Khan and Secretary Department of Family and Community Services

[2004] AATA 1267

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1267

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/690

GENERAL ADMINISTRATIVE DIVISION		)
Re		YOUMNA KHAN

Applicant

And SECRETARY DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr M Griffin, Member

Date30 November 2004

PlaceSydney

Decision The Tribunal affirms the decision under review.  

..............................................

M Griffin   Member

CATCHWORDS

SOCIAL SECURITY – sickness allowance - overpayment – raise and recover debt – whether to write off or waiver of debt – special circumstances – decision under review affirmed

Social Security Act 1991

Dranichnikov v Centrelink (2003) 75 ALD 134

REASONS FOR DECISION

30 November 2004 Mr M Griffin, Member         

1.      This is an application by Mrs Youmna Khan (“the Applicant”) for review of the decision of the Social Security Appeals Tribunal (“SSAT”) dated 19 December 2002 to raise and recover a debt of Sickness Benefit from Mrs Kahn in the amount of $7470.94.  

2.      The history of this application is as follows: On 18 May 1989, a debt of $6,955.94 was raised by the Secretary, Department of Family and Community Services (“the Respondent”) against Mrs Khan for overpayment of sickness allowance. On 26 August 1989, a charge of $515 was added to the debt for non-payment. On 7 January 2002, an authorised review officer (“ARO”) affirmed the decision to recover the debt. Mrs Khan appealed the decision to the SSAT who referred the case back to the original decision maker who, on 12 August 2002, reaffirmed the decision.  On 1 November 2002, the ARO affirmed the decision to raise the debt which was further affirmed by the SSAT, on 1 November 2002, which is the decision under review in this matter. 

3. At the hearing of this matter on 3 August 2004 Mrs Khan was assisted by her husband Mr Sher Afzal Khan. Ms Green, a Centrelink advocate, represented the Respondent. The Tribunal received into evidence the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act1975 (T1-T34, pp1-127) and Exhibits A1 and A2 for the Applicant and R1 and R2 for the Respondent.

background

4.      On 17 December 1984, Mrs Khan became a director of Jungilo Pty Ltd, (later renamed Oriental Import and Export Proprietary Limited) (“the Company”).

5.      On 20 January 1987, Mrs Khan lodged a ‘Statement by the Spouse of a Beneficiary’ form with the Respondent, declaring that she was not self-employed in a profession, trade or business, whether on her own account or as a member of a partnership.  

6.      Between 2 April 1987 and 8 March 1988, Mrs Khan was granted and paid sickness benefit.

7.      Following investigations, the Respondent found that Mr and Mrs Khan were directors and shareholders of the Company. Company records indicate that Mr and Mrs Khan, as at 30 June 1986, were the only shareholders of the company and that 11,000 shares had been issued to Mr Khan and 9,000 shares to Mrs Khan. Minutes of company meetings, dated 18 September 1986, indicate that a further 13,750 shares were allotted to Mr Khan and a further 11,250 shares to Mrs Khan on that day. On the basis of this information it was decided, on 18 May 1989, to raise and recover from Mrs Khan a debt of $6,955.94: being overpayment of sickness benefit for the period 2 April 1987 to 8 March 1988.  

8.      On 26 August 1989 an additional charge of $515.00 was imposed because the debt had not been discharged within three months after Mrs Khan had been given notice of its existence. As at that date the total amount of the debt was $7,470.94.

9.      On 12 April 2000, the Respondent took action to recover the debt from Mrs Khan by making deductions from her age pension.   

10.     Mrs Khan then sought a review of the decision to raise and recover the debt on the grounds that more than six years had past without any recovery action being initiated and therefore the Commonwealth was out of time to recover the debt.

11.     On 5 June 2000, a Centrelink officer determined that the Commonwealth was not prevented from recovering the debt on that ground and the decision was confirmed by that officer on 3 October 2001. A further review at the request of Mrs Khan was undertaken on 7 January 2002 and the ARO affirmed the decision.

