Kania and Department of Family and Community Services - [2000] AATA 1065

DECISION AND REASONS FOR DECISION [2000] AATA 1065

ADMINISTRATIVE APPEALS TRIBUNAL)
  Nº N99/782
GENERAL ADMINISTRATIVE DIVISION)
           Re:     IRENE KANIA
  Applicant
           And:    SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal: Mrs H.E. Hallowes, Senior Member

Date:4 December 2000
Place:Sydney

Decision: The decision of the Social Security Appeals Tribunal made on 29 April 1999 is set aside, and a decision substituted that half of the debt the applicant owes the Commonwealth is waived under section 1237AAD of the Social Security Act 1991. The remaining debt shall be recovered at $50.00 per fortnight.

(sgd) H.E. Hallowes
Senior MemberSOCIAL SECURITY — widow's pension — marriage-like relationship conceded — overpayment — whether special circumstances — whether "knowingly" made false statements — sudden death of partner — poor state of health — age of uncertainty — poor state of health
Social Security Act 1947
Social Security Act 1991 s.1237AADD
Re De Neumann and Secretary, Department of Social Security (1996) 45 ALD 787
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Re Beadle and Director-General of Social Security (1984) 6 ALD 1; (1985) 7 ALD 670

REASONS FOR DECISION

4 December 2000 Mrs H. E. Hallowes, Senior Member

The only issue in this application is whether Ms Kania's debt of overpaid widow B pension, amounting to $29,056.60, paid to her during the period 16 January 1992 to 29 June 1995, should be waived under section 1237AAD of the Social Security Act 1991 ("the Act"), which provides:
1237AAD 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 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.
Note:Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the documents"), together with further material lodged by both parties at the hearing. Ms Kania was represented by Ms S. Koller, solicitor, Welfare Rights Centre, Sydney. The Secretary was represented by Mr J. Kenny, an advocate with Centrelink.
The documents disclosed that a decision was made by a delegate of the Secretary on 26 March 1996 to raise the overpayment. The decision was affirmed by an authorised review officer ("ARO") and later by the Social Security Appeals Tribunal ("the SSAT") on 29 April 1999. In lodging an application for review of the decision of the SSAT, Ms Kania's daughter, Ms M. Stocks, advised the Tribunal, amongst other things:
. . . My mother believed that she was on the Aged Pension . . . not the Widows pension, . . . my mother was sent the notices, however they do not dispute that my mother did not read the back of those letters . . . she believes that her health problems have become worse since she was first approached by the department in 1995 in regards to her overpayment and they have continued to worsen. . . . she wishes to state that at no time that she was living with Mr Noel Hunter did she knowingly fail to comply with the laws of the Social Security Act.
The Tribunal was provided with statements of facts and contentions by both parties. It was contended by Ms Koller on Ms Kania's behalf that:
. . .

She suffers chronic health conditions which require her to maintain insurance and include costly and painful treatment;
She has additional expenses due to her lack of mobility and the need for the community bus and taxis;
She has not been able to free herself of the debts incurred during Mr Hunter's lifetime, at a time when she expected to have a capacity to repay;
She is unable to improve her situation due to her health and age;
She suffered anxiety and depression in consequence of Mr Hunter's demise and the subsequent events;
Her situation is affected by lack of education and life skills.
. . .

