J.R. Dwyer(1) (Senior Member), G.F. Brewer(1) (Member) and L.S. Rodopoulos(1) (Member)

First Home Owners Assistance - review of decision that amount of assistance paid was overpaid and should be recovered - owner builder - construction long drawn out - whether Act required that amount paid be treated as an overpayment - applicant lived in house during construction for some weeks - also after returning from overseas for a short time while looking for employment - whether applicant resided in dwelling "as his principal place of residence" - deferment or waiver of recovery.

Practice and Procedure - requirement that Tribunal consider mandatory requirements of legislation.

Words and Phrases - completion of construction - principal place of residence

Law Reform - suggestion that amendments to legislation be considered if Secretary is of view that the application of a mandatory provision of the legislation is inappropriate in certain circumstances.

First Home Owner's Act 1983 ss.4,5,14,15,27(3),35,37,37A

Administrative Appeals Tribunal Act 1975 s.37

Community Services and Health Legislation Amendment Act (No 2) 1989 (Act No.3 of 1990)

Building Control Act 1981

Morgan v S & S Constructions Pty Ltd [1967] VicRp 17; (1967) VR 149

McDonald v Director-General of Society Security [1984] FCA 57; (1984) 6 ALD 6

Re Mrs VG and Secretary to the Department of Housing Decision No. 2611, 4 April 1986

Levene v Inland Revenue Commissioners [1928] UKHL 1; (1928) AC 217

Re Kedem and The Secretary, Department of Community Services and Health, Decision No. 7249, 19 August 1991

Re Gaines and Secretary, Department of Health, Housing and Community Services, Decision No. 8064, 30 June 1992

Tania Theologidis v The Secretary, Department of Community Services and Health [1991] FCA 306; (1991) 30 FCR 234, 14 AAR 117

Re Jensen and Department of Community Services and Health, Decision No. 6403, 21 September 1990,

Re Constantino and Department of Health, Housing and Community Services, Decision No. 7925, 4 May 1992

Re Ward and Secretary, Department of Social Security (1985) 7 ALN 66

Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281

(i) to direct, pursuant to s.5 of the First Home Owners Act 1983 ("the

Act"), that Mr Parzatka is to be deemed not to be a prescribed person

in relation to the dwelling in respect of which he received assistance

under the Act;

(ii) to provide that, pursuant to s.37(6A) of the Act, the sum of

$2,689.39 being the amount of assistance paid to Mr Parzatka shall be

treated as if it should not have been paid; and

(iii) to provide that, pursuant to s.37A of the Act, the right of the

Commonwealth to recover the amount of $2,689.39 overpaid be deferred

until the property at Lot 155 (No.20) Dolphin Street, Smith's Beach

Estate, Phillip Island, is sold.

This is an application to review a decision of a delegate of the Secretary to the Department of Community Services and Health made under s.27(3) of the First Home Owner's Act 1983 ("the Act") which affirmed a decision that Mr Parzatka was not eligible for assistance under the Act and that the $2,689.39 which he had received was an overpayment which should be recovered from him.

2. At the hearing Mr Parzatka appeared and gave evidence. He was not represented. Mr Smart, an officer of the Department of Community Services and Health, appeared for the respondent. The respondent called Mr Perkins who lives close to the property in respect of which assistance was paid. The Tribunal received in evidence the documents (the "T documents") lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 ("the "AAT Act") and the further exhibits tendered during the hearing.

3. The eligibility provisions for assistance under the Act are found in ss.14 and 15. They provide for applications for assistance to be made by "a prescribed person". Section 14 of the Act provides that a person who has entered into a contract for the purchase or construction of a dwelling or who has commenced the construction of a dwelling is a prescribed person. Provided the person has not previously received a grant of assistance under the Act or similar legislation or owned a dwelling in Australia, the person may qualify for the payment of assistance under the Act. Section 5 of the Act provides that the Secretary shall direct that a person be deemed not to be a prescribed person if:

"the Secretary is satisfied that the person has not resided in the

dwelling as his or her principal place of residence and does not

intend so to reside within a reasonable time".

4. The reasons given for the reviewable decision are not the same as those given for the original decision. The original decision stated:

"You were requested to provide details of your circumstances in our

letter of 21 December 1989. To date no reply has been received. We

have considered your case, but on the information available, cannot be

satisfied that you have lived in your home nor that you will do so

within a reasonable time. This means you are not eligible for

assistance."

