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

[2018] AATA 41

Obradovic; Secretary, Department of Social Services and (Social services second review) [2018] AATA 41 (17 January 2018)

Division:GENERAL DIVISION

File Number(s):      2016/5006; 2016/5007-5008

Re:Secretary, Department of Social Services

APPLICANT

AndRadomir Obradovic

RESPONDENT

AndVioleta Obradovic

RESPONDENT

DECISION

Tribunal:Deputy President B W Rayment

Date:17 January 2018  

Place:Sydney

The reviewable decision of the authorized review officer will be set aside and in substitution, the debts will be wholly waived.

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

Deputy President B W Rayment

Catchwords

SOCIAL SECURITY – overpayments in respect of disability support pension, carer’s payment and parenting payments – respondent’s did not disclose ownership of property – whether respondent’s were aware of debts waived in part by Social Services and Child Support Division – whether special circumstances – debts waived in full – decision set aside and substituted

Legislation

Social Security Act 1991 (Cth), s 1237AAD

Social Security (Administration) Act 1999 (Cth), s 68(2)

REASONS FOR DECISION

Deputy President B W Rayment

17 January 2018

1. In this matter the Secretary, Department of Social Services, has appealed from a decision of the Social Services and Child Support Division of this Tribunal (the AAT1), which decided that the social security debts of Mr and Mrs Obradovic were correctly raised and that the right to recover the portion of those debts outstanding as at the date of the member’s decision be waived pursuant to s.1237AAD of the Social Security Act 1991 (Cth) (the Act).

2. Section 1237AAD of the Act provides that 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 the Social Security Act 1991, the Social Security (Administration) Act 1999 or the Social Security Act 1947; 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.

3. The debts raised and their calculation is not in issue between the parties. Aggregating the debts owed by both husband and wife, it stood at $190,885.33 at the date of the authorised review officer’s decision.  Nor is it in issue that the Obradovics did not disclose that a house property at North Narrabeen was in the ownership of Mr Obradovic and had been owned by him since 1985. Although unoccupied and not producing any income, the house’s ownership operated to limit the sums of money payable to the Obradovics so as to produce the debts raised by the Department. 

4. The Obradovics lived at all times at Warriewood, in a different property, owned by the parents of Mr Obradovic and also occupied by the parents, who assisted Mr and Mrs Obradovic with the raising of their four children. 

5. Mr Obradovic has never worked and has a serious medical condition which has prevented him from obtaining an education and which severely disables him. Mrs Obradovic, who married her husband at a very young age, is his full-time carer and receives a pension as such. 

6. I have heard the evidence of both Mr and Mrs Obradovic, who were cross-examined by Dr Thompson on behalf of the Secretary. The issue to which that evidence went is whether their failure to disclose the ownership of the house (a failure to comply with a provision within the meaning of s.1237AAD(a)(ii) of the Act) was a knowing failure. That would appear if the Obradovics both knew that they had an obligation to disclose the fact in question, and knew the fact in question yet failed to disclose it.

7. According to the decision statement of the Authorised Review Officer, the failure in question was a failure to notify the Department that Mr Obradovic was the owner of a property at North Narrabeen following service of notices under s.68(2) of the Social Security (Administration) Act 1999 (Cth) (the Administration Act).  It did not arise to consider whether the Obradovics actually understood the notices served (they, being Serbian speakers, with limited education in each case). That is because their case was that they did not know Mr Obradovic was the owner of the property in question.

8. Their case was that Mr Obradovic’s parents intended to inform them that Mr Obradovic was the owner of the property when he turned 50.  Mr Obradovic’s disability is that he suffers from a porencephalic cyst on his brain and has frequent epileptic fits.  His disability was responsible for his failure to do any schooling beyond primary school.  He has never worked. Mrs Obradovic married him in Serbia when she was 16 years old, and he brought her back with him to Australia. At first she spoke very little English and spoke mainly Serbian with her husband and her in-laws.  She was subservient to her parents-in-law and did their bidding.  Her English has steadily improved, and when she gave evidence before me, she used an interpreter only sparingly.

9. The statutory declarations put on by the Obradovics in order to challenge the debts explained that the parents of Mr Obradovic did not want to “give” the house to him earlier (that is, tell him that the house was his) because they were worried that someone would take advantage of him, in that he was always very vulnerable as a result of his medical condition. So it was suggested that the parents kept the ownership of the property secret from their son and daughter-in-law.

10. The Obradovics senior are no longer in Australia and have returned to Serbia, where they will remain permanently on medical grounds.  Mrs Obradovic recounted a conversation which she had on the telephone with them after the debts were raised, in the course of which Mr Obradovic senior said to his wife “It’s all ruined now”, apparently meaning that the secret was out, and even though Mr Obradovic was not yet 50, the communications from the Department had caused the Obradovics to learn the true situation.  This conversation took place after the Department had raised the debts.

11. The Department advised the Obradovics to occupy the house at North Narrabeen to avoid the pensions payable to them being further reduced and they did so, although the North Narrabeen house had not been well maintained over the years and it was not really suitable to them and their children as a residence.

12. The circumstances explained by Mr and Mrs Obradovic in evidence are at least possible. Before their marriage, his parents were his primary care-givers. Since then, they continued to provide accommodation for him and his wife. They would have had a concern about what would happen to their son and his family after their own death. The North Narrabeen house left them with a degree of security so long as it remained in his ownership.

