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

[2015] AATA 640

McMahon and Secretary, Department of Social Services (Social services second review) [2015] AATA  640 (27 August 2015)

Division	GENERAL DIVISION
File Number	2014/4500
Re	Michael McMahon
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Mr S Webb, Member
Date	27 August 2015
Place	Sydney

The decision under review is set aside. At all relevant times, Mr McMahon was an Australian resident for the purposes of the Social Security Act 1991. The matter is remitted to the Secretary to calculate Mr McMahon’s Disability Support Pension in accordance with these reasons.

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

Mr S Webb, Member

CATCHWORDS

SOCIAL SECURITY – Disability Support Pension – meaning of ‘Australian resident’ – multiple absences from Australia – medical reasons for travel overseas – availability of discounted air fares – enduring ties to Australia – eligibility for payment of Disability Support Pension subject to portability rules - decision set aside and remitted

LEGISLATION

Social Security Act 1991 ss 7, 94, 1212C, 1217, 1218AA, 1218AAA

Social Security (Administration) Act 1999 ss 29, 72

REASONS FOR DECISION

Mr S Webb, Member

27 August 2015

1. Michael McMahon was a farmer. Following serious health problems and the breakdown of his marriage, he claimed and was granted a Disability Support Pension (DSP). Over a period of years, he travelled frequently to the Philippines, spending more time overseas than in Australia. A delegate of the Secretary determined that he was not an Australian resident, cancelling his DSP and raising a substantial over-payment debt against him. Mr McMahon challenged those decisions unsuccessfully both on internal review and at the Social Security Appeals Tribunal (SSAT). He has applied for review.

   BACKGROUND FACTS

2. Mr McMahon is an Australian citizen. He springs from a farming family with holdings in the Hunter Valley. The holdings were sold off when his parents died. He owned property in Forbes and Darlington Point through a farming business, Kinsale Pty Ltd. Following a number of drought years and problems with his health, the properties were sold, the business was wound up and Mr McMahon’s remaining livestock was sold. He appears today in straitened financial circumstances, with no income and very few assets, depending upon his son, Brendan, and other family members for support.

3. Brendan McMahon has provided a statement in Exhibit 3. He was not called to give oral evidence.

4. Mr McMahon is married. In these reasons, I will refer to his wife as ‘K’. She was not called to give evidence. I understand that the marriage broke down in or about 2005, but Mr McMahon and K maintain a civil relationship. He told me that they are not divorced and there is some hope for reconciliation.

5. K is a flight attendant. As K’s nominated beneficiary, Mr McMahon is able to access heavily discounted airfares. I understand that following the collapse of Ansett Airlines, she obtained employment with an airline in Qatar and that she often worked routes in South-East Asia, including to the Philippines. Mr McMahon’s evidence is that he would commonly fly to meet K in the Philippines and other places as, because of her overseas employment, her visits to Australia were infrequent. I accept Mr McMahon’s evidence that K agreed to continue the beneficial arrangement with air travel when they separated, and that this is presently ongoing.

6. Under this arrangement, Mr McMahon told me that a return flight to the Philippines costs him $120 and, while there is no limit to the number of such flights he can take each year, he may only do so if there are seats available. He says this means he is treated as a ‘stand-by’ passenger and he cannot confirm travel details in advance. He also says that once such a ticket is paid for, it cannot be refunded. I accept this evidence.

7. As for siblings, Mr McMahon has a sister and a brother in Australia, and a half-sister who divides her time between the United States and Guam. He says that he has a close and enduring relationship with his siblings.

8. In 2008, Mr McMahon experienced a number of serious health problems, including a myocardial infarction associated with severe ischaemic heart disease, [1] a diagnosis of advanced non-insulin dependent Diabetes Mellitus,[2] and testicular cancer.[3]

   [1] T8 folio 105.

   [2] T8 folio 107.

   [3] T8 folio 109.

9. On 26 October 2009, he claimed DSP.[4]

   [4] T7.

10. On 29 October 2009, Mr McMahon contacted Centrelink, inquiring about portability in respect of the Newstart Allowance he was then being paid, and advised that he was planning to leave Australia on 30 October 2009 and to return before 29 January 2010.[5] The Centrelink notes state “NSA cannot be paid overseas because customer is travelling for a reason that does not allow overseas payment”. I note in passing that an overpayment debt was raised against Mr McMahon in respect of payment of Newstart Allowance during a previous period from 24 April 2008 to 14 May 2008 in which he was absent from Australia, obtaining dental work in the Philippines.[6]

    [5] T11 folio 116.

