ALAN SHIELD and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2012] AATA 232

[2012] AATA 232

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2011/4206
Re	ALAN SHIELD
APPLICANT
And	SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT

DECISION

Tribunal	Dr P McDermott, RFD, Senior Member
Date	24 April 2012
Place	Brisbane

I set aside the decision under review and substitute a decision that the applicant is indebted to the Commonwealth in the amount of $108,511.25; and that this debt is to be recovered.

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

Dr P McDermott, RFD, Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, benefits and allowances – Age pension – Single Rate – Determination of whether person a member of a couple – Debt to Commonwealth for overpayment – Writing off of debt – Waiver of debt due to special circumstances – Decision of the SSAT set aside and original debt confirmed   

LEGISLATION

Social Security Act 1991 (Cth) ss 4, 1064, 1223, 1236, 1237A, 1237AAD

CASES

Staunton-Smith v Secretary, Department of Social Security (1991) 32 FCR 164

VBH and Secretary, Department of Family and Community Services [2006] AATA 1

REASONS FOR DECISION

Dr P McDermott, RFD, Senior Member

24 April 2012

INTRODUCTION

1. I have to decide whether Mr Alan Shield (“the applicant”) and Mrs S[1] were, for the purposes of social security law, members of a couple between from 7 August 1997 to 27 April 2010 (“the relevant period”). If I consider that they were members of a couple I have to then decide whether the applicant was overpaid age pension during that period; and if so, whether that overpayment is a debt to the Commonwealth. If I consider that there is a debt to the Commonwealth I must also consider whether the debt should be recovered.

   [1] I have decided that in these reasons, which are a matter of public record, there is no need to reveal the identity of Mrs S.

   BACKGROUND

2. During the relevant period the applicant received age pension at the maximum single rate.

3. On 6 May 2010, Centrelink decided that during the relevant period the applicant was a member of a couple with Mrs S and raised a debt of $108,511.25 on the basis that the applicant had been overpaid age pension. The applicant sought internal review of this decision. On 24 December 2010, an Authorised Review Officer affirmed the original decision. The applicant sought further review of the decision by the Social Security Appeals Tribunal (“SSAT”).

4. On 8 September 2011, the SSAT decided to set aside the original decision and remitted the matter to Centrelink for reconsideration. That Tribunal decided that the applicant and Mrs S were members of a couple during the relevant period. However, the Tribunal issued a direction to recalculate the debt. This direction was issued because the SSAT found that Mrs S was the owner of a business and Centrelink had incorrectly raised the original debt on the basis of her taxable income rather than her gross income. On 29 September 2011, the applicant made an application for review of the SSAT decision by this Tribunal.

   CALCULATION OF AGE PENSION

5. The rate of age pension to which a person is entitled is calculated in accordance with Pension Rate Calculator A at the end of s 1064 of the Social Security Act 1991 (Cth) (“the Act”). The calculator provides that that the applicable rate at which age pension is paid to a member of a couple is affected by the couple’s combined income. The respondent contends that the applicant was paid age pension at the maximum rate during the relevant period. This is because he represented to Centrelink that, at all relevant times, he was single and had no income. The respondent also contends that the applicant earned personal income and was a member of a couple during the relevant period and that the other member of the couple earned business income that should have been taken into account in calculating the applicable rate of age pension to which the applicant was entitled.

6. As the applicant and Mrs S are not married, whether they are members of a couple is determined by having regard to sub 4(2)(b) of the Act. That subsection requires that the respondent form an opinion whether they are in a marriage like relationship (pre 1 July 2009) or a de facto relationship (post 1 July 2009). The subsection reads:

   Member of a couple--general

   (2)  Subject to subsection (3), a person is a member of a couple for the purposes of this Act if:

   ....

   (b)  all of the following conditions are met:

   (i)  the person has a relationship with another person, whether of the same sex or a different sex (in this paragraph called the partner);

   (ii)  the person is not legally married to the partner;

   (iii)  the relationship between the person and the partner is, in the Secretary's  opinion (formed as mentioned in subsections (3) and (3A)), a de facto relationship;

   (iv)  both the person and the partner are over the age of consent applicable in  the State or Territory in which they live;

   (v)  the person and the partner are not within a prohibited relationship.

