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Administrative Appeals Tribunal of Australia |
Last Updated: 1 August 2003
ADMINISTRATIVE APPEALS TRIBUNAL )
GENERAL ADMINISTRATIVE DIVISION |
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Re |
LISA ANNETTE STUBBS |
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And |
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES |
Tribunal |
Mr IR Way, Member |
Decision
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The Tribunal affirms the decision under review. |
...................(Sgd).....................
IR Way
SOCIAL SECURITY - benefits and entitlements - family tax benefit - overpayment - whether debt properly raised - whether debt should be recovered - whether the debt arose due to an administrative error - whether applicant would suffer severe financial hardship if debt was recovered
Family Assistance (Administration) Act 1999 ss 71, 105, 107
Family Assistance Act 1999 s 58
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Beadle v Director-General of Social Security (1985) 7 ALD 670
Secretary, Department of Social Security v Hales (1998) 153 ALR 259
Re Bestel and Secretary, Department of Family and Community Services [1999] AATA 867
1 August 2003 |
Mr IR Way, Member |
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1. This is an application by Lisa Stubbs for review of a decision of the Social Security Appeals Tribunal, dated 3 January 2003, which affirmed a decision made by Centrelink on 27 September 2002 to raise and recover an overpayment of family tax benefit in the sum f $2,474.70 for the period 1 July 2001 to 30 June 2002.
2. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T24) and other documentary evidence as follows:
§ Exhibit A1 Affidavit of Clive Stubbs sworn 8.7.03 together with Budget Planner and Statement of Facts and Contentions
§ Exhibit A2 Extract of Guide to Commonwealth Government Payments
§ Exhibit R1 Letter to applicant from Centrelink dated 17 December 2001
§ Exhibit R2 Letter to applicant from Centrelink dated 29 April 2002
3. The applicant and her husband, Clive Stubbs, gave oral evidence and Mr Stubbs presented the applicant's case. Mr J Howard, Advocate of the Service Recovery Team, represented the respondent.
BACKGROUND FACTS
4. The following background facts are not in dispute and in view of this, and on the material before it, the Tribunal finds as follows.
(a) The applicant was in receipt of family tax benefit by instalments during the 2001/2002 financial year.
(b) The applicant was also in receipt of parenting payment partnered.
(c) Following the end of the financial year, a reconciliation process took place, in which Mrs Stubbs family tax benefit rate was recalculated. This resulted in Mrs Stubbs being informed that she had received an overpayment of family tax benefit in the amount of $2,474.70 (T4/39).
(d) The respondent is recovering the debt due to the Commonwealth at the rate of $40 per fortnight and at the date of hearing of this matter the outstanding debt was $1,714.
ISSUES AND LEGISLATIVE FRAMEWORK
5. The issues in this matter are:
(a) whether a recoverable debt in the sum of $2,474.70 for the period 1 July 2001 to 30 June 2002 exists; and if so,
(b) whether the right to recover the debt should be waived.
6. In this case, whether a debt is due to the Commonwealth is to be determined under the provisions of the Family Assistance (Administration) Act 1999 ("the FAA Act") and the Family Assistance Act 1999 ("the FA Act").
7. The applicant does not dispute that there is a recoverable debt due to the Commonwealth by her in the amount of $2,474.70 in respect of overpayment of family tax benefit type B received by her during the period 1 July 2001 to 30 June 2002.
8. In view of this, and on all of the material before it, the Tribunal is satisfied that, pursuant to section 58 of the FA Act and section 71, 105 and 107 of the FAA Act, that the applicant has incurred a recoverable debt due to the Commonwealth in the amount of $2,474.70 for the period 1 July 2001 to 30 June 2002.
9. This then leaves the sole issue in this matter being whether the debt should be waived pursuant to the provisions of the FAA Act.
10. The FAA Act relevantly provides as follows:
"95(1) Subject to subsection (2), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
95(2) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.
