Zavaroni and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 128

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 128

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2007/5213

GENERAL ADMINISTRATIVE DIVISION		)
Re		JOSE ZAVARONI

Applicant

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

Respondent

DECISION

Tribunal Mr RG Kenny, Member

Date20 February 2008

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.................[Sgd]..........................

Member

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Allowances – overpayment of family tax benefit - family tax benefit child absent from Australia for more than 13 weeks – failure to advise Centrelink – debt to the Commonwealth – no waiver of debt through sole Commonwealth error – waiver of part of debt through notional entitlement to rent assistance amounting to a special circumstance – decision of Social Security Appeals Tribunal affirmed. 

A New Tax System (Family Assistance) Act 1999 ss 24, 63
A New Tax System (Family Assistance)(Administration) Act 1999 ss 71, 97, 101
Social Security 1991 s 1237AAC, 1237AAD
Social Security (Administration) Act 1999 s 110

Secretary, Department of Family and Community Services v Varhegi [2005] AATA 635
Re Schulze and Secretary, Department of Family and Community Services (2004) 81 ALD 636

REASONS FOR DECISION

20 February 2008 Mr RG Kenny, Member      

Background

1.      In 2006 and 2007, Mr Zavaroni received family tax benefit (FTB) payments through Centrelink in accordance with the New Tax System (Family Assistance) Act 1999 (the FA Act).  Under the scheme of the FA Act, his daughter Rocio, who was born on 11 October 1994, was an FTB child.  Rocio travelled to Argentina on 13 August 2006 and FTB payments to Mr Zavaroni continued at an unchanged rate until, on 21 and 22 August 2007, a Centrelink delegate determined that he had been overpaid amounts of $5,085.33 and $639.88, respectively, which were debts due by him to the Commonwealth.  Those decisions were affirmed by an authorized review officer of Centrelink on 18 September 2007.  On 17 October 2007, the Social Security Appeals Tribunal (SSAT) affirmed the decision in relation to the debt but waived that component of it which was equivalent to an amount of rent assistance that could have been payable to him under the Social Security Act 1991 (the SS Act).

Issues and Legislation

2. Mr Zavaroni conceded that he had been overpaid FTB payments in the amounts nominated above which total $5,725.21. He also conceded that this was a debt owed by him to the Commonwealth. Having considered the terms of ss 24 and 63 of the FA Act, and 71 of the New Tax System (Family Assistance) Administration Act 1999 (the FAA Act), I am satisfied that those concessions have been properly made on the basis that he was paid FTB payments at the maximum rate to which he was not entitled once Rocio had been absent from Australia for 13 weeks. 

3.      Sections 97 and 101 of the FAA Act make provision for the waiver of a debt.  They read:

Waiver of debt arising from error
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

Waiver in special circumstances
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.

4.      The issue for determination is whether the debt, or part of it, is able to be waived under either of those provisions.

Evidence

5.      Mr Zavaroni gave the following evidence.  He confirmed that Rocio had left Australia on 13 August 2006.  He went to the Centrelink office at Nambour in October 2006 in order to advise that he had changed his residential address.  While there, he advised Centrelink that Rocio had travelled to Argentina for a holiday.  On 17 November 2006, he went to the Centrelink office at Noosa and provided his income details and also advised that Rocio was attempting to gain entry to an education program in Argentina.  He was not advised by Centrelink staff that Rocio’s absence from Australia would have an effect upon the FTB payments he was receiving.  He returned to that office on 15 August 2007 where he was handed a letter which requested information from him about Rocio’s travel arrangements, her expected date of return to Australia and whether he was still supporting her whilst she was overseas.  On the following day, he returned to that Centrelink office and provided a copy of Rocio’s travel itinerary, advised that her return arrangements were uncertain and confirmed that he was providing financial support for her. 

6.      Whilst in Argentina, Rocio stayed with her grandmother and attempts were made to have her accepted into an education program.  This was achieved but confirmation of those arrangements was not made until March 2007.  In the interim, uncertainty surrounded her situation in Argentina.  With her original flight schedule, she was to return to Australia on 18 September 2006.  However, Mr Zavaroni knew before the end of August 2006 that she would not be returning to Australia on that day and had negotiated with the travel agent about a change to the ticketing arrangements.

