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

Mueller and Secretary, Department of Social Services (Social services second review) [2019] AATA 1774 (11 July 2019)
Division:GENERAL DIVISION
File Number(s): 2018/7402
Re:Stephen Mueller
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member W Frost
Date:11 July 2019
Place:Canberra

The Tribunal affirms the decision under review pursuant to section 43(1)(a) of the Administrative Appeals Tribunal Act 1975.
............................................................
Member W Frost
Catchwords
SOCIAL SECURITY – Farm Household Allowance – overpayment – whether there was an overpayment of Farm Household Allowance – whether Applicant is required to repay overpayment – decision under review affirmed
Legislation
Farm Household Support Act 2014 s 68
Social Security Act 1991 ss 1068
Social Security (Administration) Act 1999
Cases
Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25
Beadle and Director-General of Social Security [1984] AATA 176
L v Department of Social Security No. N94/272 AAT No. 10230 (1995) 38 ALD 176
Re Gerhardt and Secretary, Department of Employment and Training [1997] FCA 815
Re Stubbs and Secretary Department of Families and Community Services (2003) AATA 03/0729
Secretary, Department of Social Services v Hales (1998) 153 ALR 259
Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190
Timothy Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 at [80]
Secondary Materials
Department of Agriculture and Water Resources, Farm Household Allowance Guidelines (August 2018)
Guide to Social Security Law – 4.7.1.20, 4.7.1.30
A Guide to Australian Government Payments (1 January – 19 March 2016)
REASONS FOR DECISION
Member W Frost
11 July 2019
INTRODUCTION

