Lai and Secretary, Department of Social Services (Social services second review)

Lai and Secretary, Department of Social Services (Social services second review) [2018] AATA 854 (11 April 2018)
Division:GENERAL DIVISION
File Number: 2017/5923
Re:Shin-Yi Lai
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:11 April 2018
Place:Brisbane

The Tribunal affirms the decision under review.
.......................[SGD].................................................
Member D K Grigg
CATCHWORDS
FAMILY ASSISTANCE – family tax benefit – overpayment – where no administrative error – where no special circumstances – decision under review affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance) Administration Act 1999 (Cth)

CASES
Beadle and Director-General of Social Security (1984) 6 ALD 1
Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531
Charles v Charles [2007] FamCA 276
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Groth v Secretary Department of Social Security [1995] FCA 1708
Hunnibell and Secretary, Department and Community Services [2004] AATA 992
Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Kuoronny and Secretary, Department of Social Services (Social services second review) [2017] AATA 889
L and Department of Social Security [1995] AATA 159
Papps and Secretary, Department of Family and Community Services [2005] AATA 660
Pledger v Secretary, Department of Family & Community Services[2002] FCA 1576
Prantage v Prantage (2013) 49 Fam LR 197
Re Lumsden and Secretary, Department of Social Security [1986] AATA 228
Secretary, Department of Family and Community Services and Birgden [2003] AATA 67
Secretary, Department of Family & Community Services v Sekhon[2003] FCA 76
Sekhon v Secretary, Department of Family and Community Services[2003] FCAFC 190
Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443
Secretary, Department of Social Security v Hales [1998] FCA 219; (1998) 82 FCR 154
Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones [2012] 89 ATR 267; [2012] FCA 639
Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
SECONDARY MATERIALS
Family Assistance Guide 2017 (Cth)
REASONS FOR DECISION
Member D K Grigg
11 April 2018
INTRODUCTION & CLAIM HISTORY

