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

[2018] AATA 4601

Stafford and Secretary, Department of Social Services (Social services second review) [2018] AATA 4601 (14 December 2018)

Division:GENERAL DIVISION

File Number(s):2018/5622      

Re:Luke Stafford

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Member K. Parker

Date:14 December 2018

Place:Melbourne

The Tribunal refuses the application for an extension of time under s 29(7) of the Administrative Appeals Tribunal Act 1975.

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

Member K. Parker  

EXTENSION OF TIME APPLICATION – whether reasonable in all the circumstances to grant the extension of time – explanation for the delay – merits of the substantive application – application refused

Legislation

Administrative Appeals Tribunal Act 1975 (Cth) – s 29
A New Tax System (Family Assistance) Act 1999 (Cth)

A New Tax System (Family Assistance)(Administration) Act 1999 (Cth) – ss 95, 97, 101

Cases

Re Clinic Tavern Pty Ltd and ACT Liquor Licensing Board (1993) 32 ALD 381 Commissioner of Taxation v Brown (1999) 42 ATR 672
Re Grafton and Commonwealth (1988) 16 ALD 533
Hunter Valley Developments Pty Ltd and Others v Cohen (1984) 3 FCR 344;
Re Spencer and Commissioner of Taxation (2007) 100 ALD 389

Re Romeo and Secretary, Department of Social Security (1992) 26 ALD 248

REASONS FOR DECISION

Member K. Parker

14 December 2018

1. On 8 October 2018, Mr Luke Stafford lodged an application with the General Division of the Administrative Appeals Tribunal (this Tribunal) for an extension of time for making an application for review of a decision of the Social Services & Child Support Division (AAT1) of this Tribunal dated 15 January 2018.  Mr Stafford stated as his reasons for making the application:

   I need more time to have my concerns reviewed entirely.

   I also need consideration of documented cognitive difficulties.

2. Mr Stafford’s earlier review to the AAT1 was partly successful.  The AAT1 set aside a decision to raise a debt against him of $1,080.40 for the period from 1 July 2013 to 30 June 2014.  However, the AAT1 affirmed the following decisions:

   (a)a family tax benefit (FTB) debt of $4,032.22 for the period from 1 July 2014 to 30 June 2015;

   (b)a FTB debt of $1,431.90 for the period from 1 July 2015 to 30 June 2016; and

   (c)$60 was to be withheld for the repayment of the FTB debt of $1,431.90 for the period from 1 July 2015 to 30 June 2016.

3. On 8 October 2018, Mr Stafford also lodged a request for this Tribunal to make a Stay Order on the following bases:

   Means available for communications between Centrelink and myself were inadequate to avoid an alleged debt being raised.

   If debts were incurred it is due to inadequate process and negligence [by] Centrelink, is of no fault of mine and the ongoing negligence in pursuing debt recovery has caused significant damages to me.

   I want Centrelink to acknowledge its errors that led to alleged debts being raised against me.

   I want all related attempts to recover alleged debt amounts from me to cease.

   I want compensation for damages due to significant mental anguish inflicted over several years.

   Centrelink did not properly assess medical and [neurological] condition at the time information was provided and requests were made for financial aid, assistance with form lodgement, [assistance] with correct process for declaring casual of fluctuating income.  Frequent requests for assistance were made throughout 2010-2016 both in person and over the phone.

4. A hearing took place on 23 November 2018 in relation to applications for stay orders and an extension of time. Mr Stafford accepted that his application for review was about seven months out of time. Section 29(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) provides that an application for review must be lodged with the Tribunal within 28 days from the date that the document setting out the terms of the decision was given to the applicant.

5. Having considered the submissions made by both parties, including those made at the hearing, the Tribunal is not satisfied that it is reasonable in all of the circumstances to grant an extension of time.  Accordingly, Mr Stafford’s application for an extension of time is refused. 

6. After the hearing, this Tribunal granted an Interim (temporary) Stay Order to the effect that no further steps would be taken by Centrelink or its agents to recover the outstanding debt against Mr Stafford until this decision is handed down.  The Tribunal will now revoke this Stay Order.  However, in order to give some notice to Mr Stafford to undertake the process suggested in paragraph [3434], the Tribunal will order that the effective date of the revocation of the previous Stay Order is 8 January 2019.

   BACKGROUND

7. From 1 July 2014 to 30 June 2016 (the Relevant Period), Mr Stafford was a member of a couple and he received fortnightly FTB payments.   He has a ten-year old son who is in his sole care.

