Klaverstyn and Secretary, Department of Family and Community Services [2003] AATA 71 (24 January 2003)

Last Updated: 24 January 2003

DECISION AND REASONS FOR DECISION [2003] AATA 71

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2002/818

GENERAL ADMINISTRATIVE DIVISION )

Re CHARLES KLAVERSTYN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal The Hon CR Wright, QC (Deputy President)

Date 24 January 2003

Place Brisbane

Decision The Tribunal affirms the decision under review.

.................(Sgd)........................

The Hon CR Wright, QC

Deputy President

CATCHWORDS

SOCIAL SECURITY - family assistance benefits - effect upon family tax benefit of payment of youth allowance to child attaining 16 years - overpayment of family tax benefit - right of Commonwealth to recover overpayment - whether any part of overpayment attributable solely to Commonwealth error - whether recovery would cause severe financial hardship - whether special circumstances exist for waiving overpayment.

A New Tax System (Family Assistance) Act 1999 ss 21, 22A

A New Tax System (Family Assistance) Administration Act 1999 ss 71, 97(1), 97(2), 101

Re Gerhardt and Department of Employment, Education and Training (AAT No 10941, 17 May 1996)

Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212

Re Prince and Secretary, Department of Employment, Training and Youth Affairs (1997) 45 ALD 680

REASONS FOR DECISION

24 January 2003 The Hon CR Wright, QC (Deputy President)

Decision

1. This is an application for review of a decision made by Centrelink on 19 June 2002 to raise and recover a family tax benefit debt of $686.00 for the period 26 March 2002 to 18 June 2002.

Facts

2. On 21 February 2002, the applicant, who was in receipt of family tax benefit for his daughter, was sent a notice from Centrelink requiring him to notify Centrelink within 14 days if his daughter started to receive a social security benefit.

3. On 25 March 2002, the applicant's daughter turned 16.

4. She had a continuing eligibility for youth allowance thereafter.

5. The applicant continued to receive family tax benefit until 18 June 2002.

6. On 19 June 2002, Centrelink cancelled his family tax benefit and made a decision to raise and recover a debt of $686.00 for the period 26 March 2002 to 18 June 2002. This sum represented the overpayment of family tax benefit paid to the applicant between those dates.

7. On 8 July 2002, the applicant sought review of this decision.

8. The original decision-maker reconsidered and affirmed the decision. On 5 August 2000 an Authorised Review Officer affirmed the decision.

9. On 29 July 2002 the applicant appealed to the Social Security Appeals Tribunal who considered the matter on 29 August 2002 and affirmed the decision.

10. On 20 September 2002, the applicant applied for a stay of the decision to the Administrative Appeals Tribunal. On 14 October 2002, the respondent consented to the stay which was granted on 18 September 2002.

Law

11. Under subsection 22A(1) of the A New Tax System (Family Assistance) Act 1999, a person is no longer a family tax benefit child from the date upon which he or she is granted a social security payment.

12. Under subsection 21(1) of the said Act, an individual is eligible for family tax benefit if the individual has at least one family tax benefit child. The applicant's daughter was no longer a family tax benefit child from 26 March 2002, when she turned 16 years, and was granted youth allowance from this date. Therefore, the applicant was not eligible for family tax benefit from this date.

13. Under section 71 of the A New Tax System (Family Assistance) Administration Act 1999 ("the Act"), an amount that has been paid to a person who is not entitled to it, is a debt due to the Commonwealth. The sum of $686.00 paid in excess of the applicant's entitlement is therefore a debt due to the Commonwealth.

14. Under section 97 of the Act the Secretary must waive the proportion of a debt that has arisen "solely" due to administrative error provided that the debtor has received the payment in good faith and would suffer severe financial hardship if the debt were not waived.

15. The respondent contends that no part of the debt arose solely from administrative error. The respondent further contends that the applicant had notice of his obligation to report if a family tax benefit child in his care received a social security payment by virtue of the letter sent to him by Centrelink on 21 February 2002.

