Favero; Secretary, Department of Education, Employment and Workplace Relations and

[2008] AATA 326

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 326

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/0045

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And WILLIAM FAVERO

Respondent

DECISION

Tribunal Ms Robin Hunt, Senior Member

Date21 April 2008

PlaceSydney

Decision The decision of the Social Security Appeals Tribunal is affirmed.

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

Ms Robin Hunt
  Senior Member

CATCHWORDS

SOCIAL SECURITY – payment of benefits – respondent received newstart allowance – applied for benefits using a false identity – overpayment if no entitlement – recipient entitled to payment – requirement that unemployed satisfied – no infringement of requirements to receive newstart allowance – payments not caused by false statement – decision of SSAT affirmed

Social Security (Administration) Act 1999, ss 16(1), 16(7)

Social Security Act 1991, ss 593, 1222A, 1223(1), 1223(1AB), 1237AAD

Director General of Social Services v Thomson (1981) 38 ALR 624

Re Secretary, Department of Employment and Workplace Relations and QX2006/1 (2006) 90 ALD 320

Re Perks and Secretary, Department of Family and Community Services [2000] AATA 671

Re Stark and Department of Social Security (AATA 4762, 6 September 1988)

Director-General of Social Services v Hales (1983) 47 ALR 281

Re Davis and Secretary, Department of Social Security (1992) 26 ALD 595

Director-General of Social Services v Hangan (1982) 45 ALR 23

Dranichnikov v Centrelink (2003) 75 ALD 134

REASONS FOR DECISION

21 April 2008 Ms Robin Hunt, Senior Member   

1.      Mr William Favero wanted a new start in life. Unfortunately, he went about his new start by creating a false identity and using it to claim social security benefits. The applicant, the Secretary of the Department of Education, Employment and Workplace Relations (“the Secretary”) says that, because he claimed benefits using an assumed identity, he must repay the benefits received. The Social Security Appeals Tribunal (“SSAT”) reviewed the matter and held that, although Mr Favero had used a false identity when he applied for newstart allowance, he still would have qualified for the payments and so was entitled to keep the money. It followed there was no debt to the Commonwealth. The Secretary sought review of that decision by this tribunal. I have decided that the decision of the SSAT was correct. My reasons are set out below.

issue

2.      This case concerns claims Mr Favero made for benefits, over the period between 15 October 2001 and 25 April 2003, using an assumed identity. The issue is whether Mr Favero owes a debt to the Commonwealth as a result. If he would have been entitled to the newstart allowance paid to him had he had applied in his own name, it may be that the false information he supplied did not disqualify him. If not, Mr Favero owes a debt to the Commonwealth for the amount paid.

3.      Matters which affect his entitlement involve answers to the questions:

·Did Mr Favero make a false statement or representation that disqualifies him from receipt of the payments?

·Did Mr Favero contravene a social security provision that disqualifies him from receipt of the payments?

consideration and findings

4.      Mr Favero was self-represented at the tribunal hearing of this review. His sister attended to support him and the Welfare Rights Centre drafted written facts and contentions on his behalf. The Secretary was represented by counsel instructed by the Australian Government Solicitor.

5.      A brief chronology of Mr Favero’s background was supplied by the Secretary. This shows Mr Favero is aged 38, having been born on 18 August 1969. He completed an automotive electrical and electronic and automotive petrol injection course at TAFE in 1988.

6.      Mr Favero has a history of mental illness and drug dependence. He was detained in hospital under the Mental Health Act 1990 (NSW) between 16 March 1996 and 2 May 1996. He also has been incarcerated for criminal activity and was in custody between 31 March 1998 and 24 April 1998. Mr Favero applied for newstart allowance in his own name around the time of his release on 20 April 1998 and participated in a residential care program for drug dependent people from 18 June 1998 to 18 December 1998.

7.      A few years after these events, Mr Favero again attracted the attention of police. In 2000, Mr Favero took on an assumed identity. From the material before me it is not clear how Mr Favero obtained initial documentation in the assumed name. Mr Favero gave oral evidence that he was supplied with some documents and that he forged other documents. Ultimately, he held a passport and a Queensland driver’s licence as well as a later passport in the assumed name. He also had a character reference and enrolled in and completed a course as the other person whose identity he assumed.

8.      The assumed identity was that of an infant who died on 14 June 1972. The Victorian Registry of Births, Deaths and Marriages received a request for the infant’s birth certificate on 19 September 1996. A passport in the infant’s name issued on 9 October 2000. This document came into Mr Favero’s hands and he used that identity to do a course, to try to find work and to claim social security benefits when he could not find work. He obtained or created a reference in the name of his assumed identity, dated 12 December 2000. He also used a driver’s licence issued in Queensland on 30 May 2001. He enrolled at Mackintosh International College for a course which he duly completed in May 2001. He obtained a further passport issued in the deceased infant’s name on 24 January 2002.

