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

Skipworth and Secretary, Department of Social Services (Social services second review) [2017] AATA 2101 (7 November 2017)
Division:GENERAL DIVISION
File Number: 2017/1149
Re:Ms Jodie Skipworth
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Anna Burke, Member
Date:7 November 2017
Place:Perth

The Tribunal affirms the decision under review.
..........................[sgd]..............................................
Anna Burke, Member
FAMILY TAX BENEFIT – overpayment – where no administrative error – discretion to waive part or whole of debt - no special circumstances found – decision under review affirmed
LEGISLATION
A New Tax System (Family Assistance) Act 1999 – cl 20D
A New Tax System (Family Assistance) (Administration) Act 1999 – ss 71(2), 95, 97, 101

Child Support (Assessment) Act 1989 – s 58A
CASES
Re Callaghan and Secretary Department of Social Security (1996) 45 ALD 435

Groth and Secretary Department of Social Security [1995] FCA 1708

Ryde v Secretary, Department of Family and Community Services [2005] FCA 886

SECONDARY MATERIALS
Department of Social Services, Family Assistance Guide, Version 1.198 - Released 20 September 2017 – part 3.1.6.70
REASONS FOR DECISION
Anna Burke, Member
7 November 2017
INTRODUCTION

Ms Skipworth is seeking a second tier review of the determination by Centrelink that she has debts of $1,391.46, $5,554.62 and $5,915.69 for the 2012/13, 2013/14 and 2014/15 income years respectively (T2). Centrelink is the service provider for the Department of Social Services.
The application was heard on 8 September 2017. Ms Skipworth was self-represented and appeared by video link from Perth. Mr Christopher Bishop of Mills Oakley lawyers appeared for the respondent in person in Melbourne.
BACKGROUND
Ms Skipworth and her ex-partner, Mr Ayonrinde, have one son born in 1998 (T2 at 6). In 2009, Ms Skipworth registered for a child support assessment and elected to collect the assessed child support amount privately and directly from Mr Ayonrinde. Child support has since ceased in respect of the child because he turned 18 years of age in 2016.
Ms Skipworth received a Family Tax Benefit (“FTB”) by instalments during the 2012/13, 2013/14 and 2014/15 income years in respect of her son with Mr Ayonrinde and her two other children. Ms Skipworth’s rate of payment for FTB was based on her taxable income, including income from the child support assessment.
In August 2013, Centrelink reconciled Ms Skipworth’s entitlement to FTB (T21 at 98) taking into account annualised maintenance income under the child support assessment of $3,655.00 (T50 at 257).
In August 2014, Centrelink reconciled Ms Skipworth’s entitlement to FTB (T33 at 133) taking into account annualised maintenance income under the child support assessment of $1,249.00 (T50 at 257).
In January 2016, Centrelink reconciled Ms Skipworth’s entitlement to FTB (T50 at 226) taking into account annualised maintenance income under the child support assessment of $1,322.00 (T50 at 257).
On or about 18 April 2016, the Child Support Registrar (the “Registrar”) became aware of updated information about Mr Ayonrinde’s taxable income for the period 2011 to 2015 and as a result was required to amend the associated child support assessments for this period, increasing his liability. The amended annualised income maintenance was $7,851.00 for the 2012/13 income year, $20,234.00 for the 2013/14 income year and $20,590.00 for the 2014/15 income year (T50 at 257).
On or about 23 April 2016, Centrelink reconciled Ms Skipworth’s entitlement to FTB for the 2012/13, 2013/14 and 2014/15 income years taking into account the updated child support income assessments. On 23 April 2016, Centrelink determined that Ms Skipworth had been overpaid FTB of $1,391.46 in the 2012/13 income year, $5,554.62 in the 2013/14 income year and $5,915.69 in the 2014/15 income year (T42 – T44).
As a result of Centrelink’s determinations that FTB had been overpaid, and that these were legally recoverable debts to the Commonwealth, the following debts were raised:
(a)$1,391.46 of FTB for the 2012/13 income year;
(b)$5,554.62 of FTB for the 2013/14 income year; and
(c)$5,915.69 of FTB for the 2014/15 income year.
On 9 June 2016, Ms Skipworth then sought a review of Centrelink’s original decision by an Authorised Review Officer (“ARO”) (T51 at 286). Ms Skipworth argued that it was unfair to raise a debt against her as (T46 at 175):
(a)it was unexpected and not of her doing;
(b)she doubted she would ever collect the maintenance owed; and
(c)now that her son is 18 years of age, his father is unlikely to make any additional payments.
On 29 July 2016, the ARO affirmed the decision under review and whilst acknowledging Ms Skipworth’s circumstances were difficult and stressful they did not amount to special circumstances and as such the debt could not be waived (T46 at 175-179).
On 28 November 2016, the Social Security and Child Support Division of the Administrative Appeals Tribunal (the “Tribunal”) affirmed the decision finding Ms Skipworth owes a debt to Centrelink as a result of underpayment of child support and varied the decision to write off collection the debt for a period of three months to reduce the stress on Ms Skipworth while she considers whether she will take action in relation to collecting monies owed from Mr Ayonrinde (“Tier 1”) (T2 at 5).
On 1 March 2017, Ms Skipworth requested a review of the Tier 1 decision, by the general division of the Tribunal (“Tier 2”), on the basis that the Tier 1 decision is “wrong” and that during the “three-month period where the debt was written off to make a decision on what to do”, her circumstances had changed (T1).
ISSUES FOR DETERMINATION
The issues in contention are whether Ms Skipworth has:
·been overpaid FTB for the 2012/13, 2013/14 and 2014/15 income years;
·a recoverable FTB debt; and
·if so, whether there are any grounds to write off or waive recovery of the debt, in whole or in part.
LEGISLATION