95(3) For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:
(a) the debt cannot be recovered by means of:
(i) deductions under section 84; or
(iaa) deductions under section 1231 of the Social Security Act 1991; or
(ia) setting off under section 84A arrears of family assistance; or
(ii) application of an income tax refund under section 87; or
(iia) setting off under section 87A against advances; or
(iii) legal proceedings under section 88; or
(iv) garnishee notice under section 89;
because the relevant time limit for recovery action under that section has elapsed; or
(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d) the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt.
95(4) For the purposes of paragraph (2)(b), if a debt is recoverable by means of:
(a) deductions under section 84; or
(aa) deductions under section 1231 of the Social Security Act 1991; or
(b) setting off under section 84A arrears of family assistance; or
(c) application of an income tax refund under section 87; or
(d) setting off under section 87A against advances;
the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.
95(5) A decision made under subsection (1) takes effect:
(a) if no day is specified in the decision--on the day on which the decision is made; or
(b) if a day is specified in the decision--on the day so specified (whether that day is before, after or on the day on which the decision is made).
95(6) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
96(1) On behalf of the Commonwealth, the Secretary may waive the Commonwealth's right to recover the whole or a part of a debt from a debtor only in the circumstances described in section 97, 98, 99, 100, 101 or 102.
96(2) A waiver takes effect:
(a) on the day specified in the waiver (whether that day is before, after or on the day on which the decision to waive is made); or
(b) if the waiver does not specify when it takes effect--on the day on which the decision to waive is made.
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.
97(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.
97(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.
97(4) For the purposes of this section, the administrative error proportion of the debt may be 100% of the debt. ...
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.
102(1) The Secretary may, on behalf of the Commonwealth, decide to waive the Commonwealth's right to recover debts, or parts of debts, arising under or as a result of this Act that are included in a class of debts specified by the Minister by determination in writing.
102(1A) A determination by the Minister under subsection (1):
(a) may specify conditions to be met before the Secretary exercises the power to waive debts, or parts of debts, in the specified class; and
(b) may specify limits on the amounts to be waived in relation to debts in the specified class.
The Secretary must exercise the power to waive in accordance with any conditions or limits specified in the Minister's determination.
102(2) A decision under subsection (1) takes effect:
(a) if no day is specified in the decision--on the day on which the decision is made; or
(b) if a day is specified in the decision--on the day so specified (whether that day is before, after or on the day on which the decision is made).
102(3) A determination under subsection (1) is a disallowable instrument for the purposes of section 46A of the Acts Interpretation Act 1901."
APPLICANT'S EVIDENCE
11. The applicant in her Statement of Facts and Contentions (Exhibit A1) has set out fully the circumstances of her case as follows:
"Background
Mrs Stubbs is aged 35 and her husband, Mr Clive Stubbs is aged 41. They have two sons, Jack (aged 2) and Levi (aged 1). Mr Stubbs is studying for a degree on a full-time basis at University of Queensland Ipswich, does window-cleaning for one day a week and is receiving Centrelink payments. Mr and Mrs Stubbs are partners in the window-cleaning business, and she received approximately a 22% share of the partnership profits from their window-cleaning business and 50% of the net capital gain when a portion of the business was sold on 4 July 2001.
For the year 2001/02, Mrs Stubbs was in receipt of income adjusted Parenting Payment, and Family Tax Benefits Parts A & B, in respect of her son, Jack and $1,677 from Mr Stubbs' window-cleaning business.
On 3 July 2001, Mr and Mrs Stubbs approached Centrelink to determine if they were entitled to any Centrelink payments. Mr and Mrs Stubbs were interviewed by a Centrelink officer called Tracey. Tracey informed Mr and Mrs Stubbs that they would be entitled to Austudy, Parenting Payment (partnered) and Family Tax Benefit Parts A & B.
