Flora and Department of Family and Community Services - [2001] AATA 627

DECISION AND REASONS FOR DECISION [2001] AATA 627

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2000/304

GENERAL ADMINISTRATIVE DIVISION       )
           Re      LESLEY FLORA
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date4 July 2001
PlaceAdelaide

Decision      Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor decides that: (a) the applicant's rate of Family Allowance is to be recalculated by the respondent for the period 15 October 1999 to 1 January 2000 on the basis of her base tax year income for that relevant period; (b) any overpayment resulting from (a) is waived pursuant to section 1237A of the Social Security Act 1991; and (c) the applicant's Family Allowance rate increase is to be effected as and from 1 January 2000 in place of 2 May 2000.
  (Signed)
  J.A. KIOSOGLOUS
  (Senior Member)
CATCHWORDS
SOCIAL SECURITY - pensions, benefits and allowances – Family Allowance – rate increase date of effect – use of estimates – written request – sole administrative error – notification of decisions – failure to notify – effect of failure to notify upon seeking review
Social Security Act 1991 ss 887, 1069 H21, 1237A,
Austin v Secretary, Department of Family and Community Services [1999] FCA 938
Re Stuart and Secretary, Department of Social Security (1998) 54 ALD 241
Re Secretary, Department of Family and Community Services and Butt [2000] AATA 623

REASONS FOR DECISION

4 July 2001 Senior Member J.A. Kiosoglous MBE

This is an application by Ms Lesley Flora (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 6 July 2000 (T2) which affirmed, upon review, a decision of an authorised review officer (ARO) of the respondent dated 30 May 2000 (T14). This decision had affirmed a decision of a delegate of the respondent dated 5 May 2000 (T11) to pay a higher rate of Family Allowance to the applicant with effect from 2 May 2000.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T16), together with six exhibits, one lodged by the applicant (Exhibit A1) and five lodged by the respondent (Exhibits R1-R5). The applicant's partner, Mr S. Brown, represented the applicant, and made submissions on her behalf. Mr J. Underwood, a departmental advocate, represented the respondent.
The issue before the Tribunal is to determine the correct date of effect from which the applicant is entitled to a higher rate of Family Allowance on the basis of a revised income estimate for the 1998/99 financial year.
history of the application
The applicant was in receipt of Family Allowance in the 1998/99 and 1999/2000 financial years. The applicant provided an estimate of $37,000, being combined income for the 1997/98 tax year on 15 June 1998, which was received by the respondent on 8 July 1998 (Exhibit R3/5). An estimate of $31,606 for the 1998/99 financial year was provided on 16 September 1998 (Exhibit R3/19). This figure was used as the basis for the applicant's Family Allowance as and from 14 January 1999 (Exhibit R3/26). The applicant received letters dated 25 December 1998 (Exhibit R3/25), 3 February 1999 (Exhibit R3/29), 20 April 1999 (Exhibit R3/32) all of which advised of the use of this estimate, and indicated that any change in the estimate should be notified to the respondent. The three latter letters also addressed withholdings arising from previous overpayments that were being made.
On 15 October 1999 the respondent sent the applicant a letter stating that an estimated 1998/1999 income of $34,000 was being used to determine her current rate of payment (T3). That letter also noted (inter alia):
"…
We have used your and your partner's estimated income for the 1999/2000 tax year to work out your Family Allowance because you have not yet lodged your tax return(s).
If your actual income is less than your estimated income, we are not able to pay you arrears. If your and your partner's actual income is higher than 10% of your estimated income, you might have to pay back some or all of your Family Allowance.
…"
That letter also contained the standard notification clauses. On 22 February 2000 the applicant contacted the respondent and advised that the income may be less than the estimate upon which payment was apparently being based (T4). As a result, the respondent sent a "Changes to your Income and Assets" form (T5). On 2 May 2000 the applicant provided her 1998/99 taxable income details (T6), as a result of which, her Family Allowance was increased with effect from 2 May 2000.
On 5 May 2000 a delegate of the respondent determined not to pay a higher rate of Family Allowance prior to 2 May 2000 (T11). This decision was affirmed upon review by an ARO of the respondent on 30 May 2000 (T14) and by the SSAT on 6 July 2000 (T2). The SSAT stated in its reasons for decision (inter alia):
"…
Ms Flora did not give a revised estimate of income on February 1999 which would have enabled Centrelink to consider a change to her family Allowance entitlement. The earliest date that Centrelink had specific confirmation about change of income was 2 May 2000 and Ms Flora's Family Allowance entitlement was changed on that date. The Social Security (Administration) Act as it applies in Ms Flora's case only enabled Centrelink to increase her rate of Family Allowance from 2 May 2000, that being the date that she informed Centrelink.
…"