    [6] T13 folio 120.

11. On 11 December 2009, a notice granting DSP from 16 October 2009 and setting our Mr McMahon’s legal obligations, was sent to him at his registered address.[7] The obligations include –

    If you are planning to travel outside Australia

    If you or dependent children decide to leave Australia even for a holiday or short visit, you must tell us within 14 days of making the decision so we can check to make sure you are eligible to receive your payment while you are away. If you do not tell us your payment may stop…

    [7] T17.

12. Mr McMahon’s address then and up to the day on which his DSP was cancelled (19 February 2014) is a home unit in North Parramatta, owned by K. I understand that he and K lived in this property for many years before jointly purchasing a property in Lane Cove under a heavy mortgage. When they separated, the Lane Cove property was let. Mr McMahon says that he returned to North Parramatta under an informal arrangement with K, under which he was required to pay rent. This is consistent with information he has provided over time, in his DSP claim and subsequently. I note that Mr McMahon has declared varying amounts of rent payable to K in different documents and at different times. What is to be made of this is unclear. To my mind, little turns on it as I am satisfied that Mr McMahon did, in fact, pay rent to K in respect of the North Parramatta property.

13. Mr McMahon informed me that K became upset and angry when she received a letter demanding Mr McMahon pay child support for a child he allegedly fathered in the Philippines. She required him to vacate the home unit, but agreed to him utilising a garage at the property, which he says he did and for which he was required to pay rent. This is consistent with the documents in Exhibit 2. On Mr McMahon’s account, this came to an end when his DSP was cancelled and he was unable to meet the rental commitment, whereupon he moved in with his son.

14. As regards the claim for child support, Mr McMahon stoutly denies fathering the child, although he has not contested the child support claim formally and deductions were made from his DSP payments at the time. He denies knowing or having any contact with the woman concerned or the alleged child, asserting that the whole thing is a scam. He says that he did engage in a very brief relationship with a woman in the Philippines when he was faced with testicular cancer and related surgical treatment. On his account, the woman concerned asserts that their relationship produced a daughter. He contests this and sought a DNA test, which was refused. He says that the woman has not pursued him for child support, and he has not paid any such support and he had no continuing connection with the woman or the child.

15. As regards Mr McMahon’s overseas travel, it is quite clear, and he freely admits, that he has made frequent visits to the Philippines each year while being paid DSP. He says that he initially notified Centrelink, but he was told that he did not need to do so each time so long as the absence was less than 13 weeks and when the portability rules changed, that it was less than 30 days. He says that he followed that advice.

16. He told me that he travels to the Philippines in order to obtain cheap medications and cheap treatment for chronic problems with his feet and his teeth as a result of his Diabetes. He told me that he requires regular treatment for his feet to improve circulation and to mitigate the cracking effect of Diabetes; he is able to obtain such treatment in the Philippines at a cost of $3, whereas the same treatment in Australia would cost $80. He told me that he requires a lot of dental treatment, including root canal treatment and fillings, as a result of the Diabetes; he is able to access such treatment at a cost of $400 for root canal work in the Philippines that would cost $2,000 or more in Australia, or there would be extensive waiting times to obtain such treatment in a public hospital. He maintains that in his straitened financial circumstances, and being able to access very cheap flights, obtaining treatments of this kind in the Philippines is his only realistic option.

17. His evidence is that he benefits from a healthy diet of cheap fresh food in the Philippines, and the warm climate reduces symptoms that become worse in the Australian winter months. He also said that he travelled there for psychological support prior to his separation from K.

18. When in the Philippines, he told me that he stays in cheap hotels. The documents in Exhibit 1 and Brendan’s statement in Exhibit 3, lend weight to his evidence on this point.

19. By his account, he does not have and has never had a residence visa for the Philippines. He is not able to own property there. And he does not want to reside there, although his visits there have improved his health and his weight has reduced.

20. On 22 March 2013, Mr McMahon’s eligibility for DSP was selected for review.[8]

    [8] T45 folio 256.

21. On 19 February 2014, a delegate of the Secretary determined that Mr McMahon was not an Australian resident and he was not entitled to receive DSP from the date of grant. An overpayment debt in the amount of $95,195.67 was raised against Mr McMahon.[9]

    [9] T66 and T67.

22. Mr McMahon sought review by an Authorised Review Officer, who affirmed the decision and decided that the debt could not be written off or waived.[10]

    [10] T78 and T79.

