Kothe and Secretary, Department of Social Services (Social services second review)

[2020] AATA 3195

Kothe and Secretary, Department of Social Services (Social services second review) [2020] AATA 3195 (27 August 2020)

Division:GENERAL DIVISION

File Numbers:2019/2035 & 2019/2040         

Re:Marie   Kothe

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member C. J. Furnell

Date:27 August 2020

Place:Melbourne

In relation to Tribunal matter 2019/2035 regarding a debt allegedly arising from an overpayment of age pension the Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with directions that:

(a)Ms Kothe be considered to be indebted to the Commonwealth as a result of the amount paid to her by way of the age pension in the period 21 February 2012 to
5 February 2018 exceeding her entitlement to the age pension.

(a)The resultant indebtedness is recoverable in that, in the circumstances, it ought not be written off and the right to recover it ought not be waived.

(b)In calculating the amount of the resultant indebtedness, Ms Kothe be considered to be a member of a couple with Mr Kothe in the period 21 February 2012 to 5 February 2018;

(c)In calculating the amount of the resultant indebtedness Ms Kothe be considered to have failed to report $235,327.72 of her income in the period 21 February 2012 to 11 September 2017.

In relation to Tribunal matter 2019/2040 regarding a debt allegedly arising from an overpayment of family tax benefit, the Tribunal sets aside the decision under review and, in substitution, decides that Ms Kothe is not indebted to the Commonwealth in respect of payments made to her by way of family tax benefit in respect of the period
1 July 2014 to 23 July 2014.

...............[sgd]......................................
Senior Member C. J. Furnell

Catchwords

SOCIAL SECURITY – age pension – single rate of pension – whether member of a couple in the relevant period – whether living separately and apart under the one roof – whether special reason not to treat as a couple – failure to disclose income earned – whether debt should be written off or waived – decision remitted with direction

SOCIAL SECURITY – family tax benefit – whether member of a couple in the relevant period – decision set aside and substituted

Legislation

A New Tax System (Family Assistance) Act 1999 (Cth)
A New Tax System (Family Assistance) (Administration) Act 1999 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth)
Crimes Act 1914 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)

Supreme Court Act 1986 (Vic)

Cases

Albion Insurance v GIO (1969) 121 CLR 342Beverley Sybil Anderson and Secretary, Department of Social Security [1993] AATA 172
Boscolo v Secretary, Department of Social Security [1999] FCA 106
Boskoski and Secretary, Department of Social Services [2014] AATA 915
Bozdag and Secretary, Department of Social Services (Social services second review) [2016] AATA 765
Dietman and Repatriation Commission (Veterans' entitlements) [2019] AATA 4428
Dimov and Secretary, Department of Family and Community Services [2005] AATA 912
DlabiI and Secretary, Department of Social Services (Social services second review) [2016] AATA 20
Donnelly v Minister for Immigration and Border Protection [2019] FCA 798
Frugtniet v Australian Securities and Investments Commission [2019] HCA 16
Hutchinson v Comcare [2019] FCA 1440
In the Marriage of Todd (No.2) (1976) 9 ALR 401Irwin v Military Rehabilitation and Compensation Commission [2009] FCAFC 33
Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Kettlewell and Secretary, Department of Social Services (Social services second review) [2018] AATA 8Lees v Comcare [1999] FCA 753
Lyons and Secretary, Department of Social Services (Social services second review) [2018] AATA 3644
Micallef and Secretary, Department of Family and Community Services [2004] AATA 485
Milovanovic and Secretary, Department of Employment and Workplace Relations [2006] AATA 930
Melvin v Secretary, Department of Social Security [2016] FCA 375  
Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469
Minister for Home Affairs v Sharma [2019] FCA 597
Mosaui and Secretary, Department of Social Services (Social services second review) [2019] AATA 715
Official Trustee on behalf of Jennie Martyniak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 5
Pala and Secretary, Department of Family, Housing, Community Services and Indigenous Affairs [2010] AATA 1070
Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546
R v Kothe [2019] VCC 2251
Re Atiwill and Secretary, Department of Education, Employment and Workplace Relations [2013] AATA 148
Re Sperring and Secretary, Department of Employment and Workplace Relations [2007] AATA 1050
Re Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729
Secretary, Department of Education, Employment and Workplace Relations and Hitchcock and Anor [2008] AATA 677
Secretary, Department of Employment and Workplace Relations and Gilson [2007] AATA 1361
Secretary, Department of Social Services v Hales (1998) 82 FCR 154
Secretary to the Department of Justice and Regulation v LLF [2018] VSCA 155
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Staunton-Smith v Secretary, Department of Social Security (1991) 32 FCR 164
Superannuation Warehouse Australia Pty Ltd and Australian Securities and Investments Commission [2019] AATA 88Szoxp v Minister for Immigration and Border Protection [2015] FCAFC 69
Tobin and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Anor [2010] AATA 284
Utczas and Secretary, Department of Social Security [1989] AATA 756
Vincent v Military Rehabilitation and Compensation Commission [2010] AATA 180

Vo and Secretary, Department of Social Services (Social services second review) [2019] AATA 2341

Secondary Materials

Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991 (Cth)

Pearce, Dennis C, Administrative Appeals Tribunal (LexisNexis Butterworths, 4th ed, 2015)

REASONS FOR DECISION

Senior Member C. J. Furnell

27 August 2020

1. Ms Kothe has applied to the Tribunal[1] for review of decisions made by the Tribunal’s Social Services and Child Support Division (SSCSD) on 1 March 2019[2] (AAT first review decisions).

   [1] T3.

   [2] T4.

2. The essential (but not only) question in issue in this review is whether, for the purpose of calculating her entitlement to the age pension, Ms Kothe was a member of a couple in the period 21 February 2012 to 5 February 2018.

3. I have decided that she was for reasons which I will soon outline. Before doing so, however, I propose first to identify the decisions the subject of review, the issues to be addressed in reviewing those decisions, the material I had before me and the legislative and factual context.

   DECISIONS SUBJECT OF REVIEW

4. The issues now to be addressed by the Tribunal flow from the task it is undertaking. That task involves it doing over again that which was done in the making of the decisions the subject of review. The boundaries of that task are marked by those decisions and the statutory questions they answer.[3]

   [3] Frugtniet v Australian Securities and Investments Commission [2019] HCA 16 at [51].

5. The decisions now the subject of review are the two decisions which, in the AAT first review decisions, the SSCSD decided to affirm.[4]

   [4] When a decision is affirmed by the SSCSD, what the Tribunal reviews is the decision as affirmed: Social Security (Administration) Act 1999, s 179.

6. The first was a decision of 27 July 2018. It concerned an alleged debt in respect of amounts paid by way of the age pension.  It was described by the SSCSD as one in which the Respondent decided that:

   Mrs Kothe had a debt of $86,779.23 due to overpayment of the age pension for the period from 21 February 2012 to 5 February 2018. Centrelink said that Mrs Kothe was a member of a couple and had incorrectly been paid the single rate of the age pension, rather than the partnered rate; and that she had not properly declared her earned income during the relevant period.

   As to this decision, the SSCSD noted that it had been affirmed by an authorised review officer on 25 October 2018.[5]

   [5] When an initial decision is affirmed by an authorised review officer, what the SSCSD reviews is the decision as affirmed: Social Security (Administration) Act 1999, s 142.

7. The second was a decision of 12 February 2018. It concerned an alleged debt in respect of amounts paid by way of family tax benefit. It was described by the SSCSD as one in which the Respondent decided that “Mrs Kothe had a debt of $198.03 due to overpayment of FTB for the period from 1 July 2014 to 23 July 2014 because they said she was a member of a couple during that period.” As to this decision, the SSCSD noted that it had been affirmed by an authorised review officer on 23 March 2018.

8. The Respondent contends that there is a third decision now the subject of review. The context in which that contention is made is as follows.

9. On 12 February 2018, the Respondent made two decisions concerning Ms Kothe. I mentioned one of them in paragraph 7 (being a decision concerning an alleged family tax benefit debt). In the other decision of 12 February 2018, it was decided that Ms Kothe and Mr Hans Kothe (her husband) “… are living as a member of a couple. This means that you are no longer able to receive Age Pension at the single rate. From 14 February 2018 your payment will be changed to the partnered rate.”[6]

   [6] T94.

10. On 23 March 2018, an authorised review officer purported to review and vary that decision of 12 February 2018. The decision so reviewed was described (inaccurately) as one “…to pay you the partnered rate of Age Pension on the basis that you have been a member of a couple with Mr Hans Kothe since 15 January 2008.” The variation to that decision entailed a determination that Ms Kothe ceased to be a member of a couple from 16 March 2018.[7]

    [7] T98.