7. In forming an opinion that two persons are in a marriage like or a de facto relationship, the respondent is required to have regard to all the circumstances of the relationship, including, in particular, each of the matters stated at subs 4(3) and 4(3A) of the Act, as follows:

   Member of a couple – criteria for forming opinion about relationship

   (3)  In forming an opinion about the relationship between 2 people for the purposes of paragraph (2)(a), subparagraph (2)(aa)(ii) or subparagraph (2)(b)(iii), the Secretary is to have regard to all the circumstances of the relationship including, in particular, the following matters:

   (a)  the financial aspects of the relationship, including:

   (i)  any joint ownership of real estate or other major assets and any joint liabilities; and

   (ii)  any significant pooling of financial resources especially in relation to major financial commitments; and

   (iii)  any legal obligations owed by one person in respect of the other person; and

   (iv)  the basis of any sharing of day-to-day household expenses;

   (b)  the nature of the household, including:

   (i)  any joint responsibility for providing care or support of children; and

   (ii)  the living arrangements of the people; and

   (iii)  the basis on which responsibility for housework is distributed;

   (c)  the social aspects of the relationship, including:

   (i)  whether the people hold themselves out as married to, or in a de facto relationship with , each other; and

   (ii)  the assessment of friends and regular associates of the people about  the nature of their relationship; and

   (iii)  the basis on which the people make plans for, or engage in, joint social activities;

   (d)  any sexual relationship between the people;

   (e)  the nature of the people's commitment to each other, including:

   (i)  the length of the relationship; and

   (ii)  the nature of any companionship and emotional support that   the   people provide to each other; and

   (iii)  whether the people consider that the relationship is likely to continue indefinitely; and

   (iv)  whether the people see their relationship as a marriage-like relationship or a de facto relationship.

   (3A)  The Secretary must not form the opinion that the relationship between a person and his or her partner is a de facto relationship if the person is living separately and apart from the partner on a permanent or indefinite basis.

   CONSIDERATION

8. In deciding whether the applicant and Mrs S were members of a couple during the relevant period I am required, following the Federal Court of Australia decision in Staunton-Smith v Secretary Department of Social Security (1991) 32 FCR 164, to have regard to the totality of the circumstances of the relationship between the parties.

9. In determining this application I have had regard to the record of an interview that was conducted on 2 November 2010. On that occasion the applicant was interviewed in the presence of his solicitor. At that interview the applicant was informed that Centrelink was investigating a number of allegations that had been made concerning him. One allegation was that he had an ‘undisclosed marital relationship’ and had been living as a ‘member of a couple’ since 1995. The applicant stated that he understood the allegation and did not deny it, instead remarking: “Although this business of living as a couple seems rather flexible”. When I asked the applicant about his response to that allegation he stated that he had made a “mistake”. I have had regard to the fact that at the first available opportunity he did not deny that he was a member of a couple. Instead, he quibbled about the meaning of “living as a couple”. I regard his response as confirmatory that he has been living as a member of a couple.

10. I am required to have regard to the criteria set out at subs 4(3) and 4(3A) of the Act. Whilst the criteria do have some subjective components, the views of the parties to a relationship are not crucial in view of the fact that what is crucial is the opinion that the Secretary forms after having regard to all of the circumstances of the relationship.[2] In these reasons I will examine these criteria.

    [2] VBH and Secretary, Department of Family and Community Services [2006] AATA 1.

    Financial Aspects

11. During the relevant period, Mrs S owned a restaurant. There is no evidence that the applicant had an interest in the restaurant. I accept the submission of the applicant that there is no evidence that during the relevant period he and Mrs S held any joint assets.

12. The applicant worked in the restaurant unpaid for five years before, in July 1999, being given minimal wages of $55 per week. In July 2001 his wage was increased to $110 per week. The applicant, who has accounting qualifications, stated that he did the necessary accounting for the business. In his statement he outlined the nature of that assistance to Mrs S: he did the book keeping and prepared GST returns; he dealt with tradespersons as well as taking phone bookings; and he also spoke to the public at large because Mrs S did not have confidence in her English language skills.

13. Not only did the applicant act as an accountant for her restaurant, he also acted as the accountant for her shop.[3]

    [3] The applicant assisted Mrs S in two businesses that she operated.

