Monfared and Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2000] AATA 686

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1998/1764

General Administrative DIVISION )

Re Mahvash MONFARED
Applicant

And SECRETARY, DEPARTMENT of FAMILY and COMMUNITY SERVICES
Respondent

DECISION

Tribunal Mrs M T Lewis, Senior Member

Date 10 August 2000
PlaceSydney

Decision The Tribunal affirms the decision under review.

..............................................
M T Lewis
Senior Member
CATCHWORDS
SOCIAL SECURITY – Family Payment – overpayment – whether recoverable debt - Applicant failed to notify change in circumstances – Applicant's combined income exceeded relevant income ceiling – whether administrative error - whether debt should be waived due to special circumstances

Administrative Appeals Act 1975 ss 34B, 37

Data–Matching Program (Assistance and Tax) Act 1990 s11

Social Security Act 1991 ss 23, 41, 872,873, 838, 841,1069-H2 – H27, 1223(1), 1224(1) and 1237AAD

Re Secretary, Department of Social Security and Prior AAT 9384, 25 March 1994.
Re Secretary, Department of Social Security and Giles AAT 9401, 5 April 1994.
Re Secretary, Department of Social Security and Marinozzi AAT 11644, 26 February 1997.
Re Secretary, Department of Social Security and Grozdanovska AAT 11536, 15 January 1997.
Re Secretary, Department of Social Security and Boyd (1998) 50 ALD 219