11. Based on this 23 March 2018 decision, the Respondent contends that the Tribunal now has jurisdiction concerning the issue of whether Ms Kothe was a member of a couple with Mr Kothe in the period from 15 January 2008 (and, presumably, the issue of whether they ceased to be a couple as from 16 March 2018). It says, in effect, that the SSCSD had before it for review a decision as to that issue, albeit a decision not specifically addressed in the AAT first review decisions. I reject that contention.

12. I have jurisdiction to review the decisions affirmed by the SSCSD in the AAT first review decisions.[8] In affirming those decisions the SSCSD did not make any decision concerning the issues of whether Ms Kothe was a member of a couple from 15 January 2008 or whether she had ceased to be a member of a couple on 16 March 2018. Even if my jurisdiction extends to dealing with matters properly before, but not addressed by, the SSCSD (or original decision-maker),[9] I am not satisfied that those issues were, in fact, properly before the SSCSD (or original decision-maker).

    [8] Social Security (Administration) Act 1999, s 179.

    [9] See, for example, Irwin v Military Rehabilitation and Compensation Commission [2009] FCAFC 33 at [26].

13. First, there is no evidence suggesting that Ms Kothe sought to have the Tribunal review the 12 February 2018 decision, as varied on 23 March 2018. Consistently with the express terms of the AAT first review decisions, only two decisions would appear to have been made the subject of an application for Tribunal review.[10] 

    [10] T108, 1378 where reference is made to two “AAT1” requests of 26 November 2018.

14. Second, there had been no internal, second tier decision-making with respect to the issue of Ms Kothe’s position as from January 2008.[11] It would be inconsistent with the legislative intent apparent from the two part process provided for in the Social Security (Administration) Act 1999 for the Tribunal now to address that issue. In a different context, it has been said that “…[t]he Tribunal has jurisdiction only in relation to a reviewable decision and a reviewable decision can only be reached after a two-tier process…”[12].  As the learned author of “Administrative Appeals Tribunal” states, “…if reconsideration is a prerequisite to jurisdiction, the claim under review must have been reconsidered separately from any other claims”.[13] Here, the “claim under review” comprises a proposition that Ms Kothe was not a member of a couple as from January 2008. There has been no separate reconsideration of that claim.   

    [11] Cf Lees v Comcare [1999] FCA 753 at [39].

    [12] Vincent v Military Rehabilitation and Compensation Commission [2010] AATA 180 at [81].

    [13] D Pearce “Administrative Appeals Tribunal”, 4^th edition, 3.10, citing Comcare v Lofts [2013] FCA 1197.

15. Third, in terms of matters before the original decision-maker, I note that the 12 February 2018 decision, as varied on 23 March 2018,[14] had nothing to say as to the position prior to 14 February 2018. All that was decided on 12 February 2018 was that Ms Kothe would be paid the age pension at the partnered rate as from 14 February 2018 (despite the inaccurate characterisation of that decision on 23 March 2018).[15] The only variation purportedly made to that decision on 23 March 2018 was that Ms Kothe’s pension was to cease to be calculated at the partnered rate from 16 March 2018.

    [14] Social Security (Administration) Act 1999, s142.

    [15] This is not only reflected in the terms of the decision of 12 February 2018 (T93) but also the Respondent’s internal records concerning the making of the decision in which the officer stated simply an opinion that the relevant customers are to be treated as a member of a couple-see T108,1418.

16. In any event, in terms of the age pension, it would seem that the period prior to 2012 is irrelevant as Ms Kothe was not then in receipt of it (albeit that she was in receipt of a disability support pension for around five years before 2012.)[16]

    [16] Applicant submission of 29 April 2020.

    ISSUES TO BE ADDRESSED

17. The issues to which a review of the decisions the subject of review gives rise are whether:

    (a)For the purpose of calculating her entitlement to the age pension, Ms Kothe ought to have been taken to be a member of a couple in the period 21 February 2012 to 5 February 2018.

    (b)For the purpose of calculating her entitlement to the age pension, there had been a failure to take into account income Ms Kothe had earned in that period as a result of a failure of Ms Kothe to disclose that income.

    (c)The amount paid to Ms Kothe by way of the age pension in respect of that period exceeded her entitlement to the age pension such that she is indebted to the Commonwealth for $86,779.23.

    (d)For the purpose of calculating her entitlement to the family tax benefit, Ms Kothe ought to have been taken to be a member of a couple in the period 1 July 2014 to 23 July 2014. 

    (e)The amount paid to Ms Kothe by way of family tax benefit in respect of that period exceeded her entitlement to the family tax benefit such that she is indebted to the Commonwealth for $198.03.

    (f)Insofar as Ms Kothe is indebted to the Commonwealth, whether that indebtedness ought be written off or the right to recover it waived.

    MATERIAL BEFORE ME

18. In terms of documentary material, I had before me:

    a)a statutory declaration made by a friend of Ms Kothe’s (who, in these reasons, I shall refer to as “Claire”) on 30 July 2019;

    b)a letter of 13 November 2019 from Ms Kothe to the Tribunal (enclosing another letter of that date to the Respondent);

    c)a statement of issues, facts and contentions made by the Respondent on 29 May 2020;

    d)1447 pages of “T” documents and 53 pages of supplementary “T” documents;[17]

    e)two submissions made by Ms Kothe on 29 April 2020;

    f)a submission made by Ms Kothe on 9 June 2020;

    g)a three page undated statement of Mr Hans Kothe (Ms Kothe’s husband).

    In addition, I had the benefit of hearing oral evidence from Ms Kothe and Mr Hans Kothe, and from one of their children (who, in these reasons, I shall refer to as the “son”).

    [17] “T” is a reference to material lodged with the Tribunal under s 37 of the Administrative Appeals Tribunal Act 1975. “ST” is a reference to supplementary material so lodged.

    WAS MS KOTHE A MEMBER OF A COUPLE IN THE PERIOD 21 FEBRUARY 2012 TO 5 FEBRUARY 2018?

19. As I mentioned earlier, the first issue to which a review of the AAT first review decision gives rise is whether, for the purpose of calculating her entitlement to the age pension,
    Ms Kothe ought to have been taken to be a member of a couple in the period 21 February 2012 to 5 February 2018.

20. As is apparent from the way in which the issue is formulated, the amount of a person’s entitlement to the age pension can be affected if the person is a member of a couple. For a person not permanently blind that amount is determined using the pension rate calculator set out at the end of s 1064 of the Social Security Act 1991 (the Act).[18] Pursuant to that calculator, as a general rule, the age pension is payable at a maximum payment rate less the greater of an income reduced rate or an assets reduced rate.[19] The determination of each such rate applicable to a person is affected if the person is a member of a couple[20] so that, if a person is not a member of a couple, the rate at which the person’s age pension is payable will be higher than the rate that would be payable were the person to be considered to be partnered (i.e. a member of a couple). [21]

    [18] Social Security Act 1991, s 55.

    [19] Social Security Act 1991, s 1064.

    [20] The maximum rate for a member of a couple is less than for a person who is not a member of a couple- Social Security Act 1991, s 1064-B1. The income of a person who is a member of a couple is, in essence, the average of their respective incomes: Social Security Act 1991, s 1064-E2. The value of the assets of a person who is a member of a couple is, in essence, the average value of their respective assets: Social Security Act 1991, s 1064-G2.

    [21] Social Security Act 1991, s 4(11).

21. While arguably obvious, there are at least two reasons for the non-couple (or single) rate being higher than the partnered rate: “First, that there are economies of scale in two people living together. Second, because there has been a pooling of resources, the two people are better-off financially because they pool their joint income and assets…”[22] This suggests that the sharing of living costs and pooling of resources is indicative of a “couple” relationship, a point to which I shall return.

    [22] Pala and Secretary, Department of Family, Housing, Community Services and Indigenous Affairs [2010] AATA 1070 at [50].

22. Turning now to the position of Ms Kothe, as she has at all relevant times been legally married to Mr Kothe, she will be considered to be a member of a couple with him unless either, in the Tribunal’s opinion, they are living separately and apart from each other on a permanent or indefinite basis[23] or the Tribunal is satisfied that she ought not be treated as a member of a couple for a special reason in the particular case.[24] 

    [23] Social Security Act 1991, s 4(2).This definition of “couple” also applies in the context of the family tax benefit provisions under A New Tax System (Family Assistance) Act 1999 (see s3 of that Act).

    [24] Social Security Act 1991, ss 4(6) and 24(1).

    Separately and Apart?

23. Ms Kothe and Mr Kothe each gave evidence to the effect that, in their view, at all relevant times, they lived separately and apart from each other, albeit while living under the same roof. While their subjective views are of importance,[25] they need to be considered in the light of objective indicators as to the nature of their relationship.[26] Indeed, in arriving at my opinion as to whether Ms Kothe and Mr Kothe were living separately and apart, I am required to have regard to certain specific indicators or considerations. They are:

    (a)the financial aspects of their relationship;

    (b)the nature of their household;

    (c)the social aspects of their relationship;

    (d)the issue of any sexual relationship; and

    (e)the nature of their commitment to each other.[27]

    [25] Boskoski and Secretary, Department of Social Services [2014] AATA 915 at [63].

