Wallace and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1644

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1644

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S 200600344

GENERAL ADMINISTRATIVE DIVISION		)
Re		JANET LOUISE WALLACE

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Mr J G Short (Member)

Date8 August 2007

PlaceAdelaide

Decision The Tribunal affirms the decisions under review.

..............................................

J G SHORT
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Family Tax Benefit – overpayment not solely due to administrative error – special circumstances do not exist – decisions affirmed

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ss 71, 97, 101

Re Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

8 August 2007   Mr J G Short (Member)  

1.      Janet Wallace has appealed decisions affirmed by the Social Security Appeals Tribunal (SSAT) on 22 September 2006 raising and recovering a debt of $7,320.01 arising from an overpayment of Family Tax Benefit (FTB) for the period 17 November 2004 until 30 June 2005 and raising and recovering a debt of $6,726.29 arising from an overpayment of FTB for the period 1 July 2005 until 16 May 2006.

issues

2.      The issues for the Tribunal to determine are:

(a)whether Ms Wallace has debts in the sum of $7,320.01 and $6,726.29 reflecting overpayments of FTB; and

(b)if yes, whether recovery of all or part of the debts should be waived (cancelled) or written-off (recovery deferred).

evidence

janet wallace

3.      Ms Wallace told the Tribunal that from at least the start of the first debt period on 17 November 2004 until at least the end of the second debt period on 16 May 2006, she and her former partner had a shared care arrangement in respect of their children.

4.      Ms Wallace adopted as accurate the summary of her evidence provided to the SSAT and recorded at paragraph 10 of that Tribunal’s reasons for decision:

“…

·Ms Wallace expressed her frustration that she had been burdened with a major debt due to incompetence by staff at the Family Assistance office.  She stated that it is true that she informed the Child Support agency of any changes in her circumstances and she had at least 38 conversations with Centrelink, including the Family Assistance office.  This shows her good faith in dealings with the Family Assistance office and it is not accurate to state that she failed to advise the Family Assistance office of her situation.

·She has five children from her marriage with her former husband.  She is on good terms with her former husband and they maintain daily contact for the sake of the children.  Their children are Sophie (date of birth: 16 February 1999), Joseph (date of birth: 5 April 1997), Alexander (date of birth: 22 June 1995), Amy (date of birth: 22 January 1994) and Harrison (date of birth: 8 December 1991).  Ms Wallace now lives with her current partner, Chris.  He has two children, one is married and the other child lives with his mother.

·Her former husband currently rents housing from the Department of Defence and the children have to spend time there with him for him [to] retain this housing.  When they separated, her former husband had the house through the Department of Defence to go to but Ms Wallace was not sure where she would live.

·She concedes some responsibility for the debt up until June 2005.  Ms Wallace said she is not fully responsible for this debt as she was under stress at the time due to the separation from her former husband.  Her view is that the Family Assistance office needs to be accountable in some way.

·When she first separated from her former husband on 17 November 2004 she rang the Family Assistance office and was told to ring the Child Support agency.  This agency has been aware of the share care arrangement since 17 November 2004.  The Family Assistance office told her that all of her information from the Child Support agency would be handed over to them.  Some months later she rang the Family Assistance office as her current partner had ceased paying child support for his adult son and she was told to inform the Child Support agency and that they would then share the information with the Family Assistance office.

·Prior to her separation from her former husband Ms Wallace was receiving FTB in relation to her children and had minimal contact with the Family Assistance office.  She only contacted them to inform them of her husband’s income.

·Her children spend fifty percent of the time with each parent by agreement.  Ms Wallace explained the Family Assistance office provided the waiver form, regarding FTB entitlements, to her on 17 November 2004.  However, she did not complete the form at the time as she had received a large amount of forms to complete and she was preoccupied at the time with the care of her children and ensuring they had a roof over their heads.