Mr Kenny contended on behalf of the Secretary that no special circumstances exist in this matter and that Ms Kania should have been aware of the Secretary's interest in her marital status after she was visited by a field officer from the then Department of Social Security ("the department") in February 1991. A record of the interview conducted by the field officer was included in the documents (T10). The Tribunal notes that in lodging her claim for pension on 18 November 1986 under the Social Security Act 1947 Ms Kania had ticked the box that she was claiming Supporting Parents' Benefit. She recorded that her date of birth was 22 September 1931 and she provided an address in Mt Druitt. She indicated that she had claimed a payment from the department in the past for sickness benefit. She advised that she had her daughter, Michelle, who was under 16 years, in her care. By letter dated 9 December 1986, she was advised that she had been granted widow's pension and she was given notice that, if she changed her address, she should advise the department immediately. On 23 July 1990 Ms Kania, having apparently moved from Mt Druitt to Penrith, advised a further change of address to Emu Heights. She did not provide any details with respect to whether she owned her home or whether she was paying rent or receiving free accommodation, but she advised that she was paying for food each week. The main reason for her move was to "move in with my daughter". At interview on 13 February 1991 Ms Kania gave her current address as being the house she shared with her daughter at Emu Heights. It was recorded that she provided information that she stayed at "Noels place" most weekends. The house in Emu Heights was owned by her and one of her daughters. She advised that she had never resided with Mr Noel Hunter in Blaxland "in a situation similar of that to husband and wife".
Mr Kenny noted letters sent by the department to Ms Kania dated 16 March 1992 (T11), 16 January 1993 (T13), 20 September 1993 (T14), 8 June 1994 (T15) and 15 August 1994 (T16) which advised Ms Kania that she should read the back of the letters which told her of her obligations under the Act, including that she should tell the department if she started living with someone as if she was married to them. The earlier letters referred to Ms Kania as being in receipt of widow's pension; the letters in 1994 however only referred to "your pension".
The documents include a copy of Mr Hunter's death certificate, his date of death being recorded as 6 July 1995 on which Ms Kania is recorded as his "de facto", and a record of interview with Ms Kania, dated 8 December 1995 (T18), in which she said that she had not advised the department of her relationship with Mr Hunter because "I did not think they needed to know about it because I thought I received age pension and not widows pension". She stated that she had been in a marriage-like relationship as a member of a couple with Mr Hunter since 28 December 1991. She said that she was now aware that the department assessed people's entitlements depending on whether they were single or a member of a couple.
In considering whether Ms Kania had not been entitled to be paid widow's pension during the relevant period, a delegate recorded on 26 March 1996 that "Client moved to partners address and did not advise the department until 1994. When client advised of change of address, she did not advise of relationship". The earlier record of interview referred to above and the interview with Ms Kania, which was conducted on 8 December 1995, apparently both occurred as a result of "public allegations". At the hearing Ms Kania suggested that those allegations were made by members of Mr Hunter's family.
The documents include medical reports from Dr P. Louda, Ms Kania's general practitioner, dated 4 November 1986, although the Tribunal is satisfied that the year should probably read 1996, and 20 May 1999. Dr Louda advised that he has known Ms Kania since 1986 and that he has been her family doctor for 13 years. He went on to record that Ms Kania has brought up six children more or less on her own and that she has suffered for many years from "the most severe Rheumatoid Arthritis I have attended to during my 32 years in medical practice". Ms Kania has also had to undergo a number of surgical procedures, laminectomy and spinal fusion, multiple fusions in her ankles and feet. She suffers side effects from the complicated anti-arthritic medication she has to take. Dr Louda noted that Ms Kania's de facto relationship ended quite tragically when Mr Hunter died suddenly at the age of 59 years. In his opinion this created severe emotional trauma for Ms Kania and he has prescribed anti-anxiety and anti-depressive medication since then. He noted that Ms Kania needed to spend quite a large amount of money on medication.
Ms Kania gave oral evidence to the Tribunal. She received little education. Her first language is French. She came to Australia with her husband in 1966, finally settling here in 1968. Her six children are now aged 26, 34, 36, 45, 46 and 47 years. She was divorced from her husband approximately 17 years ago. She undertook some domestic work before hurting her back. She met Mr Hunter towards the end of 1991. Although she moved to where he lived, she told the Tribunal that it was "not my place". Mr Hunter's wife and friend lived upstairs and on many occasions Ms Kania thought that she may return to live with one of her daughters. She was never sure she was going to stay in Blaxland. Mr Hunter was not divorced and she did not know if he would ever reach a settlement with his wife. Ms Kania told the Tribunal that she "held back" because she did not have "the trust". She therefore did not change her address for correspondence. Her daughter completed forms which came for her from the department. She did not know what Mr Hunter earned or that it would affect her social security payment.
When Mr Hunter died suddenly, in July 1995, his wife and daughter told Ms Kania to immediately move out of Mr Hunter's home. Ms Kania's daughter approached a solicitor and Ms Kania received his superannuation lump sum of $60,000.00 after entering into a Deed of Family Arrangement in April 1996. She outlined her expenses to the Tribunal and the debts which she now owes. The debts were amassed when Mr Hunter supported her and she did not anticipate being in financial difficulty. She receives a French pension of approximately $170.00 per fortnight which she uses to pay the park fees where her mobile home is situated. She received a compensation payment in the early 1980s and she outlined how that money had been lent to her son and in return he made contributions to an AMP account for her. There were some assets she had and which she did not disclose to the Secretary. She said that her health is not very good and she outlined her medical conditions, described by Dr Louda
Mr Kenny put to the Tribunal that Ms Kania's credit was in issue. He noted that Ms Kania had purchased a home with one of her daughters where her mail was delivered and that she had acknowledged that her name was still on the title to the property, although she failed to disclose to the Secretary that she had an interest in the property. Before departing overseas in May 1994, she had ticked boxes indicating to the Secretary that she did not own her own home. She did not complete any details with respect to a partner. Under cross-examination, Ms Kania conceded that she was able to attend a departmental office alone and that she was satisfied counter staff understood what she said when completing an application form for payment of pension. She also conceded that Mr Hunter had been her partner, but she went on to say "What was mine was mine", and that she and Mr Hunter kept their money quite separate. Ms Kania said that she used the proceeds of her AMP investment to decorate her mobile home and she acknowledged that she has a collection of porcelain dolls.
Ms Stocks also gave oral evidence to the Tribunal. She outlined her knowledge of her mother's relationship with Mr Hunter until September 1991 when she had left to join the Army.