Mr Stephen Mueller is a sheep farmer and cereal grain grower in Temora, South-Western New South Wales (NSW). He has experienced years of drought and his financial circumstances are ‘disastrous’.
The Farm Household Allowance (FHA) is a social security payment that was established in 2014 for farmers and their families experiencing financial hardship. Mr Mueller was granted the maximum rate of FHA for the financial year ending 30 June 2015 (2015 Financial Year) based on his estimated income being a loss of $22,700.
For the following financial year ending 30 June 2016 (2016 Financial Year), Mr Mueller did not provide the requested estimate of his income. Centrelink therefore paid FHA to Mr Mueller based on his 2015 Financial Year income estimate. Because Mr Mueller’s income for the 2016 Financial Year ultimately exceeded the income test amounts stipulated by Centrelink for that year, he was determined to have been overpaid FHA and a debt was raised against him.
On 30 October 2018, the Social Services and Child Support Division of the Tribunal (AAT1) affirmed the decision of Centrelink’s Authorised Review Officer (ARO) to raise a FHA debt against Mr Mueller in the amount $13,919.84 for the 2016 Financial Year.
In December 2018, Mr Muller applied to the General Division of the Tribunal for a review of the AAT1 decision.
ISSUES
The issues before the Tribunal are whether:
(i)there was an overpayment of FHA to Mr Mueller in the 2016 Financial Year; and
(ii)if there was an overpayment, Mr Mueller is required to repay the FHA amount.
BACKGROUND
On 4 July 2014, Mr Mueller submitted a claim form with Centrelink for FHA (Claim Form). Mr Mueller’s ‘Farm Income Details’ were provided and his ‘Estimated Profit/Loss’ was listed as being ‘-$22700’. That is, Mr Mueller expected to make a loss for the 2015 Financial Year. On 21 July 2014, Mr Mueller was granted the maximum rate of FHA with retrospective effect from 11 July 2014 and the first payment was made on 24 July 2014.
There is no dispute between the parties about Mr Mueller’s entitlement to FHA payments during the 2015 Financial Year; the dispute before the Tribunal concerns the FHA payments made during the 2016 Financial Year. In this regard, on 9 July 2015, the Department of Human Services (Department) wrote to Mr Mueller and requested that he provide an estimate of his income for the 2016 Financial Year. Mr Mueller was advised that if he did not provide an estimate, his 2015 Financial Year income estimate of $-22,700.00 would be used to calculate his eligibility and the rate of FHA payment for the 2016 Financial Year. Mr Mueller was informed that: ‘If your rate of Farm Household Allowance is calculated using an incorrect income estimate, you may be overpaid and have to pay this money back’.[1]
[1] Exhibit R5.
Despite the Department’s request, Mr Mueller did not provide an estimate of his income during the 2016 Financial Year and so again was paid the maximum rate of FHA for that year. In five separate telephone calls with Centrelink between July 2015 and January 2016, Mr Mueller confirmed that there were no changes to his circumstances and no income to report.[2] Additionally, Mr Mueller did not report any changes to his income estimate during financial reviews conducted by Department case officers in December 2015 and June 2016. In his Statement of Facts, Mr Mueller claimed that:
As a farmer, it is difficult to estimate the anticipated income for any particular year, because a single weather event can turn a good crop into a disaster. When asked by the FHA, I did not change my original estimate, because the conditions at that time did not indicate that I would make any income.[3]
[2] Section 37 Tribunal Documents (T-Documents), T18, folio 102 – 113.
[3] Exhibit A1.
Following the end of the 2016 Financial Year, Mr Mueller was informed by the Department that he had been overpaid FHA and had a debt of $14,141.94, because the Department was unable to verify that he was entitled to FHA in circumstances where he had not lodged his 2016 Financial Year income tax return. The Tribunal notes that the amount of $14,141.94, which is higher than the current claimed debt of $13,919.84 because the Respondent could not conduct a reconciliation to identify the correct amount without Mr Mueller’s tax return, included an income support bonus component paid to Mr Mueller that is not contested by the Respondent and not included in the FHA debt.
Following receipt of this notification, Mr Mueller provided his 2016 Financial Year income tax return[4] to the Department on 23 October 2017. With the information from Mr Mueller’s tax return, the Department performed a reconciliation that calculated Mr Mueller had been overpaid FHA in the amount of $13,919.84 for the 2016 Financial Year. The overpayment was due to Mr Mueller’s farming business making a profit of $35,405.00 for the 2016 Financial Year, not the loss the Department had based his payments on due to the requested information not being provided earlier by Mr Mueller. In January 2018, the Department raised a FHA debt against Mr Mueller and in February 2018, following a requested review, an ARO affirmed the decision that he had been overpaid FHA in the amount of $13,919.84.[5]
[4] Exhibit R9.
[5] T11, folio 73 – 79.
In August 2018, Mr Mueller applied for review of the ARO decision by the AAT1 and on 30 October 2018, the AAT1 affirmed the decision that Mr Mueller had a legally recoverable FHA debt of $13,919.84 for the 2016 Financial Year.
Earlier this year, and after making his application to the Tribunal, Mr Mueller provided the Department with an amended tax return for the 2016 Financial Year, which lists his income as being less than that indicated in the tax return for the same year submitted in 2017, in circumstances where his ‘wool advance payment had been counted twice’ in that earlier return. However, this revised amount of $29,405 also exceeds the allowable income amount under Centrelink’s guide to Australian Government payments, such that Mr Mueller would still not qualify for any FHA for the 2016 Financial Year.
