Kerferd and Secretary, Department of Families, Community Services and Indigenous Affairs
[2007] AATA 1730
•4 September 2007
CATCHWORDS – PRACTICE AND PROCEDURE – social security – family tax benefit and maternity payment – reinstatement application – whether discretion should be exercised – reinstated.
A New Tax System (Family Assistance) Act 1999 ss 5, 7, 7A, 7(2)(aa), 7(2)(b), 8, 9, 10, 21, 21(1A), 22, 22A, 23(1), 23-26, 26(1), 27, 28, 59, 36(2)-(5) and 37(1)-(4)
A New Tax System (Family Assistance)(Administration) Act 1999 ss 5, 6, 7(1)(a), 7(1)(b), 13, 16(2), 17, 21(1)-(3), 19(a), 26A, 27A(3), 36, 37, 38, 39(1), 40(1)-(3), 47(1), 104 51B, 54B, 105 and 107
Administrative Appeals Tribunal Act 1975 ss 2A, 33, 37, 42A, 42A(2) and s 42A(5)(a) and (b) 42A(7) 42A(8) and (9) 42A(10) and 42A(2)
Freedom of Information Act 1982
Logounov v Commissioner of Taxation [2000] FCA 1745
Re Emeco Australia (NSW) Pty Ltd and Commissioner for ACT Revenue (1993) 30 ALD 725
Re Kerferd and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 1324
Re Oates and Secretary, Department of Social Security (1994) 37 ALD 241
Re White and Department of Families, Community Services and Indigenous Affairs. [2007] AATA 1712
DECISION AND REASONS FOR DECISION [2007] AATA 1730
ADMINISTRATIVE APPEALS TRIBUNAL )
) V2006/1175
GENERAL ADMINISTRATIVE DIVISION ) V2007/47
Re: DAVID KERFERD
Applicant
And:SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
2007/0705
Re: LOUISE KERFERD
Applicant
And:SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 4 September 2007
Place: Melbourne
Decision: The Tribunal has decided to:
1.reinstate applications Nos. V2006/1175, V2007/47 and 2007/705; and
2.direct that:
(1)in each of application Nos. V2006/1175, V2007/47 Mr Kerferd file with the Tribunal and give to the Secretary a copy of:
(a)a Statement of Fact and Contentions i.e. a document setting out a written summary of the facts and arguments upon which he relies to support his view that the decision under review is not correct; and
(b)any other material he wishes to rely on at the hearing.
(2)in application No. 2007/705 Mrs Kerferd file with the Tribunal and give to the Secretary a copy of:
(a)a Statement of Fact and Contentions i.e. a document setting out a written summary of the facts and arguments upon which she relies to support his view that the decision under review is not correct; and
(b)any other material she wishes to rely on at the hearing.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 3 May 2007, Senior Member Handley dismissed two applications that the applicant, Mr David Kerferd, had lodged for review of two decisions made by a delegate of the respondent, the Secretary of the Department of Families, Community Services and Indigenous Affairs (Secretary) under the A New Tax System (Family Assistance) Act 1999 (FA Act) and the A New Tax System (Family Assistance)(Administration) Act 1999 (FA Administration Act).[1] He also dismissed a third application lodged by Mrs Louise Kerferd for review of a further decision made by the Secretary.[2] He dismissed all the applications on two bases: that Mr Kerferd had failed to appear at the hearing listed for that day and that Mr Kerferd had failed, within a reasonable time, to proceed with the applications and to comply with directions. On 1 June 2007, Mr Kerferd asked that his applications be reinstated. I have decided that the matters be reinstated.
BACKGROUND
[1] File Nos. V2006/1175 and V07/47
[2] File No. 200700705
In this section, I will summarise the factual background as I understand it to be from the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (AAT Act) (T documents) and from the Tribunal’s file as well as what was said by Mr Kerferd and Mr Perdon, who appeared for the Secretary.
Application No V2006/1175
From September 1999, Mr Kerferd received a family tax benefit (FTB) in respect of his daughter. On 10 June 2005, Mrs Kerferd lodged a claim for maternity payment and FTB for their son, who had been born the month before.[3] On 15 June 2005, Centrelink sent Mrs Kerferd a form for FTB and advised her that Mr Kerferd should complete it as he was already in receipt of FTB.[4] Mr Kerford telephoned Centrelink on 16 June 2005 to advise that FTB was to be paid to Mrs Kerford.[5] Later the same day, he telephoned again to query when he was going to receive maternity payment and was told that the claim for his new child had been “put through” in his wife’s, and not his, name.[6] Mrs Kerford also made a telephone query regarding the payments. She is recorded as having told Centrelink that she did not wish to continue to claim FTB in relation to her son and would claim it at the end of the financial year. She just wanted to receive the maternity payment.[7]
[3] T documents, 35-40
[4] T documents, 42
[5] T documents, 59
[6] T documents, 59
[7] T documents, 60 and see also 61
On 20 June 2005, Mr Kerferd sent a letter to Centrelink asking for the cancellation of the family tax benefit for his daughter from 10 June 2005.[8] His family tax benefit was cancelled on 21 June 2005 with effect from that day.[9] In the letter notifying him of the cancellation, Centrelink wrote:
“We are not paying you Family Tax Benefit as you requested us not to. If you wish to claim Family Tax Benefit for this period you will need to complete a new claim form.”[10]
[8] T documents, 63
[9] T documents, 65-66
[10] T documents, 65
There then followed a series of telephone calls by Mr Kerferd to Centrelink. They concerned Mrs Kerferd’s claim for maternity payment and the payment of FTB for each of his children and whether he wanted it paid in a lump sum at the end of the year or fortnightly. I will not summarise them.
The Authorised Review Officer (ARO) affirmed the delegate’s decision to cancel Mr Kerferd’s FTB and did so on 12 September 2005.[11] Mr Kerferd sought review of the decision in the Social Security Appeals Tribunal (SSAT) and, on 21 November 2006, it too affirmed the decision to cancel.
