McKenna and Department of Family and Community Services - [2002] AATA 671

DECISION AND REASONS FOR DECISION [2002] AATA 671

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2002/333

GENERAL ADMINISTRATIVE DIVISION       )
           Re      KIM McKENNA
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr B J McCabe, Member

Date9 August 2002
PlaceBrisbane

Decision The Tribunal affirms the decision under review.

..................(Sgd)......................
Mr B J McCabe
Member
CATCHWORDS
SOCIAL SECURITY – overpayment – whether applicant failed to advise Centrelink of her husband's earnings – whether debt can be waived – whether applicant should be treated as not being part of a couple – discretion under s 24 – whether there is a special reason justifying the exercise of the discretion

Social Security Act 1991

Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Re SRL and Secretary, Department of Social Security (1998) 51 ALD 796
Re QX02/2 and Secretary, Department of Family and Community Services [2002] AATA 220
Re Watson and Secretary, Department of Family and Community Services [2002] AATA 311
Re Secretary, Department of Family and Community Services and Perry [2001] AATA 282

REASONS FOR DECISION

9 August 2002 Mr B J McCabe, Member

Introduction

Kim McKenna has sought review of a decision to raise and recover a debt in the amount of $12,661.26. The Secretary says the debt arose because Mrs McKenna received social security benefits that she was not entitled to receive. The Secretary says the applicant received the benefits because she failed to disclose details of her husband's income.
The Evidence
In addition to the "T" documents provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, the Tribunal heard oral testimony from Mrs McKenna. It also took evidence over the telephone from the applicant's former husband, Mr Steven McKenna, who was in New Zealand. Mr Foster for the respondent also tendered copies of bank withdrawal slips bearing the applicant's handwriting and signature. At the conclusion of the hearing, Mrs McKenna provided the Tribunal with copies of orders and other correspondence relating to Family Court proceedings against her former husband.
The applicant was not represented at the hearing.
The Facts
The applicant married Steven McKenna on 19 August1989 in Melbourne. She gave birth to her first child, Emma Jean, on 11 October 1989. Emma Jean has a condition known as Sotto's Syndrome or cerebral gigantism. Robert James was born on 5 February 1991. The applicant says she and Mr McKenna were friends and she got married because her mother urged her to ensure that her children would have a father. Mrs McKenna said she had suffered abuse as a child and wished to marry a decent man. Mr McKenna was a member of the Salvation Army, and seemed kind.
Mr and Mrs McKenna moved to the Gold Coast in 1992/1993 after he lost his job on the Victorian railways. They lived in a variety of places during their time together. They separated in March 2000 and were subsequently divorced. The applicant now lives with the children at Hope Island. Mr McKenna has moved to New Zealand. The applicant's sister lives on the Sunshine Coast but she is not in close contact with the applicant.
The applicant has not worked since she moved to the Gold Coast. Her husband had difficulty finding work when he arrived and he received Newstart allowance. He was employed at Dreamworld in 1995. The applicant says he told her that he ceased receiving Newstart shortly after he commenced work. In fact he continued to receive Newstart benefits. She also failed to inform Centrelink of Mr McKenna's employment in the documents relating to the parenting allowance and parenting payment benefits that she received. She would not have been entitled to those benefits (certainly not at the same rate) if Centrelink had taken into account Mr McKenna's income.
The applicant says she became ill shortly after the birth of her daughter. During her illness, she agreed that Mr McKenna should take responsibility for all of the financial matters. Thereafter, she said, Mr McKenna dealt with all of the bills and the banking and dealings with Centrelink. She contacted Centrelink on a number of occasions to make inquiries (for example, in the event of an underpayment) but she was usually acting on her husband's instructions, she said. She did visit Centrelink on a few occasions on her own, but that was in connection with benefits available to the children or in connection with her acting as a carer for the children. She said it did not occur to ask Centrelink on those occasions about her entitlements. She said she trusted her husband.
During cross-examination, the applicant conceded she occasionally opened the mail when her husband was not present. (The mail was delivered to the home address for part of the relevant period, although it was also delivered to a post box that the applicant said her husband accessed on his own). She said she didn't like opening the mail because it upset her husband. Even so, when she did the open mail – including correspondence from Centrelink - she had the opportunity to read the contents. She claimed she never read the letters on those occasions.
The applicant's explanation of the banking arrangements raised some questions over her credibility. She said her husband handled all of the banking even though it was a joint account. She said she and her husband both had a keycard but she did not use it. The applicant said her husband would occasionally withdraw money using her keycard and provide her with an allowance. It was unclear why he would not use his own card for that purpose. But that was not the only anomaly. She claimed in her evidence she only visited the bank on a few occasions when it was necessary to open a new account following a change of address, or to otherwise alter the details of the account. She said she was with her husband on each occasion, and that he always took the lead. Mr Foster for the respondent was able to demonstrate during cross-examination that Mrs McKenna was not being entirely frank on this point. He produced two withdrawal slips bearing Mrs McKenna's signature. It is unclear why the applicant would have completed the forms if her husband, whom she said accompanied her, was able to operate the account on his own. This evidence suggests the applicant was more actively involved in the management of the family's affairs than she would have the Tribunal believe.
Her evidence was called into question in other respects. She claims she informed Centrelink of her former husband's failure to advise Centrelink about his employment after being told by Ms Kathy Williams that he was engaged in a fraud. But Kathy Williams said in a statement tendered to the Tribunal that she did not tell Mrs McKenna that. She said she knew nothing of any fraud.
Mr McKenna gave evidence by telephone from New Zealand. The relationship between him and his former wife has become acrimonious: that much was evident from Mr McKenna's oral evidence, from the tense exchange between him and the applicant, and from the various documents relating to the Family Court proceedings that Mrs McKenna has brought against her husband. Mr McKenna candidly admitted that he had misled Centrelink about his income details over a long period of time. He said he knew he shouldn't have done it, and that he regretted it. He said his wife knew exactly what was going on at all times, and participated in what he claimed was a joint decision to conceal the truth. Although I approach his evidence with caution because of the obvious animus between him and his former wife, I am satisfied he was telling the truth.
Mrs McKenna told the Tribunal she had been brought up to believe that one's husband would always take care of the finances. She added she was abused as a child, and that Mr McKenna was aggressive and controlling, although he never physically abused her. Birgit Klimmer, a social worker, concluded in a report dated 3 October 2001 (it was prepared for Centrelink and included in the T documents) that Mrs McKenna was in fact the victim of abuse and did not know what was going on with the finances.
After hearing Mrs McKenna and seeing the evidence presented by Mr Foster, I am not satisfied that the applicant was ignorant of the fraud perpetrated by her husband. I do not pretend for a moment that her circumstances were easy, although she claimed that she and her former husband remained good friends right until the final part of their marriage. Mrs McKenna appeared to be a robust and intelligent woman – albeit one who has had to cope with real challenges caused by the state of health of her children, her isolation (she lives at Hope Island and does not drive, and public transport is poor), and by the behaviour of her former husband. I think she knew what was going on and went along with it, however reluctantly. She decided to inform Centrelink about the fraud when her husband had left to punish him for his (mis)behaviour.
The Law
The applicant has sought relief from the obligation to repay the debt on three bases. The first two of these may be dealt with briefly.
Relief Under Section 1236 of the Social Security Act 1991

