Issue 2 - Are there grounds for write off or waiver of recovery of all or part of the debt?

1. Having determined that there is a debt, I have considered whether the debt should be recovered. Division 4 of Part 4 of the Administration Act deals with non-recovery of debts. Usually, a debt must be repaid unless the law provides otherwise. As referred to by the Applicant in their SFIC, French J (as he then was) recognised this general premise in Secretary, Department of Social Security v Hales [1998] FCA 219 ('Hales') where it was stated as follows:

From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.

1. Section 95 of the Administration Act deals with the write off of a debt, section 97 of the Administration Act allows for waiver of a debt which is caused solely by administrative error and section 101 of the Administration Act allows a debt to be waived due to special circumstances.

1. Write-off temporarily suspends recovery. Pursuant to section 95 of the Administration Act, recovery of a debt can be written off only if certain strict conditions are met, such as if the person's whereabouts are unknown, they have no capacity to repay the debt, or it is not cost effective for the Commonwealth to take action to recover the debt. Subsection 95(4) of the Administration Act relevantly provides that if a debt is recoverable by means of deductions from a social security payment or family assistance payments, then the person is taken to have capacity to repay the debt unless recovery would cause severe financial hardship. I find that section 95 of the Act does not apply to the Respondent's circumstances as none of the requirements which would allow for write-off of the debt apply.

1. Section 97 of the Administration Act provides as follows:

(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. In the AAT decision of Ward and Secretary, Department of Family and Community Services [2000] AATA 212, Forgie DP held that the word 'solely' meant 'exclusively', 'only' or 'to the exclusion of all else'. Specifically, at paragraph 47 of the decision, Forgie DP stated:

This means that the Secretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor ...

1. The Applicant contended that there was no sole administrative error on the part of the Commonwealth, for the following reasons:

(a) The Respondent estimated her income for the 2022-23 income year to be less than her actual combined adjusted taxable income which resulted in an overpayment of CCS;

(b) The Respondent's representative stated before the AAT on first review as referred to in the AAT decision at [11], that she did not dispute that she had been overpaid and the Respondent's adjusted taxable income was underestimated due to a bonus her partner received;

(c) The Secretary contends that the Respondent was aware during the 2022-23 financial year that her and her partner's earnings would affect her CCS, and notes the conversation between her and the Agency on 8 January 2024 where she stated that she had tried to keep her income and activity statements up to date so that they would not end up with a debt, as she was already on a payment plan for the previous year; and

(d) Whilst the Respondent claims that the reason her combined adjusted taxable income was over the upper income threshold limit for CCS was due to her partner receiving a $12,000 bonus for the 2022-23 financial year, the Secretary notes that the Respondent did not update her income estimate for almost six months between 4 January 2023 and 30 June 2023, when she would have arguably been aware of her partner's bonus.

1. The Respondent submitted that Centrelink did not adequately inform or warn her about nearing the CCS limit. The Respondent submitted this lack of communication was a critical procedural failure that contributed to their overuse of the subsidy. The Respondent submitted that they made continuous efforts to ensure compliance by updating their income throughout the year, and that this is evidenced by the fact that an overpayment has never occurred before. The Respondent submitted that the flawed system has disproportionately impacted them and makes it difficult to track their subsidy usage.
2. In relation to the debt, I am satisfied that the debt did not arise as a consequence of sole administrative error. Rather, the debt arose due to the fact that the Respondent's and her husband's adjusted taxable income for the 2022-23 income year was higher than the upper limit threshold for the income year for entitlement to CCS. There was no administrative error on the part of the Applicant. It follows that waiver cannot occur pursuant to section 97 of the Administration Act.
3. The Respondent in this matter stated that it was an error by Centrelink as they were not adequately informed that they were nearing the limit for the payment of CCS. I find that the Respondent was sent letters during the 2022-23 income year which gave information regarding the amount of CCS payable during the income year.[9] These letters refer the Respondent to the Services Australia website for further information. While the letter itself does not provide detailed information and the information provided to recipients of child care subsidy could be more detailed or more easily accessible, I am not satisfied that this is an administrative error by Centrelink. As I do not find there was sole administrative error, it is not necessary to, and I have not considered whether the overpaid amounts were received in good faith by the Respondent.

1. Section 101 of the Administration Act provides for waiver of recovery of all or part of a debt as follows:

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. I have considered the circumstances of the Respondent's reporting of income estimates. The AAT on first review found that the Respondent did not knowingly fail to comply with a provision of the family assistance law or make a false statement. The Applicant also submits that they do not contest this finding. I am satisfied that the Respondent's estimate of income was made to the best of her ability at the time they were made.
2. In Re Callaghan and Secretary, Department of Social Security [1996] AATA 413; (1996) 45 ALD 435, 444 [48] the AAT commented:

There is nothing in s 1237AAD which suggests that the word 'knowingly' should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. The actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission...