Turning to section 1237AAD of the Act and whether Ms Kania "knowingly" made false statements or failed, or omitted to comply with provisions of the Act, Ms Koller referred the Tribunal to a number of decisions where that issue had been considered. In Re De Neumann and Secretary, Department of Social Security (1996) 45 ALD 787, at page 788, the Tribunal was satisfied that the applicant was not aware of the provisions of the Act and that she had not fraudulently or knowingly failed to comply with them. The Tribunal accepted that the applicant was genuinely confused. The applicant suffered considerable health problems in that matter and she had endured human rights abuses as a prisoner of war. The Tribunal found that a combination of illness, ignorance and isolation was sufficient to amount to special circumstances under the Act.
In Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 the Tribunal, having considered a number of authorities, said, at page 445:
(48) There is nothing in s 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.
(49) In this case, the emphasis of Mr and Mrs Callaghan's evidence was more upon their belief that the one department paid them than upon their state of mind in complying with their obligations under the Act. Mr Callaghan has acknowledged that he had received notices under s 727 of the Act and that he had read at least one of them. I am satisfied both on the material in the T documents and on his oral evidence that he received more than one of them and that he read the first one. On the basis of the notices themselves I am satisfied that they clearly set out his obligation to advise the department should his income, or that of Mrs Callaghan, change. I am also satisfied from the notice that it quite clearly stated that income included Austudy benefits. Taking into account Mr Callaghan's knowledge of the notice and of his having read at least one of them, I find that he knew that he had an obligation to advise of a change in Mrs Callaghan's income. Therefore, when he failed to advise of the change he knowingly omitted to comply with a provision of the Act.
Ms Koller noted Ms Kania's limited education and her inability to read English, so that she was unable to avail herself of information. She put to the Tribunal that Ms Kania had been isolated in her marriage and that she did not know the system of income support under the Act. She may have been confused as to what pension she was being paid, having first been granted a pension because she had children under the age of 16 years in her care and then she was not sure as to whether she was entitled to be paid widow's or age pension.
Mr Kenny put to the Tribunal that Ms Kania knowingly concealed the fact that she had a partner and where she lived from the department. He noted that she had failed to disclose her investment with AMP. He suggested to the Tribunal that she was "astute" and he noted that she now lives independently.
For those whose employment involves regular application of the Act to customers' circumstances, it may be difficult to appreciate that those dependent on the Act for financial support may not comprehend explanations with respect to entitlement given either orally or in writing. If financial support is forthcoming, customers may not reflect upon their own obligations under the Act even if they have understood explanations given to them. On the other hand, Ms Kania had dealings with the department over a number of years before the period when her overpayment arose which should have assisted her in understanding her obligations. She may have avoided, or deliberately chosen, not to fully acquaint herself with her obligations to the Secretary.
Ms Kania finally settled in Australia in 1968 and, although it was put to the Tribunal that her husband had denied her the opportunity of mixing in the community and that he did everything for her, the Tribunal notes that she was employed from time to time outside the home and that her children all attended school in Australia. She acknowledged that she learnt from them. She had worked in a hospital for six years until 1984. She was able to go to a solicitor and to arrange a separation from her husband, and for her husband to pay for the children.
Ms Kania did not dispute before the Tribunal that she was in a marriage-like relationship with Mr Hunter. She probably had little choice in so doing in these proceedings as she had used that contention to support her claim with respect to Mr Hunter's estate. The evidence satisfies the Tribunal however that she should be given the benefit of any doubt, the Tribunal has as to whether she "knowingly" made false statements. It appears to the Tribunal that Ms Kania's daughters have been the driving force in protecting their mother's interests and that she has relied on them to a large extent. She has placed her trust in others. On the balance of probabilities, she is not an "astute" woman. The debts she amassed at the time of her relationship with Mr Hunter point to her having some feelings of financial security, although the Tribunal is satisfied, on the other hand, that she continued to feel some insecurity in her living arrangements. She always knew that she could return to live in the house she owned with Natalie. It is possible that Ms Kania had a clear understanding of the situation and that she deliberately withheld information from the department in order to enhance her financial circumstances which enabled her to enjoy a standard of living she had not had during her marriage. She has been able to surround herself with possessions such as her porcelain dolls which she would otherwise not have been able to afford. The Tribunal has had some time to consider Ms Kania's responses to questions asked of her in the interview conducted in February 1991 and it is satisfied that, in stating that she had never resided with Mr Hunter in a situation similar to that of husband and wife, there were sufficient grounds for her to have genuinely held that belief and the Tribunal finds that she did not knowingly make a false statement or false representations; nor, from her understanding, did she omit to comply with a provision of the Act.
Turning to section 1237AAD(b), French J in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 said, at pages 702-703, having considered Re Beadle and Director-General of Social Security (1984) 6 ALD 1 and (1985) 7 ALD 670:
. . .
The concept of special circumstances is broad.   A constellation of factors, including financial circumstances, may fall within it.   The express exclusion of financial hardship alone as a special circumstance is an indicator that it would otherwise be included.   This gives some measure of the range of circumstances which will qualify as special.   But as a matter of grammar and ordinary logic, the exclusion of financial hardship alone as a special circumstance does not mandate its inclusion in the range of matters constituting such circumstances for the purpose of enlivening the secretary's discretion.
On this point and as a matter of construing this section by reference to the ordinary meaning of its words, the secretary's submission that there cannot be special circumstances for the purpose of s 1237AAD(b) unless there is also financial hardship is not accepted.   The explanatory memorandum does not undercut this conclusion.   There it is said that the new special circumstances provision can only be used where the debt arose because of an innocent mistake by a social security recipient.   Second, it is said that financial hardship of itself is not a sufficient reason to waive the debt.   This is in substance a restatement of the ordinary meaning of the provision.
The evident purpose of s 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. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words. It may be that there will be few cases in which the secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the secretary would exercise the discretion to waive in the absence of financial hardship. But to anticipate the limits of the categories of possible cases by imposing on the language of the section a fetter upon its application which is not mandated by its words, is to erode its useful purpose.