Section 1236 of the Social Security Act 1991 ("the Act") permits the Secretary to write off a debt in the circumstances set out in s 1236(1A). That sub-section provides:
"The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt."

The debt is currently being recovered through deductions from the applicant's social security benefits. It follows that the debt is recoverable, and the debtor has the capacity to pay the debt. Since her whereabouts are not an issue and no further recovery action is contemplated, it can be seen that the discretion under s 1236 is not available to assist the applicant.
Waiver Under Section 1237AAD
Section 1237AAD allows the Secretary to waive a debt where there are special circumstances. But the discretion is only available where the debt did not arise as a result of the debtor or another person making a false statement. In this case, someone – in all likelihood, more than one person – has made a false statement. It follows that the requirements of the section have not been satisfied.
Whether the Applicant Should Not be Treated as Being Part of a Couple Under Section 24
Section 24 of the Act permits the Secretary to treat individuals who are clearly members of a couple as if they were not in a couple for the purposes of the Act. If Mr and Mrs McKenna were not a couple, Mr McKenna's income would be irrelevant to the calculation of the applicant's entitlement to benefits. A debt would not have been raised against her because she would not have been overpaid.
Section 24(1)(c) says the discretion to disregard the relationship is exercisable where:
"the Secretary is satisfied that the person should, for a special reason in the particular case, not be treated as a member of a couple…"

It is therefore necessary to consider whether there is any evidence in this case that would amount to a "special reason" within the meaning of the section.
The discretion under s 24 should not be lightly exercised: Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277. But the discretion has been exercised in some cases. In Re SRL and Secretary, Department of Social Security (1998) 51 ALD 796 and Re QX02/2 and Secretary, Department of Family and Community Services [2002] AATA 220, the Tribunal concluded the applicants should not have been treated as being a member of a couple (although QX02/2 was ultimately decided on another ground). Mr Foster suggested these cases could be distinguished on the basis that the applicants did not share in the improperly obtained benefits. The fact that the applicant did not share in the benefits received by the partner might favour the exercise of the discretion in some cases, but I do not accept that it is the only set of circumstances that will justify the exercise of the discretion. The section is intended to provide the ability to give relief in extraordinary cases. It would be a mistake to try and anticipate what those circumstances might be.
Having regard to the circumstances of this case, I am not satisfied there is a special reason justifying the exercise of the discretion in favour of Mrs McKenna. Her former husband may have been controlling and abusive, but I have already concluded that she knew he was receiving benefits that he was not entitled to receive, and that she must have been aware that her entitlements were affected. She had the ability to approach Centrelink and clarify her position if she wished to do so. She knew what was occurring, and she could and should have done something about it. Her failure makes it difficult to justify the exercise of the discretion under s 24.
I note the Tribunal has reached similar conclusions in Re Watson and Secretary, Department of Family and Community Services [2002] AATA 311 and Re Secretary, Department of Family and Community Services and Perry [2001] AATA 282. In each of those cases the person seeking exercise of the discretion was the victim of abuse. While the fact of abuse is dreadful, it is necessary to show whether there is a special reason in all the circumstances justifying exercise of the discretion.
Conclusion
I have considerable sympathy for Mrs McKenna. Her lot in life is a difficult one. I understand that criminal proceedings have been commenced against her. But I cannot escape the conclusion that the debt was properly raised against her, and that she is not entitled to relief. The decision under review is affirmed.
I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B J McCabe, Member
Signed:         Sarah Oliver
  Associate
Date of Hearing  22 July 2002 (at Southport)
Date of Decision  9 August 2002
The Applicant Appeared in Person
Solicitor for the Respondent    Mr N Foster, Departmental Advocate