1. Based on the evidence of the Respondent, I find that the debt did not result wholly or partly from the Respondent or any other person knowingly making a false statement or false representation or knowingly failing or omitting to comply with a provision of the family assistance law.
2. As regards "special circumstances", the term is not defined in the legislation. The Federal Court and the AAT have considered the issue of special circumstances on a number of occasions. In every case, the individual circumstances of the case were examined to determine whether they were such that it would be unjust, unreasonable or inappropriate for the debt to be recovered.
3. In Groth v Secretary, Department of Social Security [1995] FCA 1708, Kiefel J (as she then was) noted as follows:

The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case (229), 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.

1. The Federal Court in Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25, 17 [33]; [2007] FCA 25; 100 ALD 9 emphasised that it is not the intention of Parliament that the exercise of this discretion be confined to the "exceptional" case, but rather that there is something that distinguishes the case from the ordinary or usual case. The Full Federal Court in Dranichnikov v Centrelink [2003] FCAFC 133, 148 [66] determined that whether there are special circumstances in a particular case depends on whether there are circumstances that would distinguish the case from the usual.
2. The Respondent submitted that there are a number of matters that should be taken into account and accepted as constituting special circumstances in her case that make it appropriate to waive the debt. The Respondent stated that her mental health has been impacted since the birth of her child in August 2020 and she suffered from post-natal depression. She stated that she was treated regularly for around 18 months until around the middle of 2022 with therapy and medication, only having stopped taking medication in the middle of 2024. The supports and medication have allowed her to continue with employment. The debt has caused stress and anxiety on her and the relationship with her husband. They have both sought additional support through couples counselling made available through their employer's assistance programs.
3. In respect of other health issues, the Respondent stated that her son has an osteochondroma on his shoulder which requires surgical removal due to it being close to a nerve and impacting the growth plate in his shoulder. While the majority of the cost will be covered through her health insurance, they will have an out-of-pocket cost of a few thousand dollars.
4. In respect of her and her husband's employment, she stated that her husband lost his job in February 2020 and she was also made redundant in August 2020. Her husband was able to find employment in August 2020 and she restarted work in September 2021. They have both maintained employment since this time. The Respondent confirmed that their combined income for the 2023-24 income year was $366,401 and they estimated their income for the 2024-25 income year at $420,000. The Respondent also confirmed that she received a promotion with her current employer in August 2024.
5. The Respondent also submits they have a mortgage of just over $1.3 million. In 2023 their mortgage repayments nearly doubled after the fixed rate repayments expired. A substantial part of their income at the time was dedicated to covering the mortgage repayments. Their position has slightly improved with the most recent interest rate reduction. They are also repaying a credit card debt of around $3,100 and a car loan of approximately $20,000. They have a little under $16,000 in savings. They are marginally in a better position but describe their financial circumstances as one of financial fragility in meeting their basic living costs. They submitted that the debt now threatens their ability to maintain a small buffer of income over expenses and exacerbates their financial stress.
6. They have been reliant on child care due to not having any family support networks, as the Respondent's parents live abroad and her husband's father passed away in 2023 after a long illness. The Respondent has also submitted that the debt is grossly disproportionate to the small amount, around $225, by which their income was above the upper income threshold for the 2022-23 income year. They submitted that it is a large financial penalty which they feel is punitive.
7. The Applicant's written and oral submissions as to why there are not special circumstances in the Respondent's case that make it appropriate to waive the debt included as follows:

(a) The Respondent's circumstances as a whole are not sufficiently unusual, uncommon or exceptional so as to make her case markedly different from the usual or ordinary run of the cases and otherwise 'special.' Rather, the Secretary contends that the Respondent's claimed special circumstances are more akin to the normal vicissitudes of life and therefore not 'special';

(b) The job losses experienced by the Respondent and her partner, mortgage repayments and family expenses are normal vicissitudes of life;

(c) The Respondent's recent combined adjusted taxable income for 2023-24 financial year was $366,401 and she and her partner are still presently both employed, the Secretary contends that the Respondent's finances are not straitened; and

(d) The Respondent's commencement of mental health treatment due to financial strains is also a normal vicissitude of life and is not sufficiently unusual, uncommon or exceptional. The Respondent is managing her anxiety and depression conditions, it is not uncommon or unusual for a person to be mentally impacted by financial issues, and there is no medical evidence available which indicate that her situation is more extreme than what other families are likely to be experiencing in the current economic climate.

1. In support of the Applicant's contention that the circumstances of the Respondent did not constitute special circumstances, I was referred to a number of AAT decisions. I have referred to the following decisions:
   • In Burgess and Secretary, Department of Social Services [2017] AATA 525 [44] ('Burgess'), where the AAT found that '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'.[10]
   • In Bisceglie and Secretary, Department of Social Services [2016] AATA 294 ('Bisceglie'), where the AAT stated:

Whilst the Tribunal acknowledges that the circumstances in which Ms Di Bisceglie found herself in the relevant period may have been challenging, including juggling running a business, dealing with "many problems" in managing the business (including the need to re-program a new cash register, delays in lodging the quarterly BASs to the ATO), working long hours (i.e. 7am to 4.30pm, six days a week), dealing with associated paperwork, having family health issues (i.e. helping care for her father who was diagnosed with Alzheimer's disease) and caring for small school-age children, the Tribunal finds that none of those circumstances are so "unusual" or "uncommon" so as to make them "out of the ordinary" or "special".[11]

