AHAMED v Secretary, Department of Social Services
[2020] FCCA 1245
•20 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| AHAMED v SECRETARY, DEPARTMENT OF SOCIAL SERVICES | [2020] FCCA 1245 |
| Catchwords: ADMINISTRATIVE LAW – Appeal of Administrative Appeals Tribunal decision – social security entitlements – relevant considerations on application for waiver of debt – importance of comparison of notional entitlement to actual payments when considering waiver – likely entitlements for relevant period (if properly sought) not subject of findings – arguable claim that notional entitlements for relevant period would have been greater than benefits actually received – appeal allowed. |
| Legislation: Social Security Act 1991 (Cth), ss.24, 739A, 1070C, 1218, 1237AAD, 1237AAC Social Security Legislation Amendment Bill (No 4) 1991 |
| Cases cited: Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25. PZHC and Secretary, Department of Social Services (Social services second review) [2015] AATA 762 Robinson and Secretary, Department of Social Services [2014] AATA 446 |
| Appellant: | MOHAMMAD AHAMED |
| Respondent: | SECRETARY, DEPARTMENT OF SOCIAL SERVICES |
| File Number: | MLG 261 of 2020 |
| Judgment of: | Judge Riethmuller |
| Hearing date: | 26 February 2020 & 1 April 2020 |
| Date of Last Submission: | 14 April 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 20 May 2020 |
REPRESENTATION
| The Appellant appeared in person. |
| Solicitors for the Respondent: | Australian Government Solicitor |
ORDERS
The Appeal be allowed.
The decision of the Administrative Appeals Tribunal (General Division) made 13 December 2019 be set aside and the matter be remitted for rehearing according to law.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 261 of 2020
| MOHAMMAD AHAMED |
Appellant
And
| SECRETARY, DEPARTMENT OF SOCIAL SERVICES |
Respondent
REASONS FOR JUDGMENT
Background
The appellant filed an appeal of a decision of the Administrative Appeals Tribunal (‘the Tribunal’) dated 13 December 2019 with respect to social security entitlements. The appeal was lodged in the Federal Court of Australia on 3 January 2020 and subsequently transferred to the Federal Circuit Court of Australia for hearing.
The appellant raises three questions of law framed in his Notice of Appeal as follows:
a)Should the appellant receive the single rate of Disability Support Pension (‘DSP’) during the period of April 2017 until 28 April 2019 based on the special circumstances?
b)On the basis of those special circumstances, should the debt be waived in the period of April 2017 until 26 February 2018?
c)Should the rent assistance be paid to the appellant during the period of January 2016 until February 2018, due to special circumstances?
The grounds of the application are simply listed as:
a)Serious financial hardship;
b)Personal difficulties; and
c)Special circumstances.
As the appellant was unrepresented I did not require him to carefully particularise his grounds, but proceeded to hear his submissions as best he was able to present them.
The Tribunal decision
The Tribunal affirmed a decision with respect to declining the backdating of rent assistance and set aside a decision with respect to the waiver of a disability support pension debt of the appellant. The Tribunal remitted the matter to the Secretary of the Department of Social Services (‘the Department’) for the purpose of waiving $2,000 from the appellant’s total debt, on the basis that special circumstances had been found.
The relevant background facts are summarised by the decision-maker in the following chronology (see paragraphs [5] – [14] of the Tribunal Reasons for Decision (‘the decision’):
5. On 29 November [2012], [the appellant] was granted the DSP at the single rate.
6. On 9 November 2015, [the appellant] advised Centrelink that he had married in Bangladesh on 12 February 2015 and his wife remained in Bangladesh indefinitely.
7. On 23 November 2015, Centrelink advised [the appellant] that he would be paid a single person DSP even though he had a partner, as his partner was not residentially qualified to receive a payment and he met the criteria for financial difficulty. He was advised that he was required to inform the Centrelink if any circumstances related to either him or his partner changed.
8. On 17 December 2015, [the appellant] departed Australia to complete a year study towards his degree in Bangladesh and subsequently returned to Australia on 16 February 2017.