23. The SSAT affirmed the decision on review.[11]

    [11] T2.

    ISSUES

24. The issues to be determined are whether Mr McMahon was overpaid an amount of DSP and, if so, whether the debt raised against him should be written off or waived in the particular circumstances.

25. In order to determine whether he was overpaid DSP it is necessary to determine if he is an ‘Australian resident’ at all relevant times. This is the key issue.

    WAS MR MCMAHON AN AUSTRALIAN RESIDENT?

26. The Secretary submits that Mr McMahon does not meet the Australian resident test at any time from the day he was granted DSP, on 16 October 2009, until it was cancelled on 19 February 2014. The key reason for this is that Mr McMahon spent more time outside Australia than in Australia during this period – he was absent for 1,229 days out of 1,567 days. Furthermore, in the Secretary’s submission, when all of the indicia for being an Australian resident are considered, Mr McMahon does not have sufficient ties to Australia to make a positive finding that at all relevant times he was an Australian resident.

27. The Secretary maintains that the evidence is not sufficient to make any such finding – there is no formal agreement with K in respect of rent; Mr McMahon has no significant assets or financial interests, or business or employment, in Australia; and, while Mr McMahon has family in Australia, he may well have one or more children in the Philippines.

28. For these reasons, the Secretary asserts that Mr McMahon cannot meet the residence test for DSP eligibility.

29. I do not agree.

30. The matter is to be determined under the Social Security Act 1991 (the Act), with reference to the Social Security (Administration) Act 1999 (the Administration Act). The eligibility tests for DSP are set out in s 94 of the Act. In this context, the requirement for residence is set out in s 94(1)(ea). This section was amended with effect from 1 July 2011, such that the ‘Australian resident’ requirement is applied as of the date a person satisfies the ‘work test’ for DSP. For present purposes it is not necessary to address the work test.

31. At hearing, the Secretary conceded, rightly, that the amending provision does not have a retrospective effect.

32. Nonetheless, the ‘Australian resident’ test applies. That term is given meaning by s 7(1) and (2) of the Act –

    (2) An Australian resident is a person who:

    (a) resides in Australia; and

    (b) is one of the following:

    (i) an Australian citizen;

    (ii) the holder of a permanent visa;

    (iii) a special category visa holder who is a protected SCV holder.

33. The key feature of this definitional provision that is presently controversial is the phrase ‘resides in Australia’. Section 7(3) set out relevant matters to which regard must be had when determining such issues –

    (3) In deciding for the purposes of this Act whether or not a person is residing in Australia, regard must be had to:

    (a) the nature of the accommodation used by the person in Australia; and

    (b) the nature and extent of the family relationships the person has in Australia; and

    (c) the nature and extent of the person’s employment, business or financial ties with Australia; and

    (d) the nature and extent of the person’s assets located in Australia; and

    (e) the frequency and duration of the person’s travel outside Australia; and

    (f) any other matter relevant to determining whether the person intends to remain permanently in Australia.

    Accommodation

34. The evidence in Exhibits 2, 3, 4 and 6 demonstrates that throughout the period I must consider from 16 October 2009 to 19 February 2014, Mr McMahon retained rental accommodation at North Parramatta, being the home he and K lived in for the majority of their married lives together. For part of the period in issue, from 2013, he moved his possessions into a garage at this property where he occasionally slept overnight when he was not staying with his son or with one of his siblings.

35. On Mr McMahon’s evidence, this arrangement changed somewhat following cessation of his DSP - the rental accommodation in North Parramatta Mr McMahon maintained by informal arrangement with K, ended when he could no longer meet his rental commitments.

36. Thereafter, Mr McMahon moved in with his son. This arrangement is presently ongoing. Mr McMahon’s account is consistent with Brendan’s evidence in Exhibit 3. Mr McMahon told me that he is very grateful to his son, who supports him financially, but he does not want to intrude upon his son, who is recently married, so he stays with his brother or his sister as well, and he has his name on a public housing waiting list.

37. Mr McMahon’s evidence is that he when he is in the Philippines, he stays in cheap hotels, and he has no on-going or regular accommodation in that country. The evidence in Exhibits 1 and 3 support this conclusion.

38. These matters weigh in favour of Mr McMahon residing in Australia.

    Family relationships

39. I accept that Mr McMahon has close and enduring relationships with family members, including, particularly, his son, his sister and his brother. On his evidence, he has drawn strong support from these relationships over the past years, since his health and his financial circumstances took a turn for the worse.