13. If, as the Obradovics assert, they were not told that the property was in their ownership they would naturally assume that it belonged to the Obradovics senior.  They were never asked to pay any sum for the upkeep of the property.

14. It seems that the ownership of the house was concealed from the beginning. The transfer of the property to him in 1985 described him as a shop assistant, which was never the case. The transfer was accepted by a solicitor whom he did not know and never instructed.  A small mortgage was taken out, and later repaid in full, without his knowledge and the mortgage was not signed by him, but rather someone signed the memorandum in his name. The signature on the mortgage does not resemble the specimen signatures which were tendered in evidence. He had no income permitting him to repay the mortgage or buy the property, and may not even have been able to obtain a mortgage from the bank. No details of the transaction with the bank have been able to be produced by the bank. The occupation attributed to him in the mortgage document was false. The mortgage was repaid without any of his money.

15. Like AAT1, I have found the evidence given by Mr and Mrs Obradovic to be credible on its face.

16. Two main matters are relied upon by Dr Thompson in order to support a submission that their evidence should not be accepted.  The first is that Mrs Obradovic is not recorded by the Department as having asserted to its officers that neither she nor her husband knew that he owned the property, but rather only as having asserted that there was no difficulty about the house because they were not occupying it and derived no income from it.   The cross-examination related to part of a note made by the authorized review officer which reads: “You advise you didn’t think of declaring the ownership of the property to Centrelink as you treat it as your own home and your parents also use it regularly, and as you are not deriving an income from the property”.

17. The note relates to a telephone conversation between Mrs Obradovic and the authorized review officer, in English, in 2011, more than six years ago.  When Mrs Obradovic was taken through that note by the Serbian interpreter, she explained that communications by telephone were more difficult for her to understand than talking to someone in person.  She said that her father-in-law had informed her that there was nothing wrong with owning a house and did not matter whether it was in his (the father-in-law’s) name or someone else.  She remembers repeating that contention to officers of the Department.  And she added: “But, I did not say that I knew the house was in his name prior to that”.

18. There is scope for the conversation relied upon by Dr Thompson to have been based on a miscommunication in my opinion, and the absence of the involvement of an interpreter when Mrs Obradovic was spoken to by the authorized review officer, while not a matter for complaint, made the potential for misunderstanding greater.  The note was not supported before me by any oral evidence from its author as to the way in which Mrs Obradovic spoke.  It was not expressly suggested to Mrs Obradovic that she had given deliberately false evidence about what she knew concerning the house before the debt was raised. I do not find what is recorded in the note to be sufficient reason to reject her evidence.

19. The second matter relied upon by Dr Thompson is more circumstantial. Mrs Obradovic produced a number of documents to the Tribunal as records which she had retained. They consisted of rate notices and insurance communications sent through the post about the North Narrabeen property, which if examined by Mrs Obradovic, could have indicated that the North Narrabeen property was owned by her husband.  Her evidence was that the documents did not so indicate to her.  She said she had no inkling that he owned the property and did not draw that inference from the documents. She ventured, perhaps as a result of reconstruction, that she thought the name “R. Obradovic” on some of the rate notices referred to her mother-in-law.  Her volunteering of the documents to AAT1 does not suggest that she appreciated at the time of their production to the Tribunal that they might have informed her that her husband owned the property.  The voluntary production of the documents is not the act which one would expect of a person intending to mislead the Tribunal and present false evidence.

20. The case theory of the Department seems to depend mainly on an attack on Mrs Obradovic, and to depend on an inference that, if she found out the true position, she would have told her husband, and then to involve a suggestion that he also gave false evidence on oath before me.

21. I would need to be satisfied by cogent evidence before making such a finding.  I am not so satisfied, in the case of the evidence of either Mr or Mrs Obradovic.

22. Therefore like AAT1, I conclude on the balance of probabilities that any non-compliance with the notices served under the Administration Act was not knowing non-compliance, which satisfies the requirements of s.1237AAD(a).

23. AAT1 dealt with the question of special circumstances by noting that the consequence of not waiving the debts would appear to be that the Obradovics would have to sell their house to repay the debts. That would deprive them of their present accommodation.   Having repaid the debts they would be left with money which may enable them to buy other accommodation.

24. In my view to require them to take such a step would be very disruptive for them.  Mr Obradovic is very unwell.  For example, on one occasion during the hearing, when his wife was giving evidence, he wandered off outside the Tribunal room and did not reappear. He apparently suffered an epileptic attack.  To expose him to further disruption to his living arrangements is not something which appears to me to be consistent with the dictates of good government, given his particular circumstances.

25. Therefore it seems to me that there are special circumstances in this case justifying the waiver of the debts.

    DECISION

26. In my opinion the correct or preferable decision is to waive the whole of the debts, which will involve repayment by the Department of any amounts previously deducted from social security payments to the Obradovics.

27. The reviewable decision of the authorized review officer will therefore be set aside and in substitution, the debts will be wholly waived.

I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President B W Rayment

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Associate

Dated: 17 January 2018

Date(s) of hearing:	14 September & 24 November 2017
Solicitors for the Applicant:	Department of Human Services
Solicitors for the Respondents:	Illawarra Legal Centre