Evelyn Morris and Secretary, Department of Social Services

[2013] AATA 718

[2013] AATA  718

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2012/5302
Re	Evelyn Morris
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Dr P McDermott RFD, Senior Member
Date	8 October 2013
Place	Brisbane

The Tribunal affirms the decision under review.

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Dr P McDermott RFD, Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Parenting Payment – Family Tax Benefit – Crisis Payment – Debt raised – Debts more than six years old – Debt period extended by review – Debts recoverable under law – Debts cannot be waived – Debts cannot be written-off – Decision under review affirmed

LEGISLATION

A New Tax System (Family Assistance) Act 1999 (Cth) ss 21, 22

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 25, 25A, 71, 86, 95, 97, 101
Social Security Act 1991 (Cth) ss 5, 500, 500D, 1061JH, 1223, 1231, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 (Cth) ss 68, 94, 123

REASONS FOR DECISION

Dr P McDermott RFD, Senior Member

8 October 2013

INTRODUCTION

1. Ms Evelyn Morris (“the applicant”) has sought the review of a decision to cancel her parenting payment from 31 January 2005, as well as to raise and recover debts for parenting payment and family tax benefit (“FTB”) for the period 31 January 2005 to

   
   

   30 May 2006 (“the relevant period”), and a crisis payment paid on 13 January 2006.

   BACKGROUND

2. On 30 March 1998 and 19 February 2002, the applicant made successful claims for FTB and parenting payment, respectively.

3. On 27 September 2004, Centrelink wrote to the applicant about her parenting payment and advised her to inform Centrelink if the amount of time that the child spends with her changes.[1] On 17 November 2004, Centrelink wrote to the applicant about her FTB and advised her that she had an obligation to inform Centrelink if her child stopped living with her or could no longer be considered her dependent.[2]

   [1] Exhibit A, T-Document 6, p. 40.

   [2] Exhibit A, T-Document 6, pp. 44-45.

4. On 3 February 2005, the applicant advised Centrelink that her child had been in the care of the applicant’s mother since 31 January 2005, but would not be out of her care for longer than 8 weeks.[3] The applicant was advised of her obligations and the 14 day notification requirements. The applicant has advised Centrelink of numerous changes to her address between Queensland and New South Wales in the relevant period.

   [3] Exhibit E, p. 27.

5. On 13 January 2006 a crisis payment of $235.70 was made to the applicant.[4]

   [4] Exhibit A, T-Document 5, pp. 38-39.

6. On 7 April 2006, Centrelink was advised that the applicant did not have the care of her child, who was in the care of the applicant’s parents (in Queensland). On 16 May 2006, the records disclose the applicant as having advised Centrelink that some twelve months previously her child went to her parents and had been with them ever since. There is no issue that the applicant’s parents had the care of the child during the relevant period. Since 31 January 2005, the child had been enrolled in a Queensland school, the records of the school disclose that the applicant’s parents were listed as the child’s guardians.[5]

   [5] Exhibit A, T-Document 7, p. 62.

   PRIOR DECISIONS

7. On 26 May 2006, a decision was made by Centrelink to cease the payment of parenting payment from 31 January 2005. On 9 June 2006, a parenting payment debt of $17,073.72 was raised in respect of payments of that benefit which were made during the period 1 February 2005 to 30 May 2006. FTB debts of $3,105.38 and $6,487.59 were subsequently raised in respect of payments made in the 2004/05 and 2005/06 financial years. A crisis payment debt of $235.70 was also raised in respect of the payment of that amount made on 13 January 2006. These debts were raised because the child had not been in the care of the applicant during the relevant period. On 16 August 2007 the applicant sought review of these decisions.

8. On 14 September 2007, an Authorised Review Officer affirmed the decisions to cancel parenting payment, and to raise and recover debts from the applicant. On 24 May 2012, the applicant sought further review of the decisions.

9. On 30 July 2012, the Social Security Appeals Tribunal set aside the decision made by the Authorised Review Officer and remitted the matter back to Centrelink with the direction that the parenting payment was to be cancelled from 31 January 2005 (instead of

   
   

   1 February 2005) and that the debt of the parenting payment was to be recalculated on that basis. It was also decided that the Commonwealth's right to recover one half of the outstanding balances of all debts as at 17 July 2012 was waived. The applicant has sought review of this decision.

   LEGISLATION

10. The relevant legislation that I have to administer is the Social Security Act 1991 (Cth) (“the SS Act”), the A New Tax System (Family Assistance) Act 1999 (Cth) (“the FA Act”) and the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (“the FA Admin Act”).

    CONSIDERATION

11. There is no dispute that for most of the relevant period, the applicant was living in

    
    

    New South Wales while her child was being cared for by the applicant’s parents in Queensland. There were two minor periods of time when the applicant lived in Queensland. The applicant does not dispute that her parents had the care of the child during the relevant period. I accordingly find that the applicant did not have the care of her child during the relevant period.

