Re Brittain and Secretary, Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2000] AATA 161

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S1999/44

General Administrative DIVISION )

Re NATALIE BRITTAIN
Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date3 March 2000
PlaceAdelaide

Decision Pursuant to s.43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor, decides that the debt for the period 3 July 1997 to 22 October 1998 be waived.

(Signed)
J.A. KIOSOGLOUS
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Family Payment – overpayment – regard had for estimate – whether Department erred in having regard to the estimate – whether erroneous regard for estimate is departmental error – sole administrative error considered – whether departmental error can constitute "special circumstances" – discussion of "special circumstances" and "administrative error"
Social Security Act 1991 ss. 885,891,1069, 1223, 1237A,1237AAD
Re Stuart and Secretary, Department of Social Security (1999) 54 ALD 241
Re Secretary, Department of Family and Community Services and Childs [1999] AATA 630
Re Secretary, Department of Family and Community Services and Flores [1999] AATA 69
Re Secretary, Department of Social Security and Abeyratne (AAT 13081, 10 July 1998)
Re Secretary, Department of Family and Community Services and Delia [1999] AATA 779
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Gale and Secretary, Department of Employment, Education and Training (1996) 42 ALD 477
Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543
Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113
Re Nehma and Secretary, Department of Family and Community Services [1999] AATA 219
Re Clark and Secretary, Department of Family and Community Services [1999] AATA 809

REASONS FOR DECISION

3 March 2000 Senior Member J.A. Kiosoglous MBE

This is an application by Ms Natalie Brittain (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 28 January 1999 (T2) which affirmed a decision of an authorised review officer (ARO) on 4 December 1998 (T15) affirming the delegate's decision of 9 November 1998 (T9) to raise and recover a debt of $1,867.25 being Family Payment for the period 3 July 1997 to 22 October 1998.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T19), together with 14 exhibits, 12 lodged by the applicant (Exhibits A1-A12) and 2 lodged by the respondent (Exhibits R1-R2). In addition, the Tribunal heard evidence from the applicant. The respondent called Mr Wayne Mees, Centrelink Customer Service Officer, as a witness. The applicant was represented by her partner, Dr T. Horr, and the respondent was represented by Ms C. Hunt, a departmental advocate.
The issues before the Tribunal are whether or not the applicant was overpaid during the relevant period and if so, whether or not part of the resultant debt should be waived due to sole administrative error or special circumstances.
history of the application
The applicant and her partner, Dr Horr, live together and have two children for whom the applicant received and continues to receive Family Payment. The applicant estimated her and her partner's combined income for the 1996/97 tax year in her claim form dated 16 September 1996 as $46,916.
Dr Horr ceased work in February 1997. The applicant received a letter dated 11 June 1997 (T3/46) "requesting" an estimate of income for the 1997/98 tax year and stating (inter alia):
"…
Because your circumstances have changed in the last 12 months, we need an estimate of your combined taxable income for the 1997/98 financial year.
As you have not already given us an estimate for 1997/98, please complete and return the Estimate Statement.
The authority for this request is in section 873 of the Social Security Act. If you do not return this form within 14 days after this notice is given your payment may be cancelled."

To this the applicant responded on the attached form (T3/47) with an estimate of $25,462. That form also contained a statement which reads (inter alia):

"I/We declare that the information supplied is complete and correct.
If I have provided an estimate of income, I agree that my Family Payment is to be recalculated if my actual income is more than 110% of my estimate and that I may have to repay any overpayment that results."

From 3 July 1997 the respondent used this estimate to calculate her entitlements. A letter dated 1 July 1997 (T5/49) informed the applicant that this figure was being used in this way.

The applicant provided a statement of combined income for the 1996/97 tax year on 27 October 1997 in the amount of $52,427 (T21).
The respondent advised the applicant by letter dated 15 December 1997 that the Department was using the estimate of $25,462 to calculate her entitlements (T7/60). On 22 October 1998 the applicant stated a combined income for the 1997/98 tax year in the amount of $28,237 (T8/66).
The delegate raised a debt on 9 November 1998 as the combined income for the 1997/98 tax year exceeded 110% of the estimate of $25,462. This decision was affirmed on review by the ARO and SSAT, the latter of whom stated (inter alia) in their reasons for decision:
"…
The Tribunal has found that Ms Brittain's family payment rate was paid based on her estimate of income in the tax year 1997/98 and that her actual income for that tax year was more than 110% of the amount of income estimated by her. This means that under section 885 her rate of family payment has to be recalculated on the basis of her actual income for that financial year.
…"