On 4 November 2011 the Department of Human Services (“Centrelink”), notified Mrs Lai that her family had been assessed as being entitled to the maximum rate of child care benefit (“CCB”), of up to 50 hours of CCB per week for each of her two children in approved care and that her income details were not required as she was receiving an income support payment.[1] CCB is a subsidy provided by the Australian government which reduces a recipient’s child care fees. The notice also provided that Mrs Lai must inform Centrelink if there are any relevant changes to her circumstances such as changes to income.
[1] Exhibit 1, T Documents, T5, pages 196 – 197, Centrelink notice dated 4 November 2011.
Section 58(1) of the A New Tax System (Family Assistance) Act 1999 (“Act”) provides that the annual rate of FTB is to be calculated in accordance with the Rate Calculator in Schedule 1 of the Act. CCB is to be calculated in accordance with the Rate Calculator in Schedule 2 of the Act.[2]
[2] Section 74(1), Act.
Clause 38L of Schedule 1 of the Act, provides that where an individual or their partner is receiving a social security pension, a social security benefit, a service pension or income support supplement, the individual's income excess is nil and their income tested rate is the same as their maximum rate. When the pension or benefit paid to the individual or their partner is cancelled, FTB is no longer payable free of the income test.
On 9 May 2014 Centrelink requested that Mrs Lai update her family income estimate for the 2014 - 2015 financial year, for the purpose of calculating her FTB and CCB, by choosing either one of the following two options:[3]
(a)using the income estimates calculated by Centrelink; or
(b)estimating her own family income.
[3] Exhibit 1, T Documents, T6, pages 198 – 200, Centrelink notice dated 9 May 2014.
The notice sent to Mrs Lai on 7 July 2014 indicated that she was being paid FTB calculated on the basis that:[4]
(a)FTB Part A had no income; and
(b)FTB Part B was considered a lower earner of $14,420.
[4] Exhibit 1, T Documents, T7, pages 201 – 203, Centrelink notice dated 7 July 2014.
On 1 August 2014 Centrelink reassessed Mrs Lai’s entitlement to child care rebate (“CCR”) and CCB, as a result of reduced fees from Mrs Lai’s child care service during the 2013 - 2014 financial year.[5]
[5] Exhibit 1, T Documents, T8, pages 204 – 206, Centrelink notice dated 1 August 2014.
On 8 August 2014 Mrs Lai was advised by Centrelink that in order to receive the FTB Part A supplement for the 2014 – 2015 financial year, she needed to ensure that her child who was turning four, had a health check.[6]
[6] Exhibit 1, T documents, T9, pages 207 – 209, Centrelink notice dated 8 August 2014.
Mrs Lai then advised Centrelink that she had intended to leave Australia on 12 October 2014. Centrelink advised Mrs Lai that whilst outside Australia:[7]
(a)CCB may be paid indefinitely;
(b)after 42 days outside Australia FTB Part B can no longer be paid;
(c)FTB Part A reduces to the base rate; and
(d)after 56 weeks outside Australia FTB Part A (base rate) can no longer be paid.
[7] Exhibit 1, T Documents, T10, pages 210 – 211, Centrelink notice dated 16 September 2014.
On 1 October 2014 Centrelink advised Mrs Lai that the Australian Tax Office (“ATO”) had provided it with details of Mrs Lai’s tax assessment for 2013 – 2014 financial year, which indicated that Mrs Lai’s current income estimate for the 2014 – 2015 financial year may be less than her actual income. Centrelink again requested that Mrs Lai update her annual family income estimate for the 2014 – 2015 financial year, either by using the income estimates calculated by Centrelink or estimating her own family income by 22 October 2014.[8]
[8] Exhibit 1, T Documents, T12, pages 214 – 216, Centrelink notice dated 1 October 2014.
On 8 October 2014, Centrelink determined that it owed Mrs Lai $2,259.35 in unpaid FTB entitlement for the 2013 – 2014 financial year.[9]
[9] Exhibit 1, T Documents, T13, pages 217 – 219, Centrelink notice dated 8 October 2014.
The notice sent to Mrs Lai on 19 October 2014, indicated that she was being paid FTB calculated on the basis that FTB Part A had no income and FTB Part B lower earner was $14,420.[10]
[10] Exhibit 1, T Documents, T 14, pages 220 – 222, Centrelink notice dated 19 October 2014.
Centrelink notices sent to Mrs Lai in November 2014 indicated that she was being paid FTB calculated on the basis that FTB Part A had no income and that the FTB Part B amount could not be paid because Centrelink’s records indicated that Mrs Lai was still overseas.[11]
[11] Exhibit 1, T Documents, T 16 – T17, pages 225 – 230, Centrelink notices dated 1 November 2014 and 24
November 2014.
On 1 December 2014 Centrelink:
(a)notified Mrs Lai that her family had been assessed as being entitled to the maximum rate of CCB, of up to 50 hours per week for each of her two children in approved care and that her income details were not required, as she was receiving an income support payment.[12] The notice also provided that Mrs Lai must inform Centrelink if there are any relevant changes to her circumstances, such as changes to income; and
(b)
requested that Mrs Lai provide a new estimate of her total family income within

