Riddell v Secretary, Department of Social Security

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

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

Gammaldi and Secretary, Department of Social Services [2016] AATA 1028

Groth and Secretary Department of Social Security (1995) FCA 1708

Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443

Secretary, Department of Social Security v Hales [1997] FCA 1565; (1998) 82 FCR 154

Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639

Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76

Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190

1. Ms Bokhoree lodged a claim for family assistance on 1 August 2013.[1] On the basis of Ms Bokhoree's estimate of income for the 2014-2015 financial year, Ms Bokhoree was paid a family tax benefit (FTB) and schoolkids bonus (SKB).[2] On the basis of Ms Bokhoree's estimate of income for the 2015-2016 financial year, Ms Bokhoree was paid a family tax benefit (FTB) and schoolkids bonus (SKB).[3]
2. On 23 November 2015, the Department of Human Services ("Centrelink") wrote to Ms Bokhoree advising that information received from the Australian Tax Office (ATO) indicated that her current income estimate for the 2015-2016 may be less than her actual income.[4] As a result, Centrelink determined that Ms Bokhoree had been overpaid.
3. As a result of the Centrelink's determination that Ms Bokhoree had been overpaid the following debts were raised:
   • (a) $1,684.00 of SKB (SKB Debt);[5] and
   • (b) $3,005.76 of FTB (FTB Debt).[6]
4. Ms Bokhoree sought a review of Centrelink's original decision by an Authorised Review Officer ("ARO"). Ms Bokhoree argued that because she withdrew money from superannuation to pay for necessary surgery, her income appeared higher than it was. The appeal to the ARO was unsuccessful. The ARO found that no "special circumstances" existed to waive the debts.[7]
5. On 14 April 2016 Ms Bokhoree lodged an application for review with the Social Services and Child Support Division ("SSCSD").[7] The SSCSD rejected Ms Bokhoree's claim and affirmed the ARO's decision on 29 June 2016.[8]
6. Ms Bokhoree has sought a review of the SSCSD's decision by this Tribunal.[9]
7. Ms Bokhoree submits that she is in financial hardship and/or that special circumstances exist such that the debts should be written off or waived.

1. The issues for determination are whether or not:
   • (a) Ms Bokhoree has been overpaid SKG and FTB for the 2014-2015 year;
   • (b) the SKB Debt and FTB Debt are recoverable; and, if yes
   • (c) the SKB Debt and FTB Debt should be written off;
   • (d) the SKB Debt and FTB Debt should be waived due to administrative error; or
   • (e) "special circumstances" exist such that the SKB Debt and FTB Debt should be waived.
2. For the reasons set out below, I have affirmed the decision under review. No circumstances exist such that the SKB Debt and FTB Debt should be waived or written off.

1. Pursuant to section 58 of the New Tax System (Family Assistance) Act 1999 ("Family Assistance Act"), entitlement to FTB is calculated with reference to a person's adjustable taxable income.
2. The effect of section 31 of the A New Tax System (Family Assistance) (Administration) Act 1999 ("Administration Act"), in this instance, is that where Secretary becomes aware that the recipient's adjusted taxable income is such that the rate of family tax benefit should be a different rate to the rate previously determined, the Secretary must, vary the determination.
3. Centrelink became aware that Ms Bokhoree's taxable income exceeded $100,000 in the 2014-2015 year, and as a result, Ms Bokhoree was not entitled to SKB for the period between 1 January 2015 and 30 June 2015[10] and the rate of FTB payments which were payable had to be varied. That is, Ms Bokhoree had been overpaid.
4. Section 70 of the Administration Act provides that overpaid family assistance debts are debts due to the Commonwealth.
5. Ms Bokhoree does not dispute the calculations of the amounts of the SKB Debt and FTB Debt.

1. Even if a debt is owed, the Secretary may write off a debt in certain circumstances set out in section 95 of the Administration Act. Section 95 provides relevantly:

(1) The Secretary may, on behalf of the Commonwealth, decide to write off a debt for a stated period or otherwise, but only if subsection (2), (4A) or (4B) applies.