legislation

Sub-sections 1069-H13, H14, H18, H19, H21 and H22 of the Social Security Act 1991 (the Act) relate to the method of Family Payment calculation:
"Appropriate tax year
1069-H13. Subject to the following provisions of this Submodule, the appropriate tax year for a day is the base tax year for that day.
Base tax year
1069-H14. The base tax year for a day is the tax year that ended on 30 June in the calendar year that came immediately before the calendar year in which the day occurs.
…
Change to appropriate tax year because of notifiable event
1069-H18. If:
          (a)       a notifiable event occurs in relation to a person; and
(b)the person's income for the tax year in which the notifiable event occurs exceeds:
(i)        110% of the person's income for the base tax year; and
(ii)       110% of the person's income free area;
the appropriate tax year, for the purpose of applying this Module to the person for the remainder of the family allowance period, is the tax year in which the notifiable event occurs.
Change to appropriate tax year because of effect of notifiable event on income for later tax year
1069-H19. If:
          (a)       a notifiable event occurs in relation to a person; and
(b)point 1069-H18 does not make the year in which the event occurs (the event tax year) the appropriate tax year; and
(c)the person's income for the tax year that follows the event tax year is likely to exceed:
(i)        110% of the person's income for the base tax year; and
(ii)       110% of the person's income free area;
the appropriate tax year, for the purpose of applying this Module to the person for:
(d)the part of the family allowance period in which the event occurs that comes after the end of the event tax year; and
(e)the next family allowance period after the one referred to in paragraph (d);
is the year that follows the event tax year.
…
Family allowance recipient may ask Secretary to change appropriate tax year
1069-H21. If:
          (a)       family allowance:
(i)        is not payable to a person because of this Module; or
(ii)       is payable at a reduced rate because of this Module; and
(b)the person gives the Secretary an estimate of the person's income for a tax year; and
(c)the person requests the Secretary to make a determination under this point; and
(d)the person agrees that the person's rate of family allowance for that tax year is to be recalculated if the person's actual income for that tax year exceeds 110% of the amount estimated by the person;
the Secretary must determine that the appropriate tax year, for the purpose of applying this Module to the person on or after the day on which the request is made, is the tax year in which the request is made.
Form of request
1069-H22. A request under point 1069-H21 must be made in writing in accordance with a form approved by the Secretary."

Section 885 of the Act provides for a recalculation of Family Payment if actual income exceeds 110% of the estimated amount:
"885 Recalculation if income exceeds 110% of estimated amount
(1)       If:
(a)in working out the rate of family allowance payable to a person, regard is had to the person's income for a tax year; and
(b)the income to which regard was had consisted of an amount estimated by the person; and
(c)the person's income for that tax year is more than 110% of the amount of the income on which the determination of the rate of family allowance was based;
the person's rate of family allowance is to be recalculated on the basis of that income.
885 (2) For the purposes of this section, a person's income for a particular tax year is the sum of:
(a)       the person's taxable income for that year; and
(b)       the person's adjusted fringe benefits value for that year; and
(c)       the person's target foreign income for that year; and
(d)       the person's net rental property loss for that year.
885 (3) In this section:
adjusted fringe benefits value has the same meaning as in points 1069-H25 and 1069-H26 in Module H of the Family Allowance Rate Calculator in section 1069."
Section 891 of the Act requires the s.885 recalculation to take effect from the day on which the earlier decision took effect (or was first implemented):
"891 Underestimate of income - date of effect of determination
If:
(a)the Secretary makes a determination of a person's rate of family allowance; and
(b)in making the determination, the Secretary had regard to the person's income for a tax year; and
(c)the income to which regard was had included an amount or amounts estimated by the person; and
(d)the person's income for the tax year is more than 110% of the amount of the income on which the determination referred to in paragraph (a) was based; and
(e)the Secretary makes a determination varying the person's rate of family allowance, or cancelling the person's family allowance, to give effect to the recalculation required by section 885;
the later determination takes effect on the day on which the earlier determination took effect."