At this initial interview in July 2001, Mr and Mrs Stubbs asked how much income they could earn before they lost any of their payments. The Centrelink officer, Tracey, clearly stated that Mr Stubbs could earn $110 p/wk and Mrs Stubbs could earn $31 p/wk from the window-cleaning partnership, in addition to the Parenting Payment, before their Centrelink payments would be affected.
In response to this Centrelink advice, Mr and Mrs Stubbs worked out that Mrs Stubbs taxable income for the year 2001/02 from the window-cleaning business would be less than or equal to $31 p/wk for the financial year (approx. $1,600 for the year 2001/02).
At that initial interview, Mrs Stubbs was assisted by the Centrelink officers in filling out one of the forms, Request for Income Details (T5) (`Desley' filled out the name/address; Tracey assisted us to fill out the Estimated taxable income from Government, which included the Parenting Payment). This form shows Mrs Stubbs estimated taxable income from the following sources:
1. Business or self-employment $1,600.00
2. Government $8,392.80
Mrs Stubbs' total estimated taxable income was shown as $9,992.80.
This form was posted to Centrelink on or around 5th July, 2001. Although Centrelink claims not to have received the form, Centrelink was clearly aware that Mrs Stubbs was in receipt of a Parenting Payment in any event.
Mrs Stubbs read the accompanying information, and correspondence provided by the Centrelink officer and completed the appropriate forms.
In reliance on the information provided by Centrelink, Mr and Mrs Stubbs prepared a budget and decided that, although finances would be very tight:
1. Mr and Mrs Stubbs would downscale their window-cleaning work;
2. Mrs Stubbs could earn $31 p/wk in the form of partnership profits;
3. Mr Stubbs would commence studying for a degree; and
4. they would plan for another child.
Mrs Stubbs believed that Centrelink's regular payments into her back account were in accordance with Centrelink's appropriate calculations and she received the payments in good faith.
In August 2002, Mr and Mrs Stubbs' second son, Levi, was born.
On 26th August, 2002 Mrs Stubbs contacted Centrelink to advise that her actual adjusted taxable income for 2001/2002 was $9,930. The receipt of the Parenting Payment affected the Family Tax Benefit paid in 2001/2002. Mr and Mrs Stubbs accept that they were not entitled to the money that has now been raised as a debt, due to Mrs Stubbs receiving the Parenting Payment. ..."
12. The applicant has further stated that the debt should be waived as it is attributable solely to an administrative error by Centrelink. Further, she contends that Centrelink had a duty of care to inform her correctly and that she will suffer severe financial hardship if the debt is not waived and in support of this contention the applicant has stated:
"Mrs Stubbs supplied all of the information about her estimated taxable income in her initial interview with Centrelink, including receipt of her Parenting Payment, and by confirming with Centrelink on the form of her estimated taxable income.
The Department itself erred in its incorrect indexing of that claim by not recording the receipt of the Parenting Payment (despite being informed of this payment by Mrs Stubbs at the initial interview), and did not conduct internal cross-indexing and detection of the payment.
Mrs Stubbs received the Family Tax Benefit Part B payments in good faith, having genuinely believed that she fulfilled her notification obligations by her initial interview with Centrelink and the subsequent form she sent in, she was never alerted to the possibility of an overpayment by and advice, written or otherwise, provided by Centrelink nor by any other means until September 2002.
Recovery of the debt would now cause Mr and Mrs Stubbs severe financial hardship, as they must rely on the income from window-cleaning one day a week and government payments (until Mr Stubbs graduates in approximately July 2005).
Moreover, the overpayment arose solely as a result of Centrelink's administrative error by not taking into account the Parenting Payment, and Mrs Stubbs received the money in good faith. As a result, Mrs Stubbs requests that the Tribunal exercise its discretion under section 97 of the Act in her favour.
Also, pursuant to section 101 of the Act, Centrelink's administrative error could be regarded as a `special circumstance' on the basis that Mrs Stubbs' notification of the Parenting Payment in the initial interview, and by form, would normally be sufficient notification to prevent further erroneous payment, but for Centrelink's error.