Secretary may write off debt if debt irrecoverable or debt will not be repaid etc.

(2) The Secretary may decide to write off a debt under subsection (1) if:

(a) the debt is irrecoverable at law; or

(b) the debtor has no capacity to repay the debt; or

(d) it is not cost effective for the Commonwealth to take action to

recover the debt.

(3) For the purposes of paragraph (2)(a), a debt is taken to be irrecoverable at law if, and only if:

(b) there is no proof of the debt capable of sustaining legal proceedings for its recovery; or

(4) For the purposes of paragraph (2)(b), if a debt is recoverable by means of:

(aa) deductions under section 1231 of the Social Security Act 1991; or

(b) setting off under section 84A family assistance; or

(c) application of an income tax refund under section 87; or

(d) setting off under section 87A against a payment referred to in paragraph 82(2)(a);

the person is taken to have a capacity to repay the debt unless recovery by those means would cause the person severe financial hardship.

1. The Secretary must also waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt: section 97 of the Administration Act.
2. The Secretary may also waive a debt owed, under section 101 of the Administration Act, if satisfied:
   • (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.

Should the SKB Debt and FTB Debt be written off? (section 95)

Is the debt irrecoverable at law? (section 95(3))

1. Section 95(3) sets out when a debt is taken to be irrecoverable at law. None of the circumstances set out in section 95(3) exist in this case and therefore I find the debt is not irrecoverable at law.

Does Ms Bokhoree have the capacity to repay the debt? (section 95(4))

1. Section 95(4) provides that if a debt is recoverable by means of deductions, from income tax refunds or family assistance payments, the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
2. The SKB Debt and FTB Debt have already been recovered in full. The SKB Debt was deducted from FTB payments[11] and the FTB Debt was deducted from Ms Bokhoree's tax refund.[12]
3. The issue is whether Ms Bokhoree is suffering from "severe financial hardship".
4. The Electronic File Records of Centrelink record that in February 2016 Ms Bokhoree told Centrelink that the debts should be waived because the only reason her income was over $100,000 was because she withdrew over $20,000 from her superannuation to pay for unforeseen surgery. She feels disadvantaged because the superannuation withdrawal did not boost her income because it was used to pay for her surgery.[13]
5. At the hearing before me and in written submissions of Ms Bokhoree, Ms Bokhoree explained that:
   • She is struggling financially to support her two children as a single parent.
   • Centrelink did not originally inform her that they were deducting amounts from her tax return to pay the FTB Debt.
   • During and even before this whole ordeal she was neither informed nor given any explanation about any issues about being overpaid. Centrelink did not inform her about being overpaid until after they deducted the money from her tax refund.
   • She was not aware the superannuation funds she had withdrawn would be classified as an "additional income." The money was not withdrawn as additional income but as a life support.
   • She had to take money from her pension to have surgery to treat a life-threatening situation.
   • Her financial struggles have lead her to partake in a Masters degree for the benefit of her daughters to financially support them.
   • Since having the money forcefully taken from her by Centrelink and their mistakes, her life has gone downhill and become a living nightmare.
   • Her eldest daughter was studying at Bond University and it was costing her $5,000/month to support her daughter during her studies. Her daughter has since changed Universities and Ms Bokhoree now pays for her accommodation of approximately $288/week and for her food and other living expenses.
   • "Make no mistakes, I may not be a drug addict or popping kids left, right and center, I may not be homeless and my kids aren't teenage parents or off doing drugs or working full time (as Centrelink have kindly compared me to show how well I am doing) but that does not make my situation laughable when I get the courage to ask for help and it definitely does not mean I do not deserve help."

