Jennifer McDonald and Secretary, Department of Social Services
[2014] AATA 747
•15 October 2014
[2014] AATA 747
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/0062
Re
Jennifer McDonald
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Ms A F Cunningham, Senior Member
Date 15 October 2014 Place Perth The decision under review is affirmed.
.......(Sgd) AF Cunningham.................................................................
Ms A F Cunningham, Senior Member
CATCHWORDS
SOCIAL SECURITY - Family Tax Benefit - Applicant not Entitled to Family Tax Benefit Payments - Overpaid Amounts are Debts owed to the Commonwealth - Whether Debt can be Written off or Waived
LEGISLATION
A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration) Act 1999
CASES
Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424
Secretary, Department of Education Employment Training and Youth Affairs v Prince (1997) 50 ALD 186
REASONS FOR DECISION
Ms A F Cunningham, Senior Member
15 October 2014
The applicant, Jennifer McDonald was in receipt of Family Tax Benefit (FTB) for her foster child, Katrina who had been in her full-time care since 20 January 2008. Katrina left Ms McDonald’s care on 11 March 2011 but payments of FTB continued to be made into Ms McDonald’s bank account until 30 June 2012.
The issues for the Tribunal to determine are whether Ms McDonald incurred FTB debts to the Commonwealth for the period 11 March 2011 until 30 June 2012 and if so, whether all or part of those debts should be written off or waived.
Ms McDonald contends that shortly after Katrina left her care she informed Centrelink accordingly and expected that FTB payments for Katrina would cease from that time. Centrelink however has no record that Ms McDonald advised that Katrina left her care on 11 March 2011.
Centrelink calculated the amount of overpayment of FTB as $1979.04 for the period 11 March 2011 to 30 June 2011; and $6620.94 for the period 1 July 2011 to 30 June 2012. On 28 May 2013 a decision was made to raise and recover these amounts as debts owing to the Commonwealth. Centrelink’s decision was affirmed by an Authorised Review Officer and by the SSAT on 20 November 2013. Ms McDonald now seeks a review of the decision by the Tribunal.
The hearing was conducted by way of video link to the Perth Registry. Ms McDonald appeared on her own behalf and Allyson Ladhams appeared for the Secretary. Ms McDonald gave oral evidence. Naomi Ibaqu gave evidence by telephone from Bunbury on behalf of the applicant. The respondent did not recall any evidence and tendered the T documents pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.
LEGISLATION
The legislation relevant to this application is contained in the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (Administration Act).
Ms McDonald meets the entitlement provisions for FTB as set out in section 21 of the Family Assistance Act. The child Katrina, qualified as an FTB child of Ms McDonald in accordance with the provisions of section 22 of the Family Assistance Act.
Section 58 of the Family Assistance Act provides that the rate of FTB payable is calculated in accordance with the Rate Calculator in Schedule 1.
Section 25 of the Administration Act provides:
(1) If, after a claimant becomes entitled to be paid family tax benefit by instalment:
(a) anything happens that causes the claimant to cease to be eligible for family tax benefit on the days for which the claimant will become entitled to be paid the benefit under the determination concerned, or to become eligible for a daily rate of family tax benefit that is less than that specified in the determination; or
(b) the claimant becomes aware that anything is likely to happen that will have that effect;
the claimant must, in the manner set out in a written notice given to the claimant under section 25A, as soon as practicable after the claimant becomes aware that the thing has happened or is likely to happen, notify the Secretary that it has happened or is likely to happen.
(2) Strict liability applies to the element of an offence against subsection (1) that a notice is a notice given under section 25A.
Section 71 of the Administration Act provides that if a person is paid an amount of FTB to which the person was not entitled, the amount paid is a debt to the Commonwealth.
Section 95 of the Administration Act states that the Secretary may write off a debt in certain circumstances which are outlined in subsection (2) as follows:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost-effective for the Commonwealth to take action to recover the debt. Subsection (3) sets out the circumstances in which a debt is taken to be irrecoverable at law.
Section 97 requires the Secretary to waive the right to recover the portion of a debt that is attributable solely to an administrative error made by the Commonwealth. This section provides:
(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.
Section 101 of the Administration Act allows for waiver of the right to recover a debt in special circumstances and provides:
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.
CONSIDERATION AND FINDINGS
It was not disputed that between 11 March 2011 and 30 June 2012, Ms McDonald was paid FTB in relation to Katrina when Katrina was not in her care. Because she was not in the care of Ms McDonald, Katrina was not an FTB child and did not therefore satisfy the criteria in section 22 of the Family Assistance Act.