LEGISLATION & CONSIDERATION
The object of the Farm Household Support Act 2014 (FHS Act), at the time of Mr Mueller’s application for FHA and in the 2016 Financial Year was to improve the financial situation of farmers and their partners, who need financial assistance, by providing them with: farm household allowance for up to 3 years; funding to engage in certain activities; and funding to obtain a farm financial assessment.[6] Section 4 of the FHS Act notes that ‘the assistance is available to farmers, and partners of farmers, who contribute significant labour and capital to a farm enterprise that has a significant commercial purpose or character’ and that the rules dealing with how to make claims, how payments are made and review of decisions relating to payments under the FHS Act are found in the Social Security Act 1991 (Social Security Act) and the Social Security (Administration) Act 1999 (Administration Act). Section 90 of the FHS Act also confirms the applicability of the Social Security Act and the Administration Act to FHA.
[6] Section 3 of the FHS Act.
Mr Mueller met the qualification criteria for FHA set out in section 8 of the FHS Act. Sections 55 and 56 of the FHS Act state that the rate of FHA is determined using ‘Module B of the Benefit Rate Calculator B’ from section 1068 of the Social Security Act, which provision requires both the income and assets of a person to be taken into account. The rate of FHA may be reduced if a person's income or assets are above specified thresholds contained in Table D of the guide to Australian Government payments.[7] The income cut-off amounts applicable to Mr Mueller as a single person with no children during the 2016 Financial Year were as follows:
(a)$1,007 per fortnight between 1 July and 19 September 2015;
(b)$1,014 per fortnight between 20 September and 31 December 2015;
(c)$1,014 per fortnight between 1 January and 19 March 2016; and
(d)$1,021 per fortnight between 20 March and 30 June 2016.
[7] Exhibit R8.
Section 68 of the FHS Act provides that the determination of a rate of FHA may be based on an estimate of the person’s ‘business income’ if that estimate is considered reasonable. Subsection 68(3) of the FHS Act notes that ‘A person's business income is ordinary income of the person in the form of profits from a business carried on by the person’.
Was there an overpayment of FHA for the 2016 financial year?
There was no evidence before the Tribunal that Mr Mueller responded to the Department’s request by letter dated 9 July 2015 for information regarding his income for the 2016 Financial Year. The letter stated that:
If you do not provide this information to us by 23 July 2015, we will use your income estimate for the 2015 financial year to calculate your rate of payment. Our records show that your income estimate for that financial year was $-22700.-00.[8]
[8] Exhibit R5.
As a result of Mr Mueller not responding to this request, the Department applied his 2015 Financial Year income estimate of a loss of $22,700.00 to the 2016 Financial Year and continued to make fortnightly FHA payments at the maximum rate during that year. There was also no evidence that Mr Mueller provided any update to the Department regarding his income during the 2016 Financial Year.
In October 2017, and following the raising of the FHA debt by the Department, Mr Mueller provided his 2016 Financial Year income tax return to the Department disclosing a net business income of $35,405. An updated 2016 Financial Year income tax return provided to the Respondent in January 2019 reduced Mr Mueller’s business income from $35,405 to $29,405. Regardless of which of these two income figures is applied, Mr Mueller did not qualify for any FHA for the 2016 Financial Year because his income during that year exceeded the fortnightly income cut-off amounts in each of the four time periods set out in Centrelink’s guide to Australian Government payments.[9] To determine the debt owing by Mr Mueller, the Department used the daily rate of FHA paid to Mr Mueller across the 2016 Financial Year (totalling $13,689.765) and added the Energy Supplement component (being $230.0676) also paid to Mr Mueller as a result of his receipt of the FHA payment.[10] The Department correctly identified the debt owing to the Commonwealth by Mr Mueller as being all of the $13,919.84 paid to him during the 2016 Financial Year.
[9] Exhibit R8.
[10] Exhibit R7.
Section 70 of the FHS Act states that a debt due to the Commonwealth is raised against a FHA recipient where the payment of FHA has been made based on an estimate of that person’s business income and the person has not complied with a request by notice under the Administration Act to provide information regarding their business income during a particular period that could have identified the correct amount of such income. The provision states that the debt is taken to have arisen under Part 5.2 of the Social Security Act, which contains section 1223(1) as follows:
Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
It is clear that Mr Mueller’s actual business income exceeded his estimated business income in the 2016 Financial Year. The latter was used by the Department to make payment to Mr Mueller of FHA and, despite numerous opportunities, he did not provide any updated income information to the Department to enable it to correctly identify his FHA entitlement until October 2017. Based upon his actual business income for the 2016 Financial Year, Mr Mueller received an overpayment of FHA because he did not qualify for FHA in that year. In accordance with the Respondent’s calculation, Mr Mueller was overpaid FHA in the amount of $13,919.84. The Tribunal finds that this overpayment constitutes a debt due to the Commonwealth pursuant to section 1223 of the Social Security Act.
Can the FHA payment be offset over future financial years?