8. The FTB debt arose for the Relevant Period because Mr Stafford received overpayments of FTB during that period.  This occurred because the combined actual income of Mr Stafford and his partner for each of the financial years within the Relevant Period was more than the combined income estimate provided by Mr Stafford to Centrelink.  This is evident from the facts set out in the outline of submissions dated 15 November 2018 lodged on behalf of the Secretary, Department of Social Services (the Secretary’s Submissions) and also, in the findings of the AAT1.

9. Essentially, Mr Stafford did not contest these facts.  His grievance lies in what he described as process issues.  He said he had made various attempts to communicate with Centrelink to find out how he should report his income, given that it was casual and fluctuating.  He said Centrelink informed him of different ways that he should report income and that he should overestimate it.  At the hearing, Mr Stafford told the Tribunal he “agreed to debts raised by the data”, but his main point was that it was not his fault; that it was a “process-related issue”; and that he was told to follow a process and has not been able to get a record of the fortnightly reports had said he made to Centrelink about income received.

10. In terms of Mr Stafford’s current financial circumstances, he said that he had not worked since February 2018.  Before that time, he was working but on a casual basis.  He said he was not presently receiving Newstart Allowance because of his partner’s income.  He said he has about $20 in his savings account.  He said he owned a car but it would be valued at less than $500.  Mr Stafford said he jointly owns an apartment with his partner.  He said his mother helped him to pay the deposit and his partner is meeting the mortgage repayments.  He said he jointly owns 3,000 shares with his mother. 

    CONSIDERATION

11. Section 29(7) of the AAT Act gives the Tribunal discretion to extend the 28-day time limit to lodge an application for review of a decision where the extension of time application has been made in writing, which it has in this case; and if the Tribunal is satisfied that it is reasonable in all the circumstances to do so. As a guiding principle, the time limit cannot be ignored unless there is a very good reason to do so. Special circumstances need not be shown, but the decision-making body must not grant the extension unless it is positively satisfied it is proper to do so. The application for the extension of time must show an acceptable explanation for the delay and show that it is fair and equitable in the circumstances to extend the time – see the Federal Court decision of Hunter Valley Developments Pty Ltd and Others v Cohen (1984) 3 FCR 344.

    Length of the delay

12. Mr Stafford did not dispute that there was a delay of approximately seven months.  This is a significant delay relative to other applications for an extension of time that come before the Tribunal.  Having said that, applications for an extension of time involving delays longer than seven months have been granted but it was usually where the prospects of success in those applications were good or at least, reasonable.

    Explanation for the delay

13. The Tribunal notes Mr Stafford’s written reason for the delay, as set out in paragraph [1].

14. At the hearing, Mr Stafford was given a further opportunity to explain his reasons for the delay.  Mr Stafford did not deny receiving the AAT1 decision with the letter informing him about the 28-day time limit.  He accepted that the late lodgement was “my mistake” and that he “was under the impression that he would receive more information about how to go forward”.  He said he was waiting for Centrelink to contact him to tell him what would happen next.  Mr Stafford explained that this matter was extremely distressing for him and had caused him an “extreme amount of anxiety”. He said that when he did not hear from Centrelink, that he “let it go” because he “did not want to deal with the extreme stress”.  The Tribunal asked Mr Stafford why he did not ask his partner to help him.  Mr Stafford said he did not want to burden her with it, because “she’s helping me by giving me somewhere to live”.

15. The Tribunal accepts the situation was no doubt stressful for Mr Stafford. However, if he was unable to deal with the stress of it at the time, or if his stated cognitive impairment hindered him in understanding what he needed to do, the Tribunal considers that he should have asked his partner to assist him to lodge an application for review.  It is a two-page form that does not require a lot of information to be entered onto it.  The Tribunal also notes that English is Mr Stafford’s first language and he has completed secondary-level education.  He is also fortunate to be a member of a couple and has his partner available to assist him, and possibly also his mother.

16. Based on the above, the Tribunal does not consider that the reason proffered by Mr Stafford for the delay in making the application for review was an acceptable explanation for the delay, in particular a delay that extended for about seven months. Accordingly, this factor weighs against the Tribunal granting Mr Stafford’s application for an extension of time.

