Mohanna; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Anor and

[2008] AATA 406

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 406

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/2986

GENERAL ADMINISTRATIVE DIVISION

)

Re

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Applicants

And FATIMA MOHANNA

Respondent

DECISION

Tribunal Rear Admiral A R Horton AO, Member

Date19 May 2008

PlaceSydney

Decision

The decision of the Social Security Appeals Tribunal is affirmed as follows:

a.        the decision to raise and recover a debt of parenting payment in the amount of $1,317.44 for the period 27 September 2003 to 26 December 2003 is affirmed;

b.        the decision to raise and recover a debt of family tax benefit in the amount of $2,257.45 for the period 27 September 2003 to 26 December 2003 is affirmed; and

c.        the decision to raise and recover a debt of family tax benefit in the amount of $4,158.70 for the period 18 May 2004 to 28 September 2004 is affirmed.

The decisions of the Social Security Appeals Tribunal in respect of parenting payment for the period 18 May 2004 to 16 August 2004 are set aside, and in substitution:

d.        the original decision to raise and recover a debt of parenting payment in the amount of $2,307.22 for the period 18 May 2004 to 17 August 2004 is affirmed; and

e.        parenting payment is not payable for the period 18 August 2004 to 16 November 2004.

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

Rear Admiral A R Horton AO

Member

CATCHWORDS - SOCIAL SECURITY – Parenting payment – Portability- limited to 26 weeks prior to 1 July 2004 – Requirement to advise Centrelink when circumstances change and when temporarily out of Australia – Debts arising from payment when considered ineligible or overpayment - Family Tax Benefit – Reduction of rate in certain circumstances - Debt raised because of overpayment – Consideration as to write-off or waiver under special circumstances – Decision of SSAT to cancel a debt raised and to decide an entitlement for arrears of parenting payment reviewed – Decision set aside and raised debts confirmed.

Administrative Appeals Tribunal Act 1975 – 37, 41(2)

Social Security Act 1991 – 1218B, 1223, 1236(1), 1237, 1237A(1), 1237AAD

Social Security (Administration) Act 1999 – 68

A New Tax System (Family Assistance) Act 1999

A New Tax System (Family Assistance)(Administration) Act 1999 – 25, 71, 95, 97, 101

Beadle v Director-General of Social Security (and others) (1985) 7 ALD 670

Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114

Dranichnikov & Ors v Centrelink & Ors (2003) 75 ALD 134

Groth v Secretary, Department of social security (1995) 40 ALD 541

Jazazievska v Secretary, Department of Families and Community Services (2000) 65 ALD 424

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Estafanos and Secretary, Department of Family and Community Services (2005) 88 ALR 778

Secretary, Department of Employment, Education, Training and Youth Affairs and Prince (1997) 152 ALR 127

Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76

Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC190

Weekes and Secretary, Department of Family and Community Services [2004] AATA 770

REASONS FOR DECISION

19 May 2008 Rear Admiral A R Horton AO        

1.      Mrs Fatima Mohanna (“the Respondent”) arrived in Australia from Lebanon in 1987 aged 12. She married Mr Ahmad Anani in 1999. Their first child, Batoul was born in July 2001, and Mrs Mohanna claimed family tax benefit (“FTB”) in August 2001 and parenting payment in August 2002. In subsequent years she and her husband lived for relatively long periods in the United States, where he sought, without success because of the employment laws in that country, to work with his brother who owned a window factory.

2.      During those periods of temporary absence from Australia, Mrs Mohanna continued to receive family tax benefit, albeit the rate was reduced to base level from time to time in accordance with the legislation. She also continued to receive parenting payment in accordance with the portability provisions for that benefit. In 2003, parenting payment should have ceased at the end of the 26 week portability period, but this did not happen, and a subsequent debt was accordingly raised by Centrelink, as was a debt for overpayment of family tax benefit.

3.      In 2004, Mrs Mohanna again left Australia for the United States and Lebanon, and a further debt was raised by Centrelink in respect of an ineligibility for portability of parenting payment and overpayment of family tax benefit.

4.      On 29 May 2007, the Social Security Appeals Tribunal (“SSAT”) affirmed the parenting payment and family tax benefit debts respectively of $1,317.44 and $2,257.45 for the period 27 September 2003 to 26 December 2003 as well as a debt of $4,158.70 for overpayment of family tax benefit for the period 18 May 2004 to 28 September 2004. The SSAT set aside the decision to raise and recover a debt of parenting payment of $2,307.22 for the period 18 May 2004 to 17 August 2004 on the basis that Mrs Mohanna was eligible for such payment under the portability rules. The SSAT further found that Mrs Mohanna was eligible for parenting payment for the period 18 May 2004 to 16 November 2004.