14 days or that her FTB would be cancelled and her CCB would be reduced.[13]
[12] Exhibit 1, T Documents, T 18, pages 231 – 232, Centrelink notice dated 1 December 2014.
[13] Exhibit 1, T Documents, T 19, pages 233 – 234, Centrelink notice dated 1 December 2014.
On 4 December 2014, Mrs Lai contacted Centrelink and updated her income estimate information used to calculate her FTB and CCB entitlements.[14] As a result of this updated information, for the period 8 December 2014 to 14 December 2014, Centrelink calculated Mrs Lai's FTB and CCB entitlement based on a combined family income estimate of $79,420, comprised of an income estimate of $65,000 for Mrs Lai, and $14,420 for her husband, Mr Yeong-Tong Kuoronny.[15]
[14] Exhibit 1, T Documents, T47, page 465, ODR archive notes dated 4 December 2014.
[15] Exhibit 1, T Documents, T45, page 419, Centrelink Mainframe screen printouts.
On 5 December 2014 Centrelink notified Mrs Lai that her family had been assessed as being entitled to the maximum rate of CCB, of up to 50 hours of CCB per week for each of her two children in approved care and that her income details were not required as she was receiving an income support payment.[16] The notice also provided that Mrs Lai must inform Centrelink if there are any relevant changes to her circumstances, such as changes to income.
[16] Exhibit 1, T Documents, T 20, pages 235 – 236, Centrelink notice dated 5 December 2014.
Centrelink notices sent to Mrs Lai on 5 December 2014 and 15 January 2015 indicated that she was being paid FTB calculated on the basis that FTB Part A had no income and FTB Part B lower earner was $14,420.[17]
[17] Exhibit 1, T Documents, T 21 – T22, pages 237 – 242, Centrelink notices dated 5 December 2014 and 15January 2015.
On 8 May 2015 Centrelink requested that Mrs Lai update her family income estimate for the 2015 – 2016 financial year, for the purpose of calculating her FTB and CCB, by choosing either one of the following two options:[18]
(a)using the income estimates calculated by Centrelink; or
(b)estimating your own family income.
[18] Exhibit 1, T Documents, T 25, pages 247 – 249, Centrelink notice dated 8 May 2015.
On 22 June 2015 Centrelink notified Mrs Lai that her family had been assessed as being entitled to a partial rate of CCB, of up to 50 hours of CCB per week for each of her two children in approved care and that her estimated combined income was $79,420.[19] The notice also provided that Mrs Lai must inform Centrelink if there any relevant changes to her circumstances, such as changes to income.
[19] Exhibit 1, T Documents, T 26, pages 250 – 251, Centrelink notice dated 22 June 2015.
The notices sent to Mrs Lai on 22 June 2015 and 29 June 2015, indicated that she was being paid FTB calculated on the basis that FTB Part A was a combined income of $80,453 and FTB Part B lower earner was $14,608.[20]
[20] Exhibit 1, T Documents, T 27 – T 28, pages 252 – 257, Centrelink notices dated 22 June 2015 and 29 June 2015.
Between 22 June 2015 and 29 June 2015 Mrs Lai also received notices from Centrelink, which indicated that Centrelink had determined she had been overpaid:
(a)CCB for the 2012 – 2013 financial year, because her income had been $52,857 and therefore she had received more CCB than she was entitled to and that the amount of $243.52 was a debt owed to the government (“CCB Debt 2012 – 2013”);[21]
(b)FTB for the 2012 – 2013 financial year, because the annual family income reported was higher than she was entitled to and that the amount of $759 was a debt owed to the government (“FTB Debt 2012 – 2013”);[22]
(c)CCB for the 2013 – 2014 financial year because her income had been $61,430 and therefore she had received more CCB than she was entitled to and that the amount of $589.56 was a debt owed to the government (“CCB Debt 2013 - 2014”);[23] and
(d)FTB for the 2013 – 2014 financial year because the income that year was $61,430 and therefore she had received more FTB than she was entitled to and that the amount of $2518.50 was a debt owed to the government (“FTB Debt 2013 – 2014”).[24]
[21]         Exhibit 1, T Documents, T 35, pages 294 – 297, Centrelink notice dated 22 June 2015.
[22]         Exhibit 1, T Documents, T 38, pages 306 – 309, Centrelink notice dated 22 June 2015.
[23]         Exhibit 1, T Documents, T 37, pages 302 – 305, Centrelink notice dated 22 June 2015.
[24]         Exhibit 1, T Documents, T 36, pages 298 – 301, Centrelink notice dated 22 June 2015.
On 6 August 2015 an Authorised Review Officer (“ARO”) from Centrelink reviewed a decision which required Mrs Lai’s husband, Mr Kuoronny, to repay an Austudy debt of $46,538.77.[25] The ARO found that Mr Kuoronny had not reported Mrs Lai’s income to Centrelink, as required. On 17 October 2015 an ARO also affirmed decisions that Mrs Lai had a CCB debt of $487.04 for the period 1 October 2012 to 30 June 2013 and a FTB debt of $759.00 for the period 29 September 2012 to 30 June 2013, on the basis that