    [26] Official Trustee on behalf of Jennie Martyniak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 5 at [27].

    [27] Social Security Act 1991, s 4(3).

1. I address each of these specific considerations later. Before doing so, however, I should mention some propositions of general application.

2. First, the specific considerations to which I am required to have regard are not exhaustive.[28] “[A]ll the circumstances of the relationship” must be considered, having regard to the persons’ concerned “interpersonal relationship as a whole””.[29]

   [28] Social Security Act 1991, s 4(3).

   [29] Melvin v Secretary, Department of Social Security [2016] FCA 375 at [19] citing Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546 at [46].

3. Second, persons are unlikely to be considered to be living separately and apart from each other on a permanent or indefinite basis if they maintain a marriage-like relationship.[30] I note that the application of this proposition in any particular context can be difficult given that the concept of a marriage-like relationship is nebulous; what it is composed of varies from couple to couple.[31]

   [30] Pelka v Secretary, Department of Family and Community Services [2006] FCA 735 at [46].

   [31] Staunton-Smith v Secretary, Department of Social Security (1991) 32 FCR 164 at 175. See Re Sperring and Secretary, Department of Employment and Workplace Relations [2007] AATA 1050 at [70] where Senior Member Isenberg acknowledged the difficulty in ascertaining whether a particular relationship was marriage-like.

4. Third, two persons are more likely to be a couple if the relationship they share differs from that which they have with anyone else.[32] Of interest here is that, in giving her oral evidence, Ms Kothe characterised her relationship with Mr Kothe as unique.

   [32] Pelka v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] FCAFC 92 at [30]. But see also Dietman and Repatriation Commission (Veterans' entitlements) [2019] AATA 4428, where what would appear to be a unique relationship between persons living under one roof was nevertheless not such as to constitute them being a couple.

5. Fourth, the nature of a person’s relationship with another is not determined by physical aspects of the relationship. Indeed, two people may comprise a couple despite a lack of ongoing physical proximity.[33] In this regard, there is both a physical and mental element to the living separately and apart concept, with the mental element being independent of the physical one.[34] Hence, for example, the maintenance of separate physical residences does not preclude a finding that the persons concerned are a couple. [35] “What must be considered is not only whether the parties live separately, in physical terms, albeit under one roof, but also whether their de facto relationship (the consortium vitae) has broken down.”[36]  In an oft cited[37] decision of Watson J, His Honour stated that:

   …“separation” means more than physical separation — it involves the destruction of the marital relationship (the consortium vitae). Separation can only occur in the sense used by the Act where one or both of the spouses form the intention to sever or not to resume the marital relationship and act on that intention or alternatively act as if the marital relationship has been severed.[38]

   [33] Utczas and Secretary, Department of Social Security [1989] AATA 756 at [11]; Dimov and Secretary, Department of Family and Community Services [2005] AATA 912 at [31]; Szoxp v Minister For Immigration and Border Protection [2015] FCAFC 69 at [55-57].

   [34] Szoxp v Minister for Immigration and Border Protection [2015] FCAFC 69 at [55-56]; Melvin v Secretary, Department of Social Security [2016] FCA 375 at [83].

   [35] Dimov and Secretary, Department of Family and Community Services [2005] AATA 912 at [31]; Szoxp v Minister for Immigration and Border Protection [2015] FCAFC 69 at [55-57].

   [36] Official Trustee on behalf of Jennie Martyniak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 5 at [64].

   [37] See Kettlewell and Secretary, Department of Social Services (Social services second review) [2018] AATA 8 at [18] and Mosaui and Secretary, Department of Social Services (Social services second review) [2019] AATA 715 at [38].

   [38] In the Marriage of Todd (No.2) (1976) 9 ALR 401 at 403.

6. I turn now to the specific considerations to which I am required to have regard.

   Financial aspects

7. In looking to the financial aspects of the relationship between Ms Kothe and Mr Kothe, consideration needs to be given to:

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

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

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

   (d)the basis of any sharing of day‑to‑day household expenses.

8. As for the joint ownership of real estate, after their alleged separation (which, at the latest, was said by Ms Kothe to have occurred by 2003),[39] Ms Kothe and Mr Kothe jointly purchased two properties.

   [39] Ms Kothe has identified a number of years as the year in which he alleged separation from Mr Kothe commenced; 1999 (T6); 2000 (T35); 2001 (T57) 2002 (T86) and 2003 (T4 at [17] when giving evidence before the SSCSD.

9. The first property they purchased together after the alleged separation was in Cockatoo in Victoria. Ms Kothe’s evidence was that they bought this property together in 2008 and sold it in 2013.[40] The second property they purchased together was in Holbrook, New South Wales. It was purchased in 2016[41] and is currently registered in the name of both Ms Kothe and Mr Kothe, as joint tenants.[42]

   [40] See Ms Kothe’s letter of 13 November 2019 in which she states that she and Mr Kothe purchased the house in Cockatoo together.

   [41] T60.

   [42] ST2.

10. As for joint liabilities, the acquisition of both properties was financed by borrowings jointly undertaken by them. The Cockatoo purchase was initially funded by a Westpac loan taken out by both Mr Kothe and Ms Kothe,[43] a loan which appears to have been refinanced by funds they jointly borrowed from Bankwest.[44] The Holbrook property purchase was funded by an ANZ bank loan, again taken out by Mr Kothe and Ms Kothe.[45]

    [43] Undated statement of Mr Kothe; T76, 452.

    [44] T74, 293.

    [45] Ibid.

11. A joint borrowing was also undertaken by Ms Kothe and Mr Kothe in 2017 with the ANZ bank to fund renovations to the Holbrook property.[46]

    [46] T77, 525-526.

12. The joint borrowing of funds by Ms Kothe and Mr Kothe not only gave rise to material, ongoing, joint liabilities but also to significant legal obligations between them. As joint debtors they would each have a right of contribution exercisable against the other,[47] as well as a statutory right of indemnity should one of them satisfy the joint liability.[48]

    [47] Albion Insurance v GIO (1969) 121 CLR 342 at 350.

    [48] Supreme Court Act 1986 (Vic), s 52.

13. The joint borrowing of funds to acquire jointly owned property and the associated assumption of joint (and, possibly, several) liabilities amounted to a “significant pooling of financial resources especially in relation to major financial commitments” for the purposes of s 4(3) of the Act. Here, what was involved was “…more than financial cooperation or separate contributions to different elements of household expenditure.”[49] It reflected a putting together of resources into a common fund, a combining of resources for a common benefit.[50] In terms of the Cockatoo property the common benefit was their ownership of residential accommodation. In terms of the Holbrook property, as well as providing residential accommodation to Mr Kothe, it may well have been a joint financial investment. That it was such an investment would seem to have been the view of the Judge presiding at Ms Kothe’s sentencing hearing (His Honour Judge Trapnell) with respect to her conviction in 2019 on a charge of dishonestly obtaining a financial advantage by deception from a Commonwealth entity.[51]

    [49] Pelka v Secretary, Dept of Family and Community Services (2006) 151 FCR 546 at [52].

    [50] Vo and Secretary, Department of Social Services (Social services second review) [2019] AATA 2341 at [29].

    [51] R v Kothe [2019] VCC 2251 at [40].

14. This joint assumption of liabilities to support the joint acquisition of property applied not only to the acquisition of freehold estates. For instance, they together assumed liability as (and acquired property as) leasehold tenants.[52]

    [52] See, for example, a lease of property in Doveton at T67.

15. As for the sharing of day‑to‑day household expenses, I note that, in addition to joint accounts maintained with respect to their joint borrowings, Ms Kothe and Mr Kothe from time to time maintained what would appear to be joint, household, operating accounts.

16. At least in the period commencing in September 2010 and ending in November 2013, Ms Kothe and Mr Kothe maintained such an account with Bankwest from which various household expenses were paid and into which was paid Mr Kothe’s age pension.[53]

    [53] T74, 377-439.

17. In 2017, a joint account was maintained by Ms Kothe and Mr Kothe with ANZ bank from which petrol and other everyday expenses seem to have been paid.[54] Ms Kothe’s evidence was, however, to the effect that she was the only person who operated on this account (albeit that Mr Kothe was an authorised signatory.)[55] The account statements reflect regular transfers to Mr Kothe. Ms Kothe’s explanation was that, when a bill was to be paid, she would pay her share of it to Mr Kothe. This was consistent with Ms Kothe’s evidence to the effect that the sharing of household expenses was not generally effected by payments out of a joint account, but rather by contributions to the person who in fact met the relevant expense.

