Eskett and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 64 (7 February 2011)

Last Updated: 8 February 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 64

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/3086

GENERAL ADMINISTRATIVE DIVISION		)
	Re		Lisa Eskett

Applicant

And

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

Respondent

DECISION

Tribunal

Senior Member A K Britton

Date 7 February 2011

Place Sydney

Decision

1. The reviewable decision made on 3 June 2010 is set aside. 2. The matter is remitted to the Respondent for recalculation of the debt owed by the Applicant in accordance with these reasons for decision.

......................[sgd]................
Senior Member

CATCHWORDS

SOCIAL SECURITY – family assistance – residency – debt – where payment received in good faith – date at which debt was raised – special circumstances

A New Tax System (Family Assistance) Act 1999 (Cth) — s 21

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) — ss 70, 71, 97, 101

Secretary Department of Social Security v Hodgson [1992] FCA 338; (1992) 37 FCR 32

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Education, Employment, Training & Youth Affairs, Department of v Prince [1997] FCA 1565; (1997) 50 ALD 186

Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531

Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484

Sekhon v Secretary, Department Family and Community Services [2003] FCAFC 190; (2003) 76 ALD 105

Beadle v Director-General of Social Security [1984] AATA 176

REASONS FOR DECISION

7 February 2011

Senior Member A K Britton

1. Australian citizen, Mrs Lisa Eskett received family tax benefits (“FTB”) and associated benefits after moving to New Zealand in November 2004. In December 2009 the respondent Secretary decided to cancel those benefits and also to recover from Mrs Eskett, benefits which had been paid to her throughout that period. On review, the Social Security Appeals Tribunal affirmed the decision to recover payments made to Mrs Eskett but decided to increase the amount repayable to $18,346.50. Mrs Eskett now seeks review of that decision.
2. It is agreed that since November 2004, Mrs Eskett has not met one of the eligibility criteria for FTB and the immunisation allowance — namely, being an “Australian resident” (see s 21(1)(b) of the A New Tax System (Family Assistance) Act 1999 (Cth) (“Family Assistance Act”) and s 7 of the Social Security Act 1991 (Cth)). It follows that she was not entitled to receive either benefit after November 2004, and the payments received by her after that time constitute a debt due to the Commonwealth (ss 70(a) and 71 of the A New Tax System (Family Assistance) (Administration) Act 1999 (“Administration Act”).
3. The sole issue to be decided is whether the power conferred by the Administration Act to waive some or all of the debt payable by Mrs Eskett should be exercised in this case.

POWER TO WAIVE THE DEBT

4. Section 97 of the Administration Act provides that the Secretary — or in this case, the Tribunal acting as substitute decision-maker — must, in certain circumstances, waive a debt incurred. It provides:

Waiver of debt arising from error
(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.

5. Three elements must be satisfied before the power to waive the debt incurred by Mrs Eskett under s 97 of the Administration Act can be exercised:

(i) A proportion of the debt must be attributable solely to an administrative error made by the Commonwealth; and
(ii) The payments that gave rise to that proportion of the debt must have been received by Mrs Eskett in good faith; and
(iii) Either:
(a) Mrs Eskett would suffer severe financial hardship if that proportion of the debt was not waived, or
(b) The debt was not raised until after the end after of the period specified in s 97(3) of the Administration Act.

ATTRIBUTABLE SOLELY TO ADMINISTRATIVE ERROR?

6. A pre-condition to the exercise of the power conferred by s 97 to is that the debt is attributable solely to an administrative error made by the Commonwealth. The Secretary contends that Mrs Eskett was at least partly responsible for the continuation of payments after she was no longer an Australian resident, and that the power to waive the debt cannot therefore be exercised. Mrs Eskett asserts that she kept Centrelink fully informed of her circumstances and that the debt was attributable to Centrelink’s failure to act on that information. To put these submissions in context, it is necessary to examine the dealings between the parties since November 2004.
7. Mrs Eskett testified that when she and her husband decided to move to New Zealand in late 2004, it had been their intention to “give it a go” and review the situation after 12 months. She testified that it had been her understanding that she would lose her entitlement to FTB once she left Australia, but was advised otherwise by the Centrelink officer she spoke to on 8 November 2004. An electronic file note of that conversation made by the officer recorded:

A/n going overseas to NZ on 11 NOV 2004.
A/n plans to leave Australia on 11 NOV 2004.
A/n will return to Australia on 11 NOV 2005.
FTB can be paid o/s until 11 NOV 2007. Cancel FTB if still o/s then.

