Harrison and Secretary, Department of Family and Community Services

[2006] AATA 659

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 659

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/1419

GENERAL ADMINISTRATIVE DIVISION		)
Re		SHARON HARRISON

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal REAR ADMIRAL A R HORTON AO, Member

Date26 July 2006

PlaceSydney

Decision The decision of the Social Security Appeals Tribunal to recover a child care benefit overpayment debt of $541.50 for the period 16 July 2003 to 17 August 2003 is set aside, the debt being waived under the provisions of section 101 of the Family Assistance (Administration) Act 1999.      

..............................................

Rear Admiral A R Horton AO, Member

CATCHWORDS

SOCIAL SECURITY – child care benefit – benefit calculated against income advised by applicant – applicant subsequently advised changed circumstances and requested minimum or nil rate – Centrelink later applied incorrect income and paid rate at 100% – applicant requested correction and return to minimum or nil rate – overpayment – Centrelink confirmed administrative error – consideration of special circumstances – decision set aside – debt waived.

A New Tax System (Family Assistance) Act 1999 – sections 41, 43

A New Tax System (Family Assistance (Administration)) Act 1999 – sections 51B, 71C, 97,101     

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

Beadle (and others) v Director General of Social Security (1985) 7 ALD 670

Re Ivovic and Director General of Social Security (1981) 3 ALN N95

REASONS FOR DECISION

26 July 2006 REAR ADMIRAL A R HORTON AO, Member   

1.        This is an appeal by Sharon Harrison (“the Applicant”) against a decision of the Social Security Appeals Tribunal (“the SSAT”) of 11 October 2005 that affirmed a decision of an Authorised Review Officer (“ARO”) of  28 June 2005 to recover a child care benefit debt of $541.50.  The original decision to raise this debt was made by a delegate of the Family Assistance Office of Centrelink on 11 May 2005.

2. At a hearing of the Administrative Appeals Tribunal at Gosford on 10 July 2006, Ms Harrison was self represented. Mr Ken Bullock, an advocate of the Centrelink Legal Services Branch represented the Secretary, Department of Family and Community Services (“the Respondent”). The documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the T documents) were taken into evidence, as was the Respondents Statement of Facts and Contentions dated 28 June 2006 (Exhibit R1).

BACKGROUND

3.        Prior to 15 July 2001, Ms Harrison had been in receipt of child care benefit at the 100% rate in respect of her child Emma, her estimated income – advised in about 2000 – being $20,539.   On that date Ms Harrison advised Centrelink in a written statement that “I am now working full time and am partnered” and that she no longer required “benefits and request they be cancelled” (I note the statement refers to being in receipt of parenting payment).  The statement went on to say “I wish to receive the minimum child care allowance.  Our combined income is in excess of $78,000 per annum”.    At some point thereafter, her child care benefit was reduced to the minimum of 16.79%. 

4.        On 16 July 2003, the Family Assistance Office advised Ms Harrison that the child care benefit percentage for Emma, then attending Gosford Christian Centre Pre-School, had been increased to 100% (under the criteria for Approved Care).  A file note states that Ms Harrison requested in a letter received by Centrelink on 11 August 2003 that she be reverted to the minimum or nil rate.  The file note states that as Ms Harrison could not be contacted, she was reverted to the minimum (16.79%) rate. This decision was confirmed in a letter of 18 August 2003.

5.        On 11 May 2005, the Family Assistance Office raised a debt for recovery of $541.50, this being the overpayment received during the period 16 July 2003 to 18 August 2003.  This advice of the debt referred to a comparison of estimated income against the actual income for 2003/2004 (following a data matching exercise with the Australian Taxation Office), rather than the actual period of overpayment. 

LEGISLATION    

6.        The criteria under which a person may be paid child care benefit is defined in sections 41, 42 and 43 of the Family Assistance Act 1999 (“the Act”), where they relevantly state:

“SECT 41
Overview of Division
(1)

This Division deals with eligibility for child care benefit. Before a person may be determined under Division 4 of Part 3 of the Family Assistance Administration Act to be entitled to be paid child care benefit, the person must first be eligible for it.