9. On 25 July 2016, [the appellant]’s wife was granted a subclass 309 visa (provisional partner) which provided her with the right to work in Australia.
10. On 5 April 2017, [the appellant]’s wife arrived in Australia and they commenced living together.
11. On 15 January 2018, [the appellant] advised Centrelink of a change in address and that he had been paying the rent at the address since 2 February 2017. Centrelink issued [the appellant] a rent certificate for completion.
12. On 25 January 2018, [the appellant] lodged a rent certificate, advising Centrelink that he did not share accommodation with other people, with Centrelink inclusive of a copy of his lease agreement and he was granted rent assistance from 15 January 2018 as a component of his DSP.
13. On 5 January 2018, [the appellant]’s son was born and subsequently on 26 February 2018 [the appellant] made an application for family tax benefit (FTB). FTB was finally granted on 20 September 2018 inclusive of rent assistance, [the appellant] received back pay for the period 5 January to 20 September 2018. [the appellant] and his wife have subsequently separated.
14. On 7 December 2018, a departmental Authorised Review Officer (ARO) reviewed the decision to raise and recover a DSP debt of $6,795.88 and affirmed the decision as [the appellant] had not advised Centrelink that his partner had entered Australia and commenced living with him. The ARO found that CJCY had been overpaid from 5 April 2017 to 16 April 2018 by $6,795.88 as this was the difference between the single rate of payment compared to the partnered rate of payment. The ARO also determined that special circumstances did not exist to enable the debt to be waivered.
Issue 1: Should the appellant have received the single rate of DSP?
The Tribunal went on to consider whether, in accordance with section 24 of the Social Security Act 1991 (Cth) (‘Social Security Act’) he should not be treated as a member of a couple for Social Security purposes during the period of April 2017 until 28 April 2019. The Tribunal noted that the appellant was a member of a couple, as he was legally married and residing with his wife: see paragraph [31] of the decision. The Tribunal outlined the arguments (at paragraph [32] of the decision), as follow:
· they had the ability to pool and share resources, enjoy the economies of scale and were not prevented from doing so;
· [his]wife’s visa afforded her work rights in Australia and it was open to her to obtain employment;
· [the appellant] had access to Social Security and family assistance payments;
· there was no evidence of financial hardship in the relevant period;
· [the appellant] and his wife were not separated by illness or imprisonment nor were they no longer living in separate countries from 5 April 2017;
· there were no unexpected changed circumstances outside of [the appellant]’s control; and
· it was not for the taxpayer to subsidise or bear the costs of [the appellant]’s wife’s choice to move to Australia.
When the appellant notified Centrelink that he was married, his wife was still living overseas. At that time the Department paid the single rate of pension, presumably on the basis that it was not then open to his wife to come to Australia, as she did not then have a visa, and therefore they could not pool their resources. The Tribunal did not accept the appellant’s claim that he had notified Centrelink when his wife moved from Bangladesh to live with him in Australia.
The issue in dispute was whether there was a ‘special reason’, pursuant to section 24(1)(c) not to treat the appellant as being a member of a couple, following his wife’s arrival in Australia.
The appellant made submissions that once residing in Australia, his wife was precluded from either working or accessing Centrelink benefits due to a lack of English language skills and her illness during pregnancy (at paragraph [34] – [35] of the decision).The Tribunal noted that although the appellant’s wife was not working at the time she was not precluded from working in Australia or accessing Centrelink benefits. The Tribunal found that as the appellant and his wife were not separated by illness or imprisonment or living in separate countries there was no special reason for him to “not be considered a member of a couple” pursuant to section 24 the Social Security Act: see paragraph [38] of the decision.
The appellant’s argument turns on the definition that should be applied to the phrase “a special reason” as it appears in section 24(1)(c) of the Social Security Act. This section has been considered in a number of cases.