"I work hard to keep a roof over my head and my kids. I work hard to make sure they don't end up as one of Townsville Statistics. Not one struggling family situation is the same as another; Centrelink should know that more than any other government departments. Situations vary but that doesn't mean I don't deserve the courtesy of being treated fairly or with respect. But what I was dealt with was ridicule and being told other families have it worse, but so does third world and developing countries but this is about me and my family and I do not deserve to be told that I don't get something because "others have it worse than you".

• Her financial situation has caused her stress and she is no longer working due to poor health, anxiety and depression.
• In February 2016 she was unable to pay her rent and as a result was issued a notice to vacate and had to move out from the property as soon as possible. Her sister lent her money to pay her credit card bill.
• Her credit card and rent payments are currently up to date.
• She is struggling to buy basics in the house.

1. Dr Sam Baker, Bariatric Surgeon, has confirmed that Ms Bokhoree had bariatric surgery for necessary health reasons and that it was not available to her via the public health system.[14]
2. Ms Bokhoree says:
   • (a) she never had any affordability to pay Centrelink;
   • (b) the money was forcefully taken from her account;
   • (c) she is struggling financially and hopes to get the debt money refunded so that it relieves some of her financial burdens;
   • (d) she can no longer afford to pay for her daughter's school trips.
3. Ms Bokhoree contends that those circumstances, demonstrate that she is suffering from severe financial hardship and that the SKB Debt and FTB Debt should be waived.
4. Ms Bokhoree provided evidence that she was given a Notice to remedy breach and to vacate her rental accommodation in February 2016,[15] however, she acknowledged at the hearing that her rent obligations are no longer outstanding.
5. At the hearing Ms Bokhoree gave evidence that, while she is not currently working due to stress and anxiety, she is receiving 70% of her former income as a nurse from her insurance with Q Super and that she intends to get back to work as soon as she is mentally able. She is currently attending psychological counselling.[16]
6. Ms Bokhoree is managing to house herself and one of her daughters and she is able to pay for her adult daughter's accommodation and living expenses. She was also able to partially fund an overseas trip at the end of last year to visit her family overseas.[17] While she has a HECS debt, resulting from her Master's studies, and credit card debts, Ms Bokhoree gave evidence that she is managing to pay her credit card bills and she acknowledged that she is not obligated to pay her HECS debt until such time as her income reaches an appropriate level, and even then, she is not expected to pay that debt all at once.
7. I find that the evidence does not support a finding that Ms Bokhoree suffers from severe financial hardship.

Is it cost-effective for the Commonwealth to recover the debt?

1. As the FTB Debt and SKB Debt have already been recovered it is not relevant whether it cost effective for the Commonwealth to recover the debt.

1. There is no basis for the SKB Debt or the FTB Debt to be written off under section 95 of the Act.

Should the SKB Debt and FTB Debt be waived due to administrative error (section 97)

1. If administrative error was the sole cause for the debt arising, the Secretary must waive the right to recover the debt. The debt "must be "attributable solely" to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes": Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76, per Wilcox J (at [41]) and on appeal to the Full Federal Court Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190, at [23].
2. The SKB Debt and FTB Debt arose due to a reconciliation of Ms Bokhoree's income against her estimate income. Ms Bokhoree does not dispute the reconciliation calculations.
3. The SKB Debt and FTB Debt did not arise solely from, or at indeed in relation to any, administrative error.
4. There is no basis for the SKB Debt and FTB Debt to be waived under section 97 of the Act. Ms Bokhoree does not contend that there has been any administrative error.

ARE THERE SPECIAL CIRCUMSTANCES THAT MAKE IT DESIRABLE FOR THE SKB DEBT AND FBT DEBT TO BE WAIVED: SECTION 101

1. There are a few elements to be satisfied under section 101 before a debt may be waived. First, the debt must not have arisen from the debtor, that is Ms Bokhoree must not have knowingly made a false statement or a false representation or knowingly failed or omitted to comply with a provision of the Act or the Administration Act. Second, there must be special circumstances (other than financial hardship alone) that make it desirable to waive the debt. Third, it must be more appropriate to waive than to write off the debt or part of the debt.
2. The Secretary does not contend that Ms Bokhoree "knowingly" failed to comply.
3. The issue, therefore, is whether special circumstances exist.

