Rowe; Secretary, Department of Family and Community Services
[2002] AATA 245
•12 April 2002
CATCHWORDS – SOCIAL SECURITY – Family Allowance – recovery of overpayment – actual income exceeded estimated income by more than 110% - whether entitlement to Family Allowance may be recalculated under s. 885 after 1 July, 2000 – s. 885 repealed from 1 July, 2000 but s. 1223(3) provides that an amount recalculated under s. 885 is a debt due to the Commonwealth – whether liable even though s. 885 repealed – when liability arose – decision set aside.
Social Security Act 1991 ss. 860, 872, 874, 875, 876, 887, 878, 879, 880, 881, 881A, 884, 885, 886, 891, 1069, 1222A and 1223,
Acts Interpretation Act 1901 s. 8
Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 53
Director of Public Works v Ho Po Sang [1961] AC 901
Robertson v City of Nunawading [1973] VR 819
Esber v Commonwealth of Australia and Another (1992) 174 CLR 430
Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1
DECISION AND REASONS FOR DECISION [2002] AATA 245
ADMINISTRATIVE APPEALS TRIBUNAL )
) W2001/332
GENERAL ADMINISTRATIVE DIVISION )
ReSECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Applicant
AndRAELENE ROWE
Respondent
DECISION
Tribunal: Miss S A Forgie (Deputy President)
Date: 12 April, 2002
Place: Melbourne
Decision:The Tribunal
1.sets aside the decision of the Social Security Appeals Tribunal dated 8 August, 2001; and
2.substitutes a decision that the respondent is liable to pay to the applicant overpayment of Family Allowance totalling $1,726.50 in respect of the period 25 August, 1999 to 2 May, 2000.
S A FORGIE
Deputy President
REASONS FOR DECISION
On 10 September, 2001, the applicant, the Secretary of the Department of Family and Community Services ("Secretary") applied for review of a decision of the Social Security Appeals Tribunal ("SSAT") dated 8 August, 2001. In that decision, the SSAT set aside a decision of a delegate of the Secretary dated 10 January, 2001 to raise and recover an overpayment of Family Allowance made to the respondent, Mrs Raelene Rowe in respect of the period from 25 August, 1999 to 2 May, 2000. The amount of that Family Allowance was $1,726.50. The SSAT decided that Mrs Rowe did not owe a debt at all and that any moneys already recovered from her be repaid to her.
This case was heard on the papers and no oral evidence was given. Written submissions were made on behalf of the Secretary. None were made on behalf of Mrs Rowe. The only documents to which regard has been had were the documents lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 ("T documents").
THE ISSUES
The issue in this case is whether Mrs Rowe has been overpaid Family Allowance in respect of the period 25 August, 1999 to 2 May, 2000 and, if so, whether that amount may be recovered. Resolution of that issue depends upon whether s. 885 of the Social Security Act 1991 ("the Act") may be used to recalculate her entitlement despite its repeal with effect from 1 July, 2000.
BACKGROUND
On the basis of the T documents, I have made a number of findings of fact that I will set out in the following paragraphs.
Mrs Rowe's husband was employed in the catering industry in January, 1999 when the business in which he worked was sold. He continued to be employed by the new proprietor of the business. In April, 1999, the proprietor wrote a letter setting out Mr Rowe's gross wage and stating that he worked approximately 40 hours per week. A copy of that letter was given to Centrelink. On 25 August, 1999, Mrs Rowe lodged with Centrelink a form entitled "Changes to your Income and Assets" ("Income and Assets form"). Mrs Rowe provided details of both her assets and her taxable income for the financial year 1997/98. She then advised that her husband had changed his job on 27 February, 1999. In response to a request to provide details about their estimated taxable income for the financial year 1999/2000, Mrs Rowe estimated that her husband would receive $25,000 in salary or wages and that she would receive $1,469 in payments from Centrelink. Following the segment of the form asking for the estimate, the following notice appeared:
"If we use your total combined estimated taxable income and your actual income is less than your estimated income, we are not able to pay you arrears.