[11] T documents, 80-82
Application No V2007/47
Centrelink had been making payments of FTB to Mr Kerferd in respect of his daughter and son. It did so by making the payments to a bank account. The bank started returning the FTB payments Centrelink had paid into that account. This led Centrelink to write to Mr Kerferd on 22 June 2006 advising of their return. It asked him for the correct details of a bank account to which he would like his FTB payments sent and which was either in his name or an account to which he had access. A form was enclosed with the letter so that he could complete the details and return it to Centrelink within 28 days.[12]
[12] T documents, 167
Mr Kerferd contacted Centrelink on 23 June 2006 regarding FTB. The Centrelink officer advised him that he needed to provide bank account details.[13] On 28 June 2006, Centrelink wrote to Mr Kerferd advising him that it could not pay him FTB as it did not have correct details of a bank account to which to send the payments. It cancelled his FTB.[14] His Health Care Card (HCC) was valid only until 19 June 2006. On receiving the letter, Mr Kerferd sought review of the decision on the basis that he had not been given 28 days’ notice.[15]
[13] T documents, 169
[14] T documents, 172-173
[15] T documents, 174 and 175
Telephone communication continued between Mr Kerferd and Centrelink. On 4 July 2006, Centrelink wrote to Mr Kerferd advising that its cancellation of FTB had been premature and apologised. His FTB had been restored from the date of effect of the cancellation i.e. 19 June 2006. Centrelink reminded him that it was waiting for the form it had enclosed with its letter of 22 June 2006. It expected to receive it by 21 July 2006.[16]
[16] T documents, 178
Also on 4 July 2006, Mr Kerferd wrote to Centrelink asking for review of the cancellation decision on 22 June 2006 as soon as possible.[17] He also asked for a new HCC as the previous one was invalid and destroyed. Mr Kerferd also referred to a previous request he had made for the CCB reconciliation statement for 2004/05 to be reviewed by an ARO as it contained incorrect details. Finally, Mr Kerferd stated that Centrelink was pursuing his wife for money that had never been claimed and she had never received. Centrelink had been previously notified of this and he regarded its debt collection actions as pure harassment.
[17] T documents, 179
On 7 July 2006, Mr Kerferd responded to Centrelink’s letter of 4 July 2006.[18] He did not accept the apology, did not agree with the explanation and sought review of the cancellation decision by an ARO.
[18] T documents, 182
On 10 July 2006, Centrelink wrote to Mr Kerferd saying:
“We cannot pay you Family Tax Benefit because we do not have the correct account details to send your payments to. Please contact the Family Assistance Office with this information.
Your Health Care Card is valid until 3 July 2006. Please destroy this card immediately after this date.”[19]
[19] T documents, 184
Mr Kerferd contacted Centrelink on 10 July 2006 stating that he had not been receiving payments of FTB but refusing to give details of his bank account.[20] Centrelink noted in its records that the FTB had been inadvertently cancelled after the return of a payment scheduled for delivery to the nominated bank account on 6 July 2006. Mr Kerferd’s FTB was restored with effect from 3 July 2006 and Centrelink again apologised.[21] Mr Kerferd sought review by an ARO and noted that the FTB had been restored but not the HCC.[22]
[20] T documents, 186
[21] T documents, 187 and 192
[22] T documents, 194
On 21 July 2006, Centrelink wrote to Mr Kerferd advising that it could not pay him FTB because it did not have the correct details of an account to which to send the payments. His HCC was valid only until 17 July 2006.[23] Mr Kerferd sought review of the decision by an ARO who affirmed it on 2 August 2006.[24] The ARO affirmed the decision to cancel Mr Kerferd’s FTB.[25] The SSAT also affirmed the decision and did so on 3 January 2007.
[23] T documents, 197
[24] T documents, 202-204.
[25] T documents, 205-209
Application No 2007/0705
On 21 June 2005 Centrelink cancelled Mr and Mrs Kerferd’s entitlement to FTB.[26] It had noted that she had contacted it on 10 June 2005 and lodged a claim for it on that day in respect of her son and with effect from 5 June 2005. Centrelink recorded the financial details that she had given on July 2005. It recorded Mr Kerferd’s telephone advice on that day that the claim was only in respect of their son as they would claim for their daughter as a lump sum payment.[27] Centrelink then wrote to Mrs Kerferd advising her that the cancellation decision had been changed and advised her of the rate of FTB that was payable to her with effect from 5 June 2005. The decision-maker told Mrs Kerferd in a letter dated 5 July 2005 that he had made this decision after considering the claim form and the additional information supplied by Mrs Kerferd on 4 July 2005. [28]
[26] T documents, 234
[27] T documents, 238-239
[28] T documents, 240-245
Mr Kerferd contacted Centrelink on 7 July 2005 regarding the letter of 5 July 2005 to his wife.[29] On 14 July 2005, Centrelink paid FTB to Mrs Kerferd for her daughter as well as her son and advised her of it.[30] Centrelink wrote again to Mrs Kerferd on 29 July 2005. It asked her for current and correct information. In particular, it asked her to provide a written authorisation if she wanted her husband to make changes or decisions about the payments.[31] Centrelink was then sent a copy of an Enduring Power of Attorney purporting to be signed by Mrs Kerferd and appointing Mr Kerferd as her attorney. As such, she authorised her husband to do anything that she could lawfully authorise an attorney to do.[32]
[29] T documents, 246
[30] T documents, 254-256
[31] T documents, 257
[32] T documents, 258
On 10 August 2005, Centrelink wrote to Mrs Kerferd asking her to contact it to discuss the choices she had regarding FTB payments for her daughter and her wishes on that subject. It also asked her to return supply any information it had previously requested.[33]
[33] T documents, 260
On 12 September 2005, an ARO reviewed the decision to pay Mrs Kerferd FTB for both of her children. He affirmed the decision and advised Mrs Kerferd of the decision in a letter dated 12 September 2005.
Mrs Kerford wrote to Centrelink on 14 September 2005 advising that she no longer wanted to be paid FTB for her son. Her husband would apply for FTB in relation to her son and would lodge a claim. She also advised that Centrelink had been paying her FTB for her daughter but had done so without her having lodged a claim for it. The payments should not have been made. Her husband would be claiming FTB in respect of her daughter and would do so from the date when FTB payments were stopped in order for maternity payment to be paid to her.[34]
[34] T documents, 271
The SSAT affirmed the decision of the delegate and did so on 11 January 2007.