That appears to be a confused reference to s.5 of the Act, although the delegate did not state that she was satisfied that Mr Parzatka had not resided in the dwelling as his principal place of residence and did not intend to reside there within a reasonable time. Nor did the delegate make a direction in the terms required by s.5.

5. The reviewable decision relied on the fact that the person who applied for the relevant building approval stating he was an "owner-builder" was Mr Parzatka's father, who is also Mr Stan Parzatka. The delegate therefore concluded that Mr Parzatka had not "commenced construction of a dwelling" as required by the Act.

6. The statement lodged pursuant to s.37 of the AAT Act (the "s.37 statement") in substance sets out two reasons for the reviewable decision. The first reason is that relied on in the delegate's letter advising of the reviewable decision, namely that the Mr Stan Parzatka who signed the building approval and owner-builder's permit documentation was not the applicant. The second reason was a new one. It was set out in paragraphs 18-20 of the s.37 statement as follows:

"18. Section 17(1) of the Act provides that assistance shall not be

paid in respect of an owner-built dwelling which has not been

completed unless substantial progress on construction has been, or is

likely to be, made within a reasonable time. Sub-paragraph 35(2)(b)(i)

refers to the situation where a dwelling which has not been completed

at the time of making the application is not completed within 6 months

after the date specified in the application, or within 6 months of the

date of the first payment of assistance. Sub-section 37(6) provides

that where an amount of assistance has been paid and the circumstance

in section 35(2)(b)(i) occurs, then the assistance shall be treated as

if it should not have been paid.

19. In the instant case, Mr Stanley Parzatka, in his application

(Document T6), stated that he intended to occupy the house 'as soon as

possible' and indicated that at that time (May 1988) the house had

already reached 'lock-up stage'. As more than 6 months have expired

since May 1988, a situation referred to in paragraph 35(2)(b) has

occurred. As a result the provisions of section 37(6) operate to deem

the amount of assistance paid to the applicant to be an amount which

should not have been paid. Section 37(3) then provides that so much of

an amount overpaid as exceeds the total amount of assistance payable is

a debt due to the Commonwealth which may be sued for and recovered in a

court of competent jurisdiction.

20. Although the Department has no information that the building has

been completed, the fact that the applicant may now have completed the

construction of the home can have no relevance to the mandatory time

limits for completion of construction as effectively imposed under

section 35 and section 37."

7. The respondent's statement of facts and contentions repeated the three grounds set out above, namely:

(i) the applicant was not the person who sought and obtained the

building approval;

(ii) the applicant had not lived in the home as his principal place of

residence and did not intend to do so, rather it has been and will be a

weekender holiday home for the applicant's parents, siblings and

himself; and

(iii) because of delays in completion of construction the amount of

assistance which had been paid should not have been paid.

8. Mr Smart at the commencement of the hearing said that he wished to abandon the grounds based on the fact that the applicant's father rather than the applicant signed various documents including the application for assistance under the Act and on the delay in completion of construction. He said he relied only on the contention set out as follows:

"... further of alternatively, that the applicant having not occupied

the subject dwelling as his principal place of residence or so

intending to occupy it within a reasonable time (of its commencement),

that in accordance with section 5 of the Act he must be deemed not to

be a prescribed person in respect of it, so that the provisions of

section 37(6A) are applicable;"

9. The Tribunal does not see any difficulty in Mr Smart abandoning the point which was based on the fact that Mr Parzatka's father had signed the application for building approval. The T documents contain a copy certificate of title of the land on which the dwelling was built. The transfer to Mr Parzatka from his parents was registered on 15 July 1987. The property was therefore Mr Parzatka's property and Mr Parzatka "commenced the construction" of the dwelling even if his father signed the application for building approval.

10. Neither Mr Smart nor either of the delegates who made decisions in this matter referred to s.15(2)(b) of the Act which provides that an application for assistance "shall be signed by the person ... who is a person to whom subsection 14(2) applies in relation to the dwelling". We considered whether the failure by Mr Parzatka to comply with s.15(2)(b) was relevant to the question whether he had received money he should not have received. We have concluded that it is not. Mr Smart informed the Tribunal that it was not in dispute that, were it not for s.5 of the Act, Mr Parzatka would have been a "prescribed person" within the meaning of s.14(1)(c) of the Act. We consider that s.15 does not provide any reason to hold that assistance paid to an otherwise eligible person must be treated as an overpayment because the application by the applicant was not signed in his own hand.