12.     On 2 April 2002, Mrs Khan sought review of the decision from the SSAT. The matter was set down for hearing by the Tribunal on 3 June 2002 but it was established that Mrs Khan had also sought a  review of the decision to raise the debt not just the action to recover the debt and the matter was remitted to Centrelink so that that aspect of the decision could be reviewed. On 12 August 2002, the decision to raise the debt was affirmed by a Centrelink officer and on 1 November 2002 an ARO affirmed that decision.

13. The debt could be recovered some 11 years after it had originally been raised, because action had been taken on 30 November 1994, a period of five years and six months from the date the debt first was raised (18 May 1989). The reason for this was that section 1231(2E) of the Social Security Act 1991 (“the Act”) allows a period of six years for the recovery of a debt before the Commonwealth before recovery is time barred. Similarly, because further action occurred on 12 April 2000, when the decision was made to recover the debt through withholdings from Mrs Khan’s age pension, and this date was five years and five months later, the Commonwealth had again not exceeded the six year time bar and was not precluded from recovery of the debt.

14.     The ARO found that Mrs Khan’s involvement with the Company precluded her from qualifying for sickness benefit under the Social Security Act 1947 (“the 1947 Act”) as it then stood. The reason for this was that Mrs Khan could not be considered as unemployed which was one of the qualifying conditions for entitlement to sickness benefit.

15.     On 19 December 2002, the SSAT affirmed the decision. Mrs Khan seeks review of that decision.

issues

16.     The issues to be decided in this matter are whether:

(a) The debt owing by Mrs Kahn of $7470.94 was correctly raised; and if so

(b) Special circumstances exist which would make it preferable to waive all or part of the debt, pursuant to section 1237AAD of the Act.

evidence

17.     Mrs Khan gave oral evidence. The Tribunal asked Mrs Khan about her involvement in the Company. She said that she had never been involved in the Company, that she had never worked with the company and had never received any money from the company. She said :

“sometime my husband brought a paper home and said: You have to sigh this one, I am establishing the company and I signed it. Sometimes I do sign paper for him but money wise, I never actually, once we lost our furniture. I was in the hospital having my cancer - colon operation - when I was in hospital my husband came home, he couldn’t open the door because the key was changed, our furniture was gone because we couldn’t pay the mortgage and how come we have the money and we can not pay our mortgage. We didn’t have any income and was St. George, and they came and they … change the lock, they took our furniture because we couldn’t pay the mortgage.”

18.     Mrs Kahn’s written submission state, at page 7, that:

“It should also be noted that Centrelink has recognised that the business did not operate during the debt period, by cancelling Mr Khan’s debt for the equivalent period (T17).  If it is agreed that the business did not operate during the debt period, that it follows that Mrs Khan was unemployed during this time and therefore eligible for sickness benefit.”

19.     Mrs Khan was cross-examined about a Centrelink form which she completed upon return to Australia in May 2003 (Exhibit R1, attachment D). In that form she declared that she had been self-employed in New Zealand for six years. Mrs Kahn said that she had operated a market store selling leather goods and garments, a similar business to that which she and her husband had been the directors of in their Company. Mrs Khan said that the statement in form was incorrect and that she had only operated the business for sometime less than a year.

20.     Mr Khan gave oral evidence. He described a series of business enterprises in which he had been involved over many years, all of which had failed. Mr Khan was questioned about the various taxation returns and profit and loss statements prepared by his accountants and also about the numerous overseas trips he had made during the relevant period. Mr Khan said that the cash flow figures were all projections and that no monies were ever in fact received. He said that his frequent journeys overseas were occasioned by his need to be in Pakistan for the protracted litigation involving the loss of the substantial monies he had paid for stock which had been misappropriated by his brother. Mr Khan was asked how he was able to afford such an amount of overseas travel when his wife was receiving sickness benefits and he was on unemployment benefit. He said that he was not here to be cross examined about his trips and “my thing”. He said: “you can ask me about Mrs Khan and I’m giving you the answers so I don’t have to give you any other answer on that.” Pressed further on the point Mr Khan agreed that his family had gifted some money to him during the relevant period.

consideration of the issues

21.     The applicable law in determining whether the debt was correctly raised is sections 116 and 117 of the 1947 Act. These sections state that for a person to qualify for a sickness benefit, the person must be qualified to receive an unemployment benefit in respect of that period.