8. Mrs Eskett denied telling the Centrelink officer that she proposed to return on 11 November 2005, and insisted that had merely stated that she and her husband would review their living arrangements after 12 months.
9. In a letter to Mrs Eskett dated 8 November 2004, Centrelink wrote:

Thank you for telling us about your plans to travel outside Australia from 11 November 2004. Please read this letter carefully. It tells you what will happen to your Centrelink payments while you are overseas.

You must tell us as soon as possible if any part of your travel plans change.

The information you provided shows that you can receive Family Tax Benefit until 11 November 2007. If you remain outside Australia after 11 November 2007. If you remain outside Australia after 11 November 2007 your Family Tax Benefit will stop.

...

If you are delayed overseas by an emergency and cannot return on the date you told us, please call us on ([phone]. You may reverse the charges by asking your local telephone operator.

10. In a pro forma letter of the same date, Centrelink provided Mrs Eskett with details of FTB payments made. In addition, Mrs Eskett was reminded that among other things:

You must tell us if you:
...
become, or cease to be, an Australian resident;
leave Australia, even for a short time or return to Australia;

...

You must tell us if your FTB child:
...
lives outside Australia, or ceases to live outside Australia, even for a short time;
leaves Australia, even for a short time, or returns to Australia;
...

11. On 5 September 2005, Mrs Eskett contacted Centrelink to provide revised income details and to advise that she was expecting a second child. The baby was born in November 2005. A file note of that conversation records Mrs Eskett saying that she was “expecting to return to live in Australia within three years of departure”.
12. On 3 January 2006, Mrs Eskett lodged a claim for maternity payment and immunisation allowance. In answer to Question 4 of that that claim, headed “Absences from Australia”, Mrs Eskett wrote:

Please give details of ALL absences from Australia in the last 3 years:
Departure date Return date
20/11/04 09/08/05
22/08/05 [left blank]
...

If you are currently overseas and do not know your return date, write the departure date and leave the return date blank.

13. On 5 January 2006, Mrs Eskett attended the Port Macquarie Centrelink office to, among other things, provide evidence of the birth of her second child. An electronic note made by the interviewing officer recorded:

Income est same client stated they have been in New Zealand since 11/11/04 as there [sic] business is there. Baby born in New Zealand. They have temporarily come back to Australia and will be returning for work purposes again shortly. Client stated that they will be returning to Australia to live again permanently within 12 months (2006)...[emphasis added]

14. In evidence given in these proceedings, Mrs Eskett denied saying that she would be returning to Australia within 12 months. She contended that consistent with the information given in the claim form lodged two days earlier, she had told the interviewing officer that she did not know at that stage when she and her family would be returning to Australia.
15. Mrs Eskett testified that while at all times she and her husband had intended to return to Australia, a number of events that occurred after their arrival in New Zealand — including the unplanned and difficult birth of their second child, and her own ill health — meant that their plans were in a state of flux. As a result, the family stayed in New Zealand longer than they had originally anticipated. They continue to reside in New Zealand. Mrs Eskett testified that while there were no firm plans to return at this stage, she and her husband were now actively pursuing employment opportunities in Australia.
16. The phrase “a debt that is attributable solely to an administrative error made by the Commonwealth” is contained in s 1237A(1) of the Social Security Act 1991 which, while not identical, is relevantly similar to s 97 of the Administration Act. The former was considered by the Full Federal Court in Sekhon v Secretary, Department Family and Community Services [2003] FCAFC 190; (2003) 76 ALD 105, in which Selway J said (at 113):

The ordinary or usual interpretation of the phrase ‘attributable solely to’ is that it refers to the single or sole cause of the relevant act or event. The word ‘attributable’ means ‘capable of being attributed’. It involves an objective assessment of causation. The words a debt attributable solely to an administrative error can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.

