The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the written statement of reasons for the decision in this application by:

• deleting the word "Respondent's" in the sixth sentence in paragraph 32 and

• deleting the word "Respondent's" in paragraph 33 and substituting therefor the word "Secretary's".

........................[Sgd Ms L Tovey]..............

DECISION AND REASONS FOR DECISION [2008] AATA 372

SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

The Tribunal sets aside the decision of the Social Security Appeals Tribunal made on 18 January 2007 and substitutes a decision that the decision of the Applicant, to raise and recover overpayments of family tax benefit of $8,837.64, is affirmed.

FAMILY ASSISTANCE - family tax benefit - overpayment - waiver of recovery of debt - special circumstances

A New Tax System (Family Assistance) (Administration) Act 1999 (Cth), ss 71, 95, 97, 101

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

Re Beadle and Director-General of Social Security [1984] AATA 176; (1985) 7 ALD 670

Brown v Secretary, Department of Family and Community Services [1999] AATA 113

Castle v Secretary, Department of Employment, Training and Youth Affairs [1999] AATA 176

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

Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152; [2004] AATA 615

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

Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596; (1999) 95 FCR 64

Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; (2000) 106 FCR 281

Re Reardon and Secretary, Department of Family and Community Services [2002] AATA 33

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

Secretary, Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 116 FCR 1

Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348

Tubic and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 13

1. This is an application for review instituted by the Secretary, Department of Families, Community Services and Indigenous Affairs ("the Secretary") in relation to a decision of the Social Security Appeals Tribunal ("the SSAT") made on 18 January 2007. The decision related to an overpayment of Family Tax Benefits ("FTB") to Mrs Simone Sarolea ("the Respondent") for the 2005/06 financial year, in the amount of $8,837.64. The SSAT set aside a decision of the Secretary to recover the overpayment, and substituted a decision that the debt existed but was to be waived.

1. It is not in dispute that the Respondent received an overpayment of $8,837.64 of FTB in the 2005/06 financial year, and the only issue for my determination is whether that debt should be waived or written off.
2. I make the following findings of fact as to the manner in which the debt arose from the evidence of the Respondent given before me, which I accept in its entirety, and the section 37 documents filed in the proceedings.
3. The Respondent was, at all material times, married to Adrian Sarolea, and had three children aged 10, 8 and 3 years. At some time in 2004 Mr Sarolea decided to resign from his previous employment. After taking a few months away from work, Mr Sarolea commenced working for a company called Atwood Oceanics Pacific Ltd on a casual basis from December 2004.
4. On 22 March 2005 Mr Sarolea commenced full-time employment with Atwood Oceanics as a rig labourer on the mobile rig Atwood Eagle, with a substantial total annual remuneration package. The arrangement, set out in an Australian Workplace Agreement of that date, was in essence for Mr Sarolea to work in "cycles" comprising of 21 days on duty and 21 days off-duty. Wages were paid at the end of each on-duty period.
5. The Respondent informed the Secretary's delegate of her husband's new employment relationship by telephone on 7 April 2005. According to the relevant officer's file note, which the Respondent accepted correctly reflected their conversation, the Respondent was advised on that occasion that she would remain entitled to parenting payments so long as her husband's income over 6 consecutive fortnights did not result in a "nil entitlement" for the fortnight. That advice, which was repeated to the Respondent on many separate occasions, was incorrect. However, that approach led to the overpayment of both parenting payment and FTB.
6. The Respondent complied with her reporting obligations in all respects. She regularly advised the Secretary's delegates of the family's annual estimated income on many recorded occasions. She regularly advised the Secretary's delegates of her and her husband's fortnightly income. She provided the Secretary's delegates with a copy of her husband's employment contract. She regularly queried her entitlement to receive the payments in light of her husband's income, and was regularly given advice to the effect noted above. She made these regular queries because she was surprised that they should still be entitled to social security payments at that level when her husband's annual income was high. The position was fairly summarised in the Respondent's evidence in chief in the following terms:

"I continued to report his fortnightly earnings as requested by Centrelink. These fortnightly earnings would be large amounts .... This was the first time that we had ever been in receipt of Parenting Payment (Partnered) or any income support payment ... and I did as was instructed to me. ... I was reporting fortnightly as instructed by the department but when I reported for the fortnight that Adrian did not earn any income the six fortnights at nil rate reverted back to the beginning again. So instead of only having one fortnight to go and then it would finalise it started straight back to the six fortnights at nil rate again. When I realised that the six fortnights at nil rate would never cancel out due to his work roster of three weeks on, three weeks off, I started to question the customer service officers as to our entitlements to these payments. Each time I questioned I was given the same information that: yes, we are entitled to these payments ...