14. The applicant stated that he never asked Mrs S for a wage. He was paid a small wage on the insistence of Mrs S. Mrs S was asked in cross-examination whether she thought that it was strange that the applicant had not asked for a wage; she replied that she did not give the matter any thought. It is a reasonable inference that the fact that the applicant was not paid for his work, or was paid only nominal wages, is because the parties were members of a couple.

15. Mrs S, in her statement, states that the applicant was a signatory to the trading bank account of the restaurant. She states that he was made a signatory as a matter of convenience. She explained that before he was made a signatory it was necessary for him to drive to her shop where she would sign cheques for supplies for the restaurant or for tradespersons who provided services to the restaurant.

16. The applicant also gave evidence that he and Mrs S had a joint bank account which was used for travel purposes; both parties put money into the account. This joint bank account is evidence that there was a pooling of resources between Mrs S and the applicant, which is consistent with the parties being a couple.

17. At times the restaurant bank account had significant funds of in excess of $120,000. On 2 March 2009 the sum of $66,021.17 was deposited to this account. On 4 March 2009 the sum of $55,000 was also deposited to the account. Mrs S asserted that these deposits represented payments made by her family in Thailand. She stated that on 23 March 2009 these funds were transferred to an interest bearing deposit. The fact that the applicant had access to this account is, in my view, indicative of the applicant and Mrs S being members of a couple.

18. The case of the applicant was that in return for working in the restaurant he would live in the house bought by Mrs S. There was also a sharing of expenses between the parties. The applicant stated that, initially, he paid the rates and half of the electricity and telephone accounts. The value of the board provided to the applicant would have been far less than the wages that he would have expected to earn in the restaurant having regard to the nature and extent of his duties.

19. I should record that I do not accept it as plausible for the applicant, who is a qualified accountant, to assert that he was not aware that he was a signatory to a reverse charges bank account. 

    Nature of the Household

20. The applicant has lived in the house owned by Mrs S for some fifteen years. He and Mrs S assert that they maintain separate bedrooms. The applicant stated that, initially, he paid the rates and half of the electricity and telephone accounts, but this practice ceased.

21. The evidence before me is that the applicant and Mrs S have travelled overseas together on sixteen occasions and, on those occasions, Mrs S provided the applicant with credit. The applicant, in giving evidence, suggested that the trips had a business purpose as Mrs S purchased food in the form of curry powder for the restaurant. However, Mrs S in giving evidence stated that on her overseas visits she did not purchase any food for the restaurant. When she was giving her evidence I requested the applicant not to interject and suggest an answer that she purchased curry powder while in Thailand. 

22. On their evidence, the applicant and Mrs S maintained separate bedrooms and shared the rest of the house. The applicant did marginally more cleaning than Mrs S. This was because Mrs S was working in two businesses. The applicant also stated in evidence that he would sometimes open the restaurant, purchase food for the restaurant and then also assist with its delivery. The applicant stated that on a usual work day he would drive a car that Mrs S would use to collect food for the restaurant. He would then drop Mrs S off at the shop which she had in one suburb of Brisbane and then take the collected food to the restaurant, which was located in another suburb of Brisbane. The applicant remarked in his affidavit that he did most of the driving. 

23. The applicant provided assistance to Mrs S in her restaurant and undertook completion of the restaurant books at the house. The applicant and Mrs S sometimes bought food together but usually did so separately. Mrs S had a car that the applicant used for restaurant purposes but would still have been available to him otherwise if he had wanted to use it.

24. I consider that the nature of the household is indicative of the applicant and Mrs S being members of a couple. The fact that they have lived together for some 15 years and the applicant has had a close involvement in the businesses of Mrs S is significant.

    Social Aspects of the Relationship

25. I appreciate that the parties had little time for any social or leisure activities, but I am satisfied that they generally undertook these activities together. The applicant stated that he would occasionally go on outings with Mrs S during the day on Sundays, which was her only free time as the restaurant would open on Sunday evenings.

26. He stated that on Sundays they would occasionally visit her children or he would drive the vehicle to Pumicestone passage or Bullock’s Beach at Caloundra, or to Cleveland. He stated that he would drive her car on most of the Sunday outings. The applicant stated that on other Sundays they would source supplies from a Fortitude Valley wholesaler, particularly after a busy Saturday night, and remain at home until the restaurant was opened for Sunday evening. This indicates that the parties would spend their Sundays together irrespective of whether they went on outings.

