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

[2015] AATA 875

McRoberts and Secretary, Department of Social Services (Social services second review) [2015] AATA 875 (23 October 2015)

Division	GENERAL DIVISION
File Number	2015/2562
Re	Sarah McRoberts
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Egon Fice, Senior Member
Date	23 October 2015
Date of written reasons	13 November 2015
Place	Melbourne

The Tribunal sets aside the reviewable decision and substitutes a decision that Family Tax Benefit arrears are to be paid to the Applicant from 19 July 2007. The date of effect of the review decision is 19 July 2007.

...........................[sgd].............................................

Egon Fice, Senior Member

Catchwords

SOCIAL SECURITY – pensions, payments and allowances – family payments – family tax benefit – entitlement to payment incorrectly calculated by Centrelink due to clerical error – whether arrears payable – special circumstances – decision under review set aside

Legislation

A New Tax System (Family Assistance) Act 1999 (Cth) sch 1

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 108 – 109A,
109D – 109E

Social Security Act 1991 (Cth) ss 1237A, 1237AAD

Cases

Beadle v Director-General of Social Security (1985) 60 ALR 225

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Secretary, Department of Social Security v Hales (1998) 82 FCR 154

REASONS FOR DECISION

Egon Fice, Senior Member

13 November 2015

1. Mrs Sarah McRoberts gave birth to twin daughters on 19 April 2007.  On 6 June 2007

   
   

   Mrs McRoberts lodged an Online Claim for the Family Tax Benefit (FTB).  On that claim form she listed her partner as Mr Christopher William McRoberts.  In answer to questions whether she was the natural parent of the children and whether her partner was the natural parent of the children concerned, she answered: Yes.

2. Between 19 July 2007 and 6 August 2014 Mrs McRoberts received instalment payments of FTB Part A.  Her payments were made at the base rate.

3. In a letter dated 5 July 2007 Centrelink informed Mrs McRoberts that:

   I am writing to you about your Family Tax Benefit Part A payments.  Our records show that you have not yet taken action to receive child support for your child/ren.

   To get more than the base rate of Family Tax Benefit Part A, you need to make an application for child support for your child/ren.  This must be done by

   
   

   19^th July 2007. 

4. Subsequent letters from Centrelink to Mrs McRoberts between July 2007 and June 2014 all contained statements similar to the following:

   Our records show that you have not taken reasonable steps to obtain child support for [the twins], and as a result this may be affecting the amount of Family Tax Benefit Part A you are being paid. 

   What you need to do

   To receive more than the minimum rate of Family Tax Benefit Part A for a child from a previous relationship, you will need to take reasonable steps to obtain child support by applying for a child support assessment with the Child Support Agency.…

5. The reason why Centrelink’s letters contained statements about obtaining child support was that Centrelink had made an error when entering Mrs McRoberts’ details of her claim onto its data system by recording that the two children were the result of a previous relationship.  Centrelink has admitted making that error.  Centrelink’s records confirmed that Mrs McRoberts was a member of a couple with Mr McRoberts from

   
   

   21 February 2004.  Her children were born on 19 April 2007.

6. Mrs McRoberts only became aware of the error made by Centrelink when she spoke to a Centrelink officer about her FTB on 18 August 2014. Apparently the Centrelink officer mentioned that she had two children from another partner, which was plainly incorrect. When Mrs McRoberts became aware that Centrelink was under the erroneous view that her children were from a former relationship, she applied for the payment of her correct amount of FTB Part A including all arrears dating back to July 2007. However, Centrelink decided that Mrs McRoberts was only entitled to FTB arrears from 1 July 2013 because, absent special circumstances, s. 109D of A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act) imposed a time limit of 52 weeks for review of a decision.

7. Mrs McRoberts sought review of that decision by an Authorised Review Officer (ARO).  In a letter dated 6 February 2015 the ARO informed Mrs McRoberts that the 52 week time limit applied to her and therefore arrears of FTB were only payable to her from

   
   

   1 July 2013.

8. Mrs McRoberts then sought review of the ARO’s decision by the then Social Security Appeals Tribunal (SSAT), now a division of this Tribunal.  On 24 April 2015 the SSAT affirmed the ARO’s decision.  On 26 May 2015 Mrs McRoberts lodged an application for review of the SSAT decision by this Tribunal (now referred to as the Second Review by the Tribunal).

