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

PRACTICE AND PROCEDURE - stay application - eligibility for family tax benefit supplements - reconciliation conditions - whether failure by applicant's accountant to lodge her and her partner's tax returns in time constitute "special circumstances" - prospects of success or merits of application - prejudice - financial hardship - whether application will be rendered nugatory - public interest - decision under review stayed until review application decided

Administrative Appeals Tribunal Act 1975 - s 41(2)

A New Tax System (Family Assistance) Act 1999 - Division 1 of Part 3 - clauses 3, 25 and 29 of Schedule 1

A New Tax System (Family Assistance) (Administration) Act 1999 - s 16 - s 32A - s 32B - s 32C - s 32C(3) - s 32D - s 105 - s 105A - s 107

Family Assistance and Other Legislation Amendment Act 2013

Social Services and Other Legislation Amendment Act 2014

Anastasiadis and Secretary, Department of Employment and Workplace Relations [2007] AATA 1065

Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25

Australian Securities and Investments Commission v Administrative Appeals Tribunal and Another (2009) 181 FCR 130; [2009] FCAFC 185

Beadle and Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225

Broadbent v Civil Aviation Safety Authority [1999] FCA 1871

Cannon; Secretary, Department of Social Services [2015] AATA 1028

Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114

Dranichnikov v Centrelink [2003] FCAFC 133; [2003] 75 ALD 134

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

Kurukkai and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 146

McDonald v Director-General of Social Security [1984] FCA 57; (1984) 6 ALD 6

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

Re Commonwealth of Australia and Quirke [1986] AATA 57; (1986) 9 ALD 92

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

Re Ivocic and Director-General of Social Services [1981] AATA 57

Re Repatriation Commission and Delkou [1985] AATA 297; (1985) 8 ALD 454

Re Scott and Australian Securities and Investments Commission [2009] AATA 798

Re VBJ and Australian Prudential Regulation Authority [2005] AATA 642

1. The Secretary seeks an order staying the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal (SSCSD), dated 7 January 2016, which set aside the decision made by a Centrelink Authorised Review Officer (ARO), dated 13 May 2015, and substituted that decision with the following decision:

That the period for lodgement of Mrs McNamara's and her partner's 2012/13 income tax returns is extended to 16 September 2014 due to special circumstances. (SSCSD Decision)

1. The effect of the SSCSD Decision was that Mrs McNamara met the reconciliation conditions contained in the A New Tax System (Family Assistance) (Administration) Act 1999 (Family Assistance Administration Act) and was entitled to be paid family tax benefit (FTB) Part A and Part B supplements in the 2012/2013 income year under Division 1 of Part 3 of the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act).

1. The issue for consideration by the Tribunal is whether it is desirable in the circumstances, after taking into account the interests of any person who may be affected by the SSCSD Decision, to make an order staying the operation or implementation of the SSCSD Decision, being the decision under review in this application, and, if so, to what extent the stay order should operate.

1. Section 41(2) of the Administrative Appeals Tribunal Act 1975 (AAT Act) provides that the AAT has a broad discretion to make an order "staying or otherwise affecting the operation or implementation" of a decision under review. This power largely mirrors the general power of a court to grant relief by way of a stay: Broadbent v Civil Aviation Safety Authority [1999] FCA 1871.
2. Section 41(2) of the Administrative Appeals Tribunal Act 1975 (AAT Act) states that upon application by a party to a proceeding, the Tribunal "may":

.....if the Tribunal is of the opinion that it is desirable to do so after taking into account the interests of any persons who may be affected by the review, make such order or orders staying or otherwise affecting the operation or implementation of the decision to which the relevant proceeding relates or a part of that decision as the Tribunal considers appropriate for the purpose of securing the effectiveness of the hearing and determination of the application for review. [Emphasis added]

1. It is clear from the words used in s 41(2) that the Tribunal must take into account:

(i) the "interests of any persons who may be affected by the review"[1]; and

(ii) those matters which go to the "purpose of securing the effectiveness of the hearing and the determination of the application for review".[2]