If your actual income is more than 10% higher than your estimated income, you might have to repay some or all of your Family Allowance and/or Childcare Assistance. This means you might be overpaid if you get some unexpected income, such as a pay rise, more paid overtime, a lump sum payout, withdrawal of money from a super fund, cash from an early harvest or a rise in crop prices." (T documents, page 17)
On 19 September, 1999, a delegate of the Secretary wrote to Mrs Rowe advising her that her estimate of her combined taxable income of $26,469 had been used to calculate her Family Allowance from 7 October, 1999.
On 11 October, 1999, Mrs Rowe lodged a further Income and Assets form in which she showed her husband's estimated income for the year 1999/2000 to be $27,000. As she did not have any income, their combined taxable income was the same amount. Lodgement of the form was followed by a letter dated 5 November, 1999 from a delegate of the Secretary advising her of the amount of her Family Allowance with effect from 18 November, 1999 and advising her that the combined taxable income of $27,000 had been used.
On 3 April, 2000, Mrs Rowe advised Centrelink that she had started work and then, on 28 April, 2000, lodged a further Income and Assets form showing the combined taxable income of herself and her husband as $31,500. Family Allowance was paid on the basis of that estimate from 3 May, 2000. On 21 September, 2000, Mrs Rowe lodged a copy of her Refund Notice from the Australian Taxation Officer and her husband's Notice of Assessment. Both were dated 14 August, 2000. Their combined taxable income as shown on those notices was $32,821.
On 10 January, 2001, a delegate of the Secretary calculated that Mrs Rowe had been overpaid Family Allowance in the sum of $1,726.50. In doing so, the delegate calculated that overpayment on the basis of Mrs Rowe's estimated combined taxable income for the financial year 1999/2000 of $26,469 and $27,000 during the period 25 August, 1999 and 2 May, 2000. In that same period, their actual combined taxable income for the financial year 1999/2000 was $31,821 and so more than 110% outside their estimated combined taxable income.
LEGISLATIVE FRAMEWORK
Provisions relating to the calculation of entitlement of Family Allowance before 1 July, 2000
Prior to the Act's amendment on 1 July, 2000, a person's qualification for a family allowance was set out in Subdivision A of Division 2 of Part 2.17 of the Act. Subject to those criteria regarding income, there has been no question in this case that Mrs Rowe qualified for a family allowance. The rate of family allowance was determined by using the Family Allowance Rate Calculator at the end of s. 1069. Once the rate had been determined in accordance with that rate calculator that section provided, in so far as it is relevant in this case that:
"… the rate of family allowance payable to the person only has to be worked out again during that calendar year if:
(a)…
(b)…
(c)…
(ca)…
(d)the person revises an estimate of his or her income; or
(e)the person has underestimated his or her income; or
(f)the Commissioner of Taxation changes an assessment of the person's taxable income." (s. 860)
A determination that family allowance was payable to a person continued in effect until it ceased to be payable under either ss. 875 or 876 (relating to complying, or failing to comply, with notification requirements under s. 872) or a further determination in relation to the payment has been made under ss. 880, 881 or 881A (relating to cancellation or suspension) and taken effect (s. 874(1)). A determination of the rate of family allowance continued in effect until it became payable at a lower rate under s. 877 or a further determination made under ss. 878 or 879 had taken effect (s. 874(2)). Sections 884, 885 and 886 provided that a person's rate of family allowance might be recalculated in certain circumstances. Only s. 885 is relevant in this case.
Most of the steps in calculating a person's entitlement to family allowance are not relevant in this case. It is relevant to note that his or her income was a factor in determining the amount of family allowance payable to him or her. Point 1069-H2 provided that a person's family payment income for a particular tax year was the sum of four income components: taxable income; adjusted fringe benefits value; target foreign income; and net rental property loss for that year. If a person was a member of a couple, the person's income for a tax year included that of his or her partner (point 1069-H3). The expression "taxable income" has the same meaning as in the Income Tax Assessment Act 1997 (s. 23(1)) i.e. assessable income less deductions (s. 4-15(1)). A person's taxable income for a tax year was his or her assessed taxable income for that year, or if he or she did not have such an assessed taxable income, his or her "accepted estimate of taxable income for that year" (point 1069-H8(1) and see also points 1069-H10, 1069-H11 and 1069-H12).