REASONS FOR DECISION

10 August 2000 Mrs M T Lewis
Senior Member

This is an application for review lodged by Mahvash Monfared ("the Applicant") of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 9 November 1998 that determined that the Applicant had a recoverable debt in respect of Family Payment due to the Commonwealth in the amount of $982.80. The SSAT varied a decision of a delegate of the Secretary, Department of Social Security as it then was ("the Respondent") dated 11 September 1997, to raise and recover a debt of Family Payment in the amount of $842.40. An Authorised Review Officer ("ARO") subsequently affirmed the primary decision on 6 February 1998. The Tribunal notes that the title "Family Payments" has since been changed in the legislation to "Family Allowance", which indeed was a reversion to a previous title. As the decision under review referred to the title "Family Payment" the Tribunal has maintained the use of this nomenclature in these reasons for decision.
The Tribunal was advised by Mr Monfared, the Applicant's husband, on 14 July 1999 that the Applicant was overseas. The parties agreed, pursuant to s34B of the Administrative Appeals Tribunal Act 1975 ("the AAT Act"), to the Tribunal proceeding to consider the documentary evidence before it and the submissions of the Respondent, and to make its decision without conducting a hearing. Although the Tribunal attempted subsequently to list the matter for a face to face hearing because of a need to obtain further evidence from the Applicant, the Applicant insisted that the Tribunal proceed to make its decision on the documents before it.
The Tribunal had before it documents lodged pursuant to s37 of the AAT Act. The Respondent tendered a computer generated copy of a letter to the Applicant dated 11 June 1996 (exhibit 1), and a questionnaire completed by the Australian Tax Office dated 21 March 2000 (exhibit 2). In addition, at the request of the Tribunal, the Respondent tendered a computer record of a letter sent to the Applicant dated 18 July 1997, and a computer print-out of a display noting telephone communication with Mr Monfared on 28 August 1997 (exhibit 3). The Tribunal accepted as documentary evidence for the Applicant a fax from Shah Monfared to the Tribunal dated 14 July 1999 (exhibit A).
background
The Applicant first claimed Family Allowance in 1989. She has three children; Arash born on 23 March 1981, Arshia born on 10 June 1983 and Arsham born on 14 March 1989. The Applicant departed from Australia on 25 October 1989 and returned on 30 March 1993. She then departed again on 23 April 1993 and returned on 28 May 1994. Her children were overseas continuously from 25 October 1989 until 28 May 1994. The Respondent apparently was not notified of the family's departure and consequently a debt was incurred and an overpayment was raised in October 1995 (T18). That overpayment is not before the Tribunal but it explains the reason for withholdings during the period relevant to this present application.
In a letter from the Respondent dated 11 June 1996 (exhibit 1) the Applicant was advised that she was entitled to receive Family Payment of $68.10 per fortnight on and from 20 June 1996 as Arshia was then aged 13 years. This represented an increase in the rate of Family Payment. Withholdings of $64.65 were already in place in respect of a previous overpayment, and so the actual payment to the Applicant was $3.45 per fortnight. That letter noted that the rate was calculated on the combined income of $60,000. The Applicant was also advised in the letter that –
Under Section 872, 873 and 873(a) of the Social Security Act 1991 (the Act), you must tell us within 14 days if any of these things happen or are likely to happen. ….
You must also tell us if:
… you or your partner … are self employed and your combined income will be more than $66,000.00 in the 1995/96 or 1996/97 financial year;
…. Your marital status changes, eg. you … separate …
The letter dated 11 June 1996 (exhibit 1) was not before the SSAT, nor was there any evidence before the SSAT sufficient for it to conclude that a notice had been issued to the Applicant pursuant to ss872 or 873 of the Social Security Act 1991 ("the Act").
On 12 August 1997, only after the Respondent commenced investigations and had communication with the Applicant regarding the overpayment, Mr Monfared advised the Respondent that he and his wife had separated from February 1996 until September 1996 and during that time he did not contribute towards her living expenses (T26).
The Tribunal notes that the Respondent's letter to the Applicant dated 11 June 1996 (exhibit 1) was in the middle of this alleged period of separation. However, no notification was provided to the Respondent of the separation until 12 August 1997. The letter of 11 June 1996 was addressed to the Applicant at the address "45 Yanderra Grove, Cherrybrook" recorded in the Respondent's computer records as at 23 December 1998 (T28). That address is also currently held by the Tribunal.
In a letter to the Applicant from the ARO dated 6 February 1998 (T31) reference was made to a letter having been sent to her dated 26 November 1996 pursuant to s872 of the Act, that explained that if her 1995/96 taxable income was above the cut-off limit she should advise Centrelink within 14 days. However the SSAT was unable to find any other evidence either on the Centrelink file or the computer record that such a letter had been sent to the Applicant. The SSAT concluded in any event that the text of any such letter which would have been sent to the Applicant was invalid (T2, p7). For this reason the SSAT considered that no decision could be made against the Applicant pursuant to s872, but nonetheless there was no impediment to the debt being raised pursuant to the provisions of s1223(1) of the Act.
Mr Monfared's evidence to the SSAT was that he received his tax return in August 1996 (T2, p4). As a result of a data-matching program review that was conducted on 10 April 1997 the Respondent calculated that the Applicant's combined taxable income for 1995/6 exceeded the relevant income ceiling (T27). A debt was then raised for the period 2 January 1997 to 28 August 1997, the latter date being the date of cessation of Family Payments. The Respondent calculated the debt to be $842.40, on the basis of 18 payments of $46.80.
The decision was reviewed by an ARO (T29) who decided that there was a debt pursuant to s1224 of the Act. The ARO found that the Applicant's income was above the ceiling and that she had failed to advise the Respondent of a notifiable event pursuant to s873 of the Act. The ARO affirmed the primary decision.
As there was no opportunity for the Tribunal to take evidence from the Applicant or her husband their evidence to the SSAT on relevant issues will be considered. Mr Monfared told the SSAT that it was difficult to estimate his income as he was self-employed. He said that in the financial year ending 30 June 1996 he instructed his accountant to pay $12,000 from his private company into his superannuation account, but his accountant failed to follow his instructions. He said that it was not until he received his tax return in August that he realised this error, and by that time the amount had become part of his taxable income (T2 p4). In a letter to the Tribunal dated 14 July 1999 (exhibit A) Mr Monfared advised that the accountant later "reversed" his error. However, on a subsequent inquiry made by the Respondent, the Tax Office advised on 31 March 2000 that original assessments were issued in respect of the Applicant and Mr Monfared on 25 November 1996 and there was no amended Notice of Assessment issued for either person (exhibit 2). The Tribunal subsequently advised the Applicant of this evidence, but did not receive a response.
The Applicant's submission to the SSAT was that she was not overpaid since she was separated from her spouse between February and September 1996 (T2). Mr Monfared stated in a letter that he did not contribute any money toward living expenses during this period (T26). Mr Monfared said that he informed Centrelink of the separation by telephone, but he was not asked by the officer to whom he spoke whether the separation was likely to be permanent or who had care of the children. He said he told his wife that he had advised Centrelink of the separation. The Applicant's evidence to the SSAT was that she had overlooked advising the Respondent about their higher combined income because of her distress about the separation. Both the Applicant and Mr Monfared said that subsequently they did not think to advise the Respondent that their separation had ceased. The Tribunal notes that there is no file record of the Respondent having received telephone advice from Mr Monfared about their separation.
legislation
The relevant legislation in this matter is that which was current as at September 1997, the time in which the data-matching program review was completed and the primary decision made to raise a debt against the Applicant.
Section 23 of the Act provides the definition of taxable income that is used for the purpose of Family Payment. Section 873 provides that the Secretary may require a recipient of Family Payment to give particular information relevant to the payment of Family Payment to the recipient.
Section 838 outlines the criteria for Family Payment:
838(1) A person is qualified for family payment if:
(a) the person has at least one FP child; and
(b) the person is an inhabitant of Australia; and
(c) the person's income for the relevant family payment period does not exceed the person's income ceiling; and
(d) the value of the person's assets does not exceed $376.750.