applicant's submissions

Mr Brown submitted, on behalf of the applicant, that he and his partner underestimated their income to the respondent in the 1997/98 financial year, and had to then pay back monies in 1998/99 financial year. As a result of which, they provided a higher estimate for 1998/99, on the basis of the 1997/98 income. As things turned out, the actual income for 1998/99 was $22,700, less than the $34,000 estimate.
Mr Brown submitted that his day to day income varies significantly, and at the time of providing the estimate, as their taxation returns had not been finalised, they were not in a position to give an accurate estimate. He drew a distinction between asking for an estimate and asking for a quote, and submitted that Centrelink should have asked for the latter. He also submitted that the estimate was to the best of their ability, and that they should not be penalised in all of the circumstances.
respondent's submissions
Mr Underwood submitted, on behalf of the respondent, that the estimate provided on 8 July 1998 for the 1997/98 (Exhibit R3/5) could not be used pursuant to section 1069 H21 of the Social Security Act 1991 (the Act), which limits the use of estimates to the year in which the request is made. He conceded that the respondent was in error to use the estimate of $31,606 as provided on 16 September 1998 (Exhibit R3/19), but submitted that the result was a higher rate of Family Allowance being paid. He also submitted that the letter dated 25 December 1998 (Exhibit R3/25) was a valid notice despite containing an incorrect decision.
Mr Underwood submitted that the applicant was properly notified on 15 October 1999 as to the basis for her payment, and failed to seek review of that decision within 13 weeks as required by section 887 of the Act. He further submitted that the respondent can only calculate the rate based upon the information available to it. He conceded that the higher rate could be payable as from 1 January 2000 on the basis that the respondent failed to notify the applicant as to the changes in her rate as and from that date.
discussion and findings
One hopes that the new Family Tax Benefit legislation runs a smoother road than what has arisen out of the Family Allowance "use of estimates" saga. There is a long line of authorities dealing with the appropriate use of estimates. The leading decisions are those of Drummond J in Austin v Secretary, Department of Family and Community Services [1999] FCA 938, Deputy President Forgie in Re Stuart and Secretary, Department of Social Security (1998) 54 ALD 241 and the full Tribunal comprising President O'Connor J, Senior Member Hallowes and Dr Campbell, Member, in Re Secretary, Department of Family and Community Services and Butt [2000] AATA 623.
In the present matter, the applicant submits that the actual income should be applied retrospectively, so as to effect a higher rate of payment from an earlier date than May 2000. This in turn depends upon whether or not the applicant was properly notified of the relevant decisions, and requested the estimates to be used in line with the above-cited authority.
Unfortunately for the applicant, the Family Allowance system does not provide the Tribunal with a blanket discretion to retrospectively set the rate in light of actual income figures which turn out to be less than the estimate upon which she was paid. The Tribunal appreciates Mr Brown's point that it is unfair that if he had underestimated, a debt would have arisen, but that he does not get reimbursed for overestimating. The Tribunal can only approach the matter, however, with the legislation as it existed at the time. As such, it must examine each event over the course of the relevant period, as to whether payment of a higher rate may be effected from any earlier date.
The applicant provided an estimate for the 1997/98 tax year on 8 July 1998 (Exhibit R3/5). For the 1998/99 tax year, however, the base tax year for the purposes of Family Allowance was the 1997/98 year. Accordingly, a further estimate for the 1997/98 tax year was something of a moot point, as the estimate would have only correctly had effect if it were in relation to the 1998/99 tax year. As it was, the respondent correctly paid the applicant on the basis of the $34,942 base year income amount, and not the higher 1997/98 estimate.
On 16 September 1998 the applicant completed a "Changes to your Income and Assets" form (Exhibit R3/16-23), in which an estimate of $31,606 is given. The respondent incorrectly applied this estimate, as the applicant did not request that estimate to be used for calculating her rate. The applicant should have continued to be paid on the basis of the $34,942 income amount. Nevertheless, the respondent does not seek to recover any monies resulting from this error, and consistent with Re Butt, the sole administrative error provisions of section 1237A of the Act would be applicable in any event. In that regard the Tribunal is satisfied that the payments were received in good faith and so finds.
Despite the fact that the letter that was subsequently generated (Exhibit R3/25-27) contained the erroneous decision to pay Family Allowance on the basis of the $31,606 estimate the Tribunal is satisfied, and so finds, that it was a notice for the purposes of the Act. It is a letter which clearly identified the decision that had been made, and what effect it would have upon the rate (applying Austin).