5. The Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and the Secretary, Department of Education, Employment and Workplace Relations (“the Applicants”) have appealed the decisions by the SSAT in respect of eligibility for parenting payment for the period 18 May 2004 to 16 November 2004. Ms Jennifer Maclean appeared for the Applicants. Ms Jackie Finlay of the Welfare Rights Centre appeared for Mrs Mohanna. The documents pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) were taken into evidence (“T docs”), as were a number of other documents including Statements of Facts and Contentions, of both parties (Exhibits A1 and R1 with attachments), a statement from Mrs Mohanna of 25 January 2008 (Exhibit R3), and documents in respect of Mrs Mohanna’s bank accounts (Exhibits A5 and A6).

ISSUES

6.      At the outset, both parties agreed the calculation of debts in respect of social security payments, and hence I was not required to further consider those calculations. Both parties also agreed that the decision of the SSAT in respect of eligibility for parenting payment for the period 18 May 2004 to 16 November 2004 was incorrect in that it was based on a misinterpretation of the relevant legislation. Thus, Mrs Mohanna was accepting that a debt in respect of parenting payment had arisen, this being from 18 May 2004 to 17 August 2004.

7. Section 1218B of the Social Security Act 1991 (“the Act”) provides that if immediately before the period of absence commenced (in this case 18 May 2004 when Mrs Mohanna left Australia), the person was receiving parenting payment and “at a time not more than 26 weeks before the period of absence had commenced, parenting payment had ceased to be paid...”, parenting payment is not payable during the period of absence. That was the case in this instance, as parenting payment had ceased within that 26 week period (and was not restored until 25 February 2004 when Mrs Mohanna returned to Australia from a visit to the United States and Lebanon which had commenced in March 2003). I agree with this interpretation of section 1218B, an interpretation previously applied in Re Estafanos and Secretary, Department of Family and Community Services (2005) 88 ALR 778.

8.        The issue before the Tribunal therefore seemed to be one of whether the raised debt relating to parenting payment for the period from 18 May 2004 to 17 August 2004 should be written-off or waived in accordance with the provisions of relevant legislation. Ms Finlay submitted however, that notwithstanding that Mrs Mohanna had already paid back some $7,000 of debt, the Tribunal should consider all debt rather than just that accumulated in the 2004 period. Such a proposal was acceptable to the Applicants.

9.        It seemed quite appropriate to me that a consideration of whether write-off or waiver of debt should apply. It would be illogical to suggest that such consideration be constrained to one particular period, when the circumstances in which overpayment or payment when Mrs Mohanna was not eligible, were much the same. Further, the domestic situation of Mrs Mohanna and her financial circumstances need to be considered in a wider context than just looking at matters in a piecemeal manner. In my view, the fact that the SSAT had not accepted write-off or waiver as being applicable to those issues where the SSAT had affirmed the original decisions to raise and recover debts, did not preclude me from reviewing that decision, given that such a review had been proposed by the Respondent and accepted by the Applicants. Accordingly, the issue before me was to consider whether write-off or waiver of some or all of the raised debts was appropriate.

EVIDENCE

10.      I have noted above that Mrs Mohanna has to date paid back some $7,000 of the accrued debt, most being paid prior to September 2007. This was done by way of reductions, the amounts being as agreed with Centrelink, to her fortnightly parenting payment and family tax benefit. Those payments have on occasions been ceased by discussion with Centrelink, and the evidence before me indicates that is the current situation. In the light of the agreement by Mrs Mohanna to the additional parenting payment debt earlier referred to for the period 18 May 2004 to 17 August 2004, the total raised debt amounts to $10,040.81. Thus the outstanding debt, should waiver or write-off not be agreed, is $2,921.55.

11. As to the decision by the SSAT that Mrs Mohanna was eligible for, and should be paid, parenting payment for the full 26 week period from 18 May 2004 (to 16 November 2004), such payment had not been effected, resulting from a Stay order under the provisions of section 41(2) of the AAT Act.

12.      Except when absent from Australia, Mrs Mohanna has lived all her life in the Arncliffe/Kogarah/Rockdale area, where her parents still reside. In evidence, she confirmed that her four brothers live in the area, (where some years ago they built a six townhouse complex for the family). Mrs Mohanna completed her schooling at Moorefield Girls’ High School to Year 12. She then studied for a Bachelor in Computing Science, and in her third year, was offered and accepted work experience with IBM Global Services. On gaining her degree, she became a permanent employee, remaining with IBM for a further five years. In 2002 she was offered and took a redundancy payment in the order of $20,000; she stated that to refuse this redundancy was not an option. She further stated that her salary with IBM had been about $50,000 a year, although in cross-examination she referred to a final salary of $60,000. I note this income was double that entered in her claim for FTB in August 2001 (T4). Mrs Mohanna was unable to explain the discrepancy.

13.      As earlier stated, Mrs Mohanna married in 1999, and her first child (Batoul) was born in 2001. I do not propose to detail the particular circumstances and dates when Mrs Mohanna was thereafter temporarily out of Australia, either living in the eastern United States (Michigan) with her husband in his brother’s home, or when staying with family in Lebanon, except where they have relevance to the consideration before me. Suffice that she was absent from Australia from September 2002 to March 2003, that she informed Centrelink of her intention to be out of Australia (T29), and that she returned to Australia in March 2003, inside the legislated 26 week portability period.