Section 1069 H2 to H27 determines the inclusions in a person's Family Payment income and the way to identify the base taxation year. Subsections 1069 H13 and H14 provides that Family Payment during a calender year is calculated using the person's income in the "base year", which is the financial year that ended in the preceding calender year.
Appropriate tax year
1069-H13       Subject to the following provisions of this submodule, the appropriate tax year for a family allowance payday is the base tax year for that payday.
Base tax year
1069-H14       The base tax year for a family allowance payday is the tax year that ended on 30 June in the calender year that came immediately before the calender year in which the payday occurs.
Income of Members of Couple to be Added
1069-H3         For the purposes of this module, if a person is a member of a couple, the person's income for a tax year includes the income for that year of the person's partner.
Section 1223(1) of the Act provides:
Subject to subsections (1A) and (1B) and (2), if:
(a) an amount has been paid to a person by way of social security payment; and
(b) the recipient was not qualified for the social security payment and the amount was not payable to the recipient;
the amount so paid is a debt due to the Commonwealth.
Section 1224 provides that if an amount paid to a person was made as a result of a person having omitted to advise Centrelink of a notifiable event then the amount paid is a debt due to the Commonwealth.
In respect of the waiver of a debt arising from administrative error, s1237A.(1) provides:
Subject to subsection (1A), the Secretary must 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.
In respect of the waiver of a debt in special circumstances, s1237AAD 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 a 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 this Act …
(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.