11. However we have more difficulty with Mr Smart's next concession. He stated in opening that he would not be "pressing any argument ... on section 35." The Tribunal questioned Mr Smart about this issue because of the mandatory language, used in s.35(1), s.35(2)(b)(i) and s.37(6) of the Act, and relied on in the respondent's s.37 statement. So far as relevant those provisions read as follows:

"35.(1) This section applies where assistance has been paid in respect

of a dwelling whose purchase or construction had not been completed on

the date on which the application was made.

(2) Where -

...

(b) in the case of a dwelling the construction of which had not been

completed on the date on which the application was made -

(i) the construction of the dwelling is not completed within 6

months after the date specified in the application as the date on

which it was expected that the construction would be completed or,

if no date was so specified, within 6 months after the date of the

first payment of assistance;

...

and the Secretary is not forthwith notified in writing of the fact,

then the sole applicant, or each of the joint applicants, as the case

may be, is guilty of an offence punishable, upon conviction, by a

fine not exceeding $1,000 or imprisonment for a period not exceeding

6 months, or both."

"37.(1) Where an amount of assistance has been paid to an applicant or

applicants and the whole or part of the amount should not have been

paid, the whole, or that part, as the case may be, of the amount is

referred to in this section as an amount overpaid, and the succeeding

provisions of this section apply.

(2) ...

(3) So much of the amount overpaid as exceeds the total amount (if any)

of further assistance payable, but not paid, to the applicant or

applicants is a debt due to the Commonwealth by the applicant, or by

the applicants jointly and severally, as the case may be, and may at

any time be sued for an recovered in a court of competent jurisdiction

by the Secretary suing in his official name.

(4) ...

(5) ...

(6) Without limiting the generality of subsection (1), where:

(a) an amount of assistance has been paid in respect of a dwelling;

and

(b) either of the following subparagraphs applies:

(ii) a contract for the purchase of the dwelling that provided for

the payment of the whole or a part of the purchase price by

instalments was not entered into by the applicant or applicants

by any or the circumstances referred to in paragraph 35(2)(a) or

(b) occurs;

the amount of assistance is to be treated for the purposes of this

section as if it should not have been paid."

12. We note that the s.37 statement in this matter, which was received by the District Registrar on 3 January 1991, contains a copy of s.37(6) in the form in which it appeared prior to 17 January 1990 when the Community Services and Health Legislation Amendment Act (No. 2) 1989 (Act No. 3 of 1990) came into operation. From that date the new s.37(6) set out above was substituted. As both the original decision and the reviewable decision were made after 17 January 1990 it is the substituted form of s.37(6) which must be applied and should have been included in the T documents, although in substance there is no difference in effect.

13. When the Tribunal asked Mr Smart how he could ask the Tribunal to simply disregard mandatory provisions in the relevant legislation he replied:

"Yes. I think that it is very difficult to say whether in fact section

35 is a directory or a mandatory provision quite frankly, and I think

that as a matter of practice, it is not appropriate to exercise it if a

dwelling is in fact completed. I do not think there is any issue here

that the dwelling is completed even though it did take a considerable

period of time but that - I mean there are any number of dwellings

especially dwellings which are constructed by people operating as owner

builders which take considerable longer than these particular periods

of time. And I am not aware that the Secretary, under this Act, has

ever sought to exercise the provisions under section 35 where the

dwelling is completed only in circumstances where the construction is

abandoned. And I would not be pressing any argument today on section

35."

It appears that in making these comments Mr Smart was referring rather to a discretion whether to prosecute under s.35 than to the raising of an overpayment under s.37(6).

14. The Tribunal could only agree with Mr Smart that it seems inappropriate to take action which involves raising an overpayment and possible charging a person with an offence under the Act because construction of a completed dwelling for which assistance has been paid proceeded more slowly than anticipated. The Tribunal was however concerned about the practice of simply ignoring a mandatory provision in the legislation. the following discussion took place:

"The Tribunal: Over and over again we see cases where the legislation

which we are obliged to apply is in a sense ignored or varied by the

departmental officers - frequently to the advantage of the community.

...

Why leave the provision in the Act then, that is the trouble.

Mr Smart: Well, I think that one of the reasons is that Parliament is

often loath, having created legislation, to amend it unless they have a

very strong argument put to them as to why they should.

The Tribunal: The fact that something has been in an Act for almost 10

years and never used might be reason..."