Mr Kuoronny had not been entitled to Austudy from 29 September 2012.[26] These debts were later reconciled to take into account the fact that Mr Kuoronny was receiving an income support payment and the CCB debt was adjusted and reassessed to be $68.18 and the FTB debt was reassessed to be $102.12.[27]
[25]         Exhibit 1, T Documents, T 29, pages 258 – 265, ARO decision and notes dated 6 August 2015.
[26]         Exhibit 1, T Documents, T 30, pages 266 – 269, ARO decision and notes dated 5 May 2016.
[27]         Exhibit 1, T Documents, T 30, pages 266 – 269, ARO decision and notes dated 5 May 2016.
On 16 November 2015 Mrs Lai lodged her Income Tax Return with the ATO. Centrelink then calculated Mrs Lai’s adjusted taxable income for the 2014 - 2015 financial year as being $64,010 and Mr Kuoronny’s most recent estimate of taxable income for the 2014 - 2015 year was $14,420.[28]
[28] Exhibit 1, T Documents, T 31, pages 270 - 275, ARO decision and notes dated 7 June 2016.
On 17 November 2015 Mrs Lai received a notice from Centrelink which indicated that Centrelink had determined she had been overpaid CCB for the 2014 – 2015 financial year because the annual family income was higher than Centrelink was aware. Therefore, she had received more CCB than she was entitled to and the amount of $1,924.03 was a debt owed to the government (“CCB Debt 2014 – 2015”).[29]
[29] Exhibit 1, T Documents, T 39, pages 310 – 313, Centrelink notice dated 17 November 2015.
On 25 November 2015 Mrs Lai received a notice from Centrelink which indicated that Centrelink had determined she had been overpaid FTB for the 2014 – 2015 financial year because the annual family income was higher than Centrelink was aware. Therefore she had received more FTB than she was entitled to and the amount of $3,501.83 was a debt owed to the government (“FTB Debt 2014 – 2015”).[30]
[30] Exhibit 1, T Documents, T 40, pages 314 – 317, Centrelink notice dated 25 November 2015.
Mrs Lai sought a review of the decisions to raise and seek recovery of the FTB Debt 2014 - 2015 and CCB Debt 2014 - 2015. The ARO found that those debts were correctly raised.[31]
[31] Exhibit 1, T Documents, T 31, pages 270 - 275, ARO decision and notes dated 7 June 2016.
On 13 December 2016 the ATO determined that Mrs Lai’s taxable income for the year ended 30 June 2016 was $57,693.[32]
[32] Exhibit 3, ATO notice of assessment dated 13 December 2016.
On 9 May 2017 this Tribunal decided that the FTB Debts and CCB Debts for the 2012 - 2013 and 2013 - 2014 financial years were correctly raised. Senior Member Tavoularis found that, at that time:
(a)Mrs Lai and Mr Kuoronny received approximately:
(i)$6,000 per month in gross earnings;
(ii)$6,500 per annum for homestay services;
(iii)Net rental income of $378 per week from an investment property;
(b)Mrs Lai and Mr Kuoronny own an investment property worth approximately $415,000, which had an interest only mortgage of $265,000;
(c)Mrs Lai and Mr Kuoronny had obtained an interest free loan of $85,000 from family and friends to purchase the investment property;
(d)Mrs Lai and Mr Kuoronny jointly own a home valued at $650,000 with a registered interest only mortgage of $260,000;
(e)Mrs Lai and Mr Kuoronny had obtained a loan of $405,000 to buy their home from a Mr Su (provided in exchange for Mrs Lai and Mr Kuoronny providing homestay services for his daughter for 5 years). The terms of the loan are that $1 interest is payable per annum and the loan is otherwise not repayable until 2020; and
(f)Mr and Mrs Lai were “in an advantageous financial position in comparison to most other social security recipients”[33] and therefore Mrs Lai’s “financial position is [not] one of “severe hardship”.
[33] Kuoronny and Secretary, Department of Social Services (Social services second review) [2017]
AATA 889, at [54]
On 14 September 2017 the ATO determined that Mr Kuoronny’s taxable income for the year ended 30 June 2016 was $6,687.[34]
[34] Exhibit 3, ATO notice of assessment dated 14 September 2017.
Mrs Lai then lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal and contended that Centrelink had used her adjusted taxable income and her husband’s most recent estimated income as the total family income, when it should have used her actual family income, not the estimate, to determine the total FTB she was entitled to.[35] The SSCSD affirmed the ARO’s decision on 30 August 2017.[36]
[35] Exhibit 1, T Documents, T 33, pages 287-288, Letter from AAT to Centrelink dated 7 June 2016.
[36] Exhibit 1, T Documents, T2, pages 4 – 7, SSCSD’s Decision and Reasons for Decision dated 30 August 2017.
Mrs Lai has sought a review of the SSCSD’s decision by this Tribunal.[37][38]
[37] Exhibit 1, T-Documents, T1, pages 1 – 3, Application for second review dated 3 October 2017.
ISSUES FOR DETERMINATION
The issues for determination are whether:
(a)Mrs Lai has been overpaid her entitlements to FTB and CCB for the 2014 - 2015 financial year (“Debts”); and, if yes
(b)the Debts are recoverable; and, if yes
(c)the Debts should be written off; or
(d)the Debts should be waived due to administrative error; or
(e)“special circumstances” exist such that the Debts should be waived.
WAS MRS LAI OVERPAID FTB PAYMENTS?
Pursuant to section 59 of the Act, where the Secretary has determined an individual's percentage of care of a child to be at least 35% and not more than 65%, the person's shared care percentage is as set out in subsection 59(2) of the Act, which provides:
(2)The individual's shared care percentage for the FTB child is the relevant percentage specified in column 2 of the table.