1. The Act does not define what constitutes "special circumstances".
2. There has been considerable judicial consideration of the phrase in the context of other social security legislation, for example:
   • "Special" denotes something different from the usual or ordinary: Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, at 545 per Kiefel J (as she then was).
   • French J (as he then was) said in in Secretary, Department of Social Security v Hales (1998) 82 FCR 154, at 162:

The concept of special circumstances is broad. A constellation of factors, including financial circumstances, may fall within it. The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included. This gives some measure of the range of circumstances which will qualify as special. But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the Secretary's discretion... It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction 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.

• The Full Federal Court in Riddell v Secretary, Department of Social Security [1993] FCA 261; (1993) 42 FCR 443 held, at 450:

Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.

• Jacobson J in Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs v Jones (2012) 89 ATR 267; [2012] FCA 639 explained the effect of the authorities as follows [emphasis added]:

[51] ...the phrase "special circumstances", although lacking in precision, is sufficiently understood as including events or things that render the operation of the statue in a particular case as unfair, unintended or unjust. What is required is something that takes the case out of the ordinary, and unfairness or unintended consequences may show that this exists. Moreover, the circumstances of the case are not confined to matters that are external to the operation of the statutory scheme: see Smith per von Doussa J at 60, 61-62; Groth per Kiefel J at 545, Kertland v Secretary, Dept of Family and Community Services [1999] FCA 1596; (1999) 95 FCR 64 per Merkel J at 71, 73; Kirkbright v Secretary, Dept of Family and Community Services [2000] FCA 1876; (2000) 106 FCR 281 per Mansfield J at [22], [26]-[27] and [31]-[32]; see also Secretary to the Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 116 FCR 1 per Heerey J at [17].

1. The AAT has also considered the phrase and held that the interpretation in Beadle and Director-General of Social Security (1984) 6 ALD 1, at [12] (i.e. that the circumstances must be unusual, uncommon or exceptional), applies to the Act.[18]
2. In summary, the circumstances relied upon to be "special" must be unusual, different, uncommon or exceptional.[19]

1. The Secretary submits that no special circumstances exist and that therefore the discretion in section 101 cannot be invoked.[20]
2. Other than financial hardship, Ms Bokhoree presented no other reason for why the debts should be waived. Ms Bokhoree does not contend that her need for surgery constitutes a "special circumstance".
3. In relation to her present health issues, the medical evidence provided by Ms Bokhoree indicates that:
   • (a) her overall health has improved as a result of the surgery;[21]
   • (b) she is stressed about her current financial situation;[22] and
   • (c) the Centrelink decision is impacting her ability to maintain equilibrium in her daily activities.[23]
4. There is no other information provided which suggests that Ms Bokhoree's stress is having such an impact that it should be taken into account as a "special circumstance", As referred to earlier, despite her stress and anxiety, Ms Bokhoree is:
   • (a) managing to house and care for herself and one of her daughters;
   • (b) she is able to pay for her adult daughter's accommodation and living expenses;
   • (c) she has been able to organise, pay for, and partake in overseas travel;
   • (d) she is managing to pay her credit card and rental bills; and
   • (e) has been able to partake in an online Masters course.
5. Marital issues and busy work and family commitments and the normal vicissitudes of life are not "uncommon", "out of the ordinary", or "exceptional" circumstances. They are not, generally, "special circumstances" for the purposes of the Act.
6. In Gammaldi and Secretary, Department of Social Services (Social services second review) [2016] AATA 1028 the Tribunal found that even where the Applicant had had a difficult year, with family health issues, business challenges, and increased responsibilities, this did not constitute uncommon or unusual occurrences and were not "special circumstances".
7. In Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 Brennan J (as President of the AAT) noted (at 643) that consistency with comparable cases and decisions is "[o]ne of the factors to be considered in arriving at the preferable decision".[24]
8. On the available evidence, I am unable to find that Ms Bokhoree's financial and health issues constitute a "special circumstance". There is no basis for the SKB Debt and FTB Debt to be waived under section 101 of the Act.