Pursuant to section 887 of the Act, where notice of a decision is given and a person seeks review within 13 weeks of the decision, any alteration to the decision can have effect from the date of the original decision. If review is not sought within 13 weeks, then any change can only have effect from the date that review is sought. In this case, the applicant did not seek review of the decision as notified by the letter dated 25 December 1998 (Exhibit R3/25-27), and thus cannot have a higher rate effected as and from that date.
The applicant also received further letters dated 3 February 1999 (Exhibit R3/29-31) and 20 April 1999 (Exhibit R3/32-34) which the Tribunal finds are to the same effect as the letter dated 25 December 1998. Accordingly, both letters are notification letters for the purposes of the Act, and the applicant did not seek review within 13 weeks of the receipt of either letter, such that a higher rate cannot be paid as and from the date of either of those notification letters.
The applicant continued to be paid erroneously on the basis of the $31,606 estimate until providing a revised estimate on 14 October 1999 (Exhibit R3/47) in the amount of $34,000. As a result of this, a further letter was generated by the respondent dated 15 October 1999 (T3), and the Tribunal finds that, consistent with Austin, it constitutes a notification notice for the purposes of the Act. There is a distinction to be drawn, however, between the "Changes to your Income and Assets" form, which includes a specific question as to whether or not the person wishes the estimate to be used (see question 13 at Exhibit R3/5 for example) and the "Review of your Family Allowance" form, which has no such direct question. Whilst the applicant provided an estimate as requested by the respondent on the form dated 14 October 1999 (Exhibit R3/35-47), the Tribunal is not satisfied that she made a written request that her rate be recalculated using the estimate. Whilst the declaration (Exhibit R3/48) refers to recalculation in the event that the estimate is more than 110%, it does not make reference to the actual use of the estimate. The applicant was not making a choice whether or not she wished that estimate to be used, and Mr Underwood did not seek to cross-examine her in this regard. Accordingly, the Tribunal so finds that, consistent with the principles outlined in Re Butt, the estimate of $34,000 should not have been used by the respondent. The correct figure remained the base tax year income amount ($34,906). Accordingly, the applicant's rate should be recalculated as from 15 October 1999 until 1 January 2000. Any over payment resulting from this recalculation is waived, pursuant to section 1237A of the Act, in line with the authority established in Re Butt. The Tribunal finds that the payments were received in good faith, and that the overpayment resulted from sole administrative error.
As from 1 January 2000 a decision was made by the respondent to increase the applicant's Family Allowance rate based upon the annual indexation increase. The applicant was not notified of this decision. Mr Underwood submitted that the respondent has adopted a liberal interpretation of sub-section 887(4) of the Act, in that the applicant's request for review made in May 2000 could be taken as a request for review of the decision made on 1 January 2000 to increase the rate of Family Allowance. It is fitting in the circumstances of this case to adopt such an attitude, as the applicant's request for review could be considered to be broad enough to encompass the decision dated 1 January 2000. As a result of the applicant's application for review, a favourable decision has been made, in that it resulted in the applicant receiving a higher rate of Family Allowance. Pursuant to sub-section 887(4) of the Act, and with the respondent concurring with this liberal interpretation of the said section, the Tribunal finds that the higher rate of Family Allowance determined in accordance with the review instigated by the applicant is payable as and from 1 January 2000, rather than 2 May 2000.
For completeness the Tribunal notes the applicant's contact with the respondent in February 2000. As she did not actually provide a revised estimate at this time, the conclusion of the SSAT in this respect was correct, and the rate could not be recalculated as and from this time. In the absence of fresh information, the respondent had no basis upon which to base a recalculation.
Whilst the Tribunal has endeavoured to make this decision read as simply as possible, it is an unfortunate consequence of the extreme complexity of the Family Allowance structure that a lay person may well find it difficult to understand. Hopefully the new system will prove easier for applicants to understand and for the respondent to administer and implement.
decision
For the above reasons, and pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor decides that:
(a)the applicant's rate of Family Allowance is to be recalculated by the respondent for the period 15 October 1999 to 1 January 2000 on the basis of her base tax year income for that relevant period;
(b)any overpayment resulting from (a) is waived pursuant to section 1237A of the Social Security Act 1991; and
(c)the applicant's Family Allowance rate increase is to be effected as and from 1 January 2000 in place of 2 May 2000.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  12 June 2001
Date of Decision  4 July 2001
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Mr J. Underwood
Solicitor for the Respondent    Centrelink