16. In the case of Re Gerhardt and Department of Employment, Education and Training (AAT No 10941, 17 May 1996), Deputy President Forgie concluded that the word "solely" meant "exclusively", "only" or "to the exclusion of all else". In Re Ward and Secretary, Department of Family and Community Services [2000] AATA 212, Deputy President Forgie elaborated:

"This means that the Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. ...

The question of whether there is an administrative error and whether the debt is solely attributable to that error are two different things."

These principles are plainly correct.

17. The respondent contends that the applicant contributed to the relevant error by failing to notify the Family Assistance Office that his child was in receipt of youth allowance and therefore the debt was not solely due to administrative error.

18. The Social Security Appeals Tribunal in the decision now under review, expressed the opinion that "it was administrative error that caused the payments of family tax benefit to continue after the application for and payments of youth allowance effective from 26 March 2002 had commenced to be paid to his [the applicant's] daughter".

19. The applicant did not specifically notify Centrelink that his daughter had commenced receiving the youth allowance.

20. When giving evidence to the Social Security Appeals Tribunal the applicant made the following points:

* His daughter turned 16 on 25 March 2002 and she applied for youth allowance on 26 March 2002. He was aware of the changes that would follow from this event. On 12 March 2002, he phoned Centrelink to ask why his family tax benefit would drop.

* He had no idea whatsoever how Centrelink worked out the pension payments. He understood that his family tax benefit would drop but Centrelink had advised that he would be entitled to payment of family tax benefit at the basic rate. He was told "You may still be entitled to some family tax benefit".

* After March 2002, initially nothing happened regarding the payment of his daughter's youth allowance. He phoned Centrelink and was told that she needed some extra identification. He had to contact Centrelink - the office had not contacted him.

* He and his daughter went to Centrelink and sat with a Centrelink officer who filled out all the necessary forms. Centrelink was aware that his daughter had applied for youth allowance. The family tax benefits dropped from $434.80 to $93.38 and he attributed this decrease to the youth allowance payments to his daughter. He assumed all was in order.

* He never intended to take more money than that to which he was entitled. He thought that by phoning Centrelink, by attending a Centrelink office to assist with his daughter's youth allowance application, he had done all that he needed to do.

21. The applicant gave similar evidence at the Administrative Appeals Tribunal hearing on 14 January 2003 at Coolangatta.

22. The Social Security Appeals Tribunal assessed the applicant as a credible witness and expressed the opinion that "it was not unreasonable for him to conclude that the family tax benefit payments had been reduced, as he had expected, as a result of his daughter's youth allowance payment and in accordance with the information that 'he' believed Centrelink already had about his circumstances".

23. I agree that the applicant was a credible witness and I also agree that the conclusions which he formed, as to the reasons for the reduction of the family tax benefit, were not unreasonable.

24. Nonetheless, I am unable to conclude, as the Social Security Appeals Tribunal appears to have done, that the overpayments made to the applicant were "solely" due to administrative error. In part, at least, the overpayments resulted from the applicant's failure to notify Centrelink that his daughter had commenced receiving the youth allowance.

25. This was a completely understandable mistake in the circumstances which he described and it is difficult to be critical of his conclusion that he had done all that was required of him, but there is no escaping the fact that the real and immediate cause, both of the commencement of the family benefits tax overpayments and their continuation until 18 June 2002, was his failure to formally advise that his daughter was receiving the youth allowance. "Causation" is a flexible concept involving, in part at least, a value judgment. The "but for" test is no longer the principal touchstone.

26. In my opinion, subsection 97(1) clearly does not authorise an apportionment of a Commonwealth debt on the same basis as would be appropriate if, for example, dividing liability for contribution between joint tortfeasors on just and equitable principles having regard to their respective responsibility for negligently caused damage.