applicant's submissions

Dr Horr, for the applicant, contended that the notice dated 11 June 1997 (T3/46) does not indicate that a response to it constitutes a request to use the figure provided in the response as an estimate. He submitted that the notice demands an estimate be given but that no formal request was made by the applicant that the figure provided in response to the letter be used as an estimate. The estimate provided by the applicant on the form (T3/47) was made without being aware of the consequences of the provision of such an estimate. Under cross-examination, Dr Horr stated that he and the applicant would have read the letters sent in July 1997 and thereafter tried to comprehend them on the basis of what they knew then, but that they did not understand the importance of the letters, and did not understand that the combined income figure listed (such as at T5/49) was the basis upon which payment was being made. On his understanding of those letters, the significant aspect was that one was to contact the Department upon receipt of taxation returns and that nothing need be done before that time.
In Dr Horr's submission, given no formal request was made by the applicant for the new estimate to be used to determine the rate of entitlement, the consequent payment at that rate is due to departmental error.
Dr Horr further submitted that the Department was in error in continuing to use the $25,462 estimate after July 1998, at which time it was no longer applicable. In his submission, the respondent should have made provision for the applicant to make a new estimate in July 1998 for the 1998/99 tax year.
Dr Horr contended that the average income for the total periods of the 1997/98 and 1998/99 financial years is within 10% of the $25,462 estimate in any event, and so the payment during the 15 month debt period was in fact correct. In Dr Horr's submission the debt only arose because the applicant worked overtime in the last weeks of the 1997/98 financial year, so it was unfair to penalise her over the entire period of the overpayment.
Dr Horr contended that if there is a debt it should be waived pursuant to ss.1237A or 1237AAD of the Act and notes that the applicant had no understanding of the way in which the Family Payment system works, nor was the applicant provided with any information which would enable such understanding despite asking for such information at various times. Dr Horr submitted that the applicant acted in good faith and with honesty at all times, and also referred to his mother's health during the period and especially towards the end of the 1997/98 financial year as being circumstances contributing to "special circumstances".
wayne phillip mees
Mr Mees, a Centrelink Customer Service Officer called by the respondent, gave evidence that he recalled he may have had a conversation with the applicant in or around November 1998, but not before the time at which the debt was raised.
He stated that the pamphlet issued in 1998 was much clearer in explaining Family Payment than its predecessors, and that before this time it was unlikely the applicant would have been able to access adequate written information on Family Payment. He further stated however, that he would expect most Customer Service Officers to be able to sufficiently explain the Family Payment system verbally.
respondent's submissions
Ms Hunt submitted, on behalf of the respondent, that the figure of $25,462 provided in response to the letter dated 11 June 1997 (T3/47) constitutes an estimate for the purposes of determining income, and that the provision of that figure brought into being sub-s.1069-H21 of the Act which sets the appropriate tax year as being that in which the estimate is provided.
Ms Hunt referred to the letters dated 6 July 1997 and 15 December 1997 and submitted that the Department provided sufficient information to ensure that the applicant was aware that she was paid on an estimate.
She submitted that from 1 January 1998 the base tax year was 1996/97, and that since the applicant's entitlement was being based on an estimate, sub-s.1069-H15 came into operation. Sub-section 1069-H15 provides that where the current estimate in use is lower than the relevant base tax year, then the current tax year is the appropriate one, hence the continued use of the estimate.
She contended that the Department gave adequate advice of its procedures, and that the debt arose as the result of unexpected overtime. In her submission, there was no administrative error, and nor are there circumstances such that they could be described as being special. In particular the health of Dr Horr's mother was not special in that it did not prevent the applicant from managing her day to day affairs. She conceded that the applicant acted with good faith at all times.