9. The only issue I am required to determine is whether the extension of time in special circumstances provision set out in ss. 109D and 109E of the Administration Act should be applied to Mrs McRoberts.

   TIME LIMITS FOR REVIEW

10. FTB is usually paid to a claimant by instalments in the course of a financial year and then reconciled after 30 June of that year. A person’s rate of FTB is worked out using the Rate Calculator which is located in Schedule 1 of A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act). Mrs McRoberts only became aware that her FTB Part A was being paid at the incorrect rate as a result of discussions with a Centrelink officer on 18 August 2014. According to the ARO’s decision, Centrelink’s record was updated (this is in fact incorrect – it was corrected) and her FTB entitlement was reconciled with arrears being paid to her from 1 July 2013 to 6 August 2014.  She was dissatisfied with that decision and sought review by an ARO.

11. Subdivision B of Part 5, Division 1 of the Administration Act, deals with reviews initiated by an applicant. Subject to a number of exceptions set out in s. 108 (2), which do not apply in this case, subsection (1) provides:

    (1)  A decision of any officer under the family assistance law must be reviewed on application under section 109A unless an exception set out in subsection (2) applies to the decision.

12. Relevantly, s. 109A of the Administration Act provides:

    (1)  A person affected by a decision (the original decision):

    (a)that is not a care percentage decision; and

    (b)that, under section 108, must be reviewed under this section;

    may apply to the Secretary for review of the original decision.

13. Section 109D provides that time limits apply to review of certain decisions. Ordinarily, an application for review under s. 109A must be made no later than 52 weeks after the applicant is notified of the decision concerned (s. 109D(1)). There was no dispute that Mrs McRoberts made her application for review of the original decision (made on

    
    

    19 July 2007), outside the 52 week limit. However, the Secretary (and for the purposes of review, the Tribunal) may extend the time limit for the making of an application for review if satisfied that there are special circumstances which prevented the applicant from making an application under s. 109A within the 52 week limit.

14. The significant limitation on the payment of arrears as far as Mrs McRoberts is concerned is that set out in s. 109E of the Administration Act. Relevantly, it provides:

    (1)  If:

    (a)a person applies under section 109A for review of a decision (the original decision) relating to the payment to the person of family tax benefit by instalment; and

    (b)the application is made more than 52 weeks after the person was given notice of the original decision; and

    (c)the Secretary or an authorised review officer decides, under subsection 109A (2), to vary the original decision or to set aside the original decision and substitute a new decision; and

    (d)the decision of the Secretary or authorised review officer (the review decision) will have the effect of creating or increasing an entitlement to be paid family tax benefit by instalment;

    the date of effect of the review decision is:

    (e)unless paragraph (f) applies – the date that would give full effect to the review decision; or

    (f)if the date referred to in paragraph (e) is earlier than the first day of the income year before the income year in which the application was made – that first day.

    (2)  The Secretary may, if he or she is satisfied that there are special circumstances that prevented the applicant from making an application under section 109A for review of the original decision within 52 weeks, determine that subsection (1) applies as if the reference to 52 weeks were a reference to such longer period as the Secretary determines to be appropriate.

15. The effect of s. 109E (1) of the Administration Act on Mrs McRoberts’ claim is that, because she made the application for review more than 52 weeks after the original decision was made, the date of effect of the review decision is the first day of the income year before the income year in which the application was made. Mrs McRoberts sought review on 18 August 2014 which was, in effect, the 2015 income year. The income year before that income year was the 2014 income year. That year commenced on

    
    

    1 July 2013 and that is the date from which the ARO determined arrears were payable.  To extend the arrears date as Mrs McRoberts requested, she must be able to satisfy

    
    

    s. 109E (2), that is, that there were special circumstances which prevented her from making the application within 52 weeks after the original decision.

    SPECIAL CIRCUMSTANCES

16. The Full Court of the Federal Court of Australia (Bowen CJ, Fisher and Lockhart JJ) in Beadle v Director-General of Social Security (1985) 60 ALR 225 (Beadle) dealt with the meaning of the expression special circumstances.  The court said, at 228 (emphasis added):

    The Director-General has power to fix a longer period in special circumstances.  Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate.  For example, where the delay beyond six months was due to the claimant’s being misled by a departmental officer or was due to the negligence of a third party it might be thought the normal six months would be inappropriate; that special circumstances had been shown which warranted a longer period.  More difficult would be questions of ignorance, illiteracy, isolation, illness and the like.  It would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase “special circumstances”, although lacking precision, is sufficiently understood in our view not to require judicial gloss.

17. Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 also dealt with the phrase special circumstances.  Her Honour referred to Beadle and said, at 545 (emphasis added):

    … [a]nd for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case.  That was, I consider, the only enquiry to be undertaken in this 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.

18. French J, as he then was, also dealt with the expression special circumstances in Secretary, Department of Social Security v Hales (1998) 82 FCR 154. This was in the context of applying the debt waiver provisions set out in s. 1237AAD of the Social Security Act 1991 (the Social Security Act). His Honour said, at 162:

    The concept of special circumstances is broad.  A constellation of factors, including financial circumstances, may fall within it.…

    The evident purpose of s. 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt.  It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words.…

19. The Secretary submitted that there was no evidence of special circumstances which prevented Mrs McRoberts from requesting a review of the original decision regarding the FTB rate.  That was because Mrs McRoberts agreed that she had received a number of letters from Centrelink to the effect which I have referred above at [3] and [4].

    
    

    Mr T Noonan, who appeared on behalf of the Secretary, in written submissions, stated that Mrs McRoberts was made aware, in that correspondence, of the fact that her FTB payments were being made at the base rate.  Therefore, she was given sufficient notice of the fact that she was being paid at a lesser rate to that to which she was entitled. 

    
    

    Mr Noonan referred to a number of cases determined by the Federal Court and the Tribunal dealing with whether adequate notice was given to a person receiving social security payments.  The problem with those cases referred to by Mr Noonan is that none of them involved an error made by Centrelink.  Mrs McRoberts’ case is plainly distinguishable from those cases.  Mrs McRoberts was clearly not responsible for the error as the entries in her online claim plainly state that her partner, Mr McRoberts, was the natural parent of both children.

20. Also, respectfully, I do not accept Mr Noonan’s submissions that the letters sent to

    
    

    Mrs McRoberts between 2007 and 2014 provided her with adequate notice, or in fact any notice, that her FTB was being paid at the wrong rate.  The first letter sent by Centrelink, which is dated 14 June 2007, is a standard letter which sets out the amount of the Family Tax Benefit Part A as well as other Maternity Payments to which Mrs McRoberts was entitled.  It gives no indication whatsoever as to the basis on which the amount was calculated.  The next letter, dated 5 July 2007 to which I have referred above, simply states that Mrs McRoberts has not yet taken action to receive child support for her children.  Furthermore, it states that to receive more than the base rate of Family Tax Benefit Part A, she needed to make an application for child support.  As Mrs McRoberts said in her evidence to the SSAT, she did not consider that those statements applied in her circumstances.  In fact, she was correct about that. 

21. Furthermore, Mr McRoberts, who represented his wife at the hearing, submitted that the statements were positively misleading in that they could be understood to be saying that Mrs McRoberts was only entitled to a rate higher than the base rate if she had made an application for child support. Knowing full well that child support did not apply to her because she and her husband remained together, she was not entitled to anything other than the base rate. In my opinion, that submission is compelling. It is of course based on the reasonable premise that Centrelink struck the correct rate to begin with. Given that Mrs McRoberts made it very clear in her claim form that her partner was the father of both children, it is not possible to understand how she could have arrived at the conclusion that Centrelink had not struck the right rate. She was not previously the recipient of FTB and, although the methodology for calculating the correct rate of FTB is set out in Schedule 1 to the Family Assistance Act, the calculation is sufficiently complex to deter any reasonable person. Without going into the overall rate calculation process, the introduction to the calculator provides:

    1 Overall rate calculation process

    (1)  To work out an individual’s annual rate of family tax benefit, add:

    (a)the individual’s Part A rate calculated under Part 2 (clauses 3 to 24S), Part 3 (clauses 25 to 28) or Part 3A (clause 28A); and

    (b)the individual’s Part B rate calculated under Part 4 (clauses 28B to 33).

