SOCIAL SECURITY - payments of rent assistance - applicant co-owner of his residence - applicant a homeowner and ineligible for rent assistance - overpayments are debts due to Commonwealth - debts not to be written off - right to recover debts not to be waived - decision affirmed

Social Security Act 1991 ss.11(4), 11(8), 1064-D1, 1236, 1237A, 1237AAD.

Glozier v Secretary, Department of Family and Community Services [2000] FCA 376; (2000) 171 ALR 211

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

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

The applicant, Allan (Ahmad) Bahsa, has applied to the Administrative Appeals Tribunal for review of a decision made by the Social Security Appeals Tribunal. The SSAT decided that Mr Bahsa owes the sum of $21,763.88 to the Commonwealth because he was not entitled to rent assistance that he received during various periods from July 1990 to April 2003. The SSAT also decided that that amount should be recovered from Mr Bahsa.

At the hearing, Mr Bahsa gave evidence with assistance from an interpreter in Arabic. His brother Jamal Bahsa also gave evidence.

Mr Bahsa has been receiving social security payments and rent assistance since 1981. In April 2003 Centrelink made a search of the title to the property at 32A Leonard Street, Bankstown, where Mr Bahsa lives. Mr Bahsa co-owns that property, holding a 1/6 share as a tenant in common (T26 in the documents lodged by the respondent under s.37 Administrative Appeals Tribunal Act 1975). The date of the transfer was 18 August 1978. He lives there with his parents and his wife and their three children.

Upon learning that Mr Bahsa owned a share of the property, Centrelink raised four debts against Mr Bahsa to recover a total of $21,763.88 in rent assistance. Details of each debt are as follows:

• Rent assistance received while Mr Bahsa was paid Newstart Allowance from 4 July 1990 to 26 November 1997 $11,230.55

• Rent assistance received by Mr Bahsa while being paid Carer Payment from 4 December 1997 to 18 March 1999 $2,623.20

• Rent assistance Mr Bahsa received while being paid Family Payment from 30 March 1999 to 30 June 2000 $3,090.80

• Rent assistance received while Mr Bahsa was paid Family Tax Benefit from 1 July 2001 to 1 April 2003 $4,819.33

Centrelink examined the sickness benefit reviews that Mr Bahsa had lodged on 21 December 1981 (T4) and 8 July 1982 (T5). A question in the review documents asked 'Do you own (or partly own) the home in which you live?'. Centrelink concluded from his answers that he knew about his share in the property and deliberately tried to mislead the Department of Social Security by stating otherwise. Centrelink found that Mr Bahsa had been overpaid rent assistance and that the overpayments should be recovered. He asked for that decision to be reviewed and the authorised review officer at Centrelink reached the same decision. The officer thought that Mr Bahsa's answers on these forms indicated that he deliberately tried to mislead and thus he had not received the payments in good faith. On 3 July 2003 the authorised review officer also concluded (T33) that the debts could not be waived under s.1237A of the Social Security Act 1991 (the Act) and that there were no special circumstances to Mr Bahsa's case that justified waiving the debts in whole or in part pursuant to s.1237AAD of the Act.

Mr Bahsa gave evidence that he considers that the property at 32A Leonard Street, Bankstown is owned by his mother and father. He said that he was not aware that he owned a 1/6 share in the property until Centrelink gave him that information in 2003. He explained that when his father tried to obtain finance to buy the property in 1978, the bank told him that they would not give him a loan because he was unemployed. But the bank was prepared to provide finance if the applicant and his brother Jamal, both of whom were working at the time, would guarantee the loan and put their names on the title. He thought he remembered going to the bank and a solicitor to sign papers.

George Shad, solicitor, noted in his letter 'To whom it may concern' dated 18 June 2004 (exhibit A4) that he recalled the applicant's parents coming to see him in 1978 to obtain advice about buying a home. Mr Shad's file was no longer available but he could recall that the bank would not lend to the applicant's father as his income was insufficient. The bank asked for the applicant and his brother to be added to the loan to ensure repayments. Mr Shad's understanding was that the applicant's parents made the loan repayments without any contribution from their sons. The applicant's father Mohamad Bahsa made a statutory declaration on 24 April 2003 confirming that he and his wife Badia are the owners of the property (T31). He stated that the bank obliged them to add the names of their sons to the title because the boys were working and the bank needed guarantors for the loan.

Mr Bahsa does not read or write Arabic or English. He said he did not fill in the documentation relating to his sickness benefit reviews that were given to the Department in 1982 (T4) and 1983 (T5) but he agreed that he signed the documents.