·The Family Assistance office records show that she contacted the office on 11 April 2005 and she stated she was enquiring regarding the annual $600 FTB lump sum payment per child.  She asked if in her situation would both she and her former husband receive half of the payment each and she was told that she was the disadvantaged parent so she would receive the total amount once he lodged his tax return or, soon after 18 November 2005 if he had not lodged his tax return.  Ms Wallace explained she received a cheque for $3,000 not long after 18 November 2005 for the FTB lump sum payment per child of $600.

·Not once did the Family Assistance office follow up with her regarding completing the waiver form and she felt that if it was such an important issue then they should have followed this up with her.  She assumed that because in her contact with the Family Assistance office they were aware she had a share care arrangement with her former husband that she was receiving the correct amount of FTB.  Her view is that her records with the Family Assistance office confirm that she had shared care of her children with her former husband.

·In June 2005 she had contact with Centrelink regarding her returning to work and they changed details on her records in various screens during this interview.  On 4 July 2005 she had a further interview with Centrelink regarding her options in relation to returning to work.  However not once on either occasion was it mentioned to her regarding the importance of her completing a waiver form regarding the FTB entitlements for her former husband.

·She commenced work in September 2005 and at that stage she was receiving Parenting Payment single and reported her earnings each fortnight to Centrelink.

·Ms Wallace stated to the Tribunal that it was incorrect information in the statement of the authorised review officer decision that the overpayments were brought to her attention by the Family Assistance office on 6 January 2006.  She was not advised until she received the form on 16 May 2006 from the Family Assistance office to complete regarding the share care arrangement.

·Ms Wallace confirmed she and her former husband have now completed a form for the Family Assistance office regarding the share care arrangement in relation to their children and it is accurate that the agreed share care arrangement has been 50/50 since 17 November 2004.  However she reiterated that the Family Assistance office already knew that information.  Ms Wallace agrees the debt has been caused partly by her mistake of not completing the correct forms regarding the share care arrangement when she initially separated from her former husband.  At the time she was very stressed regarding her children and their future.  However from 20 June 2005 when she had contact with Centrelink, including the Family Assistance office, her situation was discussed (including the share care arrangement regarding her children).  Centrelink, including the Family Assistance office, has to take some responsibility for the debt being accrued because they should have asked her how much of the care of her children was shared and informed her that the necessary forms had not been completed.  Her view is that the debt has resulted from some Centrelink error as they did not follow up with her regarding the waiver form in relation to her former husband’s FTB entitlements.

·She is an honest person with a responsible job working with children.  She has always been honest in her dealings with Centrelink including informing them when her current partner moved in to live with her and reporting any money that she has earnt.

·When the debt was raised, the Family Assistant office ceased her payments for two paydays and then recommenced her payments once she had phoned the debt collection agency and arranged to repay $24 per fortnight towards the debt.  Ms Wallace was informed that her share of the yearly FTB lump sum payment, $1500 ($300 per child for five children), would automatically go towards repayment of the debt.  This will make it very difficult for her financially as she was planning to use that money to pay for school fees.  Her children all attend public school and two of her children will be at high school next year.

·She regards her current repayments towards the FTB debt to be $50 a month.  It is affecting her family, as it is more difficult to afford the additional ongoing costs associated with having five children at school.  For example costs associated with school camps and school photographs.  She does not have a lot of savings and feels strongly that she should not have to pay for Centrelink’s inadequacies.  If this had happened in any business people would be held accountable for their mistakes.

·She was not aware of whether her former husband was currently receiving FTB payments or whether he had received a back payment of arrears for his FTB entitlements.

·Ms Wallace currently is expected to phone the debt collection agency every three months to verify her financial situation.  Ms Wallace explained that the only change to the Statement of Financial Circumstances form that she had provided to the Tribunal prior to the hearing is that she now has a $2,500 bill for lawyer’s fees.  She confirmed she currently only receives $132 per fortnight in FTB payments.  Her Parenting Payment from Centrelink ceased when her current partner moved in to live with her and her children.