Provisions relating to recalculation of Family Allowance and recovery of overpayments before 1 July, 2000
Section 885 provided for the recalculation of family payment if taxable income had been underestimated by 10% or more:
"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."
For the purposes of s. 885, a person's income for a particular tax year was the sum of his or her taxable income and certain other specified income (s. 885(2)).
Section 891 was relevant in considering the date of effect of a determination made where a person has underestimated his or her income. It provided:
"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."
Section 1222A makes provisions in relation to debts due to the Commonwealth in situations in which an amount has been paid by way of a social security payment before 1 January, 1991. It is not relevant in this case. Sections 1223(3) and (4) are relevant. They expressly provided that overpayments of Family Allowance were debts due to the Commonwealth. In so far as they are relevant, they provided:
(3) Subject to subsection (4), if;
(a)an amount (the 'received amount') has been paid to a person by way of family allowance; and
(b)the person's rate of family allowance is recalculated under:
(i)section 884 (amendment of assessable income); or
(ii)section 885 (underestimate of income); or
(iii)section 886 (failure to notify notifiable event); or
(iv)section 886A (overestimate of child maintenance expenditure); and
(c)the received amount is more than the amount (the 'correct amount') of the family allowance payable to the person;
the difference between the amount and the correct amount is a debt due to the Commonwealth.
Note:For the date of effect of a determination made to take account of an amendment of assessable income, see section 890.
(4) If:
(a)a family allowance is paid to a person in a tax year; and
(b)apart from this subsection an amount of family allowance would become recoverable under subsection (3) before the end of the tax year; and
(c)the amount would be recoverable because of:
(i)an increase in the person's income; or
(ii)an underestimate of the person's income;
the amount is recoverable only after the end of the tax year.
Note:a person's taxable income is defined in point 1070-D11. A person's taxable income may increase, amongst other reasons, because the person underestimated his or her taxable income and the Commissioner of Taxation has made a subsequent assessment of the person's taxable income."
Amendments of provisions relating to calculation of Family Allowance and recovery of overpayments from 1 July, 2000
Parts 2.17 (including ss. 885 and 891) and 3.7 (including s. 1069) of the Act were repealed by A New Tax System (Family Assistance)(Consequential and Related Measures) Act (No.1) 1999 ("NTS No. 1 Act") (s. 3 and items 3 and 4 of Schedule 4) with effect from 1 July, 2000. Sections 1223(3) and (4) were repealed by A New Tax System (Family Assistance)(Consequential and Related Measures) Act (No.2) 1999 ("NTS No. 2 Act") (s. 3 and item 144 of Schedule 1).
Amendments of provisions relating to calculation of Family Allowance and recovery of overpayments from 6 July, 2000
Although already repealed by the NTS No. 2 Act, the Youth Allowance Consolidation Act 2000 ("YAC Act") purported to repeal ss. 1223(3) and (4). It substituted new provisions which read:
"(3) Subject to subsection (4), if:
(a)an amount (the received amount) has been paid to a person by way of youth allowance or family allowance; and
(b)either of the following subparagraphs applies:
(i)…
(ii)the person's rate of family allowance is recalculated under section 884 (amendment of assessable income), 885 (underestimate of income) or 886 (failure to notify notifiable event);
(b)the received amount exceeds the amount (the correct amount) of the … family allowance … payable to the person;
the excess is a debt due to the Commonwealth.
Note: For the date of effect of a determination made to take account of an amendment of assessable income, see section 890.
(4)If:
(a)… family allowance is paid to a person in a tax year; and
(b)an amount of … family allowance is recoverable under subsection (3) from the person; and
(c)apart from this subsection the amount would be recoverable before the end of the tax year;
the following paragraphs have effect:
(d)…
(e)if the amount of family allowance that is recoverable because of:
(i)an increase in the person's income; or
(ii)an underestimate of the person's income;
it is recoverable only after the end of the tax year."