The course of events in the Tribunal
A conference was convened in each of the three matters by a Conference Registrar and held on 16 March 2007. The Conference Registrar decided to issue directions to the parties in each matter. The directions followed as similar format in each case and are illustrated by that issued to Mrs Kerford in proceedings No. 2007/0705:
“THE TRIBUNAL DIRECTS:
1.On or before 13 April 2007 the applicant file with the Tribunal a Statement of Facts and Contentions (i.e. a written summary of the facts and arguments the applicant relies on to support the applicant’s view that the decision under review is not correct) and serve a copy on the respondent;
2.On or before 11 May 2007, the respondent file with the Tribunal a Statement of Facts and Contentions and serve a copy on the applicant.
[Signature of Conference Registrar]
NOTES TO DIRECTION:
1Failure to comply with this direction is likely to result in this matter being listed for a directions hearing at which the party will be required to explain the failure to comply.
2Failure by a party to comply with this direction will not necessarily result in a delay to the listing, or the adjournment, of a hearing.
3If a party is unable to meet the time limits imposed by this direction, that party must apply for an extension of those time limits. Any such application should be made well before the time limit expires so that the Tribunal is able to consider the application before the party is in the position of having failed to comply with the direction.”
On 19 May 2007, Mr Kerferd telephoned the Tribunal to object to the three applications being listed for hearing together. That was referred to me and took Mr Kerferd’s wishes into account together with the way in which the applications could be heard most efficiently and expeditiously while being fair to both parties and ensuring that they could put their cases. That is required of me by s 2A of the AAT Act as well as by the notions of procedural fairness provided for in the general law. I decided that the factual frameworks against which the decisions were made had so much in common and the issues were sufficiently inter-linked to warrant their being heard together. On 26 March 2007, the Tribunal sent both parties a listing notice advising that the hearing would be held on 25 May 2007. I constituted Senior Member Handley to hear the three applications. Mr Kerferd telephoned the Tribunal’s Registry to object to the three matters being heard together and advised that he would only be presenting his case in relation to matter No. V2006/1175.
When Mr Kerferd did not comply with the direction to lodge a Statement of Facts and Contentions by 13 April 2007, the Tribunal listed a dismissal hearing to consider why the applicants should not be dismissed for Mr and Mrs Kerferd’s failure to comply with that direction. It was listed before Senior Member Handley for hearing on 3 May 2007.
Mr Kerferd wrote to the Tribunal on 2 May 2007 referring to a telephone conversation he had with a Registry officer on 23 April 2007. The Tribunal’s note of that conversation and of a subsequent conversation reads:
“…Mr Kerferd rang to ask why there was a HDIS listed. I told him that it was because he hadn’t lodged his SFC. He told me he wasn’t intended to lodge any documents and that any doc’s relevant he would bring on the day. I told him that he needs to lodge any documents before the Hearing. He said that he didn’t want to do this.
I told him that the HDIS would give him a chance to talk to SM Handley about this. He said that he wouldn’t be attending the HDIS because he had to look after his kids. I asked him if he could attend by telephone – he didn’t want this.
In the end, I said I pass this conversation on to SM Handley.
… David Kerferd rang – he cannot attend the HDIS on the 3/5 as he will be working. The only date he is available for the month of May is the 25th, for the Hearing.”
Mr Kerferd wrote:
“I contacted … on 23rd April 2007 saying that I could not attend a hearing set down for 3rd May 2007 due to employment commitments.
I told her that I had received a letter dated 26th March 2007 which I has assumed was a response to my letter dated 20th March 2007 which was a response to a letter dated 16th March 2007 from the AAT. The letter dated 26th March 2007 listed a hearing for the above appeal number on the 25th May 2007 at 10:00am. I have allocated the 24th and 25th May 2007 to prepare and attend the hearing. I am unable to attend another hearing on such short notice and said that the hearing for the 3rd May 2007 would have to be adjourned to the 25th May 2007 and the 25th May 2007 hearing be rescheduled.
I understood that … was going to pass this information to a senior member but did not hear back from her so I called again yesterday. She said she had passed the details of our call to a senior member and would follow it up again. Today she has called and asked me to put my request in writing.
Further issues are as follows:-
1. The AAT has not followed the application process as per the website
2. The AAT has not arranged for a solicitor to meet or represent me.
3. Centrelink has still not released documents requested under FOI.
4. The AAT has scheduled additional unrelated appeals at the same time including my wife’s and an unrelated appeal of mine to be heard at the same time.”
The District Registrar wrote to Mr Kerferd on the same day and sent it to him by facsimile. After referring to Mr Kerferd’s letter, he wrote:
“The applications will remain listed tomorrow morning at 9:30am.
Failure to appear may result in the applications being dismissed.”
When Mr Kerferd failed to appear at the hearing on 3 May 2007, Senior Member Handley dismissed the three applications. After reciting that fact together with Mr Kerferd’s failure to comply with the direction in each matter, he:
“… DIRECTED by reason of the applicant failing –
(i)to appear on 3 May 2007; and
(ii)failing within a reasonable time –
∙to proceed with the application; and
∙comply with Directions
that the application be dismissed.”
The Tribunal sent a copy of the “direction” to Mr Kerferd and advised him that he might be able to apply for reinstatement. He did not telephone until 22 May 2007 when he asked whether the hearings would be proceeding on 25 May 2007. He was told that the applications had been dismissed. In a letter sent on 1 June 2007, Mr Kerferd sought reinstatement of the three applications.
Reasons for dismissal of three applications
At Mr Kerferd’s request, Senior Member Handley gave written reasons for dismissing the three applications. He referred to the substance of the three applications, the conference, directions, the listing of the applications for hearing and the notes of the conversations and correspondence between Registry officers and Mr Kerferd.