9.      He pleaded guilty to a number of offences for which he was again imprisoned. On 17 December 2003, he was sentenced to prison for a minimum of three years but was released early in April 2006.

10.     When Mr Favero made his claim for newstart allowance on 15 October 2001, he used the false identity which has given rise to the Secretary’s debt recovery action. The quantum of the debt claimed is $17,240.04.

Did Mr Favero make a false statement or representation that disqualifies him from receipt of the payments?

11. Section 16(1) of the Social Security (Administration) Act 1999 (“the Administration Act”) requires a person who makes a claim for a social security payment to lodge a written claim for the payment or to make the claim in a manner approved in accordance with subsection (7). Mr Favero made a written claim on 30 October 2001 using the appropriate form but filled out as the assumed identity. With the claim he supplied some supporting documents in the assumed name, including a rent certificate from his landlord. In a signed statement he said that he had never worked and had been supported by his family and spent time in drug rehabilitation.

12.     Legislation involved in deciding whether Mr Favero must repay the social security assistance he received includes sections 593 and additional provisions of Part 2.12 , Division 1--Qualification for and payability of newstart allowance, 1223(1) and (1AB) and 1237AAD of the Social Security Act 1991 (“the Act”). Section 593 provides that a person is qualified for newstart allowance if unemployed. Further parts of division 1 deal with the activity test and exemptions from this requirement. Subsequent subdivisions deal with a range of situations where newstart allowance is not payable, but the Secretary has not raised any of these in Mr Favero’s case and there is no material suggesting any apply to him.

13.     I accept Mr Favero’s evidence that he was not employed when he made his claim. There is no evidence to counter his claim that he was unable to find a job and was unemployed. It follows that he satisfied section 593 and was entitled to the payments unless disqualified on some other ground.

14.     Mr Favero produced medical certificates during the relevant period, albeit in the false name he was using, which established his drug dependence. The certificates are mentioned in the Centrelink records before me, but have not been produced as Centrelink has been unable to find them. Because of his medical problems, Mr Favero was not required to satisfy the activity test. He did not fail to comply with the terms of his newstart activity agreement and the Secretary has not argued that he was capable of working at this time. The Secretary, however, contends that it was not possible to be satisfied that Mr Favero met all the requirements for the allowance he received because he supplied false information. The Secretary’s main complaints are that he used a false identity and did not disclose that he was a qualified motor mechanic, making it impossible for the Secretary to be satisfied that he qualified for the allowance.

15.      Mr Favero told the tribunal that he could no longer work as a motor mechanic for two main reasons. He said his drug problems were related to his being a manic depressive and suffering back pain. He developed back pain after working as a motor mechanic for 10 years. Back pain caused in this occupation had led to his taking prescription painkillers and then using marijuana for relief. He became addicted to drugs and involved with drug dealers and criminal activities as a result. He left his job as a mechanic and went to Queensland where he tried to start again and to avoid criminal associates in the motor industry.

16.     I note that Mr Favero disclosed he was a bartender when he filled out his claim in 2001 and did not mention being a qualified mechanic. Mr Favero had completed a bartenders’ course as certified in the false name. He gave evidence that he now is employed as a maintenance worker in a fitness centre. The Secretary has not established conclusively that Mr Favero was capable of undertaking work as a motor mechanic and that it was suitable work for him. I note the importance of this factor and its effect on finding whether Mr Favero was truly unemployed in all the circumstances, as discussed in Director General of Social Services v Thomson (1981) 38 ALR 624. On balance, I accept his evidence that this work had become unsuitable for him. In any event, it is largely irrelevant as he was unable to work for at least some of the time he claimed assistance because of his unquestioned drug dependency. Therefore, I am satisfied and find that the failure to disclose his past work history and qualifications had no material effect on his entitlement to newstart allowance and did not disqualify him.

Did Mr Favero make a false statement or representation that disentitled him to the payments made?

17. Section 1222A of the Act provides that a debt arises if the amount should not have been paid. Other provisions allow the Secretary to raise, recover, waive and write off social security debts. Debts for the purposes of section 1222A arise only if established under another provision of the Act or certain other Acts. The Secretary has argued a debt arises in Mr Favero’s case pursuant to sections 593 and 1223.

18.     Section 593(1)(a) provides that a person must satisfy the Secretary that throughout the period he or she is unemployed. I have already found I am satisfied as to this requirement.

