McGoldrick and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs - [2010] AATA 142

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 142

ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2009/4213

GENERAL ADMINISTRATIVE DIVISION )
ReMargaret McGOLDRICK

Applicant

AndSecretary, Department of Families, Housing, Community Services and Indigenous Affairs

Respondent

DECISION

TribunalMr RP Handley, Deputy President
Date26 February 2010
PlaceSydney
DecisionThe decision under review is varied by writing off recovery of the outstanding debt as at the date of this decision for a period of 12 months with the direction that on the expiry of that period, a further review of the recovery of the debt be undertaken.
....................[sgd].......................
Mr RP Handley
Deputy President

CATCHWORDS

SOCIAL SECURITY – overpayment of Family Tax Benefit – shared care arrangement – administrative error – special circumstances – decision under review varied

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RELEVANT ACTS

A New Tax System (Family Assistance) Act 1991: ss 22, 22(6A)

A New Tax System (Family Assistance) (Administration) Act 1999: ss 95, 101

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CITATIONS

Wade v Secretary, Department of Family and Community Services [2004] FCA 1660(2004) 139 FCR 285; (2004) 87 ALD 26; [2004] FCA 1660

Beadle v Director-General of Social Security (1985) 7 ALD 670; (1985) 60 ALR 225(1985) 60 ALR 225; (1985) 7 ALD 670

Re Beadle and Director-General of Social Security (1984) 1 AAR 362; (1984) 6 ALD 1(1984) 6 ALD 1; (1984) 1 AAR 362

Groth v Secretary, Department of Social Security (1995) 40 ALD 541(1995) 40 ALD 541; (1996) 2 SSR 10a

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OTHER AUTHORITIES

Family Assistance Guide

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REASONS FOR DECISION

26 February 2010

Mr RP Handley, Deputy President

Margaret McGoldrick has applied to the Tribunal for the review of a decision of the Social Security Appeals Tribunal (SSAT) requiring her to repay the balance of a Family Tax Benefit (FTB) debt of $4,564.70 (as at 17 July 2009). The issues for the Tribunal are, first, whether Ms McGoldrick received an overpayment of FTB and, second, if she did, whether and if so how much of the resulting debt she should be required to repay.

Background

In 1992, Ms McGoldrick gave birth to her and her then-husband Kevin McGoldrick’s first child James. Their second child died of congenital heart disease aged six months, and Ms and Mr McGoldrick separated and were subsequently divorced. From when James was aged three, Ms McGoldrick was his primary carer. Ms McGoldrick states that as James grew older and required less constant supervision, Mr McGoldrick requested greater access. Nevertheless, Ms McGoldrick states that she remained James’ primary carer, attending to his medical, education and everyday needs.
Ms McGoldrick received FTB at the full rate for James during the 2005/2006, 2006/2007 and 2007/2008 financial years. At a Centrelink interview on 28 June 2006, Ms McGoldrick told the officer interviewing her that James stayed with his father on weekends and some school holidays. Centrelink subsequently sent her a questionnaire to complete requesting information about the shared care. Centrelink has no record of receiving a completed questionnaire from Ms McGoldrick and there was apparently no follow up by Centrelink. On 13 April 2007, Ms McGoldrick signed a customer declaration form stating that her percentage of care of James was 100%.
In July 2008, Mr McGoldrick claimed FTB backdated to July 2005 for his share of caring for James. Ms McGoldrick confirmed that the care arrangement with Mr Goldrick was that James would spend every Wednesday night with his father and three nights every second weekend, a total of five nights per fortnight, plus half of the school holidays. Centrelink calculated that James spent 142 nights a year, or 39 percent of the time, with his father and 61 percent of the time with Ms McGoldrick.
On 30 July 2008, Centrelink decided that Ms McGoldrick had been overpaid FTB for the period 1 July 2005 to 30 June 2008 totalling $9,101.74 in respect of the 39 percent of the time James had spent with his father. Ms McGoldrick requested a review of this decision. On 3 October 2008, an authorised review officer decided to vary the decision under review by waiving that part of the debt in respect of the period 28 June 2006 to 13 April 2007 amounting to $2,433.10 on the ground that this was due to administrative error and Ms McGoldrick received the payments in good faith. However, that administrative error ended on 13 April 2007 when Ms McGoldrick signed a customer declaration form stating that her percentage of care of James was 100 percent. The review officer said that there was no evidence that Ms McGoldrick advised Centrelink of the sharing of care before June 2006.
Ms McGoldrick sought a review of this decision by the SSAT which, on 17 July 2009, set aside the decision and substituted a new decision that:
§Ms McGoldrick had recoverable FTB debts of $2,836.89, $3,202.50 and $3,062.35;
§The portion of the debt for the period 28 June 2006 to 13 April 2007 of $2,433.10 should be waived due to administrative error; and
§The balance of the debt as at the date of the hearing, $6,086.26, be reduced by 25 percent, $1,521.56, due to Ms McGoldrick’s special circumstances.
§The balance of the debt now owing is $4,564.70.
On 4 September 2009, Ms Goldrick lodged an application for a further review by the Administrative Appeals Tribunal (AAT).