THE SUBMISSIONS
Mrs McMahon submitted, in essence, that s. 1223(3) expressly provides for the creation of a debt in the circumstances of this case. Relying on s. 8 of the Acts Interpretation Act 1901 ("AI Act"), Mrs McMahon submitted that any liability incurred before the repeal of s. 885 continued after its repeal. Ms Weinberg submitted, in essence, that s. 1223(3) does not create a debt as such. Without s. 885, it creates nothing but a potential to create a debt. Mrs Rowe cannot be subject to a liability until all investigations have been completed and they cannot be completed as there is no longer a provision in the Act permitting recalculation. Both Mrs McMahon and Ms Weinberg referred to a number of cases.
CONSIDERATION
The starting point of any consideration of whether a debt is due to the Commonwealth must be with s. 1222A. Apart from an amendment that does not affect its substance in relation to these proceedings, that section has, at all material times, provided that an amount paid by way of a social security payment (including a Family Allowance) is only a debt due to the Commonwealth if a provision of, in this case, the Act provides that it either was or is such a debt.
The only provisions in the Act that were in effect at the time that the Secretary sought to recover an overpayment of Family Allowance from Mrs Rowe on 10 January, 2001 were ss. 1223(3) and (4) as substituted with effect from 6 July, 2000. Reference was made in s. 1223(3) to a recalculation under s. 885 but s. 885 had been repealed on 1 July, 2000 and so before ss. 1223(3) and (4) were enacted in their present form. Had s. 885 not been repealed, it would be clear that s. 1223(3) created a debt to the Commonwealth where the amount shown by the recalculation made under s. 885 to be the amount by which the Family Allowance paid to Mrs Rowe exceeded that payable to her. Section 885 provided for a recalculation but did not itself create the liability. That was the province of s. 1223(3).
The first question to consider is when that liability was created for s. 8 of the AI Act provides, in so far as it is relevant, that:
"Where an Act repeals in the whole or part a former Act, then unless the contrary intention appears the repeal shall not:
(a)…
(b)…
(c)affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed; or
(d)…
(e)affect any investigation legal proceeding or remedy in respect of any such right privilege obligation liability penalty forfeiture or punishment as aforesaid;
and any such investigation legal proceeding or remedy may be instituted continued or enforced, and such penalty forfeiture or punishment may be imposed, as if the repealing Act had not been passed."
If Mrs Rowe was not subject to a liability to repay the amount overpaid to her by way of Family Allowance before the repeal of ss. 885 and 1223(3), then s. 8 of the AI Act will have no application.
That brings me to consider the provisions of Part 2.17. Prior to its repeal, the effect of its provisions were that a person's entitlement to Family Allowance was based on his or her taxable income for a tax year. In certain circumstances, regard could be had to an estimate of that taxable income but there is no need to explore those circumstances in this case. Mrs Rowe found herself in such circumstances. When the person's combined taxable income for the tax year under consideration was 110% of the amount estimated to be the taxable income, the person's entitlement to Family Allowance was recalculated. The recalculation was made pursuant to s. 885(1).
Once there was a debt to the Commonwealth, the person was immediately liable to repay that debt. When did a person's liability arise? Did the fact that the amount of the overpayment might not be known until some time after the conclusion of the financial year, mean that the person did not have a liability until after the recalculation had been made and shown that there was in fact an overpayment?
A similar issue was considered by the High Court in Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 (Taylor, Windeyer and Owen JJ, Barwick CJ and Kitto J dissenting) in the context of the Workers Compensation Act 1958 as amended by the Workers Compensation (Amendment) Act 1965. Mr Lucas suffered an injury at a time when s. 5(1) of the legislation provided that his employer was liable to pay compensation for his injury in accordance with the Act. Among the compensation payable were payments to his dependants should he die from his injury. He did die but only after the legislation had been amended to prove that an employer make increased payments to a worker's dependants should he or she die. The issue for the High Court was whether Mr Lucas's employer was liable to pay the smaller or greater payments to his dependants. The resolution of the question depended in part on the interpretation of s. 7 of the Acts Interpretation Act 1958 (Vic) which was in similar terms to the s. 8 of the AI Act.