22.     Mrs Khan claims to have been unemployed during the relevant period because she had no involvement whatsoever in the Company and because the Company effectively was not operating.  

23.     I had the benefit observing Mr and Mrs Khan give oral evidence in person. I formed the clear impression that they were not reliable witnesses. The history of the family businesses demonstrate that Mrs Khan originally worked in her husband’s shop and later operated a market store in the same line of business in New Zealand. During the relevant period, Mr Khan was largely absent from the country and Mrs Khan remained at the family home. The Centrelink form completed by Mrs Khan upon her return to Australia clearly indicates that she was self-employed for six years in New Zealand. It is not apparent on the construction of this document how she could have mistaken the period of employment. Mr Khan gave confusing and inconsistent oral evidence. His explanations for his protracted absences from Australia were unconvincing. He declined to answer questions when they were first put to him and gave a clear impression of prevarication.

24.     The Tribunal does not accept the evidence of Mrs Kahn and her husband that she was unemployed during the relevant period. The Tribunal relies on evidence that Mrs Kahn was involved with her husband’s shop and market store, demonstrating many years experience of and participation in the leather fashion goods business.  The Tribunal also relies on the substantial documentary evidence of significant sums of money passing through the various tax returns a and cash flow forecasts as well as Mr Kahn’s extensive overseas travel.  Therefore, the Tribunal finds that the debt of $7470.94 was correctly raised.

25. The final issue is whether ‘special circumstances’ exist in which it would be appropriate to waive all or part of the debt pursuant to section 1237AAD of the Act. The term ‘special circumstances’ was discussed in Dranichnikov and Centrelink (2003) 75 ALD 134:

“65     The decision-maker clearly also determined that the circumstances were such that they were not exceptional or unusual so that waiver could not be made as a matter of discretion under s 101. That equates “special circumstances”, as that expression is used in the Administration Act with either exceptional circumstances or unusual circumstances. The origin of the test apparently adopted by the secretary appears to be the decision of the first instance judge in Beadle v Directory-General of Social Security (1985) 7 ALD 670; 60 ALR 225. That was a decision under previous legislation, the history of which is referred to by French J in Secretary, Department of Social Security v Hales (1998) 82 FCR 154; 51 ALD 695; 153 ALR 259. The Full Court in Beadle comprising Bowen CJ, Fisher and Lockhart JJ, however, was of the view that it was not possible to lay down precise rules as to what constituted special circumstances under the then s 102(1)(a) of the Social Security Act 1947 (Cth). Their Honours point out that the question whether there were special circumstances was one for the decision-maker (in that case the Director-General) bearing in mind the purpose for which the power was given. The reference to the first instance decision from which the words “unusual, uncommon or exceptional” come was not actually affirmed by the Full Court.

66 To some extent the question whether there were special circumstances must depend on how it came about that the error occurred. Again that is not a matter to which the decision-maker apparently averted. Other cases which have considered analogous words such as “special reasons” has tended 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 contexts in the decision which Lockhart, Shepherd and Burchett JJ discuss.

67     It is possible to read the decision statement as suggesting that the present case was one incapable of falling within the words “special circumstances”. If that is what was held, it would involve legal error. However, the real problem with the exercise of discretion under s 101 as with the mandatory provisions of s 97, is that the decision-maker appears not to have considered at all what the circumstances were which gave rise to the overpayment. Whether those circumstances were or were not special will obviously be a matter for the decision-maker when the factual circumstances have been ascertained.”

26.     On the evidence presented, I find that there are no personal, financial, medical or other matters raised by Mrs Khan that constitute special circumstances, nor is there anything in the circumstances which gave rise to the debt that constitute special circumstances. Therefore I find that special circumstances do not exist and the debt should not be waived.

decision

27.     The Tribunal affirms the decision under review.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M Griffin, Member

Signed: A. Krilis
  Associate

Date/s of Hearing  3 August 2004
Date of Decision  30 November 2004
Representative for the Applicant    Self
Advocate for the Respondent        Ms Jane Green