1. The "interests of any persons who may be affected by the review" are to be identified by reference to the statutory scheme under which the decision under review was made.[3] The statutory regime relevant to this application is contained in the Family Assistance Act and the Family Assistance Administration Act and the persons who may be affected by this application are limited to the Secretary (i.e. the Commonwealth) and Mrs McNamara, the Applicant, and her partner.
2. Because the jurisdiction of the Tribunal is wide and diverse, it is not practicable to lay down a principle or a set of specific principles applicable to every type of case in respect of which there may be an application for a stay[4].
3. The matters to be taken into account by the Tribunal when considering whether to grant a stay are not closed. Matters which have been considered by the Tribunal when determining whether to grant a stay include:

• prospects of success or merits of the case;
• prejudice to parties or those persons whose interests may be affected by the review;
• whether it is in the public interest to grant a stay;
• whether the safety of the public is imperilled;
• hardship or loss which may be suffered by an applicant;
• likelihood of recovery of monies by the Commonwealth where debts are owed;
• conditions or undertakings which might ameliorate the consequences of the stay; and
• whether the review application, if successful, would be rendered nugatory or futile if the stay is not granted[5].

1. In this case, the Tribunal considers it appropriate to consider the following matters in determining whether a stay order should be made:

(i) prospects of success or merits of the application;

(iv) whether the application will be rendered nugatory; and

1. Each of these matters is considered, in turn, below.

(i) Prospects of success or merits of application

1. It is relevant for the Tribunal to consider whether there are facts and circumstances which, if established at the substantive hearing, would provide a basis for the applicant's success in the review application; or whether there are points of law raised which, if sustained, will lead to that conclusion[6]. Although no party bears a burden of proof to establish facts or make out a case, it will usually be the applicant who will need to provide the Tribunal with sufficient evidentiary material to enable it to exercise its discretion in accordance with law[7].
2. This review application concerns Mrs McNamara's entitlement to FTB Part A and Part B supplements in the 2012/2013 financial year.
3. On 21 November 2014, Centrelink completed a reconciliation of Mrs McNamara's entitlement to FTB for the 2012/2013 financial year and decided that Mrs McNamara could not be paid FTB Part A and Part B supplements because she and her husband had lodged their income tax returns by 30 June 2014 (Original Decision).
4. On 4 December 2014, Mrs McNamara requested a review of the Original Decision and, on 13 May 2015, a Centrelink authorised review officer (ARO) affirmed the Original Decision (ARO Decision). On 8 December 2015, Mrs McNamara applied to the SSCSD for a review of the ARO Decision and, on 7 January, the SSCSD made the SSCSD Decision, as set out in paragraph 1 above.
5. A person's eligibility for FTB payments is determined under Division 1 of Part 3 of the Family Assistance Act and the FTB rate calculator contained in Schedule 1 to the Family Assistance Act. Clauses 3 and 25 of Schedule 1 to the Family Assistance Act provide for the inclusion of a Part A supplement in the calculation of the rate of FTB Part A and clause 29 provides for the inclusion of a Part B supplement in the calculation of the rate of FTB Part B.
6. The rate of payments throughout the year is set in a series of determinations made pursuant to s 16 of the Family Assistance Administration Act. In the ordinary course, a person may receive FTB Part A and B supplements at the end of the financial year following a reconciliation process achieved through the mechanism of a review under s 105 of the Family Assistance Administration Act. Section 105A of the Family Assistance Administration Act provides the authority to review a rate and includes Part A and Part B supplements.
7. Specifically, s 32A of the Family Assistance Administration Act requires that the Secretary disregard the amounts of the FTB supplements when making or varying a determination until the claimant "has satisfied the FTB reconciliation conditions" which apply in the relevant period.
8. Section 32B of the Family Assistance Administration Act explains when an individual will satisfy the reconciliation conditions. Relevant for present purposes is s 32C of the Family Assistance Administration Act which provides that an individual must lodge their tax return within the first income year after the relevant income year[8], unless the Secretary is satisfied that there are "special circumstances" that prevented the individual from lodging the return before the end of that first income year[9]. Section 32D of the Family Assistance Administration Act provides that the same applies to an individual's partner where the individual is a member of a couple.
9. It is not in dispute that Mrs McNamara and her partner did not lodge their tax returns for the 2012/2013 financial year until after 30 June 2014 (namely on 16 September 2014), as required by the Family Assistance Administration Act.
10. Accordingly the substantive application will turn on whether there were "special circumstances" that prevented Mrs McNamara and her partner from lodging the returns before 30 June 2014, the end of that first income year, for the purposes of s 32C(3) of the Family Assistance Administration Act.
11. In finding that "special circumstances" existed in Mrs McNamara's case, the SSCSD stated the following in the SSCSD Decision:
    1. The tribunal accepts that in and about the relevant time Mr Wheatcroft was experiencing significant stress due to the health concerns of his partner. Medical evidence presented to the tribunal states that those circumstances impacted on Mr Wheatcroft's professional capacity at the time. Further, the tribunal accepts that the situation was further exacerbated because of the particular household circumstances Mrs McNamara was dealing with at the relevant time. The tribunal accepts her evidence that her household had taken on responsibility for a foster child and that this gave rise to a range of issues that had to be dealt with and as such she failed to follow up the lodgement of the tax returns in a timely manner.
    2. On balance the tribunal was satisfied that special circumstances existed, as there appears to have been an unusual range of factors, which in combination has the effect of preventing Mrs McNamara and her partner from lodging the income tax returns by the required date. These factors included:

(a) Having instructed Mr Wheatcroft on 23 May 2014 both the accountant's and Mrs McNamara's expectation was that the returns would be completed and ready to lodge by 23 June 2014.

(b) Mrs McNamara and her husband run a business. They were not able to lodge their individual and business returns prior to the relevant date due to the complexity of the returns and they were reliant upon an accountant to assist them with the preparation of their tax returns.

(c) Mr Wheatcroft's usual practice and his failure to record details of his client's instructions into the office management system appear to have been affected by his partner's illness leading up to her medical diagnosis in June 2014. Whilst Mr Wheatcroft first attended to Mrs McNamara's returns in late May the evidence indicates that his partner had been ill for some time and this had a significant impact upon Mr Wheatcroft. This meant the usual risk management system was not in place and the matter 'slipped through the system.'

(d) Mrs McNamara's own failure to follow up on the timely lodgement of the returns before 30 June 2014 was impacted by her preoccupation with the care of a foster child during the relevant period. The teenager presented with challenging behaviour, as well as cross cultural issues that impacted upon the household.

1. The expression "special circumstances" is not defined in the Family Assistance Administration Act (or the Family Assistance Act) but has been considered extensively by the Federal Court and this Tribunal in the social security and family assistance law context. Broadly, it has been held that for circumstances to constitute "special circumstances" they must be circumstances which are "unusual, uncommon or exceptional," "markedly different from the usual run of cases," "special" or "out of the ordinary" and they include "events which would render the (strict application of the rule in question) unfair or inappropriate:" see, for example, Re Ivocic and Director-General of Social Services [1981] AATA 57 at [45]; Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 per Toohey J; Beadle and Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225 at 228 as per Bowen CJ, Fisher and Lockhart JJ; Groth and Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545 per Kiefel J; Dranichnikov v Centrelink [2003] FCAFC 133; [2003] 75 ALD 134 at [66] per Hill J; Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 at [33] and Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 at [80].
2. The Guide to Family Assistance Law (Guide) is a policy document used by Centrelink in applying the family assistance legislation. At 6.4.1.30, under the heading "Reconciliation Process", the Guide states:

Note: From 1 July 2012 individuals and/or their partners have 12 months after the income year (1.1.1.75) to lodge a tax return or notify Centrelink they are not required to lodge in order to receive FTB supplements or top-ups.

......

Extensions to the tax lodgement timeframe may be granted in special circumstances.