Windeyer J reviewed the word "liability", which he found to be used in three senses:
"It seems to me that without descending to too much refinement there are at least three main senses in which lawyers speak of a liability or liabilities. The first, a legal obligation or duty : the second the consequence of a breach of such an obligation or duty : the third a situation in which a duty or obligation can arise as the result of the occurrence of some act or event. It is in the third sense that s. 5(1) speaks of an employer as liable to pay compensation in accordance with the Act. But I do not think it is the sense in which it is said that an amending Act does not disturb existing liabilities arising out of past transactions. That to my mind describes a liability having become complete by past events rather than a situation in which some future event must occur to make the effect of past events create a completed liability. …" (page 584)
In the context of the legislation with which he was concerned, Kitto J said that, in providing that an employer was liable to pay compensation in accordance with the provisions of the Workers Compensation Act 1958 if, in the course of employment, personal injury was caused to a worker, s. 5(1) used the word "liable" to describe "a prospective duty or obligation" (page 586). As he had done earlier in his judgement, his Honour drew a distinction between the word "liable" and "liability". He continued:
"… In my opinion a liability, in the sense of an obligation, can only be said strictly speaking to have been 'incurred' when it can be correlated with a right or claim in some identifiable person who can enforce it. And the persons who can claim the benefit of the obligation which the Act imposes in the case of the death of the worker were, as the law was before 1965 and as it is now, not ascertainable until the death. This is a situation in which it seems to me not correct to speak of a right having accrued and a liability having been incurred before death." (page 586)
In so far as an investigation is preserved by s. 8(e) of the AI Act, care must be taken to draw a distinction between an "…investigation … in respect of any such … liability …" (i.e. a "… liability acquired accrued or incurred under any Act so repealed …" (s. 8(c))) and an investigation which is conducted to decide whether a person should be subject to a liability. In the context of a right rather than a liability, this distinction has been drawn by the Privy Council in Director of Public Works v Ho Po Sang [1961] AC 901 when their Lordships considered s. 10 of the Interpretation Ordinance that is in substantially the same terms as s. 8 of the AI Act:
" It is to be observed that under s. 10(e) a repeal is not to affect any investigation, legal proceeding or remedy 'in respect of any such right.' The right referred to is the right mentioned in section 10(c), i.e., a right acquired or accrued under a repealed enactment. This part of the provisions in paragraph (e) of section 10 does not and cannot operate unless there is a right as contemplated in paragraph (c). It may be, therefore, that under some repealed enactment a right has been given but that in respect of it some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right should or should not be given. Upon a repeal the former is preserved by the Interpretation Act. The latter is not. Their Lordships agree with the observation of Blair-Kerr J. that: 'It is one thing to invoke a law for the adjudication of rights which have already accrued prior to the repeal of that law; it is quite another matter to say that, irrespective of whether any rights exist at the date of the repeal, if any procedural step is taken prior to the repeal, then, even after the repeal the applicant is entitled to have that procedure continued in order to determine whether he shall be given a right which he did not have when the procedure was set in motion." (page 922)
A few years later, in Robertson v City of Nunawading [1973] VR 819 (Winneke CJ, Gowans and Starke JJ), the Full Court of the Supreme Court considered a situation in which a developer had submitted a plan for subdivision of commercial land to a council in compliance with s. 569A of the Local Government Act 1958. The council was required to consider it according to the procedures set out in s. 569B but, before it did so, that section was amended by the inclusion of a new s. 569(8A). Pursuant to the amendment, the council could request the developer for a security and, if the developer failed to comply with the request, could refuse to seal the plan. Prior to the amendment, such a provision had applied only to residential land. After reviewing various authorities including Ho Po Sang, the Full Court concluded:
"If the conclusion is justified (as it appears to be) that the mere taking of procedural steps under a statute in the expectation of achieving a benefit from an administrative authority does not create a right to the continuance of the proceedings after the repeal of the statute, then the conclusion seems equally justified that the mere taking of such procedural steps does not create a right to the continuance of the proceedings unaffected by amendment of the statute.