Senior Member Handley observed that a Conference Registrar may give the parties directions under s 33 of the AAT Act. He noted that it:
“… is not the usual practice of the Tribunal to direct unrepresented applicants to lodge a Statement of Facts and Contentions. I assume that such a Direction was made in the present applications because the conference registrar was satisfied that Mr Kerferd was able to articulate and present the applications as the representative. There was nothing on the Tribunal files to indicate that he had any objection to Directions being issued or that he was incapable of complying with Directions.”[35]
[35] [2007] AATA 1324 at [16]
A note on the Directions told him that the matter might be listed for a directions hearing at which he would be required to explain his failure to comply. Senior Member Handley said:
“18. The memorandum of 23 April 2007 indicated to me that Mr Kerferd did not intend to comply with the Directions. He was given the opportunity to have the dismissal hearing listed by telephone to cause him minimal inconvenience but that offer was also rejected.
19. I was aware that the applicant sought an adjournment on 1 May 2007 of the Directions Hearing. The reasons articulated by his letter of 2 May 2007 did not in my view permit the exercise of a discretion to allow the matter to be adjourned.
…
24. The applicant was notified on the afternoon prior to the Directions Hearing of 3 May 2007 that the matter would continue to be listed. He was also notified that his failure to appear may result in the applications being dismissed.
25. A Statement of Facts and Contentions is an essential tool to ensure that each party is afforded procedural fairness. This Tribunal does not allow review by ambush. Rather, it ensures by the delivery and exchange of a Statement of Facts and Contentions as a consequence of Directions, that each party will be aware, prior to hearing, of the case that will be advanced by the other party. Failure to comply with Directions offends the authority of the Tribunal to issue Directions as to the procedure to be followed … in connection with the hearing of a proceeding (s 33(2), (2A) of the AAT Act). Failure to attend the Tribunal when matters are listed offends the efficiency of the Tribunal and denies the opportunity for another application to be listed. These were the failings by the parties who initiated these applications and who had a duty to prosecute them. No reasonable explanation was given for the failure to comply – indeed, the memorandum of 23 April 2007 suggests Mr Kerferd would refuse to comply.
26. As reflected by the Directions made on 3 May 2007 I was satisfied in the exercise of the discretion found in s 42A(2) and s 42A(5)(a) and (b) that by reason of the applicant failing to appear on 3 May 2007, by reason of him failing to comply with the Directions made on 16 March 2007 and by reason of him failing to proceed with the application [sic] that the applications should in the circumstances be dismissed.”
LEGISLATIVE FRAMEWORK: AAT Act
Senior Member Handley relied on two sections of the AAT Act in dismissing Mr Kerferd’s applications. They are both found in s 42A of that legislation. The first relates to the failure of a party, other than a decision-maker, to appear and is found in s 42A(2):
“(2) If a party to a proceeding before the Tribunal in respect of an application for the review of a decision (not being the person who made the decision) fails either to appear in person or to appear by a representative at a directions hearing, or an alternative dispute resolution process under Division 3, held in relation to the application, or at the hearing of the proceeding, the Tribunal may:
(a)if the person who failed to appear is the applicant – dismiss the application without proceeding to review the decision; or
(b)in any other case – direct that the person who failed to appear shall cease to be a party to the proceeding.”
It is clear from the terms in which s 42A(2) is expressed that failure to appear does not automatically lead to the conclusion that the Tribunal must exercise its power. Failure is a necessary pre-requisite to the exercise of the power but whether the Tribunal will actually exercise it is a matter for its discretion. The discretionary aspect is inherent in the provision that “the Tribunal may” dismiss (emphasis added).
Also inherent in s 42A(2) is the notion that the party who has failed to appear has been given notice of the proceeding concerned. Failure in the context of s 42A(2) means more “…. not to manage (to do something) …” or “… not to bother (doing something) …”[36] rather than simply not to do something. It carries an element of knowledge of what is to be done and an element of, for whatever reason, not doing it. In the context of s 42A(2), that is to say that a party must have been given proper notice of the proceeding before it can be said that non-attendance at the proceeding amounts to that party’s failing to appear at that proceeding.
[36] Chambers 21st Century Dictionary, revised edition, 1999, reprinted 2004, Chambers
That this is so is reinforced by the requirement in s 42A(7) that:
“Before exercising its powers under subsection (2), the Tribunal must be satisfied that appropriate notice was given to the person who failed to appear of the time and place of the directions hearing, conference, mediation or hearing, as the case may be.”
Senior Member Handley also relied on s 42A(5) of the AAT Act in dismissing Mr Kerferd’s three applications. It provides:
“(5)If an applicant for a review of a decision fails within a reasonable time:
(a)to proceed with the application; or
(b)to comply with a direction by the Tribunal in relation to the application;
the Tribunal may dismiss the application without proceeding to review the decision.”
There are three provisions in s 42A relating to the Tribunal’s power to reinstate an application once it has been dismissed. Sections 42A(8) and (9) relate to reinstatement where the Tribunal has dismissed an application under s 42A(2). Beginning with s 42A(8), it provides:
“If the Tribunal, under subsection (2), has dismissed an application (other than an application in respect of a proceeding in which an order has been made under subsection 41(2), the person who made the application may, within 28 days after receiving notification that the application has been dismissed, apply to the Tribunal for reinstatement of the application.”
Once an application has been made under s 42A(8), s 42A(9) comes into play as the two are inter-dependent.[37] Section 42A(9) provides:
“If it considers it appropriate to do so, the Tribunal may reinstate the application and give such directions as appear to it to be appropriate in the circumstances.”
[37] Logounov v Commissioner of Taxation [2000] FCA 1745 at [18] per Conti J
The Tribunal has a further power that it may use to reinstate an application. That arises in the circumstances specified in s 42A(10), which provides:
“(10) If it appears to the Tribunal that an application has been dismissed in error, the Tribunal may, on the application of a party to the proceeding or on its own initiative, reinstate the application and give such directions as appear to it to be appropriate in the circumstances.”
LEGISLATIVE FRAMEWORK: FA Act and FA Administration Act
Eligibility for FTB
Eligibility for FTB is the subject of s 21 of the FA Act. Section 21(1) provides:
“(1) An individual is eligible for family tax benefit if:
(a)the individual has at least 1 FTB child (see section 22 and later provisions); and
(b)the individual:
(i) is an Australian resident; or
(ia)is a special category visa holder residing in Australia; or
(ii) satisfies subsection (1A); and
(c)the individual’s rate of family tax benefit, worked out under Division 1 of Part 4, is greater than nil.”