Mr Bahsa said that he and his wife and three children live in the property, with his parents. He pays his parents $250 a week for board and lodging. According to his evidence at the SSAT, which he did not dispute before me, his father pays household outgoings, such as utility bills. He said the property is not subject to mortgage. Mr Bahsa receives Family Payment, and Carer Allowance and Carer Payment in respect of his father. A deduction of $40 a fortnight is being made from his payments to recover overpaid family assistance. His wife receives Special Benefit. When cross-examined he did not dispute that he and his wife receive approximately $1,300 per fortnight in Centrelink payments. Similarly he did not dispute that his parents receive the age pension. His sister lives close by and is regularly at the house to help their mother who has become seriously ill. According to a note from Dr R Dimitri dated 23 June 2004 (exhibit A1) the applicant's mother suffers from heart disease, insulin dependent diabetes, hypertension and sleep apnoea. Dr S Riad's note dated 22 June 2004 (exhibit A2) records the father's complaints as a heart condition from a heart attack in 1997 and hyercholesterolaemia, and that the applicant assists by taking his father to visit doctors and by doing the household shopping.

Mr Larcombe, who represented the respondent, asked Mr Bahsa what he thought would happen if he was unable to pay his parents the weekly board and lodging. Mr Bahsa said he would not be able to stay in the home because his parents would not be in a position to afford to keep his family. It was put to him that he told the SSAT that his parents would not make him and his family leave the house if he could no longer pay the $250 a week. Mr Bahsa next said that his parents would probably allow them to stay in the property for about a month but would then have to go. He added that he would have to find money to pay them, otherwise his family will end up on the street.

The applicant's children suffer from asthma and have attended the Eldridge Road Medical Centre for many years for their asthma (exhibit A3). Not infrequently the applicant will have to take one of them to hospital for treatment.

Jamal Bahsa also gave evidence. The title search shows that Jamal too has owned a 1/6 share of the property since August 1978. The remaining interest in the property is co-owned by their parents Mohamod [sic] and Badia Bahsa as joint tenants (T26). Jamal said that his mother and father sold their house in Lebanon around the time of their emigration in order to buy the family home at Bankstown. His evidence was that he and Allan had to become guarantors of any loan made to their father. He said that he did not know he was on the title on the property before Centrelink started its action against his brother.

Eligibility for rent assistance is dealt with in the pension rate calculators in both the Act and the Family Assistance Act 1999. Each of these calculators is applicable to Mr Bahsa because he receives a number of social security payments. To qualify for rent assistance under the various rate calculators the person must not be an ineligible homeowner and pay or be liable to pay rent; for example s.1064-D1(a) and (c) of the Act:

Qualification for rent assistance

1064-D1. An additional amount to help cover the cost of rent is to be added to a person's maximum basic rate if:

(a) the person is not an ineligible homeowner; and

...

(c) the person pays, or is liable to pay, rent (other than Government rent); and

The term 'ineligible homeowner' is defined to mean a homeowner, other than a number of specific exemptions none of which is applicable here. The term 'homeowner' is defined in s.11(4) of the Act, which relevantly provides:

11(4) For the purposes of this Act:

...

(b) a person who is a member of a couple is a homeowner if:

(i) the person, or the person's partner, has a right or interest in one residence that is:

(A) the person's principal home; or

(B) the partner's principal home; or

(C) the principal home of both of them; and

(ii) the person's right or interest, or the partner's right or interest, in the home gives the person, or the person's partner, reasonable security of tenure in the home;

Section 11(8) deals with the concept of 'reasonable security of tenure in the home' as follows:

11(8) If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.

'Ineligible homeowner' is given the same meaning for the purposes of the Family Assistance Act 1999 (see s.3 of that Act).

There is no dispute that Mr Bahsa and his family reside at 32A Leonard Street, Bankstown. I make the following findings:

• 32A Leonard Street, Bankstown is Mr Bahsa's principal home and has been since it was purchased in 1978.

• the certificate of title to 32A Leonard Street, Bankstown records that Mr Bahsa is a registered proprietor of that property holding a 1/6 share as tenant in common.

• by reason of being a registered proprietor he has a right or interest in the property.

Being registered as a co-owner of the property gives Mr Bahsa certain rights at law. In the context of a rent assistance case, the Federal Court held that " ... there can be little doubt a registered joint owner, unencumbered by any equitable claim, would have a right or interest in a property which gave him or her reasonable security of tenure." (Glozier v Secretary, Department of Family and Community Services [2000] FCA 376; (2000) 171 ALR 211, at 215 per Heerey J). I note that s.11(8) of the Act deems such a right or interest in a person's principal home to give the person reasonable security of tenure in the property unless the Secretary is satisfied to the contrary.

Is there any evidence that would establish that Mr Bahsa does not have reasonable security of tenure in the property, whether by reason of an equitable claim against his interest or otherwise? The statutory declaration by the applicant's father (T31) does not refer to the source of the repayments to the bank. Consequently, I place little weight in Mr Shad's uncorroborated statement that "We also understand that repayments on the loan were made by Mr Mohamad Bahsa and his wife and the children did not make or assist in those repayments." (exhibit A4) From the T documents I note that Mr Bahsa was paying $50 in board back in 1982 (T4), this had increased to $100 a week by 1992 (T9) and to $150 by 1997 (T14). After his marriage in March 1998 he began paying $200 a week (T20), which he increased to $250 in 2001 (T21). The Bahsa family migrated to Australia in 1977 (T20). I infer from the evidence before me that the bank would not lend to the applicant's father because he was not working and any social security benefits he received were not considered sufficient to manage the loan repayments. I infer that Mr Bahsa, who was working and making a weekly contribution to the household budget, was assisting his father, at least indirectly, to meet the repayments. This assistance would have continued when Mr Bahsa started receiving social security payments. Taking into account that Mr Bahsa has contributed financially to his parents' household for over 25 years, has lived there throughout that period, now plays an important role in helping care for his father, and there being no evidence to establish that his legal interest in the property is subject to some equitable encumbrance, I am satisfied that his interest as a registered proprietor gives him reasonable security of tenure in the property.