Eligibility of individual for child care benefit

(2)

An individual may be eligible for child care benefit:

(a)      by fee reduction for care provided by an approved child care service (see section 43, Subdivision A); or
(b)      …
(c)      …
(d)      …

Before an individual can be eligible under section 43, the individual must be conditionally eligible under section 42.

SECT 42
When an individual is conditionally eligible for child care benefit by fee reduction for care provided by an approved child care
service
(1)

An individual is conditionally eligible for child care benefit by fee reduction for care provided by an approved child care service to a child if:

(a)      the child is an FTB child of the individual, or the individual's   partner; and
(b)      the individual, or the individual's partner:
           (i)       is an Australian resident; or
  and
(c)        …

SECT 43

When an individual is eligible for child care benefit by fee reduction for care provided by an approved child care service

(1)

An individual is eligible for child care benefit by fee reduction for a session of care provided by an approved child care service to a child if:

(a)      when the session of care is provided, a determination is in force      under Part 3 of the Family Assistance Administration Act with          the effect that the individual is conditionally eligible for child care benefit by fee reduction in respect of the child; and
(b)      the care is provided in Australia; and
(c)      the individual, or the individual's partner, has incurred a liability        to pay for the session (whether or not the liability has been         discharged)”.

7.        The parameters for the payment of child care benefit are as in section 51B of the Family Assistance (Administration) Act 1999 (“the Administration Act”) and in respect of the consideration of overpayments, sections 71C, 97 and 101 of the Administration Act.  Section 95 whereby the debt might be written off is, on the evidence, not relevant in this matter. The Administration Act provides as follows:

“SECT 51B
Determination of entitlement

(1)

If the Secretary is satisfied that the claimant is eligible under section 43 of the Family Assistance Act for child care benefit by fee reduction in respect of one or more sessions of care provided by an approved child care service to the child during the income year, the Secretary must determine that the claimant is entitled to be paid child care benefit by fee reduction for the sessions:

(a) at the rate for which; and
(b) in the amount for which;

the Secretary considers the claimant eligible.

(2)
           …

SECT 71C
Debts arising in respect of child care benefit where
overpayment

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.

SECT 97
Waiver of debt arising from error

(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.

(3)

The Secretary must waive the administrative error proportion of a debt if:

(a)      the payment or payments were made in respect of the debtor's        eligibility for family assistance for a period or event (the eligibility    period or event) that occurs in an income year; and
(b)      the debt is raised after the end of:
           (i)       the debtor's next income year after the one in which the                    eligibility period or event occurs; or
           (ii)       the period of 13 weeks starting on the day on which the                    payment that gave rise to the debt was made;
  whichever ends last; and
(c)      the debtor received in good faith the payment or payments that       gave rise to the administrative error proportion of the debt.

(4)

For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt.

SECT 101
Waiver in special circumstances

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 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

8.        A recipient of child care benefit is paid a rate dependent on income.  The benefit is payable at the maximum rate of 100% when the combined income is below the relevant threshold.  When the combined income exceeds the upper income threshold, the recipient is paid at the 16.79% rate.  That is, regardless of combined income, child care benefit for an eligible person is payable at a rate between 16.79% and 100% depending on the level of that combined income.

9.        Ms Harrison gave evidence that from mid 2000 she had been in receipt of parenting payment and child care benefit based on an estimated income of $20,539, given that neither she nor her partner were in permanent employment.  As earlier noted, she advised a change of circumstances by letter in July 2001, and requested child care benefit payment at the minimum rate.  In her application for review by this Tribunal, she referred to a visit to Centrelink Leichhardt at that time, where she was informed that she would have to receive the minimum payment, and in oral evidence she confirmed that this conversation had taken place. 