The records contained in the T documents indicate that during the relevant period there were two other foster children in Ms McDonald’s care. Ms McDonald confirmed that she had two other foster children in her care and received FTB payments for them during the relevant period.
It was not disputed by Ms McDonald that the amount of FTB overpayments calculated by Centrelink was correct nor did she contend that she was entitled to receive the payments.
The Tribunal is satisfied that the overpayment amounts, as detailed at T17, have been correctly calculated in accordance with the Rate Calculator in Schedule 1 of the Family Assistance Act. As Ms McDonald was not entitled to these payments, they are debts owing to the Commonwealth, as provided for in section 71 of the Administration Act. Ms McDonald maintained however, that the debt should either be waived or written off.
I do not consider that there is any capacity to write off the debt pursuant to section 95 of the Administration Act. I do not accept that Ms McDonald has no capacity to repay the debt or that it is irrecoverable in accordance with the provisions of subsection 95(3). The debt is currently being recovered by withholdings of $60 per fortnight from Ms McDonald’s FTB payments paid in respect of her other foster children.
The issue of waiver of the debt arises under two provisions of the Administration Act namely section 97, which provides for waiver of the debt attributable solely to an administrative error and section 101, which provides for waiver in special circumstances.
It was Ms McDonald’s evidence that she advised Centrelink either on the day of Katrina’s departure or shortly thereafter and accordingly assumed that she would no longer be paid FTB payments for her. Her evidence was confirmed by Naomi Ibaqu, a former neighbour of Ms McDonald’s who gave evidence by telephone. Ms Ibaqu said that she had lived in a residence across the road from Ms McDonald for a couple of years whilst Katrina was in the care of Ms McDonald. She recalled visiting Ms McDonald’s residence during the incident in March 2011 which led to Katrina’s departure. It was Ms Ibaqu’s evidence that only a few days after Katrina’s departure, Ms McDonald had visited her for a cup of tea and it was during this conversation that she informed Ms Ibaqu that she had gone to Centrelink to stop her FTB payments for Katrina.
The evidence from the respondent was that there is no record of Ms McDonald’s attendance at the local Centrelink office. Ms McDonald was not surprised that Centrelink had not kept a record of her attendance. It was her evidence that she has another dispute with Centrelink regarding overpayments for one of her other foster children and she has been advised by a lawyer to keep records of her interactions with Centrelink. Ms McDonald said that she had had a number of foster children in her care from time to time and that she had never received a form to complete when a child ceased to be in her care. She said that it had been her practice to telephone Centrelink to advise of any change in circumstances.
I accept Ms McDonald’s evidence that soon after Katrina’s departure she contacted Centrelink to advise the Katrina was no longer in her care as she had done on previous occasions. Her evidence was corroborated by Ms Ibaqu, a former neighbour of Ms McDonald’s and an independent witness. The question remains as to whether the debt can be said to be attributable solely to an administrative error made by the Commonwealth which raises the question as to whether Ms McDonald continued to receive FTB payments for Katrina in good faith.
Ms McDonald maintained that she never received any correspondence from Centrelink that detailed the amount of FTB paid with respect to each of the children in her care. This was disputed by Ms Ladhams on behalf of the respondent who referred the Tribunal to screenshots of Centrelink correspondence that would have been received by Ms McDonald. These documents are included in the T documents and refer to letters sent on 19 July 2010 (T7, p 19); 8 November 2010 (T8, p 23); 19 February 2011 (T9, p 27); 21 June 2011 (T 10, p 31); 21 May 2012 (T 11, p 34); 7 June 2012 (T 13, p 38); and 27 June 2012 (T 14, p 41). Amongst other matters, these notices advised Ms McDonald that she must inform Centrelink if her FTB child stopped living with her. The letters also specify the amount paid with respect to each child in her care.
Whilst Ms McDonald said that from time to time she had difficulty with mail receipt, she did agree that she periodically received letters from Centrelink. The SSAT recorded in its decision at paragraph 28 that Ms McDonald did not dispute having received Centrelink’s letters and in fact had noticed that the letters did not indicate a decrease in the rate of the payments. It is recorded that Ms McDonald had assumed that Centrelink was calculating the rates correctly.
Ms McDonald maintained that she believed that the FTB monies that she continued to be paid were with respect to the other two foster children still in her care. She said that she did not periodically check the payments received as they were paid into a bank account which she infrequently accessed. Ms McDonald said that it was a very difficult time for her personally as her daughter’s father had passed away in February 2011, her own father died in June 2011 and one of her foster children was diagnosed with type I diabetes in September 2011. She was also caring for her mother who had been diagnosed with terminal cancer.