·The FTB debt is constantly on Ms Wallace’s mind.  She is concerned as she is not paid from her employer during the school holidays and the child support payments she receives pays for all of the bills associated with raising her children including school fees, health insurance, clothing for school, music lessons, sporting costs and the cost of feeding five children for fifty percent of the time.  Her former husband provides clothes for the children at his house.

·Since the separation Ms Wallace has had to have surgery in relation to her gall bladder and she has had cancerous sunspots removed.  Having this FTB debt is very stressful for Ms Wallace as she normally pays bills as soon as they arrive in the mail.  If it is decided that the debt must be repaid she agrees she will have to continue to pay the minimum repayment amount that she is currently paying.  However, she does not agree to have to repay the debt with the $1500 annual FTB lump sum payment she will receive in relation to her five children (her fifty percent share of this FTB payment).”

5.      Ms Wallace was referred to records relating to conversations between herself and Centrelink staff and documents completed at about the time of her claim for Parenting Payment.  At T7/42 is a record of a contact between Centrelink and Ms Wallace regarding a claim for Parenting Payment Single.  A portion of this record reads:

“Shared care not yet sorted.  Likely to be around 25% to O/A.  (C) is to discuss with O/A and advise us of her % care.  Waiver sent to (C) … as she feels that O/A will waive care of children.”

Ms Wallace said that she could not remember all of the conversation which led to this record.  She recalled some reference to 25 percent.  She remembered being provided with a form of waiver (for use by the other parent if that parent is prepared to waive their entitlement to FTB) but did not consider that form had application to herself and consequently the form was not completed or returned.  Ms Wallace said that she had advised the Child Support Agency (CSA) that care of the children was shared and understood that the CSA would relay that advice to Centrelink.  Ms Wallace said that she could not now recall whether she told Centrelink staff that she would call back when the care arrangements were settled.  She said that it was a time when she was not thinking straight.

6. Ms Wallace was also referred to the text of a letter suggested to have been sent to her by Centrelink on 18 November 2004 (T8/43), that is about the time she claimed Parenting Payment Single. The letter purports to contain a request made under s 158 of the A New Tax System (Family Assistance) (Administration) Act 1999 (the Administration Act) and refers to the form of waiver provided to Ms Wallace. In part the letter reads:

“If a waiver of your ex-partners Family Tax Benefit is not applicable, please advise us of the shared care arrangements for all of your children.”

Ms Wallace said that she could not really comment about this form.  She said that perhaps she had other things on her mind.

7.      Ms Wallace was also referred to her initial claim form for Parenting Payment (T40/166-196).  At T40/174 Ms Wallace appears to have ticked a negative response to the question “Do you (or your partner) share the care of this child with another person?”.  An example is then provided “e.g. the child stays overnight with the other parent for periods of time?”.  She said that she understood the question to be asking whether she shared the care of any of the children with a person who was not the child’s parent.  Ms Wallace went on to explain that she had always attempted to answer honestly, all questions asked of her by Centrelink.  She said that it was not fair to have to repay monies paid to her because of a Centrelink error.  Ms Wallace said that if there was any confusion about the care arrangements for the children and the fact that she shared that care on a fifty/fifty basis with her ex-partner, then Centrelink had numerous opportunities to remedy the error and consequently confine the debt to a lesser sum. 

8.      Ms Wallace referred to folio T11/57 which, in reference to her ex-partner’s defence housing accommodation, records the following comment:

“… He rents the house in Bracken Place thru DHA so that he could have the children with him.  Cust and ex have joint custody of the children. … As processes have been established to confirm separation this review is to be finalised prt as per s500 of the ssa.”