It got to the point that we did not feel the system was correct and that we needed to see some documented evidence, such as Family Assistance Legislation, that we are in actual fact entitled to these payments and that we were never going to incur a debt. As we have always conducted ourselves with the highest of ethics and honesty and integrity, I am still awaiting this documentary evidence. At this point we decided to suspend our Parenting Payment (Partnered) until we received written evidence and they said it would not cancel our Parenting Payment (Partnered) just put it on hold until everything was verified."

1. The Respondent impressed me as an exceptionally honest person. As the Respondent fairly put it in her submissions to me, there was nothing else which she could have done to ensure she received the correct payment short of walking into Centrelink's office and "doing their job for them". As I note below, it was only through the Respondent taking all reasonable steps to challenge the continuing payments that the error came to light. She only continued to receive the payments because of constant assurances by the Secretary's delegates that she was entitled to the payments.
2. On 1 May 2006, in response to the Respondent's request for a review of the position, a delegate of the Secretary appreciated that it was likely that the Respondent had been overpaid. The Respondent was understandably upset at the prospect of having a large debt, given the steps which she had taken to avoid that consequence. On 1 May 2006 the Respondent's parenting payment was suspended, and she was asked to provide an estimate of her total family income for the purposes of determining her entitlement to FTB.
3. A subsequent review of the Respondent's payments in the period during the period her husband was employed full-time revealed that the Respondent had received an overpayment of $2,907.70 in parenting payment and $8,837.64 in FTB.
4. The parenting payment was overpaid because it should have been cancelled 6 fortnights after the commencement of Mr Sarolea's full-time employment.
5. The FTB overpayment was a consequence of the Secretary's delegate's incorrect perception of the Respondent's entitlement to parenting payment. A person in receipt of parenting payment is entitled to FTB Part A at the "maximum non-income tested rate" for the period they are entitled to parenting payment. The FTB entitlement of a person who is not in receipt of a social security payment is based on the combined income of the person and their partner. The difference between the Respondent's entitlement at the maximum non-income tested rate and her entitlement based on her family income in the relevant period was $8,837.64.
6. On 6 October 2006 the Secretary's delegate wrote to the Respondent indicating that an overpayment of $8,837.64 FTB had created a debt of that amount owed to the Commonwealth.
7. On 9 October 2006 a delegate of the Secretary decided to waive the overpayment of parenting payment under s. 1237A(1) of the Social Security Act 1991 (Cth). Under that provision, the Secretary must waive a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received the payment in good faith. The Secretary's delegate was satisfied of both those matters.
8. The Respondent sought a review of the decision to raise and not waive the FTB debt. The Secretary's delegate reviewed the matter and determined to affirm the decision on 24 October 2006. The delegate correctly appreciated that s. 1237A of the Social Security Act did not apply to a FBT debt and that the equivalent provision in the A New Tax System (Family Assistance) (Administration) Act 1999 (Cth) ("the Administration Act"), s. 97, contained an additional requirement that the person would suffer severe financial hardship if the debt were not waived. In light of the Respondent's combined family income for the 2005/06 financial year, her estimated family income for the 2006/07 financial year and the $60 per fortnight standard FBT repayment amount, the Secretary's delegate was not satisfied that the Respondent would suffer severe financial hardship if the debt was not waived.
9. The Respondent sought a further review of that decision, which was confirmed by an Authorised Review Officer of the Secretary on 15 November 2006.
10. However, on 18 January 2007 the SSAT set aside the decision to raise the FBT debt and substituted a decision that there is a debt of $8,837.64, but the recovery of the whole of the debt is to be waived. The SSAT acted on the basis that the requirements of s. 101 of the Administration Act, discussed below, were satisfied.
11. The Secretary now seeks a review of the decision of the SSAT by this Tribunal.