    [54] T77, 777-785.

    [55] T77, 523.

18. This basis for the sharing of household expenses aligns with statements made in material lodged with the Respondent from time to time by Ms Kothe. In 2008, Ms Kothe said she and Mr Kothe each paid half the council and water rates, half the utilities’ costs and half the mortgage payments.[56] In 2014, Ms Kothe stated to Centrelink that she was paying a proportion of household expenses, albeit that the proportion then was less than 50%[57] (presumably reflecting a sharing of the expenses with a third person, the son who was then living with Ms Kothe and Mr Kothe). More recently, the expense sharing arrangements seem to have evolved into Ms Kothe paying a regular amount into an account in Mr Kothe’s name, for use by him in paying utility expenses.[58] (It is, however, clear that Ms Kothe on occasion met those expenses directly rather than reimbursing Mr Kothe for her perceived share, as reflected in various debits to her personal banking account.[59])

    [56] T6.

    [57] T35.

    [58] T91-separated under one roof form lodged in February 2018.

    [59] See ANZ bank statements with respect to an account in Ms Kothe’s own name at T77,690.

19. I find that, overall, the financial aspects of Ms Kothe’s and Mr Kothe’s relationship are such as to provide strong support for a conclusion that they were not living separately and apart in the relevant years. Together they voluntarily entered into significant, long-term, arrangements well after their supposed separation. Moreover, whether or not it reflected a pooling, there was a clear combining of financial resources to meet household expenses,[60] an arrangement common in a marriage-like relationship.

    [60] Lyons and Secretary, Department of Social Services (Social services second review) [2018] AATA 3644 at [74].

    The nature of their household

20. As for the nature of Ms Kothe’s household, consideration is required to be given to:

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

    (b)the living arrangements of the people; and

    (c)the basis on which responsibility for housework is distributed.[61]

    [61] Social Security Act 1991, s4(3)(b)(i) – (iii).

21. I find that Ms Kothe and Mr Kothe accepted joint responsibility for providing care and support of their children. Together they visited their daughter overseas when she was, according to Ms Kothe, unwell. As for the son, the evidence from both Ms Kothe and Mr Kothe was to the effect that they shared a house with him because he needed their support at a time when he had substance abuse issues. When speaking of her children and grandchildren Ms Kothe’ s evidence was that “we [referring to both her and Mr Kothe] do what we can.”

22. As for their living arrangements, in her statutory declaration, Claire asserted that Ms Kothe did not have a relationship of man and wife with Mr Kothe as they undertook everything in and out of their house separately. This is consistent with the assertion from both Ms Kothe and Mr Kothe that they lived separate lives. This, however, is not consistent with material from time to time submitted by Ms Kothe and Mr Kothe to the Respondent. For instance:

    ·In 2008 Ms Kothe contended that she and Mr Kothe were living under the one roof not as partners but as carers for each other. [62] Mr Kothe assisted Ms Kothe with her medications and provided “moral guidance.” Ms Kothe stated that it had been a “joint effort” in completing and lodging with the Respondent a “separated under one roof form.” Meal preparation, cleaning, housekeeping and shopping were shared tasks. They ate meals together.

    ·In 2014 Ms Kothe reported a situation largely reflective of the one she had described in 2008. [63] For instance, she and Mr Kothe were said to still eat meals together (albeit that Mr Kothe was no longer said to provide any support should there be a personal crisis or support in relation to money matters).

    ·In 2015, again the situation as described by Ms Kothe remained largely unchanged except that it was said that she and Mr Kothe sometimes did the other’s washing.[64]

    ·In 2018, it was said that Ms Kothe and Mr Kothe only ate meals together on special occasions. [65] This was confirmed by Mr Kothe in material he lodged with the Respondent,[66] albeit that he went on to suggest that he and Ms Kothe sometimes used the same bedroom (a suggestion rejected in oral evidence at the hearing of this proceeding) and that they assist each other in illness (but not in money matters or personal crises).

    [62] T6.

    [63] T35.

    [64] T57.

    [65] T91.

    [66] T90.

23. The proposition that Ms Kothe operated in all ways separately from Mr Kothe is also difficult to reconcile with what I infer were their ongoing mutual decisions regarding residential accommodation made during the period of their alleged separation.

24. Ms Kothe’s evidence was that she and Mr Kothe lived in Perth together until around 2007 when they moved to Packenham, Victoria. In 2008, they moved to Cockatoo, Victoria into a house they had purchased. They sold the Cockatoo property in 2013 and moved to Doveton. In 2015, they moved to Endeavour Hills and shortly thereafter moved back to Doveton. In July 2017, they moved to Narre Warren.[67] This reflects the Respondent’s records of Ms Kothe’s and Mr Kothe’s residential addresses.[68]

    [67] See the Respondent’s address history for Ms Kothe at T107,1317.

    [68] T107, 1317 compared to T104, 1056.

25. As for the basis on which responsibility for housework is distributed, I note that:

    (a)In July 2008, Ms Kothe stated that food preparation, cleaning and household tasks were shared and that she and Mr Kothe took it in turns to go shopping. They each, however, did their own washing.[69]

    (b)In February 2014, Ms Kothe advised that she and Mr Kothe cleaned separate parts of their house but food was shared.[70]

    (c)In April 2015, cleaning, gardening and shopping tasks were said by Ms Kothe to be undertaken by everyone (which I take to mean by all those then residing together, including Ms Kothe and Mr Kothe). Ms Kothe and Mr Kothe sometimes did the other’s washing.[71]

    (d)In February 2018, Mr Kothe advised that shopping and cleaning tasks were shared.[72]

    [69] T6.

    [70] T35.

    [71] T57.

    [72] T90.

26. I find that, overall, the nature of the Ms Kothe’s and Mr Kothe’s household is supportive of a conclusion that they were not living separately and apart in the relevant years. In those years they appeared to accept a joint responsibility for the care of their children, aspects of their living arrangements were reflective of a mutually supportive relationship, together they made (and continued to make) significant decisions (such as those concerning their residential accommodation) and, by and large, the apportionment of housework reflected a relationship which had Ms Kothe and Mr Kothe acting in concert.

    Social Aspects of their relationship

27. In looking to the social aspects of Ms Kothe’s and Mr Kothe’s relationship, consideration is required to be given to:

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

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

    (c)the basis on which they make plans for, or engage in, joint social activities.[73]

    [73] Social Security Act 1991, s 4(3)(c)(i) – (iii).

28. As to how Ms Kothe and Mr Kothe held themselves out in the relevant years, I:

    (a)Note that Ms Kothe’s Medicare card for 2019 is in her and Mr Kothe’s name.[74]

    (b)Note that Ms Kothe identified to employers Mr Kothe as either her next of kin[75] or partner.[76]

    (c)Infer from Ms Kothe’s use of her married name that third parties with whom she dealt would be likely to have considered her to be in a marital relationship with Mr Kothe. Indeed, at the hearing of this proceeding, Ms Kothe readily accepted that this would have been the case, at least in relation to the perspective of the banks which financed their joint borrowings.

    [74] T57.

    [75] T83.

    [76] T85.

29. As to the assessment of friends and regular associates, it would (according to Ms Kothe)[77] have been that Ms Kothe’s relationship with Mr Kothe was not akin to that of a married couple. Ms Kothe said she had had had several relationships with third parties, a matter corroborated (to an extent) by Claire’s statutory declaration. Apart from that declaration, however, there is little in the material before me from friends or regular associates as to the assessment they, in fact, made as to the nature of Ms Kothe’s relationship with Mr Kothe. Moreover, the probative value I attribute to that declaration is somewhat diminished given that Claire’s statements to the effect that Ms Kothe and Mr Kothe did not have a marital relationship and that they  undertook everything in an out of their house separately seem to relate only to the situation existing prior to November 2012 (when Claire moved to the Northern Territory) and are difficult to reconcile with other material before me concerning such matters as the nature of Ms Kothe’s household. 

    [77] T35.

30. As for the basis on which they plan for or engage in joint social activities:

    (a)In July 2008[78] and April 2015,[79] Ms Kothe stated that she and Mr Kothe sometimes shared social occasions involving their children or grandchildren.

    (b)In December 2017, Ms Kothe stated that she and Mr Kothe travelled together, and took part in family reunions, at times.[80]

    (c)In February 2018, Mr Kothe stated that he and Ms Kothe ate together at family gatherings and special occasions.[81]

    [78] T6.

    [79] T57.

    [80] T86.

    [81] T90.

31. By and large, it would appear that Ms Kothe’s social activities with Mr Kothe were limited to those involving their family. As to this limitation, however:

    ·In the material before the Tribunal there is little to suggest that Ms Kothe had an extensive social life beyond the ambit of her family, apart from Claire’s statutory declaration (which, as I have said, appears to relate only to the position prior to November 2012).