There are, however, some circumstances associated with the submission of the plan which need to be considered to see if they produce a special result. No doubt the preparation of the plan would involve expense, and associated with the lodging of the plan is the payment of a fee. It might be said that this expense would have been incurred in the expectation of the plan being considered in accordance with the existing legislation, although, in relation to such a contention the fact of the passing of the amending Act a month before the submission of the plan could not be excluded from consideration. But it is difficult to see upon what principle a right attracting protection from repeal or amendment could be founded on such considerations, and the very fact that they might operate with different force in different cases underlines the difficulty.
The fact that various periods for procedural steps are measured under the Act from the date of submission of the plan appears to have no relevance to the matter being discussed. It attaches some importance to the date of submission in the procedural scheme but it lends to no inference that a right is vested at that time in the person submitting the plan." (page 826)
Although again considering the issue in terms of a right rather than a liability, the High Court's judgement in Esber v Commonwealth of Australia and Another (1992) 174 CLR 430 (Mason CJ, Deane, Toohey and Gaudron JJ, Brennan J dissenting) is also relevant. The Court was concerned with the applicability of redemption provisions in the Compensation (Commonwealth Government Employees) Act 1971 ("the 1971 Act") after they had been repealed by the Compensation Employees' Rehabilitation and Compensation Act 1988 ("the 1988 Act"). The majority considered first the transitional provisions of the 1988 Act and concluded that those provisions ensured that Mr Esber's entitlement to redemption was to be determined in accordance with the 1971 Act. Although it acknowledged that this was sufficient to decide the case, the majority went on to consider s. 8 of the AI Act and whether or not Mr Esber had an accrued right under the 1971 Act.
The delegate of the Commissioner for Compensation had disallowed Mr Esber's claim for redemption because he was not satisfied that certain requirements had been met. At the time of the repeal of the 1971 Act, Mr Esber's application to the Tribunal was out of time and the extension had not yet been granted. The majority said that he had, "... at the time of the repeal of the 1971 Act, a right to have his application to the tribunal determined pursuant to Part V of the 1971 Act" (page 440). The majority went on to say:
"... at the least, the appellant had, at the time of the repeal of the 1971 Act, a right to have his application to the Tribunal determined pursuant to Pt V of the 1971 Act. It may not be possible to say of a person in the position of the appellant that he had a right to a favourable determination from the Tribunal. The Tribunal was required to stand in the shoes of the decision-maker (the delegate) and arrive at its own decision (Drake v Minister for Immigration (1979) 24 A.L.R. 577, at p. 589). In Drake, Bowen CJ and Deane J said of the Tribunal (at p. 589):
'The question for the determination of the Tribunal is not whether the decision which the decision maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.'
But that is not to the point here. If it be assumed that the appellant did not have a right to redemption in the sense first discussed [i.e. a right to redemption of weekly payments within the meaning of section 8 of the Acts Interpretation Act 1901], he had a right to have his claim to redemption determined in his favour if the delegate had wrongly refused his claim. To borrow a sentence from the judgment of Hope JA in NSW Aboriginal Land Council v The Minister [Winbar Claim] (1988) 14 N.S.W.L.R. 685, at p. 694:
`The right might be said to be a conditional one, namely, conditional upon the relevant facts being established, but the right was nonetheless a right because it was conditional.'