1. Provision for FTB is made by the A New Tax System (Family Assistance) Act 1999 (Cth) and the Administration Act. As it is not in dispute that an overpayment of $8,837.64 was made to the Respondent, it is convenient to turn directly to the provisions for the writing off and waiving of debts in the Administration Act.
2. Section 71(2) of the Administration Act provides that:

(a) an amount (the received amount) has been paid to a person by way of assistance; and

(b) the received amount is greater than the amount (the correct amount) of assistance that should have been paid to the person under the family assistance law;

the difference between the received amount and the correct amount is a debt due to the Commonwealth by the person."

1. Section 95 of the Administration Act provides for the writing off of debts in the following terms:

"(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.

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

(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."

Sub-sections 95(4A) and (4B) are not presently relevant.

1. The applicable waiver provisions are those found in Part 4 Division 4 of the Administration Act. Section 97 of the Administration Act, in that Division, provides:

"(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

(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;

(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."

1. Section 101 of the Administration Act, also in that Division, provides:

"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."

1. As noted above, it was common ground before me that the amount of $8,837.64 did represent an overpayment of FTB to the Respondent for the 2005/06 financial year. That would result in the Respondent owing a debt of that amount to the Commonwealth pursuant to s. 71(2) of the Administration Act.
2. It was also common ground before me that the Respondent would not suffer severe financial hardship if the debt were not waived, so that the debt cannot be waived under s. 97(1) and (2) of the Administration Act.
3. I should, however, note one matter in relation to s. 97 of the Act. The Secretary's submissions before me were that the debt was not attributable solely to administrative error of the Commonwealth and that the FBT overpayments were not received by the Respondent in good faith. I would reject both of those contentions by the Secretary. As I have found above, the Respondent complied fully with her obligations to keep the Secretary informed and provided all of the relevant details of her husband's employment. The Respondent received the payments because of the constant assurances which the Secretary's delegates gave to her that she was entitled to the payments. I have no hesitation in finding, as the Secretary's delegate found when waiving the parenting payment debt, that the FBT debt is attributable solely to an administrative error made by the Commonwealth and that the Respondent received the over-payments in good faith. It is unnecessary for me to give further details of my reasons for those conclusions at this point, because of the absence of severe financial hardship means that the discretion in s. 97 of the Act is in any event inapplicable to this case.
4. It is also clear that, at the time when the Secretary's delegate raised the debt, s. 97(3) of the Administration Act was not applicable and that none of the criteria for writing off a debt under s. 95 of the Administration Act were satisfied.
5. The question is then whether the requirements of s. 101 for waiver of the FBT debt are satisfied in the present case. I have already concluded that it is not open to write off the debt. It would follow that s. 101(c) of the Administration Act does not prevent me from waiving the debt. The live issues for my determination are therefore those raised by s. 101(a) and (b) of the Administration Act. That is, whether:
   • (a) the debt resulted wholly or partly from a person making a false statement or representation, or failing 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 the whole or part of the debt
6. If the above criteria are satisfied then it is necessary for me to consider whether I should exercise my discretion to waive the debt under s. 101 of the Administration Act.

