Katchel and Secretary, Department of Family and Community Services and Anor

[2004] AATA 1351

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1351

ADMINISTRATIVE APPEALS TRIBUNAL

GENERAL ADMINISTRATIVE DIVISION            

N2004/758

Re: Leanne Katchel

Applicant

And:Secretary, Department of Family and Community Services

Respondent

And:Darren Katchel

Joined Party

DECISION

Tribunal:       P.J. Lindsay, Senior Member

Date:             16 December 2004

Place:            Sydney

Decision:The decision under review is affirmed.

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

P. J. Lindsay, Senior Member

©        Commonwealth of Australia          (2004)

CATCHWORDS

SOCIAL SECURITY – payments of family tax benefit -  applicant shares the care of her children with former husband – claim by former husband for arrears of family tax benefit – determination of percentage of care -– overpayments are debts due to Commonwealth – debts not to be written off – debts not due solely to administrative error - no special circumstances justifying waiver of right to recover debts - decision affirmed

A New Tax System (Family Assistance) Act 1999 ss. 22, 25, 26, 59

A New Tax System (Family Assistance) (Administration) Act 1999 ss.70, 71, 95, 97,101

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

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

REASONS FOR DECISION

P.J. Lindsay, Senior Member

1.      Leanne Katchel (the applicant) is the mother of Joshua (born 15 July 1990), Luke (born 19 April 1993) and Jordan (born 12 February 2000). Her former husband, Darren Katchel (the joined party), is their father.  This is an application by Ms Katchel for review of a decision made by the Social Security Appeals Tribunal (SSAT) on 17 May 2004, that she repay a debt due to the Commonwealth arising from her receipt of family tax benefit payments (FTB).

2. At the hearing, Ms Katchel, her father Michael Kennedy and Darren Katchel gave evidence. Mr G Richardson from Centrelink represented the Secretary to the Department of Family and Community Services (the respondent) and Ms Katchel represented herself. The tribunal had before it the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T documents) and the exhibits tendered at the hearing.

background

3.      Ms Katchel has been receiving family tax benefit in respect of each of her children since 1 July 2000. She separated from her husband on 4 September 2000 when he left the family home (T47-122). They agreed on shared access or care arrangements that gave Darren Katchel contact with the two older children on alternate weekends from 6pm Friday to 6pm Sunday and on Wednesdays from 6pm to 8.30 pm. Jordan would visit on Sundays. Formal arrangements were made by consent orders on 4 June 2001 by the Federal Magistrates Court (T8). The only change was for Jordan to begin staying overnight with his father.

4.      On 10 December 2003, Mr Katchel applied for family tax benefit in respect of the three children (T62). He claimed that he had 16 per cent of the care of each child since 16 June 2001. Centrelink accepted that each child had been in his care from 16 June 2001. Consequently, the applicant’s entitlement to family tax benefit had to be re-assessed on the basis that she had only 84 per cent of their care since 16 June 2001. Centrelink raised debts for overpayment in respect of the periods 1 July 2001 to 30 June 2002 and from 1 July 2002 to 23 December 2003. An authorised review officer at Centrelink was requested to examine the matter. The authorised review officer’s conclusion was that the family tax benefit debts, $1,981.85 for the 2001-02 financial year and $1,746.71 for 1 July 2002 to 23 December 2003, were properly raised and quantified (T43).

5.      Ms Katchel’s appeal to the SSAT was partly successful. The SSAT found that it was not until around June 2002 that Mr Katchel had care of Jordan for two nights per fortnight. This gave the applicant 100 per cent care of Jordan in 2001-02. Centrelink was directed reduce the applicant’s debt for that period accordingly. The SSAT made no change to the debt for the period from 1 July 2002 to 23 December 2003.

6.      Before this tribunal Ms Katchel has maintained that Centrelink is the cause of any overpayment of family tax benefit. She asserts that when she completed the application form for child support on 12 September 2000 (T47), she told Centrelink that she was not the sole carer of her children but Centrelink did not take this information into account.  

issues

7.      These are the issues to be decided:

·is there a debt owing by the applicant to the Commonwealth due to overpayment of family tax benefit from 1 July 2001 to 30 June 2002, the amount of which had been recalculated as directed by the SSAT to be $1,025.65.