15. In the light of that exchange the Tribunal was puzzled to learn from its own research that s.37(6) was in fact amended in 1990 but that the amendment still requires that an amount of assistance paid is to be treated as if it should not have been paid "if any of the circumstances referred to in paragraph 35(2)(a) or (b) occurs". Section 35 was not amended at that time and continues to impose a six month time limit. If the views expressed by Mr Smart are those of the Secretary to the department it would seem that a further amendment should be sought to limit the operation of s.35(2) and s.37(6) of the Act so that they do not apply in circumstances where they are considered to be inappropriate.

16. In this matter the Tribunal's attention was drawn to s.37(6) by the material put before the Tribunal on behalf of the respondent. So long as s.35(2) and s.37(6) remain in the Act in their present form the Tribunal cannot ignore them where the evidence establishes that construction of a dwelling was not completed within the time limits in s.35. The Tribunal pointed out to Mr Smart that it was obliged to apply the legislation and that it appeared to create a difficulty for Mr Parzatka. Mr Smart agreed that s.37(6) provided a difficulty for Mr Parzatka but he suggested that the difficulty could be avoided by the Tribunal making the decision on the basis that s.5 of the Act applied as Mr Parzatka had never resided in the dwelling as his principal place of residence. We consider that once the matter has been raised before it the Tribunal must consider the evidence to see whether or not s.37(6) requires that the amount of assistance paid to Mr Parzatka be treated as if it should not have been paid to him.

17. Section 35(2)(b)(i) of the Act makes it an offence not to "forthwith" notify the Secretary in writing if the construction of a dwelling in respect of which assistance has been paid "is not completed within six months after the date specified in the application as the date on which it was expected that the construction would be completed or, if no date was specified, within six months after the date of the first payment of assistance". Surprisingly, there is no provision for an extension of time in which to complete or notify. Question 28 on the application for assistance (T6, p 32) reads:

"When is your home expected to be completed?"

The answer given by Mr Parzatka is - "as soon as possible". By letter dated 27 March 1988 Mr Parzatka was asked to advise when the home was expected to be completed. He replied on 8 June 1988 (T10):

"The approximate completion date is Dec: 88."

Thus applying the first leg of s.35(2)(b)(i), and regarding the letter of 27 March 1988 as providing information to be added to the application, Mr Parzatka had to notify the Secretary if construction was not completed by June 1989. Alternatively, applying the second leg, the first payment to Mr Parzatka was make on 8 July 1988; thus he had to notify if construction was not completed by 8 January 1989. So far as the evidence discloses he did not notify the Secretary of the delay within either of those time limits or at all.

18. As there are two possible dates and as it is conceded that the provision operates harshly it seems appropriate to take the later date, namely 30 June 1989, as the relevant date. Mr Parzatka said that he built the house himself with help from his father and his brothers. He lived in the house while working on it in between jobs as a chef in Melbourne and other parts of Victoria and for some weeks between 20 March 1988 and 1 May 1988 worked at "The Anchor" at Cowes as a chef while living in and working on the house. At that stage the house did not have hot water, plumbing or an internal toilet. From receipts Mr Parzatka produced and tendered in evidence, we are satisfied that the work preparing for connection of the electricity was done prior to 6 May 1988 and the electricity was connected in May 1988 and the rough in for the plumbing work was done on 11 May. The gas was installed on 11 May 1988.

19. Mr Parzatka said that he continued to work on his house after May 1988 and that the reason he left "The Anchor" when his hours and earnings were reduced was that he needed more pay to be able to keep constructing the house. He said:

"I did that and worked on the house up until it was - just before the

final certificate was due. There was only a few alterations that needed

to be installed. I was waiting for this sewerage connection to the land

so I can get me home certificate. The council kept telling us: Oh it

was going to be in about a year, two years, six months so we were not

sure when so we kept waiting and kept asking to connect the sewerage up

and then get the certificate. Then it became aware to us that the

council gave us two years to build the house so we had to install a

septic tank which I was opposed to. If they are putting sewerage - the

sewerage system through why put a septic tank in there when you are

going to have to fill it up again anyway, why not just wait. And so

that was constructed - the septic tank I was still owing my parents

money for that."