discussion and findings
This matter can be distinguished from the general cases involving overpayments arising from notifiable events in that although a notifiable event occurred on 23 September 1996, (that being the commencement of the applicant's partner's employment), as the actual taxable income turned out to be not more than 110% of the relevant tax year, this did not in itself give rise to the overpayment.
What gave rise to the overpayment in this case was the fact that the Department had regard to the July 1997 estimate, and that the subsequent tax return showed an income of greater than 110% (although only by a fractional amount).
As regard was given to "a tax year" which amounted to more than 110% of the "estimate to which regard was had", s.885 of the Act necessarily gave rise to a recalculation of the applicant's entitlement, dated, pursuant to s.891, on the date the estimate was first regarded in determining rate of payment. Pursuant to sub-s.1223(3) of the Act, the implementation of s.885 of the Act necessarily gives rise to a debt and the Tribunal so finds there to be a debt. At this stage of establishing a debt, it is sufficient that regard was had to the estimate and to the relevant tax year, regardless of whether or not the Department was right to do so.
Having found a debt to exist, the Tribunal then turns to consider waiver. The first contention of the applicant was that the Department was in error to have regard to the July 1997 estimate, as regard should only be had to an estimate where it is specifically requested in writing by a person.
The Tribunal was referred to a number of authorities dealing with this issue. In Re Stuart and Secretary, Department of Social Security (1999) 54 ALD 241 Deputy President Forgie stated at paragraphs 64-69:
"64.What is a 'request'? The word is defined in the Shorter Oxford English Dictionary to mean, in so far as it is relevant in this case:
'… To express a wish or desire to have, etc.; to beg the favour or permission to be allowed to do something 1565. 2. Trans. To ask, or ask for (something) 1594. 3. To ask (a person) to do something 1533. …'
65.A similar meaning is given in Black's Law Dictionary (revised 4th edition, 1968):
'To ask for something or for permission or authority to do, see, hear, etc., something; to solicit; and is synonymous with beg, entreat, and beseech …'
66.Questions 10 and 11 are not formulated in terms of a request. There is no sense to be gained from those questions that Ms Stuart is asking the Secretary that he change her appropriate tax year or even that she is expressing a desire that he do so. The questions are formulated in terms more of an invitation. The invitation is directed to a claimant and is an invitation to provide more information on the basis that the additional information may lead to his or her being paid a greater amount. There is no sense to be gained from those questions that Ms Stuart would consider that she had a choice whether or not to give the information. There is no sense that she could have known that she was choosing either to rely on the tax year 1993/94 as her appropriate tax year or on the 1994/95 tax year. While there is an indication that Ms Stuart was being told that she could possibly receive more family payment if she gave an estimate, there is no sense from the evidence that she could have known what she was choosing between (i.e. between possibly a lesser (even nil amount), but more certain, family payment or possibly a greater amount which was based on an estimate for the financial year 1994/95 but which could lead to recalculation of her family payment during the whole of 1995 if she incorrectly estimated that income (section 885)).
67.Taking the whole form into account, I am not satisfied that the form can be read as a request made by Ms Stuart to the Secretary to determine that her appropriate tax year is the tax year 1994/95.
68.As there is no request by Ms Stuart to change her appropriate tax year, the Department should have calculated Ms Stuart's rate of family payment on the basis of her assessed taxable income for the tax year 1993/94. The fact that it did not do so led to its making an overpayment for the estimated income of Ms Stuart was less than her actual income for the tax year ended 30 June 1994.
69.The mistake in calculating the amount of family payment payable to Ms Stuart was, at the outset, solely due to the administrative error of the Department. There remains, however, a question whether the amount of the overpayment was solely due to its error throughout the entire 1995 calendar year or whether it was due to a failure or omission by Ms Stuart to comply with the Act? The answer to that question depends upon whether there has been a failure to notify the Department of a notifiable event."