7. Mr Zavaroni receives income support payments under the SS Act in the form of disability support pension. He is engaged in part-time employment, mainly on the weekends, as a taxi driver. He has no savings, lives in rental accommodation and has debts in the order of $14,000. He continues to provide financial assistance to his daughter and has been making fortnightly repayments of his FTB debt. He suffers from an orthopaedic condition relating to his back and has been advised that he will need to undertake surgery for it.

8.      Mr Zavaroni agreed that, from time to time when he had received FTB payments, letters were sent to him by Centrelink and that these letters indicated to him that certain information had to be provided to Centrelink.  He conceded that this included information concerning his daughter’s residential and travel arrangements.  A copy of such a letter was in evidence and Mr Zavaroni agreed that he had received letters in the same format but that it was not his practice to read the information contained in them.  Mr Zavaroni is not fluent in the English language and thought that this may have contributed to misunderstandings when he was looking at Centrelink documentation and in communicating with Centrelink officers.

Submissions

9.      Mr Zavaroni submitted that he had advised Centrelink of Rocio’s absence from Australia on two occasions in 2006 and considered that this should have alerted Centrelink to the need to adjust his FTB payments.  For that reason, he submitted that the debt had arisen solely because of error by the Commonwealth.  He considered that it was unfair for Centrelink to raise the debt against him and, in particular, because he had spent years in Australia in employment and had made substantial contribution through the payment of income taxes.

10.     Mr Flintoft conceded that Mr Zavaroni may have advised Centrelink that Rocio had left Australia.  However, he submitted that, at most, this was only on the basis that she was on a holiday.  He submitted that Mr Zavaroni had become aware, by the end of August 2006, that she was to stay in Argentina for a much longer period.  He submitted that, even after she had attained entry into the education program, this information about remaining in Argentina had not been given to Centrelink.  Mr Flintoft submitted that Mr Zavaroni had been advised by letter of his obligations to keep Centrelink informed about the living arrangements of his daughter whilst he was in receipt of FTB payments.  He submitted that his failure to provide full information to Centrelink about Rocio’s arrangements had contributed to the continuation of FTB payments at the incorrect level; that, therefore, the debt did not arise solely through Commonwealth error; and that it could not be waived on that basis.  Further, Mr Flintoft submitted that there were no special circumstances in Mr Zavaroni’s case which would justify waiver of the debt and that it was inappropriate to adopt the approach to waiver taken by the SSAT in this matter.

Consideration

11.     A copy of the letter, dated 15 August 2007, to Mr Zavaroni was in evidence.  It bears a Centrelink stamp indicating that it was received at the counter of the Noosa office on 16 August 2007.  The travel documents provided by Mr Zavaroni were also in evidence and also bore the same date stamp.  The travel itinerary provided by Mr Zavaroni to Centrelink confirms Rocio’s departure on 13 August 2006 and also her projected return to Australia on 18 September 2006.  A file note, dated 15 August 2007, from the office indicates that the letter was sent to Mr Zavaroni by mail on that day although Mr Zavaroni understood that he had received the letter across the counter.  I am satisfied that it was provided to him by one or other means on 15 August 2007 and that he returned to the office on the following day with the relevant documentation, including the letter, all of which were stamped at the counter on 16 August 2007.  A further file note, dated 16 August 2007, indicates that this was the first notification to Centrelink that Rocio was absent from Australia. 

12.     The first element to be satisfied for the debt to be waived under s 97 of the Act is that it must be attributable solely to administrative error made by the Commonwealth.  A debt will not arise solely through error by the Commonwealth if there has been some contribution to the causing of the debt by the recipient: see Director‑General of Social Services v Hangan (1982) 70 FLR 212 at 215, 225 and 235. I am satisfied that Mr Zavaroni contributed to Centrelink’s overpayment to him of family tax benefit. Within 2 weeks of Rocio’s departure from Australia, he made arrangements to defer her return ticket and knew, at that time, that she was not returning until after education plans were investigated. In October 2006, he advised that she was away on a holiday. Notification of the underlaying arrangements at that time would have provided an opportunity for Centrelink to investigate Mr Zavaroni’s circumstances. That would also have been the case if he had provided full information on 17 November 2006 which was already after the relevant 13 week period after which higher payments could not be made. Those were matters which contributed to the continuation of FTB payments at the higher level. Because there was contribution on his part, I am satisfied that this was not a case of sole Commonwealth error and that the debt can not be waived under s 97 of the FAA Act.