27. It is fair to say that Mrs S had a different view of the social aspects of the relationship. She stated that she did not recall going on outings to Caloundra or Cleveland and that the applicant did not go that often with her when she visited her children. I consider that she is not a reliable historian. She was, for instance, unable to tell me when she divorced her husband. I consider that the fact that the applicant and Mrs S spent Sundays together to be indicative of them both being members of a couple.

    Sexual Relationship

28. There is no evidence that the applicant and Mrs S ever had a sexual relationship. I do not regard this factor as being of significance in this case. What is significant is that the applicant informed the SSAT that he thought that Mrs S would ask him to leave the house if he had formed a sexual relationship with another person; this is consistent with the applicant and Mrs S having a relationship of some intimacy as members of a couple.

    Nature of Ongoing Commitment to Each Other

29. The applicant and Mrs S lived in the same house, owned by Mrs S, for about 15 years. Their relationship was likely to continue in that form. They trusted each other and provided companionship. The applicant had access to a bank account which, for a short time, held an amount in excess of $120,000.

30. In final submissions, to which the applicant made no reply, the respondent pointed out a number of matters which evidence the nature of the ongoing commitment of the applicant to Mrs S. This includes evidence that in his will he has bequeathed his estate to Mrs S. It is also shown by the fact that the he accompanies her on her medical appointments. Further, the applicant helped Mrs S with her business, without asking for any financial compensation, and provided companionship. These are matters which are indicative of the fact that the applicant and Mrs S are members of a couple.

31. The nature of the ongoing commitment of the applicant is also shown by the fact that he had been provided with support by Mrs S when his pension was cancelled.

32. The wills of Mrs S, which are in evidence, do not make provision for the applicant. Indeed the applicant was a witness to both wills which were made in 1988 and 1993; this was at a time when Mrs S was still married. Mrs S was unable to tell me when she was divorced. From the statement of the applicant it would seem that the divorce occurred sometime in 1997. It is not surprising that that the applicant would not have been a beneficiary under these wills which were made when Mrs S was still married. Mrs S, in her evidence, stated that the 1993 will has not been revoked. However, under succession law the provision in the will to her then husband would have been revoked upon her divorce. Even though the applicant is not a beneficiary under the 1993 will, I think that it is a reasonable inference that the sons of Mrs S would ensure that the applicant would have a home in the event of Mrs S predeceasing the applicant. That is because Mrs S, in her statement of 10 August 2011, remarked that one son had agreed to help out the applicant when his pension ceased.

33. I am satisfied that during the relevant period the applicant and Mrs S had an ongoing commitment to each other as members of a couple.

    CONCLUSION

34. After taking into account the evidence before me and the criteria set out in subs 4(3) and 4(3A) of the Act, I find that the applicant and Mrs S were members of a couple during the relevant period.

35. The applicant, in final submissions, dated 21 March 2012, has adverted to the possibly of this Tribunal finding “that one of the reasons that the other party [i.e. Mrs S] left the country [i.e. Australia] was to facilitate the restoration of the applicant’s age pension payment”.[4] I do not consider that it is necessary for me to come to a conclusion about events after the relevant period as the application concerns the eligibility of the applicant for pension during the relevant period.  However, it is fair to say that Mrs S has admitted that the Centrelink investigation was a factor in her deciding to leave the country and go to Thailand.

    [4] Submissions on behalf of the Applicant, dated 21 March 2012 at para 36.

    Debt

1. During the relevant period the applicant was paid age pension at the maximum single rate. He also failed to declare his income to Centrelink as well as failing to inform Centrelink that he was a member of a couple. In accordance with sub 1064(4) of the Act, where a recipient of age pension is a member of a couple, the recipient’s partner’s circumstances, including their income, is also relevant to the rate at which age pension is payable. As a consequence, the applicant was overpaid age pension.

2. The SSAT directed the respondent to recalculate the debt because the original debt calculations had been based upon the net income of Mrs S. The reason for the direction was that her net income would have included deductions which were not allowable under the social security law, such as donations and losses from unrelated business entities. The result is that the calculation of the debt of the applicant would be understated. This was appreciated by the Authorised Review Officer. I am satisfied that the respondent has insufficient information to recalculate the debt and is not able to obtain that information. In these circumstances I have made a decision that the amount of the debt remains $108,511.25. This decision would not prejudice the applicant whose debt could, in reality, be higher.