    ·It is qualified in the sense that Ms Kothe and Mr Kothe have, on a few occasions, travelled together. Ms Kothe initially characterised these travels as ones not undertaken “together” with Mr Kothe,[82] but then suggested they were undertaken together but simply to visit their daughter overseas who had been unwell. [83] Lastly, their travelling was also said to entail visiting “mutual friends”.[84] In the period 27 May 2012 to 24 October 2018 Ms Kothe had eight trips overseas.[85] The return dates with respect to three of those trips coincided with return dates with respect to overseas trip undertaken by Mr Kothe.[86]

    [82] T35.

    [83] T86; Submission of 29/4/20.

    [84] Letter of 13/11/19.

    [85] T107,1319.

    [86] T104,1057. I note that in the period 18 November 2013 to 6 December 2017 Mr Kothe had undertaken three trips overseas.

1. I find that, while finely balanced, overall, the social aspects of Ms Kothe’s and Mr Kothe’s relationship are such as to offer some, but not strong, support for a conclusion that they were living separately and apart. There is some, but limited, evidence that those who knew them would have perceived that they were not in a marital relationship. Their social engagement seemed to have been restricted to family gatherings and the occasional overseas trip together (while it is clear that Ms Kothe undertook a number of such trips without Mr Kothe).

   Sexual Relationship

2. I accept the evidence of both Ms Kothe and Mr Kothe to the effect that, in the relevant years, they had no sexual relationship.

3. As the Respondent concedes, this consideration offers support for a conclusion that Ms Kothe and Mr Kothe were, at the relevant time, living separately and apart.

   The nature of their commitment to each other

4. In looking to the nature of Ms Kothe’s and Mr Kothe’s commitment to each other consideration needs to be given to:

   (a)the length of the relationship;

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

   (c)whether they consider that the relationship is likely to continue indefinitely; and

   (d)whether they see their relationship as a marriage‑like relationship or a de facto relationship.[87]  

   [87] Social Security Act 1991, s 4(3)(e)(i) – (iv).

5. As for the length of the relationship, it is one of long standing. Ms Kothe married Mr Kothe on 21 December 1976.[88]

   [88] T96, marriage certificate.

6. As for the nature of the companionship and support they each provide to the other, Ms Kothe expressed the view that there is no mutual reliance, in that neither one of them affords the other non-material support.

7. Both Ms Kothe and Mr Kothe maintained that they lived under the one roof for two reasons, only. The first was because it was necessary to do so, financially. The second was that it was necessary to do so in order to support their son who had a substance abuse problem.

8. I do not accept the financial necessity rationale. I appreciate that people “forced to co-habit due to financial necessity and [in] the absence of any alternative for either of them” might well not be considered to share a marital relationship.[89] That, to my mind, however, is not an accurate characterisation of the circumstances in which Ms Kothe found herself.

   [89] Re Atiwill and Secretary, Department of Education, Employment and Workplace Relations [2013] AATA 148 at [27].

9. First, Ms Kothe earned a significant sum from working as a carer in the period in question. In particular, while in receipt of the age pension, in the period 21 February 2012 to 11 September 2017, Ms Kothe earned income from employment of $244,918.57.[90]

   [90] R v Kothe [2019] VCC 2251.

10. Second, even if it is correct to say that she lived in straitened financial circumstances, Ms Kothe was not “forced to co-habit”. Rather, co-habitation would appear to have been something she either preferred or was prepared to put up with to enable her to engage in other pursuits. In this regard:

    ·as I mentioned earlier, in the period 27 May 2012 to 24 October 2018, Ms Kothe had eight trips overseas. In 2010, she travelled with Claire to New York to celebrate six months since the start of their relationship.[91]

    ·Ms Kothe gave evidence to the effect that in 2017 she experienced around $20,000 of losses in stock market trading.

    ·Ms Kothe would appear to have purchased two cars in the space of around five years, one in 2009[92] and the other in 2014.[93]

    ·At her sentencing hearing in December 2019 with respect to the offence of dishonestly obtaining a financial advantage by deception from a Commonwealth entity, it was found that Ms Kothe was “not in severely necessitous financial circumstances” but, rather, on her behalf, it was submitted that her offending occurred in the context of financial stress caused by online gambling and losses on the share market.[94]

    [91] Claire’s statutory declaration.

    [92] T35.

    [93] T57.

    [94] R v Kothe [2019] VCC 2251 at [25].

11. Third, there was an alternative to co-habitation open to at least Mr Kothe. According to Mr Kothe, part of the reason for his co-habitation with Ms Kothe was that neither of them could afford to buy a house. In this regard, both Ms Kothe and Mr Kothe gave evidence to the effect that, as between them, he was solely responsible for the loan taken out to enable the acquisition of the property in Holbrook. Put simply, it would appear that Mr Kothe was financially able to buy a house. In any event, it was clear from Mr Kothe’s evidence that the reference to “house” was no accident. When asked whether he would have been able to afford to buy a unit by himself his response was to the effect that he would not live in a unit; he required a house and land.

12. As I mentioned earlier, the second reason Ms Kothe proffered for her choosing to co-habit with Mr Kothe was that it was necessary to do so in order to support their son who had a substance abuse problem. That support was said to take the form of emotional and financial support provided in a context which involved the son (and his partner) living with Ms Kothe and Mr Kothe.[95]

    [95] Applicant’s letter of 13 November 2019.

13. I recognise that a relationship between parents founded on a desire to care for their children might simply be characterised as one reflective of a commitment to the children as opposed to a commitment to each other.[96] On the other hand, ongoing co-habitation motivated by a desire to benefit children of a marriage might be considered suggestive of a marriage-like relationship.[97] In the Marriage of Pavey[98] it was said that:

    [t]he nurture and support of the children of the marriage [w]as a constituent element of the marital relationship." In Milovanovic[99] Senior Member Professor Shearer stated that “[w]hile one would not want to lay down a rule that joint care of a child automatically disqualifies a person from being regarded as anything other than a couple for the purposes of the Act, there was evidence in the present case that there was a significant degree of dependence by Mrs Milovanovic on the continued existence of the relationship, and especially its financial aspects, in caring for their son.

    [96] Secretary, Department of Education, Employment and Workplace Relations and Hitchcock and Anor [2008] AATA 677; Secretary, Department of Employment and Workplace Relations and Gilson [2007] AATA 1361 at [54-55]; Tobin and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Anor [2010] AATA 284.

    [97] In Beverley Sybil Anderson and Secretary, Department of Social Security [1993] AATA 172, persons were considered to comprise a couple where they set aside their interpersonal difficulties in order to maintain “some kind of family relationship” (at [55]) “in the interests of the children” (at [59]).

    [98] (1976) 25 FLR 450 at 455, cited and adopted in Micallef and Secretary, Department of Family and Community Services [2004] AATA 485 at [27].

    [99] Milovanovic and Secretary, Department of Employment and Workplace Relations [2006] AATA 930 at [32].

14. In this matter, Ms Kothe’s co-habitation with Mr Kothe cannot adequately be explained by a desire to assist the son. For a large part of the time after their alleged separation the son would not appear to have lived with them.[100]

    [100] ST3,14; Respondent’s address history with respect to the son compared to Respondent’s address history with respect to Ms Kothe at T107,1317.

15. While I appreciate that assisting those with substance abuse issues can be difficult and traumatic, it is not clear why affording assistance to the son necessarily involved Ms Kothe having to continue to co-habit with Mr Kothe. Insofar as the necessity is said to stem from financial concerns, I refer to my comments earlier concerning Ms Kothe’s financial circumstances and note that, for at least some of the period while the son was living with Ms Kothe and Mr Kothe, he was in receipt of receiving a carer’s allowance in respect of his partner.[101]

    [101] He would appear to have received that allowance from 2009 up until June 2013-ST3, 27-36.

16. In any event, I do not accept the contention that, as between Ms Kothe and Mr Kothe, there is no mutual reliance and no non-material support. As I mentioned earlier:

    (a)In 2008,[102]  Ms Kothe contended that she and Mr Kothe were living under the one roof not as partners but as carers for each other. Mr Kothe was said to assist Ms Kothe with her medications and provided moral guidance.

    (b)In 2016, Ms Kothe and Mr Kothe purchased a property in Holbrook. Ms Kothe’s evidence was, in effect, that she participated in the purchase (assuming liability for funds jointly borrowed) in order to facilitate Mr Kothe’s acquisition of a house to live in. (According to Mr Kothe, he would not have been able to get the requisite loan by himself.)[103]

    (c)In 2018,[104] Mr Kothe stated that she and Mr Kothe would assist each other in illness (but not in money matters or personal crises).

