Kendall and Secretary, Department of Families, Community Services and Indigenous Affairs
[2006] AATA 807
•21 September 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 807
ADMINISTRATIVE APPEALS TRIBUNAL № V2006/306
GENERAL ADMINISTRATIVE DIVISION
Re: SUZANNE marie KENDALL
Applicant
And:SECRETARY,
DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal: Mr Egon Fice, Member
Date:21 September 2006
Place:Melbourne
Decision:The Tribunal sets aside the decision under review and determines that the debt of $1,589.25 be waived pursuant to s 101 of the A New Tax System (Family Assistance) (Administration) Act 1999.
Mr Egon Fice
Member
SOCIAL SECURITY – Family Tax Benefit – shared care – administrative error – whether recoverable debt – special circumstances
A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration) Act 1999
Social Security Act 1991
Beadle v Director General of Social Security (1985)60 ALR 225
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Ryde v Department of Family and Community Services [2005] FCA 866
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
REASONS FOR DECISION
21 September 2006 Mr Egon Fice, Member
1. Ms S. Kendall is the mother of two children, born on 18 August 2000 and 28 November 2001 respectively. She is entitled to receive the Family Tax Benefit (FTB) under the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act) as each child satisfies the definition of an FTB child under the Family Assistance Act.
2. In early 2003 Ms Kendall sought dissolution of her marriage and Orders were made by the Family Court of Australia on 4 March 2003 which included shared access to the children. Although Ms Kendall provided a Centrelink Officer with a copy of the Orders, her FTB was not re-assessed to take into account her new status until September 2005, resulting in an overpayment to her of $1,589.25.
3. Centrelink, which acts as the Commonwealth Services Delivery Agency for the Secretary to the Department of Families Community Services and Indigenous Affairs (the Secretary), raised a debt in respect of the overpayment and had, at the time of hearing, recovered the full amount by way of deduction from Ms Kendall’s ongoing FTB payments. The decision to raise the debt was affirmed by an Authorised Review Officer (ARO) at Centrelink; and then by the Social Security Appeals Tribunal (SSAT).
4. The only issue before the Tribunal is whether the Secretary should waive his right to recover all or part of the debt due to special circumstances in accordance with s 101 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act).
Relevant Facts
5. Ms Kendall’s children are FTB children for the purposes of the Family Assistance Act.Ms Kendall received FTB in respect of both of her children.
6. On 30 April 2003 Ms Kendall telephoned a Centrelink Officer, advising that an Order was made by the Family Court of Australia to the effect that her two children were to be in her care 100 per cent of the time. On 5 May 2003 Ms Kendall provided Centrelink with a copy of the Family Court Order by facsimile. That Court Order required Ms Kendall’s children to reside with her but Mr T. Kendall, her former husband, was to have regular contact with the children. Using the Order of 29 April 2003, the Secretary calculated that Mr Kendall cared for the children 17 per cent of the time, and Ms Kendall cared for the children 83 per cent of the time. Despite having been provided with a copy of the Order, Centrelink continued to pay Ms Kendall 100 per cent of the FTB until 26 October 2004.
7. On 27 October 2004 the Family Court of Australia made further Orders, by consent, regarding the shared responsibility for the long term care, welfare and development of Ms Kendall’s children. Based on this Order, the Secretary calculated that Mr Kendall cared for the children 27 per cent of the time and Ms Kendall cared for the children 73 per cent of the time.
8. On 22 September 2005 Ms Kendall informed Centrelink that her children spend three nights a fortnight with their father, commencing 1 November 2004. Based on this advice Centrelink reduced Ms Kendall’s rate of FTB to 79 per cent. She was advised of this change in her rate by a letter dated 29 September 2005. Ms Kendall was then advised that she had been overpaid and that she had a debt owing to the Commonwealth of $1,589.25 as a result of overpayment of FTB between 1 November 2004 and 30 June 2005.
9. Centrelink did not become aware of the second Family Court Order of 27 October 2004 until Ms Kendall produced that Order to the SSAT prior to her hearing on 7 March 2006. Therefore, the debt which is the subject of this appeal has not been correctly calculated in any event, as it is based on the belief that Ms Kendall cared for the children 79 per cent of the time rather than the correct figure of 73 per cent of the time.No further debt has been raised to take into account the difference at this time.
Shared Care Family Tax Benefits
10. There is no question that Ms Kendall qualifies for the FTB under s 21(1) of the Family Assistance Act, and that both of her children are FTB children for the purposes of that Act. Section 3A of the Family Assistance Act makes it clear that an individual (a child) may be taken, for the purposes of that Act, to be in the care of two or more individuals at the same time. Under s 22(7) of the Family Assistance Act, where the Secretary is satisfied that the pattern of care over a period of time is such that, for the whole or for parts of the period, a child will be an FTB child of more than one person, and one of the individuals makes or has made a claim for the payment of FTB for some or all of the days of that period, the child is taken to be an FTB child of that individual for the purposes of s 22(7) on each day in that period, whether or not the child was in the individual’s care on that day. This is subject to s 25 of the Family Assistance Act which provides that where the an individual has care of the child for less than 10 per cent of the time, the child is not taken to be a FTB child for that person.
