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

[2018] AATA 4208

Todd and Secretary, Department of Social Services (Social services second review) [2018] AATA 4208 (9 November 2018)

Division:GENERAL DIVISION

File Number(s):      2018/5749, 2018/5750

Re:Fiona Todd

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Mark Hyman, Member

Date:9 November 2018

Place:Canberra

The application for an extension of time is refused

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Mark Hyman, Member

Catchwords

PRACTICE AND PROCEDURE – extension of time application – family assistance debts – principles governing extension of time applications – explanation of delay – where applicant rested on her rights – prospects of success – other considerations – extension of time refused

Legislation

A New Tax System (Family Assistance) Act 1999
A New Tax System (Family Assistance) (Administration) Act 1999, ss 71, 95, 97, 101
Acts Interpretation Act 1901, s 29
Administrative Appeals Tribunal Act 1975, ss 28, 29
Administrative Decisions (Judicial Review) Act 1977, s 11

Evidence Act 1995, s 160

Cases

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Beadle and Director-General of Social Security [1984] AATA 176
Commissioner of Taxation v Brown [1999] FCA 1198
Dranichnikov v Centrelink [2003] FCAFC 133
Gerhardt and Secretary, Department of Employment and Training [1997] AATA 173
Hunter Valley Developments v Minister for Home Affairs and Environment (1984) 58 ALR 305
Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565

Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190

REASONS FOR DECISION

Mark Hyman, Member

9 November 2018

1. The applicant, Ms Fiona Todd, seeks an extension of time in which to lodge an application for review of a decision at first review by this tribunal affirming debts raised under family assistance law. Ms Todd reported her family income to the Department of Human Services – Centrelink (the Department) for the financial year from July 2016 to June 2017, but in error the Department recorded that income as zero. As a result the amount of child care benefit and family tax benefit (FTB) paid to her over the financial year was in excess of the amounts that should have been paid. The Department discovered the overpayment and raised debts for $1,807 for child care benefit payments over the period 4 July 2016 to 2 July 2017, and $13,268.12 for FTB payments for the financial year.

2. The debts were affirmed on review by an authorised review officer and on 11 July 2018 at first review by this tribunal. Ms Todd applied to this tribunal for further review on 24 September 2018, and on 3 October 2018 lodged an application for an extension of time to allow the review application to be entertained. The Secretary, Department of Social Services (the Secretary), the respondent in this matter, opposes the application for an extension of time.

3. The tribunal held a hearing on 24 October 2018. Ms Todd appeared by telephone, with her partner, Mr Scott Baker. Ms Charlie Inglis, a departmental advocate, appeared in person representing the Secretary.

4. The tribunal had before it Ms Todd’s applications for review and for an extension of time and a submission from the Secretary, with attachments.

   LEGISLATIVE FRAMEWORK

5. Section 29 of the Administrative Appeals Tribunal Act 1975 (the AAT Act) governs the process for making applications for review. Subsection 29(1) specifies (relevantly) that the application must be made within the prescribed time; subsection 29(2) provides that, subject to exceptions not presently relevant, the prescribed time is 28 days after the decision for which review is sought is given to the applicant. Subsection 29(7) provides that the tribunal may, on written application, extend the time for making an application for review if satisfied that “it is reasonable in all the circumstances to do so”. Subsection 29(9) allows the tribunal to ensure that a person affected by an application for an extension of time is notified of the application; and subsection 29(10) requires the tribunal to hold a hearing on an extension of time application if that application is opposed by whoever was notified under subsection 29(9).

6. The provisions governing payment of family assistance are set out in the A New Tax System (Family Assistance) Act 1999 (the Family Assistance Act). Section 58 of that Act specifies that the rate of FTB is worked out using the rate calculator in Schedule 1 to the Act. The rate of child care benefit is worked out under Division 4 of Part 4 and Schedule 2 of the Act, as it stood at the time.

7. The A New Tax System (Family Assistance) (Administration) Act 1999 (the FA Administration Act) governs debt arising under family assistance law. Under section 71 of that Act, if a person is paid more family assistance than their entitlement, the amount of the overpayment is a debt due to the Commonwealth. Under section 95 the Secretary may write off a debt under certain limited circumstances. Under section 97 the Secretary must waive a debt if it arose solely from administrative error, the debtor received the payment in good faith, and payment of the debt would cause the debtor severe financial hardship. Under section 101 the Secretary may waive the debt if there are special circumstances (other than financial hardship alone) that make a waiver desirable and the debtor has not knowingly misled the Department or failed to comply with family assistance law.

8. It will be apparent that the opportunities for forgiving debts are very limited: those who have received public funds to which they are not entitled – no matter who is at fault - should expect to have to repay them, except under tightly constrained circumstances.