Shared care percentages

Item
Column 1

Individual's percentage of care

Column 2

Shared care percentage

1 35% to less than 48% 25% plus 2% for each percentage point over 35%

2 48% to 52% 50%

3 more than 52% to 65% 51% plus 2% for each percentage point over 53%

*Shared care percentages*
1	*35% to less than 48%*	*25% plus 2% for each percentage point over 35%*
2	*48% to 52%*	*50%*
3	*more than 52% to 65%*	*51% plus 2% for each percentage point over 53%*

Part 3, Division 1 of the A New Tax System (Family Assistance) Administration Act 1999 (Cth) (“Administration Act”) sets out the eligibility criteria for receiving CCB, and Schedule 2 of the Administration Act details how the CCB percentage is calculated. An entitlement to CCB is calculated with reference to a whole financial year and is also based on a person's (and their partner's) adjusted taxable income.
Sections 16 and 20 of the Administration Act enable Centrelink to use an estimate of a person's adjusted taxable income to determine their annual FTB entitlement.
Sections 25 and 56C of the Administration Act require FTB and CCB recipients respectively, to notify Centrelink of changes in circumstances that may affect their eligibility to receive those payments.
Section 105 of the Administration Act enables the Secretary to review a person's rate of entitlement where there is sufficient reason.