Section 21(1A) is concerned with holders of certain visas and is not relevant in this case.
The circumstances in which a person is an FTB child of an adult are set out in s 22 of the FA Act. That is the effect of s 22(1). In so far as the provisions of s 22 relate to individuals under 18 years of age, s 22 provides that:
“(2) The individual is an FTB child of the adult if:
(a) the individual is aged under 18; and
(b)the adult is legally responsible (whether alone or jointly with someone else) for the day-to-day care, welfare and development of the individual; and
(c)the individual is in the adult’s care; and
(d)the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult.
(3)The individual is an FTB child of the adult if:
(a)the individual is aged under 18; and
(b)a family law order or registered parenting plan is in force in relation to the individual; and
(c)under the order or plan, the adult is someone with whom the individual is supposed to live or someone with whom the individual is supposed to have contact; and
(d)the individual is in the adult’s care; and
(e)the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult.
(4)The individual is an FTB child of the adult if:
(a)the individual is aged under 18; and
(b)the individual is in the adult’s care; and
(c)the individual is not in the care of anyone with the legal responsibility for the day-to-day care, welfare and development of the individual; and
(d)the individual is an Australian resident, is a special category visa holder residing in Australia or is living with the adult.
(5)…
(6)…
(7)If:
(a)the Secretary is satisfied there has been, or will be, a pattern of care for an individual (the child) over a period such that, for the whole, or for parts (including different parts), of the period, the child was, or will be, an FTB child of more than one other individual under subsection (2), (3), (4), (5) or (6); and
(b)one of those other individuals makes, or has made, a claim under Part 3 of the A New Tax System (Family Assistance) (Administration) Act 1999 for payment of family tax benefit in respect of the child for some or all of the days in that period; and
(c)subsection 25(1), (1A) or (1B)does not require that the child be taken not to be an FTB child of that individual for any part of that period;
the child is to be taken to be an FTB child of that individual for the purposes of this section on each day in that period, whether or not the child was in that individual’s care on that day.”
Section 22A specifies circumstances in which, despite the provisions of s 22¸an individual cannot be the FTB child of another. Two are relevant in this case:
“When the individual is not an FTB child of the adult at a particular time
If the individual is aged: | then the individual cannot be an FBT child of the adult if: |
1. 5 or more and less than 16 | (a) the individual is not undertaking full-time study or primary education and the individual has adjusted taxable income, for the income year in which the particular time occurs, that equals or exceeds the cut-out amount (see subsection (2)); or (b) the adult is the individual’s partner, or would be if the individual was over the age of consent applicable in the State or Territory in which the individual lives. |
… | … |
3. any age | the individual, or someone on behalf of the individual, is, at the particular time, receiving: (a) a social security pension; (b) a social security benefit; or (c) payments under a program included in the programs known as Labour Market programs.” |
Sections 23-25 are concerned with situations in which an individual is an FTB child of another. One is where an event occurs in relation to the child and without the adult’s consent but which prevents the child being in the adult’s care. Another concerns situations in which the FTB child leaves Australia or is overseas for a period. The third concerns situations in which the FTB child is in the individual’s care for less than 30% of a period.
Section 26 provides that:
“(1) For any period when 2 individuals who are members of a couple would otherwise be eligible at the same time for family tax benefit in respect of one or more FTB children, only one member is eligible.
(2) The member who is eligible is the one determined by the Secretary to be eligible, having regard to:
(a)whether one member of the couple is the primary carer for the child or children; and
(b)whether the members have made a written agreement nominating one of them as the member who can make a claim under Part 3 of the A New Tax System (Family Assistance) (Administration) Act 1999 for payment of family tax benefit in respect of the child or children.”
Sections 27 and 28 are concerned with children of blended families. Section 28 provides for eligibility for FTB where there are two individuals who are members of a couple, each would be eligible for FTB for two or more children during a period but for s 26(1), at least one of the FTB children is a child of only one of them and at least of the FTB children is either a child of their relationship or a child of the other of the individuals. The Secretary may determine that both members of the couple are eligible for FTB for the children for the period and determine the percentage each is to receive.
The FA Administration Act is concerned with the payment of FTB. Section 5 provides that:
“The only way that a person can become entitled to be paid family tax benefit is to make a claim in accordance with this Subdivision [A of Part 3].”
The person making the claim must be an individual or an approved care organisation.[38] A claim may be for the payment of FTB by instalment[39] or for a past period.[40]
[38] FA Administration Act, s 6
[39] FA Administration Act, s 7(1)(a)
[40] FA Administration Act, s 7(1)(b)
Where an individual has been found to be the FTB child of a person and also the FTB child of another person but the two persons are not members of the same couple, s. 59 of the FA Act provides that the Secretary may determine the percentage that is to be the first person’s percentage of FTB for the individual.
Making a claim for FTB
Section 5 of the FAA Act provides that “the only way that a person can become entitled to be paid family tax benefit is to make a claim in accordance with … Subdivision [A of Part 3]”. An individual or an approved care organisation (described in the legislation as a “claimant”) may make a claim:
“(a) for payment of family tax benefit by instalment; or
(b)for payment of family tax benefit for a past period; or
(c)in the case only of a claimant who is an individual – for payment of family tax benefit by single payment/in substitution because of the death of another individual.” (FAA Act, s. 7)
The manner in which a claim is made is the subject of s. 7(2) of the FAA Act. A claim for FTB by instalment must give details of a bank account in accordance with s. 7A (FAA Act, s. 7(2)(aa)) and a claim for FTB by instalment and a claim for payment of FTB by instalment or for a past period must give a tax file number (“TFN”) in accordance with s. 8 (FAA Act, s. 7(2)(b)). Sections 9 and 10 impose certain restrictions on claims for payment of FTB by instalment and for a past period respectively. Those limitations are not relevant in this case.