    (d)When speaking of her children and grandchildren Ms Kothe’s evidence was that “we [referring to both her and Mr Kothe] do what we can.” By early 2018 they had “to share the running to school etc” of the grandchildren as the son was working.[105]

    [102] T6.

    [103] Undated statement of Mr Kothe.

    [104] T90.

    [105] T91

17. The proposition that Ms Kothe and Mr Kothe would assist each other in times of illness is borne out to some extent by matters of which the Tribunal only became aware on the day of hearing. On that day, Ms Kothe stated that Mr Kothe was suffering from an illness and that, because he was unwell, he was again living under the same roof as Ms Kothe (noting that he had, apparently, begun to reside in Holbrook on his own in March 2018).

18. The integration of Ms Kothe’s life with that of Mr Kothe’s is reflected in their joint ownership of property. Rather than separating economically since their alleged marital separation, Ms Kothe and Mr Kothe acquired what would appear to be their most valuable assets jointly, i.e. the Cockatoo and Holbrook properties. It is of significance that Ms Kothe was aware that, should she pre-decease Mr Kothe, her interest in these assets would be acquired by Mr Kothe, and vice versa.[106]

    [106] Vo and Secretary, Department of Social Services (Social services second review) [2019] AATA 2341 at [24].

19. As for whether Ms Kothe and Mr Kothe consider that their relationship is likely to continue indefinitely, the material before me suggests that they do. Neither of them has ever sought a divorce or has any intention to re-marry. Ms Kothe’s evidence was to the effect that, at her age, she saw no reason to do so. It seems to me, however, that while this may well be a valid response now, it fails to explain why a person who was around 52 years old at the time of the alleged separation in 2003 neither pursued a divorce nor considered re-marriage.

20. As for whether Ms Kothe and Mr Kothe see their relationship as a marriage‑like relationship or a de facto relationship, their evidence is to the effect that they do not see themselves in such a relationship. Nevertheless, regardless of how they view their relationship, I find that that in the period in question it was a relationship:

    ·That involved mutual respect. According to Ms Kothe they would always respect each other.[107]

    ·Unlike one either of them shared with anyone else. Ms Kothe characterised their relationship as unique. “It is clearly relevant…to have regard to the fact that a commitment that each of those persons has to each other is different from the commitment that each person has to any other person.”[108]

    [107] T86, letter from Ms Kothe of 10 December 2017.

    [108] Re Pelka v Secretary Department of Families, Housing, Community Services and Indigenous Affairs [2008] FCAFC 92 at [30].

21. I find that Ms Kothe’s and Mr Kothe’s commitment to each other is such as to suggest that their relationship is marriage-like.

    Conclusion on question of living separately and apart

22. Despite not all the considerations to which I am required to have regard pointing in the same direction,[109] on balance and in all the circumstances, I find that Ms Kothe and Mr Kothe were not living separately and apart on a permanent or indefinite basis in the period in question. Their “marriage, albeit perhaps not a ‘happy’ marriage, is still a marriage, with many of the indicia of a marriage.”[110]

    [109] Sperring and Secretary, Department of Employment and Workplace Relations [2007] AATA 1050 where at [70] it was said: “As observed in Cullinane (where there was found to be a marriage-like relationship) being a member of a couple involves a lot more than sharing a common address. However, all the criteria need not be satisfied. In fact, one may satisfy few of them but still be considered to be a member of a couple.”

    [110] Bozdag and Secretary, Department of Social Services (Social services second review) [2016] AATA 765 at [47].

    Special reason not to treat as a couple?

23. As indicated previously, despite finding that Ms Kothe and Mr Kothe did not live separately and apart in the period in question, I could still determine not to treat Ms Kothe as a member of a couple if I were to be satisfied that she ought not be so treated for a special reason in the particular case.[111]

    [111] Social Security Act 1991, ss 4(6) and 24(1).

24. It has not been contended, however, and it does not appear to me, that there is any such special reason in Ms Kothe’s case.[112]

    [112] It has been suggested that it is incumbent on the person seeking to take the benefit of the special reason provision to provide evidence to satisfy the Tribunal that a determination under s 24 ought be made: Mosaui and Secretary, Department of Social Services (Social services second review) [2019] AATA 715 at [57].

25. The capacity to determine not to treat a person as a member of a couple on the basis of there being a special reason to do so has been said to be one that ought only be exercised as a last resort.[113]  It is a discretionary power which “is not lightly to be enlivened.”[114]

    [113] Mosaui and Secretary, Department of Social Services (Social services second review) [2019] AATA 715 at [50].

    [114] Boscolo v Secretary, Department of Social Security [1999] FCA 106 at [18].

26. The justification for a single person receiving more by way of benefits than a member of a couple “…is based on the premise that the unpartnered person does not enjoy the economies of shared living costs as does the member of a couple…”.[115]  From this justification it may be inferred that a special reason might be considered to exist if a person is unable to benefit from the sharing of living costs, that is, if the members of the putative couple are unable to pool their resources.[116]

    [115] Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991 (Cth) at 17.

    [116] Lyons and Secretary, Department of Social Services (Social services second review) [2018] AATA 3644 at [73]. See also DlabiI and Secretary, Department of Social Services (Social services second review) [2016] AATA 20 at [58] .

27. Here, no legal or other practical reason has been identified as to why Ms Kothe ought be taken as being unable to benefit from the sharing of living costs with Mr Kothe.[117]  Indeed, to the contrary, it is clear that there was such a sharing of costs, a sharing from which Ms Kothe benefitted.

    [117] See Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084 at [42].

28. Absent such a special reason and given my finding that Ms Kothe and Mr Kothe were not living separately and apart, I conclude that Ms Kothe was a member of a couple with Mr Kothe in the period 21 February 2012 to 5 February 2018.

    FOR PURPOSES OF CALCULATING AGE PENSION, A FAILURE TO TAKE INTO ACCOUNT INCOME EARNED?

29. I will address this second issue that arises on review of the decisions the subject of review briefly.

30. I find that there has been a failure to take into account income Ms Kothe earned in the period 21 February 2012 to 5 February 2018 as a result of a failure of Ms Kothe to disclose that income.

31. This finding reflects Ms Kothe’s conviction in December 2019 for dishonestly obtaining a financial advantage by deception from a Commonwealth entity and facts on which that conviction was based. Ms Kothe did not seek to challenge the veracity of those facts (noting the difficult task before her had she have chosen to do so).[118]

    [118] Donnelly v Minister for Immigration and Border Protection [2019] FCA 798 at[46] citing with approval Secretary to the Department of Justice and Regulation v LLF [2018] VSCA 155 at [42]; Minister for Home Affairs v Sharma [2019] FCA 597 at [20].

32. Those facts include (and I so find) that:

    (a)Between 21 February 2012 and 11 September 2017, Ms Kothe was in receipt of the age pension and earned income from employment which amounted to $244,918.57.

    (b)Ms Kothe failed to report $235,327.72 of that income (having only declared $9,590.85), despite being aware of her obligation to do so.

    (c)The amount of age pension overpaid as a result was $72,405.13.

    (d)The amount of the resultant indebtedness outstanding at the time of her sentencing in December 2019 was $64,869.56 (with the amount outstanding being less than the amount overpaid presumably as a result of payments made under a reparation order made with respect to Ms Kothe pursuant to section 21B (1) of the Crimes Act 1914).[119]

    AMOUNT PAID TO MS KOTHE BY WAY OF THE AGE PENSION EXCEEDED HER ENTITLEMENT SUCH THAT SHE IS INDEBTED TO THE COMMONWEALTH FOR $86,779.23?

    [119] R v Kothe [2019] VCC 2251 at [41].

33. As I mentioned earlier, one of the decisions affirmed by the SSCSD in the AAT first review decisions was a decision of 27 July 2018, a decision described by the SSCSD as one in which it was decided that “Mrs Kothe had a debt of $86,779.23 due to overpayment of the age pension for the period from 21 February 2012 to 5 February 2018.” As to this decision, the SSCSD noted that it had been affirmed by an authorised review officer on 25 October 2018.[120]

    [120] When an initial decision is affirmed by an authorised review officer, what the SSCSD reviews is the decision as affirmed: Social Security (Administration) Act 1999, s 142.

34. I find that the amount paid to Ms Kothe by way of the age pension in the period 21 February 2012 to 5 February 2018 did exceed her entitlement to the pension and that, as a result, she became indebted to the Commonwealth. I make no finding, however, as to the current amount of that indebtedness.

35. The amount paid to Ms Kothe by way of the age pension did exceed her entitlement to the pension for two reasons.

36. First, the amount so paid to Ms Kothe was calculated on the basis that she was not a member of a couple when, in fact, she was. As I mentioned earlier, the non-couple (or single) rate of age pension is higher than the partnered rate.