The Department's overpayment action has caused Mrs Stubbs significant anxiety and concern, which has affected the whole family adversely. Since the debt was raised, Mrs Stubbs has been very concerned about the debt and how it could be paid in the family's current financial circumstances. It will cause the family to suffer severe financial hardship if it has to be repaid. Also, since the birth of Levi, Mrs Stubbs has suffered from postnatal depression and is on medication.
The overpayment would not have arisen if it were not for Centrelink's error. The information Mr and Mrs Stubbs received from Centrelink was, initially, inaccurate and misleading. Mrs Stubbs made an honest attempt to fulfil her obligations. ..."
13. In respect of the family financial circumstances, the applicant provided a detailed Budget Statement (Exhibit A1). The Tribunal has examined this statement carefully. Excluding the weekly provision of $76.13 for HECS (which is a deferred debt) the Tribunal is satisfied that the applicant's budgeted weekly family expenses of just over $500 can be met from the applicant's weekly taxable income of approximately $415 and from the non-taxable weekly income of approximately $100 of family tax benefit Part A.
14. In oral evidence Mrs Stubbs told the Tribunal that she is engaged full-time on home duties. She said that she had postnatal condition for which she was currently taking medication because of anxiety, fatigue and difficulty in sleeping. Mrs Stubbs indicated that her condition was improving. Both Mr and Mrs Stubbs said they suffered from back problems, Mrs Stubbs saying she found it difficult to pick up her children and Mr Stubbs saying that sitting is a problem for him.
15. In cross-examination, the applicant and Mr Stubbs were taken to the letters sent to Mrs Stubbs from Centrelink about parenting payment (Exhibit R1) and family assistance (Exhibit R2), wherein the applicant's estimated income (or earned income) was shown as $0. It was the applicant's evidence that Centrelink were not informed that this was incorrect because the Stubbs were under the impression that Mrs Stubbs could earn up to $31 per week without affecting the level of social security benefits and they had not focused on this as an issue that needed to be resolved before the end of the financial year.
16. The Tribunal notes that the income figures quoted by Centrelink in Exhibit R1 are significantly different from those in Exhibit R2 and that in any case the figures are not consistent (or explainable) by the material before the Tribunal. Furthermore, as pointed out by the applicant, the letter of 17 December 2001 shows the applicant's assets at $34,636, a figure not provided by the applicant (or supported by any other material before the Tribunal).
CONSIDERATION
17. At the outset it must be said that the Tribunal finds that Mrs Stubbs and Mr Stubbs are entirely credible witnesses. They put their case clearly, sincerely, forthrightly and honestly.
18. The question then is whether the debt, which they readily accept is one due to the Commonwealth by the applicant, should be written off or waived pursuant to the provisions of the FAA Act.
19. Clearly, a crucial issue in this matter is when the applicant would suffer severe financial hardship if the debt were not waived.
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.
21. In this case the applicant has indicated that the family, while "scratching" is, with careful financial management, getting by. The family budget, as outlined in paragraph 13 above, supports this view. The Tribunal accepts that Mr Stubbs is undertaking a mid-life change of career and that balancing his various commitments at present results in a reduced business income. However, while the Stubbs family circumstances can be described as straitened, they do not, in the Tribunal's view, fall within the category of severe financial hardship. The Tribunal therefore finds that the applicant is not suffering severe financial hardship.
22. That being so, the question then is whether the applicant's debt should be written off pursuant to section 95 of the FAA Act. The Tribunal accepts the respondent's submission that section 95 has no application to this matter, as the applicant currently has the capacity to, and is repaying the debt without severe financial hardship. The Tribunal notes that the applicant is currently repaying the debt at $20 per week and that the Department is open to considering reduction of this repayment to $10 per week.