No False Statement and Failure to Comply with the Family Assistance Law

1. The Secretary's Statement of Facts and Contentions did not assert that the debt arose wholly or partly from the Respondent or some other person knowingly making a false statement or a false representation. Nor did the Secretary contend in that document that the Respondent had failed or omitted to comply with a provision of the family assistance law. However, the Secretary's oral and subsequent written submissions did contend that the Respondent had made a false representation or statement and that, therefore, I should not be satisfied that the Respondent met the requirements of s. 101(a) of the Administration Act.
2. I am satisfied from the documentary evidence and the Respondent's oral evidence that she fully complied with the family assistance law and did not make any false statement or representation, knowingly or otherwise. The evidence discloses that she gave the Secretary's delegates full information as to the circumstances and terms of her husband's employment in a manner that could have not reasonably have left the Secretary's delegates in any doubt as to the true position.
3. The statement or representation which the Secretary identifies is that the Respondent declared that her husband was not receiving any income when he was off duty, when in fact he was on rest and recreation leave which was covered in his annual salary. I cannot find that the Respondent falsely conveyed the terms of her husband's employment in the manner suggested. To the contrary, the early advice on 7 April 2005 was that the Respondent's husband had started "full-time" employment. She regularly advised Centrelink of his estimated annual and actual fortnightly income. I find, based on the Respondent's evidence, that she provided Centrelink with a copy of the contract shortly after her husband commenced full-time employment. It was the Respondent who continually raised the concern as to her entitlement with the Respondent's delegates and it was her persistence which eventually led the Secretary's delegate to recognise that there was an overpayment. The information which the Respondent provided was such as to reasonably convey the position in relation to her husband's employment, and the Respondent's intention was always to give a full and fair account of the relevant circumstances.
4. I therefore reject the Respondent's contention that there was any false statement or representation which wholly or partly resulted in the debt. The only reason for the debt was administrative error by the Secretary's delegates.

1. Section 101(b) of the Administration Act requires that I be satisfied that there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt.
2. The term "special circumstances" is not defined by the Administration Act, and the approach of the Tribunal and the Federal Court in a large number of cases has been to regard the matters to which the Tribunal may have regard when considering whether special circumstances exist as unconfined. Although it dealt with a somewhat different provision to s. 101 of the Administration Act, the following passage from the decision of this Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 3 is often cited in this kind of context:

"An expression such as 'special circumstances' is by its 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 on the context in which they occur. For it is context which allows one to say that the circumstances of one case are markedly different from the usual run of cases. That is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be regarded as special".

1. The decision of the Tribunal in Beadle was affirmed by the Full Court of the Federal Court on appeal: [1984] AATA 176; (1985) 7 ALD 670. While the Court recognised that it was not possible to lay down precise rules as to what constituted special circumstances, the expression "unusual, uncommon or exceptional" was not, as Hill J noted in Dranichnikov v Centrelink (2003) 75 ALD 134; [2003] FCAFC 133 at [65], actually affirmed by the Full Court.
2. In Secretary, Department of Family and Community Services v Allan [2001] FCA 1160; (2001) 116 FCR 1 at [17] Heerey J said, in the context of the statutory predecessor to s. 1184K of the Social Security Act:

"It is not sensible to lay down precise limits or precise rules about what may constitute special circumstances: Beadle v Director-General of Social Security [1984] AATA 176; 7 ALD 670 at 673; [1984] AATA 176; 60 ALR 225 at 228. Ill health financial circumstances and the unfairness of a strict application of the Act are some matters which may in an individual case, constitute special circumstances Kirkbright v Secretary, Department of Family and Community Services [2000] FCA 1876; (2000) 106 FCR 281 at 284, 288; see also Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596; (1999) 95 FCR 64 at 71."

1. Similarly, in Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545 Kiefel J said, in a passage she again adopted in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67; (2002) 116 FCR 348 at [19]:

"The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case (at ALR 229 ; ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this 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. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied."

1. In Re Fuller and Secretary, Department of Family and Community Services (2004) 83 ALD 152; [2004] AATA 615 at [27] Downes J expressed the view that both hardship and unfairness can form the basis of exercising the discretion, in the context of s. 1184K of the Social Security Act.
2. The above comments reflect the approach that was taken in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 in the context of s. 1237AAD of the Social Security Act, which is in materially the same terms as s. 101 of the Administration Act.
3. The only limitation apparent from s. 101(b) of the Administration Act is that the special circumstances are not constituted by financial hardship alone. That, of course, does not make financial hardship irrelevant if there are other factors which suggest that there are special circumstances.
4. In some cases special circumstances can arise in whole or part from the manner in which the Secretary or the Secretary's delegates administer the relevant legislation. This was the case in Re Reardon and Secretary, Department of Family and Community Services [2002] AATA 33. In that case the Tribunal had regard, in the context of s. 1237AAD of the Social Security Act, to the administrative error which caused the debt to arise when determining that there were special circumstances that made it desirable to waive half the debt.
5. The decisions of the Tribunal in Brown v Secretary, Department of Family and Community Services [1999] AATA 113 and Castle v Secretary, Department of Employment, Training and Youth Affairs [1999] AATA 176, also recognise that administrative error by the Commonwealth's officers can be taken into account in determining whether there are special circumstances that make it desirable to waive a debt. However, in both of those cases, and in Reardon, the relevant administrative error was only one of a combination of factors which led the Tribunal to consider that there were special circumstances that made it desirable to waive the relevant debt. In contrast to those cases, in the present case the Respondent has confined her reliance to the administrative errors of the Secretary's delegates, and her response to them, as giving rise to special circumstances which make it desirable to waive the debt.
6. In Tubic and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 13 at [30] I said, in similar circumstances to the present case:

"I do not exclude the possibility that there might be cases where administrative error, taken alone, will give rise to special circumstances which make it desirable to waive a debt under s. 101 of the Administration Act. However, waiver under s. 101 of the Administration Act will not necessarily be appropriate in all circumstances in which administrative error causes or contributes to a debt being incurred. There must be something in the administrative error that gives rise to what may be properly regarded as special circumstances. In that regard it should be noted that the experience of the Tribunal has been that administrative error by the Respondent's delegates is, unfortunately, far from unusual. More importantly, where special circumstances arise from administrative error of the Commonwealth, there must be something about the administrative error that makes it desirable to waive the debt. Often that will involve some unfairness or hardship to the person who received the payment if repayment were to be required."

1. I consider that statement of principle to be equally applicable to the present case. It follows that I do not necessarily accept the Secretary's submission that administrative error alone can never constitute special circumstances which would justify the waiver of a debt under s. 101 of the Administration Act. However, ordinarily something more will be required.
2. It is also to be noted that administrative error of the kind reflected in the Respondent's case is far from unusual, and is a common feature of most of the cases which come before this Tribunal. So much has been noted in a number of decisions of the Tribunal. That is a sad reflection on the manner in which the relevant legislation is administered, but it remains that fact that administrative error is common. It might be thought undesirable that the Secretary should be able to rely on common past administrative errors by his delegates to resist waiver on the grounds of special circumstances. However, Parliament has specifically addressed the circumstances where debts resulting solely from administrative error of the Commonwealth are to be waived, in s. 97 of the Administration Act. To conclude that administrative error will of itself generally not constitute special circumstances is consistent with Parliament having made that separate provision.

The Respondent's Case as to Special Circumstances

1. As noted above, the Respondent does not contend that her personal or other circumstances, or financial hardship which would result from recovery of the debt, give rise to any special circumstances which would enliven s. 101(b) of the Administration Act. Rather, she points to a failure by the Secretary's delegates to properly administer the relevant legislation and contends that this failure caused the debt to be incurred. The manner in which the debt was incurred was said to constitute special circumstances which make it desirable to waive the whole of the debt.
2. The Respondent received money to which she was not entitled, and has the capacity to repay that money. I am unable to find that the repayment would occasion any significant financial hardship to the Respondent, particularly when her current financial position is compared to that of many recipients of social security benefits such as parenting payment. That she has received the overpayment is not in any way her fault, and she has taken all steps reasonably open to her to avoid a debt being incurred. However, I do not regard the nature of the administrative error to be unusual or to give rise to unfairness or hardship of a kind that would justify waiving the Respondent's FBT debt.

1. Taking all of the circumstances of the present case into account, I am unable to find special circumstances which make it desirable to waive the whole or any part of the debt under s. 101 of the Administration Act. It follows that I do not consider that the debt, or any part of the debt, ought to be waived under s. 101 of the Administration Act.

1. For the above reasons, the Tribunal sets aside the decision of the SSAT made on 18 January 2007 and substitutes a decision that the decision of the Secretary, to raise and recover overpayments of family tax benefit of $8,837.64, is affirmed.

I certify that the 50 preceding paragraphs are a true copy of the reasons for the decision herein of Ms LR Tovey, Member

Signed:...................[Sgd Ms C Skinner]..................................