Throughout the Debt Period, Mrs Lai was receiving FTB and CCB entitlements calculated on the basis of estimates of her income that were less than her actual income and on the basis that her husband had an estimated income of $14,420 (as advised in numerous Centrelink notices).
As a result the FTB and CCB benefits paid to Mrs Lai were in excess of her actual entitlement.
Section 71 of the Administration Act provides that overpaid debts are debts due to the Commonwealth.
The Secretary submits that the excess payments are therefore debts due to the Commonwealth and that the debts have been calculated correctly.[39]
[39] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 12 December 2017, paras 27-28.
Mrs Lai’s representative, her partner Mr Kuoronny, contended that:
(a)the calculations should have been made on the basis that he was earning no income; and
(b)the CCR should have been taken into account.
However, as pointed out by the Secretary, there is no evidence that Mr Kuoronny’s income in the Debt period was $0.00. Mrs Lai’s Income Tax Return for the financial year ended 30 June 2015 indicated that Mr Kuoronny’s taxable income was $12,008 and that he had received $11,996 by way of government benefits (“Austudy”). As referred to earlier, the Austudy benefits are now a debt to the Commonwealth, and despite having had 2 years to do so, Mr Kuoronny has decided not to lodge a tax return. Even if Mrs Lai’s tax return was accepted, it indicates that Mr Kuoronny’s taxable income for the 2014 - 2015 financial year was $12,008, not $0.00, as submitted by Mr Kuoronny. There is no other evidence to corroborate Mr Kuoronny’s income or to establish the inconsistencies between Mr Kuoronny’s assertion and Mrs Lai’s tax return.
In relation to the CCR, CCR is not a component of CCB and therefore did not need to be taken into account.
There is no basis to find that Centrelink calculated the Debts, other than in accordance with the Act.
The Tribunal therefore finds that Mrs Lai owes the Debts to the Commonwealth.
ARE THE DEBTS RECOVERABLE?
Even if a debt is owed, the Secretary may write off, or waive a debt in certain circumstances set out in sections 95, 97 and 101 of the Administration Act.
Should the Debts Be Written Off?
Section 95 of the Administration Act provides relevantly:
95 Secretary may write off debt
(1) The Secretary may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise, but only if subsection (2), (4A) or (4B) applies.
Secretary may write off debt if debt irrecoverable or debt will not be repaid etc.
(2) The Secretary may decide to write off a debt under subsection (1) if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
…
(d)it is not cost effective for the Commonwealth to take action to
recover the debt.
(3) For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
…
(4) For the purposes of paragraph (2)(b), if a debt is recoverable by means of:
(a)deductions under section 84; or
(aa) deductions under section 1231 of the Social Security Act 1991; or
(b)setting off under section 84A family assistance; or
(c)application of an income tax refund under section 87; or
(d)setting off under section 87A against a payment referred to in paragraph 82(2)(a);
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
A debt is taken to be irrecoverable at law if, and only if, there is no proof of the debt capable of sustaining legal proceedings for its recovery.[40]
[40] Section 95(3), Administration Act.
If a debt is recoverable by means of section 95(4) of the Administration Act:
(a) deductions under section 84 [of the Family Assistance Act]; or
(aa)deductions under section 1231 of the Social Security Act 1991; or
(b)setting off under section 84A [Family Assistance Act]; or
(c) application of an income tax refund under section 87 [Family Assistance Act]; or
(d) setting off under section 87A [Family Assistance Act] against a payment referred to in paragraph 82(2)(a);
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
Is the debt irrecoverable at law? (section 95(3), Administration Act)
None of the circumstances set out in section 95(3) of the Administration Act exist in this case and therefore I find the debt is not irrecoverable at law.
Does Mrs Lai have the capacity to repay the debt? (section 95(4), Administration Act)
If a debt is recoverable by means of deductions from social security payments, income tax refunds or family assistance payments, the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in “severe financial hardship”[41].
[41] Section 95(4), Administration Act.
The issue is whether Mrs Lai is suffering from severe financial hardship.
Part of the FTB Debt has been repaid by way of a deduction of $509.61 from Mrs Lai’s income tax refund[42] and by way of withholding $1,370.68 from her CCR.[43]
[42] Exhibit 1, T Documents, T40, pages 314 - 317, Centrelink notice dated 25 November 2015.
[43] Exhibit 1, T Documents, T39, pages 310 - 313, Centrelink notice dated 17 November 2015.
No submission was made at the hearing to indicate that Mrs Lai was suffering from severe financial hardship.
As referred to in paragraph 27 above, this Tribunal has already decided in May 2017 that Mrs Lai is not suffering from severe financial hardship. To date no new evidence has been put before the Tribunal.
Mrs Lai has a clear capacity to repay the debt by way of instalments. Other Tribunal decisions have determined that severe financial hardship needs to involve severe or extreme financial suffering and that a person’s entire financial position would need to be materially less than the current rate of their pension.[44]
[44] Re Lumsden and Secretary, Department of Social Security [1986] AATA 228; Stubbs and Secretary, Department
of Family and Community Services [2003] AATA 729; L and Department of Social Security [1995] AATA 159;
Secretary, Department of Family and Community Services and Birgden [2003] AATA 67.
There is no evidence that Mrs Lai does not have the capacity to pay or suffers from severe financial hardship. Therefore, the Debts should not be written off pursuant to section 95(2)(b) of the Administration Act.
The Tribunal also refers to the Family Assistance Guide (“the Guide”), which is used by Centrelink, and sets out in section 1.1.S.45 that:
For the purpose of considering a waiver or a write-off, or reducing or suspending recovery of an FTB advance a person would be subject to severe financial hardship if their net fortnightly income (after reasonable expenses are deducted from gross income) over the debt repayment period (for both debts and advance recovery) would be less than the minimum fortnightly amount the person would be allowed to repay under the flexible repayment arrangements for FA debts.
The Tribunal is not bound to apply the Guide, but it may, and it should apply it in exercising its discretion, unless it is unlawful or “tends to produce an unjust decision”.[45]
[45] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 645.
Based on the Guide, Mrs Lai would not be found to be suffering from severe financial hardship.
Mrs Lai does have the capacity to pay and therefore there is no basis for the FTB Debts to be written off, pursuant to section 95(2)(b) of the Administration Act.
Is it cost-effective for the Commonwealth to recover the debt? (section 95(2)(d), Administration Act)
There is no indication from the Secretary that it is not cost-effective for it to recover the Debts.
Should the debts be written off?
There is no basis for the Debts to be written off under section 95 of the Administration Act.
SHOULD THE DEBTS BE WAIVED DUE TO ADMINISTRATIVE ERROR? (SECTION 97, ADMINISTRATION ACT)
The Secretary must also waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth, if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.[46]
[46] Section 97, Administration Act.
If an administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt “must be "attributable solely" to an administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes”.[47] Further, the payments received by the recipient must have been received in “good faith”.
[47] Secretary, Department of Family & Community Services v Sekhon[2003] FCA 76, per Wilcox J (at
[41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services[2003] FCAFC 190, at [23]