submissions

The Applicant's case is that because she was separated from her husband between February and September 1996, her husband's income from February to June 1996 should not be included in the calculation of family income. She also considered that there had been administrative errors (T1) and that the amount of the debt was miscalculated.
The Respondent submitted that pursuant to ss1069 H13 and H14 the Applicant's 1997 Family Payment should be calculated with reference to her 1995/6 taxable income, which was $79,557 (T27). This comprised $33,279 for the Applicant and $46,278 for her partner. Subsection 1069 H3 includes the income of a person's partner in the person's income for the tax year.
Pursuant to s838(1)(c) of the Act a person is not eligible for family payment if his/her income exceeds the income ceiling in the relevant family payment period. The income ceiling is provided in s1069 H27 and is indexed in line with CPI increases (ss1191-1194). In 1997 the income ceiling for a person with two Family Payment children was $69,031, and for one child it was $65,743. It was submitted that in 1997 both ceiling amounts were applicable to the Applicant, and her taxable income was above both ceilings. It was submitted that the Applicant did not qualify for Family Payment in 1997 because her family payment rate would have been nil. Pursuant to s1223(1) of the Act, any Family Payment paid to the Applicant in 1997 is a debt owed to the Commonwealth.
It was submitted for the Respondent that the ambulatory provision (s41) is also relevant in addition to the specific Family Payment provision at s841. Section 41 establishes that qualification must proceed payability and that the section applies through the life of consideration of entitlement under the Act. It was submitted that the Tribunal decisions in Re Secretary, Department of Social Security and Prior (AAT 9384, 25 March 1994); Re Secretary, Department of Social Security and Giles (AAT 9401, 5 April 1994); Re Secretary, Department of Social Security and Marinozzi (AAT 11644, 26 February 1997), and Re Secretary, Department of Social Security and Grozdanovska (AAT 11536, 15 January 1997) are preferable to the Tribunal decision Re Secretary, Department of Social Security and Boyd (1998) 50 ALD 219 on this point.
The Respondent noted that on 11 June 1996 a notice was sent to the Applicant pursuant to s872 of the Act (exhibit 1). This placed an obligation on the Applicant to inform the Respondent within 14 days that their combined income was above $66,000 in the 1995/6 financial year. No notification from the Applicant was received, despite the fact that the Applicant's husband had the relevant information about their taxable income. The Respondent submitted that if the Applicant had complied with the s872 notice her Family Payment could have been adjusted under s860(a) of the Act to prevent an overpayment.
The Respondent submitted that subs.1224(1) also applied to make the overpayment a debt of the Commonwealth, and that the calculation of the debt by the SSAT in the amount of $982.80 was correct. Moreover, that debt is owed pursuant to both subs.1223(1) and 1224(1) of the Act.
The Respondent submitted that the document issued to the Applicant on 18 July 1997 complied with s11 of the Data Matching Program (Assistance and Tax) Act 1990 ("the Data Act"). This letter was sent to the Applicant as a result of the data-matching exercise that took place on 10 April 1997 (exhibit 3). The letter was sent to the Applicant's most recent address as required pursuant to s11(3), and outlined the income details of both her and her partner. Subsection 11(1) of the Data Act allows the Applicant 28 days in which to show cause why the proposed action should not take place. The Applicant was given until 21 August 1997 to respond, being 34 days. The Respondent submitted that the Department received an undated response from Mr Monfared on 12 August 1997 (T26) which quoted reference "Q649/201 746 963 bxu".
It was submitted that only one 'q649' letter was sent to the Applicant by an officer using the logon 'bxu', who had the delegation to take the action specified in the letter. The Respondent submitted that the Applicant's partner responded to that letter on 22 August 1997 (exhibit 3) and confirmed the income details as held by the ATO, being in compliance with s11(5A) of the Data Act. The Respondent submitted that the correct procedures were followed in respect of issuing this letter.
The Respondent submitted that once the income details were verified by the Applicant's partner, action was then taken by the assessing officer to raise an overpayment of $842.40 on 8 September 1997. It was submitted that this was in compliance with s11(2)(b) of the Data Act, and was finally determined by another officer on 11 September 1997.
The Respondent submitted that the income ceilings for family payment in 1997 were as follows:
No. Of Children Annual Income Limit Fortnightly Payment
$65 743 $23.40
$69 031 $46.80
$72 319 $70.20

The Respondent submitted that there was no administrative error in this case, and no special circumstances exist that would make it appropriate to waive the debt.
consideration of evidence and findings of fact