consideration

The relevant legislation in respect of FTB is the A New Tax System (Family Assistance) Act 1991 (the FA Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (the FA Administration Act).
There is no dispute that James is a FTB child as defined in s 22 of the FA Act. Section 22(6A) of the FA Act provides that a child can be a FTB child of more than one individual and for the Secretary to determine the percentage of the relevant period during which the child was or will be in the care of each individual. Where the Secretary determines the percentage of the period during which the child was in the care of an individual, that percentage is used in calculating the FTB payable to that individual.
Centrelink’s ‘Family Assistance Guide’ sets out Centrelink policy for determining the percentage of shared care. This percentage is based on the established pattern of care, in which the time a person spends actually caring for the FTB child is the primary consideration: Wade v Secretary, Department of Family and Community Services [2004] FCA 1660, at [30] to [31].
Although Ms McGoldrick has confirmed that James spends five nights a fortnight with his father and the other nights in her care, she states that she is James’ primary carer, taking responsibility for all important decisions made for James’ welfare, including health, education, clothing and other everyday needs. There is no evidence in the documents provided by Centrelink as to the part played by Mr McGoldrick in such decision-making, and it would appear this is because there was no disagreement about the time James spent with each parent which was used as the basis for calculating the FTB for which each parent was eligible.
In my view, with Ms McGoldrick’s confirmation of the number of nights James spent in the care of his father, it was reasonable for Centrelink to assess Ms McGoldrick’s eligibility for FTB by reference to James spending five nights in every 14 and half the school holidays with his father, totalling 142 nights per annum. This equates to 39 percent of James’ time being spent in the care of his father and 61 percent spent in Ms McGoldrick’s care.
Thus, Centrelink’s assessment of the FTB overpayment received by Ms McGoldrick in the years 2005/2006, 2006/2007 and 2007/2008 appears to be correct. Section 71 of the FA Administration Act provides that where a person receives an overpayment of FTB, that amount is a debt due to the Commonwealth.
Centrelink calculated an overpayment of $9,101.74 for the period 1 July 2005 to 30 June 2008. However, the authorised review officer acknowledged that the overpayment in the period 28 June 2006 to 13 April 2007 was solely caused by an administrative error since Ms McGoldrick had informed a Centrelink officer of the shared care arrangements on 28 June 2006 and Centrelink failed to act on this information, thus contributing to the debt. The review officer therefore waived the part of the debt attributable to that period, amounting to $2,433.10. Section 97(1) of the FA Administration Act provides relevantly that the Secretary must waive the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the person received the overpayment in good faith and the person would suffer severe financial hardship if the debt were not waived.
Ms McGoldrick stated that she acted honestly throughout and had no intention of misleading Centrelink. This is not in dispute. There is no question as to Ms McGoldrick’s honesty and the Tribunal accepts that she misunderstood the basis on which FTB was calculated and was overwhelmed by the volume of paperwork generated by Centrelink which, as a sole parent claiming benefits, she was expected to complete. Thus, when she signed the Centrelink questionnaire on 13 April 2007 stating that her percentage of care of James was 100 percent, she did not understand what was meant by the percentage of care, believing this to refer to the degree of care attributable to her.
I note that the questionnaire appears to have been completed by a Centrelink officer on the basis of information supplied by Ms McGoldrick, and that the officer, having completed answers to all the questions posed, then asked Ms McGoldrick to sign the form. As Ms McGoldrick pointed out, there are several other errors in stated answers to questions: her fortnightly gross earnings are stated as weekly earnings, and the balance in Ms McGoldrick’s savings account is stated as $171,000 rather than as $171.
Nevertheless, while Ms McGoldrick may have misunderstood the question as to the percentage of care in relation to James, it was this error that appears to have caused FTB payments to continue to be made to her at the 100 percent rate for the period after 13 April 2007. In respect of the period before 28 June 2006, there is no Centrelink record of Ms McGoldrick informing Centrelink of the shared care arrangements for James in respect of the period 1 July 2005 to 27 June 2006.
Thus, I am satisfied that the review officer’s decision to only waive that part of the debt in respect of the period 28 June 2006 to 13 April 2007 on the ground of administrative error was correct. However, there are other circumstances in which Centrelink may decide not to recover a debt. The SSAT, exercising the Secretary’s powers in s 101 of the FA Administration Act, determined to waive 25 percent of the debt remaining at the time of its decision – namely $1,521.56 – because of the special circumstances of her case.
Section 101 of the FA Administration Act states:
101.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.

