(a) Was Mr Kim a member of a couple during the relevant period?

(c) Were the overpaid amounts a legally recoverable debt?

(d) If so, whether there is any basis to write off or waive part or all of the debt.

1. The Respondent filed two bundles of documents provided pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (T documents), supplementary T documents, a Statement of Issues, Facts and Contentions (SFIC) with three annexures, and post-hearing submissions dated 26 February 2021.
2. Mr KIm provided a number of documents, mostly after the hearing:
   • An undated application for bankruptcy (excluding the last 3 pages);
   • A Notice of Local Court Orders dated 11 June 2019 that states that on 16 May 2020 Mr Kim was ordered to pay $47,760 plus costs of the proceedings, including on an indemnity basis from 28 February 2019.
   • A letter from a debt recovery agent dated 2 July 2019 demanding payment to an Australian bank of $133.17 within 7 days.
   • A letter in Korean from Panthera Finance entitled "Discount Settlement" listing sums of $1,386.77 and $970.74 and a date in 2019.
   • An objection to a provisional order for restitution dated 6 September 2019 under the Victims Rights and Support Act 2013 (NSW) for the amount of $4,909.
   • A referral to the Law Society Pro Bono Scheme dated November 2019, which is partly illegible, apparently in respect of the proceedings in which the court order was made.
   • A letter of support from the Multicultural Disability Advocacy Association of NSW Inc to AAT1 dated 5 February 2020.
   • A psychologist's report dated 21 July 2011.
   • An AAT Statement of Financial Circumstances (Centrelink reviews) dated 16 January 2020.
   • Letters from Welfare Rights Centre dated 26 October 2017 and 14 February 2020.
   • A letter dated 17 October 2014 from the ARO Centrelink to Legal Aid NSW.
   • A statutory declaration dated 6 November 2018 from a registered clinical psychologist about treatment provided in January to July 2009.

1. Section 4 of the Social Security Act 1991 (Cth) is the relevant statutory provision when considering whether a person is a member of a couple for the purposes of the Act. For the reasons that follow, I have formed the opinion that Mr Kim was a member of a couple during the relevant period because he was legally married to another person and was not living separately and apart from the other person on a permanent or indefinite basis. The specific considerations in s 4 of the Act that are relevant in this case are addressed below, as well as evidence at various times about whether Mr Kim and his partner were separated under one roof.
2. Mr Kim and his former partner married in 1996. They have two children who were born in 1998 and 1999.
3. On 2 December 2008 Mr Kim's partner submitted an Assessment of Living Arrangements - Separated under one roof form. It was largely left blank. It did not indicate a date of separation and contained very limited information about the relationship. It did state that living, sleeping and utility areas such as kitchen, laundry and bathroom, were shared. The answer to the question Do you exclusively occupy any area of the home was No. Mr Kim said he did not know that his former partner had submitted the form.
4. The 2011 psychological report stated that Mr Kim "has now separated from his wife but still living under the same roof". The report was written to support an application for public housing for him and his family.
5. On 8 July 2013, Mr Kim's partner submitted a completed Relationship Details form. She stated that she separated from Mr Kim on 28 February 2013. The Respondent accepted that was the date of separation.
6. Ms Pak, counsellor, prepared a report dated 4 August 2013. She stated that Mr Kim was recently separated, separated under the same roof "3 months ago" and his partner had decided to move out with the children due to financial difficulties. She described "the sudden, [sic] shock of is wife wanting separation from him" and "Mr Kim is made to suddenly come to terms with it".
7. During an interview on 16 July 2019, Mr Kim claimed that he lived separated but under one roof in 2006 and continued to do so after moving in 2010, and formally separated in 2013. I give little weight to that claim because it was made after the debt had been raised and not during the relevant period. It was self-serving.
8. During his oral evidence, Mr Kim said that he was separated and living under the one roof from 2000 but could not tell the children. That is inconsistent with his claim during the 2019 interview that he lived separated under one roof in 2006.
9. In a subsequent report dated 3 November 2017, Ms Pak refers to the unresolved debt issue that was created while he was separated from his wife under one roof. I infer that Mr Kim was the source of that information. It was not information provided during the relevant period. It is inconsistent with the information given to Ms Pak in 2013. It was given in the period that Mr Kim was disputing the debt. I give it no weight.
10. Mr Kim referred to a statement from his friend dated 25 October 2018. His friend stated that Mr Kim talked to him about the relationship with his wife which he intended to live separate but did not tell me the reason and informed the difficulties of marriage. The statement is not helpful. It suggests that the separation had not occurred at the time the statement was written.
11. Mr Kim's evidence about providing to Services Australia a declaration that he was separated but living under the one roof with his partner was confusing. He said that he had a copy of the form his partner had handed in. He only knew that it was lodged in 2012. He then said that he had reported many times to Services Australia that he was separated but living under one roof. I asked him to provide a copy of the document he said he had. He provided a Centrelink form dated 8 July 2013 in which he stated the date of separation was 28 February 2013.