·is there a debt of $1,746.71 owing by the applicant to the Commonwealth due to overpayment of family tax benefit from 1 July 2002 to 23 December 2003.

·should either or both the debts be recovered.

evidence

8.      At the time of their separation on 4 September 2000, Ms Katchel said that she and Darren Katchel agreed that he would see the older children every second weekend, but not Jordan as he was then only 7 months old. This arrangement started soon after the separation. She completed Centrelink’s Change of Marital Status – No Longer Partnered form (T45) on 12 September 2000.  She stated she did not know Darren’s address. Question 10 of the form asked “Do you share the care of any children with another person?” to which her response was “No.” In evidence, Ms Katchel explained her answer by saying that she did not regard Darren, the father of her children, as “another person”. Centrelink recorded her attendance at its Wallsend Customer Centre on 12 September 2000 in relation to a change in her parenting payment from parenting payment partnered to parenting payment single. The note records the separation, that Darren’s whereabouts were unknown and that she had 100 per cent custody of the children (T50). 

9.      Ms Katchel completed another Centrelink form on 12 September 2000, an application for Child Support Assessment. Therein she estimated the number of nights that each child would stay with their father during the year. The form referred to a number of different periods of varying durations and Ms Katchel selected the period of shortest duration, 0 to 109 nights (T47-123). In cross-examination, she agreed that 26 fortnights of care a year approximates to 14 per cent of a year. To another question in that form, Ms Katchel responded that she and Darren would share the care of each child more or less equally through the year (T47-123). She accepted, however, that the care of children was not in fact shared equally. The T documents contain copies of letters from Centrelink to Ms Katchel in May, June and July 2001 advising of her obligations to inform Centrelink about “events that may affect your payments as soon as possible after any of these things happen”. The letters specifically required her to tell Centrelink if you “start to share the care of any of your children with another adult” (T7,T9, T10, T11 & T12). Her evidence was that she does not have the time to read Centrelink’s letters from start to finish and her focus is on how much money she is being paid.

10.      Mr Richardson asked the applicant about telephone enquiries she made of Centrelink in April 2001. She had become aware that Darren was intending to claim family tax benefit. She said that he told her his claim was unsuccessful because he had the children for less than 10 per cent of the time.  She said she called Centrelink to check whether Darren could receive family tax benefit. She denied that her enquiry was to find out whether she was not entitled to all of the payment she was receiving. However, the notes of the conversations made by the relevant Centrelink staff record that she was concerned about the effect of shared care on her family tax benefit (T4,T5 and T6). The note of the call on 24 April 2001 (T5) states that the customer, Ms Katchel, was calling in relation to a hypothetical situation regarding percentage rates of shared care and that she did not need to update her family tax benefit estimates.

11.     Ms Katchel said she did not know that she was supposed to tell Centrelink about any changes that might be made in arrangements for the care of her children.  She said that the consent orders made on 4 June 2001 changed the care arrangements in respect of Jordan because from then on he was going with his brothers and staying for the same period as them whereas previously he was not staying overnight. She did not provide Centrelink with a copy of the consent orders.

12.     Ms Katchel’s current domestic situation is that she and her three children live in a home that she and her partner have purchased. Her partner’s two children stay with them on alternate weekends. There is a mortgage of approximately $300,000, which requires a monthly repayment of nearly $2,000. She works 15 hours a week and earns on average roughly $485 a fortnight, but must pay $230 a fortnight on pre-school fees after allowing for child care benefit. She receives monthly child support which varies from around $475 to $600.  Her credit card, AGC card and department store card have a total balance in the order of $4,500. Her partner’s annual income is $64,000 and he pays $150 a week in child support. Her youngest child suffers from asthma, particularly in the colder months. 

