Baukes and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2011] AATA 645

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 645

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2011/0547

GENERAL ADMINISTRATIVE DIVISION		)
Re		Pulou Baukes

Applicant

And Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

Respondent

DECISION

Tribunal M D Allen, Senior Member

Date15 September 2011

PlaceSydney

Decision The decision under review will be SET ASIDE and this matter remitted to the Respondent with the direction that the part of the debt of $81,551.71 that does not relate to the payment of rent allowance be waived.

..................[sgd]......................

M D Allen, Senior Member

CATCHWORDS

SOCIAL SECURITY:  Applicant overpaid carer payment and carer allowance plus rent assistance.  Conceded Applicant not an Australian resident at times payments claimed.  Applicant and husband adopted pattern of living in Samoa for thirteen weeks then returning to Australia to reclaim benefits.  Did special circumstances exist to justify waiver of debt.  Debt waived except for overpayment of rent allowance.

LEGISLATION

Social Security Act 1991, Sections 1236, 1237A, 1237AAD.

CASES

Yorke v Lucas (1985) 158 CLR 661

Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535

Dranichnikov v Centrelink (2004) 75 ALD 13

Hafza v Director-General of Social Security (1985) 6 FCR 444

Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241

REASONS FOR DECISION

15 September 2011 M D Allen, Senior Member            

1.By application made 17 February 2011 the Applicant sought review of a decision by the Social Security Appeals Tribunal (“SSAT”) which determined 50% of a debt in the sum of $81,551.71, being overpayment of carer allowance and carer payment, be waived.

2.A prior determination by the Respondent had raised a debt of $81,551.71 against the Applicant following a determination that in the period 5 June 2003 to 12 July 2010 the Applicant had not been an Australian resident and hence was not entitled to payment of carer allowance or carer payment.

3.In these proceedings the Applicant did not dispute that during the period in question she had not been an Australian resident.  Given the decision of the Federal Court in Hafza v Director-General of Social Security (1985) 6 FCR 444, that concession was properly made.

4.The basic facts, upon which the Applicant’s appeal to this Tribunal are based, were broadly accepted by the Respondent.  I found the Applicant at times to be confused in her recollections of events and conversations and, where the Applicant’s version of events differs from that as recorded in contemporaneous Centrelink records, I accept the prima facie accuracy of those records.

5.The Applicant is a native of Samoa.  Her husband Josef Baukes was born in Germany in 1934.  He came to Australia in 1959.  In 1975 the Applicant was working in Samoa as a nurse and met her husband who was in Samoa with his employment.  A relationship developed and they married in 1978.  There is one child of the marriage, Michael, who lives in Sydney.

6.In 1981 the family moved to Victoria and developed a house and service station at Stawell.  The Applicant also worked as a nurse at the Ararat District Hospital.

7.At some time around 1992 the couple purchased a house at Sydenham in Victoria, being a suburb 25 kilometres north-west of Melbourne.  At this time they owned the house outright, and the couple continued to work.

8.Unfortunately the Applicant’s husband, Mr Baukes, was injured in a work accident in 1996.  He then had the misfortune to fall into the clutches of the legal profession, the net result being that their house was sold to pay legal fees (including the fees of a QC).  The case partially settled in 2002 and Mr Baukes received the sum of $85,000.00.  As Mr Baukes pointed out this was less than he had expended in legal fees.

9.During the year 2003, Mr Baukes became depressed and his physical condition deteriorated to the extent that he could not care for himself.  As Mr Baukes was already receiving an age pension the Applicant applied for, and was granted, carer payment and carer allowance.

10.Document T4 of the documents lodged with the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 is the Applicant’s original claim for carer payment which was lodged with Centrelink on 29 May 2003.  In that document the Applicant states that she is living permanently in Australia but that she intended to leave Australia “as soon as possible” as the warm weather helped Mr Baukes’ medical condition.  She stated that the couple would be away for the “winter months”.

11.Prior to lodging her claim for carer payment on 29 May 2003 the Applicant attended a Centrelink office on 9 January 2003.  The note of that attendance reads that although the Applicant and her husband were then separated she wished to go back to Samoa with her partner to live and to care for him.  It was explained to the Applicant that if she was living overseas permanently she would not be entitled to carers payment and carers allowance.