12. I am satisfied that the applicant did not qualify for parenting payment or FTB for her child during the relevant period. The applicant was not qualified to receive parenting payment as she was not the principal carer of the child as required by ss 5, 500 and 500D of the SS Act. The applicant was also not entitled to FTB as she did not have the care of the child as required by ss 21 and 22 of the FA Act. At the time when the applicant was paid crisis payment she was not entitled to receive parenting payment, and as such was not qualified under s 1061JH of the SS Act to receive crisis payment.

13. I must next review the decision of 26 May 2006 in which Centrelink decided to cease the applicant’s parenting payment. There is no issue that the applicant had failed to comply with the notices issued to her under subs 68(2) of the Social Security (Administration) Act 1999 (Cth). Under s 94 of that Act there is automatic cancellation of parenting payment from 31 January 2005.[6]

    [6] See also s 123(1)(d) of the Social Security (Administration) Act 1999 (Cth).

14. A notice under ss 25 and 25A of the FA Admin Act was sent to the applicant on

    
    

    17 November 2004, that notice required the applicant to advise Centrelink if her FTB child stopped living with her or could no longer be considered her dependent.

15. As the applicant was not qualified to receive parenting payment and crisis payment, the amount of overpayment of these benefits is a debt due to the Commonwealth under

    
    

    s 1223(1) of the SS Act. The overpayment of FTB is a debt due to the Commonwealth under s 71 of the FA Admin Act.

16. There is no issue that the following overpayments to the applicant have been made:

    ·parenting payment of $17,107.76 for the period 31 January 2005 to 30 May 2006,

    ·FTB of $3,105.38 for the period 31 January 2005 to 30 June 2005,

    ·FTB of $6,487.59 for the period 1 July 2005 to 30 May 2006,

    ·crisis payment of $235.70 in respect of the payment made on 13 January 2006.

17. Accordingly, these overpayments constitute legally recoverable debts pursuant to subs 1223(1) of the SS Act and s 71 of the FA Admin Act. The applicant has been honest in recognising that there are debts. A decision has been made to waive one half of the outstanding balances. The question now arises as to whether the right to recover the remaining balances should also be waived.

    DEBT WAIVER

18. Section 1237A of the SS Act and s 97 of the FA Admin Act provide that there can be a waiver of the right to recover a debt in circumstances where the debt is attributable solely to an administrative error made by the Commonwealth. However, these provisions have no application in this matter, as there is no evidence that the debts are attributable solely to an administrative error made by the Commonwealth.

19. Section 1237AAD of the SS Act and s 101 of the FA Admin Act enables the waiver of all or part of a debt on the grounds of special circumstances. In the past the applicant has experienced periods of homelessness although she now has stable accommodation with her parents. She has mentioned her long term unemployment despite her qualifications. She has undertaken some legal studies. After reviewing the material before me I am not satisfied that the circumstances of the applicant, who has stated she is not in severe financial hardship, can be regarded as special circumstances that would justify the exercise of the discretion to waive the remaining part of the debts. The decision to waive half of the debts gives appropriate recognition of the applicant’s circumstances.

20. One issue that was not canvassed in the Statement of Facts and Contentions filed by the Secretaries[7] on 8 August 2013 is whether the parenting payment debt and crisis payment debt should be written-off on the basis that they are irrecoverable at law. The debts are more than six years old and I consider that there was an issue of whether the applicant should still be burdened by them. I accordingly sought submissions from the parties on this issue. These submissions were admitted into evidence at an adjourned hearing that was conducted by telephone.

    [7] In this decision a reference to the Secretaries is a reference to the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, and the Secretary, Department of Education, Employment and Workplace Relations.

21. Subsection 1236(1A) of the SS Act provides that:

    The Secretary may decide to write off a debt under subsection (1) if, and only if:

    (a) the debt is irrecoverable at law...

22. Subsection 1236(1B) of the SS Act provides that:

    For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

    (a) the debt cannot be recovered by means of deductions... because the relevant 6 year period mentioned in section 1231... has elapsed...

23. Subsection 95(2) of the FA Admin Act provides, applicably to a FTB debt, that:

    (2) The Secretary may decide to write off a debt under subsection (1) if:

    (a) the debt is irrecoverable at law...

24. Under subs 95(3) of the FA Admin Act, a debt is taken to be irrecoverable at law:

    (3)… if:

    (a) the debt cannot be recovered by means of:

    …

    (iaa) deductions under section 1231 of the Social Security Act 1991…

25. Section 1231 of the SS Act provides that a debt under social security law can be recovered by making deductions from a social security payment. However, the right to make deductions is subject to limitations. In particular, subs 1231(2A) provides:

    Subject to subsection ... (2E), action under this section for the recovery of a debt or overpayment is not to be commenced after the end of the period of 6 years starting on the first day on which an officer becomes aware, or could reasonably be expected to have become aware, of the circumstances that gave rise to the debt.