Ms Wallace also referred to a record of a conversation on 4 July 2005 (T12/61).  This was an interview conducted in relation to Ms Wallace’s entitlement to Parenting Payment Single.  It includes the following comment:

“Clt separated 8 months ago from her husband, who lives very close to her.  The children move freely between both homes and the parting has been relatively amicable. …”

Ms Wallace referred to a number of other records of conversations with Centrelink staff which were suggested to imply advice of a fifty/fifty shared care arrangement with the children.

9.      Ms Wallace said that she has re-partnered.  Her partner’s income prevents her receiving a school card concession.  She has a number of debts relating to her children’s state school fees.  Ms Wallace said that at all relevant times she believed she was receiving her correct entitlement, that is an entitlement reflecting 50 percent care of the children.  She said nobody had ever explained to her how much the maximum entitlement was or pointed out the fact that she was receiving the maximum entitlement, that is an entitlement reflective of 100 percent care.  Ms Wallace said that since about June 2006 she has been working on a part-time basis as a school services officer.  Centrelink are recovering the debts by reducing her fortnightly FTB entitlement to $130.  Ms Wallace said that $1,500 normally paid as a bonus in relation to FTB children each year will be withheld and put towards the debt.  She confirmed that she receives child support at a rate of $1,300 a month.  Ms Wallace said that she does not have significant monies at bank.  She does have $15,000 in a mortgage offset account.  Ms Wallace said that $15,000 is held in the mortgage offset account for emergencies.  She jointly owns a home with her current partner, purchased approximately 18 months ago for approximately $390,000.  This house is encumbered with a mortgage of about $170,000.  She has no other major debts.  Ms Wallace explained that she has become very frustrated by her dealings with Centrelink in relation to the debt.  It has affected her health.  She has been prescribed sleeping medication.  She does not take this medication while the children are with her.  Ms Wallace said that she has not allowed the debt to impact on her relationship with her new partner or to affect the children.

ms bronwyn hill

10.     Ms Hill is an experienced customer service officer with Centrelink.  Ms Hill was called by the Department in order to interpret and comment upon some of the communication and other records held on Ms Wallace’s Centrelink file. 

11.     Ms Hill explained that for payment of Parenting Payment Single, all Centrelink needs to know is that a potential recipient has at least 25 percent care of a child.  In these circumstances, it was appropriate for Parenting Payment Single to be paid.

12.     In relation to FTB, Ms Hill said that because of the information contained in Ms Wallace’s claim for Parenting Payment, relating to the care of the children, particularly the negative response to the question whether Ms Wallace shared the care of the child with another person, it was appropriate for FTB to be paid on an understanding that Ms Wallace had sole care of the children. 

13.     Ms Hill went on to refer to some other records of conversations between Ms Wallace and Centrelink staff.  She said that most of those records would not cause her concern or suggest that Centrelink staff were in error in failing to follow up implications of a shared care arrangement.  Most of the contacts were “subject specific” and consequently, if a query was not specifically related to care arrangements for children, then it would not require any particular follow up by Centrelink staff.  Ms Hill said however, that with her experience, if she had been the recipient of the advice recorded at T11/57 referring to Mr Wallace having joint custody of the children, then she is likely to have checked whether Mr Wallace had completed a waiver form in relation to his entitlement to FTB in which case it would have been appropriate for Ms Wallace to continue to receive 100 percent of the FTB rate.  She also said that when the waiver form was not returned, best practice would have been for some follow up to occur, although in the light of particular responses Ms Wallace provided in her claim for Parenting Payment, the absence of the waiver form would not necessarily require a follow up.  Ms Hill concluded her evidence by saying that she considered that errors were made on both sides.

consideration

14. The first issue for me to consider is whether a debt exists. I find that during all relevant times, Ms Wallace had shared care, on a fifty/fifty basis, of her children. Consequently her maximum entitlement (in the absence of any waiver from her ex-partner), was to 50 percent of the maximum rate of FTB. Ms Wallace was paid 100 percent. Section 71(2) of the Administration Act reads:

“71(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.”