12.The Applicant and her husband did depart for Samoa and on 24 November 2003 Centrelink files record that the Applicant contacted Centrelink and advised that she was living permanently in Samoa since 5 June 2003.  Shortly afterwards Mr Baukes telephoned Centrelink and advised that he and his partner were not living in Samoa permanently and provided an Australian address.

13.Also on 24 November 2003 Centrelink’s Hobart office wrote to the Applicant at the Australian address provided stating inter alia: 

“The information you provided shows that you can receive carer payment and carer allowance until 4 December 2003.  If you remain outside Australia after 4 December 2003 your carer payment and carer allowance will stop.

...

If you return to Australia you may need to lodge a new claim for any payments that have been cancelled during your absence.

…

You must contact us as soon as you return to Australia so your rate of payment may be reassessed.

If you return to Australia and you then want to leave again, we will need to make a new decision about your payment.  If you can, please let us know at least six weeks before you intend to leave again.  This allows us to make any necessary arrangements with the least amount of inconvenience to you.”

14.In fact the Applicant and Mr Baukes remained in Samoa post 4 December 2003 and the payments of carer payment and carer allowance to the Applicant were stopped.  On 27 September 2004 the Applicant returned to Australia and applied to Centrelink for restitution of payments.  She then completed a claim form on 6 October 2004.  In completing this form the Applicant answered “yes” to the questions:

“Are you an Australian resident?; and

Are you living permanently in Australia?”

15.On 23 November 2004 the Applicant informed Centrelink of her intention to go overseas from 27 November 2004.  Centrelink, by letter dated 23 November 2004, informed the Applicant that if she remained overseas after 26 February 2005 her carer payment and carer allowance would stop.

16.There then developed a pattern whereby the Applicant would depart from Australia for Samoa but after thirteen weeks would return to Australia and reapply for carer payment and carer allowance.

17.In her statement the Applicant said:

“In the years from 2004 Josef and I went to and from Samoa many times.  It was cheaper to pay fares each three months than rent for private accommodation.  Every time I told Centrelink that I was leaving and would return in about 13 weeks.  I was in touch with them frequently over the years.  Once I was told that I did not have to go in to the office but that I could just ring.  However, when I tried to ring I was on the phone for so long waiting it was actually quicker to go to the Centrelink office, line up and tell them personally.  For each trip I told them when I was leaving and when I returned.

At no time during my conversations with Centrelink did anyone tell me or warn me that I should not be getting my Carer Payments.”

18.Mr Baukes in his evidence stated that when Centrelink had been informed of their intentions to go overseas they were told that, whereas his age pension was portable, the Applicant’s carer payments could only be paid for a period of thirteen weeks but would resume if she returned to Australia.  As with the Applicant, Mr Baukes said they were never told that their frequent absences overseas would jeopardise the Applicant’s entitlements.

19.The Applicant was cross examined regarding her giving an Australian address to Centrelink as her address for the service of notices.  I see no reason to reject her evidence that she was advised by a Centrelink officer that Centrelink could not send mail overseas and that she should use her son’s address in Australia.

20.Questions were asked in cross examination regarding the purchase of land in Samoa by the Applicant and her husband.  As I understand matters, part of the Applicant’s superannuation was used to buy the land, as was part of Mr Baukes damages payout.  Their son, Michael, also contributed.

21.On 27 October 2009 the Applicant made a claim for Australian Government Disaster Recovery Payment following the Samoan tsunami.  That claim form shows that the Applicant’s permanent address was PO Box 9538 Apia.

22.As stated above the Applicant and her husband commenced a pattern of going to Samoa, staying for approximately thirteen weeks, and then returning to Australia, so as to continue payments of carer payment and carer allowance.  At all times Centrelink was informed when they departed for Samoa.

23.The Applicant did not advise Centrelink that when she and her husband departed for Samoa they ceased paying rent.

24.Document T38 at p426 shows that on 28 July 2009 an alert was raised concerning possible permanent absence from Australia by the Applicant.  The note states that a Q999 was sent to the Applicant requesting information regarding permanently residing in Australia.

25.No evidence is before me as to whether or not the Applicant completed the form designated Q999 and if any follow up action was taken after the said document was sent to the Applicant.