14.      Mrs Mohanna left Australia on 28 March 2003, again advising Centrelink of her intentions. On 26 March (Exhibit A3) and/or 28 March (T7) – there being similar letters with those dates - Centrelink wrote to Mrs Mohanna acknowledging her advise, and informing her that should she still be absent from Australia on 26 September 2003, that is 26 weeks later, her parenting payment would cease and family tax benefit would reduce to the base rate. Mrs Mohanna did not return to Australia until February 2004, and her evidence was that she could not recall receiving this letter. Parenting payment was not stopped until late December 2003, nor family tax benefit adjusted until early January 2004, and hence debts were raised by Centrelink.

15.      Mrs Mohanna again left Australia in May 2004. The Applicants contend that Mrs Mohanna did not advise her intention to travel. Mrs Mohanna believes she did. In evidence, Mrs Mohanna stated that:

[I believe] … I did, like every other time that I did. That is what my practice was. Okay, I travel, I tell them I come back and then (about) one time I said I was going to go for about probably three months or more, whatever it was, and I called back from the States saying, look I am going to stay longer than that…

Mrs Mohanna contacted Centrelink from the United States in August 2004, advising that she had been overseas for three months and would be remaining another three months. Centrelink adjusted benefits accordingly and in due course raised parenting payment and family tax benefit debts. Mrs Mohanna remained overseas until late 2004 (as I understand it), and later travelled again to the United States at dates that are not before me, her last return to Australia being in June 2006.

16.      In Australia, Mrs Mohanna lived with her parents prior to her husband arriving from Lebanon in 2000, when they rented a flat. When the six townhouse complex was built for the family by her brothers, they moved into one of the townhouses and paid rent. After he went to the United States in early 2002, she continued to live in one of the town houses (where she paid no rent). In 2005, she decided to buy a unit in a block being built by her brothers at Liverpool. In her statement (Exhibit R3), she describes the circumstances thus:

I decided to buy one of them to live in. I didn’t want to live in America because my family is in Australia and I couldn’t work in America. I thought if I bought the unit it would help encourage Ahmad to return to Australia with me. Ahmad refused to be involved in buying the unit so I put it just in my name. I bought the unit for $340,000. I borrowed $170,000 from my brothers, who put a caveat over the unit, and $170,000 from Platinum Home Loans.

17.      Mrs Mohanna has never lived in that unit, preferring to be near her family in the Rockdale area. The unit remains rented, the current gross rent being $640 per fortnight. A Statement of Financial Circumstances (Attachment A to Exhibit R1), dated 10 January 2008, shows a net fortnightly loss on this property of $67. Mrs Mohanna still owes $170,000 to her brothers – who seemingly are not pressuring her for repayment and also have the caveat on the property as described in Attachment J to Exhibit R1 – and about $170,000 to Platinum. She has had the unit on the market for sale for about 12 months, initially at $340,000, with the only offers being “ridiculous”, in the order of $220,000 to $240,000. She has no intention of living in the unit. Under cross-examination, she agreed that she had not undertaken a realistic assessment of the costs of purchasing and maintaining the property.

18.      In her statement, Mrs Mohanna referred to the difficulties of physical and verbal abuse in her marriage. This became worse when she pressured her husband to return to Australia, until by the time her son Ali was born in early 2006 (Aya was born in 2003) “he had no mercy, the bashing got worse”. She further learnt that her husband “was cheating” on her. She returned to Australia in June 2006, and she has not seen her husband since. He has not worked since the first occasion of travelling to the United States (2002) and now lives in Lebanon. I note a letter from The St George Hospital and Community Health Service dated 15 January 2008 (Exhibit R1 attachment L) which attests to her having attended for counselling relating to domestic violence since November 2006, this being some five months after she last saw her husband. Mrs Mohanna gave evidence as to the difficulties in this relationship, and confirmed that her husband makes no financial, or little other it seems, contribution to the family. For the present, Mrs Mohanna abides by the position of her father that divorce is not appropriate.

19.      On return to Australia in 2006, Mrs Mohanna initially lived in her parent’s house at Arncliffe, but said that she had to move out. She sought, but was unable to obtain, Housing Commission assistance, and hence went to the private market where she obtained a rental unit in the vicinity of her family for $330 per week. She subsequently moved to another flat in the block where the rent was $300 per week. Mrs Mohanna stated that two months ago that unit was sold; I note from attachment E to Exhibit R1 that the landlord claimed to be taking action to terminate the tenancy because of non payment of rent. Mrs Mohanna is now paying $380 per week for another unit in Rockdale.