This decision has been applied by the Tribunal in Re Secretary, Department of Family and Community Services and Childs [1999] AATA 630, wherein Senior Member Hallowes rejected an argument that the respondent in that case had made a "constructive request". Senior Member Hallowes also applied Re Stuart in Re Secretary, Department of Family and Community Services and Flores [1999] AATA 69, wherein the Tribunal found that even where Mrs Flores gave an estimate on the approved form, she did not make a formal "request" on that form. In Re Secretary, Department of Social Security and Abeyratne (AAT 13081, 10 July 1998) Tribunal Member Gillham stated at paragraphs 16 and 20:
"16.In the present matter there is no evidence to indicate that when Mr and Mrs Abeyratne visited an office of the applicant (see para 5) on 25 January 1996 it was explained to them that they had a choice. It appeared to have been assumed that they wanted their family payment to be based on the estimate of $28,000. There is no indication on form SC162 that they were requesting the Secretary to determine that the appropriate tax year should be 1995/96 rather than the base year (1994/95) and that the estimate of $28,000 for 1995/96 was given for that purpose. Form SC162 does not appear to be designed for that purpose. At T25, p66, the reason for the request to provide details about the estimated income for 1995/96 is: "Because of the change in your circumstances that you told us about at Question 8". The change in circumstances indicated at Question 8 is given as Mr Abeyratne's taxable income in 1995/96 being less or likely to be less than in 1994/95. As in the case of Re Stuart (supra) there is no sense from the evidence in this matter that Mr and Mrs Abeyratne could have known that they were making a choice between receiving a greater amount of family payment but with the risk of incurring a debt if the actual income was underestimated by more than 10%, and receiving a lesser but more certain amount of family payment based on their 1994/95 taxable income. Mr and Mrs Abeyratne's intention appeared to be to recommence family payments following the return of the family from overseas. The consequence of their signing form SC162 was to incur a debt.
…
20.Having considered all the evidence the Tribunal is not satisfied that the provisions of s.1069-H20, 21 and 22 have been correctly applied; the Tribunal is not satisfied that a request pursuant to s.1069-H21 was made either by intention on the part of the respondent or in accordance with the requirements of s.1069-H22. In the Tribunal's view, the departmental officer who filled in the form which was then signed by Mr and Mrs Abeyratne, no doubt with the best of intentions, extended the respondent's desire to recommence family payments to include an increase in family payments having regard to an estimate of current year's income lower than base year income. The applicant should have calculated Mrs Abeyratne's rate of family payments on the basis of Mr and Mrs Abeyratne's assessed taxable income for the 1994/95 financial year. The Tribunal finds that this mistake amounted to an administrative error made by the Commonwealth."
Ms Hunt sought to rely on Re Secretary, Department of Family and Community Services and Delia [1999] AATA 779 wherein Deputy President Burns stated (inter alia) at paragraphs 19, 20, 23, 26 and 27:
"19.Clearly, the relevant sections of the Act vest in the Secretary very broad powers to obtain relevant information from a benefit recipient, including income details, and to have regard to that information for the purposes of the Act, namely, to assess a person's entitlement to benefit and to ensure that, from time to time, and, in response to changes in a person's circumstances, the person is receiving their correct entitlement to benefit. This serves a two-fold purpose. In the context of family allowance, if the income of a family allowance recipient increases or is likely to increase, the Secretary may reduce or cease payment of benefit in order to prevent overpayments and protect the public purse. On the other hand, if a person's income falls, or is likely to fall, the Secretary may increase the rate of payment of family allowance so as to meet the Secretary's duty to apply the legislative provisions in a manner most beneficial to the recipient of benefit.
20.In the case at hand, Mrs Delia provided two written income estimates, one of $26,991 and one of $30,000. The Tribunal's considered view is that the Secretary is not bound to have regard to such estimates only where it can be said that the person made a request under s1069-H21 or where there has been a notifiable event, but is at liberty to do so whenever information has been properly obtained by the Secretary and the Secretary sees fit for the purposes of ensuring that the person is being paid the correct rate of family allowance provided for by the Act. Such is implicit from the Secretary's wide powers to obtain information from a benefit recipient, but is also reflected in certain provisions in the Act, for example, ss878 and 879, as well as ss1069-H11 and 1069-H12 which state that "A person may give the Secretary a notice setting out the person's estimate of an income component of the person for a tax year" and "The Secretary is to accept a notice referred to in point 1069-H11 for the purposes of this Module only if the Secretary is satisfied that the estimate is reasonable" (emphasis added). Hence, the Tribunal has rejected the submission put on behalf of Mrs Delia which was accepted by the Social Security Appeals Tribunal that the Secretary wrongly had regard to Mrs Delia's income estimates. Rather, the Tribunal finds that in using Mrs Delia's estimates to vary her rate of payment from time to time, the Secretary had appropriate regard to the two estimates as the Secretary was well entitled to do under the Act. The Tribunal has also rejected the submission put by Mr Underwood that the Secretary should only have regard to income estimates in certain situations expressly authorised by Module H of Part 3.7 of the Act and not in others. There is nothing in the Act which expressly fetters the Secretary's powers in this manner and the Tribunal so finds.
…
23.Turning now to the question of waiver, it follows from the Tribunal's reasoning above that the Tribunal is not satisfied that an administrative error was made by the Commonwealth in so far as the Secretary had regard to the two income estimates provided by Mrs Delia. Rather, the Tribunal is satisfied that this course was entirely appropriate and, moreover, was one which is authorised under the Act.
…
