Petreska and Secretary, Department of Family and Community Services
[2004] AATA 972
•17 September 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 972
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/637
GENERAL ADMINISTRATIVE DIVISION ) Re CVETA PETRESKA Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal REAR ADMIRAL A R HORTON AO Date17 September 2004
PlaceSydney
Decision The decision under review is set aside, and in substitution thereof the Tribunal decides that the debt of $1,349.75, being Family Tax Benefit paid for the period 1 July 2001 to 30 June 2002, is waived.
[Sgd] Rear Admiral A R Horton AO, Member
CATCHWORDS
SOCIAL SECURITY - raising and recovery of debt – Family Tax Benefit part B – rate calculated on nil income of secondary earner – disability support pension payments not included in income of secondary earner – write off/waiver of overpayment in 2000/2001 – debt due to Commonwealth for overpayment 1 July 2001 to 30 June 2002 – error not solely attributable to administrative error by respondent – severe financial hardship not demonstrated - consideration of special circumstances – criteria met – decision set aside
Social Security (Administration) Act 1999 - section 237
A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration Act) 1999 - ss 95, 96, 97, 101, 102
Re Beadle v Director-General of Social Security (1985) 7 ALD 670
Ivovic and Director-General of Social Services (1981) 3 ALN N95
Re Reynolds and Secretary, Department of Social Security (1986) AATA 2656
REASONS FOR DECISION
17 September 2004 REAR ADMIRAL A R HORTON AO 1. This is an application to review a decision of the Social Security Appeals Tribunal (“SSAT”) on 3 May 2004 that affirmed a decision made by Centrelink on 15 May 2003 to raise and recover a debt from Mrs Cveta Petreska (“the Applicant”) of $1,349.75, being Family Tax Benefit (“FTB”) paid for the period 1 July 2001 to 30 June 2002.
2. At a hearing before the Administrative Appeals Tribunal (“the Tribunal”), Mrs Petreska was self represented. Mr Gary Richardson, an advocate from the Centrelink Service Recovery Team, appeared for the Secretary, Department of Family and Community Services (“the Respondent”). Mr Boris Petrusev, an interpreter fluent in the Macedonian language, assisted the Tribunal. The Tribunal took into evidence the documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, a letter with attachments from the Illawarra Legal Centre dated 19 July 2004 (Exhibit A1), pharmacy accounts (Exhibit A2) and the Respondent’s Statement of Facts and Contentions (Exhibit R1). Mr Dimitrija Petreski, the Applicant’s husband, gave oral evidence.
3. The Applicant accepted that the overpayment had occurred in the stated period, and that the amount calculated by the Respondent was correct, but submitted that in the circumstances, the overpayment should be written off or waived.
EVIDENCE
4. Mr Petreski worked as a crane chaser with Broken Hill Proprietary until 1984, when he was injured and subsequently received workers compensation. In 1993 he applied for and was granted the Disability Support Pension (“DSP”) which he still receives. Mrs Petreska received the DSP spouse pension until about early 2002, when she was granted the DSP. In August 1999, after twenty years of marriage, Mrs Petreska gave birth to their first and only child, Borge. Mrs Petreska described this as a traumatic period; the birth was caesarean and Borge was born with heart problems. He subsequently had two heart surgery procedures and remained in hospital for 7 weeks. Mrs Petreska stated that the prognosis for Borge was “negative”, and the Tribunal understands that he has since had 2 further operations.
5. Borge is now 5 years old. He attends pre-school for 2 and ½ hours twice a week, and the family expect him to attend a special school for children with disabilities at Warrawong in 2005. Mrs Petreska described being under intense pressure since Borge was born because of his medical conditions, and observed that he was very demanding of her time and attention.
6. The Illawarra Legal Centre (exhibit A1) provided a letter from Dr Terry Sands, consultant paediatrician, dated 15 July 2004, in which Dr Sands notes that he has been treating Borge since birth, and that he has “multiple severe ongoing health problems”, suffering from velocardiofacial syndrome, cyanotic congenital heart disease, respiratory problems, speech problems, palatal dysfunction and abnormal growth. He confirms he sees Borge regularly as do a number of relevant specialists, and that Borge is on daily medication. Dr Sands also opines that “the degree of intensity of the family’s extra involvement because of his health problems is likely to be need over a prolonged period of time”.