In Brian LewisGroth v Secretary, Department of Social Security [1995] FCA 1708, Kiefel J (as her Honour then was) considered the meaning of ‘special circumstances’ (albeit with respect to a different provision) saying:
12. The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss: Beadle's case [Beadle v. Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225] (229), and for present purposes it is sufficient to observe that it would require something to distinguish [the 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.
There is a series of cases where the circumstances of the parties, on a practical level, meant that they were unable to pool resources in the relevant sense:
a)In Hawkins and Secretary, Department of Social Security [1996] AATA 927; (1996) 44 ALD 651 (‘Hawkins Case’) the appellant’s wife was ineligible to work in Australia, ineligible for a pension and had no savings or assets. Blow DP (as his Honour then was) said (at paragraph [6]):
6. … Under s.1064-B1 of the Act, the rate of pension payable to a member of an illness separated couple, a member of a respite care couple, or a partnered person whose partner is in gaol, is the same as that payable to a pensioner who is not a member of a couple. The evident policy behind the relevant legislative provisions is that ordinarily couples should be expected to pool their resources and practise economies of scale; that those expectations should not apply to couples who are separated by illness or imprisonment; but that there would have to be some special reason not to apply those expectations to members of other couples. In fact I was referred to the explanatory memorandum to the Social Security Legislation Amendment Bill (No. 4) 1991, which included the following paragraph:
“There is no clear justification for paying a higher rate of pension/benefit or pharmaceutical allowance to a member of a couple simply because the partner does not also receive income support. For example, the partner might still be earning a living in the workforce (eg, where a wife qualifies for age pension ahead of her husband because of the age differential) or the partner may have foreign pension income or, yet again, the partner may be prevented from receiving income support because he or she is on strike.”
Blow DP went on to find (at paragraph [14]) that:
14. One must not lose sight of the fact that the discretion has to be exercised in the context of the Social Security Act, and that therefore the individuals involved will ordinarily be impecunious. However I believe that the extreme impecuniosity of the appellant’s wife, coupled with her inability lawfully to earn any income, are special factors which take this case out of the ordinary run of cases. This is a case in which one could not reasonably, or even possibly, expect there to be a pooling of resources by husband and wife. The wife has no resources at all. I am therefore satisfied that the appellant’s wife’s total lack of resources constitutes a special reason in this particular case for the appellant not to be treated as a member of couple.
b)In Eugeniusz Galewski and Secretary, Department of Social Security [1998] AATA 908; (1998) 54 ALD 569, (‘Galewski’s case’) Senior Member Muller applied the reasoning in Hawkins’ Case (at paragraph [11]) and found that ‘the usual advantages of pooling of resources for married couples do not apply in Mr. Galewski's case because of his wife's lack of resources, income and prospects’: see paragraph [13].
c)In Boscolo v Secretary, Department of Social Security [1999] FCA 106, French J (as his Honour then was) considered the provision in some detail, saying:
18. The word “special” conditioning “reasons” or "circumstances" guards the entrance to the exercise of many different statutory discretions. It is generally futile to search for its meaning in terms of other words. It is in essence instrumental, a direction to the decision-maker that the discretion it constrains is not lightly to be enlivened. … The core of the requirement for "special circumstances" or "special reasons" is that there be something unusual or different to take the matter the subject of the discretion out of the ordinary course - Minister for Community Services and Health v Chee Keong Thoo [1988] FCA 54; (1988) 78 ALR 307 at 324 (Burchett J). But that does not require that the case be extremely unusual, uncommon or exceptional - Secretary, Department of Social Security v Hodgson [1992] FCA 338; (1992) 108 ALR 322. In Beadle (supra) the Full Court, having concluded that the term "special" was sufficiently well understood not to require a judicial gloss said the matter was one for the decision-maker, in that case the Director-General of Social Security.
That matter was remitted for reconsideration, in circumstances where the appellant’s wife remained in Perth while the appellant moved to Sydney to pursue a family law dispute with respect to his children from a former relationship.
d)In Cocks v Centrelink [2000] FCA 1248, O’Loughlin J found that the appellant would not benefit from a pooling of resources, even if he lived with his wife in the Philippines, ‘for she has nothing to contribute to the pool’: see paragraph [22].