The Tribunal considers that it does not have the best evidence available to it because of the Applicant's insistence that this matter proceed to be determined on the papers. However, in the circumstances and after consideration of the problem, the Tribunal is of the view that it is able to make the correct or preferable decision on the evidence before it, and therefore no other steps are warranted to cause the Applicant to attend a hearing in respect of these proceedings.
The Tribunal finds that the Applicant has three children born on 23 March 1981, 10 June 1983 and 14 March 1989 respectively. There is no evidence before the Tribunal that any of these children were not in the Applicant's care during the period of the overpayment from 2 January 1997 to 28 August 1997. Based on that assumption, the Tribunal finds that until the 16th birthday of the eldest child on 23 March 1997 the Applicant had three Family Payment children in her care, and from 24 March 1997 and for the remainder of the period she had two Family Payment children. The Payment Summary screen (T33) indicates that from 2 January 1997 to 13 March 1997 the Applicant received payment for three Family Payment children. However, the written submissions of the Respondent to the Tribunal noted that there were two Family Payment children and one Family Payment child respectively. The Tribunal assumes that to be an error in the Respondent's submission, which is of no consequence.

Section 1069 H27 identifies the income ceiling. If the Applicant's family allowance income exceeds the income ceiling, she does not satisfy the family income test and her family allowance rate is nil. The income ceiling is based on the number of family payment children. The Applicant had three Family Payment children until 23 March 1997, when one of her children turned 16 years and payment for that child ceased. From 2 January to 13 March 1997 the Applicant was only eligible for Family Payment if her income in the 1995/1996 financial year was less than $72,319, which is the income ceiling for three Family Payment children. From 27 March 1998, the Applicant was eligible for Family Payment if the combined income was less than $69,031, being the income ceiling for two Family Payment children. It is not in dispute that the combined income for 1995/1996 was $79,567, which was in excess of both income ceilings. Therefore, the Applicant was not eligible for Family Payment between 2 January 1997 to 28 August 1997, at which time the payment ceased. Hence, the Family Payment paid to her during this period, in the amount of $982.80, was an overpayment.
Based on information obtained in a data matching exercise with the Australian Taxation Office, the Tribunal finds that in the 1995/6 financial year Mr Monfared's taxable income was $46,278 and the Applicant's taxable income was $33,279, making a combined income of $79,567. That amount is in dispute only insofar as the Applicant considers that Mr Monfared's income should not be included in the calculation of family income for the period of their separation from February to September 1996. I shall return to that issue later.
The Applicant does not dispute that she did not advise the Respondent of her family income after she received her tax assessment late in 1996. Although the Tax Office states that the assessment was dated 25 November 1996, it was Mr Monfared's evidence to the SSAT that he received his tax return advising of their taxable income in August. The only way this discrepancy can be reconciled is by assuming that Mr Monfared was referring to advice from his accountant about his tax return at the time it was lodged with the Tax Office. Nothing much turns on this point, except that by November 1996 the couple had reconciled, and it could no longer be claimed, as did the Applicant in her evidence to the SSAT, that she failed to advise the Respondent of the change in family income because of her distress about the separation.
The Tribunal finds, on the basis of this evidence, that having received the Respondent's letter dated 11 June 1996, the Applicant was required to advise the Respondent within 14 days of having separated, and within 14 days of her knowledge about her combined income being in excess of $66,000, and she failed to do so on both issues. Because she did not advise the Respondent that her income was above the ceiling, she continued to be paid Family Payment based on her income for the 1994/5 financial year. The Tribunal finds that the Respondent's letter of 11 June 1996, which was not before the SSAT, was a notice to the Applicant, properly served, pursuant to s872 of the Act.