7. A further attachment to exhibit A1 is a letter from Dr Naveen Chandra, consultant psychiatrist, dated 12 July 2004. Dr Chandra writes that Mr Petreski and Mrs Petreska both suffer from chronic anxiety and panic disorder with agoraphobia, becoming depressed from time to time, and having “their own stresses at home because of their sons[sic] congenital deformities”. He states that both take daily medication of Aurorix and Xanax.
8. Family Tax Benefit (“FTB”) was introduced in 1999 under A New Tax System (Family Assistance) Act 1999 (“the Act”), the administration arrangements for implementation being contained in A New Tax System (Family Assistance) (Administration) Act 1999 (“the Administration Act”). Mrs Petreska became eligible for this payment when it formally replaced the previous payment system on 1 July 2000. In accordance with the required procedure, she subsequently provided an estimate of combined adjustable taxable income to Centrelink in order that the rate of FBT could be established. The estimate showed that Mr Petreski had no income, he being unemployed. The estimate of Mr Petreski’s income, as the secondary earner, was relevant to the correct calculation of FBT part B.
9. In letters of 19 June 2000, 6 February 2001 and 23 June 2001, as recorded in the T documents, Centrelink advised Mrs Petreska that her rate of FBT (effectively part B) was being calculated on Mr Petreski’s estimated total income of $0.0. The letters of 19 June 2000 and 23 June 2001 require the recipient to advise changes in income of the recipient and partner, and further advise that comparison of incomes will be made with the Australian Taxation Office (“ATO”) each year. The components of income are not identified. The letter of 6 February 2001, however, requires the recipient to include in any income estimate, the full amounts of pensions or benefits derived from Centrelink.
10. On 14 February 2002, and by appointment, Mrs Petreska provided revised estimates of income to Centrelink to take account of the DSP payments to herself and Mr Petreski. Following reconciliation of the entitlements of Mrs Petreska for the 2001/2002 financial year, Centrelink determined on 15 May 2003 that FTB had been overpaid by $1,349.75 because the DSP had not been included in the income estimates by Mrs Petreska. Mrs Petreska was informed of the overpayment in writing.
11. The documents before the Tribunal provided insufficient explanation as to what led to Mrs Petreska amending her income estimate details in February 2002. The letter from Ms Liz Turnbull of the Illawarra Legal Centre Inc assists in this matter, as it refers to a “previous decision to waive an earlier similar debt for the 2000/2001 financial year”. The Tribunal considered an explanation of this decision to be essential, and the Respondent was invited to provide that explanation.
12. Mr Richardson had apparently been appointed to act for the Respondent at short notice in the absence through sickness of the nominated officer, and the Tribunal accepted that he may not have been fully familiar with the issues. The Tribunal understands that in 2001, the Government made a decision that overpayments occurring in the first year of the new FTB arrangements could be reduced by $1000 as some families were not familiar with the requirements for estimating incomes, and had provided incorrect details. It is understood that a letter from Centrelink to Mrs Petreska dated 23 January 2002 (not on file) advised her of an overpayment of $2079.30 in 2000/2001, but as she would benefit by the above decision by the Government, that debt would be reduced to $1079.30.
13. Mr Richardson then explained that this remaining debt for the 2000/2001 financial year was varied, being reduced to less than $1000, and subsequently waived under section 102 of the Administration Act. A Centrelink letter on file (T7A) gives the reasons for the waiver as the health condition of Mrs Petreska, that of her son, and the confusion “which may have existed regarding the status of non taxable allowances prior to the letter of 6 February 2001” (referred to in paragraph 9). The important point, as understood by the Tribunal, is that the letter of 23 January 2002, advising an overpayment for the previous financial year, was the trigger that led Mrs Petreski to seek an appointment with Centrelink. This appointment occurred on 14 February 2002, as earlier noted, during which Mrs Petreska provided revised estimates for income. From that date, as far as the matter before this Tribunal is concerned, Centrelink was in possession of a reasonable estimate of income for Mrs Petreska and Mr Petreski, and any further overpayment in 2001/2002 would have been minor.
14. In evidence, Mrs Petreska stated that she did not appreciate the requirement to include the DSP for herself and her husband in her estimate of income until receipt of the letter of 23 January 2002. She did not appreciate that she was being overpaid FTB until receipt of the letter of 23 January 2002. She could not recall receipt of the letter from Centrelink of 6 February 2001, which as noted above, specifically referred to the requirement for pensions or benefits to be included in income estimates. In cross examination, Mrs Petreska stated that her reading ability in English was limited, and where necessary, she took correspondence to the local community hall for translation. The difficulties she and her husband were experiencing in that period in respect of her son’s health were consuming all their attention.