In other cases, a practical assessment of the parties circumstances showed a real capacity to pool resources:
a)In Nicolaas; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and [2009] AATA 416, the appellant’s wife came from overseas but she had an earning capacity.
b)In Brawn and Secretary, Department of Social Services (Social Services second review) [2017] AATA 873 the appellant was treated as being a member of a couple when residing with his wife in Vietnam, as she had employment in Vietnam.
c)In Ekert and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 701, the appellant’s wife had no work rights, however the couple had substantial savings.
d)In Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084 (‘Kazmierczak’s Case’) and Pascoe and Secretary, Department of Social Services [2013] AATA 745 (‘Pascoe’s Case’) the appellant’s partner had an income that could be shared, even though the appellant was reluctant to ask for or the partner to provide support. In all of these cases there was, on a practical level either assets or potential earnings to share.
A number of cases have emphasised the practical application of the test:
a)In Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143 (‘Holt’s Case’) Professor RM Creyke (at paragraph [32]), pointed out that the section must be interpreted in context, noting the terms of the Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991 which says (at page 17):
32. … there is justification in paying a higher rate to an unpartnered person than to a member of a couple if both members of the couple are living together. This justification is based on the premise that the unpartnered person does not enjoy the same economies of shared living costs as does the member of a couple in those circumstances. If the economies of scale are not available to the member of the couple because he or she is living apart from his or her partner because, for example, of the illness of one or both members of the couple, then each would face similar living costs as an unpartnered person.
34. These extracts indicate two reasons for the partnered rate: that there are economies of scale in two people living together; and that because there has been a pooling of resources, the two persons are better off financially because they pool their joint income and assets.
Prof Creyke found that the appellant’s wife had no resources or earning capacity and therefore section 24 of the Social Security Act was satisfied.
b)In Kazmierczak’s Case Barker J said (at paragraphs [42] and [42]):
41. … there is a particular focus under the Act on the practical ability of the resources of the partner being available for pooling with the resources of the person holding the pension. This fundamentally derives from s 1064-A2 of the Act which provides that where two people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis.
42. It stands to reason that if for some legal or other practical reason the partner member of the couple cannot be treated as sharing income and assets then there is a ground for exercising the discretion under s 24 so as not to treat the holder of the pension as a member of a couple who are capable of sharing resources. In that regard, in effect, the s 1064-A2 expectation that there will be pooling is negatived.
The desire of the appellant in Kazmierczak’s Case to avoid having to seek support from his wife was insufficient to satisfy section 24.
c)Recently, in Pascoe’s Case the Member said (at paragraph [38]), that:
[… ] where one member of a couple has nothing to contribute to the pool of resources by way of income or assets, may be a practical reason why the person may not be treated as sharing resources, or where it may not be reasonable for the other member of the couple to be expected to seek their support.
Ms Pascoe had sought a single rate of benefit, even though she lived with her partner who worked and received a partial benefit. The thrust of the argument, which was rejected, was that the couple kept their finances separate and that Ms Pascoe’s partner did not provide any financial support.
What emerges from these cases is that couples are expected to pool resources. In the ordinary run of cases this presents few difficulties for decision makers, as a spouse will be entitled to half of a couple’s pension unless they have other resources or income (whatever category of benefit or pension one considers). That a couple in this situation have expenses greater than income, or choose lifestyle arrangements that cost more than their income amount, is not generally a special circumstance. Where, however, one member of the couple has no work rights and no assets or pension, the section is usually satisfied. The difficulty arises where the lack of pension or employment is not simply a legal impediment (such as a visa condition) but rather a practical one. In these circumstances careful consideration of the specific circumstances of the couple is required.
