Gilbert and Secretary, Department of Family and Community Services [2004] AATA 418 (19 April 2004)

Re Beadle and Directory-General of Social Security (1984) 6 ALD 1

Re Groth and Secretary, Department of Social Security [1995] AATA 121; (1995) 37 ALD 797

1. The Administrative Appeals Tribunal (Tribunal) considered an application from Ms Terrie Lynne Gilbert (the applicant) for the review of a decision made by the Secretary, Department of Family and Community Services (the respondent) on 26 July 2003 to recover a debt of $2,024.06, being Family Tax Benefit (FTB) paid to the applicant during the period from 1 July 2002 to 28 May 2003. The decision was reviewed by an Authorised Review Officer (ARO) of the respondent and the Social Security Appeals Tribunal (SSAT). On 9 September 2003, the ARO affirmed the decision (T-documents 22) and on 26 November 2003 the SSAT also affirmed the decision (T-documents 2).

2. The applicant was self represented and the respondent was represented by Mr D. Perdon, an advocate from the respondent's Service Recovery Team.

3. The Tribunal received into evidence the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975.

4. The applicant separated from her partner in February 1992. They have a son named Jamie who was born on 23 July 1990. The applicant said that her ex-partner ceased paying her child support during 1992 and that the Child Support Agency (CSA) has been endeavouring to elicit maintenance payments from him since that time.

5. The applicant said that her ex-partner received a work cover payment of $17,500 approximately and that CSA had managed to obtain $6000 from him on that occasion, which the applicant received on 3 June 2003. This lump sum $6000 receipt reduced a child support payment arrears of $19,000 approximately, which was due to the applicant at that time by her ex-partner, to $13,000.

6. The applicant does not dispute the respondent's mathematical calculations and statutory contentions which are referred to in the decision of the SSAT. The applicant accepts that her receipt of the $6000 on 3 June 2003 resulted in a recoverable debt due by her to the Commonwealth of $2024.06 for the period 1 July 2002 to 28 May 2003.

7. The applicant said that her ex-partner discontinued paying her an amount of $20 per week on 25 September 2003. She said the he is now living in Western Australia and that he is "working for cash" and that he does not lodge income tax returns. Her financial position is also affected by the respondent deducting $40 per fortnight from her FTB entitlement to progressively recover her abovementioned debt to the Commonwealth. As a result, she receives the following fortnightly income amounts:

Family payment (after $40 deduction) $203

Parenting payment $130 approximately

Salary after tax (from 4 days per week part time $799

employment at a nursing home) _____

Total Income per fortnight $1132

8. The applicant is purchasing her home in Craigieburn, Victoria and has a housing loan from RACV Finance of $80,000 approximately which results in a fortnightly loan and interest repayment of $335. The applicant estimates that her service costs (including electricity, gas, rates, phone, car registration and insurance) total approximately $900 per fortnight. Accordingly, the applicant's overall fixed costs, including her housing loan repayment total $1235 approximately per fortnight (ie. $335 plus $900), which exceeds her above fortnightly income of $1132. The applicant said that her accountant has informed her that he proposes to lodge her 2003 Income Tax Return in May 2004 and that he has calculated that she will be assessed to pay an additional amount of tax of $450 approximately.

9. The applicant said that her credit card limits are fully drawn and that she is in a dire financial situation. She is therefore endeavouring to renegotiate her housing loan in order to reduce her $335 fortnightly payment commitment. The applicant has repaid $640 in respect of her above debt to the Commonwealth, which leaves an outstanding balance due at the date of the hearing of $1384.06.

10. The parties are in agreement that the only issue in dispute for determination by the Tribunal is whether the applicant's debt should be waived due to special circumstances. The applicant provided the following written submission in support of her contention that her debt should be waived:

Centrelink are assuming that all people receiving arrears of maintenance have been in receipt of pension and full family payment for the whole of the time the arrears are owed.

I have only been in receipt of the pension and full family payment for approximately the last 3 years prior to receiving the $6,000.

Therefore, at the time for which the $6,000 was owing, I was working full time and not in receipt of payments other than the normal family allowance and therefore if it had been received at that time, there would have been nothing affected by its receipt. The only thing that would have happened is that I may have had to go without the family allowance for one fortnight, as it was treated back then. This I could accept.

If I had received the whole $19,000 owing to me, I could accept that I had received maintenance that was owed to me for the 2002/2003 financial year, and therefore been overpaid, albeit unintentionally. This $6,000 was received on 3rd June, nearly the end of the financial year.

There is still $13,000 owing to me and it is very unlikely that I will ever receive this money.

I have had to get by all those years without financial help from my ex-husband and therefore this is a double dipping by Centrelink. I had to do without the money in the past, I have a windfall of money that has been owing to me for years, which helps me to almost catch up and Centrelink takes back more than one third of what I have received. What a big con job by the Government - I was not compensated by Centrelink in pension or extra family payment during the years this money was owing, so why should Centrelink take back my Family payment for the year the arrears were received.

Please order the waiver of this overpayment and give me back the money that has already been withheld.

It is within your power to waive this overpayment if hardship is proven (which I have done) and if there are special circumstances. These Special Circumstances are not clearly defined anywhere. I believe that I have special circumstances and that this overpayment should be waived and the withholdings already taken be refunded.

11. The relevant legislation is provided by s 101 of the A New Tax System (Family Assistance)(Administration) Act 1999 (the Act):-

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.

12. The respondent referred the Tribunal to the decision of Re Secretary, Department of Family and Community Services and Howard [2003] AATA 256. In paragraph 30 of the decision, Deputy President R.P. Handley said:

The Tribunal has described "special circumstances" as "unusual, uncommon or exceptional" - "they must have a particular quality of unusualness that permits them to be described as special": Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3_, endorsed by the Full Federal Court in_ Beadle and Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225. In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545_, Kiefel J, after referring to the Federal Court's decision in_ Beadle (supra 1985), observed that special circumstances:

would require something to distinguish Mr Groth's 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.

13. It is the applicant's evidence, which the Tribunal accepts, that she is encountering financial hardship and that this hardship is being worsened by the respondent deducting $40 per fortnight from her family payment in order to progressively recover the balance outstanding in respect of the applicant's debt due to the Commonwealth. However, s 101(b) of the Act excludes financial hardship alone as a justifiable reason debt waiver due to special circumstances. The Tribunal must therefore find in this case that there are no special circumstances pursuant to s 101 of the Act of an unusual, uncommon or exceptional nature affecting the applicant that would permit the applicant's debt to be waived.

14. The Tribunal is of the view that it is appropriate in this case, to determine under s 84 of the Act, that the amount of each recovery instalment deducted from the applicant's family payment should be reduced from $40 per fortnight to $20 per fortnight from the date of this decision.

I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision herein of

Solicitor for the respondent: The Service Recovery Team