Determination of claim for FTB
The claimant’s claim for payment of FTB must be determined according to Subdivision B of Part 3 of the FA Administration Act.[41] Section 16(2) applies to the determination of an instalment entitlement claim and provides:
“If the Secretary is satisfied that the claimant is, at the time the Secretary makes the determination on the claim, eligible for family tax benefit in accordance with Subdivision A or C of Division 1 of Part 3 of the Family Assistance Act, the Secretary must determine that he or she is entitled to be paid Family Tax Benefit for each day on which the determination is in force at the daily rate at which the Secretary considers the claimant to be eligible”.[42]
If the Secretary makes a determination under s 16(2) and is also satisfied that the claimant is entitled to FTB during the whole or part of the period since the claim was made, the Secretary must determine that the claimant is entitled to be paid that amount of FTB.[43]
[41] FA Administration Act, s 13
[42] FA Administration Act, s 16(2)
[43] FA Administration Act, s 16(4)
Section 17 of the FA Administration Act applies to the determination of a past period claim and s 17(b) provides that if:
“the Secretary is satisfied that the claimant was eligible for family tax benefit:
(i)for the whole of the period in accordance with Subdivision A or C of Division 1 of Part 3 of the Family Assistance Act; or
(ii)for part of the period in accordance with Subdivision A of that Division and for the remainder of the period in accordance with section 31 of that Act;
the Secretary must determine that the claimant is entitled to be paid family tax benefit for the past period.”
If the Secretary is not satisfied of the matters addressed in ss 16 and 17, he must, if the claim is for payment of FTB by instalment, determine that claimant is not entitled to be paid FTB for each day on which the determination is in force or, if the claim is for payment for a past period, determine that the claimant is not entitled to be paid FTB for that period.[44]
[44] FA Administration Act, ss 19(a) and (b)
When is a determination in force?
Section 21(1) of the FA Administration Act provides that, subject to qualifications appearing elsewhere in s 21, a determination comes into force when it is made and remains in force at all times afterwards. In very broad terms, s 21(2) provides that a determination under ss 16 or 19(a) that a person is not entitled to be paid FTB ceases to be in force if another determination is made on a claim for payment of FTB by instalment or on a claim for payment of FTB for a past period. Section 21(3) provides that a determination ceases to be in force if a claimant advises the Secretary that he or she wishes the determination to cease to be in force.
Payment of FTB
Section 23(1) of the FAA Act, provides that:
“Subject to this section, if the claimant is entitled to be paid family tax benefit by instalment, the Secretary must, after each instalment period ending after the determination is made, pay the instalment amount to the claimant, at such time as the Secretary considers appropriate and to the credit of a bank account nominated and maintained by the claimant.”
Variation of determination
Section 26A of the FA Administration Act provides that the Secretary may require a claimant to give, within 28 days, “… details of a bank account maintained by the claimant alone, or jointly or in common with someone else, into which instalments of family tax benefit are to be paid.” The Secretary may do so if there is a determination in force under which the claimant is to be paid FTB by instalment and that claimant has not nominated a bank account into which they are to be paid.
If the claimant does not comply with the Secretary’s requirement under s 26A then, subject to one exception, the consequence is found in s 27A(3). That:
“… the consequence is that the Secretary may vary the determination so that it has the effect that the claimant is not entitled to be paid family tax benefit for any day, on which the determination was or will be in force, after the end of the last instalment period before the variation takes place.”[45]
If the Secretary finds out the claimant’s bank account details before the end of the income year following that in which the variation took place, the Secretary must vary the determination to undo the effect of the previous determination under s 27A(3).[46]
[45] FA Administration Act, s 27A(3)
[46] FA Administration Act, s 27A(4)
Section 31(1) provides that the Secretary must vary a determination that has been made under s 16 if, after the determination, there is an event that would mean either that, had the Secretary known of it, he would have concluded that the claimant would not be eligible for FTB or that the claimant was eligible but that the FTB would have been paid at a different rate. The date of effect of the determination depends on, for example, when the Secretary became aware of the occurrence and whether the determination would be beneficial to the claimant.
The Secretary’s review of decisions
Section 104 of the FA Administration Act sets out the decisions that the Secretary may review on his own initiative. Those decisions are all the decisions of any officer under the family assistance law except for certain determinations under ss 51B and 54B. Determinations in relation to FTB are not excluded. Section 105 provides that a decision coming within s 104 may be reviewed by the Secretary if “the Secretary is satisfied that there is sufficient reason to review the decision”. There are qualifications to the circumstances in which the Secretary may conduct that review but those qualifications are not applicable in this case.[47] After reviewing the decision, the Secretary may decide to affirm the original decision, vary it or set it aside and substitute a new decision. He may also deem certain events to have occurred in certain circumstances but they are not relevant in this case.[48] The date of effect of a decision made under s 105 is the subject of s 107.
[47] FA Administration Act, ss 105(2) and (3)
[48] FA Administration Act, s 105(5)
Eligibility for maternity payment
An individual is eligible for maternity payment in respect of a child in any one of the four cases set out in s 36 of the FA Act.[49] The first situation arises if the individual is a parent of the child and either is eligible for FTB in respect of that child at any time within the first 13 weeks of the child’s life or would be eligible but the rate of payment is nil.[50] The other three relate respectively to a child entrusted to the care of an individual other than a parent of that child, a stillborn child or an adopted child.[51]
[49] FA Act, s 36(1)
[50] FA Act, s 36(2)
[51] FA Act, ss 36(3), (4) and (5)
Section 37(1) sets out the general rule that “Only one individual is eligible for maternity payment in respect of a child.” Section 37(2) recognises that the eligibility provisions in the FA Act can lead to the result that two or more individuals would be eligible in respect of the same child. If that is the case, s 37(2) provides that “the individual who is eligible is the one determined by the Secretary to be eligible.” If the Secretary were satisfied that it is reasonable that two or more of the individuals should be eligible for maternity payment, then each of those individuals is eligible and the Secretary must determine the percentage that is each individual’s percentage of the maternity payment in respect of the child. That is the effect of s 37(3) but it is qualified by s 37(4) when it provides:
“If the Secretary determines that an individual who is a member of a couple is eligible for maternity payment in respect of a child, the Secretary must not determine that the partner of the individual is eligible for maternity payment in respect of that child.”