Financial aspects of the relationship are to be considered [1]

1. When he applied for NSA, Mr Kim nominated a joint bank account with his partner to receive the payment, of which his share was 50%. Mr Kim acknowledged that he was aware that his partner was working part-time and said that he reported her income but claimed that she concealed from him the true extent of it.
2. Mr Kim and his family occupied two different premises during the relevant period. In relation to the first, he said that he and his partner were listed on the rental agreement, but he alone paid the rent with money he received from Services Australia.
3. The family moved to the second premises in about May 2011 and moved out on 7 June 2013. Mr Kim said that initially only his name was on the lease and he paid almost all of the rent. Later his partner wanted her name on the lease. She said they were moving. When he went to hospital he could not pay the rent and they were told to move out.
4. In the 2013 relationship details form, his partner stated that she paid half of the rent. Mr Kim said that she was making money at that time, but she did that because she thought he "would claim half of the children". Only he paid the rent. He denied her claim that she paid the telephone bill. He said that he was receiving NSA and could pay. He denied her claim that she paid the electricity bill. He said that he paid all living costs from his NSA and FTB payments. He agreed that his NSA was paid into a joint bank account.
5. Mr Kim said that his wife did the food and general shopping but occasionally he bought big items. This is relevant to the consideration of the financial aspects of the relationship and the nature of the household.
6. The 21 July 2011 psychologist's report states that Mr Kim and the children were relying on his partner's income, which was not enough.

1. In relation to the first property they occupied, Mr Kim said that he and his partner sometimes slept in the same room for the sake of the children but sometimes he slept alone in the study. They used different rooms 80% to 90% of the time. He did not know why his partner had written in the 2008 form that they shared living and sleeping areas.
2. Mr Kim was asked about a record of a conversation he had with Centrelink on 3 April 2008 when he said that he was separated but living in the same house, sleeping together, sharing meals and sharing household duties. During his oral evidence about this record, Mr Kim said that there was no intimacy in bed. His wife suffered depression and he had a problem as well. His wife told him to see a psychologist. He believed that they were separated.
3. His evidence was confusing at this point. Mr Kim talked about 2012 and coming home from hospital and how his wife and he applied separately for housing for themselves and the children. He said that he could provide a letter to support his claim. I understand that he was referring to the 2011 psychologist's report.
4. He agreed with his wife's statement in the 2013 relationship form that he maintained the garden. He said that he did so with the help of his parents, neighbours and friends.
5. Mr Kim said that he and his partner were both responsible for looking after the children. His wife prepared meals. He said that they sometimes ate together but not all the time.

Social aspects of the relationship[3]

1. Mr Kim said that he and his wife were members of a Korean Catholic Church that he had attended since his arrival in Australia in 1989. They attended church many times on Sunday, and on Saturday with the children for Korean language school. He had a car and drove the family. In 2012 or 2013 he and his partner went to New Caledonia for a holiday.

Any sexual relationship between the people [4]

1. As already mentioned, when Mr Kim was asked about a record of a conversation he had with Centrelink on 3 April 2008, he said that there was no intimacy in bed. That is the extent of the evidence on this issue.

The nature of the people's commitment to each other [5]

1. Ms Pak's 4 August 2013 report suggests that there had been strain in the relationship for a few years because Mr Kim was unable to work and earn money and his partner thought he was too dependent on her. The 2011 psychologist report also refers to relationship issues between Mr Kim and his partner because of his negative moods, being at home and not working and ongoing problems between them over financial matters.

1. The above evidence strongly supports the finding that Mr Kim was a member of a couple during the relevant period because he was legally married to another person and was not living separately and apart from the other person on a permanent or indefinite basis. There were difficulties in the relationship, mostly arising from the financial difficulties they faced. But it was not until February 2013 that they separated under one roof.

Was Mr Kim overpaid NSA in the relevant period and is there a legally recoverable debt?