    Merits of Mr Stafford’s case

17. The Tribunal proposes to adopt the approach of the Full Federal Court in the Commissioner of Taxation v Brown (1999) 42 ATR 672 which, in effect, was to take the applicant’s case at its highest and to assess whether it was arguable that the case had merit. This approach was applied by the Tribunal in Re Spencer and Commissioner of Taxation (2007) 100 ALD 389.

18. Based on Mr Stafford’s description of how the debts for the Relevant Period arose, the issues that will arise are likely to be limited to whether the debt for the Relevant Period should be written off or waived.

19. Section 95 of the A New Tax System (Family Assistance)(Administration) Act 1999 (Cth) (the Administration Act) allows for a debt to be written off “for a stated period of time or otherwise”, if it is irrecoverable at law; the debtor has no capacity to repay the debt, or it is not cost-effective for the Commonwealth to recover the debt.  Section 95(4) of the Administration Act deems a debtor to have capacity to repay the debt if it is recoverable by setting off against the debtor’s family assistance, unless to do so would leave the debtor in severe financial hardship. 

20. Section 97(1) of the Administration Act requires a debt to be waived where it is attributable solely to an administrative error made by the Commonwealth.

21. Section 101 of the Administration Act provides an avenue for the debt to be waived when there are special circumstances and the debtor has not made a false statement or representation or failed to comply with the family assistance law, and it is more appropriate to waive the debt than to write it off.  For special circumstances to exist, they need to be uncommon or unusual, which would render strict enforcement of the family assistance laws as unjust or unreasonable in Mr Stafford’s case.

22. During the hearing, the Secretary’s representative confirmed that the outstanding debt at the time of the hearing was less than as stated in the AAT1’s decision, no doubt on account of withholdings which had been made to repay that debt since the AAT1’s decision, which was handed down 11 months ago.

23. Mr Stafford was asked about the fortnightly reporting he said he had previously made to Centrelink about his income.  The Secretary identified that the period Mr Stafford was referring to in relation to the fortnightly reporting preceded the Relevant Period and for this reason, Mr Stafford’s evidence in relation to that period (even if the supporting records were able to be identified), was not relevant to the present application.  The Tribunal accepts this contention and also notes that the AAT1 set aside the debt relating to the 2013/2014 financial year.  This application is dealing with the debt referrable to the Relevant Period only.

24. In relation to the debt which remains, following a preliminary assessment, and upon accepting Mr Stafford’s evidence as he has presented it, the Tribunal considers that:

    (a)it would be difficult for Mr Stafford to establish that he does not have the capacity to repay the debt from his family assistance that has taken place to date. It is also unlikely that he would be able to prove that by doing so, it would leave him in severe financial hardship.  This is so particularly given the account given by Mr Stafford of his ownership of shares jointly with his mother, his part ownership of real estate and his partner’s preparedness to meet the mortgage payments on the apartment they own, thereby providing them with a place to live;

    (b)Mr Stafford is unable to satisfy the Tribunal that the debt should be written off on that basis that it arose from an administrative error solely on the part of the Commonwealth.  There is no evidence before the Tribunal which would support a finding the debt arose other than on account of Mr Stafford’s error in underestimating the income and not updating the income as invited to do in the various letters he received from Centrelink, as set out in the Secretary’s outline of submissions.  The Tribunal accepts that Mr Stafford holds grievances in relation to Centrelink’s processes, although the effect of those grievances seemed to relate to periods that preceded the earlier Relevant Period. Ultimately, it was open to Mr Stafford to provide written notice to Centrelink at the times when he received the written invitations to update his income estimates by simply sending Centrelink a letter, once he became aware that the actual income was due to be significantly different from the estimated income; and

    (c)Mr Stafford has poor prospects of satisfying the Tribunal that special circumstances exist in his case that would justify a waiver of the debt in part or in whole.  It is necessary for those special circumstances to be greater than financial hardship alone.  The Tribunal has taken into account, and accepted for the present purpose that the cognitive difficulties which Mr Stafford says he has, caused him difficulty in understanding Centrelink’s processes.  It has also taken into account that he has not worked or earned income since February 2018.  It has also taken into account that while he has some assets, they may be difficult for him to liquidate to improve his present financial position.  However, the Tribunal notes that it would be possible for him to continue to have family assistance payments withheld in order to repay the debt.  Mr Stafford’s partner is presently employed as a teacher in a permanent position and is earning approximately $75,000 to $80,000 per year.  Mr Stafford and his partner own their own apartment, so they have a place in which they may live.  Mr Stafford’s partner is able to maintain the mortgage payments as she has been doing until now.  Mr Stafford also has the support of his mother who had assisted him financially in the past.  Mr Stafford would be able to liquidate his interest in the shares (and sell them to his mother) to generate further finances upon which to live or to repay the debt.  Mr Stafford’s partner (and possibly also his mother) is available to support Mr Stafford’s financially until the debt is repaid.  Accordingly, the Tribunal considers that it would be difficult for Mr Stafford to establish that special circumstances exist in his case.