Mr Mueller claimed that the Department informed him that he was entitled to three years of FHA payment and that ‘if I was over on any year I was entitled to reclaim the payment which in time would equal out the debt with no more funds being transferred’. In his Statement of Facts before the Tribunal, Mr Mueller further noted that:
I was also verbally advised by the [NSW] Rural Assistance Authority on one occasion and by the FHA case officer on at least two occasions, that should my income (which I understood to be Taxable Income) exceed the FHA limits for receiving the allowance, then there was a mechanism for this to be offset against future payments of the allowance in the following year. Based on this advice, I felt re-assured that if I should actually make an income and it turned out that I might receive too much FHA allowance, then, I would not have to repay it in a single payment.[11]
[11] Exhibit A1.
While it is true that, at the time Mr Mueller was in receipt of FHA, it could only be paid for a maximum of three years, there is no provision in the FHS Act or any other social security instrument allowing an overpayment of FHA in one year to be offset against payment of FHA in a future year to cancel any debt owed to the Commonwealth. Accordingly, Mr Mueller’s debt from the 2016 Financial Year cannot be offset by any future entitlement he may have to FHA. In addition, contemporaneous file notes from the Department did not disclose any such offsetting suggestion to Mr Mueller, and there was no evidence before the Tribunal that he was told by officers of the Department that any overpayment could be set-off against a future entitlement to FHA and that a debt would therefore not arise. In this regard, Mr Mueller at hearing asserted that such a representation had been made in a telephone discussion with an officer of the Department on 11 September 2018. The file note of this discussion does not indicate that there had been a discussion of this nature; indeed it appears that the officer indicated her inability to discuss his FHA debt with Mr Mueller.[12] For completeness, the relevant excerpt from the file note is as follows:
Customer rang…regarding any assistance available for farmers. Advised customer of extension of FHA for further year and also that the process is streamlined when a customer was a previous recipient for 3 years. Advised customer also of state based drought subsidies, CWA drought aid and also of the RFC’s who work in his immediate area. Advised customer to ring 132316 to commence claim. Customer was wanting to engage in talking about his current debt appeal, advised customer that I do not have sufficient knowledge of his claim to discuss.
[12] T18, folio 132.
This conversation occurred after both the 2016 Financial Year and the provision of Mr Mueller’s tax return for that year to the Department in October 2017. As a result of the evidence before the Tribunal, it does not place any weight on Mr Mueller’s claim that he was informed by the Department that any debt could be offset against FHA payments in future years.
Is ‘business income’ the correct form of income for FHA purposes?
Mr Mueller claimed that he understood that ‘taxable income’, not ‘business income’, was to be used in the assessment of his entitlement to FHA and that the case officers at the Department and the NSW Rural Assistance Authority did not correct this misunderstanding. In his words, ‘all they wanted to know was whether I was going to break even or not’. Mr Mueller’s Statement of Facts noted that:
In July 2014, I applied for the Farm Household Allowance. In the 2014/15 financial year my taxable income for the year was $0.00 and I received the full FHA allowance that was available to me.
For the 2015/16 financial year, after completing my tax return later than anticipated, my taxable income for the year was again $0.00 and hence I understood that I had correctly received the full FHA allowance which was paid to me.[13]
[13] Exhibit A1.
The FHS Act provides for the determination of FHA based on an estimate of a person’s ‘business income’, there are no references to ‘taxable income’. For example, section 68(3) of the FHS Act states that ‘A person's business income is ordinary income of the person in the form of profits from a business carried on by the person’. Nonetheless, Mr Mueller disputed the reasonableness of the Department’s interpretation of the FHS Act. However, in his Claim Form submitted to the Department in 2014, the requisite information regarding ‘Farm Income Details’ was provided, including the estimated loss of $22,700 for the 2015 Financial Year. This information was applied to determine Mr Mueller’s entitlement to FHA and could not readily be construed as anything other than ‘business income’ pursuant to the requirements of the FHS Act.
Although not published at the time of Mr Mueller’s initial 2014 claim, the FHA Guidelines maintained by the Department of Agriculture (first published in November 2014) also note that ‘business income’ is assessed for the purposes of determining qualification for FHA and that there is a reconciliation process used to identify the correct payment of FHA, as follows:
Unlike income from employment, farm business income can be difficult to predict due to factors such as commodity prices and seasonal conditions. To account for these factors, an estimate of business income is used to determine an individual’s rate of payment. At the end of the financial year, individuals who were paid FHA are required to supply their tax returns and financial statements to DHS to reconcile actual business income against their estimate to accurately assess their entitlement for that year.
The purpose of this annual reconciliation is to ensure that FHA recipients have received their correct entitlement for the previous financial year. This reflects the general social security law principle of payment integrity; that the right person receives the right payment at the right time.[14]
[14] Department of Agriculture and Water Resources, Farm Household Allowance Guidelines (August 2018), 33 (‘FHA Guidelines’).