26.On 10 May 2010, Mr and Mrs Baukes returned to Australia from Samoa.  On 26 May 2010 a new claim for carer payment and carer allowance was lodged by the Applicant.  On 10 June 2010 a delegate of the Respondent commenced a review of the Applicant’s entitlements and on 14 July 2010 that delegate determined that the Applicant had not been a resident of Australia for the period 5 June 2003 to 14 July 2010 and that she had thus been paid the total sum of $81,551.71, representing carer payment and carer allowance, whilst not entitled to these monies.

27.Subsection 1223(1) Social Security Act 1991 (“SSA”) states:

“(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.”

28.As the Applicant has not disputed the fact that at all relevant times she was not an Australian resident, then the overpayment sum of $81,551.71 remains a debt due to the Commonwealth. Relief may be given regarding the whole or part of that debt pursuant to the following sections of the SSA, namely:

- S1236 which refers to writing off a debt;

- S1237A which refers to waiver of a debt due to administrative error; and

- S1237AAD which refers to waiver of a debt due to “special circumstances”.

I propose to deal with these three ameliorating sections below.

29.Section 1236 SSA states:

“Secretary may write off debt

(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

(aa)  the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 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

(b)  deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999 ; or

(c)  setting off under section 84A of that Act;

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

(2)  A decision made under subsection (1) takes effect:

(a)  if no day is specified in the decision--on the day on which the decision is made; or

(b)  if a day is specified in the decision--on the day so specified (whether that day is before, after or on the day on which the decision is made).

(3)  Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.”

The decision of the SSAT restored the payment of carer allowance and carer payment to the Applicant, consequently there is a social security payment against which recovery may be made.

30.Section 1237A SSA states:

“Administrative error

(1)  Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtorreceived in good faith the payment or payments that gave rise to that proportion of the debt.

Note:          Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

(1A)  Subsection (1) only applies if:

(a)  the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b)  if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.”

The word “error” is defined in the Oxford Dictionary Online in meaning four as “Something incorrectly done through ignorance or inadvertence; a mistake for example in calculation, judgement, speech, writing, action.”

31.As I see it, there was, in the Applicant’s case, an error in that whereas on 28 July 2009 an alert was raised regarding the Applicant’s residential status, no follow up action was taken to ascertain her actual status.  To my mind this failure to take further action was an “error” on the part of Centrelink which may be properly described as an administrative error. However, both before and after that date payment could not be said to be due to administrative error alone.  Centrelink acted on the information provided by the Applicant and she continually held herself out to be an Australian resident.

32.Section 1237AAD SSA states:

“Waiver in special circumstances

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 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.”

33.The provisions of S1237AAD SSA cannot apply if the Applicant “knowingly” made a false statement or representation.

34.The word “knowingly” was interpreted by the High Court of Australia in Yorke v Lucas (1985) 158 CLR 661 at 670, as requiring a knowledge of the essential elements of the contravention.

35.In this matter I am satisfied that the Applicant knew in January 2003 that if she resided permanently in Samoa that she would not be paid social security benefits.  She was then apparently informed by Centrelink staff that she would be paid benefits if she departed for periods of no longer than thirteen weeks at a time.  In particular the letter of 24 November 2003 almost invites the Applicant to take the course she did.  The letter does state:

“If you return to Australia and you then want to leave again, we will need to make a new decision about your payment.  If you can, please let us know at least six weeks before you intend to leave again.  This allows us to make any necessary arrangements with the least amount of inconvenience to you.”

36.Neither the Applicant nor her husband struck me as particularly sophisticated people and I am not satisfied that they set out to knowingly make false statements regarding their residency status.  I find that the circumstances were that they were given a solution to their dilemma regarding whether to live in Samoa and forfeit social security benefits or remain in Australia, namely the option of remaining away from Australia in blocks of thirteen weeks.

37.Whenever the Applicant and her husband left for Samoa they informed Centrelink.  I accept that at no time did anyone at Centrelink raise any perceived difficulty with their course of action with them, except the forwarding of the form Q999, but what questions it asked of the Applicant I do not know.

38.I accept however that there were answers given by the Applicant in her claims for carer payment and carer allowance which legally were false answers.  She stated that she was living permanently in Australia which was not correct.

39.The Respondent submits that the Applicant made false statements in that she stated she was living permanently in Australia whilst not complying with any of the criteria given as examples of permanent residency in her application for carer allowance (see T4 p32).  I do not regard the examples given as being exhaustive.  The form itself uses the words “this could mean…” which to my mind allows for other criteria to be taken into account.