27. Under subsection 97(1), the Secretary's obligation to waive the right to recover any part of the debt is dependent upon that part of the debt being attributable solely to administrative error made by the Commonwealth. I am unable to conclude that any part of the debt of $686.00 can be attributed solely to any error by the Department or its officers, as the applicant's failure to advise was a continuing and concurrent cause at least throughout the relevant period.

28. In fact, I am by no means satisfied that there was any relevant error made by the Commonwealth. Merely because the applicant made a thoroughly understandable mistake in omitting to advise Centrelink of his daughter's receipt of her allowance, does not inevitably mean there was an error, properly so called, by the Commonwealth in making the overpayment, unless, as the applicant seemed to be contending, payment of the daughter's allowance necessarily fixed the Commonwealth with notice of that fact when assessment was being made of the applicant's ongoing benefit entitlement thereafter.

29. In my opinion, such a proposition is, at best, tenuous. However, it is unnecessary to finally resolve the issue as, in accordance with the findings I have already made, the overpayment is not attributable in whole or in part to any such error or oversight by the Commonwealth.

30. This is a sufficient basis upon which to affirm the decision under review but the applicant gave detailed evidence of his financial circumstances during the hearing before the Administrative Appeals Tribunal (see Exhibit A1) with a view to persuading me that if he were required to repay the sum of $686.00 he would suffer "severe financial hardship". His emphasis upon this aspect of the review was to be expected, as the Social Security Appeals Tribunal had based its decision adverse to him on the ground that, although the debt was indeed attributable to Commonwealth administrative error, the applicant would not suffer severe financial hardship if the debt were not waived.

31. In my opinion it would not be useful to conduct a detailed analysis of the applicant's financial circumstances either at the time he appeared before the Social Security Appeals Tribunal or at the present time. There is no substantial difference in his position then and now. He owns a mobile home and furniture and he has nearly paid off a station wagon. He has no other assets. He owes a number of debts totalling about $2,450 which he is paying off. He has a disability support pension of $502.00 per fortnight and he keeps $85.00 out of the $165.00 per fortnight paid as his daughter's youth allowance. He allows her the balance of $80 for her personal expenses.

32. He has no savings or cash reserves as his fortnightly expenses exceed his income. Like many people who are dependent on Commonwealth benefits he finds it difficult to make ends meet. He is substantially disabled with a spinal condition and it is unlikely that he will ever be able to secure paid employment. He does some volunteer work as a first aid instructor. In my opinion it will be difficult for him to repay the Commonwealth debt of $686.00, even at the rate of $30.00 per fortnight.

33. However, difficulty is not the same as severe financial hardship. I am not persuaded that repaying the debt will cause the applicant to suffer severe financial hardship. Accordingly, even if I were satisfied that the debt was attributable to Commonwealth administrative error, the applicant would not have satisfied me that the debt should be waived under section 97.

34. In concluding my discussion of section 97, I should perhaps add that I accept (as did the Social Security Appeals Tribunal) that the applicant received the overpayments in good faith. I have considered the case of Re Prince and Secretary, Department of Employment, Training and Youth Affairs (1997) 45 ALD 680 referred to by counsel for the respondent, but it does not change my opinion in this respect.

35. I have also considered section 101 of the Act which invests the Secretary with a discretion to waive the right to recover the whole or part of a debt if satisfied (inter alia) that there are special circumstances (other than financial hardship alone) making it desirable to do so. No such circumstances were suggested and none are apparent to me from the evidence. In any event, it is at least arguable that subsection 101(a)(ii) disentitles the applicant to the benefit of this provision by failing to comply with the notification requirements of family assistance law.

36. The application for review does not succeed and the decision under review is affirmed.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon CR Wright, QC (Deputy President)

Signed: Sarah Oliver

Associate

Date of Hearing 14 January 2003 at Coolangatta

Date of Decision 24 January 2003

The Applicant represented himself

Counsel for the Respondent Ms H Wallis-Dunne, Departmental Advocate