13.     For waiver of a debt under s 101 of the FAA Act, it must be the case, amongst the other requirements of the provision, that there are special circumstances other than financial hardship alone that make it desirable to waive the debt.  The FAA Act provides no guidance as to the meaning of the term “special circumstances” in that provision.  In Beadle v Director-General of Social Security (1985) 7 ALD 670, the Full Federal Court stated that it was not possible to lay down precise limits or precise rules for the meaning of the term as used in the context of the SS Act. The Court indicated that this would depend upon the circumstances of each particular case but commented that, even though the term lacks precision, it was sufficiently understood “not to require judicial gloss"[1].  There, the Court affirmed the decision of the Tribunal (Re Beadle and Director-General of Social Security (1984) 1 AAR 362) where the Tribunal had acknowledged that the term was "incapable of precise or exhaustive definition" and that, to be special, the circumstances "must have a particular quality of unusualness that permits them to be described as special"[2].

[1] Beadle v Director-General of Social Security (1985) 7 ALD 670 at 674.

[2] Re Beadle and Director-General of Social Security (1984) 1 AAR 362 at 364

14.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court's decision in Beadle’s case, observed (at 545) that special circumstances:

would require something to distinguish... [the]… case from others, to take it out of the usual or ordinary case. ……. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.[3]

[3] Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545

15. The SSAT noted that, if Mr Zavaroni’s FTB payments had been reduced after Rocio had been absent from Australia for 13 weeks, he would have been entitled to claim, because of his status as a disability support pensioner, for certain rent assistance under Part 3.7 of the SS Act. It was also noted that no claim for that assistance had been made and that s 110 of the Social Security (Administration) Act 1999 (SSA Act) now precluded payment to him of any arrears for that kind of payment.  The SSAT considered this to be an unfair outcome which constituted special circumstances and waived that amount of the FTB debt which was equivalent to the rent assistance he would have received.  The amount was not identified but Mr Flintoft advised that this was equivalent to waiver of $1,920.63 Mr Flintoft did not dispute Mr Zavaroni’s notional entitlement to rent assistance in the manner described by the SSAT.  However, as noted above, he submitted that reliance on the concept of notion entitlement was inappropriate.

16.     In Secretary, Department of Family and Community Services v Varhegi [2005] AATA 635, the Tribunal reviewed various authorities in relation to notional entitlement. In particular, reference was made to the following passage from Re Schulze and Secretary, Department of Family and Community Services(2004) 81 ALD 636 at 647:

Notional entitlement has been found to constitute part of the factual matrix of special circumstances in several cases such as Secretary, Department of Family and Community Services and Lyster (2000) 59 ALD 587.  However, I note that the legislature has seen fit to amend the Act to provide for set-off of notional entitlement in the circumstances provided for in s1237AAC. That provision provides for set-off of notional entitlement in only very limited circumstances and by reference to specific payments. It was the respondent’s contention that any attempt to expand notional entitlement by virtue of the special circumstances provision would defeat the intention of Parliament.  I think this submission is well-founded.

17.     In Varhegi’s case, the Tribunal agreed and was not prepared to utilize the concept of notional entitlement for assessing special circumstances. Each of those cases was concerned with special circumstances waiver under s 1237AAD of the SS Act. That provision is in the same terms as s 101 of the FAA Act. With both of these provisions, the discretion to waive a debt is expressed in broad terms. However, the qualification to the application of notional entitlement provided for in s 1237AAC of the SS Act, referred to above in Schulze, serves to narrow that discretion in that Act.  That qualification is not repeated in the FAA Act.  That is not to say that the concept of notional entitlement should be applied in all cases under the FAA Act and, for example, it would be inappropriate to do so in circumstances where a social security recipient has engaged in deliberate conduct to mislead Centrelink.  In Mr Zavaroni’s case, I am satisfied that he has not done this.  I have also noted his reference to difficulties with the English language.  Indeed, the entire hearing was conducted with the services of an interpreter.  Throughout, there was obvious reliance by Mr Zavaroni on that service.  I am satisfied that this supports his contention that there were communication difficulties in his dealings with Centrelink and that this injects a particular quality of unusualness into his situation.  I agree with the approach adopted by the SSAT which identified a level of unfairness in not recognizing his notional entitlement to the amount subsequently identified by Centrelink as $1,920.63.

Decision

18.     The Tribunal affirms the decision under review.

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member

Signed: ...............[Sgd]........................................................
  Research Associate

Date/s of Hearing  14 February 2008
Date of Decision  20 February 2008
The Applicant appeared in person
Respondent  Mr P Flintof, Departmental Advocate