The FHA Guidelines also refer to the Social Security Guide (Guide) in relation to information about allowable and non-allowable deductions for the purposes of calculating business income. Clause 4.7.1.30 of the Guide, regarding the assessment of business deductions and loses for sole traders, notes that:
If a business runs at a loss, a nil amount is included in the income test. Only the income support recipient's share of the net result from a partnership is assessed.
Business losses from previous years are NOT allowed as deductions for profits from the current year.
Business losses from the current year are generally NOT allowed as deductions from other profits (1.1.P.428) or income derived from unrelated sources, such as:
• earnings (from other employment)
• superannuation
• profits from investments, or
• profits from unrelated businesses.
Explanation: Although the ATO allows losses to be deducted from other income, this is not the case for income testing of pensions or allowances.
Moreover, clause 4.7.1.20 of the Guide sets out the approach to the assessment of income for sole traders and partnerships as follows:
Income from a sole trader or partnership business is the net amount:
• AFTER allowable expenses for the cost of running the business, AND
• BEFORE income tax and other personal deductions.
As a result of the above analysis, the Tribunal finds that Mr Mueller’s business income, not his total taxable income, was the correct form of income for the Department to use in order to calculate his qualification for payment of FHA. The Department correctly identified that Mr Mueller had been overpaid FHA in the 2016 Financial Year due to his business income for that year.
Is Mr Mueller required to repay the debt?
There is a general expectation in social security law, and in the community more generally, that monies paid to people not qualified to receive it will be required to be repaid. The Tribunal finds no reason to deviate from this principle in relation to the overpayment of FHA to Mr Mueller.
French J in the Federal Court of Australia in Secretary, Department of Social Services v Hales (1998) 153 ALR 259 stated that:
From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.
In this regard, Part 5.4 of the Social Security Act allows for a social security debt to not be recovered if it is decided to waive or write-off the debt owed to the Commonwealth.
Can the debt be written off?
Section 1236 of the Social Security Act relevantly provides that the Respondent may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise, if it is irrecoverable at law, the debtor has no capacity to repay the debt, or it is not cost effective for the Commonwealth to take action to recover the debt. Subsection 1236(1C) states that if a debt is recoverable through deductions from the debtor’s social security payment they are taken to have capacity to repay the debt ‘unless recovery by those means would result in the debtor being in severe financial hardship’.
The term ‘severe financial hardship’ in section 1236(1C) is not defined in the Social Security Act, however the Tribunal in Re Stubbs and Secretary Department of Families and Community Services (2003) AATA 03/0729 stated that it:
while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature.
In addition, the Tribunal in L v Department of Social Security No. N94/272 AAT No. 10230 (1995) 38 ALD 176 stated that:
The essential inquiry will always be whether recovery is a feasible proposition, bearing in mind the financial means and obligations of the individual concerned. Will recovery cause such personal hardship as to run contrary to the beneficial nature of the legislation?
Although Mr Mueller’s current financial circumstances are straitened, Mr Mueller appears to have capacity to repay the FHA debt in instalments at a fortnightly rate that is open to negotiation with the Respondent. Moreover, a not insignificant amount of the FHA debt has already been garnisheed through Mr Mueller’s subsequent tax returns by the Australian Taxation Office. Therefore, the Tribunal finds that it would be inappropriate to write off the debt under section 1236 of the Social Security Act.
Should the debt be waived due to administrative error?
Section 1237A of the Social Security Act relevantly provides that 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’. That is, the administrative error must be the sole cause for the debt having arisen (see Re Gerhardt and Secretary, Department of Employment and Training [1997] FCA 815). In this regard, Selway J in Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190 at [35] said that:
The ordinary or usual interpretation of the phrase 'attributable solely to' is that it refers to the single or sole cause of the relevant act or event. The word 'attributable' means 'capable of being attributed'. It involves an objective assessment of causation. The words 'a debt attributable solely to an administrative error' can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.