37. Second, as noted by the Judge presiding at Ms Kothe’s sentencing hearing in December 2019,[121] the rate at which the age pension is payable is affected by income from employment.  As a result of Ms Kothe’s failure to disclose such income in the period 21 February 2012 to 5 February 2018, she was paid by way of age pension an amount in excess of her entitlement to the age pension. 

    [121] R v Kothe [2019] VCC 2251.

38. Because the amount paid to Ms Kothe by way of the age pension in the period 21 February 2012 to 5 February 2018 exceeded her entitlement to the age pension, she became indebted to the Commonwealth for the amount of the excess.[122]

    [122] Social Security Act 1991, s1223. It is not in issue that Ms Kothe obtained the benefit of the age pension payments.

39. As to the current amount of that indebtedness, the decision which the SSCSD purported to affirm was said to involve a conclusion that Ms Kothe’s indebtedness to the Commonwealth by reason of the age pension overpayment was $86,779.23. This was also how the relevant decision was described by the authorised review officer in October 2018.

1. I am not satisfied, however, that Ms Kothe’s indebtedness to the Commonwealth by reason of the age pension overpayment is $86,779.23.

2. First, the decision the subject of review did not conclude that the amount of the relevant indebtedness was $86,779.23 (despite the SSCSD’s and authorised review officer’s description of it). In fact, in that decision, the amount of the indebtedness was said to be $81,469.44.[123] While an explanation for the differential can be found in an internal document of the Respondent lodged with the Tribunal as part of the T documents,[124] I am not able to assess the validity of the explanation. What does seem to be the case, however, is that the amount of $86,779.23 appears to reflect the result derived after making a number of manual alterations to a particular application of a “Multical-Centrelink Debt Calculator.”[125] No basis on which I should be satisfied as to the appropriateness of those alterations or that application was put to me. This is in a context where other internal records of the Respondent provide a dramatically different picture of the amount of the age pension overpaid.[126]

   [123] T99.

   [124] T108, 1437. There reference is made to a clerical error having been made as a result of a failure to take into account payments apparently designated in Ms Kothe’s bank account statements as “wages Debbie Boyle”.

   [125] T105,1104.

   [126] T105, 1091-1094 which suggests an overpayment of $44,719.86.

3. Second, it is clear that payments have been made towards satisfaction of Ms Kothe’s indebtedness. While I strongly suspect that her indebtedness has not been satisfied, it would appear to have been reduced. On the material before me, however, I am not able to determine the amount of the reduction.

4. Some repayments are identified in documents lodged by the Respondent with the Tribunal.[127]  Further, amounts appear to have been withheld from Ms Kothe’s ongoing age pension payments, presumably in satisfaction of her indebtedness.[128] In terms of that component of Ms Kothe’s indebtedness as is attributable to her failure to disclose income she had earned, it is clear from the sentencing remarks of His Honour Judge Trapnell in December 2019 that payments have been made in reduction of the debt.[129] As I suggested earlier this may well have been a result of payments made under a reparation order made with respect to Ms Kothe pursuant to section 21B (1) of the Crimes Act 1914.

   [127] T105, 1097-refers to repayments on 27 July 2018 and 13 August 2018 of $2749 and $5309.79, respectively.

   [128] T106,1167.

   [129] Noting that the amount of the age pension overpaid due to the failure to disclose income was found to be $72,405.13 while the amount of the indebtedness outstanding at the time of sentencing was $64,869.56.

5. Accordingly, in circumstances where, on the material before me, I am unable to be satisfied as to the initial amount of the indebtedness or as to the amount already paid in reduction of it, I cannot be satisfied as to the current amount of Ms Kothe’s relevant indebtedness.

   WAS MS KOTHE A MEMBER OF A COUPLE FOR THE PURPOSE OF CALCULATING HER FAMILY TAX BENEFIT IN THE PERIOD 1 JULY 2014 TO 23 JULY 2014?   

6. I find that, for the purpose of calculating her entitlement to the family tax benefit in July 2014, Ms Kothe was then a member of a couple with Mr Kothe. The reasons for this finding are the same as those on which I relied in finding that Ms Kothe was member of a couple for the purpose of calculating her age pension entitlement (noting that this earlier finding covered a period more expansive than, but inclusive of, July 2014). In both contexts, the legislative test of whether a person is a member of a couple is the same.[130]

   DID THE AMOUNT PAID TO MS KOTHE BY WAY OF FAMILY TAX BENEFIT EXCEED HER ENTITLEMENT SUCH THAT SHE IS INDEBTED FOR $198.03?

   [130] See A New Tax System (Family Assistance) Act 1999, s 3 which adopts the definition of “couple” found in Social Security Act 1991.

7. I am not satisfied about either aspect of this question in issue. In particular, I am not satisfied that an amount was paid to Ms Kothe by way of family tax benefit that exceeded her entitlement such as to give rise to indebtedness. Nor am I satisfied that, even if an excess amount was so paid such as to give rise to indebtedness, that the amount of the indebtedness is $198.03.

   Amount paid in excess of entitlement such as to give rise to indebtedness?

8. If a person receives more by way of family tax benefit than that to which the person is entitled, the excess is a debt due to the Commonwealth.[131]

   [131] A New Tax System (Family Assistance) (Administration) Act 1999, s 71.

9. Hence, it is necessary to determine the amount of the benefit to which Ms Kothe was entitled.

10. In this regard, the daily rate at which a person’s family tax benefit instalments are payable is required to be calculated in accordance with a calculator set out in Schedule 1 to the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act).[132]

    [132] Family Assistance Act, s 58.

11. Having regard to that calculator, Ms Kothe’s eligibility for, and the amount of, her family tax benefit instalments would have been, at least in part, a function of her “adjusted taxable income”.[133] The income to be taken into account in calculating an individual’s adjusted taxable income includes, if a person is a member of a couple, the adjusted taxable income of the other member of the couple.[134] 

    [133] Family Assistance Act, cl 1, sch 3

    [134] A New Tax System (Family Assistance) Act 1999 Schedule 3, cl 3 - Adjusted taxable income definition - (1) “For the purposes of this Act (other than Part 4 of Schedule 1), if an individual is a member of a couple, the individual’s adjusted taxable income for an income year includes the adjusted taxable income for that year of the individual’s partner.”

12. Hence, as I have found that Ms Kothe was a member of a couple in July 2014, income derived by the other member of the putative couple (being  Mr Kothe) ought to have been taken into account in calculating the amount of any family tax benefit instalment then payable to her. However, Mr Kothe’s income was not so taken into account.

13. This might well have resulted in Ms Kothe receiving more by way of family tax benefit than she should have received had the rate of payment applicable to her been calculated appropriately. This does not necessarily mean, however, that Ms Kothe received more than that to which she was entitled.

14. The amount of the family tax benefit to which Ms Kothe was entitled is a function of a determination in her favour which I infer was made under s 16 of the A New Tax System (Family Assistance) (Administration) Act 1999 (Administration Act).[135] Pursuant to that section, if a claim is made for payment of a family tax benefit by instalment, a determination must be made that the claimant is entitled to be paid the benefit for each day on which the determination is in force, at a particular daily rate.[136] 

    [135] See T106, 1164 and 1165 wherein certain “FTB” calculations are made with references to what would appear to be payments of “Instalme”.

    [136] This assumes eligibility for the benefit under certain provisions of the A New Tax System (Family Assistance) Act 1999 (Family Assistance Act).

15. A payment to Ms Kothe of an amount of a family tax benefit instalment which has accrued under a determination is not a payment in excess of that to which she was entitled. Indeed, there is a statutory obligation to pay such an instalment. [137]

    [137] Administration Act, s23

16. Once made, a determination such as the one I have inferred was made in Ms Kothe’s favour remains in force “at all times afterwards”,[138] albeit that it is subject to variation by determination,[139] or variation or substitution on review,[140] in certain circumstances. Neither party contended that there had been such a variation or substitution in relation to Ms Kothe’s determination.[141] Moreover, notice would have been required to have been given of any variation or substitution[142] and no such notice was revealed in my review of the 1500 odd pages of material before me. Indeed, neither party suggested any inconsistency between the family tax benefit amounts paid to Ms Kothe and the amounts payable to her under the determination in her favour.

    [138] Administration Act, s 21(1).

    [139] Administration Act, ss27-31E.

    [140] Administration Act, s105.

    [141] In the Respondent’s statement of issues facts and contentions of 29 May 2020, reference was made to various provisions of the Administration Act under which determination variations could be made (such as s 28) or whose operation depended on variations having been made (such as s 32AE). It was not contended, however, that any determination variations had been made.

    [142] Administration Act, ss 32and 106.

17. Absent any variation to or substitution of the determination in her favour, I am not satisfied that the amount of the family tax benefit instalments paid to Ms Kothe exceeded the amount to which she was entitled. Hence, I am not satisfied that any debt became due to the Commonwealth as a result of the family tax benefit payments made to Ms Kothe in, or in relation to, the relevant period.