Note: Lodgements of tax returns are the responsibility of the individual, including those who lodge via a tax agent. Providing financial statements to a tax agent or accountant prior to 30 June of the relevant lodgement year does not constitute lodgement of tax returns for FTB purposes. Extensions to the lodgement period may be granted if there are special circumstances. Special circumstances are circumstances that are unusual, uncommon or exceptional. Failure by an accountant or tax agent to lodge a tax return within the lodgement period (eg forgetting to lodge in time due to high workloads) will not ordinarily constitute special circumstances[10]. [Emphasis added]

1. It is well established that the Tribunal should apply ministerial policy unless, in a particular case, there are cogent reasons for not doing so: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645 per Brennan J.
2. The Tribunal considers that in this case there are significant prospects of the Secretary's success on review which support a stay being granted. Specifically, the Tribunal considers that Ms McNamara's circumstances, as identified by the SSCSD in the SSCSD Decision at [26] and [27] (see paragraph 22 above), do not constitute "special circumstances" as that expression has been interpreted to mean (see paragraph 23 above). Further, as stated in above (in paragraph 24), at 6.4.1.30 the Guide provides that failure by an accountant or tax agent to lodge a tax return within the relevant lodgement period will not ordinarily constitute "special circumstances". I see no good reason why the Guide should be departed from in Mrs McNamara's case. What is stated in the Guide (at 6.4.1.30) is consistent with the conclusion I have already reached, independently of what is stated therein.
3. Mr Wheatcroft's failure to lodge Mrs McNamara's tax return and her partner's tax return for them by the relevant lodgement date, as a result of his wife's illness, does not constitute a "special circumstance". As stated in the Guide (at 6.4.1.30), the lodgement of tax returns within the relevant lodgement period is ultimately the responsibility of the individual concerned, here Mrs McNamara (and her partner).
4. In any event, as submitted by the Secretary, the medical evidence before the SSCSD did not support its finding that the illness of Mr Wheatcroft's wife caused the mistake to be made[11]. The medical certificates provided to the SSCSD are very general in nature and give no insight into any diagnosed condition or its effect on Mr Wheatcroft's ability to lodge the tax return of Mrs McNamara and her partner on time. As submitted by the Secretary, only the medical certificate, dated 27 August 2015, gives any particularity as to when Mr Wheatcroft was suffering "stress", stating that Mr Wheatcroft was observed to have such symptoms on 13 August 2014[12]. As the Secretary points out, this was well after the time Mr Wheatcroft claimed to have first looked at the tax returns of Mrs McNamara and her partner (in May 2014) and when the tax returns were due to be lodged (by 30 June 2014), and well before the tax returns were ultimately lodged (on 16 September 2014)[13].

1. The Secretary's position is that if a stay is not granted, it is likely to prejudice the Secretary. That is, if the stay is not granted the Secretary will be obliged to pay Mrs McNamara FTB supplements and, should the Secretary succeed in the substantive application, the consequential debt is likely to be recovered over an extended period via withholdings or deductions from ongoing payments. The debt will only be recovered in nominal terms (i.e. without interest) and will cause administrative costs to be incurred by the Secretary.
2. In contrast, Mrs McNamara argues that if the stay is granted and the Secretary is ultimately unsuccessful in the substantive application, it is likely to prejudice her as it is unlikely that she will be paid any interest on the FTB supplements that are paid to her in the relevant period.
3. As stated above, the Tribunal considers that the Secretary has significant prospects of success on review. This is a significant factor in favour of granting the stay. Prejudice to the parties is not by itself determinative of whether the stay should be granted.

1. If the stay is not granted and the Secretary is successful in the substantive application, the resulting overpayment is likely to constitute a debt to the Commonwealth that will become recoverable from Mrs McNamara by the Commonwealth.
2. The Secretary asserts that if the stay is not granted recovery of any consequential debt "may" impose financial hardship on Mrs McNamara: Secretary's Submissions at [31]-[32].
3. However, according to Mrs McNamara:
   1. There is no basis for any assertion that Ms McNamara would experience Financial Hardship as a result of the potential directions resulting from the substantive application[14].
4. At this point, there is no evidence before the Tribunal concerning Mrs McNamara's financial position and/or her willingness to repay the FTB Part A and Part B supplements if the stay is not granted and the Secretary is successful on review. In such circumstances, I agree with the Secretary's contention that if the stay is not granted recovery of any consequential debt "may" impose financial hardship on Mrs McNamara