   CONSIDERATION

9. The discretion to grant an extension of time established by subsection 29(7) of the AAT Act is given in the broadest terms. Similar discretion is typically available to the courts. A body of case law has developed that sets out, non-exhaustively, the considerations that influence how the discretion is exercised. Among the best known of the cases dealing with these matters is Hunter Valley Developments v Minister for Home Affairs and Environment (1984) 58 ALR 305 in which Wilcox J set out a number of principles (that case related to an extension of time to seek judicial review of a decision under section 11 of the Administrative Decisions (Judicial Review) Act 1977 but the principles apply equally in present circumstances).These principles include:

   ·the starting position is that an application made outside time will not in general be entertained, so there must be an acceptable explanation for the delay;

   ·the applicant must not have “rested on her rights”; an attempt by the applicant to continue agitation of the matter will be to advantage and a shorter rather than longer delay before the application is lodged is therefore to the advantage of the applicant;

   ·any prejudice to the respondent or to other parties will militate against the grant of an extension, but mere absence of prejudice is not enough of itself to warrant a grant of extension;

   ·the merits of the substantial application are to be taken into account;

   ·fairness between the applicant and others in a similar position is also relevant.

10. The facts of this matter are that Ms Todd advised the Department on 31 May 2016 that her estimated family income (i.e. her own income plus that of her partner) for the 2016/17 financial year was $117,870. Departmental staff made an error, and entered her family income as zero. FTB and child care benefit were then paid on the wrong basis, resulting in a substantial overpayment.

    Delay and reasons for delay

11. The tribunal’s decision at first review was made on 11 July 2018. It was given as an oral decision. Under subsection 29(2) of the AAT Act the period allowed for applications for review is 28 days, but the date from which that 28 days is reckoned depends on how the terms of the decision were conveyed to the applicant: if reasons for a decision are given in writing at the time of the decision, the time is reckoned from the day the terms of the decision are given (paragraph 29(2)(a)); if the decision does not set out reasons and a statement of written reasons is sought (such statements may be sought by an applicant under section 28 of the AAT Act), the period is reckoned from the day on which the written statement is given to the applicant (subparagraph 29(2)(b)(i)) or the day on which a notice is given to the applicant that a statement of reasons will not be supplied (subparagraph 29(2)(b)(ii)); and if no statement of reasons is supplied, the time is reckoned from the date on which the notice of decision is given to the applicant (subparagraph 29(2)(b)(iii)).

12. In this instance, the Member at first review gave an oral decision, a notice of decision was despatched by ordinary post the same day, and Ms Todd did not seek written reasons (or there is no record of her having done so). Allowing four working days for despatch and receipt of the notice of decision, as provided for in section 160 of the Evidence Act 1995, Ms Todd can be taken to have received the notice on 17 July 2018. Her application for review was made on 24 September 2018. The 28 days allowed for an application for review expired on 14 August and the application for review was therefore lodged several days over five weeks out of time.

13. Ms Todd’s explanation for the delay is given on her application for the extension. She said:

    When I found out the appeal was unsuccessful this first time through the AAT I was stressed out about how was I going to pay the money and I was going to give up and started to pay. And I was thinking that this matter was not my fault I was doing the right thing with Centrelink and it was there Centrelink staff workers fault. So I should appeal this again. [sic]

14. At the hearing Ms Todd and Mr Baker elaborated a little on the above reasons, adding that at the time they were under significant stress, both financially, because of the size of the debt, and emotionally, because Ms Todd’s father had been diagnosed with cancer. The Secretary argued that, having allowed the time for application for review to lapse, and having begun to pay the debts, Ms Todd had rested on her rights; this would be in itself a reason for refusing the extension sought.

15. I note that the Secretary’s submission argues that the application was ten weeks out of time; by my calculation the application was lodged between five and six weeks after the deadline for lodgement had passed (and therefore between nine and ten weeks after the notice of decision is deemed to have been received, but between five and six weeks out of time). But the Secretary is right in noting that Ms Todd had rested on her rights: Ms Todd had allowed the Secretary to conclude that the matter had reached finality; and the delay, although not long, has not been compellingly explained.

    Prospects of success

16. It is established that in the context of an extension of time application the test regarding an applicant’s prospects of success is whether they have an arguable case; that case is to be taken at its highest, and it is inappropriate for the tribunal to undertake a test of the substantive merits or engage in cross-examination of an applicant or witness or consider issues regarding credit: Commissioner of Taxation v Brown [1999] FCA 1198 and cases cited therein.

17. The reasons that Ms Todd gave for seeking further review are closely focused on her clear sense of injustice at having to bear the consequences of the error made by departmental staff. Ms Todd also denied receiving the three letters in which she was notified that her benefits were being calculated on the basis of a family income of zero (the Secretary’s submission attached these letters, dated 31 May 2016, 23 June 2016 and 17 January 2017). Mr Baker also questioned whether the debts had been accurately calculated.

