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

[2018] AATA 3221

Perks and Secretary, Department of Social Services (Social services second review) [2018] AATA 3221 (5 September 2018)

Division:GENERAL DIVISION

File Number:           2018/3903

Re:Rachel Perks

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Dr L Bygrave, Member

Date: 5 September 2018

Place:Sydney

The application for an extension of time is refused.

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

Dr L Bygrave, Member

Catchwords

EXTENSION OF TIME – principles to be applied – whether application for extension of time is reasonable in all the circumstances – grounds for waiving whole or part of FTB debt and schoolkids bonus debt – definition of "special circumstances" under A New Tax System (Family Assistance) (Administration) Act 1999 – extension of time refused

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) s 29

A New Tax System (Family Assistance) Act 1999 (Cth) s 35UA

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 16, 20, 21, 95, 97, 101, 105 and 105A

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Chouman and Secretary, Department of Education, Employment and Workplace Relations [2009] AATA 222
Comcare v A’Hearn [1993] FCA 498
Dranichnikov v Centrelink [2003] FCAFC 133
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344

REASONS FOR DECISION

Dr L Bygrave, Member

5 September 2018

INTRODUCTION

1. On 9 July 2018, Mrs Rachel Perks lodged an application under subsection 29(7) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) seeking an extension of time to make an application to review a decision made on 27 November 2017 by the Social Services and Child Support Division (SSCSD) of the Tribunal.

2. The SSCSD decision affirmed a decision made by the Department of Human Services (Centrelink) to ask Mrs Perks to repay a Family Tax Benefit (FTB) debt in the amount of $12,140.17 and a schoolkids bonus debt in the amount of $1,686.00.

3. The Secretary opposes the extension of time sought.

4. The application was heard by the Tribunal in Sydney on 14 August 2018. Mrs Perks attended the hearing by teleconference and was assisted by her mother.

   PRINCIPLES TO BE APPLIED FOR AN EXTENSION OF TIME APPLICATION

5. Ordinarily, in accordance with paragraph 29(2)(a) of the AAT Act, an application for review of a decision must be lodged with the Tribunal within 28 days from the day on which the decision is given to the applicant.

6. Pursuant to subsection 29(7) of the AAT Act, the Tribunal may extend the time for lodging an application if it “is satisfied that it is reasonable in all the circumstances to do so” [emphasis added].

7. The principles to be applied in determining an application for an extension of time have been set out by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348 and 349 as follows:

   (a)an applicant must show an “acceptable explanation of the delay” and that it is “fair and equitable in the circumstances” to extend time;

   (b)a distinction is to be made between an applicant who has “rested on his rights” and allowed the decision-maker to believe that the matter was finally concluded, and one who has continued to make the decision-maker aware that he or she contests the finality of the decision;

   (c)any prejudice to the respondent caused by the delay;

   (d)whether the respondent or the general public would suffer any prejudice as a result of the extension;

   (e)the merits of the substantial application;

   (f)considerations “of fairness as between the applicant and other persons” in a similar position.

8. These principles are not to be applied mechanically. For example, an “acceptable explanation for the delay” is not an essential precondition to the exercise of the discretion, although it is to be expected that such an explanation will normally be given: Comcare v A’Hearn [1993] FCA 498; (1993) 45 FCR 441.

9. All of the circumstances of the case must be considered; the overriding consideration being whether it is “reasonable in all the circumstances” to grant the extension.

   REASONS FOR DELAY

10. Mrs Perks sought review of the decision made by the SSCSD on 27 November 2017, which is more than five months after the 28 day limit. In her extension of time application, Mrs Perks stated that:

    …the last 7 months has been full on as my father was diagnosed with cancer throughout this time I have been involved with appointments and treatments for him. I then had my father in law diagnosed with cancer with a month to live who sadly passed away last month.

11. At the Tribunal hearing, Mrs Perks explained that her family situation over the past nine months has been extremely stressful. After her father was diagnosed with cancer in December 2017, she was driving him to medical appointments and treatment every day for four months. She was also working part-time and caring for her children during this period. Her father-in-law was then diagnosed with cancer in February 2018 and passed away. Mrs Perks also stated that her husband has been experiencing difficulties in his workplace since December 2017.

12. I accept that Mrs Perks’ circumstances over the past nine months show an acceptable explanation for the delay and she did not “rest on her rights”. I am satisfied that this finding weighs for granting an extension of time.

    PREJUDICE TO THE RESPONDENT AND GENERAL PUBLIC

13. It is in the interests of both the Secretary and the general public that prescribed time limits are adhered to so as to ensure there is a predictable and orderly conclusion to appeal processes. I also have regard to Chouman and Secretary, Department of Education, Employment and Workplace Relations, in which the Tribunal stated:

    ... to grant an extension of time in this matter would be unfair to other applicants in similar situations who have not submitted late applications.