In the context of the appellant’s case the question arose as to whether his wife could in practice work, given her lack of English and illness, and if not, whether she was actually entitled to some form of government benefit. As she had no resources of her own, at least one of these factors was necessary to enable her, on a practical level, to pool her resources with the appellant. This question is not sufficiently answered by merely pointing to a visa condition that provides legal permission to engage in employment, nor a legal discretion that may result in payment of a benefit. Rather, some consideration was required of whether the appellant’s wife could ‘on a practical level’ work or whether she was likely to fall within the discretion for payment of a benefit or pension. Where both parties are Australian citizens living in Australia this question generally admits of a simple answer, as anyone without assets and unable to find work is generally entitled to a form of benefit (although see the unusual features of Holt’s Case).
In the present appeal, the Tribunal identified the case of the appellant in its reasons, saying:
34. [The appellant] argued strenuously that he did not expect the taxpayer to bear the burden of supporting his wife. He also argued that she had never claimed Centrelink benefits, was unable to work at the time because of her English language skills and was prevented from working as she suffered significant illness during her pregnancy.
The Tribunal did not identify the evidence relied upon, but made findings in its decision that:
38. The Tribunal having assessed all the information found that [the Appellant] was a member of a couple during the period 5 April 2017 to 16 April 2018 as he and his wife were living together in Australia. It also found that they had the opportunity to pool their resources as a couple and although his wife was not working at the time she was not precluded from working in Australia or accessing Centrelink benefits. Additionally, the Tribunal found that there was no special reason for [the appellant] to not be considered a member of a couple in accordance with section 24 of the Act, as he and his wife were not separated by illness or imprisonment nor were they living in separate countries.
This was not a case where it was suggested that the wife had other financial resources (such as assets or a foreign pension) or where she was making a lifestyle choice to stay at home or go on strike. In this case, although the Tribunal found that the appellant’s wife was not precluded by law from working, it did not address whether she could, ‘on a practical level’, work to earn an income that could potentially be shared. In the first tier review the member said that, ‘[t]here is no dispute that his wife was able to work, notwithstanding she was unable to find work’: see paragraph [9]. The appellant’s wife’s capacity to earn an income, as distinct from her legal rights to engage in employment, was not addressed in the Tribunal decision. Unfortunately, there is no discussion of the evidence that the Tribunal member relied upon to reach these conclusions.
In the context of this case the real question was whether there was a practical reason that the appellant’s wife could not be treated as sharing her income and assets with him. The practical problem advanced before the Member is that the appellant’s wife had no income earning capacity, nor any assets. On the appellant’s case his wife could not work due to a lack of language skills and illness. The practical inability of a spouse to earn an income was sufficient in Galewski’s Case, Cock’s Case and Holt’s Case to enliven the discretion. The Tribunal was required to make findings about the extent (if any) of the wife’s earning capacity and consider this in determining the exercise of the discretion under section 24 of the Social Security Act.
The Tribunal also found that the appellant’s wife had the right to access social security benefits at the relevant time. If she had a right to a pension or benefit, she would have a financial resource that could be shared. The appellant denies that his wife had any such entitlement, relying upon correspondence he says he received on 23 November 2015 where the Department wrote to the appellant advising him that his “partner is not residentially qualified to receive a payment”, although the letter later requested that the appellant advise the Department, should his partner start to receive any income or income support payments: see Court Book page 102. The ‘Visa Grant Fact Sheet’ provided to the appellant’s wife simply stated that, “You may be able to access a range of services offered by the Australian Government such as benefits from Centrelink or Medicare”: see Court Book pages 28 to 30. It appears likely that the appellant and his wife believed she was not entitled to a benefit.
Counsel for the Secretary argued that:
As the holder of a subclass 309 visa during the relevant period, [the Appellant’s wife] would not have been entitled to claim the range of benefits under the Act that a permanent resident might have been able to claim, but was eligible to receive a special benefit if she could prove that since arriving in Australia there were special circumstances in that there was a significant change in her circumstances beyond her control.