25. For these reasons, the Tribunal considers that Mr Stafford’s overall prospects of success of his substantive case are poor, even if his evidence is taken at its highest.  Accordingly, this factor weighs against the Tribunal granting Mr Stafford’s extension of time application.

    Resting on rights

26. In previous decisions, the Tribunal has expressed that an applicant cannot simply rest on his or her rights to seek a review, do nothing, and then seek the indulgence of the Tribunal – see Re Grafton and Commonwealth (1988) 16 ALD 533; Re Romeo and Secretary, Department of Social Security (1992) 26 ALD 248; and Re Clinic Tavern Pty Ltd and ACT Liquor Licensing Board (1993) 32 ALD 381.

27. It was apparent to the Tribunal from Mr Stafford’s evidence at the hearing of the extension of time application that he was aware of his appeal rights at the time he was notified of the AAT1’s decision.  Mr Stafford did not deny that he received the AAT1’s decision and notice advising him of the 28-day time limit.  Mr Stafford, on his own evidence, did not do anything at first because he said he was waiting to hear further from Centrelink and he did not want to deal with the extreme stress he said it caused him.  He did not otherwise contact Centrelink to make it known that he did not accept the AAT1’s decision and was planning to apply for a further review.  He made the present application only once debt recovery action was commenced against him.

28. In these circumstances, the Tribunal considers that Mr Stafford has rested on his rights and this factor weighs against granting an extension of time.

    Prejudice to the respondent

29. The Secretary contended that the delay in this case did not cause any prejudice. This factor weighs in favour of granting Mr Stafford’s extension of time application.

    Wider prejudice to the general public in terms of disruption to established practices

30. The Secretary contended “that the public interest and the interests of those applicants who comply with the prescribed time limits are unsettled by perceptions of unfairness and uncertainty, if an extension of time is granted where the justice of the case does not permit that this should occur”.  While the Tribunal accepts this as a general proposition, no specific cases of comparison were put forward by the Secretary in order to illustrate its point.  The Tribunal has decided that this factor does not weigh for or against the granting of the extension of time in this case, other than to note that the period of delay was significant.  

    CONCLUSION

31. The Tribunal concludes that Mr Stafford’s explanation for the delay was not acceptable, and that the period of delay was significant.  The Tribunal also considered that the prospects of Mr Stafford succeeding in his substantive application are poor, for the reasons outlined above.   The Tribunal acknowledges that there has been no prejudice suffered by the Secretary in the delay but the above-mentioned factors weigh overwhelmingly in favour of refusing Mr Stafford’s application for an extension of time.   The Tribunal is satisfied that it would be a waste of the time and resources of the parties concerned and the Tribunal for it to permit this application to be lodged and proceed to a full hearing.

32. Accordingly, Mr Stafford’s application for an extension of time to lodge his substantive application for review of the AAT1’s decision dated 15 January 2018 is refused.

    Further non-binding observation

33. At the hearing, Mr Stafford gave evidence that the private contractor debt collectors had pursued him aggressively and this had caused him great stress.  He said that they had proposed a “payment by instalment” arrangement of $150 per week, which he said he could not afford. 

1. By way of observation, the Tribunal encourages Mr Stafford to approach Centrelink directly once again as mentioned at the hearing of this application, to explore whether it is possible to enter into a more affordable arrangement for the repayment of the debt.  The Tribunal notes that Centrelink had made an attempt to enter into such an arrangement; however, Centrelink’s records indicate that Mr Stafford was not prepared to enter into a payment arrangement with Centrelink at that time.  It is open to Mr Stafford to reconsider this option.

I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Member K. Parker

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

Associate

Dated             14 December 2018

Date of interlocutory hearing	23 November 2018
Applicant	By Telephone
Advocate for the Respondent	Cameron Munro, Government Lawyer
Solicitors for the Respondent	Department of Human Services, Litigation and Information Release Branch