20. From May to September 1988 Mr Parzatka was not employed but attended Trade School part-time and worked on his house. From September to November 1988 he worked at Rawson Village Hotel near the snowfields. He said he could not return to work on his house while working there because it was too far away. In November and December 1988 he worked at a restaurant in Bayswater. After that he said:

"I was looking for work around here, and most of my house I have worked

on it. The time I had off I did work on the house so I got it up to

lock-up stage, I got it up to this stage where the sewerage just had to

be connected up, the septic."

He then met some friends who were going to Queensland and in February 1989 he went with them and found work in Queensland. In May he returned to Melbourne and in June he went overseas to gain experience as a chef working overseas. He said that before he left he received notice from the Shire of Phillip Island that his house had to be completed within two years but his father said he would look after it for him so as not to spoil his trip overseas.

21. The T documents contain further material relevant to this issue. Document T30 p 68 states that power has been connected since 20 June 1988. Document T30 p 67 contains notes of conversations between an officer of the Department of Community Services and Health and a Mr Jamieson who is described as from the Building Office of the "Shire of Cowes". Mr Jamieson is reported to have said that there were no inspections between 12 January 1988 when the frame was inspected and 23 February 1990 when the wet areas, floors and septic tank still needed completing. On 28 April 1990 all the works were completed. Document T26 includes an account from a plumber for installation of a septic tank in March 1990 at a cost of $1,850.00. Document T19 is a letter written by the Shire of Phillip Island to S Parzatka on 27 February 1990. It reads as follows:

"Completion of Dwelling - Lot 155 (No.20)

Dolphin Street, Smiths Beach Estate

Council records indicate that the dwelling at the above mentioned

location does not have a Certificate of Occupancy. The building works

have been finalized however approval for the completion of an effluent

disposal system has not been given. Would you please contact the

Council's Health Department on (059) 522 356 to arrange for the

inspection please ensure that the installation of an approved effluent

disposal system has been approved for use by the 27th April, 1990."

(emphasis added)

Document T23 is a document dated 26 April, 1990 issued by the Building Surveyor of the Shire of Phillip Island under the Building Control Act 1981. It states that the work fails to comply with the regulations because the owner or agent has not obtained approval for the use of the septic tank system. The Certificate of Occupancy was issued on 26 June 1990.

(i) after May 1988 plumbing, gas and electricity works were completed

in the dwelling;

(ii) by February 1989, when Mr Parzatka went to Queensland, most of

the work on the dwelling was completed;

(iii) on 23 February 1990 a Shire Building Inspector reported "wet

areas floors and septic tank still needed completing",

(iv) yet on 27 February 1990 the Shire Building Surveyor wrote "the

buildings works have been finalized however approval for the

completion of an effluent disposal system has not been given",

(v) in March 1990 the septic tank has installed; and

(vi) the Certificate of Occupancy was issued on 26 June 1990.

23. Because Mr Smart did not deal with this issue, he did not address us as to whether construction of a dwelling is completed when "the building works are finalized" (T19) even without a completed effluent disposal system, or whether construction is only completed either when the effluent disposal system has been installed, or when the Certificate of Occupancy is issued. Nor did he address the significance of the fact that "floor and wet areas" still needed completing on 23 February 1990. There was no evidence as to the state of construction as at 30 June 1989 save for Mr Parzatka's evidence that when he went to Queensland he had completed most of the work on the house save for connection to the sewerage or installation of a septic tank.

24. We have searched for authorities on the meaning of the term "completion of construction" in regard to construction of a dwelling. The authorities appear to be concerned not with owner builders but with completion of works by a builder under a building contract. In Morgan v S & S Constructions Pty Ltd (1967) VR 1149 at p 154 the Full Court of the Supreme Court of Victoria held in respect to a contract for the erection of a house that-

"until the work to be done under the contract had been carried out in

accordance with the contract, both in respect of manner and materials

(except for departures from the contract which were either latent or

undiscovered or merely trivial), it would be 'completed'".

The Court approved the following passage from Emden and Watson's Building Contracts and Practice 6th ed. at p 84:

"It may be said that 'completion' of a project means the realization

or fulfilment of the conception, so that where the contract is for a

dwelling-house the term 'completion' denotes a readiness for immediate

occupation.'"