This sub-section works to create debts reflecting overpaid sums even in circumstances where no fault can be ascribed to the debtor.  I find that Ms Wallace has debts to Centrelink in the sums of $7,230.01 and $6,726.29.

15.     I next considered whether recovery of all or part of the debts should be waived or written-off.

16. It was submitted by Ms Wallace that the debts, either initially or at some stage during the debt periods, were solely due to Centrelink error. Section 97 of the Administration Act reads as follows:

“97(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.”

17.     In order to waive any portion of a debt, it is first necessary to find that the debt was attributable solely to administrative error.  In this case, although I consider (as did the SSAT) that Centrelink contributed to the debts by failing to make further enquiries after ambiguous comments were recorded, and by failing to follow up on the waiver form which Ms Wallace did not return, nevertheless in the light of Ms Wallace’s misleading answers contained in her claim for Parenting Payment Single and of her failure to respond to the letter sent to her by Centrelink on 18 November 2004 requesting either the return of the waiver document or specific advice concerning the care arrangements for each child, it cannot be said that the debt arose solely as a result of administrative error.

18.     At this stage I will point out that even if I had found that the debt arose solely from administrative error, I could only waive recovery if I considered that Ms Wallace would suffer severe financial hardship if the debt were not waived, or if the debt was not raised within 12 months after the period during which the debt arose.  Both debts were raised within time.  Severe financial hardship was considered in Re Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729 at [20]:

“20. Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature.”

I adopt those comments and in the instant case would not be satisfied that recovery of the debt would cause Ms Wallace to experience severe financial hardship.

19. I next considered whether recovery of all or part of the debt should be waived under s 101 of the Administration Act. This section reads:

“101 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.”

In this case I have carefully considered the evidence provided by Ms Wallace. I have noted that none of the recipient notices, or indeed any other documentation sent to Ms Wallace, specifically stated that she was being paid in reflection of an understanding of sole care of the FTB children. Although that documentation did record a figure which was in fact the maximum rate of FTB, it did not state this to be the case. I have formed the view that Ms Wallace did not “knowingly” make a false statement or false representation or fail or omit to comply with a provision of the Administration Act.

20.     I have been urged to consider that special circumstances exist, which make it appropriate to waive recovery of all or part of the debts.  The thrust of the submission related to what was suggested to be significant Departmental error.  Other factors related to the stress Ms Wallace was under at the time she claimed benefit and on receiving notification that she had a large debt. 

21.     While I find that Centrelink should have acted more thoroughly in pursuing some of the information recorded in Ms Wallace’s Centrelink file, nevertheless, if it were necessary to apportion fault in relation to the debts, then most of that fault would lie, although innocently, with Ms Wallace’s inaccurate completion of a claim form and in her failure to respond to relevant correspondence, specifically a letter asking for the return of a waiver form or in the alternative, advice in relation to the care arrangements of her children.

22.     Other than a contribution for administrative error towards the debt, the other factors raised in support of a submission for waiver do not, in my view, either in isolation or in combination amongst themselves or with a contribution from administrative error, comprise special circumstances.  That term has been commented upon on several occasions, including in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 [at page 3]:

“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

23.     Parliament has expressed its intention in relation to debts arising out of administrative error.  Waiver in those circumstances is confined to debts arising solely as a result of administrative error, and then only when recovery of the debt would cause severe financial hardship or where a significant delay in raising the debt had occurred.  In the circumstances of this case I do not consider that it would be desirable to combine a contribution of administrative error with the other circumstances of this case to find special circumstances and consequently to waive recovery of all or any of the debts.  I am also not satisfied that it would be appropriate in the circumstances to write-off (delay) recovery of the debts.  The decisions under review are affirmed.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed:         ............J Coulthard...........................................
  Associate

Date of Hearing  27 June 2007
Date of Decision  8 August 2007

Advocate for the Applicant       Ms M Riley

Welfare Rights

Advocate for the Respondent   Ms J Kitto

Centrelink Legal Services Branch