As I have found Mr Bahsa is an ineligible homeowner, he does not qualify for rent assistance under s.1064-D1. He has received rent assistance and so has been overpaid.

The next issue is whether the amounts of rent assistance are debts that are due to the Commonwealth. I agree with the SSAT that under s.1223 of the Act, as it applied before 1 July 2001, that Mr Bahsa was paid a social security payment, in the form of rent assistance, to which he was not qualified and accordingly the payments are debts to the Commonwealth. Section 1223 was amended from 1 July 2001 and refers to social security payments being debts due to the Commonwealth if the payee was not entitled to the payments. I find that the provision applies and the payments of rent assistance from that date are also debts due to the Commonwealth. There was no dispute concerning the calculation of the several debts.

Part 5.2 of the Act deals with the recovery of overpayments. Section 1236 of the Act permits the respondent to write off a debt in certain situations:

1236.(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.

Mr Bahsa is receiving a number of social security payments and so he has the capacity to repay the debt. Recovery of the debts can be effected by making deductions from those payments pursuant to s.1231 of the Act. It would not be appropriate, therefore, to write off the debts.

Section 1237A of the Act provides that the respondent must waive the debts in certain circumstances. It reads:

1237A(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).

Mr Larcombe conceded that there was inaction on the part of the Department when it did not follow up Mr Bahsa's statement made in 1982 (T5) that he owned the home in which he lived. However, that error occurred well before the periods in which the payments to be recovered were made. Further he submitted that the applicant has subsequently made many incorrect statements in forms provided to the Department and Centrelink. For instance in June 1990, the beginning of the first period of overpayments, Mr Bahsa stated that he was paying board and lodging to his parents for his accommodation at 32A Leonard Street, Bankstown (T6). As the SSAT pointed out, Mr Bahsa did not clarify the position by noting that he owned part of that property. Mr Larcombe referred to the applicant's answers denying ownership of an interest in real estate that were provided in 1992 on a sickness allowance claim (T9), in 1992 when claiming special benefit (T10), in 1999 when claiming family allowance (T17) and in 2001 in a claim for family tax benefit (T21).

I accept the respondent's submission that the overpayments were not due solely to the Commonwealth's administrative error. Mr Bahsa's incorrect statements also contributed to the payments being made. The answers given by the applicant in the sickness benefit review documentation are puzzling. In the 1982 form he stated that he partly owned the home where he lived. This was a correct answer. But his answer in the earlier year's form had been crossed out to state that he did not have part ownership of the property. That was wrong, as were the later forms I referred to above that asked similar questions. Mr Bahsa has made an error in those later forms because he is a homeowner. I find therefore that no parts of the debts in question are attributable solely to error on the part of the Commonwealth. Waiver under s.1237A thus is not available.

Section 1237AAD gives the respondent a discretion to waive the right to recover all or part of a debt where the respondent is satisfied that there are special circumstances other than financial hardship alone that make waiver desirable. But waiver is not available under s.1237AAD where the debtor or another person knowingly made a false statement or representation or failed to comply with the Act. The section reads:

1237AAD 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 false representation; or

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

Note: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

In considering whether s.1237AAD(b) applies I note that the tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 decided that an applicant's circumstances must be unusual, uncommon or exceptional to be considered special circumstances. More recently, Kiefel J in Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 (at 545) has said of the expression special circumstances that:

... it would require something to distinguish [an applicant'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.

Mr Bahsa has three young children to support. They suffer from asthma. His mother is ill but his sister looks after her. He is the carer for his father who has heart problems and requires help from Mr Bahsa in getting to see doctors. These circumstances present Mr Bahsa and his wife with day to day stress and difficulties, but they are not unusual, exceptional or uncommon. Unfortunately, they would not be too dissimilar from what many families in Australia endure. I am satisfied that Mr Bahsa's circumstances do not constitute special circumstances, other than financial hardship alone, that make it desirable to waive the debts. Accordingly as Mr Bahsa does not satisfy s.1237AAD(b) it is not necessary to consider whether the debts resulted from his knowingly having made a false statement or having failed to comply with the Act (s.1237AAD(a)) or whether it is more appropriate to waive than to write off the debt or part of the debt (s.1237AAD(c)). The result is that the right to recover the debt wholly or in part may not be waived.

It follows that the decision under review should be affirmed.

I certify that the preceding 26 paragraphs are a true copy of the decision and reasons for decision herein of P.J. Lindsay, Senior Member:

Signed:

............................................................................

(Associate)

Hearing 1 July 2004

Decision 9 July 2004

Applicant In person