The phrase “in good faith” has been considered by the Federal Court on numerous occasions. Whether a payment has been received in good faith is determined by considering the state of mind of the recipient and is a subjective test.[48] “Wilful blindness is itself a state of mind”: Pereira v Director of Public Prosecutions (1988) 82 ALR 217 at 219-220. The words good faith should be given their ordinary meaning.[49]
[48] Pledger v Secretary, Department of Family & Community Services[2002] FCA 1576, at [59].
[49] Pledger v Secretary, Department of Family & Community Services[2002] FCA 1576, at [103].
In Haggerty v Department of Education, Training and Youth Affairs (2000) 31 AAR 529 French J (as he then was) described when a lack of good faith will arise as follows:
[16] … want of good faith will arise where there is a positive belief that the payment has been made by mistake. It will also arise where there is a suspicion held by the recipient that he or she may not be entitled to the payment made or a doubt as to the entitlement coupled with some objective basis for such suspicion or doubt. The provision does not, however, authorise the imputation of want of good faith in any of the senses above described simply because there are in existence objective facts which would raise a belief or a doubt or a suspicion of non-entitlement in the mind of some imaginary recipient.
(Emphasis added)
In Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424, 41:
A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists.
As submitted by the Secretary, Mrs Lai’s FTB and CCB debts were not caused solely by administrative error. Rather, the debts arose as a result of Mr Kuoronny’s Austudy entitlement being retrospectively reviewed and cancelled subsequent to Mrs Lai’s actual fortnightly income for the period 2 April 2011 to 19 June 2015 becoming known. Mrs Lai’s husband had failed to report changes to Centrelink for the purpose of assessing his entitlement to receive Austudy and associated payments, despite being appropriately notified of his obligations.
Mr Kuoronny has failed to lodge a 2014 - 2015 Income Tax Return, or otherwise inform the Department that he was not required to lodge in respect of that financial year in a timely manner, resulting in the debt being raised on the basis of his estimate of income for the relevant period. Even if, as contended by Mr Kuoronny, his income level was such that he was not required by the ATO to lodge an Income Tax Return, this does not mean that he does not need to establish his income to Centrelink. Centrelink, without this information, was unable to do anything other than calculate Mrs Lai’s FTB and CCB based on the estimate of Mr Kuoronny’s income previously provided.
It is Mr Kuoronny’s failure to provide the requisite income information to Centrelink that has contributed to the debts being raised.
The Tribunal does not accept Mrs Lai’s contention that Centrelink did not make it perfectly clear in its notices that it was her obligation to provide accurate income details. Mrs Lai did not correct the basis upon which Centrelink was calculating her entitlements, despite numerous notices alerting her to it.
The Debts arose due to a reconciliation by Centrelink of the amounts paid to Mrs Lai during a time when she was not eligible to receive those payments.
The Debt did not arise solely from, or in relation to any, administrative error.
There is no basis for the Debts to be waived under section 97 of the Administration Act.
ARE THERE SPECIAL CIRCUMRSTANCES THAT MAKE IT DESIRABLE FOR THE FTB DEBTS TO BE WAIVED? (SECTION 101, ADMINISTRATION ACT)
There are a few elements to be satisfied under section 101 of the Administration Act before a debt may be waived. First, the debt must not have arisen from the debtor, that is, Mrs Lai must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be special circumstances (other than financial hardship alone) that make it desirable to waive the debt. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
The question is whether Mrs Lai “knowingly” failed to comply.
“Knowingly” is not defined in the Act.
The meaning of “knowingly” was discussed in Re Callaghan[1996] AATA 413 by Deputy Registrar Forgie in regards to an identically worded section in the Social Security Act (at 445):
(48) There is nothing in section 1237AAD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation.... That actual knowledge is ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statements…
(Emphasis added)
The meaning of “knowingly” was also considered in the Family Court in Prantage v Prantage (2013) 49 Fam LR 197 in the context of s 117AB of the Family Law Act 1975 (Cth) which provides in effect, that if the court is satisfied that a party has “knowingly” made a false allegation or statement in the proceedings, the court must order that party to pay “some or all of the costs”[50] of the other party or parties. The Full Family Court summarized the authorities and agreed with Cronin J’s discussion in Charles v Charles [2007] FamCA 276 that:
[24] “Knowingly” imports a serious subjective element into the question. In respect of many findings of fact as in this case, a trial judge determines which of two versions, sometimes diametrically opposed to one another, he or she believes on the balance of probabilities. Such a finding is not necessarily a statement that one version is patently untrue or that a person is lying; it may simply be that one version is more probable than another. For a court to be satisfied that a person knowingly made a false allegation or statement in the proceedings must mean that a court can be comfortable in finding that the person lied. It would not simply then be a balancing act between two versions. To be satisfied that a lie has been told and to so find requires a careful analysis of two things. The first is that the proffered version of fact is untrue but the second is that it is put knowing it to be untrue. A court must then be cautious about such a finding because of the mandatory consequence. The finding must be elevated above the “probable” level set out in s 140(1) of the Evidence Act 1995 to consider the matters contemplated in s 140(2) of that Act. That is, the Briginshaw [v Briginshaw (1938) 60 CLR 336 ; [1938] ALR 334] test applies.
…
26] “Knowingly” is unequivocal. There can be no room for misunderstanding or doubt; objectively, the person making the statement cannot believe the statement to be true.[51]
(Emphasis added)
[50] Prantage v Prantage (2013) 49 Fam LR 197, 113.
[51] Charles v Charles [2007] FamCA 276
The Secretary does not contend that Mrs Lai “knowingly” failed to comply.
The issue, therefore, is whether “special circumstances” exist.
What does “special circumstances” mean?
The Act does not define what constitutes “special circumstances”.
There has been considerable judicial consideration of the phrase in the context of other social security legislation, for example:
·“Special” denotes something different from the usual or ordinary: Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per Kiefel J (as she then was).
·French J (as he then was) said in in Secretary, Department of Social Security v Hales (1998) 82 FCR 154, 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. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion… It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.
·The Full Federal Court in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443 held, at 450:
Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.
·Jacobson J in Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639 explained the effect of the authorities as follows:
[51] ...the phrase “special circumstances”, although lacking in precision, is sufficiently understood as including events or things that render the operation of the statute in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists. Moreover, the circumstances of the case are not confined to matters that are external to the operation of the statutory scheme: see Smith (at FCR 60, 61-62; AAR 457-458, 459-460) per von Doussa J; Groth (at ALD 545) per Kiefel J, Kertland v Secretary, Department of Family and Community Services (1999) 95 FCR 64 at 71 and 73; 30 AAR 411 at 418 and 419-420 per Merkel J; Kirkbright v Secretary, Department of Family and Community Services (2000) 106 FCR 281 at 286-287 [22], 288 [26]-[27] and 289 [31]-[32]; 32 AAR 120 at 125-126 [22], 127 [26]-[27] and 128 [31]-[32] per Mansfield J; see also Department of Family and Community Services v Allan (2001) 116 FCR 1 at 5 [17]; 33 AAR 424 at 428 [17] per Heerey J.
(Emphasis added)