10.      At the outset, and as attested to in letters to Ms Harrison, the Respondent conceded that the error whereby her child care benefit payment was paid at the maximum rate for some five weeks arose because the computer calculations inadvertently reverted to the previously advised $20,539 income figure.  The error was not discovered until Ms Harrison advised Centrelink in the letter received by Centrelink on 11 August 2003 as previously referred to, the error being corrected from 18 August 2003 when she reverted to the minimum rate.

11.      From the oral evidence of Ms Harrison, as confirmed by Mr Bullock, an overpayment of child care benefit to Ms Harrison due to administrative error also occurred in the 2001/2002 financial year.  On that occasion, the debt was raised by letter on 16 July 2003, and hence the criteria for waiver of the debt under the provisions of subsection 97(3)(b) of the Administration Act was met and the debt was waived.  In this instance, the raising of the debt in respect of the 2003/2004 financial year on 11 May 2005 precluded waiver under that subsection, a situation acknowledged by the Respondent.  Had the decision to raise the debt been deferred until the following financial year, then if such debt or part thereof was found to be due to administrative error, then consideration under subsection 97(3) would have been appropriate.

12.      A computer printout (T9) indicates that the calculation of debt was based on 5 whole weeks at the incorrect rate, commencing on 14 July 2003.  This is at variance with the advice provided in the letter of 16 July 2003, which clearly states that the 100% rate commenced on that date.  If that is correct, then the debt has been incorrectly calculated by two days and should be reduced accordingly. 

13.      There is no evidence before me that Ms Harrison benefited by the additional payments which went directly to Gosford Christian Centre Pre-School in accordance with the procedures for Approved Care.  The oral evidence of Ms Harrison is that she has not received any rebate from the Pre-School, and throughout and in continuation continued to pay by direct debit the same amount that she had been paying prior to and after the period under review.  That I was able to confirm from her ANZ bank statements, which were not taken into evidence, but my confirmation was accepted by Mr Bullock. 

14.      Ms Harrison submitted that there were special circumstances that should be considered in this matter.  She believed was had been disadvantaged by the delay in receiving advice of the debt, which she could have paid in 2003 when fully employed, but by May 2005, her ability to pay was quite different as she was on unpaid maternity leave.  Nonetheless, she had concerns that Centrelink had carried out a data matching exercise with the Australian taxation office without her knowledge nor that of her partner, particularly as she had formally advised Centrelink of an income in excess of $78,000 and of her requirement for the benefit to be paid at minimum rate or not at all. 

15.      She considered that the negligence and carelessness of Centerlink should be taken into account when considering whether special circumstances existed.  She was not in financial hardship, a view taken by the Respondent, but other factors should assume importance in considering her situation. 

16.      In response, Mr Bullock agreed that the debt was not of her making and was entirely due to an administrative error by Centrelink.  However, the legislation was quite specific and the debt had been raised under the provisions of section 71C of the Administration Act.  The situation of Ms Harrison did not meet the criteria in either subsection 97(2) or 97(3) of that Act, as she would not suffer financial hardship in the case of the former and the debt had been raised outside the time scale relevant to the latter subsection. 

17.      As to special circumstances under the provisions of section 101 of the Administration Act, the Respondent opined that the circumstances of Ms Harrison were not sufficiently unusual to warrant waiver of recovery of any part of the debt.   They were not out of the ordinary. Nor could negligence by Centrelink, should the Tribunal consider that such was the case, be sufficient reason to meet the special circumstances criteria.

CONSIDERATION AND DECISION

18.      There is no dispute as to the facts in this matter.  The Family Assistance Office of Centrelink applied an out of date income to the calculation of child care benefit rate for the period under review.  Ms Harrison had previously and formally informed Centrelink of her change to full-time employment and being partnered, and had stated a minimum combined income.  Whether that income advice was sufficient to enable Centrelink to correctly calculate payment rate was not raised and was not a matter for consideration in this review.  Suffice that a debt has been raised, although for the reasons previously given, the calculations may be in error to the extent of two days.