13.     Darren Katchel gave evidence that he initially left the family home on separation from the applicant but resumed occupation when she moved into different premises on 25 September 2000. He said that soon after the separation the two older children would stay with him every second weekend and visit on Wednesday nights. This was the result of an oral agreement he had with the applicant. He said that around 12 months after the separation, Jordan began staying with him under this arrangement. Prior to then he had Jordan only on Sundays with the other boys. He confirmed that since July 2002 there has not been any change to the arrangement applying to the children.

14.     He made enquiries in 2001 about his eligibility for family tax benefit, but Centrelink told him he did not qualify because his percentage of care was insufficient. He did not submit a formal claim for family tax benefit at the time. However, he proceeded with a claim and on 15 December 2003 he lodged a completed form providing ‘Details of your child’s care arrangements’ (T64). Therein he stated that the current arrangement for each child had started on 16 June 2001 and that he had 16 per cent of care of each.  There is a note of Ms Katchel’s phone call to Centrelink on 11 December 2003 recording that she has received forms from Darren regarding shared care arrangements (T25). It was noted that the actual care arrangements differed from those in the court orders, with Darren having Jordan on the same terms as his brothers, which was an additional night’s stay and the Wednesday night visit. The Centrelink officer noted that the applicant was told that this custody time equated to 16 per cent care and she was informed that an account would be forwarded to her for any resulting overpayment.

findings and consideration

15. Division 1 in Part 3 of A New Tax System (Family Assistance) Act 1999 (the FA Act) deals with eligibility for family tax benefit. While the applicant and Darren Katchel were a couple, that is up to 4 September 2000, only the applicant was eligible for family tax benefit (s.26 FA Act). Broadly, the FA Act provides for payment of family tax benefit to two adults, not being a couple, where the pattern is that each cares for the child in a given period (s.22(7) FA Act). There is a 10 per cent threshold on the length of care in a period for the child to be considered an ‘FTB child’ of that person in the period (s.25(1) FA Act). Where a child is in the care of a person from between 10 per cent to 30 per cent of the assessment period, the person may waive their entitlement to family tax benefit for some or all of that period (s.25(1A) of the FA Act). Part 4 of the FA Act is relevant in that it concerns the rate of family tax benefit payment. Section 59(1) of the FA Act provides as follows:

Secretary may make determination where individual is FTB child of 2 people who are not members of the same couple

(1) If the Secretary is satisfied that:

(a) an individual is an FTB child of an individual (person A); and

(b) the FTB child is also an FTB child of another individual who is not person        A's partner;

the Secretary may determine the percentage that is to be person A's percentage of family tax benefit for the child.

16.     From its introduction on 1 July 2000, the applicant has received family tax benefit in respect of her three children.  I find that following their separation, she and Darren Katchel agreed on the terms of his access to the boys. The court orders made on 4 June 2001 confirmed the arrangement that the older boys stay with Darren from Friday night to Sunday night on alternate weekends and visit on Wednesday nights for tea. From around the time of the court order Jordan began staying on Saturday nights. Although the orders made a change to the arrangement by permitting Darren to have the care of Jordan on Saturday nights, according to his evidence, which I accept, in practice from around July 2002 Jordan stayed and visited at the same times as his brothers. I find that from September 2000 to July 2002 Darren has had the care of the older boys for 16 per cent of a year but his care of Jordan did not reach the 10 per cent threshold in the period from separation, 4 September 2000, to 30 June 2002. I find that each child at relevant times has been an FTB child of Darren except that Jordan was not an FTB child of Darren’s until 1 July 2002. Based on the pattern of care as distinct from the court order, from July 2002 to December 2003 Darren had care of each boy for 16 per cent of the time.

17.     I find that on 12 September 2000 when the applicant informed Centrelink about the change in her partnered status (T45), she told Centrelink that she did not know Darren’s whereabouts and that she alone was caring for the children. This was incorrect because she had agreed on shared care arrangements with Darren around the time of the separation. It is also relevant that there was inconsistent information in the child support application form (T47), which was also completed on 12 September 2000, in that she said she would share the caring of the children more or less equally with Darren and she also provided an address for him. I am satisfied that in her calls to Centrelink in April 2001 she did not inform Centrelink that the arrangements for the care of her children had changed. The calls were hypothetical in nature but there was discussion about percentages of care and rates of payment. I find that she did not tell Centrelink about the care arrangements as she was required to do. She assumed that because Darren’s claim had not been accepted, she remained entitled to the full amount of her family tax benefit. This was an unwarranted assumption given that she must have been aware that Darren had the care of the older boys for 26 fortnights a year, which alone corresponds to 14 per cent of the year, and the implication such level of care had for overpayment. 