40.To my mind, as stated, the Applicant did not knowingly give false information, even though the information she did provide was, as a question of law, erroneous.

41.As to what constitutes special circumstances, Carr J in Secretary, Department of Social Security v Ellis (1996-7) 24 AAR 535 at 539 stated:

“In Beadle v Director-General Social Security (1985) 7 ALD 670 a Full Court of this Court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of S102(1)(a) of the Act which provided for an extension of time in which to claim a family allowance ‘… in special circumstances…’ At 673-674 the Full Court said:

‘Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate… it would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules. The matter is one for the Director-General, bearing in mind the purpose for which the power is given.  The phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss’.

In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 541 Kiefel J after referring to Beadle, said:

‘… 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 following that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.  The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.’

Later (on the same page) Kiefel J expressly approved the Tribunal’s reasoning in holding that Mr Groth’s circumstances were not out of the ordinary when Pt 3.14 of the Act (in which Ss1168 and 1184 are to be found) had the same effect on him as it did on other persons qualified to receive a disability support pension.  Her Honour added:

‘It [the Tribunal] went on to find that his circumstances and those of his family although difficult, did not constitute hardship and they could not be said to be different from other pension recipients’. ”

42.Cf Hill, Keifel and Hely, JJ in Dranichnikov v Centrelink (2004) 75 ALD 13 at para 148:

“… Other cases which have considered analogous words such as ‘special reasons’ have tendered to conclude, albeit in different contexts, that what is required will be circumstances which distinguish the case in consideration from the usual case.  There will be a requirement that the circumstances are such that takes the case out of the ordinary; Jess v Scott (1986) 12 FCR 187; 70 ALR 185 and the cases in various context in the decision which Lockhart, Shepherd and Burchett JJ discussed”.

43.In this matter I am satisfied that with one exception special circumstances exist. The Applicant adopted a pattern of behaviour which ensured that she conformed to the provisions of the SSA, namely that she remained away from Australia in the main for the period of thirteen weeks which would ensure the continuity of her social security benefits.

44.The Applicant continued to notify Centrelink of her departures and then reclaimed her benefits upon return.  At no time from 2003 until June 2010 did anyone question her residential status, but more to the point, at no time was she advised that her conduct could alter her residential status.

45.The concept of residency is a legal one and there are numerous cases in the law reports where the question of what might constitute resident status are examined.  In particular, in Koitaki Para Rubber Estates Ltd v Federal Commissioner of Taxation (1941) 64 CLR 241 Williams J at p248, refers to the well-accepted concept that a person can have more than one residence.

46.Although the Respondent has pointed to the Applicant’s nominating an address in Australia as her address for the service of notices as evidence of an intention to defraud, I accept her evidence that she was advised to do this by Centrelink staff.

47.The Applicant and her husband are in straightened financial circumstances.  This fact of itself is not a special circumstance, but it is a factor that can properly be taken into account in ascertaining whether special circumstances exist.

48.I am satisfied that as regards the bulk of the Applicant’s debt, special circumstances do exist to justify waiver of part of the debt.  In particular I refer to the Applicant’s notifications to Centrelink of her proposed departures for Samoa and the apparent condonation of the course of conduct regarding her periods of residence in Samoa.  To this may be added the personal circumstances of the Applicant and her husband.  However the Applicant also sought and received payment of rent allowance and never declared to Centrelink that she ceased paying rent when she and her husband lived in Samoa.

49.The Applicant sought to argue that she continued to be paid rent allowance due to error on the part of Centrelink, in that she informed Centrelink when she was returning to Samoa.  I disagree.  She was obliged to specifically inform Centrelink when she ceased paying rent and did not do so.  It is not unreasonable for Centrelink to assume, in the absence of advice to the contrary, that a person who is intending to absent themselves from Australia for a short period (that is thirteen weeks) might intend to keep an existing tenancy on foot and continue to pay rent to secure that tenancy.

50.The decision under review will be set aside and this matter remitted to the Respondent with the direction that the part of the debt of $81,551.71 that does not relate to the payment of rent allowance be waived.

I certify that the 50 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.

Signed:         .............[sgd].........................
  K. Lynch, Associate

Dates of Hearing  31 August 2011
Date of Decision                   15 September 2011
Solicitor for the Applicant                           Mr S Hodges
Representative for the Respondent          Centrelink Legal Services