The meaning of the term “received in good faith” appearing in section 97 has been considered by the courts and the Tribunal on a number of occasions. In Secretary, Department of Education Employment Training and Youth Affairs v Prince (1997) 50 ALD 186, Finn J said at 188-189:
It correctly concluded that payments were ``received'’ where they were available for Mr Prince's use and that occurred when they were deposited in his bank account. It likewise correctly noted that the formula ``good faith'’ derives its meaning from its particular context. What the tribunal failed to do was to construe ``in good faith'’ in its context.
The section asks that a quite specific question be addressed: was the payment received in good faith? It is quite unconcerned, for example, with whether, after 22 December, Mr Prince acted in good faith towards DEETYA. Its sole concern is with whether a particular state of affairs exists at the time a payment (or payments) is received.
…
For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received — ie is not entitled to use the moneys received as his or her own — that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.
In Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424, the Federal Court said at 436:
A person does not act in good faith where the person turns a blind eye to the circumstances which raised doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable enquiries where doubt exists.
Although Ms McDonald maintained that she did not periodically check her bank account into which the FTB payments were made, she did not dispute receiving a number of letters from Centrelink which detailed the total FTB payments. These letters did not indicate that there was any decrease in the payments but instead from 1 July 2011 the amount of the payments increased. I cannot accept that Ms McDonald was unaware that Centrelink continued to make FTB payments for Katrina.
Whilst Ms McDonald may have felt that she had complied with her obligation to advise Centrelink that Katrina was no longer in her care from March 2011, her obligation did not end there particularly in light of receipt of periodic letters from Centrelink advising of the amount of her payments. Whilst Ms McDonald disputed that the names of the foster children in her care were detailed in the correspondence, she did not dispute that payment amounts were detailed. Ms McDonald should therefore have realised that there was no decrease in the amount of the total FTB benefit periodically paid to her.
It is my finding that whilst Ms McDonald did advise Centrelink that Katrina had left her care and expected that the FTB payments with respect to Katrina would accordingly cease, she effectively turned a blind eye to the fact that Centrelink mistakenly continued payments for Katrina. For these reasons I do not consider that Ms McDonald continue to receive the FTB payments the Katrina in good faith as required by section 97 of the Administration Act in order for consideration to be given to waiver of the debt.
The remaining issue is whether there are special circumstances that make it desirable to waive the debt pursuant to section 101 of the Administration Act. This provision requires that the debt did not arise either wholly or partly from the debtor either knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the family assistance law.
Whilst there is no evidence that Ms McDonald made either a false statement or a false representation to Centrelink, it is my finding that Ms McDonald continued to receive FTB payments for Katrina after she had left her care to which she knew that she was not entitled. Ms McDonald was aware of her obligation under the family assistance law to advise of events that may affect her payments. I do not consider that her responsibility in this regard was fully discharged. Whilst Ms McDonald may have informed Centrelink at the time Katrina ceased to be in her care, she continued to receive the payments to which she was not entitled and should have advised Centrelink accordingly. There is no evidence that she did so. Ms McDonald had received various Centrelink payments over the years which were accompanied by Centrelink notices advising her of her obligation to notify Centrelink of any change in circumstances that may affect her payments. I find that Ms McDonald continued to receive FTB payments for Katrina to which she knew she was no longer entitled. It cannot be said that her obligations under the family assistance law had been fully discharged by her single notification to Centrelink in March 2011 that Katrina had ceased to be in her care. Ms McDonald’s obligation continued whilst she knowingly received FTB payments for Katrina after she ceased to be in her care. Ms McDonald should have realised that Centrelink mistakenly continued payments for Katrina because they had not correctly recorded her advice that Katrina was no longer in her care.
As I am not satisfied that the debt did not result either wholly or partly from Ms McDonald knowingly failing to comply with the family assistance law, it is not necessary for me to make a finding with respect to “special circumstances” under sub-section 101 (b). I do not consider however, that Ms McDonald’s circumstances satisfy the meaning of this term as it has been interpreted by the courts and the Tribunal.
DECISION
For all of the above reasons I affirm the decision under review.
I certify that the preceding 34 (Thirty-four) paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham, Senior Member) ..............(Sgd) A Tran..........................................................
Associate
Dated 15 October 2014
Date(s) of hearing 15 August 2014 Applicant In person Representative for the Respondent Ms A Ladhams Solicitors for the Respondent Australian Government Solicitor
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