17. Applying that approach, the question posed in this case is whether the only cause that objectively can be ascribed to Mrs Eskett’s debt is an administrative error made by the Commonwealth. I will first consider that part of the debt that was incurred throughout the period November 2004 to 11 November 2007 (“the relevant period”). For reasons addressed below I have concluded that different considerations apply to the period after 11 November 2007.
18. The Secretary contends that the decision to continue paying benefits after Mrs Eskett left for New Zealand in 2004 was attributable, at least in part, to her failure to:

(i) Provide Centrelink with information about her travel movements between Australia and New Zealand, and
(ii) Advise Centrelink that she had decided not to return to Australia and/or changed her travel plans.

19. Failure to notify Centrelink of travel movements: As the Secretary points out, Mrs Eskett failed, as required, to notify Centrelink of a number of short trips she made to Australia to visit her family after leaving for New Zealand in November 2004. It was asserted for the Secretary that Centrelink uses travel information provided by social security recipients to review their benefit eligibility. It is argued that had information concerning Mrs Eskett’s travel movements been provided, a review of her eligibility for FTB might have been triggered prior to December 2009.
20. While there can be no argument that Mrs Eskett failed to comply with her obligation to inform Centrelink of all travel to and from Australia, I am not persuaded that that failure contributed to the subject debt. It is not sufficient to identify a failure by a debtor to comply with an obligation imposed by Centrelink; the debt must be attributable in some way to that failure. Plainly, the nature of the impugned obligation is relevant. It is not suggested that the subject debt arose because Mrs Eskett failed to notify Centrelink of her travel movements. Rather, it is argued that a review of her benefit eligibility might have been triggered had she done so. No evidence was adduced to support the assertion that eligibility reviews are triggered by information provided by social security recipients about their travel to and from Australia. But in any event, in this case such information would not have revealed that Mrs Eskett had provided Centrelink with false information about her place of residence, employment or any of the other factors relevant to an assessment of her residence status (see s 7 of the Social Security Act). In my view, it is somewhat speculative to suggest that armed with information about her travel movements Centrelink officers would have been spurred into action and re assessed Mrs Eskett’s eligibility for FTB.
21. I am not satisfied that the necessary causal link between Mrs Eskett’s failure to advise of her travel movements and the creation of the debt is established.
22. Failure to advise of changed travel plans: The Secretary contends that after originally advising that she had intended to return to Australia within 12 months, Mrs Eskett failed to inform Centrelink of her revised travel plans. In support, the Secretary relies on comments attributed to Mrs Eskett, namely Centrelink electronic file notes made on 8 November 2004 and 5 January 2006.
23. It will be recalled that Mrs Eskett denies telling a Centrelink officer on 8 November 2004 that she and her family would be returning to Australia on 11 November 2005. While plainly not an independent witness, the account she gave of that conversation was plausible and internally consistent. She impressed me as a witness of truth. Her denial that she nominated a definite return is bolstered by information provided by the Secretary’s advocate in these proceedings that Centrelink’s systems require officers to enter a specific date of return when advised that a client plans to leave Australia. This might explain the reason the interviewing officer entered a return date of 11 November 2005. I accept Mrs Eskett’s account that she did not nominate a definite date of return.
24. I also accept Mrs Eskett’s claim that she did not advise Centrelink in January 2006 that she intended to return to Australia within 12 months. As noted, the record on which the Secretary relies is inconsistent with written advice provided by Mrs Eskett a few days earlier that, at that stage, she did not know when she would be returning to Australia.
25. I accept Mrs Eskett’s claim that she and her family stayed longer in New Zealand than originally anticipated because of a number of unexpected events, including the birth of her second child and her own subsequent ill health. I do not accept the Secretary’s assertion that Mrs Eskett failed to keep Centrelink briefed of her revised plans. She initially told Centrelink that she planned to remain in New Zealand for 12 months and would then review the position. Before that 12 months had passed she informed Centrelink that she anticipated that she would not be returning to Australia before November 2007, and five months later, that she did not know when she would be returning to Australia. At all relevant times Mrs Eskett nominated a New Zealand address as her family’s home address and fully disclosed details of her own and her husband’s employment in New Zealand. At no time throughout the relevant period did she misrepresent matters relevant to the assessment of whether she remained an Australian resident for the purpose of the Family Assistance Act.
26. The subject debt in my opinion was attributable to Centrelink’s failure to act on information provided by Mrs Eskett which, had it been properly assessed, would have revealed that by January 2006 at the latest, she no longer satisfied the “Australian residence” requirement. Given the information provided to Mrs Eskett in November 2004 that she would be entitled to receive FTB until November 2007 and her actions in updating Centrelink of her revised plans, I am not persuaded that the debt incurred in the relevant period was attributable in some way to any act or omission on her part.
27. I find that the debt incurred throughout the relevant period was attributable solely to Centrelink administrative error.