FTB is worked out as an annual entitlement, in accordance with schedule 1 of A New Tax System (Family Assistance) Act1999 (the “Act”) based on the combined adjusted income of the recipient and their partner or the recipient inclusive of any entitlement to child support. As Ms Skipworth had elected to have a private child support collection arrangement with Mr Ayonrinde, clause 20D of schedule 1 of the Act is applicable and provides:
20DWorking out amounts of child maintenance for administrative assessments privately collected
(1) This clause applies if, during a period in an income year:
(a)an individual is entitled to receive an amount of child maintenance for an FTB child of the individual under a liability under an administrative assessment (within the meaning of the Child Support (Assessment) Act 1989); and
(b)the liability is not an enforceable maintenance liability (within the meaning of the Child Support (Registration and Collection) Act 1988); and
(c)the child maintenance is not maintenance to which clause 20B applies; and
(d)the Secretary considers that it is reasonable for the individual to take action to obtain the amount.
Individual taken to have received full entitlement
(2) For the purposes of this Act, the individual is taken to have received, for the period in the income year, the amount of child maintenance for the child that the individual is entitled to receive under the liability, disregarding so much of that amount as is attributable to the individual receiving disability expenses maintenance.
Section 71(2) of A New Tax System (Family Assistance) (Administration) Act 1999 (the “Administration Act”) provides that a debt to the Commonwealth can arise if an individual has been paid more than they were entitled:
Overpayment
(2) If:
(a)an amount (the received amount) has been paid to a person by way of assistance; and
(b)the received amount is greater than the amount (the correct amount) of assistance that should have been paid to the person under the family assistance law;
the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person.
There is no dispute that Ms Skipworth was eligible for the payment of FTB during the 2012/13, 2013/14 and 2014/15 income years. Ms Skipworth’s annualised maintenance income was originally calculated on the basis of the child support assessment, utilising provisional income details for Mr Ayonrinde. In April 2016, the Registrar became aware that Mr Ayonrinde had filed tax income returns for the 2011/12-2014/15 income years inclusive.
The Registrar was required by section 58A of the Child Support (Assessment) Act 1989 (the “Assessment Act”) to amend the child support assessment on the basis of this information and as such reviewed Ms Skipworth’s entitlement to child support and therefore her maintenance income for the 2012/13, 2013/14 and 2014/15 income years. This in turn led to a review of her FTB entitlement and it was discovered she had received more than she was entitled.
Accordingly, the Tribunal finds that Ms Skipworth received overpayments of FTB, as defined by section 71(2) of the Administration Act, and as a result owes a debt to the Commonwealth.
Additionally, the application of government policy is outlined in the Department of Social Services, Family Assistance Guide (the “Guide”) at 3.1.6.70, Child Support Collection, which clearly states:
From 1 July 2012, the rate of FTB Part A for a child will not be restricted to the base child rate due to the payee privately collecting less than their full child support entitlement. If it is reasonable for the payee to take action to privately collect their full entitlement, they are deemed to have received the full child support entitlement for the purpose of the maintenance income test. The deemed amount applies both when the amount collected is less than the entitlement, and when the amount collected exceeds the entitlement (for example, if the payee subsequently begins to collect the full entitlement plus arrears).
The Guide further outlines at 3.1.5.70 when an individual may seek an exemption from the Maintenance Action Test:
Individuals may be granted an exemption from the maintenance action test in the following circumstances:
·if they fear that if they take action for child support the payer will react violently towards them or their family,
·where seeking child support may have a harmful or disruptive effect on them or the payer,
·if the identity of the other parent of the child or children is unknown,
·if they have had legal advice that paternity could not be proven through a court,
·if they have been unsuccessful in proving paternity, such as failed attempts to locate the father,
·where the child was born as a result of a surrogacy arrangement which is not recognised under the Family Law Act 1975,
·if there are cultural considerations that adversely impact on the individual's capacity to take reasonable maintenance action,
·where the payer in the child support case is deceased, and
·where there are other exceptional circumstances.
Section 95 of the Administration Act confers the discretion on the Secretary to write off a debt:
(1) The Secretary may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise, but only if subsection (2), (4A) or (4B) applies.
Secretary may write off debt if debt irrecoverable or debt will not be repaid etc.
(2) The Secretary may decide to write off a debt under subsection (1) if:
(a)    the debt is irrecoverable at law; or
(b)    the debtor has no capacity to repay the debt; or
(c)    the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)    it is not cost effective for the Commonwealth to take action to recover the debt.
(3) For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:
(b)     there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)     the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)     the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
(4)    For the purposes of paragraph (2)(b), if a debt is recoverable by means of:
(a)    deductions under section 84; or
(aa) deductions under section 1231 of the Social Security Act 1991; or
(b)    setting off under section 84A family assistance; or
(c)    application of an income tax refund under section 87; or