20.      Because of the difficulties in re-establishing herself in Australia in 2006, Mrs Mohanna sought and received help from the NSW Department of Community Services in respect of depression, namely referrals to counselling and assistance with child care. In her statement made in January 2007, Mrs Mohanna stated she was depressed, and had been taking anti-depressive medication for the previous two months (directed by her General Practitioner, as confirmed in evidence), such depression affecting her speech and concentration when driving. Mrs Mohanna has incurred fines for five traffic offences (Attachments to Exhibit R2), four of which I note occurred in a short period in September/October 2007. Mrs Mohanna attributed these offences to her depressive state and inability to concentrate.

21.      The Statement of Financial Circumstances shows a total fortnightly income – from parenting payment single and family tax benefit – of $1,254.98. Including the assessed $67 fortnightly loss on her property at Liverpool, total expenses at that time the Statement was drawn up being assessed as $1,538 per fortnight, this including small amounts related to fortnightly repayments of debts to Centrelink, as previously referred to, and for credit cards, fines, a store account, and tenancy arrears. In addition to the $170,000 outstanding debt to her brothers for the deposit on the property at Liverpool, she owes $13,000 to her brother Ali for the purchase of a car and $3,750 to her sister-in-law Fatima, for the return airfare from the United States in June 2006. I will return to the matter of financing of airfares and living expenses when overseas later.

22.      In evidence, Mrs Mohanna updated the fortnightly expense details as shown in the Statement of Financial Circumstances, to show an increase in rent outlay of $160 for the unit at Rockdale, an increase in the assessed mobile telephone expenses from $50 to an anticipated $100 plus to take account of business expenses – and again more on this shortly – and an increase in school fees from $20 to $120 to take account of child care costs. Thus the assessed fortnightly total expenses, on the figures provided by Mrs Mohanna, are in the order of $1,868.

23.      Mrs Mohanna stated that her flights to and from the United States and Lebanon were paid for by her brothers or her husband’s brother Hussein. She herself did not contribute to these expenses. Airline tickets, at a cost of $US 3,750 (vide Attachment 5 to Exhibit R2) for her last return to Australia in June 2006, ($US 3,750) were paid for by her sister-in law, Fatima. As in the past, she had travelled to the United States on Round the World tickets; on this occasion she decided to return direct to Australia rather than via Lebanon, and hence new tickets were necessary.

24.      Accommodation costs varied; prior to the move to the United States by her husband in early 2002, he and she initially lived in a flat in Rockdale, and then moved into one of the family units at Arncliffe, where they paid rent to the family (Exhibit R3). No details of the amount of such rent are available. Her husband subsequently remained in America, and Mrs Mohanna travelled to and from during the periods previously noted. When in America she stayed at Hussein’s house at no cost to her; when in Australia, she stayed in one of the family’s townhouses. It is impossible to ascertain from her bank statements (Exhibits A5 and A6) what, if any, rent was paid to her family.

25.      In response to the Tribunal, Mrs Mohanna stated that she had not contributed to her living expenses, and those of the children, when staying with Hussein in the United States, he having totally supported her and the children through her husband. Her evidence was that at that time she had no credit cards. Any mail addressed to her that was received by her sister, residing in the family property at Arncliffe, was not on-forwarded. Nor did Mrs Mohanna see any need, even when out of Australia for lengthy periods, to be made aware of any mail addressed to her. Whilst out of the country, social security payments to her bank continued as appropriate, noting that some of those payments are the subject of this appeal. Mrs Mohanna stated that she monitored this from time to time. Exhibit A4 is a file copy of a letter from Centrelink to Mrs Mohanna confirming her successful registration to the Centrelink self service facility. Mrs Mohanna could not recall using that site when overseas.

26.      Reference has been made to business expenses. Mrs Mohanna has tertiary qualifications in computer sciences, and has considerable experience, in my view, in that field. However, she has not worked since taking a redundancy from IBM in August 2002. As explained, she also had some experience in graphic design about 10 years ago, and hence has made the decision to gain appropriate qualifications in order to establish a business and assist in resolving her financial difficulties. In late 2007 she enrolled at the Australian College of Arts, Design and Creativity at a cost of $1,495, which from her financial statement is to be, or is being, paid off at $57 per fortnight.

27.      Mrs Mohanna has now set up a graphic design business based primarily on outsourcing. She signed an office lease in Rockdale in March 2008 for one year (at $250 per week) with a two year option. She has borrowed $40,000 from “family and the bank” to establish this business. That $40,000 loan, and any repayments that follow, is in addition to the financial expenses defined in the Statement of Financial Circumstances. Further, as yet, there is no income to offset set up and expenditure costs of the business. And as earlier noted, Mrs Mohanna also estimates a fortnightly mobile telephone expenditure of over $100 to cover business and private calls.