1. During the period 2008 to 2013, the Services Australia records included numerous notices to Mr Kim under subsection 68(2) of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) advising him of the requirement to notify it of changes to his relationship status and any income that he or his partner received from employment.[6]
2. On 1 February 2012, Services Australia began a review of Mr Kim's entitlements to NSA after receiving data about his partner's income from the Australian Taxation Office.[7] The review included requesting information from several employers of Mr Kim's partner.
3. Mr Kim failed to declare his partner's earnings in compliance with the information notices issued to him under subsection 68(2) of the Administration Act. Therefore, his rate of NSA was calculated on an incorrect basis during the relevant period and he received payment in excess of his entitlement.
4. In accordance with subsection 100(1) of the Administration Act, Mr Kim's rate of NSA can be retrospectively reduced from 8 April 2008, the start of the relevant period.
5. The debt was calculated based on the actual income for each fortnight in question earned by Mr Kim's partner. Applying the ordinary income test in Module G of section 1068 of the Act resulted in Mr Kim having been overpaid $52,430.97 in NSA during the relevant period.
6. The Respondent quite properly accepted that because Mr Kim and his partner separated on 28 February 2013, any income earned by Mr Kim's partner thereafter does not affect Mr Kim's entitlement to NSA. Therefore the $902.23 Mr Kim received in NSA payments from 28 February 2013 to 27 March 2013, should be deducted from the debt amount.
7. Mr Kim was therefore overpaid NSA in the amount of debt of $51,528.74 for the period 8 April 2008 to 27 February 2013.[8] This amount is a debt due to the Commonwealth pursuant to subsection 1223(1) of the Act.

Is there is any basis to write off or waive part or all of the debt?

1. Part 5.4 of Chapter 5 of the Act allows for debts to the Commonwealth to be written off or waived.

1. Section 1236 of the Act provides that debts may be written off "for a stated period or otherwise" in certain circumstances, including if the debt is irrecoverable at law or the debtor has no capacity to repay the debt.[9]
2. A debt is taken to be irrecoverable at law in certain circumstances, including where the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud.[10] There is evidence that Mr Kim filled out an application for bankruptcy but there is no evidence that he was made bankrupt or that he had been discharged from bankruptcy.
3. Relevantly, subsection (1C) of section 1236 provides that if a debt is recoverable by means of deductions from the debtor's social security payment, the debtor is taken to have a capacity to repay the debt "unless recovery ... would result in the debtor being in severe financial hardship".
4. The term "severe financial hardship" is not defined in the Act. In Re Lumsden and Secretary Department of Social Security [1986] AATA 228; (1986) 10 ALN N225, the Tribunal required that for this term to be satisfied, a person's entire financial position would need to be materially less than the current rate of pension.
5. In Stubbs and Secretary, Department of Family and Community Services [2003] AATA 729, the Tribunal stated at [20]:

Severe financial hardship, while not implying destitution, goes beyond straitened financial circumstances and imports a need for the particular case of a person to include financial suffering of a severe or extreme nature.

1. Mr Kim currently receives disability support pension (DSP) in the amount of $944.30 a fortnight. [11] He was most recently repaying $30 per fortnight from his NSA. The Respondent contended that that equates to approximately 3.18% of his total entitlement which is less than the "standard" rate of recovery of 15% (which would be $141.65).
2. Mr Kim has shown that in addition to the debt the subject of this case, he has outstanding debts of approximately $55,000, including the provisional order for restitution dated 6 September 2019 under the Victims' Rights and Support Act 2013 (NSW) for the amount of $4,909. However, the evidence does not demonstrate that the creditors are actively pursuing payment of the debts.
3. Mr Kim has been repaying the debt the subject of these proceedings through deductions from his DSP payment. I am not satisfied that recovery by means of future deductions from his social security payment would result in Mr Kim being in severe financial hardship.
4. I am not satisfied that the debt should be written off.

1. Section 1237A of the Act provides that the right to recover the proportion of a debt that is attributable solely to administrative error made by the Commonwealth must be waived if the debtor received payments in good faith.
2. Mr Kim claimed that Services Australia made an error, not he. I accept that finding out about the debt after "all those years" he received NSA was "like a bomb dropping" as he said, but the evidence does not point to any error made by Services Australia. Rather, Mr Kim was well aware that his wife was receiving income. He and their children were relying on her income. He had an obligation to disclose that income, having received numerous notices under subsection 68 of the Administration Act. He failed to do so. Waiver arising from error does not apply in this case.