(d)    setting off under section 87A against a payment referred to in paragraph 82(2)(a);
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
Secretary may write off subsection 28(2) or (6) debt if claimant and partner separate
(4A)The Secretary may, under subsection (1), decide to write off a debt arising because of subsection 28(2) or (6) (which deal with when income tax returns have not been lodged) if the following conditions are met:
(a)    the claimant and the partner mentioned in subparagraph 28(1)(b)(iii) (the ex‑partner) ceased to be members of the same couple after the end of the income year after the cancellation income year mentioned in subsection 28(1);
(b) if the claimant was required to lodge an income tax return for the cancellation income year—an assessment is or has been made under the Income Tax Assessment Act 1936 of the claimant’s taxable income for the cancellation income year;
(c)    in any case—the ex‑partner was required to lodge an income tax return for the cancellation income year but still had not done so by the time when the claimant and the ex‑partner ceased to be members of the same couple.
Secretary may write off subsection 60D(2) debt if claimant and partner separate
(4B)The Secretary may, under subsection (1), decide to write off a debt arising because of subsection 60D(2) (which deals with when income tax returns have not been lodged) if the following conditions are met:
(a)    the claimant and the partner mentioned in paragraph 60D(1)(b) (the ex‑partner) ceased to be members of the same couple after the end of the second income year following the particular income year mentioned in paragraph 60D(1)(a);
(b) if the claimant was required to lodge an income tax return for the particular income year—an assessment is or has been made under the Income Tax Assessment Act 1936 of the claimant’s taxable income for the particular income year;
(c)     in any case—the ex‑partner was required to lodge an income tax return for the particular income year but still had not done so by the time when the claimant and the ex‑partner ceased to be members of the same couple.
When decision under subsection (1) takes effect
(5)A decision made under subsection (1) takes effect:
(a)    if no day is specified in the decision—on the day on which the decision is made; or
(b)    if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
Debt that has been written off may be recovered
(6)Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
Section 97 of the Administration Act provides that the Secretary must waive the right to collect a debt if it is attributable solely to an administrative error:
(1)The Secretary must waive the right to recover the proportion (the administrative error proportion) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.
(2)The Secretary must waive the administrative error proportion of a debt if:
(a)    the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt; and
(b)    the person would suffer severe financial hardship if it were not waived.
(3)The Secretary must waive the administrative error proportion of a debt if:
(a)    the payment or payments were made in respect of the debtor’s eligibility for family assistance for a period or event (the eligibility period or event) that occurs in an income year; and
(b)    the debt is raised after the end of:
(i)the debtor’s next income year after the one in which the eligibility period or event occurs; or
(ii)the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made;
whichever ends last; and
(c)    the debtor received in good faith the payment or payments that gave rise to the administrative error proportion of the debt.
(4)For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt
Section 101 of the Administration Act confers a discretion on the Secretary to waive all or part of the debt in special circumstances:
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 partly 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.
CONSIDERATION
Overpayment of FTB
Ms Skipworth argued in her written submissions and appearance before the Tribunal that she found herself in an extremely unfair position as the debt had arisen through no fault of her own but a failure of numerous federal government agencies to ensure Mr Ayonrinde submitted his tax returns on time and met his child support obligations.
Ms Skipworth was at a loss as to how the notional assessment had applied in her situation as she had been forced to take steps to obtain child support payments for her son to be eligible for the maximum amount of FTB.
Ms Skipworth advised the Tribunal that she had sent her son to live with his father, Mr Ayonrinde in England to escape the domestic violence she was experiencing at the hands of her second husband. Her son had pleaded with her to be able to return home, so in 2009 she went to England to bring her son home. At this time, as Mr Ayonrinde was living abroad it was too complex and costly to chase him for child support. When Mr Ayonrinde returned to Australia they arranged an assessment through child support to establish the amount he was required to pay in respect of his son and they agreed to have the payment collected privately.
Ms Skipworth advised the Tribunal that she believed this was the best course of action at the time, as she wished to maintain an amicable relationship with her child’s father. Mr Ayonrinde had indicated he preferred a private agreement and Ms Skipworth agreed as she believes that her son has a right to maintain a relationship with his father.
The Tribunal enquired of Ms Skipworth if she had agreed to a private arrangement because of any fear or concern of a violent reaction from Mr Ayonrinde if she refused. Ms Skipworth advised the Tribunal there was no issue of violence but had agreed to the private arrangement as Mr Ayonrinde had indicated he would leave the country and not see his son again if she pursued the matter further.
The respondent contended that Ms Skipworth has not endeavoured to recoup the child support arrears owing from Mr Ayonrinde which would adequately cover the debt she has to Centrelink.