25. We have considered whether it could be held that construction of Mr Parzatka's dwelling was completed by 30 June 1989 notwithstanding that as at 23 February 1990 "wet areas, floors and septic still needed completing". In view of the fact that a mere four days later the Building Surveyor described the building works as finalized (save for the installation of the septic tank) we are prepared to find that only trivial matters needed completion in respect of the wet areas and floors. This is consistent with Mr Parzatka's own evidence. Thus the question is whether the construction of a dwelling, in an area where the Council requires the installation of an approved septic tank, can be regarded as completed before the sewerage is connected or a septic tank is installed. We note that a Certificate of Occupancy was not given until this had been done. It is likely that, applying the test approved in Morgans's Case, construction of the dwelling was not completed until the septic tank was installed as until then it was not ready for immediate occupation. However this is a significant matter for Mr Parzatka, particularly because s.35 of the Act does contain provisions relating to an offence. We consider it is not appropriate to make a finding on the issue without submissions as to the meaning of the concept of completion of construction as used in s.35(2)(b)(i) of the Act.

26. We therefore turn to the ground relied on by Mr Smart. He said that he would submit that the evidence shows that the dwelling was a family holiday home at Phillip Island and that Mr Parzatka had never resided in it as his principal place of residence and did not intend so to reside in it. He submitted that the Secretary (or the Tribunal standing in the shoes of the Secretary) was thus obliged by s.5 of the Act to direct that for the purposes of the Act Mr Parzatka was to be deemed not to be a prescribed person. Accordingly Mr Smart submitted that all the assistance paid to Mr Parzatka was recoverable under S.37(6A) of the Act. Sections 5 and 37(6A) read as follows:

"5. Where a person is a prescribed person in relation to a dwelling,

and the Secretary is satisfied that the person has not resided in the

dwelling as his principal place of residence and does not intend so to

reside within a reasonable time, the Secretary shall direct that, for

the purposes of this Act, the person is to be deemed not to be a

prescribed person in relation to the dwelling."

37(6A) Without limiting the generality of subsection (1), where:

(a) an amount of assistance has been paid to a person or persons in

respect of a dwelling; and

(b) that person, or at least one of those persons, as the case may be,

ceases to be a prescribed person in relation to the dwelling because

of a direction under section 5;

then, for the purposes of this section, the amount of assistance

(whether paid before or after the commencement of this subsection)

shall be treated as if it should not have been paid to that person or

those persons, as the case may be".

27. Mr Parzatka, in his evidence, dealt with the questions of how he came to build the house and whether or not he had ever resided in it as his principal place of residence. We accept his evidence that he built the house using money which had been paid by way of damages because he was injured in a car accident when he was six. He said that he received something of $20,000 when he turned eighteen and placed that money on deposit because he intended "to do something sensible with it".

28. Mr Parzatka said that he and his family were in the habit of visiting Phillip Island and his parents had purchased a block of land there. The copy Certificate of Title (T31,p 70) shows the land was transferred to Mr and Mrs Parzatka in December 1986. Mr Parzatka said that his father suggested giving him the block of land for a birthday present so he could build a house and live there. Mr Parzatka said that he gave it some thought, and decided;

"Yes, why not. I like Phillip Island. I go there alot."

He said that it was his intention to build the house and then to live in it and work on Phillip Island as a qualified chef.

29. Mr Parzatka said he lived in the house for a time while it was being constructed. At that time he was working at "The Anchor" at Cowes as a chef. He said, as to this period:

"I was living in a shell. No electricity, no power, no water, no

heating and light. I king of managed to grab something from work, you

know. Sneak in the shower at work before I went to work."

Mr Parzatka produced a letter confirming that he was employed by Phillip Island Motels Pty Ltd from 20 March 1988 until 1 May 1988 as a commis chef. His curriculum vitae refers to the house a t Phillip Island as his home. It states:

"Between the years 1988 & 1989 my working career was interrupted by the

construction of my own home."

It also states as to the period after November 1988:

"With most of the work completed on my home I decided to travel to

Queensland, Australia."

30. As already stated, Mr Parzatka was overseas from July 1989 to February 1991. He said that when he returned he looked for a job both at Phillip Island and in Melbourne. He said there was nothing available at Phillip Island and so he returned to Melbourne. His curriculum vitae reads:

"I returned to Australia in February 1991:

I lived in my house at Phillip Island, but with no employment available

I was forced to take up a position in Melbourne."