18. That the Department made an administrative error is not in question: Ms Inglis acknowledged the error both in her submission for the Secretary and at the hearing. But she notes that section 97 of the FA Administration Act, which allows family assistance debts to be waived for administrative error by the Commonwealth, allows that waiver only for sole administrative error. The Secretary notes that with respect to receipt of the letters, subsection 29(1) of the Acts Interpretation Act 1901 provides that a letter duly posted to the correct address is deemed to have been received. The Secretary therefore asserts that as Ms Todd received letters that set her family income as zero and stated that her family assistance was based on that zero figure, she contributed to the error by not correcting the Department’s mistake; the waiver cannot apply to her. The Secretary also questions whether, with an annual family income of over $100,000, repaying the debts at $60 per fortnight, the rate at which they were being repaid when the application for review was lodged, would throw Ms Todd into severe financial hardship.

19. Ms Todd does not appear to contest that an overpayment has occurred, which implies that the existence of the debts is established. Mr Baker suggested that he wished to challenge the calculation of the debt amounts, but I have no information before me to suggest one way or the other whether there is any substance to the objection. Ms Inglis said that she had seen the basis for the calculation and could not see any error; but that does not provide any satisfactory foundation for me to form a view. This matter was apparently not raised at first review, and I am unable to form a view about the prospects of success in respect of the issue.

20. The FA Administration Act provides that a debt must be waived where three tests are met: it has arisen from sole administrative error by the Commonwealth; the money has been received in good faith; and paying it would cause the debtor severe financial hardship. Ms Todd’s argument in her application for review and at the hearing is that the administrative error that led to the debts was made by departmental staff and she ought not to bear the burden of the error.

21. The case for waiver for sole administrative error is demonstrably weak: the Department plainly made an error, but the Secretary is correct in that the letters advising of a zero family income as the basis for determining the payments are deemed to have been received. The first of the letters was sent out on the day that Ms Todd reported her income. It is therefore the case that Ms Todd is deemed to have been aware of the error: failing to contact the Department to advise that an error had been made is indeed a contribution to the debts arising. As noted in Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 and Gerhardt and Secretary, Department of Employment and Training [1997] AATA 173, to meet the “sole administrative error” test, the administrative error must be the cause of the debt arising to the exclusion of all other causes, no matter how minor those other causes might be. That is not the case here, on the face of it. The sole administrative error criterion is unlikely to be satisfied.

22. There is also a question whether, in light of the matters raised immediately above, Ms Todd could meet the requirement that the payments were received in good faith. In this context “good faith” requires that a recipient of a payment which is beyond entitlement must have no suspicion or awareness that there is anything wrong with the payment: Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484; Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565.

23. The Secretary has put forward a sound argument that Ms Todd has not shown that repaying the debts would cause her severe financial hardship, given that her annual family income exceeds $100,000. Repayments of $60 per fortnight seem unlikely to have that effect. Ms Todd made no argument to me at the hearing on this point.

24. Section 101 of the FA Administration Act provides for waiver of a debt under special circumstances. Ms Todd did not put an argument that her debts should be waived under this provision. In any case, the Secretary argued, and I am inclined to accept, that an error by the Department and a father diagnosed with cancer – the only matters advanced that might underpin a special circumstances claim – do not, despite their seriousness, meet the special circumstances test as outlined in cases such as Beadle and Director-General of Social Security [1984] AATA 176; Dranichnikov v Centrelink [2003] FCAFC 133; or Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25.

25. I conclude that the prospects of success for Ms Todd’s case, taken at their highest, are poor. On the evidence available to me, I cannot see her as having an arguable case.

    Other considerations

26. Other possible matters to be considered in deciding an extension of time application include any prejudice to either party from denial or grant of an extension; and whether alternative avenues of relief might be available. The Secretary points out that debt matters under the family assistance law are not subject to a time limit, so that a new application for review may be brought at any time, if circumstances change. On the question of prejudice, the Secretary urges that there is a public interest in bringing finality to the review process; and that it is unfair to others if an extension is granted where it would not be in the interests of justice. I do not give any significant weight to these arguments; if an extension of time is warranted on the grounds already considered, these arguments would fall away.

    CONCLUSION

27. Taking all the matters into consideration, it is clear that Ms Todd rested on her rights and has offered less than a compelling explanation for doing so. Her prospects of success in her substantive application appear to be poor. The application for an extension of time is refused.

28.     I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Member Mark Hyman

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Associate

Dated: 9 November 2018

Date(s) of hearing:	24 October 2018
Applicant:	By telephone
Solicitors for the Respondent:	Ms Charlie Inglis, Department of Human Services