19.     Under section 1223(1), if a social security payment is made and 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. In addition, subsection 1223(1AB) provides that, without limiting paragraph (1)(b), a person who obtained the benefit of such a payment is taken not to have been entitled to obtain the benefit if the payment should not have been made. Reasons why the payment should not have been made for the purposes of this provision are set out in paragraphs (a) to (f) and include:

…

(d) the payment was made as a result of a contravention of the social security law, a false statement or a misrepresentation;

…

20.     The question arising by virtue of paragraph (d) is whether the payment to Mr Favero was made “as a result of” his contravention of a social security law and/or the false statements and misrepresentations he made in his claim. There are parallels between the present case and that of Re Secretary, Department of Employment and Workplace Relations and QX2006/1 (2006) 90 ALD 320. In the QX case, the tribunal consisting of Deputy President Hack and then Member Carstairs (now Senior Member), found no material fraudulent conduct where the applicant used a false name to claim benefits. Merely changing one’s name or claiming benefits in an assumed name is not fraudulent conduct if the claimant is otherwise qualified for the benefit sought.

21.     In the QX case, the tribunal found that he did not have a “nefarious” reason to lie about his identity. The Secretary says that, by comparison, Mr Favero concealed and changed his identity for a nefarious reason, that is, to escape police detection. Mr Favero has said this may have been part of his reasoning, but his main reason was to leave his old life behind. I am not convinced that Mr Favero claimed assistance in a false name for a nefarious reason. He may have been avoiding detection, but he did not make application for newstart allowance in a false name because he would not have received it otherwise. His case does not involve a fraud of the dimension that occurred in Re Perks and Secretary, Department of Family and Community Services [2000] AATA 671, where there were multiple claims. Also, his false statement was not critical to the overpayment in the same way as in Re Stark and Department of Social Security (AATA 4762, 6 September 1988), where the misstated place of birth was essential to achieve payment. I note the judgment of the full court in Director-General of Social Services v Hales (1983) 47 ALR 281 that the tribunal in the decision appealed had wrongly considered the respondent’s failure to state her income in the context of causation of the overpayment.

22.     However, the present case is clearly distinguishable. Mr Favero’s false statements were not the cause of the payments to him. The word “fraud” is defined in the Oxford dictionary as “Criminal deception; the using of false representations to obtain an unjust advantage or to injure the rights or interests of another. Mr Favero’s deception has not given him an unjust advantage or injured the interests of others. As well, the Macquarie dictionary defines “fraud” as deceit (and other practices) by which it is sought to gain some unfair or dishonest advantage. This is not what occurred in the present case. Mr Favero obtained social security benefits to which I have decided, on balance, he would have been entitled in his own name. I find, therefore, he has not engaged in fraudulent conduct that would disqualify him under section 1223.

23.     Mr Favero was genuinely unemployed when he claimed benefits. He was not on the run after making an escape from gaol like the recipient of benefits in Re Davis and Secretary, Department of Social Security (1992) 26 ALD 595. Applying the word “unemployed” to Mr Favero’s circumstances does not strain the meaning of the concept in the same way as in the case of Mr Davis, a prison escapee. Therefore, an analogy with the Davis case is not made out.

24.     As in QX, the payments were made because the recipient was entitled to assistance and not as a result of the false statements. Similarly, I consider the payments to Mr Favero were not made as a result of the false statements and conduct identified in this section.

25.     Again, as in QX, certain answers in the claim form involve the making of a false statement in connection with a claim. Nevertheless, I find that these statements made by Mr Favero, although obviously false, did not activate section 1223(1). While the claim form, like that completed in QX, “conveyed the overall representation that a person with the assumed name with a birth date in … existed”, I am like the members in that case, unable to accept that that representation was false for the purposes of section 1223(1). As the tribunal expressed the situation at [44]:

… Rather, there was a person who, for his own reasons, had adopted a different name and birth date. But there was only ever one person, however he described himself. We are not then persuaded that the claim form conveyed a false statement in this respect.

26.     I also agree with the tribunal in QX that causation is a question of fact determined in each particular case and falsity goes to the issue of qualification or payability which depend on a range of criteria set out in the legislation. As the tribunal said, at [50]:

50. The operation of the concept of causation in this context seems to us to be no different from its operation in the area of negligence. In that context it has been held that causation is essentially a question of fact to be answered by reference to common sense and experience and one into which considerations of policy and value judgment necessarily arise: see March v E & M H Stramare Pty Ltd [1991] HCA 12; (1991) 171 CLR 506.

51. In our view the falsity must be material to the decision to pay, that is, it must be shown that the payment would not have been made, either at all or in the same amount, had the true position been revealed. Thus we consider that the falsity must either go to a qualification issue or a payability issue. By qualification we mean the generic requirements for each payment type, either common, for example, residence, or specific, for example, age requirements for aged pension or impairment levels for disability support payments or sickness allowance. By payability we refer to the range of other matters set out in the Act, such as income and assets tests, the existence of waiting periods or the effects of compensation deferments.

I have reached the same conclusion in Mr Favero’s case as the tribunal in QX.