Ms Skipworth advised the Tribunal that over the years Mr Ayonrinde’s payment of child support had been erratic and she had relied upon the child support agency assessment in respect of the amounts owing. She further advised the Tribunal that she had calculated the outstanding amounts of child support owed, based on the advice of Centrelink and reconciling this with what she had in fact received, and estimated it was in the sum of $33,735.00. The child support agency has advised Ms Skipworth that they cannot assist in seeking arrears from Mr Ayonrinde as the child in question is now 18 years of age. Further, the maximum amount of arrears the child support agency could have pursued would have been three months only.
Ms Skipworth advised the Tribunal she had endeavoured to recoup the child support arrears from Mr Ayonrinde via email contact and in person around Christmas 2016. She said at first he advised her that he would pay what was required of him, he then suggested that the tax department had got his assessments wrong and finally he had cut off all contact with her.
Ms Skipworth believes that she is not in a financial position to pursue Mr Ayonrinde through legal channels to recoup the outstanding monies owed. She advised the Tribunal she could not understand why it was her responsibility to chase these monies down.
The respondent contended that Ms Skipworth has numerous avenues available to her to commence proceedings against Mr Ayonrinde to recoup the monies owed.
Ms Skipworth did not dispute the calculation of the monies owed but did dispute that the debt should be hers to repay.
In accordance with clause 20D of the Act, the Tribunal finds that Ms Skipworth received the full amount of child maintenance for her son, that an exemption from the maintenance action test in accordance with the Guide is unable to be granted and she has avenues available to her to seek arrears from Mr Ayonrinde.
Accordingly, the Tribunal determines that Ms Skipworth has a debt owed to the Commonwealth.
Recoverable FTB debt
The Tribunal further finds that section 71(2) of the Administration Act has been satisfied as Ms Skipworth had received an amount of FTB in excess of her entitlement and the Commonwealth has the right to recoup the amount owed.
Writing off the debt or waive recovery of the debt, in whole or in part
Writing off the debt
The Tribunal standing in the shoes of the Secretary has the discretion to write off the debt if any of the criteria under section 95(2) of the Administration Act are met.
Ms Skipworth does not meet the criteria as the Tribunal finds the debt is not irrecoverable at law and she has capacity to repay the debt, which is viable for the Commonwealth to recover. As such the Tribunal is unable to write off the debt.
Waive the debt on the basis of administrative error
Based on the evidence, the Tribunal finds that the debt was not the result of a sole administrative error by Centrelink but as a result of the recalculation of Ms Skipworth’s maintenance income following Mr Ayonrinde’s late lodgment of his tax returns. Accordingly the Tribunal cannot waive whole or part of the debt under section 97.
Waiver all or part of the debt in special circumstances
Alternatively, the Tribunal standing in the shoes of the Secretary has the discretion to waive all or part of Ms Skipworth’s debt. For the discretion to be exercised all three conditions of subsections (a)-(c) of section 101 of the Administration Act must be satisfied.
Knowingly
The term “knowingly” has not been defined in the Administration Act. However, the meaning of the term has been considered extensively by the Tribunal in circumstances similar to this matter.
In Re Callaghan and Secretary Department of Social Security (1996) 45 ALD 435, Deputy President Forgie said at [48]:
“there is nothing in section 1237AAD which suggests that the word ‘knowingly’ should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge that he or she is making a false statement or representation that he or she is failing or omitting to comply with a provision of the Act. The actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act of omission.”
The Tribunal finds that Ms Skipworth’s debts do not arise because she knowingly made false statements or declarations. The Tribunal finds that Ms Skipworth has not deliberately acted dishonestly with any intention to mislead Centrelink.
Special circumstances
