil for the sake of her children.

26.     I conclude that it was not reasonable for Ms Dawe to take action to obtain maintenance during the periods covered by the debts.  As I understand it, it follows that FTB child rate to which she was entitled was not the base rate.

27.     Having come to that conclusion, it is unnecessary for me to consider the further arguments advanced by the parties.  However, as the arguments were put, I will deal with them briefly.

28. The next argument relied on by Ms Findlay, albeit faintly, was that that debt should be waived pursuant to s 97 of the FA Administration Act because there was administrative error and Ms Dawe had received the payments in good faith, both elements of which were accepted by both parties, and that she would suffer severe financial hardship if the debt were not waived (s 97(2) of the FA Administration Act). 

29.     The evidence of Ms Dawe's financial circumstances which was before me does not persuade me that she would suffer severe financial hardship if the debt were not waived.

30. The final argument put on Ms Dawe's behalf was that the debt should be waived pursuant to s 101 of the FA Administration Act because Ms Dawe had not knowingly failed to comply with the relevant law and that there were special circumstances (other than financial hardship alone) that make it more desirable to waive, and it is more appropriate to waive than to write off the debt or part of the debt.

31. Ms Watson, who appeared for the Respondent, argued that there were no special circumstances. However, I disagree. In my opinion the circumstances outlined in relation to the cl 10 argument in paragraph 25, constitute special circumstances and I would conclude that it was more appropriate to waive than to write off the debt. In coming to that conclusion I take into account the consideration of "special circumstances" in cases such as Re Beadle and Director General of Social Security (1984) 1 AAR 362.

CONCLUSION

32.     For the above reasons, I set aside the reviewable decision and remit the matter to the respondent for reconsideration in accordance with a direction that the matter be determined on the basis that it was not reasonable for Ms Dawe to take action to obtain maintenance during the debt period.

33.     As I understand the consequence, Ms Dawe was entitled to the FTB payment she received and no debts arise.

I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member,
Mrs Josephine Kelly.

Signed: Steven Mulipola
Associate

Date of hearing:                  25 October 2007

Date of decision:                 13 February 2008

Solicitor for Applicant:        Welfare Rights Centre

Solicitor for Respondent:    Australian Government Solicitor