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.

1. The term "knowingly" is not defined in the Act. The Respondent referred to two authorities.

In Callaghan and Secretary Department of Social Security [1996] AATA 413, the Tribunal said:

48. There is nothing in section 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.

1. In Wall and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 740, the Tribunal stated:

28. In Taylor's Central Garages (Exeter) Ltd v Roper [1951] WN 383 at 385, Devlin J considered the meaning of "knowledge" and found that actual knowledge can be inferred from the evidence and the nature of the acts done. Further, in RCA Corporation v Custom Cleared Sales Pty Ltd (1978) 19 ALR 123 at 126, the Court of Appeal in the Supreme Court of New South Wales said:

"In inferring knowledge, a court is entitled to approach the matter in two stages; where opportunities for knowledge on the part of the particular person are proved and there is nothing to indicate that there are obstacles to the particular person acquiring the relevant knowledge, there is some evidence from which the court can conclude that such a person has the knowledge. However, this conclusion may be easily overturned by a denial on his part of the knowledge which the court accepts, or by a demonstration that he is properly excused from giving evidence of his actual knowledge."

29. Following the decision in RCA Corporation, it is open to the Tribunal to infer that a person had actual knowledge of their obligations under the Act where there were opportunities for them to gain that knowledge and where there were no obstacles to them acquiring the knowledge. In the present case, the respondent sent letters to the applicant notifying him of his obligations under the Act.

1. Mr Kim acknowledged that he knew his partner was earning income, although he has said that he did not know the amount. On 3 April 2008, he contacted Services Australia about eligibility for benefits. The record states: "cust stated that ptr will not provide real income amount to cus".[12] He did provide income estimates for himself and his partner for FTB purposes.[13]
2. Mr Kim was sent numerous notices advising him of his obligations to provide information about his partner's income and changes in circumstances throughout the relevant period as previously stated. He did report her income for two fortnight periods on 7 December 2012.[14] He told AAT1 that he knew he was required to report his wife's income.[15]
3. I am satisfied that Mr Kim knew his partner was earning income and that he had an obligation to advise Services Australia. He knowingly failed to comply with that obligation. That he had difficulty finding out what her income was, does not assist him. It was his responsibility to address that difficulty. There is no evidence that he sought advice from Services Australia about how he could do that. I take into account that in 2009 he had nine sessions with a psychologist for management of sleep difficulty, distress, fatigue, lowered self-esteem and worry about the future and in 2011 he suffered from severe Major Depressive disorder which was a reaction to his health, financial issues and relationship issues with his wife. However, the evidence does not change my conclusion that Mr Kim knowingly failed or omitted to report his wife's earnings to Services Australia.
4. The right to recover the debt cannot be waived under section 1237AAD of the Act.

1. The FTB debt of $13,945.98 was raised for the period 1 July 2011 to 30 June 2012 because Mr Kim had not lodged a tax return (non-lodger debt). A person claiming FTB (and/or their partner) is required to lodge an income tax return or notify Services Australia if it is determined that they are not required to do so, within 12 months following the income year in which they received a payment.[16]
2. Services Australia subsequently received information that Mr Kim was not required to lodge a tax return for the 2011-2012 financial year. On 30 June 2016 and 1 July 2016, Services Australia re-reconciled Mr Kim's FTB entitlement for the period 2011-2012 which resulted in the FTB debt being revised to nil from 30 June 2016. The Respondent accepted that Mr Kim does not have the FTB non-lodger debt.

1. For the above reasons, the decision made by AAT1 on 22 April 2020 is set aside and in substitution it is decided:

(i) The Applicant has a recoverable newstart allowance debt owed to the Commonwealth in the amount of $51,528.74 for the period 8 April 2008 to 27 February 2013; and

(ii) The Applicant does not have a family tax benefit debt in the amount of $13,945.98 for the period 1 July 2011 to 30 June 2012.

I certify that the preceding 62 (sixty-two) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member

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

[1] Section 4(3)(a), (i) to (iv) of the Act.

[2] Section 4(3)(b), (i) to (iii) of the Act.

[3] Section 4(3)(c), (i) to (iii) of the Act.

[5] Section 4(3)(e), (i) to (iv) of the Act.

[8] Annexure B to Respondent's SFIC - Debt Information Overview.

[9] Section 1236(1A)(a) and (b) of the Act.

[11] Annexure A to the Respondent's SFIC.

[16] Instruction 6.4.3 of the Family Assistance Guide.