    FTB indebtedness of $198.03?

18. As I indicated earlier, even if an amount in excess of her entitlements was paid to Ms Kothe by way of family tax benefit in or in relation to the period 1 July 2014 to 23 July 2014, I am not satisfied that the resultant amount of indebtedness is $198.03.

19. First, the decision purportedly affirmed by the SSCSD does not provide that $198.03 is the amount of the relevant indebtedness. Secondly, insofar as there was any indebtedness, the material before me suggests that it no longer subsists.

20. In the AAT first review decisions the SSCSD affirmed what it described as a decision of 12 February 2018 pursuant to which it was decided that “Mrs Kothe had a debt of $198.03 due to overpayment of FTB for the period from 1 July 2014 to 23 July 2014 because they said she was a member of a couple during that period.”

21. There are several difficulties with this description of the relevant decision. Set out below is an extract from it.[143]

    Information about your family’s assessment for 2014-15
    Family Tax Benefit you have already received $1,069.96
    Total Family Tax Benefit you are entitled to $920.00
    This includes:
    Standard Family Tax Benefit $828.46
    Family Tax Benefit Part A Supplement $91.54
    $149.96 Excess amount
    

    [143] T93.

    AMOUNT PAYABLE (amount you owe the Australian Government) $198.03

22. As is apparent from its terms:

    (a)The decision is expressed to relate to the financial year 2014-15, not the period 1 July 2014 to 23 July 2014.

    (b)The overpayment of family tax benefit is expressed to be in an amount of $149.96, albeit that (without explanation either in the document itself or at the hearing of this proceeding) the amount payable is said to be $198.03.

    (c)No reference is made to the contention that the claimed overpayment arose because Ms Kothe was a member of a couple in the period 1 July 2014 to 23 July 2014 (albeit that it is implied that the overpayment was discovered consequent upon a check of “your annual family income and your family circumstances”).

23. Accordingly, the decision said to have been affirmed by the SSCSD in the AAT first review decisions differs in certain material respects from the decision actually made.

24. The decision the subject of my review in this proceeding is the initial, 12 February 2018, decision. It is the decision which was affirmed by the SSCSD[144] as it was the decision that was the subject of review by the SSCSD (given its affirmation on 23 March 2018).[145]

    [144] A New Tax System (Family Assistance) (Administration) Act 1999, s 128(2).

    [145] A New Tax System (Family Assistance) (Administration) Act 1999, s 111(1).

25. That decision says nothing about indebtedness in, or in relation to, the period 1 July 2014 to 23 July 2014. Second, that decision suggests that the amount of the excess payment is $149.96, not $198.03.

26. In reviewing a decision, I am obliged to make the correct or preferable decision on the basis of relevant and probative material[146] before me, not material before the primary decision-maker.[147]

    [146] Superannuation Warehouse Australia Pty Ltd and Australian Securities and Investments Commission [2019] AATA 88 at [78]; Hutchinson v Comcare [2019] FCA 1440 at [22].

    [147] Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469 at [52]; Hutchinson v Comcare [2019] FCA 1440 at [4].

27. The relevant and probative material before me includes certain computer records (categorised by the Respondent in its index of T documents as “Computer records: Family Tax Benefit”).[148] While neither party adverted to these records (either in written or oral submissions), they appear to show that Ms Kothe had, by May 2018,[149] repaid the indebtedness she had allegedly incurred consequent on her receiving more by way of family tax benefit than she was entitled to in respect of the period 1 July 2014 to 23 July 2014 as a result of her then being a member of a couple.

    [148] T106,1160-1167.

    [149] See, in particular, T106,1162.

    AGE PENSION DEBT WRITTEN OFF OR WAIVED?

28. As I have found that Ms Kothe is indebted to the Commonwealth in respect of payments made to her by way of the age pension, the issue arises as to whether the indebtedness ought be written off or the Commonwealth’s right to recover it waived.

29. I am not satisfied that such indebtedness ought be written off. A debt may be written off when it is deemed to be irrecoverable at law,[150] the debtor has no capacity to repay the debt, the debtor's whereabouts are unknown (despite all reasonable efforts having been made to locate the debtor) or it is not cost effective for the Commonwealth to take action to recover the debt.[151]

    [150] Social Security Act 1991, s 1236(1B).

    [151] Social Security Act 1991, s 1236.

30. Of these bases for writing off a debt, the only one of potential relevance in these proceedings would appear to be the one concerning Ms Kothe’s capacity to repay. Subject to one qualification, she will be deemed to have that capacity given that it would appear that the alleged indebtedness is recoverable by deductions from Ms Kothe’s social security payments (noting that the alleged indebtedness has already been repaid to an extent by setting various amounts off against Ms Kothe’s age pension payments). The qualification to this applies where this means of repaying indebtedness causes severe financial hardship.[152]  

    [152] Social Security Act 1991, s 1236(1C).

31. I am not satisfied that severe financial hardship would be the result of requiring Ms Kothe to repay her age pension debt. In a context where the “…taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered…”,[153] the concept of severe financial hardship is not one given broad scope. Here, I am not satisfied that it has application. For instance, the material before me does not establish that requiring Ms Kothe to repay her indebtedness would result in her   facing financial suffering of a severe or extreme nature.[154]

    [153] Secretary, Department of Social Services v Hales (1998) 82 FCR 154 at 155.

    [154] Re Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729.

32. I am not satisfied that the right to recover Ms Kothe’s indebtedness ought be waived.

33. Such a waiver might occur in a number of circumstances.[155] Of particular potential relevance are two such circumstances.

    [155] See Social Security Act 1991, s 1237(1).

34. First, a waiver might occur in relation to a proportion of a debt if that proportion “is attributable solely to an administrative error made by the Commonwealth [and] if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.” [156]

    [156] Social Security Act 1991, s 1237A.

35. As I see it, no part of Ms Kothe’s age pension debt is attributable solely to an administrative error made by the Commonwealth. While it might have been contended by Ms Kothe that the Commonwealth had erred in not acting earlier on information she and Mr Kothe provided, it was not contended, and I do not find, that Commonwealth error was the only cause that objectively can be ascribed[157] to any proportion of the relevant debt (including that proportion attributable to the mis-characterisation of her relationship with Mr Kothe).

    [157] See Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 at [35].

36. Second, a waiver might occur in special circumstances (other than financial hardship alone) as long as it is appropriate to do so and provided the relevant debt did not result wholly or partly from (amongst other things) the debtor knowingly making a false statement or a false representation or failing or omitting to comply with a provision of the Social Security Act 1991 or Social Security (Administration) Act 1999.[158]

    [158] Social Security Act 1991, s 1237AAD.

37. Quite apart from the issue of whether there are, in this matter, “special circumstances”, as I see it, I am precluded from exercising that power of waiver given that the proviso to the capacity to do so is not satisfied. Here the relevant indebtedness arose at least partly as a result of Ms Kothe having stated, falsely, that her income was a particular amount at times when it was, in fact, substantially more than that stated. According to His Honour Judge Trapnell, Ms Kothe falsely reported her income to the Department of Human Services on 57 occasions at a time when she knew she had to report her income and how to do it.[159]

    [159] R v Kothe [2019] VCC 2251 at [9-12].

    DECISION

38. In relation to Tribunal matter 2019/2035 regarding a debt allegedly arising from an overpayment of age pension the Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with directions that:

    (d)Ms Kothe be considered to be indebted to the Commonwealth as a result of the amount paid to her by way of the age pension in the period 21 February 2012 to
    5 February 2018 exceeding her entitlement to the age pension.

    (e)The resultant indebtedness is recoverable in that, in the circumstances, it ought not be written off and the right to recover it ought not be waived.

    (f)In calculating the amount of the resultant indebtedness, Ms Kothe be considered to be a member of a couple with Mr Kothe in the period 21 February 2012 to 5 February 2018;

    (g)In calculating the amount of the resultant indebtedness Ms Kothe be considered to have failed to report $235,327.72 of her income in the period 21 February 2012 to 11 September 2017.

39. In relation to Tribunal matter 2019/2040 regarding a debt allegedly arising from an overpayment of family tax benefit, the Tribunal sets aside the decision under review and, in substitution, decides that Ms Kothe is not indebted to the Commonwealth in respect of payments made to her by way of family tax benefit in respect of the period
    1 July 2014 to 23 July 2014.

I certify that the preceding 132 (one hundred and thirty-two) paragraphs are a true copy of the reasons for the decision herein of Senior Member C. J. Furnell

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

Associate

Dated: 27 August 2020

Date of hearing:	15 June 2020
Applicant:	By telephone
Advocate for the Respondent:	Ms Kellie Latta
Solicitors for the Respondent:	Sparke Helmore Lawyers