26. It is also important to have regard to subs 1231(2E) of the SS Act, which provides that:

    If,

    (a) subsection (2A) applies so that action under this section for the recovery of a debt or overpayment must be commenced within a particular period; and

    (b) within that period:

    (i) action is taken under this section or section 1232 (legal proceedings) or 1233 (garnishee notice) for the recovery of the debt or overpayment; or

    (ii) a review of a file relating to action for the recovery of the debt or overpayment occurs; or

    (iii) other internal Departmental activity relating to action for the recovery of the debt or overpayment occurs;

    action under this section for the recovery of the debt or overpayment may be commenced within the period of 6 years after the end of the activity or action referred to in paragraph (b).

27. In discussing the issue of whether the debts can be regarded as irrecoverable at law it is important to set out the background of the internal recovery process of Centrelink.
    The Department first became aware of the circumstances giving rise to the parenting payment debt on 9 June 2006. An investigation into these circumstances was completed on that date and the debt was also raised on that day. It is therefore clear that pursuant to
    s 1231(2A) of the SS Act, the recovery of the debts must commence within six years of
    9 June 2006, unless an action, review or activity pursuant to subs 1231(2E) occurs during that period to extend the time for commencement of recovery.

28. The recovery of the debts commenced on 19 June 2007, this is when a deduction was made from the applicant's newstart allowance and applied against the FTB debt (debt id: U30…32). The recovery of this debt commenced within the six year period provided for in subsection 1231(2A) of the SS Act. An internal procedure guide provides that if there are multiple debts owed to the Commonwealth, those debts are each given a unique code for accounting purposes and are automatically coded for recovery and placed in a queue for recovery to take place. Due to the limitations of the debt recovery system, withholdings cannot be split between more than one debt code and the system requires the debts to be recovered in accordance with a set order. The ‘Debt Repayment Hierarchy’ in the internal procedure guide determines the priority of debt repayment.

29. The Secretaries submit that the technical recovery method of the raised debts is an administrative procedure and that the debts should be treated as "one debt due to the Commonwealth" for the purpose of applying subs 1236(1A)(a) of the SS Act. It was pointed out that the debts all arose out of the same set of factual circumstances and are a product of the administrative limitations of recovering the debts simultaneously. It was submitted that it would be an artificial exercise to separate these debts for the purpose of applying subs 1231(lA)(a) of the SS Act. However, I cannot accept this submission of the Secretaries as the debts have been treated differently by being given different identification numbers and by being recorded on different debt schedules.

30. An alternative submission was made by the Secretaries that the recovery of the parenting payment debt and crisis payment debt commenced within the six year period provided for in subsection 1231(2E) of the SS Act. There is evidence that an Authorised Review Officer conducted a review of the file relating to the recovery of those debts on 14 September 2007. This review action satisfies the requirements of subs 123l(2E)(b)(ii) of the SS Act, such that the period for the commencement of recovery was extended to 14 September 2013. On 4 September 2013, a $20 deduction of 28 August 2013, for a debt not the subject of the present proceedings, was redirected to be applied against the parenting payment debt and the crisis payment debt in equal amounts ($10 to each debt). The action for the recovery of the parenting payment debt and the crisis payment debt commenced on 4 September 2013, so that there was recovery of the debts prior to the expiry of the six year limitation period set out in subs 1231(2A) of the SS Act, as extended by the operation of subs 1231(2E) of the SS Act.

31. As a matter of completeness, I have to review whether the applicant’s FTB debts were irrecoverable at law. There are two debts of FTB payments which are identified as U30…32 and U30…33. The evidence before me is that the recovery of debt
    id: U30…32 took place between 19 June 2007 and 21 October 2010, and the recovery of debt id: U30…33 took place between 21 October 2010 and 29 August 2012. These debts were not barred from recovery by the operation of s 86 of the FA Admin Act as an action for the recovery of these FTB debts commenced within six years after an officer became aware of the of the circumstances of the applicant on 7 June 2007. Therefore these FTB debts cannot be written-off pursuant to s 95(2)(a) of the FA Admin Act.

32. Another issue that needs to be examined is whether the applicant can be regarded as having no capacity to repay the parenting payment debt and crisis payment debt. Under
    s 1236(1A)(b) of the SS Act there is discretion to write off a debt if “the debtor has no capacity to repay the debt”.

33. Section 1236(1C) of the SS Act provides that:

    For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:

    (a)  deductions from the debtor's social security payment; or

    (b) deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or

    (c)  setting off under section 84A of that Act;

    the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.

34. The applicant is currently repaying the debts by way of a $20 deduction per fortnight from her newstart allowance. The applicant stated that this rate of deduction did not cause her to experience severe financial hardship. Consequently, it is inappropriate to write off the debt under s 1236 of the SS Act. However, if this level of deduction causes severe financial hardship in the future, the applicant should inform Centrelink.

35. The applicant has benefited from having contact with a Centrelink social worker. I would recommend that this contact should be formalised by the applicant having regular assistance from the social worker. The applicant has a genuine desire to enter the workforce and should be given every assistance to achieve her goal.

    DECISION

36. The decision under review is affirmed.

I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the decision herein of
Dr P McDermott RFD, Senior Member

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Associate

Dated 8 October 2013

Dates of hearing	29 August 2013, 27 September 2013
Applicant	In person
Solicitor for the Respondent	Mr Ashley Burgess, Departmental Advocate