1. Ms Bokhoree's appeal fails. No circumstances exist such that the SKD Debt and FTB Debt should be written off or waived.
2. The decision under review is affirmed.

I certify that the preceding 53 (fifty-three) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

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

[1] Exhibit 1, T Documents, T5, pages 56-78, Claim Form dated 1 August 2013

[2] Exhibit 1, T Documents, T6, pages 79-81, Letter from DHS to Ms Bokhoree dated 14 May 2014; T7, pages 82-84,

Letter from DHS to Ms Bokhoree dated 8 July 2014; T8, pages 85-87, Letter from DHS to Ms Bokhoree dated 10 November 2014; T9, pages 88-90, Letter from DHS to Ms Bokhoree dated 16 March 2015;

[3] Exhibit 1, T Documents, T10, pages 91-93, Letter from DHS to Ms Bokhoree dated 13 May 2015; T 11,

pages 94-96, Letter from DHS to Ms Bokhoree re Family Assistance dated 28 June 2015; T12, pages 97-99,

Letter from DHS to Ms Bokhoree re Family Assistance dated 18 November 2015.

[4] Exhibit 1, T Documents, T13, pages 100-102, Letter from DHS to Ms Bokhoree dated 23 November 2015.

[5] Exhibit 1, T Documents, T14, pages 103-104, Letter from DHS to Ms Bokhoree Account Payable (SKB) dated 23

[6] Exhibit 1, T Documents, T15, pages 105-108, Letter from DHS to Ms Bokhoree Account Payable (FTB) dated 1

Exhibit 1, T Documents, T1[7], pages 111-117, Authorised Review Officer's letter and decision dated

[7] Exhibit 1, T Documents, T18, pages 118-119, Letter from AAT to DHS dated 14 April 2016.

[8] Exhibit 1, T Documents, T2, pages 4-9, SSCSD's Decision and Reasons for Decision dated 29 June 2016.

[9] Exhibit 1, T Documents, T1, pages 1-3, Application for Review dated 27 July 2016.

[10] Section 35UA(1)(d), Family Assistance Act, as it was at the relevant time.

[11] Exhibit 2, Secretary's Statement of Facts, Issues and Contentions dated 11 April 2017, Attachment A; Exhibit 1,

T Documents, T2, page 7, SSCSD's Decision and Reasons for Decision dated 29 June 2016.

[12] Exhibit 1, T Documents, T15, pages 105-108, Letter from DHS to Ms Bokhoree Account Payable (FTB) dated

[13] Exhibit 1, T Documents, T21, page 151, Electronic File Notes (Centrelink).

[14] Exhibit 13, Letter from Dr Baker dated 7 March 2017.

[16] Exhibit 15, Letter from Dr Chris Richardson dated 29 April 2017.

[18] See Hunnibell and Secretary, Department and Community Services [2004] AATA 992, at [19]; Papps and Secretary, Department of Family and Community Services [2005] AATA 660, at [37].

1. [19] The core requirement for "special reasons" is that there be something "unusual or different": French J in Boscolo v Secretary, Dept of Social Security [1999] FCA 106; (1999) 90 FCR 531, at [18]; Barker J in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084,

[20] Exhibit 2, Secretary's Statement of Facts and Contentions dated 11 April 2017, paras 37-38.

[21] Exhibit 13, Report of Dr Baker dated 7 March 2017; Exhibit 14, Report of Dr Gupta dated 13 March 2017.

[22] Exhibit 13, Report of Dr Baker dated 7 March 2017; Exhibit 14, Report of Dr Gupta dated 13 March 2017.

[23] Exhibit 15, Report of Dr Richardson dated 29 April 2017.

[24] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 643.