23. The next question before the Tribunal is whether the debt can be waived because of administrative error. In this case, the applicant clearly is of the view that the respondent has caused the debt because of administrative error. Given the circumstances in this matter, the Tribunal is sympathetic to the applicant's contention that Centrelink failed to properly exercise their duty of care in the advice given to them in the first instance.
24. The Tribunal is also mindful that the letters sent to the applicant, as put before the Tribunal, not only apparently contain inconsistencies about income amounts but also, on one view, might be seen to be not inconsistent with the advice the applicant initially received about the levels of income which could affect the level of social security benefits. These matters must be weighed up against the requirement for recipients of letters (such as Exhibits R1 and R2) to notify Centrelink of changes in circumstances including changes in income.
25. In this case, the Tribunal is satisfied that the applicant received her payments for family tax benefit B in good faith. However, the Tribunal has not seen fit to proceed to make a finding in respect of administrative error.
26. There is a clear requirement for the applicant to satisfy that part of section 97, namely, severe financial hardship if the debt were not waived, for waiver of the debt because of administrative error.
27. In this case the Tribunal is satisfied, for the reasons already given (and noting that the respondent is open to reducing the amount of weekly debt recovery to $10) that the applicant would not suffer severe financial hardship if the debt were not waived.
28. That then leaves the remaining question as to whether there are special circumstances in this matter, such that the debt should be waived pursuant to section 101 of the FAA Act.
29. With respect to special circumstances, the Tribunal notes that although special circumstances are not defined in the Act, the approach to be taken in interpretation and application of the discretionary provisions of the Act have been dealt with by the Tribunal and the Federal Court in numerous cases. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 it was said:
"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."
30. This decision was generally affirmed on appeal by the Full Court of the Federal Court of Australia in Beadle v Director-General of Social Security (1985) 7 ALD 670, where it was said:
"the phrase `special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss."
31. Furthermore the Tribunal is mindful that all of the circumstances in a particular case must be considered and the Tribunal should adopt a flexible response to such circumstances bearing in mind the need to consider community interest in the recovery of public monies.
32. In this respect the Honourable Justice French in Secretary, Department of Social Security v Hales (1998) 153 ALR 259 relevantly said:
"The evident purpose of section 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial constraint upon the words. It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the Section a fetter upon its application which is not mandated by its words is to erode its useful purpose."
33. In this case, in respect of special circumstances, the applicant has raised financial hardship, health and administrative error as matters for consideration.
34. As has already been indicated, the Tribunal has found that severe financial hardship does not exist in this case and the Tribunal is satisfied that the applicant's financial circumstances do not come within the categorisation of special circumstances in that they are not uncommon, unusual or exceptional. Likewise, the Tribunal is satisfied that the applicant's health and Mr Stubbs' health conditions are not special circumstances.
35. In respect of the remaining contention, that is, administrative error being a special circumstance, the Tribunal agrees with the Social Security Appeals Tribunal, where, in its decision of 3 January 2003, that Tribunal said that section 101 of the FAA Act is not meant to circumvent the intentions of section 97 (see also Re Bestel and Secretary, Department of Family and Community Services [1999] AATA 867). The Tribunal has accepted the applicant's evidence about the incorrect information she received from Centrelink. The Tribunal has also pointed to the applicant's responsibilities to read and respond to Centrelink's correspondence.
36. The Tribunal, for the reasons given above, has not proceeded to a finding as to whether the applicant's debt is due solely to administrative error. However, the Tribunal has found that the debt cannot be waived because of administrative error. The Tribunal is of the view that it would then be inappropriate to bring any administrative error within the provisions of special circumstances unless there are circumstances which are so unusual that they can be described as "special". The Tribunal is satisfied that any administrative error arising in this matter is not such that it can be described as "special".
37. The Tribunal affirms the decision under review.
I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of Mr IR Way, Member
Signed: Sarah Oliver
Associate
Date of Decision 1 August 2003
The Applicant appeared in person and was assisted by her husband, Mr Stubbs
For the Respondent Mr J Howard, Departmental Advocate
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