Leila Karimi and Secretary, Department of Social Services
[2014] AATA 314
[2014] AATA 314
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2013/1832
Re
Leila Karimi
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Member K Hogan Date 16 May 2014 Place Perth The Tribunal affirms the decision under review.
…(Sgd) K Hogan………..…
Ms K Hogan, MemberCATCHWORDS
Social Security - Family Tax Benefit - Change of Circumstances not Notified - Debt owed to the Commonwealth - Whether Debt can be Written Off - Whether Debt can be Waived Solely due to an Administrative Error - Whether Debt can be Waived due to Special Circumstances
LEGISLATION
A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration) Act 1999
CASES
Dranichnikov v Centrelink [2003] FCAFC 133
Re Anderson and Secretary, Department of Families and Community Services (2002) 69 ALD 484
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126
SECONDARY MATERIALS
Family Assistance Guide
REASONS FOR DECISION
Member K Hogan
16 May 2014
BACKGROUND
The applicant has two children, born on 2 February 1996 and 10 August 2003 respectively. The application is in receipt of Family Tax Benefit (FTB) payments in respect of her two children.
On 12 June 2011, the applicant’s relationship with her former partner broke down.
On 27 July 2011, the applicant advised Centrelink of the breakdown of the relationship and that she would contact the Child Support Agency (CSA) to obtain a fresh child support assessment.
On 3 September 2011, the applicant contacted Centrelink to inquire about how her child recently turning 18 may affect her FTB payment. Centrelink subsequently raised an inquiry which revealed that no new child support assessment had been made after the applicant’s separation from her former partner on 11 June 2011.
On 25 October 2012, a Centrelink officer decided that the applicant had been overpaid FTB and had hence incurred a debt of:
·$8,688.78 for the 2011/2012 financial year (Period One); and
·$3,776.94 for the period from 1 July 2012 to 16 October 2013 (Period Two).
The Centrelink officer decided that the debt must be recovered and raised a debt against the applicant (the Original Decision).
On 30 October 2012, the applicant requested an internal review of the Original Decision by telephone, stating that Centrelink had not told her that she must apply for child support from her former partner and that if she failed to do so her FTB would be affected.
On 21 December 2012, a Centrelink Authorised Review Officer (ARO) affirmed the Original Decision.
On 29 January 2013, the applicant applied to the Social Security Appeals Tribunal (SSAT) for a review of the ARO’s decision.
On 13 March 2013, the SSAT affirmed the ARO’s decision.
On 23 April 2013, the applicant applied to this Tribunal for a review of the SSAT decision.
LEGISLATIVE FRAMEWORK
The relevant legislation in this matter is contained in A New Tax System (Family Assistance) Act 1999 (Act) and A New Tax System (Family Assistance) Administration Act 1999 (Administration Act).
Section 58 of the Act provides, in part:
(1)Subject to sections 60 to 63, an individual’s annual rate of family tax benefit is to be calculated in accordance with the Rate Calculator in Schedule 1.
Clause 10 of Schedule 1 to the Act relevantly provides:
(1)The FTB child rate for an FTB child of an individual is the base FTB child rate (see clause 8) if:
(a)the individual or the individual’s partner is entitled to claim or apply for maintenance for the child; and
(b)the Secretary considers that it is reasonable for the individual or partner to take action to obtain maintenance; and
(c)the individual or partner does not take action that the Secretary considers reasonable to obtain maintenance.
(2) Subclause (1) does not apply to maintenance that is:
(a)a liability under an administrative assessment (within the meaning of the Child Support (Assessment) Act 1989); and
(b)not an enforceable maintenance liability (within the meaning of the Child Support (Registration and Collection) Act 1988).
Section 95 of the Administration Act provides in part:
(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.
…
(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
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
…
Section 97 of the Administration Act provides, in part, as follows:
(1)The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.
(2) The Secretary must waive the administrative error proportion of a debt if:
(a)the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and
(b) the person would suffer severe financial hardship if it were not waived.
…
Section 101 of the Administration Act provides:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of the family assistance law; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
ISSUES
The issues before the Tribunal are:
·Whether the applicant was overpaid FTB;
·Whether any overpayments were a debt to the Commonwealth; and, if so
·Whether the debt should be recovered from the applicant.
EVIDENCE
The written evidence in front of the Tribunal consisted of:
(a)Section 37 Documents provided by the respondent; and
(b)Written submissions provided by the respondent
The Tribunal heard oral submissions on behalf of both the parties.