3. Section 1223 of the Act provides as follows:

   (1)  Subject to this section, if:

   (a)  a social security payment is made; and

   (b)  a person who obtains the benefit of the payment was not entitled for any  reason to obtain that benefit;

   the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

4. Because of the operation of s 1223 of the Act, an overpayment of social security payment is a debt due to the Commonwealth. The sum of $108,511.25 is a debt due to the Commonwealth.

   Whether there is a Basis for Writing off the Debt

5. Section 1236 of the Act enables the Secretary, subject to conditions, to write off a debt for a stated period or otherwise.

   (1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

   (1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:

   (a) the debt is irrecoverable at law; or

   (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.

   (1B)  For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

   (a)   the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or

   …

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

   (c) the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or

   (d) the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.

   (1C)  For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:

   (a) deductions from the debtor’s social security payment; or

   … 

   the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.

6. The respondent contends that the applicant now continues to receive age pension and has capacity therefore to repay the debt via instalments at a fortnightly rate that is subject to negotiation. There is no evidence that payment in this manner will cause the applicant severe financial hardship. Consequently, it is not appropriate to write off the debt pursuant to s 1236 of the Act.

   Whether there is Sole Administrative Error

7. Section 1237A of the Act provides that the right to recover all or part of a debt can be waived by the respondent if it is attributable solely to administrative error and the applicant received payments in good faith. There is no evidence of any sole administrative error by the Commonwealth and no basis therefore exists for waiver pursuant to s 1237A.

   Whether there are any Special Circumstances such that the Debt Might be Waived

8. Section 1237AAD of the Act provides that all or part of a debt may be waived by the respondent because special circumstances are found to exist that make such a waiver appropriate.

9. Section 1237AAD provides 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 false representation; or

   (ii) failing or omitting to comply with a provision of this 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.

10. I am not satisfied that the circumstances are not special such that it is desirable to waive part or all of the debt.

11. Another matter that I have considered is the fact that allegations have been made to Centrelink that the applicant has “overseas income and assets, in particular Thailand”. When the applicant was first informed about this allegation by the Centrelink officer, he initially responded, not by denying the allegation, but instead by stating: “Yeah, I’d like to know how you worked that out”. When I asked the applicant in the presence of his solicitor if he had any accounts overseas he did not answer my question. Instead he claimed that he was not able to open an account in Thailand. The applicant, who has been an accountant, asserts that he now has no assets. I appreciate that the applicant was divorced in 1973, but after his divorce he had an interest in a commercial building that had been sold. I am not satisfied that the applicant does not have any assets. In these circumstances it would be inappropriate for me to exercise the discretion under s 1237AAD of the Act.

12. I should record that I do not consider that the applicant is a credible person. He was reluctant to give me a straight answer to some of my questions. When I asked him about the marital status of Mrs S when he first took her out to lunch, he was reluctant to answer that question. Instead he was defensive in stating that he could see no reason why he could not have had lunch with her.

13. Another factor that makes it inappropriate for me to exercise the discretion under s 1237AAD is that the applicant did not disclose to Centrelink the income that he derived from the restaurant. I do not accept the explanation of the applicant that he thought that the Australian Taxation Office would advise Centrelink of his income. I am satisfied that the applicant was given information notices to advise Centrelink of any income that he derived. The applicant stated that he did not always read these notices, but as an accountant he should have appreciated his responsibilities.

    DECISION

14. I set aside the decision under review and substitute a decision that the applicant is indebted to the Commonwealth in the amount of $108,511.25; and that this debt is to be recovered.

15. I would like to express my appreciation to the assistance provided to this Tribunal by Mr Cranitch of the Welfare Rights Centre who represented the applicant.

I certify that the preceding 50 (fifty) paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member.

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

Associate

Dated  24 April 2012

Date(s) of hearing	7 March 2012
Date final submissions received	4 April 2012
Advocate for the Applicant	Mr Cranitch, Welfare Rights Centre
Advocate for the Joined Party	Donna Smith, Departmental Advocate