11. Under s 59(1) of the Family Assistance Act, 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.
…
12. Given that there are two Court Orders dealing with the care of Ms Kendall’s children, and they involve shared arrangements between Ms Kendal and her former husband, it would ordinarily be appropriate that the Secretary determine the percentage of care to be applied to each party in accordance with the Family Court Orders.
13. I have examined the percentage of care calculations made by the Secretary as a result of the Family Court Order dated 29 April 2003 and the Order dated 27 October 2004 and I agree with those calculations. There was no evidence before me to suggest that Ms Kendall has done anything other than comply with those Orders. Therefore, the amount of the debt which is the subject of this review is correct. Furthermore, given that the second Family Court Order slightly altered the percentage care attributable to Ms Kendall from 79 per cent to 73 per cent, it is arguable that there has been an additional slight overpayment, although that was not the subject of any argument before the SSAT. Given that the Tribunal’s powers to review are limited to review of the decision of the SSAT (see s 142 of the Administration Act), there is nothing that I can say should the Secretary decide to raise a further overpayment.
Waiver of Debt Arising from Error
14. Under s 71(2) of the Administration Act, where an amount has been paid to a person by way of assistance and that amount is greater than the correct amount of assistance that should have been paid under the Family Assistance Law, the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.
15. Section 97 of the Administration Act 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.
…
16. The Secretary accepts that Ms Kendall provided Centrelink with a copy of the Family Court Order dated 29 April 2003 within a week of the Order being made. However, Centrelink did not calculate a shared care percentage for Ms Kendall based on that Order. Although the Order was provided for the purpose of investigating Ms Kendall’s qualifications for parenting payment, the Secretary accepts that Centrelink should have used the information to ensure she was receiving the correct rate of FTB. In fact, had that first Court Order been used to calculate the correct rate of FTB, Ms Kendall’s percentage of the shared care would have been calculated at 83 per cent. When she did explain to Centrelink that her former husband had care of the children for three days per fortnight, which meant that Ms Kendall’s percentage of the shared care would have been calculated at 79 per cent, the overpayment was raised based on that calculation. The very fact that there was a Family Court Order which dealt with the custody of the children should have immediately alerted the Centrelink Officer that Ms Kendall may not have been entitled to 100 per cent of the FTB for both of her children. However, and I accept Ms Kendall’s evidence on this, no discussion whatsoever took place initially about shared care in respect of the FTB. Had that administrative error not occurred, any subsequent adjustments due to minor changes in the custody arrangements which were given effect in the Family Court Order of 27 October 2004 would not have caused the extent of overpayment which occurred. The ARO said this about Ms Kendall:
…
Though there is no record of the court order being lodged in November 2004 I have no reason to doubt that this occurred (as the customer has a good history of keeping Centrelink informed). Unfortunately, this documentation appears to have been misplaced and as a result her record was not adjusted accordingly.
Considering the customer’s assertions that she was unaware that the arrangement would effect her FtB [sic] (states that when lodged documentation nothing was advised to her at that time which she believes should have occurred) and as her former partner is not claiming FtB [sic] it is understandable to have the belief that the FtB [sic] would remained unchanged.
17. In these circumstances, I accept that the debt sought to be recovered by the Secretary is attributable solely to an administrative error made by the Commonwealth. I am also satisfied that Ms Kendall received the payments in good faith and that was in fact conceded by the Secretary. However, Ms Kendall readily admitted that she would not suffer severe financial hardship if the debt were not waived. In fact, by the date of the hearing of this application, the Secretary had recovered the entire amount of the debt and Ms Kendall admitted that she was able to manage despite receiving assistance at a reduced rate for almost 12 months. Nevertheless, Ms Kendall argued that special circumstances applied to her case and that the waiver should be considered on that ground.
Waiver due to Special Circumstances
18. Section 101 of the Administration Act 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.
19. The term special circumstances is not defined in the Administration Act. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 Toohey J said:
…
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.
20. However, I note that Beadle went on appeal to the Full Court of the Federal Court (Beadle v Director General of Social Security (1985) 60 ALR 225) where the Full Court said, at 228:
The phrase “special circumstances”, although lacking precision, is sufficiently understood in our view not to require judicial gloss
21. Section 101 of the Administration Act is, except for reference to the family assistance law, in precisely the same terms as s 1237AAD of the Social Security Act 1991. French J, in Secretary, Department of Social Security v Hales (1998) 82 FCR 154, when dealing with s 1237AAD, said at 162:
The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. …
… The evident purpose of s 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. …
22. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J accepted what was said by the Full Court in Beadle and French J in Hales stating, at para 26:
While, as French J pointed out in Hales, the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for ”special circumstances” discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.