    The grant of an extension of time in this matter would set an unwelcome example and cause inconvenience to Centrelink and the Tribunal in having to deal with large numbers of such applications. There is a general public interest in ensuring finality in decision-making.[1]

    [1] [2009] AATA 222, paras [30-31].

14. I accept that the Secretary and the general public would have expectations about the finality of the decision-making process in relation to Mrs Perks’ application. As the delay is more than five months, I am satisfied that there would be prejudice to the Secretary and the general public if the extension of time is granted. This factor weighs against granting an extension of time.

    MERITS OF SUBSTANTIVE MATTER

15. I am required to consider the merits of the substantive application in deciding whether to grant the extension of time. The substantive matter is whether, on the balance of the evidence before the Tribunal:

    ·Mrs Perks has a FTB debt in the amount of $12,140.17 and a schoolkids bonus debt in the amount of $1,686.00; and

    ·if so, there are any grounds for waiving all or part of the debt. 

    Relevant legislation

16. The legislation relevant to the qualification for and calculation of FTB is set out in the A New Tax System (Family Assistance) Act 1999 (Cth) (the Act) and the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) (the Administration Act).

17. FTB is means tested; a person’s rate of FTB is calculated as an annual entitlement and paid on the basis of their estimate of their adjusted taxable income (or combined adjusted taxable income if a member of a couple) for the coming financial year. A person can elect to receive FTB by way of fortnightly instalments based on income estimates.

18. At the end of each financial year, Centrelink reconciles the estimated taxable income with the actual taxable income as assessed by the Australian Taxation Office. If the income estimates were too low, the person may incur a debt. If the income estimates were too high, the person may receive arrears.

19. FTB may comprise of FTB Part A and FTB Part B payments. FTB Part B provides additional financial assistance to families where the higher income earner’s adjusted taxable income is $100,000 per year or less.

20. Section 20 of the Administration Act provides that Centrelink can make a determination about a person’s eligibility for and rate of FTB on the basis of an estimate of income. Sections 16 and 21 of the Administration Act provide that a determination about the rate of payment remains in force until another determination is made. Sections 105 and 105A of the Administration Act authorise Centrelink to review a person’s entitlement rate, where there is sufficient information, such as information that a rate may appear incorrect.

21. It is fundamental to the FTB scheme to understand that the rate of payment is based on adjusted taxable income over a whole financial year. Every recipient has their rate of FTB reconciled against their combined actual verified income.

22. The payment of schoolkids bonus was phased out in July 2016. However, prior to this date, section 35UA of the Act provided that a recipient of FTB Part A was eligible to receive schoolkids bonus payments if their adjusted taxable income was $100,000 per year or less.

    BACKGROUND

23. The Secretary’s submission dated 31 July 2018 sets out the following background facts:

    ·During the 2014-2015 financial year, Mrs Perks was in receipt of FTB and schoolkids bonus payments based on forward estimates of her and her husband’s combined income. Mrs Perks provided various combined income estimates ranging from $67,000.00 to $84,000.00.

    ·On 4 November 2015, Centrelink raised an FTB debt of $12,140.17 and a schoolkids bonus debt of $1,686.00. These debts were raised because after reconciliation of Mr and Mrs Perks tax returns for the 2014-2015 financial year, the income estimates were lower than their actual assessable taxable income, which was $138,297.00. As a result, Mrs Perks should have been paid FTB at a lower rate and should not have been paid schoolkids bonus.

    CONSIDERATION

24. At the Tribunal hearing, Mrs Perks explained that the reason for the discrepancy between her forward estimates of her and her husband’s combined income and their actual taxable income was that she received an unexpected compensation payment prior to the end of the 2014-2015 financial year. However, she did not dispute the amount of their actual combined adjusted taxable income for the 2014-2015 financial year nor the calculation of FTB and schoolkids bonus debts by Centrelink.

25. Based on the evidence before the Tribunal, I am satisfied that Mrs Perks was overpaid FTB in the amount of $12,140.17 for the 2014-2015 financial year and this amount is a debt to the Commonwealth.

26. Mrs Perks was not eligible to receive schoolkids bonus payments because Mr and Mrs Perks’ combined actual taxable income for the 2014-2015 financial year was not $100,000 or less. I am satisfied that Mrs Perks was overpaid schoolkids bonus in the amount of $1,686.00 and this amount is a debt to the Commonwealth.

    Are there any grounds for waiving all or part of the debt?

27. As a general rule if a person has a debt to the Commonwealth, the debt must be repaid. However, in certain situations a requirement to repay a debt may be written off, which means that repayment of the debt is postponed for a definite or indefinite period; or waived, meaning that the debt does not need to be repaid.