APPLICANT
The applicant gave evidence before this Tribunal stating that during the relevant periods the applicant was under heavy stress.
The applicant gave evidence that her former partner and herself were under extreme financial pressure following the collapse of her former partner’s auto-mechanic business in late 2010. The applicant gave evidence that the family home was lost in September 2010 as a result of these financial troubles. The applicant’s former partner was not employed during the period of 1 July 2011 to October 2012. The applicant’s former partner has relied wholly on Centrelink payments since the business collapsed.
The applicant gave evidence that during 2012, when her daughter was in year 11, the whole family was under a great deal of stress. This lead to her daughter failing her studies in year 11.
The applicant’s father was ill during the relevant periods.
The applicant sought medical assistance for her stress; she was prescribed with sleeping tablets to help her sleep. These tablets were prescribed in around March 2011 and the applicant took them for a few months. The applicant gave evidence that no other members of the family were seeking medical assistance at that time.
The applicant and her former partner have a debt owed to the bank as a result of the foreclosure of their home mortgage; this debt is not being repaid and totals around $47,000. The applicant also owes a personal debt of around $5,000.
In cross examination, the applicant stated that during the relevant periods she would not open any letters from Centrelink but did state that she had received numerous letters from Centrelink at that time.
RESPONDENT
The respondent contended that the applicant failed to contact CSA and obtain a fresh child support assessment following the breakdown of her relationship with her former partner. The respondent contended that the applicant was aware of her obligation to obtain a fresh child support assessment and to notify Centrelink, the applicant had spoken to Centrelink regarding contacting CSA via telephone on 27 July 2011. The applicant was sent notices on 27 July 2011, 29 July 2011, 9 August 2011, 8 February 2012, 11 July 2012 and 26 July 2012 referring her to her ‘current’ child support assessment notices. The respondent contended that the applicant was aware of her obligation to contact CSA and obtain a fresh child support assessment.
The respondent contended that during the relevant periods the applicant should have been paid the base rate of FTB, not the higher rate at which she was being paid. This resulted in a debt being owed to the Commonwealth.
The respondent contended that the applicant is able to repay the debt through fortnightly deductions from her FTB; as such it is not appropriate to write off the debt through the operation of s 95 of the Administration Act.
The respondent contended that the debt cannot be solely due to an administrative error. The respondent accepts that a lack of communication between CSA and Centrelink was a cause of the debt, but not the sole cause. The respondent contended that the applicant failing to obtain a fresh child support assessment, as she was aware she needed to do, contributed to the debt. Section 97 of the Administration Act could hence not be satisfied.
The respondent contended that the applicant knowingly failed to contact CSA and obtain a fresh child support assessment and therefore knowingly failed to comply with a provision of the family assistance legislation. The respondent further contended that the applicant’s circumstances were not such to distinguish the applicant’s case from the usual case, such that her situation was no longer ordinary. Section 101 of the Administration Act could hence not be satisfied.
ANALYSIS
The Tribunal finds that the applicant failed to take reasonable maintenance action, as such during the relevant periods the applicant should have been paid FTB at the base rate rather than the higher rate at which she was being paid. The Tribunal finds that the applicant was overpaid FTB and owes a debt to the Commonwealth equal to $8,688.78 for Period One and $3,776.94 for Period Two. This does not however conclude the matter.
The Tribunal finds that the applicant was aware she was required to contact the CSA and obtain a child support assessment. The applicant stated that she did not do so because of the circumstances outlined above. In this respect the Tribunal notes the several letters sent to the applicant that stated the need to notify Centrelink of any changes in her circumstances, as well as her phone conversation with a Centrelink officer in which she stated she would contact the CSA.
The Tribunal finds that the debt may not be written off under s 95 of the Administration Act. The Tribunal finds that the applicant has the capacity to repay the debts by small instalments as she is currently doing. The Tribunal finds that subsections 95(a), (c) and (d) do not apply to the debts.
In the circumstances, the Tribunal cannot find that the debt was due solely to an administrative error made by the Commonwealth. The applicant failing to obtain a fresh child support assessment contributed to the debt. The requirements of s 97 are not satisfied.
That leaves me to consider whether the debt may be waived due to special circumstances through the operation of s 101 of the Administration Act.