40. As to the proposition that Mr McMahon has one or more children in the Philippines, this is an open question. It appears that there may be two claims of paternity against him – one involving child support payments. Whether or not these claims are true, I cannot determine on the present materials. Even if they are, and I make no such finding, I accept his evidence that he does not have an enduring relationship with the children or their mothers.

41. These considerations weigh for Mr McMahon residing in Australia.

    Employment, business or financial ties

42. Mr McMahon has had no employment since his farming business collapsed, well before the period I must consider. Without employment or other business ties in Australia, this does not lend much weight to him residing in Australia; nor does it weigh against that possibility.

43. Mr McMahon has a bank account and a share trading facility in Australia.

44. From 2009 until his DSP was cancelled in February 2014, Mr McMahon relied on social security payments as his sole source of income. Thereafter, he relied on family members, and particularly his son, for financial support.

45. These arrangements reveal enduring ties to Australia, despite the small scale of Mr McMahon’s finances. This weighs in favour of Mr McMahon residing in Australia.

46. As I have said, on Mr McMahon’s evidence, from 2013 child support payments were deducted from his DSP for the benefit of a child in the Philippines and he did not formally challenge the claim. There is an open question about the veracity of the child support claim against Mr McMahon, and whether the child is a child fathered by Mr McMahon. The present evidence is not sufficient for me to make any findings about these matters. And it does not establish that Mr McMahon had or presently has a meaningful or enduring relationship with the woman and child.

47. On the present materials, this does not weigh for or against Mr McMahon residing in Australia.

    Assets

48. Mr McMahon has very few assets. He has an interest in a property at Lane Cove with K. He told me that this property is heavily mortgaged and, presently, there is negative equity. I am unable to ascertain the value of the property or the size of the mortgage liability on the present materials.

49. He has a share portfolio comprised of options that are highly leveraged. He told me that the value of his equity would be negative or close to nothing.

50. He owns a Daihatsu motor vehicle, which I understand he has owned from when he was farming.

51. As for money, he has a bank account, but no savings to speak of. He is presently relying on family members for support.

52. None of these matters were challenged and I accept Mr McMahon’s evidence on these points. They add some weight to Mr McMahon’s proposition that he was at all times residing in Australia

    Travel outside

53. Mr McMahon’s ‘Immigration Advised Movements’ in and out of Australia are set out in Exhibit 5 and in T87 folios 404 to 408.

54. As can be seen, he has travelled frequently for short periods from 2 September 2006 (when the records commence) to 22 June 2015 (when the records end).

55. Mr McMahon’s evidence is that, since separating from K, all of his international travel has been to the Philippines in order to obtain medical and dental treatments, or to Guam to visit his half-sister.

56. Close examination of his movement records reveals that he travelled overseas frequently for periods of between two weeks and three months, returning for short periods, on one occasion for only one day, before departing again. This weighs against him residing in Australia during the period he was paid DSP.

57. Nevertheless, the frequency and pattern of his movements in and out of Australia, insofar as a pattern can be seen at all, are consistent with his oral evidence about seeking cheap treatments of various kinds in the Philippines and visiting his newly discovered half-sister for short periods in Guam. On Dr Wilson’s evidence, I accept that Mr McMahon requires regular treatment for foot and dental conditions that are secondary to Diabetes. The only evidence before me about the comparative costs of such treatment comes from Mr McMahon. I accept that his assertion that he obtains very substantial cost savings obtaining treatment for his feet and his teeth in the Philippines, and that he makes further savings buying generic medicines (prescribed by his treating doctors in Australia) in the Philippines.

1. The cumulative quantification of Mr McMahon’s absences from Australia reveals a striking disproportion between time spent overseas and time spend here. The Secretary says that Mr McMahon was absent for 1,229 days out of 1,567 days. I accept that this calculation is correct.

2. The present records reveal that the broad pattern of Mr McMahon’s travel out of Australia has persisted since September 2006 and it has continued despite the cancellation of his DSP. This supports the proposition that he is travelling for the health reasons he has described. To my mind, his need for treatment and the difficulty of him obtaining treatment in a timely manner with limited means in Australia illuminates the reasons for his frequent absences from Australia.

3. While sheer absence may weigh against him residing in Australia during the period I must consider, the reasons for his absences and the pattern of his travel suggest that he has maintained close and enduring ties with Australia, particularly with his treating doctors and with family members who support him. And those matters weigh in support of him residing here even though he was often absent.