18.     Having regard to the pattern of care or the actual arrangements, I agree with the SSAT’s findings as to the percentage shares of family tax benefit for the periods 1 July 2001 to 30 June 2002 and 1 July 2002 to 23 December 2003.  Darren has not acted under s.25(1A) to waive his entitlement to arrears of family tax benefit.

19.     It follows that Ms Katchel was overpaid in respect of the older boys in the first of those periods and in relation to each boy for the later period. An overpayment of family tax benefit is a debt due to the Commonwealth under s.70 of A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act). The amount of the overpayment, and hence the debt for each period, is calculated as the difference between the amount she was paid and her correct entitlement: s.71(2) of the Administration Act. Recovery of the debt will proceed unless written off or waived. Section 95 of the Administration Act provides that the respondent may write off the debt. Since the debts for the two periods are not irrecoverable and there is no evidence that Ms Katchel does not have the capacity to repay the debts, indeed I was informed that the debt for the earlier period has been reduced by withholdings from $1,025.65, as recalculated in accordance with SSAT’s direction, to $225.65, I find there are no grounds for writing off the debts.

20. The respondent must waive the right to recover that part of a debt that is due solely to administrative error. Section 97(1) of the Administration Act reads:

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.

Ms Katchel submitted that Centrelink were the cause of the overpayment because they did not read or process the information in her application for child support assessment dated 12 September 2000. I have already stated above that I do not agree with her. Centrelink’s record of her attendance on 12 September 2000 notes that she said that Darren was a non custodial parent and she has 100 per cent care of the children. It would not have been possible for her to share the care of the children if she did not know Darren’s address, as she stated in the form relating to family tax benefit. The information in the forms about knowledge of Darren’s whereabouts was not consistent.  I infer that she provided additional information in the child support assessment form about his address because it was perceived to be to her advantage. She did not refer to their shared care arrangements in her hypothetical discussions with Centrelink in April 2001 and she did not provide Centrelink with a copy of the consent orders.  There is no basis, therefore, for finding that any portion of the debts is attributable solely to administrative error.

21. In special circumstances, however, the respondent may waive recovery of the debt. Section 101 of the Administration Act states:

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.

22. In considering whether s.101(b) applies I note that the tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 decided that an applicant’s circumstances must be unusual, uncommon or exceptional to be considered special circumstances. More recently, Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 (at 545) has said of the expression special circumstances that:

… it would require something to distinguish [an applicant’s] case from others, to take it out of the usual or ordinary case … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

23. Ms Katchel works in part time employment. With her partner, who earns a good income, she has three children to provide for and a substantial mortgage to repay. She has other financial commitments. Her partner must contribute to the support of his children from an earlier relationship. I appreciate that having to repay the overpaid family tax benefit will place additional strain on the family budget. Their financial circumstances are not comfortable, but equally they are not too dissimilar from those of many other families in Australia. While her youngest suffers from asthma, the rest of the family enjoys good health. I am satisfied that, on the whole, Ms Katchel’s circumstances are not uncommon or exceptional and do not constitute special circumstances that make it desirable to waive the debts in whole or in part. Accordingly, since she does not satisfy s.101(b) it is not necessary to consider whether the debts resulted from her knowingly having made a false statement or having failed to comply with a provision in the family assistance law (s.101(a)) or whether it is more appropriate to waive than to write off the debt or part of the debt (s.101(c)).

24.     The tribunal affirms the decision of the SSAT.

I certify that the preceding 24 paragraphs are a true copy of the decision and reasons for decision herein of P.J. Lindsay, Senior Member:

Signed:         

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

(Associate)

Hearing  23 November 2004
Decision  16 December 2004
Applicant  In person

Respondent’s representative                     Centrelink