15. She further stated that she could not understand why Centrelink did not automatically take account of their DSP payments when calculating the rate of FTB, but when she became aware of the requirement for her to include DSP in income estimates, she had immediately taken steps to provide correct estimates, and she continues to do so. Mr Petreski gave evidence, and reiterated that the overpayment that occurred through the failure to include the pension payments to himself and his wife resulted from a lack of understanding of the requirement, and because their attention was directed to their son’s health.
16. Exhibit A1 from the Illawarra Legal Centre included a list of fortnightly expenses incurred by the Petreska family. Following some adjustment in the course of the hearing, including the addition of mortgage payments, and the adjustment of telephone expenses, a total of about $875 in fortnightly expenses was calculated. Mrs Petreska advised that this did not include some one–off pharmaceutical expenses which were not covered by the Health Concession Card, nor the yearly expenses such as home and car insurance. Exhibit A2 contained a summary of accounts and tax invoices for the family for various periods with Berkeley Pharmacy.
17. The Respondent submitted that the family was not in a situation of severe financial hardship (section 97(2) of the Administration Act) as the calculated fortnightly expenses fell some $200 short of their income of $1080, comprised of two DSP payments, FBT and Carer Allowance. Further, Mrs Petreska was seemingly having no difficulty in paying off the overpayment at $20 per fortnight, as appropriate under section 82 of the Administration Act.
18. The Respondent submitted that the circumstances did not meet the limited criteria for debt write off under section 95 of the Administration Act, citing Re Reynolds and Secretary, Department of Social Security (1986) AATA 2656. Neither could the debt be waived under section 97 of the Administration Act; whilst there was an element of administration error on the part of Centrelink, section 97 requires that the overpayment must have resulted solely from that error, and that was not the case. The Respondent referred to the Centrelink letter of 6 February 2001 in particular, which drew Mrs Petreska’s attention to the income estimate requirements.
19. In respect of the remaining option that might be considered, that of “special circumstances” under section 101 of the Administration Act, the Respondent accepted that the overpayment had not resulted from any deliberate action by Mrs Petreska, and that her son had significant medical problems, causing much concern for the family. In a financial sense, carer allowance and the Health Concession Card provided relief, as does the eligibility for the DSP for both Mr Petreski and Mrs Petreska. But case law is such that “special circumstances” had to show the circumstances as being unusual, unfair or unreasonable, and that was not the situation in this matter.
LEGISLATION AND FINDINGS
20. There is no dispute by Mrs Petreska that an overpayment occurred in the 2001/2002 year, and specifically for the period from 1 July 2001 to 14 February 2002. There is no dispute that the overpayment, as reconciled by Centrelink, was $1,349.75. The position of Mrs Petreska is that such debt should be written off, because Centrelink contributed to the overpayment by not taking account of the known DSP payments to herself and her husband, or waived in the light of the circumstances, particularly those relating to the severe medical conditions of her son Borge.
21. Section 95 of the Administration Act refers to the writing off of a debt, and states relevantly:
“(1)Subject to subsection (2), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(2)The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtors whereabouts are unknown …
(d)it is not cost effective for the Commonwealth to take action to recover the debt.”
22. The debt is recoverable at law and Mrs Petreska has demonstrated the capacity to repay the debt, deductions already being undertaken from FTB in accordance with section 84 of the Administration Act. Clearly, the Respondent has determined that it is cost effective to take such action to recover the debt. Accordingly, the debt cannot be written off.
23. Power to waive the Commonwealth’s right to recover the debt is vested in the Secretary, and therefore in the Tribunal in these circumstances, under section 96 of the Administration Act, sections 97 to 102 being relevant. In this matter, only section 97, which refers to a debt attributable solely to an administrative error by the Commonwealth, and section 101 which permits the debt to be waived in special circumstances, need be considered.