The AAT has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at 3 (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[52]
[52]See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps and Secretary, Department of Family and Community Services [2005] AATA 660, at [37].
In summary, the circumstances relied upon to be “special” must be unusual, different, uncommon or exceptional.[53]
[53]The core requirement for “special reasons” is that there be something “unusual or different”: French J in Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084,
Do special circumstances exist?
The Secretary submits that no special circumstances exist and that therefore the discretion in section 101 of the Administration Act cannot be invoked.
Section 101 of the Administration Act specifically provides that financial hardship alone will not constitute a special circumstance.
The Tribunal finds that:
(a)the notices sent to Mrs Lai were very clear in informing her of the basis upon which her payments were made; and
(b)Mrs Lai was reckless in failing to inform Centrelink that this was incorrect.
There is insufficient evidence to find that Mrs Lai’s circumstances are sufficiently special to warrant the discretion to waive all or part of the debts under section 101 of the Administration Act.
CONCLUSION
The decision under review is affirmed.

I certify that the preceding 91 (ninety-one) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

.........................[SGD]...............................................
Associate
Dated: 11 April 2018

Date of hearing: 2 March 2018

Date final submissions received:

Applicant:

Advocate for the Applicant:

28 March 2018

In Person

Mr Yeong-Tong Kuoronny

Advocate for the Respondent: Maleah Underhill

Solicitors for the Respondent: Department of Human Services

[38] Exhibit 1, T Documents, T1, pages 1 – 3, Application for Review dated 3 October 2017.

at [37].

[2018] AATA 854

11 April 2018

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Remedies

*Shared care percentages*
*Item*	*Column 1* *Individual's percentage of care*	*Column 2* *Shared care percentage*
1	*35% to less than 48%*	*25% plus 2% for each percentage point over 35%*
2	*48% to 52%*	*50%*
3	*more than 52% to 65%*	*51% plus 2% for each percentage point over 53%*

Date of hearing:	2 March 2018
Date final submissions received: Applicant: Advocate for the Applicant:	28 March 2018 In Person Mr Yeong-Tong Kuoronny
Advocate for the Respondent:	Maleah Underhill
Solicitors for the Respondent:	Department of Human Services