RECEIVED IN GOOD FAITH?

28. Being satisfied that the debt incurred in the relevant period was attributable solely to administrative error on the part of Centrelink, it is necessary to consider whether ss 97(2) or 97(3) are satisfied. Each requires that the debtor receive in good faith the payment or payments that gave rise to the “administrative error proportion” of the debt.
29. A payment of a social security benefit is not received in “good faith” if the recipient acts without an honest belief that they are entitled to receive and retain the payment: per Finn J in Education, Employment, Training & Youth Affairs, Department of v Prince [1997] FCA 1565; (1997) 50 ALD 186 at 189. A lack of good faith does not require evidence of fraud and extends to situations where the recipient “turns a blind eye” to circumstances which raise doubts as to their entitlement, or fails to make reasonable enquiries where doubt exists: per Cooper J in Jazazievska v Secretary Department of Family & Community Services [2000] FCA 1484 at [40], [41].
30. While the Secretary does not suggest that Mrs Eskett made a false statement or representation, he contends that she should have raised with Centrelink her continued eligibility for payments, especially when it became apparent that she would be away from Australia longer than she originally expected. Furthermore, the Secretary contends that her decision to apply for the New Zealand equivalent of the FTB in April 2007 should have raised real doubts about her continued eligibility for payment.
31. It will be recalled that prior to departing for New Zealand, Mrs Eskett received written advice from Centrelink that:

The information provided shows that you can receive Family Tax Benefit until 11 November 2007. If you remain outside Australia after 11 November 2007 your Family Tax Benefit will stop.

32. Mrs Eskett was also advised that she needed to tell Centrelink if she ceased to become an Australian resident but not what factors were relevant to that assessment. Given that she was told in November 2004 that she would continue to qualify for benefits notwithstanding that she planned to move to New Zealand and review the position in 12 months, it is not unreasonable that she assumed that she remained eligible for benefits after arriving in New Zealand, especially given that she had notified Centrelink of her revised plans and that she was residing and working in that country.
33. I also accept that as claimed, Mrs Eskett thought that there was an information-sharing arrangement between Centrelink and its New Zealand equivalent, and that she believed that benefits were not mutually exclusive.
34. I am satisfied that up until 11 November 2007, Mrs Eskett received payments made to her by Centrelink in good faith. Absent advice to the contrary and given that she had advised Centrelink of her circumstances, in my opinion she was entitled to rely on the written advice to her prior to leaving for New Zealand. However her failure to bring to Centrelink’s attention the continuation of benefits after 11 November 2007 indicates in my opinion a lack of good faith — she effectively “turned a blind eye” to a situation which objectively assessed ought to have warranted an enquiry of Centrelink. For that reason I am not satisfied that the power to waive any proportion of the debt incurred after 11 November 2007, can be exercised.