The expression “special circumstances” has not been defined in the Act. However, the meaning of “special circumstances” has been considered extensively by the Federal Court and the Tribunal.
In Ryde v Secretary, Department of Family and Community Services [2005] FCA 886 at [26], Her Honour Branson J said :
“…the evident purpose of section 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for ‘special circumstances’ discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.”
In Groth v Secretary Department of Social Security [1995] FCA 1708 Kiefel J said:
“…for present purposes it is sufficient to observe that it requires something to distinguish Mr Groth’s case from others, to take it out of the usual ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow if one to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.”
In summary, it has been held that for circumstances to constitute “special circumstances” there must be circumstances which are “unusual, uncommon or exceptional,” “markedly different from the usual run of cases”, “special” or “out of the ordinary” and they include “events which would render the strict application of the rule in question unfair or inappropriate.”
Ms Skipworth contended that special circumstances applied in her case, that contrary to the respondent’s assertion her “load was immense” and she had numerous health and family issues which should be considered in the granting of a waiver on special circumstances.
Ms Skipworth advised the Tribunal she had been undergoing extensive medical testing over the last 12 months in respect of spine and nerve issues. She said that:
(a)so far she has already undergone two surgical procedures for her spine in respect of multiple bulging discs and degeneration in her neck and lower back;
(b)this condition is causing her extensive pain, restrictions of movement and dizziness;
(c)she is taking pain medication constantly and this has resulted in her inability to continue in the paid workforce; and
(d)she has also experienced numerous ‘Gastro’ problems which are still under investigation.
Ms Skipworth’s youngest son is autistic and attends a specialist education college which requires her to drive him to and from school, because he cannot access the bus for children with special needs as the route is currently fully booked. On top of this, the family is in the process of moving house to be closer to the school and this has put both financial and psychological strain on the family.
Ms Skipworth’s daughter has recently been diagnosed with autism and this has required her to find an alternative school for her daughter to meet her intellectual/learning disability needs.
The stress of these proceedings and the debt hanging over the family has also put strain on the family as a whole, in particular it is having a significant impact on her eldest son and her relationship with her current partner who feels aggrieved that he is bearing the debt of another individual.
CONCLUSION
Whilst the Tribunal finds that Ms Skipworth’s situation is complex, placing emotional and financial stress upon the family, it is not exceptional or out of the ordinary to warrant a finding that special circumstances exist. Additionally, the Tier 1 hearing wrote off three months of debt recovery which the Tribunal believes was an appropriate recognition of Ms Skipworth’s circumstances.
The Tribunal is not satisfied that Ms Skipworth meets each of the requisite conditions of section 101 of the Act and is therefore unable to waive all or part of the debt owed to Centrelink.
DECISION
For the reasons given above the decision under review is affirmed.

I certify that the preceding 58 (fifty - eight) paragraphs are a true copy of the reasons for the decision herein of Anna Burke, Member

.........................[sgd]...............................................
Administrative Assistant
Dated: 7 November 2017

Date of hearing: 8 September 2017

Applicant: Self- Represented by video link from Perth

Representative for the Respondent: Mr C Bishop

Solicitors for the Respondent: Mills Oakley Lawyers

[2017] AATA 2101

7 November 2017

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Statutory Construction

Remedies

Date of hearing:	8 September 2017
Applicant:	Self- Represented by video link from Perth
Representative for the Respondent:	Mr C Bishop
Solicitors for the Respondent:	Mills Oakley Lawyers