I am satisfied that Ms McGoldrick did not make a false statement or a false representation and there is no evidence that she failed or omitted to comply with a provision of the family assistance law. Like the SSAT, I am also satisfied that it was appropriate to waive rather than to write off a part of the debt. The SSAT found Ms McGoldrick’s circumstances were sufficiently unusual or different to be considered special: her difficult financial situation, her being unable to find full-time employment, the need to urgently replace a hot water system, and her suffering from epilepsy, including recent seizures causing loss of consciousness with her being unable to afford her medication or an appointment with her treating neurologist.
Ms McGoldrick told me that the majority of her seizures occur at home but occasionally at work. While generally she uses public transport because she is unable to drive, if she has a seizure at work, someone usually insists on taking her home. In particular, I note Ms McGoldrick’s evidence that she has cancelled medical appointments with her treating specialists and not purchased medication for treatment of her epilepsy when she is unable to afford this. The SSAT considered whether Ms McGoldrick’s circumstances were sufficiently unusual to amount to ‘special circumstances’ as discussed in cases such as Beadle v Director-General of Social Security (1985) 7 ALD 670; (1985) 60 ALR 225 (Beadle). In that case, the Full Federal Court did not think it possible to lay down precise limits or precise rules; it would depend on the circumstances of the particular case as to whether they constituted special circumstances. Moreover, even though the phrase “special circumstances” lacks precision, it “is sufficiently understood in our view not to require judicial gloss” (at 228).
In Beadle, the Court affirmed the decision under review in that case, Re Beadle and Director-General of Social Security (1984) 1 AAR 362; (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase “special circumstances” is “incapable of precise and exhaustive definition”, said, nevertheless, that the circumstances “must have a particular quality of unusualness that permits them to be described as special” (at 3).
In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:
would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case ... it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

In its submissions to the Tribunal in the present proceedings, Centrelink did not dispute the SSAT’s exercise of the s 101 discretion to waive 25 percent of the remaining debt at the time of its decision, but contended that Ms McGoldrick’s circumstances did not warrant any further exercise of the discretion. In my view, the SSAT had reasonable grounds for exercising its discretion in the way it did, but I agree with Centrelink’s submission that Ms McGoldrick’s circumstances do not justify further waiver.
The other relevant power in relation to whether a debt should be recovered is write-off. Section 95(2) of the FA Administration Act empowers the Secretary to write off a debt for a stated period or otherwise. Relevantly, a debt may be written off if the debtor has no capacity to repay the debt. To write off a debt is to postpone its recovery either for a stated period or otherwise. Then, for example, if a person’s financial situation improves and the person has a capacity to repay the debt, even if only by way of instalments, recovery of the debt may be resumed.
I note that Ms McGoldrick is presently repaying the debt at the rate of $30 per fortnight. She told me that maintaining this repayment is causing her significant financial problems such that she has recently had to cancel an appointment with a gynaecologist and with the neurologist who oversees the treatment of her epilepsy because she cannot afford their fees ($180 in the case of the gynaecologist). She is also not always able to afford the medication for her epilepsy, having lost the benefit of the health care card and other “pensioner rebates” when James turned 16 and she was no longer receiving a part parenting payment.
Ms McGoldrick said she works three days a week on a permanent part-time basis, usually at Port Kembla Hospital. She is unable to drive because of her epilepsy, restricting the full-time employment opportunities open to her because many positions require a driving licence. She owns her own home but is repaying a mortgage of about $100,000 and also has a personal loan with an amount outstanding of about $3,500. She has no credit card or other debts.
When asked about the level of her repayments, Ms McGoldrick was unaware that she could ask for a reduction in the amount of her regular repayments on the ground of the financial situation currently affecting her. Where a person has a reduced capacity to repay a debt this may be an appropriate outcome. However, in Ms McGoldrick’s case, I am satisfied that she currently lacks any real capacity to repay the debt and, it appears, she is compromising her health in order to comply with her obligation to repay the debt to Centrelink.
In my view, this is an appropriate case in which to exercise the power to write off – to postpone the recovery of – Ms McGoldrick’s remaining debt until her financial situation improves. As noted, she is seeking full-time employment to boost her income. She also said that James, now aged 17, has left school and is undertaking a 12-month pre-apprenticeship auto-electrician course at TAFE, and commencing part-time employment. Thus, in 12 months’ time Ms McGoldrick’s financial situation may have improved and she may have a capacity to repay the debt by modest instalments. I am therefore satisfied that it is appropriate to write off the recovery of Ms McGoldrick’s debt for a period of 12 months from the date of this decision, with her financial situation to be reviewed at the end of that period.
In conclusion, whilst I agree with the SSAT’s decision dated 17 July 2009, I have decided, in addition, that the balance of Ms McGoldrick’s debt as at the date of the decision in these proceedings should be written off for a period of 12 months from the date of this decision, with further recovery of the outstanding debt to be reviewed by Centrelink at that time.

Decision

The decision under review is therefore varied by writing off recovery of the outstanding debt as at the date of this decision for a period of 12 months, with the direction that at the expiry of that period, a further review of the recovery of the debt be undertaken.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RP Handley, Deputy President.

Signed: .........[sgd].................................................................
Associate

Date of Hearing:  22 February 2010
Date of Decision:  26 February 2010
Applicant representative:                   Self-represented
Respondent representative:              Mr K Bullock, Centrelink Legal Services