31. In evidence Mr Parzatka said that on his return to Australia in February 1991 he went to Phillip Island and attempted to live in the house and obtain work as a chef on Phillip Island or nearby. He said he opened a Post Office box at Cowes and tried to get work on Phillip Island, but because it was towards the end of the summer season, people were not putting on new staff. He said he travelled to Wonthaggi and Inverloch looking for work but was equally unsuccessful. Mr Parzatka produced a letter from Australia Post which confirmed that he opened a mail box at Cowes but unfortunately it is undated so gives no indication of when the mail box was opened. Mr Parzatka said he did not go back to "The Anchor" as he thought they would be unlikely to re-employ him as he had not left on good terms. He did not give the Tribunal any details as to places where, or dates when, he applied for work as a chef within a reasonable distance of Phillip Island in February 1991 except for one job at "The Bayfield".

32. Mr Parzatka described his attempt to obtain employment at "The Bayfield". He said:

"I did go for a job there but it did not work out at "The Bayfield";

that is a new hotel they have got there. I worked there for one day and

I approached the owners, who were offering me a job on a weekly basis,

and asked about whether or not they are going to need me for that

period of time because it did not seem to me that they were going to be

that busy, beginning of - you know, the time I went for the job. And he

just turned around and said, no, okay, all right, see you later, there

is the door. So that was pretty hopeless. All I did was inquire about

how busy they were as to how often they will need me because I had

other job offers in the snow, Mansfield, just outside Mansfield,

Merrijig. I had a job offer up there from - the agency rang me up

because I applied for a chef's job - and they said they have got a job

up there for sure. And I was asking down at Phillip Island, just asking

them whether or not they are going to be keeping me there, you know,

because they have stuffed me around before and I did not want to be

stuffed around again. I was a bit hesitant to believe what they were

trying to tell me. And they just showed me the door. So I took the

other job at the ski job, which I needed money."

From the curriculum vitae it appears that Mr Parzatka's job at Merrijig was from August to October 1991, so his attempt to obtain employment at "The Bayfield" would appear to have been made in late 1991.

33. Mr Parzatka said that after about two weeks living at Phillip Island he returned to Melbourne where he obtained a job and again lived in his parents' home. When he again became unemployed he said he had enquired whether he could be paid unemployment benefit if he moved to Phillip Island but was told that he would not be able to get if for twelve weeks because he would be treated as having moved from an area of high employment to an area of low employment. He felt he could not live without unemployment benefit for twelve weeks and so he remained with his parents in Melbourne.

34. The respondent called Mr Perkins who lives diagonally opposite the house. He said that the house is mainly unoccupied except for being used as a holiday home by members of the family. He said he has only seen Mr Parzatka there once or twice and he understood that he had been overseas for a long time. He said that the house had been unoccupied during the week most of the time. He confirmed that the house is now up for sale. Mr Parzatka did not deny that the house had been used by members of his family as a holiday home. He pointed out that his family had helped him build it and added:

"I use their house, they should use mine. My family is entitled to what

I have got because, like, that is the way they live. You know, Italians

live their certain way and they have their parents living with them all

the time. We just live our certain way, we just share what we have

got."

35. Mr Parzatka said in evidence that the house had been up for sale since February 1992. He hoped to sell it and buy one where he would have work close at hand and be able to provide a home for himself, his girlfriend and their expected child. He therefore no longer intends to reside in the dwelling as his principal place of residence.

36. On this evidence Mr Smart asked the Tribunal to direct, pursuant to s.5 of the Act, that Mr Parzatka be deemed no to be a prescribed person in relation to the dwelling. The Tribunal found Mr Parzatka to be an honest witness and accepted his evidence. It therefore asked Mr Smart why it should not find that the house had been Mr Parzatka's principal place of residence while he was working at "The Anchor" hotel from 20 March to 1 May 1988. Mr Smart submitted that, as at that stage the house was not completed, it could not be a dwelling within the meaning of that term in s.4(2) of the Act, which reads as follows:

"4(2) A dwelling shall not be taken to be a dwelling for the purposes

of this Act unless the Secretary is satisfied that -

(a) the facilities it provides are such that it is reasonable to regard

it as the principal place of residence of a person or persons; and

(b) if any building standards are applicable to it - it complies with

those standards"

37. The evidence establishes that prior to 1 May 1988 the house did not have gas or electricity connected and did not have an internal toilet. We feel obliged to agree with Mr Smart that the effect of s.4(2) is to preclude the Tribunal treating Mr Parzatka's residence in the house from 20 March to 1 May 1988 as residence "in the dwelling as his ... principal place of residence" because the house did not have the facilities which a principal place of residence would have such as gas, electricity, plumbing and an internal toilet. Mr Parzatka's evidence was that he was living in a shell and used the shower at "The Anchor" before work. No doubt the house also did not comply with building standards.