The statutory basis for this entitlement is not identified in the Tribunal decision, nor was it identified in the submissions of the respondent on the appeal. According to the online ‘Social Security Guide’ (at<<
‘… the holders of provisional visa subclasses 309, 310, 820 and 826 may have access to SpB, but since legislative changes introduced with effect from 1 January 2012, these visa holders must show that they are in financial hardship AND have experienced a substantial change in circumstances beyond their control after arrival in Australia.’
This appears to be a summary of the provisions in Chapter 2, Part 2.15 of the Social Security Act. Notably there seems to be ‘a newly arrived resident’s waiting period’ (see s.739A) for special benefit determinations, which appears to be a period of 208 weeks from entry into Australia. Importantly, as Counsel for the respondent identified, this waiting period does not apply if:
739A(7) … the person, in the Secretary’s opinion, has suffered a substantial change in circumstances beyond the person’s control after the person first entered Australia.
The operation of the test is discussed in several cases, including Secretary, Department of Social Security v Calin-Al Secara and Ors [1998] FCA 1510; (1998) 89 FCR 151; (1998) 51 ALD 481; 28 AAR 385; Department of Employment, Education and Youth Affairs v Daryl Ferguson [1997] FCA 663; (1997) 76 FCR 426; (1997) 147 ALR 295; (1997) 48 ALD 593; (1997) 25 AAR 195; Zandieh-Nadem v Secretary, Department of Family & Community Services [2000] FCA 1422; and Dept of Family & Community Services v Huynh [2002] FCA 112.
In this case the only factor that appears to show a ‘substantial change in circumstances’ that was beyond the control of the appellant’s wife is her illness. The Tribunal, however, did not discuss this issue or provide any reasons as to whether it found that the appellant’s wife would have been likely to satisfy the test in section 739A(7) of the Social Security Act. This highlights the distinction between the theoretical rights at law to social security, and the practical question of eligibility in the circumstances of this case.
Finding
A ground of appeal has been made out with respect to this issue. The Tribunal did not consider the appellant’s wife’s practical capacity to obtain and engage employment, nor whether any incapacity was a ‘substantial change’ in her circumstances that would give rise to an entitlement to a benefit. The determination of these issues was necessary in this factually unusual case as they went to the heart of the section 24 question: whether the appellant’s wife had any resources to share with him.
Issue 2: Should rent assistance have been paid to the appellant during the period of January 2016 to February 2018 due to special circumstances?
The appellant sought rent assistance for a period prior to February 2018. The Tribunal identified (at paragraph [61] of the decision) that the appellant first advised the Department that he was paying rent on 15 January 2018 and therefore rent assistance could not be paid for an earlier period due to the terms of the provisions of the legislation.
The appellant’s case is more complex, in that he relies upon the fact that he was in receipt of rent assistance in 2015, before he travelled to Bangladesh to study. The appellant departed Australia on 17 December 2015 and his rent assistance was cancelled on 16 June 2016. At that time the Department gave him notice of the cancellation of his rent assistance and he did not seek a review of the decision.
On 16 February 2017, the appellant returned to Australia but did not advise the Department of a change in address, or that he was paying rent. He received a number of letters advising that his pension did not include rent assistance: those letters were dated 20 February 2017, 21 February 2017 and 15 December 2017. It appears to have been only on 15 January 2018 that the appellant advised the Department of a change in address, to Seddon Victoria, when he also gave notice that he had been paying rent at that address since 2 February 2017. As a result, the Department issued the appellant a rent certificate for completion, which he returned on 25 January 2018. He was granted rent assistance from 15 January 2018.
Backdating of rent assistance is limited by section 110(1) of the Social Security (Administration) Act 1999 (Cth) which provides:
(1) … if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect:
(a) on the day on which the person so informed the Department; or
(b) on the day on which the event or change occurred; whichever is the later.
Whilst the appellant claims that the decision to cease payment of his benefits whilst he was overseas was incorrect, he still cannot obtain a backdated benefit. A review decision can only be backdated to the date that the review is requested (if the review was requested more than 13 weeks after the decision): see section 109(2) of the Social Security (Administration) Act 1999 (Cth). In this respect the decision of the Tribunal must be affirmed.