19.      Further, the error of the 16 July 2003 was quickly brought to the attention of Centrelink by Ms Harrison in order that the level of payment could be corrected.  That is not disputed by the Respondent.  There is evidence that the direct debit payments by Ms Harrison to the Pre-School continued at the “existing” rate; there is no evidence before me that she has personally benefited from the overpayment. 

20.      Ms Harrison cannot benefit from subsection 97(2) of the Administration Act.  As to the issue of “good faith”, rather she took the appropriate and principled steps to have the situation corrected.  She concedes that to pay $541 will not lead to financial hardship, a view supported by the evidence.  Nor can she benefit from subsection 97(3) of the Administration Act, as the raising of the debt did not occur in the relevant timescale. 

21.      As to section 101 of the Administration Act wherein all or part of the debt may be waived, the criteria in subsection (a) has been met.  She did not make a false statement or representation, nor did she fail or omit to comply with any provision of family assistance law.  Thus the issue to be considered is whether there are special circumstances vide subsection (b) and if so, is it more appropriate to waive, rather than write off, the debt.  If written off, the debt could be recovered at a later date.

22.      The term “special circumstances” is not defined in social security law.  The view of the tribunal in Re Beadle and Director General of Social Security (1984) 6 ALD 1, presided over by Toohey J and later endorsed by the Full Court in Beadle (and others) v Director-General of Social Security (1985) 7 ALD 670 wherein the Full Court stated “we do not think it possible to lay down precise limits or precise rules”  is widely accepted as providing appropriate guidelines.   Of relevance, that tribunal stated:

“"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

23.      In an earlier decision, the Tribunal in Re Ivovic and Director-General of Social Security (1981) 3 ALN  N95  took perhaps a more liberal line whilst nonetheless requiring a consideration of the wider aspects of the matter before it, stating in part:

“the use of the word “special” is we think, intended to allow the decision-maker the fullest opportunity to consider the particular circumstances of each case” and “Whilst keeping the dominant principle of s115 (of the then act ) in mind, he (the decision maker) must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise inappropriate”.

24.      It may be fair to say that in many, if not most cases, the applicant has contributed to some extent to the overpayment, perhaps by not appreciating that an overpayment was occurring, by not advising Centrelink that an overpayment was occurring in a reasonable timescale or when the basis of payments were not understood, or maybe by not taking note of the requirements to inform Centrelink when circumstances changed. 

25.      In this matter, and to the contrary, Ms Harrison took the appropriate steps.  It can be argued that she should have realised that even for such a short period of overpayment, a debt would result;  but so too it might be argued that the letter of 18 July 2003 correcting the payment rate might have stated that an overpayment debt might follow. And in the case of Ms Harrison, this was the second occasion of an overpayment, which observing that it was waived under subsection 97(3) of the Administration Act, was also the result of administrative error.   That overpayment in those circumstances should happen twice no doubt generated an understandable emotional response by Ms Harrison on the second occasion.

26.      Taking a broad view of the circumstances in this matter, I am of the opinion that special circumstances can be deemed to exist.  I take no account of the small amount of the debt; whether or not Ms Harrison has the ability to pay is not the question in my view.  The question is whether the circumstances are unusual;   I believe in the totality of the matter they are.  Importantly, and in that context, I consider that to affirm the decision that a debt exists would be unjust, unreasonable and inappropriate, and accordingly the debt is waived.

27.      The decision of the Social Security Appeals Tribunal to recover a child care benefit debt of $541.50 for the period 16 July 2003 to 17 August 2003 is set aside, the debt being waived under the provisions of section 101 of the Family Assistance (Administration) Act 1999.      

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of REAR ADMIRAL A R HORTON AO, Member:

Signed:         Associate

Date of Hearing  10 July 2006 
Date of Decision  26 July 2006
Representative for the Applicant              Ms S Harrison, Self-Represented
Advocate for the Respondent                    Mr K Bullock