• In Strange and Secretary, Department of Employment and Workplace Relations [2006] AATA 239 ('Strange'), where the AAT stated:

So I think, in this case, the evidence simply does not sustain a special circumstances waiver on the part of the applicant. I well recognise the applicant has suffered a series of adverse events in her life. She has suffered the death of her father, a divorce, and probably other things I am not really aware of, which make her feel that her position is out of the ordinary, but, as unfortunate as her circumstances are, in terms of my job as a review decision maker, I am not satisfied that we actually activate the threshold for special circumstances waiver.[12]

1. The Applicant further submitted that the consideration that the application of the 2022-23 upper income threshold limit on the Respondent was unjustly harsh by the AAT first review does not weigh in favour of any special circumstances. The Applicant submitted that while the Respondent's adjusted taxable income was only over the upper income threshold by a relatively small amount, it was Parliament's intention for that financial year that people earning above that limit should not be entitled to any CCS. This is also explicitly reflected in the Guide for Australian Government Payments. As such, the Applicant submitted that no matter how harsh the Respondent may consider the decision to be, this factor by itself, does not weigh in favour of finding special circumstances to waive the CCS debt in whole or part.
2. In support of this submission, the Applicant referred to the decision in Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 [23], [33] ('Chamberlain') where Kiefel J (as she then was) stated as follows:

It may generally be accepted that the statutory provisions here in question were intended to operate upon factual bases which were assumed and were not intended to reflect the true position. This is so with respect to the figure of fifty per cent taken of the lump sum compensation payment; the amount of basic rate of pension used to divide it; the period during which double payment is assumed to have occurred; and perhaps even the commencement of the period when the loss of earning capacity arose, which would normally be taken to be the date when the compensable injury was occasioned to the person.

In the present case the Tribunal considered that the application of the formulae was unfair to the applicant because she would have to pay more than she had received by way of compensation for economic loss, indeed twice as much. That factor will however be present in most cases and is an aspect of the application of the formulae. In my view it cannot, by itself, amount to a special circumstance, one out of the ordinary.

1. The decision in Chamberlain concerned the application of subsection 1184(1) of the Social Security Act 1991 (Cth) (now section 1184K) and the treatment of a compensation payment as not having been made if the Secretary thinks it is appropriate to do so in the special circumstances of the case. The Applicant contends that the reasoning as to the application of a legislative formula, even when it produces a harsh result, cannot by itself amount to special circumstances, and is equally applicable in the context of these proceedings.[13] I accept and am bound by the proposition that a harsh result due to the application of a legislative formula cannot by itself amount to special circumstances.

1. I accept the matters raised by the Respondent relating to her mental health. I am satisfied that the Respondent and her husband are both still working. I accept the Respondent's submissions that the Respondent's medical circumstances have placed some difficulty on her and the family, but I am not satisfied that they are sufficiently unusual, uncommon or exceptional so as to make her case different from the usual or ordinary run of cases.
2. In Gammaldi and Secretary, Department of Social Services (Social services second review) [2016] AATA 1028 ('Gammaldi'), the AAT found that even where the Applicant had had a difficult year, with family health issues, business challenges, and increased responsibilities, these did not constitute uncommon or unusual occurrences and were not "special circumstances". The circumstances in this matter are analogous to those in Gammaldi and Burgess, Bisceglie and Strange referred to above. I note that the Respondent's and her husband's financial circumstances have been a difficult balancing act, but they are not straitened. While they have experienced job losses and increased mortgage repayments, I find that these circumstances, as submitted by the Applicant, are more akin to the normal vicissitudes of life and therefore not 'special'.[14]
3. I have taken all matters into account, both individually and cumulatively in relation to the Respondent's circumstances. I am not satisfied that the Respondent's circumstances considered individually or cumulatively make it unfair for the overpaid CCS to be repaid nor that it would be unjust, unreasonable or inappropriate to recover the debts. The Respondent received in excess of her entitlement and I am not satisfied that there are special circumstances in this case that make it desirable to waive the debt or any part thereof.
4. It follows that section 101 of the Administration Act does not apply. There being no other relevant legislative provisions, I conclude that the debt must be recovered.

1. The Tribunal sets aside the decision under review and, in substitution, decides that the Respondent has incurred a CCS debt of $18,040.74, and that the debt is recoverable.

[1] Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth).

[2] T-documents, pages 1 to 207; Bank Statements pages 1 to 427; Respondent's written submissions pages 1 to 19.

[3] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 640; G v Minister for Immigration and Border Protection [2018] FCA 1229.

[8] Guide to Australian Government Payments July 2022.

[10] see also Bokhoree and Secretary, Department of Social Services (Social services second review) [2017] AATA 871 at paragraph 48.

[11] [2016] AATA 294 at paragraph 27.

[12] [2006] AATA 239 at paragraph 56.

[13] See also Viscuso; Secretary, Department of Social Services and (Social Services second review) [2021] AATA 381.

[14] Re NMVQ and Secretary, Department of Education [2024] ARTA 441 at paragraph 72.