Significantly in this matter, to satisfy s 101(1) the applicant must have not have ‘knowingly’ made a false statement or false representation or failed or omitted to comply with a provision of the family assistance law. In this regard, the respondent referred the Tribunal to several authorities on the meaning of ‘knowingly’. At [48]-[49] in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 Deputy President Forgie stated:
[48] There is nothing in s 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 or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be 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 statement or the act or omission.
[49] In this case, the emphasis of Mr and Mrs Callaghan's evidence was more upon their belief that the one department paid them than upon their state of mind in complying with their obligations under the Act. Mr Callaghan has acknowledged that he had received notices under s 727 of the Act and that he had read at least one of them. I am satisfied both on the material in the T documents and on his oral evidence that he received more than one of them and that he read the first one. On the basis of the notices themselves I am satisfied that they clearly set out his obligation to advise the department should his income, or that of Mrs Callaghan, change. I am also satisfied from the notice that it quite clearly stated that income included Austudy benefits. Taking into account Mr Callaghan's knowledge of the notice and of his having read at least one of them, I find that he knew that he had an obligation to advise of a change in Mrs Callaghan's income. Therefore, when he failed to advise of the change he knowingly omitted to comply with a provision of the Act.
Further, in Re Anderson and Secretary, Department of Families and Community Services (2002) 69 ALD 484 at [27], Member Cowdroy stated:
[27] Following the RCA Corporation, above, case, it is open to the tribunal to infer that the applicant has actual knowledge of his obligations under the Act where there are opportunities for that knowledge to be gained and where there are no obstacles to him acquiring that knowledge. In this case, the applicant has had the opportunity to gain an understanding of his obligations under the Act through the provision of advice letters to him from the respondent. The tribunal is not aware of any obstacles that would prevent Mr Anderson from understanding those letters and gaining that knowledge. Mr Anderson has stated that he was aware that he should inform Centrelink if he started work. Clearly, he performed some work and earned a small profit from the business in some years,
The respondent also referred to another decision of Deputy President Forgie, Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114 at [74], where the Deputy President stated:
[74] In Re Secretary, Department of Family and Community Services and Jonauskas, I reviewed previous cases that had considered the meaning of the word “knowingly” as used in s 1237AAD(a) and the way in which the SS Act has consciously distinguished amongst three meanings of the word. I concluded that “knowingly” means actually knowing as opposed to the other two of the three degrees of knowledge. The first of the other two sorts is the sort of knowledge that comes from deliberately refraining to make enquiries because the enquiries will lead to answers that are not desired by the enquirer. The second is constructive knowledge in the sense that the person ought to have known the specific information or had the means of knowledge.
[75] On the findings that I have already made, I am satisfied that Mr Davy satisfies the requirements of s 1237AAD in that the debt did not result wholly or partly from his knowingly making a false statement or representation or failing or omitting to comply with a provision of the Act. He might have received one or two of the letters after his father was imprisoned but I accept that he took the mail to his father to be dealt with. His father was the person who controlled his affairs. He did not see it as his mail and he did not have actual knowledge of the contents of the letters and the obligations imposed upon him in the notices given under s 68.
The respondent also referred the Tribunal to several authorities on the meaning of ‘special circumstances’. Importantly, in Dranichnikov v Centrelink [2003] FCAFC 133 Hill J stated at [66]:
…what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary…
The Tribunal accepts the applicant’s evidence that during the relevant periods she did not open her mail and did not read the letters that Centrelink had sent her. However, when considering that the applicant had applied for a fresh child support assessment when she separated from her partner in 2004, her phone conversation with a Centrelink officer on 27 July 2011 and the numerous notices sent to the applicant the Tribunal finds that the applicant had actual knowledge of her obligation to obtain a fresh child support assessment and notify Centrelink. The applicant cannot satisfy the requirements of s 101 of the Administration Act.
The Tribunal finds that the debt owed by the applicant cannot be written off or waived.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 43 (forty three) paragraphs are a true copy of the reasons for the decision herein of Member K Hogan ....(Sgd) T Freeman...............
Associate
Dated 16 May 2014
Date of hearing 17 January 2014 Applicant In person Representative for the Respondent Ms S Vahala Solicitors for the Respondent Australian Government Solicitors
Key Legal Topics
Areas of Law
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Administrative Law
Legal Concepts
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Appeal
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Jurisdiction
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Administrative Review
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Overpayment Recovery
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Child Support Assessment
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Evidence
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