23. By way of special circumstances, Ms Kendall pointed me to the fact that she was having difficulty in obtaining child support payments from her former husband. From a figure of approximately $900 per month, the payments had now reduced to $618 per month and had become irregular. The last two payments were less than $600. She expressed concern that at this level, her children would begin to suffer. Furthermore, she said that because of the marital breakdown, her children were having difficulties at school and they were now attending a child psychologist. She said she could manage when she was getting the full rate of child support from her former husband, but the reduced rate was now creating a problem.
24. Ms Kendall had purchased her own home with the proceeds of the division of property following the marital breakdown but she pointed out that the home was mortgaged and that she was in the process of renovating it. She showed the Tribunal a number of photographs which indicated that the house is undergoing extensive renovations and is currently in a basic state. Ms Kendall admitted that she had a sum of money in an ING bank account, but she said she was being very careful with her money at the moment, as some of it was earmarked to complete the renovations. She also wanted to return to study in order that she might provide for her children in the future. She said that she was under considerable stress as a consequence of the protracted Family Court battle and that is being reflected in the behaviour of her children.
25. While I have no doubt that Ms Kendall’s financial position is dependent on the continued receipt of child support payments, and that she needs to take care regarding expenses, she admitted that she is not presently suffering financial hardship and this would not by itself, in any event, constitute special circumstances. As for the stress associated with the marriage breakdown, while regrettable, it would not justify departure from the general rule.
26. However, there was one further matter raised by Ms Kendall as constituting special circumstances. She said that while her former husband has care of the children for approximately 27 per cent of the time, he has not and does not intend to claim the FTB for that proportion of shared care. Furthermore, he is not prepared to waive his right to claim a proportion of FTB. Given that Ms Kendall’s former husband has care for the children for more than 10 per cent of the time, but less than 30 per cent of the time, and were he to make a claim for the FTB, the Secretary would be satisfied that he was eligible, he could, by written declaration given to the Secretary, waive his eligibility for FTB. The children then would not be taken to be FTB children as far as he was concerned and Ms Kendall would be entitled to 100 per cent of her entitlement to FTB. According to Ms Kendall, by not waiving his eligibility rights, the children are being deprived of approximately $150 per fortnight which could be spent towards their care and maintenance.
27. In my view, Mr Kendall’s refusal to waive his eligibility for the FTB, despite the fact that he has no intention of making such a claim, is highly unusual and does give rise to hardship and unfairness as far as the children are concerned. As best I could gather from Ms Kendall, his refusal to sign a waiver simply stems from the very poor relationship which has developed between Mr and Ms Kendall as a consequence of the protracted Family Court proceeding. The problem is that although Mr Kendall no doubt believes he is depriving Ms Kendall of those monies, the reality is that it is the children, who are in Ms Kendall’s care for 73 per cent of the time, who are likely to suffer. Therefore, although the overpayment arose as a consequence of Ms Kendall having less than 100 per cent of the shared care of the children, no claim has been made by Mr Kendall for the remaining percentage of shared care. It is not as if, in relation to Ms Kendall’s two children, there has been an overpayment of FTB. The only problem which has arisen is that all of the payment was directed to Ms Kendall on behalf of the children rather than having a proportion of that money directed to Mr Kendall on their behalf. It seems to me that in circumstances such as these, where it is the children that ultimately suffer from the consequences of an individual who refuses to grant a waiver, while at the same time having no intention of claiming a proportion of FTB, the Secretary ought not make a determination under s 59(1) of the Family Assistance Act.
28. Therefore, I am satisfied that the situation outlined above constitutes special circumstances in her case which make it desirable to waive the debt raised by the Secretary. Also, because Ms Kendall’s situation does not fall within s 95 of the Administration Act dealing with debt write off, it is more appropriate to waive than to write off the debt or part of the debt. As French J said in Hales:
If it is not appropriate to write off the debt but it is appropriate to waive it, then it is more appropriate to waive the debt than to write it off.
I am also satisfied that the debt did not arise wholly or partly from Ms Kendall or any other person making a false statement or false representation or failing to comply with the provisions of the family assistance law.
Conclusion
29. Although I am satisfied that the debt in question was attributable solely to an administrative error made by the Commonwealth, the waiver provisions in s 97 of the Administration Act cannot apply to Ms Kendall because, by her own admission, she would not suffer severe financial hardship if the debt were not waived. However, I am satisfied that the special circumstances provided for in s 101 of the Administration Act do apply to Ms Kendall’s situation making it desirable to waive the debt raised by the Secretary. Therefore, the decision of the SSAT made on 7 March 2006 affirming the decision under review should be set aside and instead the debt in the sum of $1,589.25 should be waived pursuant to s 101 of the Administration Act. Because Ms Kendall has repaid that debt, the Secretary should remit the sum in total.
I certify that the twenty‑nine [29] preceding paragraphs are a true copy of the reasons for the decision of:
Mr Egon Fice, Member
signed: . . . . . . . . . . . . . . . . . .
Associate
Date of hearing: 1 September 2006
Date of decision: 21 September 2006
Advocate for the applicant: Self-representedAdvocate for the respondent: Ms A. Bramley, Legal Services Branch, Centrelink
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