26.The Tribunal would indicate that although, at the end of the day, the issue of whether or not there was a request by Mrs Delia for the purposes of s1069-H21 is not determinative of the issues before the Tribunal, in view of the uncertainty surrounding the issue arising from perceived differences in the Tribunal's reasoning from time to time, the Tribunal would consider it appropriate in the circumstances to indicate its view that the preferred approach is that taken by Deputy President Forgie in the case of Stuart (supra). The Tribunal's considered view is that the word "request" is to be given its ordinary meaning and that provision of information to the Department in the circumstances apparent here cannot be considered to be a request. As Mrs Delia said, had she been fully appraised of the fact that she could choose whether or not to provide an income estimate and request a determination to be made, and had she been aware of the potential consequences of adopting such a course, she may well have chosen not to provide an income estimate, thereby sacrificing any additional entitlements she may have been entitled to and avoiding the potential for overpayments to arise. As it was, she was not so appraised but was responding to what she perceived to be a demand by the Department which would result in cancellation of payment should she fail to comply. The Tribunal would indicate that it cannot be assumed that every person who is paid family allowance at a reduced rate and who experiences a fall in income will necessarily choose to receive a higher rate of benefit thereby running the risk of incurring a debt should their estimate prove incorrect by greater than 10 per cent. Accordingly, it cannot be taken that a person in Mrs Delia's shoes has made a request of the Secretary simply because she has supplied an income estimate which, on its face, rendered her being entitled to a higher rate of payment.
27.At the end of the day however, whether or not it would be described as a request is immaterial, given the Tribunal's view as to the Secretary's very broad powers to obtain and utilise information for the purposes of ensuring that persons are, on the material available to the Secretary at the relevant time, being paid their correct entitlements in accordance with the Act. In any event, the Tribunal was informed that the "request" situation has now been rectified by an amendment to the relevant form, and the Department is to be commended for this initiative."
In the present matter, the Tribunal has had careful regard to the form upon which the estimate was given (T3/47) and notes that no evidence was put before it to indicate that this was an "approved form" in accordance with sub-s.1069-H22. Nor is there any indication that the applicant knew that she was making a choice that an estimate be used to calculate her entitlement by virtue of providing an estimate. As Dr Horr told the Tribunal, the estimate was provided because the letter accompanying the form clearly sets out the penalties for failure to provide an estimate. The estimate in this case was simply provided because the Department was threatening to cancel the applicant's benefit. Further, there is no evidence on the form, that the provision of the estimate is a "request" by the person filling out the form. In the circumstances, the Tribunal finds that no "request" was made.
In Re Delia, the Tribunal considered that whether or not a request is made is "immaterial, given the Tribunal's view as to the Secretary's very broad powers to obtain and utilise information" (paragraph 26), and hence found that the use of the estimate did not amount to administrative error. This conclusion is contrary to that reached in Re Stuart as followed in Re Flores and Re Abeyratne, wherein the use of the estimate was considered to amount to administrative error. In considering these, this Tribunal adopts the strict approach taken in Re Stuart as followed in Re Flores and Re Abeyratne.
The Tribunal, in the current matter, does not accept that the Secretary of the Department be allowed to have regard to estimates which are not generated by specific request, for this appears to fly contrary to the specific legislative provisions contained in the Act.
If the Secretary were able to operate in this manner, it would make useless the inclusion of sub-ss.1069-H21(c) and 1069-H22 of the Act, wherein it is specifically noted that a person must "request" the Secretary to make a determination in accordance with an estimate, and goes so far as to specify the form of such a request.
There is a clear policy objective behind this, which is noted in Re Delia (in the second half of paragraph 26 (supra)), that it cannot be assumed that people want to receive a higher rate of benefit following a fall in income. It must be an individual assessment as to whether or not the risk of incurring a debt is outweighed by the potential for a higher rate of payment. What is significant in this present matter, is that the applicant was denied that choice, and according to the specific legislative provisions, it must be her choice to make, not the Department's. Family Payment is something that should not be forced upon people whether they like it or not. Where legislation provides that people must be given choice to either elect to be paid according to an estimate or to their base tax year, and moreover must elect to do so in a specific form, that legislation must be given its due.
Having proper regard for the legislation in this matter means the Tribunal considers that sub-ss.1069-H21 and 1069-H22 of the Act have not been properly applied, and the Department should not have had regard for the estimate provided in July 1997 (T3/47) in calculating the applicant's rate of Family Payment. The Department's reliance on this estimate constituted administrative error in the circumstances and the Tribunal so finds.
In order to satisfy s.1237A of the Act, the next question before the Tribunal is whether or not such administrative error was the sole reason for the existence of the debt, there being no contest as to good faith. There are two concerns the Tribunal has in this regard. Firstly, the applicant received several letters, dated 1 July 1997 (T5/49-51), 5 July 1997 (T5/52-55), 15 December 1997 (T7/60-62) and 16 October 1998 (T7/63-65) which all contained the income figure "used to work out your and your partner's combined rate", that being $25,462. The letter dated 6 July 1997 also stated (at T5/52):
"… As you are being paid on an estimate of your combined income, you must tell us if you and your partner's combined income will be more than $28,008.20. …"