SEVERE FINANCIAL HARDSHIP

35. To satisfy s 97(2) of the Administration Act, it is necessary that Mrs Eskett would “suffer severe financial hardship” if the proportion of the debt attributable to the relevant period is not waived. The debt attributable to that period is about $10,000.
36. Mrs Eskett and her husband have been in regular employment since 2004 and currently have a combined annual income of about $NZ 60,000. In addition they receive employer provided accommodation. They have savings of about $NZ13,000, a small credit card debt and a debt to Mr Eskett’s parents of about $NZ3,000. While the repayment of the debt would exhaust their savings, in my opinion it could not reasonably be argued that Mrs Eskett would suffer “severe financial hardship” if it were not waived. Section 97(2) therefore does not apply.

RAISING OF THE DEBT

37. Section 97(3) of the Administration Act instructs that providing the administrative error proportion of the debt is received in good faith, it must be waived if 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; ...

38. Section 97(3)(b) requires a three-step process to be undertaken :

(i) Identify the debtor's next income year after the one in which the eligibility period or event occurs;
(ii) Second, identify the period of 13 weeks starting on the day on which the payment that gave rise to the debt was made
(iii) Third, select whichever of the above two dates, i.e. the date referred to in (i) and (ii), ends last.

39. The debt was raised in December 2009 — during the 2009/2010 income year. In respect of each income year that fell within the period relating to administrative error proportion of the debt, that is, 2004/2005, 2005/2006, 2006/2007 and 2007/ 2008, the next income year after the one in which the eligibility period occurred (s 97(3)(b)(i)), ended after the 13 week period after the payment giving rise to the debt was made (s 97(3)(b)(ii)). As the proportion of the debt incurred in each of these four income years was not raised until after the end of the financial year after which it was incurred, s 97(3) of the Administration Act mandates that the administrative error proportion of the debt must be waived.

Should the outstanding part of the debt be waived under s 101?

40. The final issue to be determined is whether the balance of the debt — that is, the debt incurred after 11 November 2007 — should be waived under s 101 of that Act. It provides:

Waiver in special circumstances
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.

41. It is not in issue that s 101(a) is satisfied, that is, the debt did not arise as a result of Mrs Eskett knowingly making a false statement or representation, or failing or omitting to comply with a relevant statutory provision. Accordingly, it is necessary to decide whether special circumstances exist and, if so, whether the power to waive the right to recover all or part of the balance of the debt should be exercised.
42. The term “special circumstances” has been the subject of exhaustive consideration by the AAT and the Federal Court. The Federal Court has declined to adopt a prescriptive formula about the meaning of the term (see for example, Beadle v Director-General of Social Security [1984] AATA 176; French J in Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531 at 535). Nonetheless, the Court has emphasised that the term denotes a requirement that there be “something which distinguishes [the claimant’s] case from others, to take it out of the usual or ordinary case”: per Kiefel J in Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545. This, however, is not to be interpreted as a requirement that the claimant’s circumstances be “extremely unusual, uncommon or exceptional”: per Hill J in Secretary Department of Social Security v Hodgson [1992] FCA 338; (1992) 37 FCR 32 at 42.
43. Mrs Eskett argued that special circumstances exist because firstly, the debt is not inconsiderable and would deplete her family’s savings and secondly, the appreciation of the Australian dollar as against the New Zealand dollar throughout the period the debt was incurred has, in effect, increased her liability.
44. In my view, Mrs Eskett’s financial position could not be described as something that distinguished her position from that of other social security recipients. There is no evidence — and nor is it suggested — that the repayment of the remaining proportion of the debt, places Mr Eskett in a straitened financial position even if movement in the exchange rates is taken into account. I am not satisfied that “special circumstances” exist, and am therefore unable to exercise the power to waive the balance of the debt.

ORDERS

1. The reviewable decision made on 3 June 2010 is set aside.

2. The matter is remitted to the Respondent for recalculation of the debt owed by the Applicant in accordance with these reasons for decision.

I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member A K Britton.

Signed: ...................................[sgd]...................................

Associate to Senior Member Britton

Date of Hearing: 27 January 2011

Date of Decision: 7 February 2011

The Applicant was self-represented.

Solicitor for the Respondent: Centrelink Advocacy Branch