SWAROOP DAVIES and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

[2009] AATA 452

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 452

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/0160

GENERAL ADMINISTRATIVE DIVISION		)
Re		SWAROOP DAVIES

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Regina Perton

Date23 June 2009

PlaceMelbourne

Decision The Tribunal sets aside the decision of the Social Security Appeals Tribunal that Mrs Davies is entitled to a waiver of part of her debt to the Commonwealth. The Tribunal substitutes a decision that Mrs Davies owes a debt to the Commonwealth of $3,813.29 as a result of overpayment of family tax benefit for the 2002–03, 2003–04 and 2004–05 financial years.

(sgd) Regina Perton

Member

Social Security – family tax benefit - debt to Commonwealth ‑ waiver – whether attributable to administrative error - whether special circumstances exist – decision under review varied.

A New Tax System (Family Assistance) (Administration) Act 1999 s 71, 105

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 

REASONS FOR DECISION

23 June 2009 Regina Perton       

1.      Swaroop Davies is the mother of two children.  For some years, when her children were younger, she was eligible for family tax benefit (FTB).  The amount of FTB to which a parent is entitled, if any, is affected by the person’s income and that of her/his partner.  Mrs Davies, like many others in receipt of FTB, has at various times overestimated or underestimated her prospective annual income and that of her husband.  For Mrs Davies and many others, this has resulted in overpayments and underpayments of FTB that are often only identified after the end of a particular financial year. 

2.      Centrelink, which administers FTB for the Department of Families, Housing, Community Services and Indigenous Affairs (the Department), determined that Mrs Davies was overpaid  $1,832.30 for the 2002–03 financial year, $1,917.84 for the 2003–04 financial year and $63.15 for the 2004–05 financial year.  Mrs Davies sought a review of the Centrelink decision by the Social Security Appeals Tribunal (SSAT). The SSAT decided to waive $976.37 of the debt for 2002/3 but decided that that the rest of the debt must still be repaid.

3.      In her application to the Tribunal, Mrs Davies stated her belief that the calculations by Centrelink were incorrect.  She sought waiver of all the debts.  She also sought $40,000 in compensation from Centrelink.  Centrelink seeks reinstatement of the debts in full, submitting that the SSAT’s waiver of part of the debt was inappropriate. 

4.      The issues in this matter are:

·Does Mrs Davies have debts to the Commonwealth?

·If so, should the debts be waived on the basis of administrative error?

·If not, should the debts be waived because of special circumstances?

5.      The Tribunal does not have the legislative power to award compensation to an applicant.

Does Mrs Davies have a debt to the Commonwealth?

6.      Centrelink undertook several reconciliations of Mrs Davies’ income and that of her husband to ascertain if she had been paid the correct amounts of FTB.   Some of the reconciliations were undertaken before Mrs Davies and her husband lodged their tax returns.  It is Centrelink’s practice to undertake a reconciliation of a person’s income in the previous financial year soon after 31 October.  The date is chosen as it is assumed that most FTB recipients with straightforward income arrangements will have lodged their tax return by that date.   However, the calculations in dispute were undertaken before Mr and Mrs Davies had lodged their tax returns.  Their tax returns were not straightforward, as they included net rental property losses from an investment property.  Mrs Davies FTB entitlements were recalculated after the lodgement of the tax returns.  As a result, Centrelink has provided different information about the amount of underpayment or overpayment of FTB to Mrs Davies at various times.

7. Centrelink’s most recent calculations of the debts took into account the actual taxable incomes of Mr and Mrs Davies in the pertinent financial years. The Tribunal is satisfied that Mrs Davies did not under-report her income deliberately. Regardless of the circumstances which led to the overpayments, the amounts overpaid are debts owed to the Commonwealth pursuant to s 71 of A New Tax System (Family Assistance)(Administration) Act 1999 (the Administration Act). 

8.      Centrelink has calculated that Mrs Davies was overpaid $1,832.30 for the 2002–03 financial year; $1,917.84 for 2003–04 financial year and $63.15 for the 2004–05 financial year.  The Tribunal has no reason to doubt that the calculations are correct. Mrs Davies indicated that she doubted Centrelink’s calculations but did not provide an alternative calculation. 