Mr Mueller asserted that he was informed by the Department’s FHA case officer on at least two occasions that any overpayment could be offset against a future entitlement to FHA and that a debt would therefore not arise. However, contemporaneous file notes from the Department’s electronic system do not disclose any discussion with Mr Mueller about offsetting any overpayment against a future year’s entitlement to FHA and, despite claiming that the officer ‘conveniently didn’t write it that way’, Mr Mueller did not provide any evidence to substantiate this allegation. Regardless of whether any such representation was made to Mr Mueller (which is not accepted by the Tribunal), this would not amount to being the sole reason for Mr Mueller incurring the FHA debt for the 2016 Financial Year. The overwhelming reason for the debt was Mr Mueller’s failure to provide an accurate estimate of his business income for the 2016 Financial Year. Mr Mueller was paid FHA based on the 2015 Financial Year income estimate he provided in 2014, he was notified in the Department’s letter dated 9 July 2015 and warned that a debt may arise if the estimate was not accurate, and he did not correct this information until October 2017, being over a year after the end of the 2016 Financial Year. Accordingly, the Tribunal finds that the FHA debt cannot be waived due to the alleged administrative error.
Should the debt be waived due to special circumstances?
Under section 1237AAD of the Social Security Act, the Secretary may waive all or part of a debt on the grounds of special circumstances if satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or false representation; or
(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; 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.
Mr Mueller gave evidence of his difficult financial circumstances and claimed in his Statement of Facts that, if he was unsuccessful before the Tribunal, ‘I am not in a position to easily repay any of it’.[15] At hearing, Mr Mueller said his financial circumstances were ‘pretty well disastrous…the bank won’t lend me another cent…I’ve basically got to close down more or less’. Aside from the FHA debt, Mr Mueller’s other current debts include: a bank overdraft of $497,858.20; a mortgage of $76,666 for his principal place of residence; a mortgage of $25,768.14 for his farming property; and borrowings of approximately $60,000 from his sister. Although not raised before the Tribunal, the Respondent noted in its Statement of Facts, Issues and Contentions that, at the AAT1 hearing, Mr Mueller said that he ‘did have some equity’ in the two properties. In relation to the FHA debt of $13,919.84, Mr Mueller noted that the Australian Taxation Office has garnisheed amounts of $3,956 and $1,039 on 30 April 2018 and 20 December 2018, respectively. If there has been no further intervening action in relation to the FHA debt, this leaves an amount of $8,924.84 owing to the Commonwealth by Mr Mueller.
[15] Exhibit A1.
At the hearing, the Tribunal asked Mr Mueller to describe any special circumstances he may have, other than financial hardship, that may make it desirable to waive the FHA debt pursuant to section 1237AD of the Social Security Act. Mr Mueller did not provide information regarding any non-financial circumstances. To assist Mr Mueller in considering the matters that may give rise to special circumstances, the Tribunal noted the AAT1 decision referred to Mr Mueller describing his personal circumstances, being that he ‘has no chronic health conditions and that he had no special caring responsibilities’.
Post-hearing submissions
Because Mr Mueller was unable to provide information at hearing regarding any special circumstances, he was invited to provide further written submissions for the Tribunal to consider whether the debt should be waived due to special circumstances.
Mr Mueller’s further written submissions: confirmed his ‘dire’ financial situation, including through the provision of bank statements for his various loans; expanded on his argument that he understood ‘taxable income’, not ‘business income’, was to be used in assessing eligibility for FHA; and made a new claim that he did not provide, and does not know the origin of, the income details contained in his completed 2014 FHA Claim Form.
In relation to the ‘taxable income’ argument, the Tribunal again notes that the FHS Act provides for the determination of FHA based on an estimate of a person’s ‘business income’; there are no references to ‘taxable income’ in the FHS Act. In addition, the Claim Form submitted by or on behalf of Mr Mueller refers to ‘Farm Income Details’, not personal income details, which could only be considered to be related to the income of his farming business. The FHA Guidelines maintained by the Department of Agriculture also confirm that business income is the relevant form of income assessed for qualification for FHA. As a result, the Tribunal finds that all of the publicly available information regarding FHA refers only to farm income as a basis for that payment such that an applicant could not reasonably consider any other form of income was to be used to assess eligibility for FHA and, accordingly, the Tribunal has found that Mr Mueller’s business income, not his total taxable income, was the correct form of income for the Department to use in order to calculate his qualification for payment of FHA.
Although Mr Mueller’s subsequent related claim, raised after the hearing, that he does not know the source of the ‘Farm Income Details’ contained in his original Claim Form, was outside the intended scope of the Tribunal’s post-hearing directions requesting further information regarding any special circumstances, given the nature of this claim, the Tribunal held a subsequent hearing by telephone to hear from the parties.
At the directions hearing, Mr Mueller asserted that the Claim Form was completed when he was in the office of his NSW Rural Assistance Authority case officer in West Wyalong. Mr Mueller agreed that his claim for FHA was likely to have been made on 4 July 2014, however he was unable to recall whether the Claim Form was completed via telephone or online.