Making a claim for maternity payment
The only way in which a person can be entitled to be paid maternity payment is by making a claim in accordance with Division 3 of Part 3 of the FA Administration Act.[52] Only an individual may make such a claim[53] in a form and manner, containing any information and accompanied by any documents required by the Secretary.[54] An individual can only make one claim[55] but may withdraw of vary it in a manner determined by the Secretary.[56] If withdrawn, a claim is taken never to have been made.[57]
[52] FA Administration Act, s 36
[53] FA Administration Act, s 37
[54] FA Administration Act, s 38
[55] FA Administration Act, s 39(1)
[56] FA Administration Act, ss 40(1) and (2)
[57] FA Administration Act, s 40(3)
Section 47(1) provides that:
“If the claimant is entitled to be paid maternity payment … , the Secretary must pay it to the claimant, at such time as the Secretary considers appropriate and to the credit of a bank account nominated and maintained by the claimant.”
CONSIDERATION
Senior Member Handley dismissed Mr and Mrs Kerferd’s applications on three bases. One basis was their failure to appear, either in person or by a representative, at the directions hearing held on 3 May 2007. That basis led Senior Member Handley to exercising his power to dismiss under s 42A(2). Dismissal under s 42A(2) entitled Mr and Mrs Kerferd to apply for reinstatement of their applications under s 42A(8). Once they had lodged their applications for reinstatement, the Tribunal need only consider whether it is appropriate to reinstate them. It does that under s 42A(9). If I were to consider the matter on the basis that they had been dismissed under the two bases specified in s 42A(5), I would not be able to consider the question of reinstatement under s 42A(9) as it only arises if the conditions in ss 42A(2) and (8) have occurred. I would have to consider the application for reinstatement under s 42A(10) and first determine whether Senior Member Handley dismissed the applications in error. Only if they were dismissed in error would I be able to consider whether I should exercise my discretion whether to reinstate them.
There is, however, no need for me to consider the applications on the basis of my power in s 42A(10) at all. The limits of my discretion under s 42A(9) are the same as the limits of any discretion I would have were I to have power to reinstate under s 42A(10). Whatever decision I reach regarding the discretion under s 42A(9) will be the same as the decision I would reach were I to have the power under s 42A(10). Given that all applications were dismissed under s 42A(2) as well as under s 42A(5), I need only consider the matter under the former.
I considered the limits of the discretion in Re Oates and Secretary, Department of Social Security[58] and in Re White and Department of Families, Community Services and Indigenous Affairs.[59] I adopt my reasons in those cases but; for the purposes of this case, will summarise only the main principles that guide the exercise of my discretion.
[58] (1994) 37 ALD 241
[59] [2007] AATA 1712
The first is that reinstatement applications begin from the premise that:
“… the person whose proceedings have been dismissed should not be prevented from presenting his or her case provided the person’s misconduct has not prejudiced the other party.”[60]
[60] (1994) 37 ALD 241 at 246
The second principle is that notions of fairness between the parties are also relevant:
“(20) When compared with applications for an extension of time, the group of persons in a position like that of an applicant seeking reinstatement of his application, will be substantially smaller. The group does not comprise those in respect of whom a particular type of administrative decision has been made but those who have actually sought review but failed to appear at the appropriate time and whose applications have been dismissed. Arguably, the public interest shifts from ensuring certainty in administrative decision making and consistency of treatment of those affected by decisions to ensuring the efficient operation of a case management scheme and consistency of treatment of those affected by that scheme. Having had regard to the cases of Davies v Pagett[[61]] and Lenijamar Pty Ltd and Ors v AGC (Advances) Ltd,[[62]] I do not think that the public interest in this sense is directly relevant in its own right. What will be relevant is the regard which the parties have paid to that case management system. It will be relevant in assessing whether the respondent has been prejudiced and whether the respondent is likely to be prejudiced again in the future by the applicant's conduct.”[63]
[61] (1986) 10 FCR 226
[62] (1990) 27 FCR 388
[63] Re Oates and Secretary, Department of Social Security (1994) 37 ALD 241 at 246-247
A further consideration is whether the application, if reinstated, would have merits. That does not require an exhaustive consideration of the merits but it does require a consideration of whether the application would have any chance of success if reinstated. To reinstate an application in circumstances in which there can be no chance at all of its being successful is to give false hope to an applicant as well as to waste the resources of both parties let alone of the Tribunal.
Consideration of the merits of the substantive application, if reinstated, is also relevant. This does not mean that I should examine those merits in detail or make findings of fact and express views on the law. Clearly I should not as the issues have not been fully argued and the evidence not fully given. What I must do was set out by President Curtis in Re Emeco Australia (NSW) Pty Ltd and Commissioner for ACT Revenue[64] in the context of an application for an extension of time but no less applicable to an application for reinstatement:
“… I think that the proper test is to be put no higher than that the applicant has or can have an arguable case.”[65]
The principles regarding the prospects of success or merits of the applicant’s case were stated in the context of applications for an extension of time but are equally applicable to an application for reinstatement. In both instances it is futile to reinstate an application when the Tribunal has no power to review the decision concerned.
[64] (1993) 30 ALD 725
[65] (1993) 30 ALD 725 at 732
In applying these principles to Mr and Mrs Kerferd’s applications, I will start with Mr Kerferd’s reasons for not attending the hearing on 3 May 2007. They were set out in his letter of 2 May 2007 and were reproduced in Senior Member Handley’s reasons for decision.[66] In his view, Mr and Mrs Kerferd’s reasons “… did not … permit the exercise of a discretion to allow the matter to be adjourned.”[67] He did not give any reasons for his view but it is clear that he had also formed the view that Mr Kerferd had decided by 23 April 2007 that he would not comply with the directions. It may well be that Senior Member Handley saw Mr Kerferd’s individual actions, culminating in his failing to appear at the directions hearings on 3 May 2007, as simply part of a single plan of action to do nothing until the hearing.