Although the Tribunal accepts Dr Horr's evidence that neither he nor the applicant understood the implications of the estimate, or how the Family Payment system worked (aside from the fact that they knew they had to provide their income tax returns) the letters are reasonably clear in stating what income figure was being used to calculate the rate of payment. The letter dated 6 July 1997 also stated that the Department needed to be notified if the income would be more than $28,008.20. In effect, this put the applicant on notice of the need to notify if the income figure was above that amount, whether or not she fully understood how her payment was being determined, even though it was in fact being erroneously calculated on the basis of the estimate.
This gives rise to the second concern, in that it must be considered that the applicant's failure to notify as from April 1998 (by which time she would have been aware of a combined income in excess of $28,008.20) contributed to the debt. It contributed in spite of the applicant's lack of understanding as to the Family Payment system and the rationale by which her entitlement was being calculated. For these two reasons, the Tribunal cannot be satisfied that the departmental error was the sole cause of the debt and so finds s.1237A of the Act unsatisfied.
The Tribunal then turns to consider special circumstances. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal set out its classic statement of "special circumstances", noting that an exhaustive definition is not possible, and that the Tribunal needs to look at all the circumstances of a case to determine if it has that characteristic which could be called "unusual, uncommon or exceptional". Where departmental errors constitute a part of such circumstances, they are part of the factual matrix that must be considered by the Tribunal as a whole in determining whether there is that particularly "unusual, uncommon or exceptional" quality present.
Mistaken advice by departmental officers amounting to administrative error has been considered as a special circumstance by this Tribunal in situations where sole administrative error cannot be said to exist. In Re Gale and Secretary, Department of Employment, Education and Training (1996) 42 ALD 477 this was considered in the context whereby the student had made several detailed enquiries of the Department and in Re Secretary, Department of Social Security and McAvoy (1996) 23 AAR 543 the Tribunal considered it in relation to circumstances whereby the Department had given misleading advice over the course of three years, commenting at p53:
"…
The responsibility for efficient and effective administration of departmental practice and policy must carry with it a responsibility for any error or mistake which is made by the departmental officers alone. …"
In Re Brown and Secretary, Department of Family and Community Services [1999] AATA 113, Tribunal Member Bullock considered a case wherein there was departmental administrative error, which could not be said to be sole error and stated (inter alia) at paragraphs 82, 85 and 87:
"82. … While the Tribunal finds that Mrs Brown contributed to the overpayment in terms of her failure to respond to Departmental notices, the Tribunal also determines that the overpayment arose because of the failure of the Department of Social Security in particular to follow its own procedures and to investigate information provided to it not only by Mrs Brown, but also by the Department of Veterans' Affairs. Accordingly, the Tribunal considers that the Departmental administrative error in this case is a special circumstance which should be taken into account in terms of the manner in which the debt arose.
…
85.The Tribunal further finds that there is a special circumstance in relation to the occurrence of this overpayment which relates to the fact that Mrs Brown was completing claim forms and reading correspondence from various Commonwealth agencies at a time of great distress and increased vulnerability. In these circumstances, it is likely that Mrs Brown was not fully aware or providing full concentration to the matters being presented to her in relation to her financial security. These circumstances, combined with Mrs Brown's inexperience of financial matters and dealings with bureaucracies, are likely to have caused her to have been less able to fully appreciate the matters being presented to her and she therefore, in the Tribunal's view, had a reduced capacity to deal with the matters arising following her husband's death.
86.…
87.… The Tribunal determines that $10,000 of the outstanding debt should be waived to reflect the special circumstances of Mrs Brown's case including the Departmental administrative error, the circumstances of her recent bereavement and her inability to deal with the administrative requirements in her quest to secure her future financial position. …"
In Re Nehma and Secretary, Department of Family and Community Services [1999] AATA 219, Tribunal Member Bullock found special circumstances due to significant departmental errors, stating (inter alia) at paragraph 75:
"75.In all the circumstances and in the facts of this particular case, the Tribunal finds that there are special circumstances in this matter which arise as a result of Departmental administrative error. Mrs Nehma was given incorrect advice by the Department in relation to her mother's claim and subsequent receipt of Job Search Allowance. The Department also failed to apply section 517A of the Act. Further error occurred when the Department failed to apply its own policies and procedures in relation to review and statements of debt provided to assurers. Accordingly, the Tribunal finds that the debt owed by Mrs Nehma should be waived either as a whole or in part pursuant to section 1237AAD of the Act. …"
The Tribunal considers that the departmental error in this case is significant such that whilst not being solely responsible for the debt, it should be considered to be a special circumstance. No request was made by the applicant to have her rate determined in such a manner. It was as a result of the Department relying on the estimate that the applicant was exposed to the much greater risk of incurring a possible debt, by virtue of reducing the margin of error available to the applicant (albeit whilst receiving the benefit of a higher Family Payment rate). Section 1237A should not be read in isolation from s.1237AAD of the Act, and it is appropriate to consider departmental error in circumstances where it can either be said to be so significant in itself (as in Re Nehma) to give rise to special circumstances, or appears special when put together with all the other circumstances of a case.