The appellant argued that he was entitled to rent assistance when living outside of Australia, as he was studying. This argument appears to rely upon section 1218 of the Social Security Act which provides for the payment of benefits when a person is studying overseas. The appellant’s disability pension appears to have been restored on 8 January 2016, once he commenced his studies in Bangladesh. It was in the middle of 2016, after the appellant had been overseas for 26 weeks that his rent assistance was cancelled. The key problem for the appellant is that section 1070C limits rent assistance to circumstances where a person is paying rent with respect to premises in Australia: see section 1070C(c). There is no evidence that the appellant was paying rent in Australia at the relevant time.
Finding
I am not persuaded that the appellant has demonstrated any error on the part of the Tribunal with respect to the rent assistance aspects of the decision. I note, however, that between his return to Australia on 16 February 2017 and his application for rent assistance on 15 January 2018, he was without rent assistance for around 11 months, which he could have claimed.
I also note that the appellant raised issues concerning Pensioner Education Supplement entitlements. This issue does not appear to have been subject to a specific objection or claim. However, it may ultimately be relevant to the discretion as to waiver, when the matter is remitted to the Tribunal.
Issue 3: Should the debt be waived?
A debt can be waived under the Social Security Act, if the test provided for by section 1237AAD is satisfied. It relevantly provides:
(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 this Act, the Administration Act or the 1947 Act; 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.
French J (as his Honour then was) pointed out that, ‘The evident purpose of section 1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness, in the event of a rigid application of a requirement for recovery of debt’: see Secretary, Department of Social Security vHales [1998] FCA 219. However, the fact that a recipient has spent an overpayment on ordinary living expenses, even if caused by the Department, is not of particular significance, provided that the Tribunal takes into account ‘the respondent’s error and the nature of the error… [and] the financial hardship the appellant might suffer if required to repay the debt’: see Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25.
Importantly, in Oberhardt v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1923 the relevance of ‘notional entitlements’ was considered. Section 1237AAC provides that debts must be waived to the extent of the amount of unclaimed entitlements, in certain specific categories (for example family payment). Spender J noted that:
59. … [Whilst] the terms of s.1237AAC do not mandate that notional entitlement cannot be considered as a relevant consideration when considering "special circumstances" in s.1237AAD (b). There is nothing in s.1237AAD or its neighbouring provisions to suggest that the limitations in s 1237AAC apply in circumstances other than specifically enumerated in s 1237AAC . To do so is impermissibly to fetter a broadly expressed discretion, by implication.
The amount of a ‘notional entitlement’ was taken into account in PZHC and Secretary, Department of Social Services (Social services second review) [2015] AATA 762 (comparing notional Newstart allowances against Austudy payments): see also Wilson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Anor [2012] AATA 154, JZWB and Secretary, Department of Social Services (Social services second review) [2015] AATA 721 The logical underpinning of these cases is that ‘the Commonwealth would, in effect, not be financially disadvantaged: see Hotop DP in Robinson and Secretary, Department of Social Services [2014] AATA 446 (at [50]).
In this present case the section was found to be fulfilled in respect of the appellant’s circumstances, as the Tribunal waived $2,000 of the debt. In its decision the Tribunal states:
59. […] found that [the appellant’s] circumstances on the whole were sufficiently unusual uncommon and exceptional as to make his case markedly different from the ordinary run of cases and therefore determined to waive a proportion of the debt. The Tribunal found that [the appellant] had contributed to his situation by failing to make a simple phone call to Centrelink around 5 April 2017 in which he could have advised of his change in circumstances, that his wife had commenced living with him in Australia, he had changed address and was paying rent at the time. The Tribunal did not think [the appellant’s] situation warranted cancellation of the whole debt as he had contributed to the making of his circumstances and he had already had benefit of moneys for which he was not entitled. However, the Tribunal determined that an amount of $2,000 was warranted to be waivered in recognition of his hardship and special circumstances.