    (2)  To work out the individual’s Part A rate:

    (a)use Part 2 (clauses 3 to 24S) if the individual has at least one FTB child and:

    (i)  the individual’s adjusted taxable income does not exceed the individual’s higher income free area; or

    (ii) the individual, or the individual’s partner, is receiving a social security pension, a social security benefit, a service pension or income support supplement; and

    (b)use Part 3 (clauses 25 to 28) if the individual has at least one FTB child and:

    (i)  the individual’s adjusted taxable income exceeds the individual’s higher income free area; and

    (ii) neither the individual, nor the individual’s partner, is receiving a social security pension, a social security benefit, a service pension or income support supplement; and

    (c)use Part 3A (clause 28A) if the individual has no FTB children.

    Use Schedule 3 to work out the individual’s adjusted taxable income.  Use clause 2 to work out the individual’s higher income free area.

22. One then has to apply whichever method is applicable following another set of seriously complex steps.  Matters such as an individual’s standard rate under Division 2; the large family supplement if any; a newborn supplement if any; a multiple birth allowance if any; supplement under Division 2A; an energy supplement; and rent assistance if any are considered.  No doubt Centrelink has a computer program to assist in calculating the correct rate for various applicants.  Without such assistance, this would be an extraordinary task.

23. Centrelink accepts that it made an error and that it did not tell Mrs McRoberts that such an error had been made until August 2014.

24. Furthermore, subsequent letters reinforced Mrs McRoberts’ view of her entitlement.  They stated that in order to get more than the minimum rate of Family Tax Benefit Part A for a child from a previous relationship, she must apply for child support from the child’s other parent.  In other words, unless she fell within the category described, she was only entitled to the minimum rate.

25. Plainly, not to allow Mrs McRoberts to recover FTB to which she was lawfully entitled from 2007 would cause a grave injustice.  The injustice is amplified by the fact that the cause of the situation in which she finds herself was Centrelink’s error.

26. It would be regarded as rather strange that if Mrs McRoberts had been overpaid as a consequence of Centrelink’s sole error, the Secretary would have had to waive the right to recover the proportion of the debt attributable solely to administrative error made by Centrelink (s. 1237A of the Social Security Act). However, in circumstances where Mrs McRoberts was underpaid, Centrelink could avoid making payment in arrears despite the fact that it was also due solely to administrative error.

27. In my opinion, this is a clear case where the special circumstances provision in s. 109D and 109E should be applied. To do otherwise would cause a grave injustice to Mrs McRoberts. Those special circumstances prevented Mrs McRoberts from making an application under s. 109A of the Administration Act for review of the original decision within 52 weeks. I should also add that she was prevented, not in a physical sense, but rather because she did not have any practical means of being alerted to the error made by Centrelink (unless Centrelink notified her of the error which it did not do) given that she had provided Centrelink with the correct information on her application. It was not unreasonable for Mrs McRoberts to assume that the correct information had been used in calculating her entitlement to FTB. Furthermore, not only did Mrs McRoberts not have any reason to attempt to calculate the rate for herself, even if she had attempted to do so, I seriously doubt that she could have succeeded without the aid of Centrelink’s computer program.

1. In light of the special circumstances to which I have referred above, I am also the opinion that the date of effect of the review decision should, in accordance with s. 109E(2), be extended so as to commence on the date when Mrs McRoberts received her first payment in July 2007.

   CONCLUSION

2. I have found that s. 109D(2) and s. 109E(2) should be applied to Mrs McRoberts’ application for review of the original decision made by Centrelink regarding the rate of FTB to which she was entitled. The longer period which should be applied in her case should extend to begin from 19 July 2007.

3. I find that the decision made by the former SSAT on 24 April 2015 was not the preferable decision.  I set aside that decision and in substitution decide that Mrs McRoberts should have a longer period than 52 weeks from the original decision, commencing on

   
   

   19 July 2007 and concluding on 18 August 2014 when she discovered Centrelink’s error and sought review, for the purpose of making an application under s. 109A of the Administration Act. Furthermore, the date of effect of the review decision should be

   
   

   19 July 2007.

I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member

............................[sgd]............................................

Associate

Dated 13 November 2015

Date of hearing	23 October 2015
Advocate for the Applicant	Mr C McRoberts
Advocate for the Respondent	Mr T Noonan
Solicitors for the Respondent	Department of Human Services