28.      In cross-examination, Ms Maclean referred Mrs Mohanna to various figures in the two bank accounts before me, they being an AwardSaver Account and a Streamline Account and both being in the name of Mrs Mohanna. The former, from 12 June 2003 to 15 February 2008, predominantly reflects the receipt of parenting payments and family tax benefits, but on occasions, relatively large Netbank Transfer debits (for example $10,000 on 7 November 2005, $3,000 on the following day and $15,500 on 3 March 2004) are recorded. Mrs Mohanna indicated she could not positively identify the reasons for the transfers, given the elapsed time, but believed they were transfers of monies back to either her brothers accounts or that of Hussein. However, the records of the Streamline Account show that those monies, in the examples given, were actually transferred into that Streamline account, which seemed to be used very much as a day to day account including mortgage payments.

29.      The Respondent sought explanation for a transfer of $6,885.00 into the Streamline Account from Supreme Window Company. Mrs Mohanna confirmed this transfer had been made by Hussein’s company, but could not recall the reason for the transfer. The Respondent also sought explanation in respect of large transfers in 2005, where large sums amounting to about $110,000 in total were transferred into the Streamline Account. Later in the year, some $64,000 was debited to ANZ Card Netbank Bpay, $50,000 to Aus Mortgage Sec and $20,000 to Platinum Home Loan. Mrs Mohanna could give no adequate explanation as to the basis of these transfers, but indicated they could have been in response to the original approval for a home loan of $270,000 when only $170,000 was taken up. Suffice that the reasons for, and the basis of, these transfers remains unclear as does the independent financial position of Mrs Mohanna, particularly given her evidence of payments through her husband from Hussein and “there is always borrowing and returning and borrowing from family”.

CONSIDERATION OF THE EVIDENCE

30.      To reiterate, the matter before me is whether Mrs Mohanna can benefit by the legislative provisions where a debt or debts may be written-off or waived. The legislation pertaining to parenting payment is found in the Social Security Act1991 (“the Act”) and the Social Security (Administration) Act1999 (“the Admin Act”). The legislation pertaining to the payment of family tax benefit is found in the A New Tax System (Family Assistance) Act 1999 (“the FA Act”) and the A New Tax System (Family Assistance)(Administration) Act 1999 (“the FA Admin Act”).

31. Section 1223 of the Act, and similarly section 71 of the FA Admin Act provide that a debt to the Commonwealth will arise when a person was not entitled for any reason to the benefit.

Write-off of debts

32. Pursuant to subsection 1236(1) of the Act, and subsection 95 of the FA Admin Act, a debt, or part thereof, can be written-off subject to certain criteria. Write-off is a postponement of recovery of the debt, which still exists and may be recovered at a later time. The criteria for write-off is relevantly defined (as shown in subsection 1236(1) of the Act) as:

(1A) 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.

(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:

(a) the debt cannot be recovered by means of deductions, or legal
        proceedings, or garnishee notice, because the relevant 6 year period  
        mentioned in section 1231, 1232 or 123 has elapsed; or

…                   

33.      Write off is not appropriate in this instance, nor indeed was it argued by the Respondent. The debts are recoverable by law and it is cost effective for the Commonwealth to take action to recover the debts. Whilst Mrs Mohanna is in financial difficulties, the extent of which will be referred to later, she has demonstrated a capacity to repay the debts since 2003, regular fortnightly repayments having been made by a limited reduction in social security benefits. To date, some $7,000 has been repaid. Repayments are presently not being made, pending the decision of this Tribunal, but it is reasonable to assume that should a decision be reached that all or part of the debts cannot be waived, repayments of the outstanding amount by an agreed reduction of social security benefits can be resumed.

Waiver of debts

34. Under section 1237 of the Act and section 96 of the FA Admin Act, the right to recover all or part of a debt to the Commonwealth may be waived. As noted in the former, this is a permanent bar to the recovery of the debt – the debt ceases to exist.

35. Section 1237A of the Act and section 97 of the FA Admin Act provide for waiver of debts which have arisen solely from administrative error. The former relevantly states:

Administrative error

(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

Note:   Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).

The latter relevantly states:

(1) The Secretary must waive the right to recover the proportion (the administrative error proportion ) of a debt that is attributable solely to an administrative error made by the Commonwealth if subsection (2) or (3) applies to that proportion of the debt.

(2) The Secretary must waive the administrative error proportion of a debt if:

(a) the debtor received in good faith the payment or payments that gave  rise to the administrative error proportion of the debt; and

(b) the person would suffer severe financial hardship if it were not waived.