Once the appellant lodged an application to the Tribunal to review the delegate's decision, he had a right to have the decision of the delegate reconsidered and determined by the Tribunal. It was not merely 'a power to take advantage of an enactment' (Mathieson v. Burton (1971), 124 C.L.R. 1, at p. 23, per Gibbs J.; and see Robertson v. City of Nunawading, [1973] V.R. 819). Nor was it a mere matter of procedure see Newell v. The King (1936), 55 C.L.R. 707, at pp. 711-712; it was a substantive right see, by way of analogy, Australian Coal and Shale Employees Federation v. Aberfield Coal Mining Co. Ltd. (1942), 66 C.L.R. 161, at pp. 175, 178, 185, 194; Colonial Sugar Refinery Co v. Irving, [1905] A.C. 369, at pp. 372-373. Section 8 of the Acts Interpretation Act protects anything that may truly be described as a right, 'although that right might fairly be called inchoate or contingent' Free Lanka Insurance Co. Ltd. V. Ranasinghe, [1964] A.C. 541, at p. 552; see also Continental Liqueurs Pty. Ltd. v. G.F. Heublein and Bro. Inc. (1960), 103 C.L.R. 422, at pp. 426-427; Director of Public Works v. Ho Po Sang, [1961] A.C. 901. This was such a right. It was a right in existence at the time the 1971 Act was repealed. That being so, and in the absence of a contrary intention, the right was protected by s8 of the Acts Interpretation Act and was not affected by the repeal of the 1971 Act."
Recognition that the word "liabilities" is, subject to the context in which it is used, capable of applying both to liabilities that have matured into causes of action and those that may be described as either "potential" or "contingent" liabilities was given by the High Court in Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan J). As McHugh J expressed it, in the context of the Stevedoring Industry Acts (Termination) Act 1977 (Vic), it is not "… wrong to speak of a contingent liability in tort that existed …" at the end of the transitional period when the Stevedoring Industry Finance Committee became liable to discharge all of the liabilities and obligations of the Australian Stevedoring Industry Authority that it replaced. Again as McHugh J said:
"… The case would be different if the respondent was to be liable only for causes of action 'that existed immediately before the expiration of that period'. But the legislature has chosen a more ambiguous term. That ambiguity should be resolved in a way that protects, rather than destroys, potential rights. It should therefore be given an interpretation which protects the rights which the plaintiff would have had against the Authority but for the legislative re-organisation of the industry." (page 56)
It seems to me that these cases show that there are distinct questions I must consider in a case such as this. One is whether the repealed legislation created a liability, either potential or contingent on one hand or realised, as it were, on the other. If it does and if the provision creating that liability is repealed, it is presumed that the liability is not affected unless a contrary intention is shown in the repealing legislation. Regard must, therefore, be had to the repealing legislation.
In the context of the Family Allowance provisions of the Act, this means that I must consider whether Mrs Rowe incurred a liability under the Act to repay the Family Allowance prior to the amendments on 1 July, 2000. If she is liable, it arose under s. 1223(3) and was subject only to s. 1223(4). That section, rather than s. 885, created the liability if a liability was created at all. Section 885 provided only for a recalculation of Family Allowance and the basis upon which that recalculation would be made.
On one view, the liability only arose if each of the three factors set out in s. 1223 had been met i.e. an amount had been paid, the recalculation under s. 885 had taken place and there was a difference between the amount paid and the correct amount payable to Mrs Rowe. The recalculation was not an instrument to determine the quantum of the debt but an event that must occur to create the liability.
On another view, the liability arose each and every time that Family Allowance was paid to Mrs Rowe. Section 1223(3) was simply one part of an overall scheme for the payment of Family Allowance. That scheme included provisions providing for a person's entitlement to Family Allowance, its payment and recovery. Section 1223(3) could be used to determine amounts of overpayment at any time throughout a tax year. There is no suggestion that s. 1223(3) could only be brought into force after the end of a tax year and so after, in this case, 30 June, 2000 in respect of Family Allowance paid in the tax year 1999/2000. If that were not the case, there would be no need for s. 1223(4) to provide that any amount is only recoverable after the end of the tax year.
As soon as a person's entitlement had been assessed and the amount of the payment calculated and paid, a liability also arose. It was a liability to pay the difference between the amount paid to a person and the correct amount payable to that person. The liability could be determined by reference to facts which, although not necessarily known at the time, could be ascertained by fixed reference points. The estimate of income was, of course, known. The actual income might not have been known but could be ascertained, even if at a later time, by reference to a fixed reference point in the form of the assessment of that income by the Commissioner of Taxation. Therefore, the facts were capable of being ascertained and did not depend upon future events to create a completed liability. The quantum of the liability could not be determined until the person's taxable income was known but, although that generally had to be assessed by the Commissioner of Taxation after the conclusion of the tax year, it was assessed by reference to income that had been derived and expenses incurred in the tax year and not in the future. It follows that the quantum could not be determined until the recalculation had taken place under s. 885.