28. Section 95 of the Administration Act sets out the circumstances in which a debt can be written off. Subsection 95(2) states that a debt may be written off if it is irrecoverable at law, the person has no capacity to repay it, the person’s whereabouts are unknown, or it is not cost-effective to try and recover the debt. A person is taken to have capacity to repay a debt unless it would cause the person to experience severe financial hardship.

29. Section 97 of the Administration Act says that a debt can be waived if the overpayment arose only because of Centrelink error; and the person received the money believing it to be their correct entitlement; and, in situations where the debt was raised within the current or subsequent financial year, if the repayment of the debt would cause the person severe financial hardship.

30. As set out in paragraphs 23 and 24 above, the FTB and schoolkids bonus debts arose because Mrs Perks underestimated the combined income of herself and her husband for the 2014-2015 financial year. I find the debts should not be waived due to administrative error.

31. Section 101 of the Administration Act provides that all or part of a debt may be waived if there are “special circumstances”. This can only be applied where the debt did not result wholly or partly from a false or misleading statement and where the circumstances (other than financial hardship alone) are deemed ‘special’ making it desirable to waive rather than write off the debt.

32. The term “special circumstances” is not defined in the legislation; however, the Federal Court and the Tribunal have considered the issue of special circumstances on a number of occasions. In every case, the individual circumstances of the case were examined to determine whether the circumstances were such that it would be unjust, unreasonable or inappropriate for the debt to be recovered. In particular, the Full Court of the Federal Court in the matter of Dranichnikov v Centrelink [2003] FCAFC 133 determined that whether there are special circumstances in a particular case is dependent on whether there are circumstances that would distinguish the case from the usual case. In the Tribunal’s view it is also appropriate when considering the exercise of this discretion, to have regard to the objects of the Act in the recovery of social security overpayments. The Federal Court in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 emphasises that it is not the intention of Parliament that the exercise of this discretion be confined to the ‘exceptional’ case but rather that there is something that distinguishes the case from the ordinary or usual case. Further, for special circumstances to exist there must be some factors apart from financial hardship alone, which distinguish the case and set it apart from other similar cases.

33. In considering this waiver provision, the Tribunal is also mindful of the purpose of the social security system, Parliament’s intention that payments are made on the basis of need and that debts should generally be recovered unless there are special circumstances. This means that social security recipients who receive money they are not entitled to receive are generally expected to repay it unless repayment would be unjust, unreasonable or inappropriate in the particular circumstances.

34. At the Tribunal hearing, Mrs Perks said she is extremely stressed by her current financial, personal and health circumstances.

35. Mrs Perks explained that she has been involved in difficult legal proceedings associated with her previous employment. As a result, she is currently receiving compensation payments in the amount of $580.00 per week and seeking on-going employment with the assistance of the insurance agency. Mrs Perks said her husband has also experienced difficulties in his workplace since December 2017 and is undergoing retraining prior to resuming employment shortly. Mr and Mrs Perks have a mortgage. Mrs Perks confirmed she is repaying the Centrelink debts in the amount of $60.00 per fortnight but said she has been borrowing money from her mother in order to make these repayments.

36. The Secretary’s submissions contended that Mrs Perks can negotiate with Centrelink and reduce her debt repayments to as low as $5.00 per fortnight. Mrs Perks said she has tried to discuss this option with Centrelink but had not received any assistance to date.

37. In relation to Mrs Perks’ health situation, she told the Tribunal that she has suffered from depression for the past five years. As no information was before the Tribunal, I provided Mrs Perks additional time to file supporting medical evidence.

38. Mrs Perks filed medical reports from Ms Georgina Anderson (registered psychologist) dated 10 July 2014, 9 October 2017 and 15 August 2018. These reports set out that Mrs Perks is continuing to experience depression and stress at a clinically severe range. I note that Mrs Perks is receiving ongoing counselling and medical support.

39. While I accept that Mrs Perks is experiencing financial stress and depression, I find that a global assessment of her situation does not constitute special circumstances that warrant waiver of the debt that remains outstanding under section 101 of the Administration Act.

40. I therefore find that there are minimal prospects of success of the substantive application.

    CONCLUSION

41. Taking into account all of the information before me, I am not satisfied that it is reasonable in the circumstances to grant the extension of time.

    DECISION

42. The application for an extension of time is refused.

I certify that the preceding 42 (forty - two) paragraphs are a true copy of the reasons for the decision herein of Dr L Bygrave, Member

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Associate

Dated:  5 September 2018

Date(s) of hearing:	14 August 2018
Applicant:	By telephone
Solicitors for the Respondent:	Jimmy Kim, Department of Human Services