[66] [2007] AATA 1324 at [11]
[67] [2007] AATA 1324 at [19]
I can sympathise with Senior Member Handley’s position. Mr Kerferd has taken every point when he feels that there has been an error in his dealings with the Secretary and is not prepared to accept with grace any attempts by Centrelink to rectify any errors that it has made or its apologies. It might be thought by some that he is inclined to engage in “brinkmanship” when, for example, he leaves every action that he takes, until the very last day of the permitted time. He is, of course, entitled to do that if he wishes but others are entitled to take a view of him in light of it. Any such view should not, however, cloud the exercise of my discretion in this matter.
At the hearing of the applications for reinstatement, Mr Kerferd said that he had not received some of the T documents and that Centrelink had refused his request for documents under the Freedom of Information Act 1982 (FOI Act). With regard to the T documents, he agreed that the address to which Centrelink indicated it had sent them is in fact his address. The issues, he said, are complex and he wanted them referred for an alternative dispute resolution (ADR). The directions were made without his involvement in a conference held by a Conference Registrar under the AAT Act. He had left the conference, he said, when she had decided to refer the matters to a hearing rather than to ADR. Mr Kerferd did not suggest that he did not receive a copy of the directions. Despite his disappointment about the lack of a referral to ADR, he was prepared to attend at the hearing of the applications but could not attend the directions hearing. He works from home and had to be with a client at the time scheduled for the directions hearing.
Mr Kerferd has said that the issues raised by the decisions under review are complex. They are presented with complexity but, whether they are complex when they are analysed, remains to be seen. By failing to comply with the Conference Registrar’s direction, Mr Kerferd has failed to summarise his position and, in doing so, possibly alleviate some of the complexity. It is true as both Mr Kerferd and Senior Member Handley have observed, that the Tribunal often asks only the Secretary, and not the individual affected by the decision, to lodge a Statement of Facts and Contentions. That may be the case because the issues are clear and all the relevant material known. It may be because the individual may have difficulty in expressing his or herself on paper. In cases of some complexity involving an individual, such as Mr Kerferd, who is clearly able to express himself and argue a position, the Tribunal may decide to ask an individual to lodge a Statement of Facts and Contentions. Whichever cause is taken, the aim is to help the parties focus on the matters that are in dispute between them and thereby assisting the Tribunal. It is not for either party to ignore the order. As Mr Kerferd discovered, there are consequences in that course. It is always open to the individual to ask the Tribunal for a variation of the direction to allow sufficient time within which to comply. Mr Kerferd did not choose that course.
In his Statement of Issues relating to the applications for reinstatement and dated 19 June 2007, Mr Perdon pointed to the “surfeit of litigation with the respondent” in which Mr Kerferd has indulged. Mr Perdon said that Mr Kerferd has lodged at least 36 requests for review with Centrelink as well as at least 18 requests under the FOI Act. In addition to the three reinstatement applications, he has six further applications with the Tribunal. On my count, there have now been 12 applications made by either Mr or Mrs Kerferd but three have been dismissed under s 42A(4) on the basis that Mr Kerferd was unable to show that the decision of which review was sought was reviewable by the Tribunal. Of the remaining nine, three were listed for a jurisdiction hearing on 31 August 2007 and one has been listed for hearing on 28 September 2007. Apart from the three with which I am concerned, the remaining two are proceeding through the Tribunal’s normal processes.
It seems to me that a submission regarding the number and nature of Mr Kerferd’s applications and proceedings is more suited to an application that a proceeding be dismissed on the basis that it is frivolous or vexatious than to a reinstatement application. What is more important is whether there is any merit in any of the cases. However pedantic, persistent or irritating an individual may be, it is important that the individual receives what is rightly his or her entitlement under, in this case, the FA Act and the FA Administration Act.
In a case such as this, I consider that it is far more in keeping with the Tribunal’s obligation to provide “… a mechanism that is fair, just, economical, informal and quick”[68] if I were to reinstate the applications. In the long run, it will be more efficient for all of the parties if the applications the Tribunal currently has are heard and, if there is jurisdiction to review them, considered on their merits. From the Secretary’s point of view, the merits of Mr Kerferd’s cases may appear weak but the law governing his entitlements and those of his wife have some complexity. This has been illustrated by Centrelink’s own errors in administering the matters. Mr and Mrs Kerferd are entitled to have the merits of their applications heard and determined. The parties will then be able to exercise their right of appeal to the Federal Court.
[68] AAT Act, s 2A
The fact that I am reinstating Mr and Mrs Kerferd’s applications should not be interpreted as condoning their ignoring the directions properly given to them or in failing to appear at the directions hearing. Senior Member Handley’s decision is understandable but there are different issues to be considered on a reinstatement application.
In order to understand Mr and Mrs Kerferd’s arguments as to why the Secretary’s decisions are incorrect and the decisions they seek, I intend to direct that they file a Statement of Facts and Contentions in each of their applications. As explained in the original direction, that means that they must file with the Tribunal and give to the Secretary a copy of a document that summarises the facts and arguments on which they rely to support their view that the decisions are not correct. If they to rely on any written material that must also be lodged. They must lodge all material by close of business on 28 September 2007. If Mr and Mrs Kerferd do not comply with the direction, the issue of dismissal under s 42A(5) may become a live issue once more.
For the reasons I have given, I:
1. reinstate applications Nos. V2006/1175, V2007/47 and 2007/705; and
2. direct that:
(1)in each of application Nos. V2006/1175, V2007/47 Mr Kerferd file with the Tribunal and give to the Secretary a copy of:
(a)a Statement of Fact and Contentions i.e. a document setting out a written summary of the facts and arguments upon which he relies to support his view that the decision under review is not correct; and
(b)any other material he wishes to rely on at the hearing.
(2)in application No. 2007/705 Mrs Kerferd file with the Tribunal and give to the Secretary a copy of:
(a)a Statement of Fact and Contentions i.e. a document setting out a written summary of the facts and arguments upon which she relies to support his view that the decision under review is not correct; and
(b)any other material she wishes to rely on at the hearing.
I certify that the seventy-seven preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ...................................................................
Jayne Haydon Associate
Date of Extension of Time Hearing 12 July 2007
Date of Decision 4 September 2007
Representative for the Applicants Mr D. KerferdAdvocate for the Respondent Mr D. Perdon
Advocate, Legal Services Branch
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