24. The Respondent has conceded that the circumstances relating to the introduction of the FTB, whereby the government acknowledged uncertainty by recipients as to the requirements for estimating income, reflected some administrative error. However, the Tribunal finds that the debt could not be attributed solely to administrative error, and section 97 is quite specific in that the debt must be solely attributable to an administrative error by the Commonwealth. Whilst some letters from Centrelink to Mrs Petreska, in the view of this Tribunal, failed to describe the criteria for estimating income, that of 6 February 2001 adequately defined the requirement to take account of pensions and benefits. Whilst Mrs Petreska could not recall receiving that letter at that time, the letter may be deemed to have been received under section 237(1) of the Social Security (Administration) Act 1999.
25. Section 101 of the Administration Act provides an authority to waiver the debt “in special circumstances”, and states relevantly:
“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 in part from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of the family assistance law; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.”
26. Special circumstances is not defined in legislation, but the view of Toohey J in the Federal Court decision in Re Beadle v Director-General of Social Security (1985) 7 ALD 670 has been widely followed. He stated:
“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. Whether circumstances answer any of these descriptions must depend on the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”
27. Neither the Respondent nor the SSAT considered the circumstances in this matter to be “special”, the latter observing that “taking into account all the circumstances and considering the objects of the family assistance legislation in providing income support for families and the public interest in ensuring that overpayments are recovered the tribunal decided that Mrs Petreska’s circumstances were not such as to warrant waiving the whole or part of the debt”.
28. Section 101 does not permit financial hardship alone to be reason for special circumstances. Nor does the Tribunal consider, on the available evidence, that Mrs Petreska and her family are in uncommon or exceptional financial circumstances. The Tribunal does however take into account the medical circumstances of Borge and the evidence given by Mr Petreski and Mrs Petreski, evidence which is well supported in the reports by Dr Sands and Dr Chandra. Alone, it might be argued that these circumstances are neither uncommon nor exceptional, and reference has previously been made to the receipt of carer payment as providing financial compensation to enable the family to better cope. The Tribunal considers however, that the decision by the Respondent to waive the overpayment in 2000/2001 is relevant to this matter.
29. To summarise, the letter of 6 February 2001 advised the requirement to include pension payments (ie DSP) in estimated income for FTB purposes. It was not until 23 January 2002, almost twelve months later, that Mrs Petreska was advised of an overpayment, resulting from her failure to identify DSP payments as part of income. In the interim, she had made no change to her previous advice that the income of Mr Petreski was nil. After applying the Government waiver of $1000, Centrelink waived the remaining debt for 2000/2001 on 23 April 2002, the reasons for such a decision being “special circumstances due to Mrs Petreska’s health condition, that of her son, and the confusion which may have existed ….prior to the letter of 6 February 2001”.
30.The Tribunal accepts the evidence of Mrs Petreska that she does not recall receiving the letter of 6 February 2001. Certainly, she made no attempt to amend the details of her husband’s income until receipt of the advice of the overpayment, almost twelve months later, and the Tribunal has no reason to doubt her evidence that she acted in good faith. Accordingly, the Tribunal is of the opinion that the circumstances deemed as justifying the decision by the Respondent to waive the overpayment for the 2000/2001 year, were equally relevant and applicable, on the evidence, to the next six months before the receipt of advice that she had been in an overpayment situation during that six months. The Tribunal finds that taking into account all aspects in this matter, the circumstances meet the criteria in section 101(b) of the Administration Act in that they were “special”.
31. The criteria in section 101 has a number of parts. Whilst “special circumstances” are considered to exist in accordance with subsection (b), the conditions of subsection (a)(i) (or (ii)) must also be met. In this matter, the Tribunal must be satisfied, in accordance with that subsection of the Act, that the debt did not result wholly or in part from “the making of a false statement or false representation”. The Tribunal is so satisfied, the evidence being that Mrs Petreska did not understand the necessity to show pension payments as income, and hence provided income estimates in ignorance of such a requirement, but in good faith.
DECISION
32. Given that “special circumstances” are deemed to exist, the decision of the SSAT to raise and recover a debt from Mrs Petreska of $1,349.75 in respect of Family Tax Benefit for the period 1 July 2001 to 30 June 2002 is set aside and the debt waived under the provisions of section 101 of A New Tax System (Family Assistance) (Administration) Act 1999.
I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of REAR ADMIRAL A R HORTON AO
Signed: Neil Glaser
AssociateDate/s of Hearing 8 September 2004
Date of Decision 17 September 2004
Representative for the Applicant Self represented
Advocate for the Respondent Gary Richardson
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