Returning now to the issue of the Applicant's separation, the Tribunal notes that Mr Monfared's formal advice of the separation was lodged on 12 August 1997, well over a year after the commencement of the alleged separation in February 1996. On the evidence currently available the Tribunal is not satisfied to the requisite standard (balance of probabilities) that the Applicant and Mr Monfared were separated during the stated period. If the decision turned on this point the Tribunal would need to seek further evidence. However, even if the Tribunal was to find that the Applicant and Mr Monfared were separated for the stated period, the Tribunal is not satisfied to the requisite standard on the evidence of Mr Monfared to the SSAT that he advised the Respondent of this fact by telephone. The Tribunal finds that it is unlikely that an officer would fail to make a file note or a computer record of the information, would fail to clarify with the informant whether the separation was likely to be permanent, and would fail to ask the whereabouts of the children – a fact which would determine the Applicant's continued eligibility for Family Payment. Moreover, if Mr Monfared saw fit to advise the Respondent of their separation, why then did he not also advise of their reconciliation? Having found that the Applicant did not notify the Respondent of their separation within 14 days of the notice dated 11 June 1996 that identified separation of the couple as a notifiable event, she has not complied with her obligations under s873 of the Act.
Based on information on the "Payment Summary" screen (T33) the Tribunal finds that the Applicant was paid $982.80 in Family Payment from 2 January 1997 to 14 August 1997. This comprised $70.20 per fortnight for three family payment children from 2 January 1997 to 13 March 1997, and $46.80 per fortnight from 27 March 1987 to 14 August 1997 for two family payment children. The eldest child reached the age of 16 years on 23 March 1997. The Tribunal is satisfied that the Applicant received an additional family payment on 28 August 1997.
The Respondent raised an overpayment in this matter as a result of deciding that there was a debt due to the Commonwealth under s11(6) of the Data Act. At the request of the Tribunal the Respondent provided further documents which satisfy the Tribunal the Respondent complied with the requirements of s11(6). Having found that there is a debt due to the Commonwealth in these circumstances, then pursuant to s1224C of the Act the Tribunal determines that the amount so paid to the Applicant is recoverable.
The Tribunal notes the submissions of the Respondent that there are two streams of decisions in the Tribunal in relation to the respective functions of s41 and s873 of the Act. The Respondent submitted that the Tribunal should not follow the decision Re Boyd.
The Tribunal rejects the Respondent's submission on this issue, and considers, with respect, that the decision Re Boyd is a careful and preferred interpretation of the relevant legislation by a specially constituted Tribunal for the purpose of providing that statutory interpretation. As there is no Federal Court case law on the issue the Tribunal considers that it should follow the decision Re Boyd as it applies to the facts of this matter. The Tribunal considers, therefore, that the function of s41 is spent once the Respondent has determined that the Applicant was qualified for Family Payment. Once that determination has been made the Tribunal must then consider whether a notice was properly served on the Applicant pursuant to s872 of the Act.Contrary to the SSAT decision, and with better evidence now before this Tribunal by way of the Respondent's letter to the Applicant dated 11 June 1996, the Tribunal considers that notice was given to the Applicant pursuant to s872 and she failed to comply with that notice.
The Tribunal notes the Applicant's submission that there was an administrative error on the basis that there was an error in the calculation of the overpayment, which was identified by the SSAT. However, that error did not cause the payment to be made to which she was not entitled, and so it does not represent an administrative error for the purpose of establishing her entitlement to payment. Hence, it does not represent an administrative error for the purpose of considering the waiver provision in s 1237A.(1) of the Act as it stood at the time the debt arose.
At the SSAT hearing no submissions were made by the Applicant in respect of special circumstances for waiver. For the Tribunal to find that special circumstances exist, it must find that the circumstances were "unusual, uncommon or exceptional". There was no evidence before the Tribunal that constitutes special circumstances for the purpose of s 1237AAD of the Act as it stood at the time the debt arose.
The Tribunal considers that there are no grounds to waive the debt. The debt of $982.80 remains a debt to the Commonwealth, and the Respondent is entitled to take recovery action against the Applicant in respect of that amount. The decision under review is affirmed.
I certify that the 45 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs M T Lewis, Senior Member.
Signed:         .....................................................................................
  Associate
Date/s of Hearing  1 October 1999 and 10 May 2000
Date of Decision  10 August 2000
Solicitor for Applicant               Unrepresented
Solicitor for the Respondent    Administrative Law Section, Centrelink

[2000] AATA 686

10 August 2000

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Standing

Limitation Periods

Judicial Review

Administrative Error

Debt Recovery