36.      In both Acts, the debt must be attributable solely to administrative error. The Applicant contended that none of the debts resulted “solely” from administrative error, the submission being:

a.        Whilst Centrelink should have ceased parenting payment and reduced family tax benefit to the base rate after 26 weeks in 2003, Mrs Mohanna had been so informed by letter in March 2003, and hence had a responsibility to so advise Centrelink should that not occur. The Applicant further relied on the knowledge and experience of Mrs Mohanna as to the portability rules, she having travelled offshore the previous year – and returned inside the 26 week period – and she having advised Centrelink of her intentions to travel outside Australia in March 2003.

b. Whilst Mrs Mohanna gave evidence that she believed she had informed Centrelink of her intentions to travel in February 2004, there is no Centrelink record to support that contention. Had she done so, then under the criteria in section 1218B of the Act, she would not have been eligible for parenting payment, and would have been so advised. The Applicant further postulated that as Mrs Mohanna contacted Centrelink from the United States in August 2004, (as recorded at T29), it could be argued that she was aware of the portability criteria, albeit she may have believed that portability was only extant for 13 weeks, a reduced period that even had she been eligible for portability payment, would not have applied to her.

37.      In the Federal Court decision of Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76, a decision subsequently upheld by the Full Court, Wilcox J stated that for subsection 1237A(1) to have effect, the whole of the debt:

must be attributable solely to administrative error. …Administrative error must be the sole cause, not merely one of multiple causes.

38.      On the evidence before me, it is clear that in 2003, Mrs Mohanna contributed to the continuation of payment of parenting payment, when she was not so entitled, she having been previously aware of the portability provisions, and she also having been forwarded a letter from Centrelink in March 2003 informing her of the conditions for payment of benefits. That she apparently made no attempt to check incoming mail to her home address contributed to the subsequent problem. In respect of her next absence from Australia from May 2004, I find on the evidence that Mrs Mohanna did not ensure that Centrelink was aware of her travel intentions; had she done so, it could be expected that she would have been advised of her ineligibility for parenting payment. There is no evidence before me to show that she received such advice. Suffice she was paid parenting payment when she had no entitlement to portability of that payment. In turn, her family tax benefit was paid at an incorrect rate.

39.      Ms Finlay submitted that an incorrect family tax benefit arrears payment of $1,690.74, apparently resulting from a telephone call from Mrs Mohanna on 1 September 2004, solely resulted from Centrelink error. This issue was not raised when Mrs Mohanna gave evidence, and a letter from Centrelink to Mrs Mohanna (T24 p233) on 2 November 2004 does little to clarify the issue or explain the reasoning; nor does the decision of an Authorised Review Officer (T26 p239) assist. The Applicants did not make any submission on this issue.

40.      A note at T29 p268 refers to Mrs Mohanna being granted parenting payment, and family tax benefit estimates being updated. My understanding, based on a file note at T29 p266, is that family tax benefit was cancelled on 19 August 2004, following the contact from Mrs Mohanna when she advised her situation and intentions. The effective date was recorded as 1 July 2004. A file note at T24 p233 notes that family tax benefit was restored following Mrs Mohanna’s telephone call, (of 1 September) and the arrears payment of $1,690.74 was paid. Given that Mrs Mohanna had not then been in receipt of family tax benefit for barely two weeks, there is no logic, in my view, for a payment of that magnitude. Hence it might be argued that this payment was attributable solely to administrative error by the Commonwealth. Given how this situation arose, I do not believe that to be the case. But in any event, waiver under section 97 of the FA Admin Act, also requires that a payment be received in good faith. As Mrs Mohanna had been receiving family tax benefit until cancelled on 19 August, she should have had no expectation of an arrears payment of that magnitude only 12 days later.

41. I do not find that any of the debts can be attributed to administrative error alone, and thus they cannot be waived under the provisions of sections 1237 of the Act and section 97 of the FA Admin Act. So too, the conditions of subsection 97(2) of the FA Admin debt as it applies to family tax benefit and severe financial hardship, wherein it is a component of the “sole” test is not for consideration.

42.      It is not necessary to consider whether the payments were received in “good faith”, (noting that I have already commented on this aspect in the context of the arrears payment), the second criteria incorporated in both Acts. Nonetheless, I do so for completeness. Ms Finlay had indicated at the outset that Mrs Mohanna was not relying on an argument of good faith. In final submission, Ms Finlay submitted that Mrs Mohanna had not knowingly failed to inform Centrelink when payments to which she had no entitlement were being made, the implication being that they had been received in good faith. The term “good faith” has been addressed by the Federal Court in Secretary, Department of Employment, Education, Training and Youth Affairs and Prince (1997) 152 ALR 127 and in Jazazievska v Secretary, Department of Family and Community Services (2000) 65 ALD 424, and I refer to the views of Finn J (at page 130) in the former, wherein he stated:

Its (referring to similar wording in the Student and Youth Assistance Act 1973 to that in the relevant Acts in this matter) concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie. is not entitled to use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith…

43. From the evidence, the payments in 2003 were not received in good faith. However, it could be argued that Mrs Mohanna left Australia in May 2004 believing that she would have an entitlement to parenting payment portability, as had been the case on previous occasions. But there is no reason before me to suggest that in contacting Centrelink on 19 August 2004, Mrs Mohanna was thus confirming that she had advised Centrelink of her intentions to travel overseas the previous May. I presume she would not have been aware of the limitations that might be imposed on her eligibility under the provisions of section 1218B of the Act. But given that she knew that she had a responsibility to inform Centrelink of her intentions to temporarily leave Australia, and in turn would be advised of conditions for payment of benefits, at best one might describe her attitude as one of “blind” good faith. But as earlier noted, nothing hangs on this particular issue as the debts do not meet the sole administrative error criteria.