In this regard, the Respondent tendered a file note of the Department’s records regarding Mr Mueller’s Claim Form submitted on 4 July 2014[16]. The file note contains two entries for 4 July 2014. The first entry noted that Mr Mueller contacted Centrelink by telephone and he was advised to claim FHA online or, if that was not possible, a paper form would be issued. The second entry for 4 July 2014 noted that a FHA claim was submitted and ‘obtained via Online Claim using Internet’. Accordingly, the Tribunal finds that Mr Mueller’s Claim Form was completed online on 4 July 2014.
[16] Exhibit R11.
Mr Mueller stated that the Claim Form contained erroneous information that he could not have provided, such as related to his former partner’s surname, the date they separated and the amount in his bank savings account. However, his primary challenge was to the information contained in the Claim Form regarding his ‘Farm Income Details’, which he claimed were provided to Centrelink by someone other than himself. Mr Mueller did not provide any evidence to support this claim and accepted that he had agreed to the declaration at the end of the Claim Form regarding its content.
The Tribunal finds it difficult to consider Mr Mueller’s claim regarding the completion of the Claim Form credible in circumstances where: the provision of the income estimate in that form was only contested following the hearing, despite that income estimate being central to Mr Mueller’s application for review by the Tribunal; the Department relied on this income estimate to pay FHA to Mr Mueller for all of the 2015 Financial Year (which payments are not in dispute); and Mr Mueller was asked on multiple occasions to confirm that his financial position for the following 2016 Financial Year remained as stated in the Claim Form, which the Department relied upon and was not corrected until Mr Mueller provided his 2016 Financial Year tax return in October 2017. In these circumstances, the Tribunal does not give Mr Mueller’s new claim any significant weight. Moreover, it is not determinative of the issue before the Tribunal regarding the overpayment of monies received by Mr Mueller for FHA in the 2016 Financial Year and, even if the income estimate was not provided by Mr Mueller in the Claim Form for him to commence receiving FHA in the 2015 Financial Year (which is not accepted by the Tribunal), on the evidence before the Tribunal, it does not give rise to administrative error made solely by the Commonwealth or any special circumstances such that the debt could be waived.
As the Tribunal has previously noted, the reason for the debt was Mr Mueller’s failure to provide an accurate estimate of his business income for the 2016 Financial Year. Mr Mueller was paid FHA based on the 2015 Financial Year income estimate, he was notified in the Department’s letter dated 9 July 2015 and warned that a debt may arise if the estimate for the 2016 Financial Year was inaccurate, and he did not correct this information until October 2017.
Consideration
Although the term ‘special circumstances’ is not defined in the Social Security Act, it has been the subject of substantial common law discussion. For example, the Tribunal in Beadle and Director-General of Social Security [1984] AATA 176, stated that:
An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.
In addition, the Federal Court in Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25, noted that ‘there must be something that distinguishes the case from the ordinary or usual case’. Finally, the Tribunal in Timothy Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 at [80], stated that:
“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances…that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it…He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement.
Ultimately, apart from his difficult financial situation compounded by the continuing effects of the drought in and around Temora, Mr Mueller has not identified anything about his circumstances that are especially unusual or out of the ordinary that would enliven the use of the power to waive his FHA debt. As a result, while Mr Mueller’s capacity to repay the balance of the FHA debt may currently be reduced, the Tribunal does not find that there are special circumstances favouring the FHA debt being waived. Essentially, Mr Mueller has had the benefit of the FHA monies since receiving them in the 2016 Financial Year when he was not qualified to do so. Accordingly, they must be repaid.
CONCLUSION
The Tribunal has found that there was an overpayment of FHA to Mr Mueller in the 2016 Financial Year in the amount of $13,919.84 and that he is required to repay this amount to the Commonwealth. The Tribunal therefore affirms the decision under review pursuant to section 43(1)(a) of the Administrative Appeal Tribunal Act 1975.

I certify that the preceding 55 (fifty-five) paragraphs are a true copy of the reasons for the decision herein of Member W Frost.

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Associate
Dated: 11 July 2019

Date(s) of hearing: 18 June 2019

Date final submissions received:
25 June 2019

Applicant: Mr Stephen Mueller

Solicitors for the Respondent:
Mr Kelvin Defranciscis, Department of Human Services

Riley Calaby, Department of Human Services

[2019] AATA 1774

11 July 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Jurisdiction

Procedural Fairness

Remedies

Statutory Construction

Date(s) of hearing:	18 June 2019
Date final submissions received:	25 June 2019
Applicant:	Mr Stephen Mueller
Solicitors for the Respondent:	Mr Kelvin Defranciscis, Department of Human Services Riley Calaby, Department of Human Services