The Tribunal turns to the report of Dr Louda where he describes the sudden death of Mr Hunter and the emotional trauma this caused Ms Kania, particularly in light of the insecure position that placed her in at the very time she needed support. She also lives in considerable pain, and has had to undergo a number of operations. In considering its discretion the Tribunal is satisfied that Ms Kania's circumstances are special such that it is desirable to waive part of the debt. The debt preys upon Ms Kania's mind. The sudden death of Mr Hunter caused Ms Kania emotional stress, but also, at her age, uncertainty as to the future. She was forced to leave Blaxland and it is the circumstances which prevailed at that time which satisfies the Tribunal Ms Kania's circumstances are special. Those suffering a similar bereavement to Ms Kania normally have time in which to make an appropriate decision as to where they should live. Ms Kania was not given that time by Mr Hunter's relations. She also has considerable medical expenses.
The Tribunal is satisfied however that the whole of Ms Kania's debt should not be waived. She has had the advantage of public moneys during a period when she now acknowledges she lived as a member of a couple. She has an asset, her mobile home, which she would not otherwise have had if she had not been Mr Hunter's partner. The Tribunal intends to waive half of Ms Kania's debt, and to limit the rate of recovery of the remaining debt to $50.00 per fortnight. The Tribunal is satisfied that it is more appropriate to waive part of the debt than to write off all or part of the debt, for if the debt was written off the possibility of the debt being brought back into account would remain and this would not assist Ms Kania's mental state. Ms Kania has other debts which she must pay off, as the result of purchases she made when she was in receipt of a social security payment during the period she was supported by Mr Hunter. She had no expectation that Mr Hunter would die in his fifties.
It is for these reasons that the Tribunal will set aside the decision under review and substitute a decision as indicated above.
I certify that the twenty-four [24] preceding paragraphs are a true copy of the reasons for the decision herein of
Mrs H.E. Hallowes, Senior Member
(sgd)         Catherine Thomas
                 Personal Assistant
Date of Hearing:  12.07.00
Date of Decision:  04.12.00
Solicitor for the Applicant:           Ms S. Koller, Welfare Rights Centre
Solicitor for the Respondent:       Mr S. Kenny, Advocate with Centrelink