44. Under section 1237AAD of the Act and section 101 of the FA Admin Act, there is discretion to waive a debt or debts where there are “special circumstances”. Both sections relevantly state, with minor variation in subsection (a)(ii) (whereby section 101 of the FA Admin Act refers to the “family assistance law” and section 1237AAD of the Act refers to “this Act, the Administration Act or the 1947 Act”):

The Secretary may waive the right to recover all or part of a debt if

the Secretary is satisfied that:

(a) the debt did not result wholly or partly from the debtor or another person knowingly:

(i) making a false statement or a false representation; or

(ii) failing or omitting to comply with a provision of this

Act, the Administration Act or the 1947 Act; and

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c) it is more appropriate to waive than to write off the debt or

part of the debt.

45.      I have referred to “knowingly” above. Mrs Mohanna did not knowingly make a false statement or false representation. Nor did she knowingly, in my view, fail or omit to comply with a provision of either Act. I acknowledge the view of the Applicant that she did so in not advising her intention to travel out of Australia in 2004, that is, she failed or omitted to comply with section 68 of the Social Security (Administration) Act 1999, and section 25 of the FA Admin Act, which required her to report changes in her circumstances, but I am of the opinion that this may be a harsh view of her actions. In short, I believe she omitted to do so, but find that she did not knowingly do so. As earlier indicated, write-off is not appropriate. Thus whether or not waiver is appropriate hangs on whether there are “special circumstances”, which cannot be based on financial hardship alone.

46.      The term “special circumstances” is not defined in legislation, but the term has been considered in both the Administrative Appeals Tribunal and the Federal Court. The interpretation put forward by the Tribunal, with Toohey J presiding, in Re Beadle and Director General of Social Security (1984) 6 ALD 1, has been widely followed, and states:

An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

47.      That Tribunal went on to say (at page 3) that "the existence of special circumstances is to be determined from all the circumstances..." which in the context of the matter before that tribunal related to an application for handicapped child’s allowance. That "all the circumstances" should be considered in this matter is supported by the words of the Full Federal Court in dismissing an appeal against the above decision (Beadle v Director-General of Social Security (and others) (1985) 7 ALD 670), wherein it was stated at 674 in respect of whether special circumstances were evident in the delay in making a claim:

More difficult would be questions of ignorance, illiteracy, isolation, illness and the like. It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it possible to lay down precise limits or precise rules.

Such a view has been subsequently endorsed by the Full Federal Court in Dranichnikov & Ors v Centrelink & Ors (2003) 75 ALD 134 at 66 – 67.

48.      Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 observed that:

... although imprecise [it] is sufficiently understood not to require judicial gloss: Beadle’s case [(1985) 60 ALR 225, 7 ALD 670] (at ALR 229; ALD 674), and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

49.      The wider implications in considering whether special circumstances exist have more recently been encapsulated in Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, Deputy President Forgie presiding, where she stated:

The special circumstances are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances …that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system.

50.      Ms Finlay submitted that Mrs Mohanna is in severe financial hardship. Ms Maclean acknowledged that Mrs Mohanna was in a difficult financial situation, but regard need be had to how that situation arose. The evidence before me as to Mrs Mohanna’s financial situation is somewhat confusing. I accept that she is seemingly in a difficult financial situation, but to what extent is unclear. Her evidence was that she worked with IBM for five years at a final salary of about $60,000 a year, and took a $20,000 redundancy in 2002. In 2001, when Batoul was borne, she became eligible for parenting payment and later became eligible for family tax benefit. In subsequent years until her final return from the United States in June 2006, she continued to receive those benefits except where her period of absence exceeded the portability parameters or when she was not eligible (for parenting payment) in 2004 because of her previous extended absence from Australia.

51.      Yet throughout those years, her evidence was that she had little if any accommodation costs, being supported by her family or her husband’s brother Hussein, and again, from her evidence, when in the United States her living expenses were met by Hussein. Further the air travel costs for herself and children were predominantly met by her brothers. Her husband generally remained in the United States, and one might argue that in so doing, he had made a conscious decision not to work in the absence of the necessary immigration approval. Hence he seemingly made no financial contribution to the marriage. Notwithstanding, from the bank statements made available, and from Mrs Mohanna’s evidence, particularly as she referred to considerable financial assistance from her family, it is impossible to ascertain just how and when her income dissipated.