Should the debt be waived on the basis of administrative error

9.      The SSAT decided that part of the debt for 2002/3, namely $976.37 of the $1,832.30 should be waived on the basis of administrative error by Centrelink. Mrs Davies submitted that because Centrelink did not seek review of the SSAT’s decision to waive part of the debt, Centrelink had accepted the outcome and therefore that waiver should stand. She also cited a letter that she received from Centrelink concerning the debt after the SSAT’s decision.   The Tribunal is undertaking a fresh review of the matter and is therefore not bound by the SSAT’s decision.  On the first hearing date, the Tribunal informed Mrs Davies that by seeking review of the 2002/3 debt, she was risking reinstatement of the total debt.  The Tribunal  adjourned the hearing to allow Mrs Davies  to seek legal advice and decide if she wished to include the 2002–03 debt in her application for review.  Mrs Davies decided to proceed with a review of all three debts.

10.     Mrs Davies submitted that the errors arose as a result of incorrect manipulation and/or entry of data on Centrelink’s computer system.  She provided extensive written and oral submissions and documentation to support her submission.   She was particularly concerned about a test system that Centrelink was operating of which her records constituted a part.  Mrs Davies  pointed to a lack of proactive responses and care on Centrelink’s part as contributing to the situation.   She also expressed concern about the destruction of certain records as a further example of Centrelink’s poor and/or defective administration. 

11. While there may be a basis for some of Mrs Davies’ concerns, the Tribunal is not satisfied that the overpayments are due to the issues she raised. Centrelink has acknowledged that difficulties arise for many FTB recipients because of the requirement to estimate income at the start of the financial year. Therefore, some people receive more than their entitlement and others less during a particular year. Mrs Davies has been one of those affected, partly because of the unpredictability of her income in those years. It is also unfortunate that she was chosen as a member of a control group for a trial that Centrelink undertook to test strategies in relation to client contact; as a result of which Centrelink did not contact her regularly in relation to updates of her and her husband’s income. However, a failure on Centrelink’s part not to regularly seek out information about Mrs Davies’ income and the fact that it undertook a calculation of her entitlement based on incomplete information as her tax return had yet to be lodged do not change the amount she was entitled to be paid. The errors have now been rectified and the correct amount calculated based on her and her husband’s actual income. Section 105 of the Administration Act allows Centrelink to review earlier decisions about entitlements of its own volition, as it did in Mrs Davies’ case.

12.     While some of the calculations during the relevant years may well have been wrong in hindsight, the Tribunal is not satisfied that the debts are solely attributable to administrative error on Centrelink’s part.   The Tribunal therefore sets aside the SSAT’s decision to waive part of the debt due to administrative error.

Should the debt be waived because of special circumstances?

13.     Section 101 of the Administration Act allows for the waiver of a debt if there are 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.

14.     The term special circumstances is not defined in the legislation.  For the Tribunal to exercise its discretion to determine that Mrs Davies’ situation constitutes special circumstances, it must be satisfied that there is something to make the case stand out from the usual or the ordinary (Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25. In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, Branson J held that the use of the term special circumstances in the legislation demonstrated an intention to proscribe waiver in ordinary cases.  Branson J stated that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case.

15.     The Tribunal is not satisfied that the situation in which Mrs Davies finds herself is vastly different from the situation of other social security recipients who have incurred debts due to overpayments.  In the Tribunal’s experience, it is, unfortunately, not unusual for debts to arise in circumstances where a person is unable to accurately estimate income to be earned in a future period. 

16.     The Tribunal is not satisfied that the circumstances in this case constitute special circumstances (other than financial hardship alone).  Hence, the Tribunal finds that the waiver provisions of s 101 of the Administration Act should not be invoked. 

17.     The Tribunal finds that Mrs Davies owes a debt to the Commonwealth for the overpayment of FTB.  The debt comprises an overpayment of $1,832.30 for the 2002–03 financial year; an overpayment of $1,917.84 for the 2003–04 financial year; and an overpayment of $63.15 for the 2004–05 financial year.  The Tribunal notes that Mrs Davies has repaid a significant part of the debt.

DECISION

18.     The Tribunal sets aside the decision of the Social Security Appeals Tribunal that Mrs Davies is entitled to waiver of part of her debt to the Commonwealth. The Tribunal  substitutes a decision that Mrs Davies owes a debt to the Commonwealth of $3,813.29 as a result of  overpayment of family tax benefit for the 2002–03, 2003‑04 and 2004–05 financial years.

I certify that the eighteen [18] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)           Dianne Eva

Clerk

Dates of hearing:  30 September 2008, 20 March 2009
Date of decision:  23 June 2009
Advocate for applicant:               Self - represented
Advocate for respondent:            Ms Peta Heffernan

Solicitor for respondent:              Australian Government Solicitor