The recalculation was the tool enabling the determination of the quantum of the amount of Family Allowance paid to the person. It was not, however, a tool that the Secretary could pick up or put down on his own whim. Section 885(1) provided that if certain criteria were met, then "the person's rate of family allowance is to be recalculated on the basis of that income" (emphasis added). The section was expressed in terms of a direction and imposed an obligation to recalculate and not a discretion. The criteria that had to be met to impose the obligation were that, in working out the Family Allowance payable, regard had been had to an amount of income estimated by the person for a tax year and that his or her income for that tax year was more than 110% of the amount of their estimated income. It seems to me that this obligation arose each time a payment of Family Allowance was made to a person and that payment was calculated on the basis of an estimate of income. The obligation could not be fulfilled immediately for the actual income that a person receives in a tax year would often not become apparent until after the end of that year but it remained an obligation to do so when it did. As an obligation, it was not affected by its repeal unless a contrary intention appeared (AI Act, s. 8). I will return to this aspect shortly.
Recalculation under s. 885 was one of the criteria to be met under s. 1223(3) before a debt could be due to the Commonwealth. As the Secretary was obliged to recalculate the amount of Family Allowance under s. 885, I am swayed to the view that s. 1223(3) imposed a liability upon a person to repay the amount revealed by that calculation to be an overpayment of Family Allowance. That liability was imposed each time the Family Allowance was paid to him or her even though the quantum of the liability was necessarily left to be determined at a later time when the person's actual income had been determined. That liability continues unless a contrary intention appears in the Act or in the amending legislation.
The amendments made by the NTS No. 1 Act and the NTS Act No. 2 Act were unfortunately executed. I think that regard must be had to the both as a whole for, between them, they achieved what the Parliament intended i.e. the revocation of ss. 1223(3) and (4) and the substitution of new provisions. In retaining a reference in s. 1223(3) to s. 885 even though it had been repealed, it seems to me that Parliament has drafted the section on the basis, as I have found, that the obligation to recalculate under the repealed s. 885 was not affected by its repeal. Contrary to evincing an intention to affect the Secretary's obligation to recalculate, it seems to me that Parliament has underlined that the obligation continues.
It seems to me that this is an end of the matter for the person's liability to pay any overpayment of Family Allowance revealed by the recalculation arises under s. 1223(3) as it was inserted in the Act by the NTS No. 2 Act. That is quite apart from any liability that arose under s. 1223(3) in its original form and which would have covered the period from 1 to 6 July, 2000 when the section had been repealed but not enacted in its present form.
There was no question in this case that the Secretary had correctly raised an overpayment of Family Allowance in the amount of $1,726.50 if Mrs Rowe were liable to repay the debt at all. In view of the conclusions I have reached regarding both liability under s. 1223(3) in both its repealed and present forms and the Secretary's obligation under s. 885, I have concluded that Mrs Rowe is liable to repay the sum of $1,726.50. For these reasons, I:
1.set aside the decision of the Social Security Appeals Tribunal dated 8 August, 2001; and
2.substitute a decision that the respondent is liable to pay to the applicant overpayment of Family Allowance totalling $1,726.50 in respect of the period 25 August, 1999 to 2 May, 2000.
I certify that the thirty-nine preceding paragraphs are a true copy of the reasons for the decision herein of
Miss S A Forgie (Deputy President),Signed: …………………………………..
Paul Paczkowski AssociateDates of Hearing 21 February, 2002
Date of Decision 12 April, 2002
Counsel for the Applicant Mrs McMahon
Solicitor for the Applicant Australian Government Solicitor
Counsel for the Respondent Mrs Weinberg
Solicitor for the Respondent Victorian Legal Aid
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