Whilst the applicant is not blameless, given the Tribunal's finding that she failed to notify and was provided with a basic degree of information in the letters she received, Mr Mees, the departmental officer gave evidence that no adequate written information was available in 1997, such that Dr Horr would not have been able to access such information despite his requests for it (which the Tribunal accepts he did in fact make). It was not until 1998 that a more adequate pamphlet was produced. The Tribunal was impressed with Mr Mees and has no doubt that he would be able to explain the Family Payment system to recipients in sufficient detail that would enable them to have a basic grasp of what remains a complicated and confusing system of administration. The Tribunal is satisfied however that Mr Mees was not involved until after the debt was raised, at which time it was too late. Up until that point, the applicant's representative had not been able to obtain the requisite knowledge and information from the Department, whether in written or oral form.
To further compound the situation, Dr Horr, being the person who would attend to the applicant's matters concerning the Department was the primary care giver for his mother throughout the course of her protracted cancer battle, which lead to her death in January 1999. As Dr Horr told the Tribunal, in the last two months of the 1997/98 financial year, the family had other pressing issues to deal with. In this case, the Tribunal considers that departmental notification requirements would have been far from their minds at that time towards the end of the 1997/98 financial year, especially given they didn't really understand such requirements in any event.
The Tribunal considers that the applicant and her usual representative did not understand how their rate was being calculated. They had a lack of experience in dealing with the Department, and had difficultly obtaining relevant information from the Department. They had difficulty interpreting departmental letters (and this is understandable, given that this Tribunal has also previously found Family payment letters to be confusing (see Re Clark and Secretary, Department of Family and Community Services [1999] AATA 809). During the period in which they should have notified, they were also responsible for the care of Dr Horr's terminally ill mother. It is reasonable that these circumstances, when taken into consideration together with the significant departmental administrative error, make this case "unusual, uncommon and exceptional", and the Tribunal so finds.
Accordingly, it is appropriate that the Tribunal waive the whole of the debt pursuant to s.1237AAD of the Act, taking all of these circumstances into account.
The Tribunal notes that it has chosen not to canvas the issue of whether or not the estimate can be "carried over" into a new tax year as happened here, as this issue has no direct bearing upon the Tribunal's finding of special circumstances. The extent to which an estimate can continue to be regarded is of concern to this Tribunal however, and the Tribunal would express its opinion that it has serious reservations as to the practice of estimates being carried over into new tax years as happened in this case from July 1998 onwards.
decision
For the reasons given and pursuant to s.43 of the Administrative Appeals Tribunal Act 1975, the Tribunal sets aside the decision under review and in substitution therefor, decides that the debt for the period 3 July 1997 to 22 October 1998 be waived.
I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  11 February 2000
Date of Decision  3 March 2000
Counsel for the Applicant        Dr T. Horr
Solicitor for Applicant               -
Counsel for the Respondent    Ms C. Hunt
Solicitor for the Respondent    Centrelink

[2000] AATA 161

3 March 2000

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Administrative Error

Special Circumstances

Statutory Interpretation