The amount of $2,000 was struck for the waiver, by balancing the conduct of the appellant against the hardship of having a debt. In reaching this decision the Tribunal, quite properly, recounted much of the difficult personal circumstances of the appellant: see paragraphs [53]-[58] of the decision. What is not discussed is whether, had the appellant and his wife both applied to the Department (in a timely fashion) for the relevant benefits available to them, the amount that would have been dispensed by the Department would likely have been more or less than that actually paid.
It is difficult to accept that, had the appellant’s wife been paid a benefit or pension (even at half the couple rate), the total paid to the appellant and his wife would have been less than the single rate of pension paid to the appellant. It does not appear to have been in dispute that his wife had no other means of support than the appellant. In these circumstances, the failure of the appellant and his wife to apply for all possible benefits and pensions (and scrupulously comply with the provisions) may well have resulted in the Department paying less money to the household over the relevant period. In circumstances where the effect of the conduct has been to the disadvantage of the recipient and his wife (compared to what they would otherwise have received), it is difficult to understand why all of the overpayment would not be waived. It does not seem appropriate to rely upon non-compliance which resulted in a lower overall payment as a basis for declining to waive the debt, as the appellant and his wife are already worse off financially through his error or neglect. Of course, the department has lost the opportunity of assessing entitlements at the relevant time, reinforcing the importance of the applicant in providing evidence to prove any relevant facts and circumstances.
Importantly, whilst the cases speak of a ‘notional entitlement’ that is sometimes described as being ‘set off’ against the debt (see for example Robinson and Secretary, Department of Social Services [2014] AATA 446) such terms run the risk of treating any notional entitlement as an amount that must be set off as a matter of law. The position under section 1237AAD is that the statutory discretion remains unfettered: it is more accurate to describe the notional entitlement as a relevant factor, rather than a ‘set off’, even if the appropriate exercise of the discretion would often result in the waiver of that part of the debt equivalent to the likely amount of any notional entitlement. For this reason, it is still appropriate to consider the ‘notional entitlement’ of the appellant and his wife as a couple as it is relevant to the discretion. To require any strict analogy to law or equity would be to impermissibly limit the discretion in the section: see generally Angelakos’ case.
A similar problem arises with respect to the rent assistance that the appellant failed to claim for eleven months (see above). Whilst the rent assistance cannot be claimed in arrears, the fact remains that the appellant, through his failure to make the claim in a timely way, nonetheless went without that assistance. The loss of this sum (the amount of which is not clear from the submissions) would also be a relevant consideration in determining whether to waive the debt that arises with respect to the amounts the appellant was paid, provided the appellant proved his entitlement to that benefit at the relevant time (even though he did not claim it).
The situation in this case stands in clear contrast with a case where a claimant is overpaid through failure to comply with the rules and could not have received the amount paid through full compliance. In such a situation it is logical that their hardship may be weighed against the extent to which their conduct caused an overpayment. Where a debt is caused by an incorrect claim, in circumstances where the correct claims would have resulted in a greater payment from the Department, a failure to waive the debt would further penalise those who have failed to navigate the system in order to advance their own best interests.
Finding
As a result, I find that the Tribunal has failed to have regard to an important consideration in determining how much of the debt to waive, namely, the amounts that would likely have been paid to the appellant and his wife (if it is found that the appellant’s wife was entitled to a special benefit under the Act) if they had each claimed their full entitlements.
Conclusion
In this matter I have found that the Tribunal erred in its considerations of the appellant’s case. The Tribunal failed to make necessary findings of fact relevant to the question that arose under section 24 of the Social Security Act (whether the appellant should have been treated as not being a member of a couple). Secondly, even if the Tribunal’s ultimate finding with respect to section 24 were correct, the Tribunal failed to have regard to the difference between what the appellant received, and the amount of pensions, benefits and allowances that the appellant and his wife would likely have received, had they applied in a timely manner for each entitlement that appears to have been open to them.
I therefore allow the appeal and remit the matter to the Tribunal to be determined according to law.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Riethmuller
Associate:
Date: 20 May 2020
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