(iv) Whether the application will be rendered nugatory

1. The Secretary contends that the review application may be rendered nugatory if the stay is not granted. According to the Secretary, if the stay is not granted FTB Part A and Part B supplements will be paid to Mrs McNamara and there is a real risk that the Secretary would not be restored to his original position if he succeeds in the substantive application. The Secretary further submits that while the amounts may be recoverable at law, successful recovery action cannot be guaranteed[15].
2. In contrast, Mrs McNamara argues:
   1. There is no basis for any assertion that the Respondent [i.e. Mrs McNamara] would be unable to comply with a direction from the tribunal to repay the entitlement awarded in the decision under appeal[16].
3. In circumstances where there is no evidence before the Tribunal concerning Mrs McNamara's financial position and/or her willingness to repay the FTB entitlements if the stay is granted and the Secretary is successful on review, the Tribunal considers that there is a real risk that the review application "may" be rendered nugatory if the stay is not granted.

1. The Tribunal considers that the public interest tends towards the grant of a stay in this case[17]. As submitted by the Secretary, family assistance payments are made from public funds and it has an obligation to protect those funds by ensuring that payments are made only to individuals who are lawfully entitled to receive them and, in this case, the lawful payment of FTB supplements to Mrs McNamara is an issue to be determined during the substantive proceedings[18]. The quantum of funds payable, but for the stay, is irrelevant[19].

1. For the above reasons, the Tribunal considers it appropriate to make an order, pursuant to s 41(2) of the AAT Act, staying the SSCSD Decision until the substantive review application has been decided.

I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Senior Member CR Walsh

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

[1] Re VBJ and Australian Prudential Regulation Authority [2005] AATA 642 at [39].

[2] Kurukkai and Minister for Immigration and Multicultural and Indigenous Affairs [2004] AATA 146 at [34].

[3] Australian Securities and Investments Commission v Administrative Appeals Tribunal and Another (2009) 181 FCR 130; [2009] FCAFC 185.

[4] Re Repatriation Commission and Delkou [1985] AATA 297; (1985) 8 ALD 454 at 457-8 per DP Hall.

[5] Not all of these matters will necessarily apply in every case. See also Re Scott and Australian Securities and Investments Commission [2009] AATA 798 at [4] where Downes J set out a non-exhaustive set of factors to be taken into account when determining an application for a stay order. The factors referred to by Downes J in Re Scott seem to have become the general touchstone against which consideration of stay applications is approached: see Re O'Sullivan and Australian Securities and Investments Commission [2015] AATA 265 at [6].

[6] Re Commonwealth of Australia and Quirke [1986] AATA 57; (1986) 9 ALD 92 and Anastasiadis and Secretary, Department of Employment and Workplace Relations [2007] AATA 1065 at [11].

[7] McDonald v Director-General of Social Security [1984] FCA 57; (1984) 6 ALD 6.

[8] The changes to the time frames for the lodgement of tax returns were inserted by the Family Assistance and Other Legislation Amendment Act 2013. The changes applied in relation to the 2012-13 income year and later income years.

[9] The reconciliation conditions contained in s 32C to s 32H of the Family Assistance Administration Act and s 107 of the Family Assistance Administration Act, as they currently appear, were inserted into the Family Assistance Administration Act by the Social Services and Other Legislation Amendment Act 2014 (2014 Amending Act). However, the application provisions for the 2014 Amending Act state that the changes to s 32C to s 32H and s 107 only apply in relation to the 2013-14 income year or a later income year: see sub items 26(1) and (2) of the 2014 Amending Act.

[10] Section 6.4.1.30 of the Guide was recently considered and applied by DP Constance in Cannon; Secretary, Department of Social Services [2015] AATA 1028 at [17]- [20] and [23]-[24].

[11] Secretary's Submissions on Stay Application, dated 7 January 2016 (Secretary's Submissions), at [25].

[12] Secretary's Submissions at [25].

[13] Secretary's Submissions at [25].

[14] Respondent's Submissions on Stay Application, dated 11 March 2016 (Respondent's Submissions).

[15] Secretary's Submissions at [27]-[29].

[17] Secretary's Submissions in Reply at [5].

[18] Secretary's Submissions at [33].

[19] Secretary's Submissions in Reply at [5].