   Any other matter relevant to determining whether the person intends to remain permanently in Australia

4. Mr McMahon told me with some passion that his home is in Australia, in the country where he was raised, and where he has lived and worked on farms all his life. His evidence is that he does not now and never has wanted to reside anywhere else, including in the Philippines. He maintains that he is not permitted to reside in the Philippines, or to own property there, because he does not have and has not sought a residence visa.

5. He told me that he is very thankful to K for enabling him to travel with great frequency to the Philippines to obtain the cheap treatments he requires, and to visit family members. In his submission, without this facility for cheap travel, his life and his health would be very different – he would not be able to afford to travel to the Philippines to obtain the regular cheap treatments he needs, and his health would be worse.

6. Throughout the period in issue, he has maintained an ongoing therapeutic relationship with his treating doctors in Australia – Dr Wilson, a general practitioner in Parramatta, Dr Watts, a urologist and oncologist at Westmead Hospital, and Dr Ong, a cardiologist at that same Hospital. He told me that he would not seek specialist advice in the Philippines as this would not be of the same quality as the specialist care he obtains in Australia.

7. These matters weigh for Mr McMahon residing in Australia.

   Conclusion

8. Weighing these various factors, on balance, I am reasonably satisfied that Mr McMahon was residing in Australia at all relevant times. The amount of his absences from Australia from October 2009 to February 2014 weigh against him residing here, but his absences were of a temporary nature for the purposes of s 1212C of the Act, and I am satisfied that he did not cease to reside in Australia while he was temporarily absent.

9. The cumulative amount of his absences over time, and the short duration of his presence in Australia from time to time, are outweighed by other factors, including the strong and enduring ties he has maintained with family members and with his treating doctors. He has maintained rental accommodation in North Parramatta, albeit in reduced form from mid-2013, and thereafter he has been living with his newly married son. His financial ties to Australia are those of dependence – this is where he has retained his limited financial resources, and this is where he derives financial support from family members and, previously, taxpayers.

10. While his living arrangements have been somewhat peripatetic, especially from 2013, and he has but few assets, these factors do not weigh against him residing in Australia at all relevant times.

11. It follows that Mr McMahon is an ‘Australian resident’ for the purposes of s 7 and s 94(1)(ea) of the Act at all relevant times. That being so, he was eligible for DSP from the date of grant on 16 October 2009 and subsequently.

    WAS MR MCMAHON OVERPAID AN AMOUNT OF DSP?

12. In view of my finding that Mr McMahon was an ‘Australian resident’ at all relevant times, he was eligible to be paid DSP during the period it was paid to him. But this is subject to him meeting the portability rules set out in Part 4.2 of the Act. If he was absent from Australia and paid DSP for a period longer than that allowed under s 1217 of the Act, an overpayment may have occurred.

13. This matter was not agitated in detail during the hearing. For this reason, I will remit the matter to the Secretary to determine whether Mr McMahon’s absences have complied with the portability rules, with reference to s 1217 of the Act as amended.

14. Mr McMahon has not made a request for indefinite portability. At hearing, he did not press that he is within the terms of s 1218AAA or s 1218AA of the Act, concerning indefinite portability. I note that the Secretary contends that Mr McMahon does not meet these tests, and that he does not have a ‘severe impairment’. These issues were not ventilated or pressed at hearing, and they are not squarely before me, there having been no prior claim, no determination and no reviewable decision addressing such matters. Perhaps for this reason, the present evidence concerning the extent of Mr McMahon’s disabilities is very scant. The medical report of Dr Wilson leaves open whether there is a ‘severe impairment’ for the purposes of s 1218AAA or whether Mr McMahon is ‘terminally ill’ for the purposes of s 1218AA of the Act. These are not matters that I can properly determine, presently.

15. It is not necessary to proceed further to consider issues of debt and recovery.

    DECISION

16. The decision under review is set aside. At all relevant times, Mr McMahon was an Australian resident for the purposes of the Social Security Act 1991. The matter is remitted to the Secretary to calculate Mr McMahon’s Disability Support Pension in accordance with these reasons.

I certify that the preceding 73 (seventy-three) paragraphs are a true copy of the reasons for the decision herein of Mr S Webb, Member

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

Associate

Dated 27 August 2015

Date of hearing	26 June 2015
Applicant	In person
Solicitors for the Respondent	Department of Human Services