27.     The Secretary also drew attention to the judgment of the full court of the federal court in Director-General of Social Services v Hangan (1982) 45 ALR 23 at 33. Justice Toohey, with whom Justice Fox agreed, there pointed out the tribunal in that case should have asked the question whether the relevant payments were made as a result of any failure on Mrs Hangan’s part to comply with the legislative provision being considered and whether any of those payments would have been made had there not been such a failure. I have asked these questions in relation to Mr Favero and find, on balance, that the relevant payments to him were not made as a result of any failure on his part and that payments to him would have been made had he not failed to disclose his true identity. I therefore find that Mr Favero does not have a debt to the Commonwealth arising from lack of qualification or overpayment by virtue of any provision contained in section 1223.

28. My finding that the payments were not the result of the false statements also is in line with the prosecution action taken against Mr Favero in respect to the same matters. Part 6 of the Administration Act contains provisions about offences related to social security claims. Division 2 sets out certain offences and Division 3 sets out penalties. The respondent was charged with an offence under section 214, having made false and misleading statements to an officer. However, the Secretary did not challenge the respondent’s claim that he was not charged with an offence under section 215 for obtaining a payment that was not payable to him or with making a statement to deceive or affect rates pursuant to section 213. That is, Mr Favero was not charged or convicted of an offence that involves the false statements being the cause of the payments he received.

29. Further to my remarks above about the offence and penalty provisions of the social security legislation, it is clear that Mr Favero did infringe section 214 of the Administration Act. This does not lead to a conclusion that the payments were made because of his contravention of the Act. In passing, I note that a number of documents before me do not form any part of the Centrelink records in 2001 to 2003 when Mr Favero claimed newstart allowance and are not statements made or documents used by Mr Favero in his dealings with Centrelink. These records were supplied to Centrelink by the Australian Federal Police in 2007 and were part of the evidence used when the police successfully prosecuted Mr Favero in 2003 and 2004. Mr Favero gave frank oral evidence that he had forged a number of the documents in the police files. The documents included a false business name registration and character references. Mr Favero said he had not put these false documents to any use but had created them to establish a background for his new identity in the hope they would help him get a job. When asked why he did not produce the forged documents to Centrelink he said he did not because he knew that would be wrong. He drew a distinction between the false documents and false identity he used in his application to Centrelink. He argued the false identity did not bring about any Centrelink payments to which he was not entitled because he qualified for the allowance even if he used his correct name. He needed to access social security entitlements when he could not find work and had run out of money.

waiver

30.     Although I have found that Mr Favero does not have a debt to the Commonwealth arising from his false statements or from overpayment pursuant to sections 593 or 1223, I have also considered whether any debt should be waived if I am wrong about there being no debt.

31. Section 1237AAD of the Act provides that a debt may be waived where:

• the debt did not result wholly or partly from the debtor knowingly making a false statement or false representation or knowingly failing or omitting to comply, with a provision of the legislation: s 1237AAD(a);

• there are special circumstances (other than financial hardship alone) that make it desirable to waive: s 1237AAD(b); and,

• it is more appropriate to waive than to write off the debt or part of the debt: s 1237AAD(c).

32. Mr Favero knowingly made a false statement and failed to comply with a provision of the Act, but this was not the reason he was paid. Similarly again to the tribunal’s findings in the QX case, I find that his making knowingly false statements and his knowing failure to comply with the legislation, does not result in a prohibition against waiver in this case. The question again is whether the debt resulted from that falsity. This does not ensue in the circumstances of this case. As the tribunal said in QX, if the payment was not the result of the falsity, the resulting debt was not.

33.     The term “special circumstances” requires circumstances out of the ordinary. In another case concerning recovery of an overpayment, Dranichnikov v Centrelink (2003) 75 ALD 134 at 148, the court considered the way the overpayment arose was pertinent to the decision whether the debt should be waived. As I am satisfied that Mr Favero would have been entitled had he applied in his own name, this is a consideration relevant to waiver of any resulting debt. His entitlement takes this case out of the ordinary and gives it a “special” character.

34. Mr Favero has a job and has not asked that the debt be written off. However, having to repay over $17,000 would leave him with no income for some months or require a lengthy period of instalment payments. This indicates to me that it would be more appropriate to waive than to write off any debt. Had it been necessary to consider waiver, I would have reached the conclusion that each of the matters in section 1237AAD was made out.

decision

35.     The decision of the SSAT is affirmed.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Ms Robin Hunt, Senior Member

Signed: ........................[Sgd]..........................
  Associate

Date of Hearing:  1 February 2008
Date of Decision:  21 April 2008
Appearance for the Applicant:       Self-represented
Counsel for the Respondent:         Ms K Eastman
Solicitor for the Respondent:          Ms A Nanson