52.      In 2005, Mrs Mohanna committed herself to the purchase of the unit at Liverpool, a unit that she has no intention of living in. By her own admission, she had not appreciated the running costs associated with such a commitment and had made no provision to meet those costs. She borrowed half the purchase price from her brothers and took out a mortgage of $170,000 for the other half. There is no evidence that she contributed financially from her own income or savings to the purchase, and her evidence was that she still owed her brothers $170,000 and there was no immediate pressure to repay. There is a caveat on the property in favour of the two brothers, but from the limited documentation before me, I am unable to say whether this has a bearing on whether that loan must be repaid. The full amount of the loan with Platinum remains virtually extant after three years.

53.      I understand Mrs Mohanna’s desire to return to the work force, particularly now that her children, apart from the younger Ali, make that more achievable, but whether she has realistically planned her venture must be questioned. She has taken a loan “some from bank, some from family”, and committed to a $250 per week lease for the first year with an option on a further two years. No evidence was presented as to income to date, or estimated income from this business. In terms of her financial position, the estimated expenses vide the Statement of Financial Circumstances put before me show expenses well in excess of income; I venture to suggest that some curtailing of those expenses would be warranted and essential.

54.      I am of the view that whilst the financial circumstances of Mrs Mohanna are difficult, they are not such as to be considered unusual or uncommon. Inevitably, reliance on social security payments brings with it a necessity to strictly monitor or curtail financial expenditure. The evidence of Mrs Mohanna is that insufficient attention and thought has been given to her financial planning, perhaps made more so by the convenience of financial assistance given her by her family and Hussein. In that respect, it could be argued that unlike many others on social welfare support, she has been in receipt of much consideration by her family, to the detriment of accepting her own responsibilities.

55.      That the marriage of Mrs Mohanna has broken down cannot, in this instance, be considered a “special circumstance”. Certainly it could be expected to have an adverse effect on Mrs Mohanna and her children, and I accept it could well have been to the detriment of the health of Mrs Mohanna. But by her evidence, the marriage has been difficult for many years - albeit she spent much of 2002 to 2006 with her husband in the United States - by the verbal and physical abuse from her husband, by his refusal to participate in domestic planning, and by his failure to bring financial assistance to the union. Marriage breakdown is unfortunately common. I am unable to regard it as a “special circumstance” in the context of being a reason for waiver, and I pay due regard to the fact that notwithstanding the breakdown, Mrs Mohanna has already been able to pay back some $7,000 of the assessed debt.

56.      The final issue to be considered is whether the health of Mrs Mohanna is such as to warrant it being considered as a contributor to a waiver because of special circumstances. Her evidence is that she suffers from depression, and in that context and in her general situation of returning on a permanent basis to Australia without her husband, she sought medication from her general practitioner and assistance from the New South Wales Department of Community Services. Mrs Mohanna obviously believes that her adverse health is not such that she cannot cope with a new work challenge; she made no reference to health being a negative issue in that context. No evidence was put before me as to medical issues with her children that might have a bearing. In the circumstances, I find that health is not a relevant factor.

57.      Taking account of all the circumstances, when all these factors are considered both by themselves and as a whole, I am unable to find that they meet the criteria of “special”. There is nothing in the situation of Mrs Mohanna that “takes it out of the usual or ordinary case” (Groth supra). Difficult though her domestic situation, notably in a financial context, may be, it is not unusual, uncommon or exceptional. Accordingly I find that her circumstances are not such as to warrant a waiver of debts. In reaching this decision, I take account of the reasoning in Weekes and Secretary, Department of Family and Community services [2004] AATA 770 as submitted by Ms Finlay, but do not find the argument persuasive, that in the matter before me, the administrative errors by Centrelink, when taken together with Mrs Mohanna’s circumstances, can be considered “special circumstances”.

DECISION

58.      The decision of the Social Security Appeals Tribunal is affirmed as follows:

a.        the decision to raise and recover a debt of parenting payment in the amount of $1,317.44 for the period 27 September 2003 to 26 December 2003 is affirmed;

b.        the decision to raise and recover a debt of family tax benefit in the amount of $2,257.45 for the period 27 September 2003 to 26 December 2003 is affirmed; and

c.        the decision to raise and recover a debt of family tax benefit in the amount of $4,158.70 for the period 18 May 2004 to 28 September 2004 is affirmed.

The decisions of the Social Security Appeals Tribunal in respect of parenting payment for the period 18 May 2004 to 16 August 2004 are set aside, and in substitution:

d.        the original decision to raise and recover a debt of parenting payment in the amount of $2,307.22 for the period 18 May 2004 to 17 August 2004 is affirmed; and

e.        parenting payment is not payable for the period 18 August 2004 to 16 November 2004.

I certify that the 58 preceding paragraphs are a true copy of the reasons for the decision herein of Rear Admiral A R Horton AO:

Signed: ...........[sgd]...............................................................
  Associate

Date of Hearing  30 April 2008

Date of Decision  19 May 2008

Solicitor for the Applicant          Ms Jennifer Maclean, Centrelink Legal Services Branch

Solicitor for the Respondent    Ms Jackie Finlay, Welfare Rights Centre