38. By February 1991 this problem no longer existed. The dwelling had a Certificate of Occupancy. However the evidence about Mr Parzatka's residence in the house after his return from overseas in February 1991 is very vague. There is no precise evidence as to dates, no record as to whether or not it was during this time that he opened his postal box at COwes, no detail as to efforts he made to find employment at Cowes or nearby during this time, and no evidence as to whether Mr Parzatka moved any or most of his possessions from his parents' house to Phillip Island. There is some evidence that Mr Parzatka may have become confused as to whether attempts to find employment were made in February 1991 or later in the year. On the other hand this period of residence at Phillip Island is mentioned in the curriculum vitae which we are satisfied Mr Parzatka had prepared for purposes other that this hearing. In fact he did not originally bring it with him to the hearing but only brought it after the lunch adjournment, when the Tribunal suggested that he go home and bring back any records to clarify his evidence as to how he funded the building of the house and as to his employment history after leaving "The Anchor" restaurant at Cowes.

39. A direction under s.5 of the Act of only to be made when the Secretary is satisfied of two matters:

(i) that the person has not resided in the dwelling as his principal

place of residence; and

(ii) that he does not intend so to reside within a reasonable time.

The evidence that the house is now up for sale satisfies (ii). The question is, whether we should be satisfied that Mr Parzatka did not reside in the house as his principal place of residence during February 1991.

40. In McDonald v Director - General of Social Security [1984] FCA 57; (1984) 6 ALD 6 both Woodward and Jenkinson JJ emphasised that the standard of satisfaction does not require any more that "a belief - even on a find balance", per Woodward J at p 14, that one finding is more likely than the other. Jenkinson J, at p 21, explained that the requirement of proof in a civil proceeding did not "involve necessarily any greater confidence than a bare preponderance of probability may engender". His Honour then went on to consider what happens in administrative proceedings if a tribunal finds itself unpersuaded either that a circumstance exists or that it does not exist and explained that the result in such cases will depend on the substantive law. Applying that approach in this matter, if we are not satisfied that Mr Parzatka "has never resided in the dwelling as his principal place of residence" then we should not make a direction under s.5 of the Act. If, however, the evidence leaves us with a belief - even on fine balance - that he has never so resided in the dwelling, then we must make the direction.

41. Mr Smart relied on the decision of the Tribunal in Re Mrs VG and Secretary to the Department of Housing, Decision No. 2611, delivered 4 April 1986, as showing how the phrase "principal place of residence" had been interpreted by the Tribunal. The Tribunal there quoted and applied the well-known passage from the judgement of Viscount Cave LC in Levene v Inland Revenue Commissioners [1928] UKHL 1; (1928) AC 217 at p 222 as to the meaning of the word "reside". His Lordship said:

"... the word `reside' is a familiar English word and is defined in the

Oxford English Dictionary as meaning `to dwell permanently or for a

considerable time, to have one's settled or usual abode, to live in or

at a particular place'. No doubt this definition must for present

purposes be taken subject to any modification which may result from the

terms of the Income Tax Act and Schedules; but, subject to that

observation, it may be accepted as an accurate indication of the

meaning of the word `reside'. In most cases there is no difficulty in

determining where a man has his settled or usual abode, and if that is

ascertained he is not the less resident there because from time to time

he leaves it for the purpose of business or pleasure."

42. However in spite of those comments this is one case where there is "difficulty in determining where a man has his settled or usual place of abode" because Mr Parzatka had no "settled or usual abode" in Australia after his long trip overseas. On his evidence when he went to Phillip Island he was considering where to settle. Because he did not succeed in finding employment at Phillip Island or nearby, he returned to his parents' home and that again became his settled home in Australia, as it had been when he last lived in Victoria. The question is whether, for a short time before that, his dwelling at Phillip Island became his principal place of residence.

43. The facts in this matter are similar to those in Re Kedem and The Secretary, Department of Community Services and Health, Decision No. 7249, delivered 19 August 1991, where the Tribunal concluded that a three week stay in a unit owned by the applicant was "a trial period during which the applicant took the opportunity to explore avenues of employment, refurnish the unit" amongst other purposes. A different finding on similar facts was made in Re Gaines and Secretary, Department of Health, Housing and Community Services, Decision No. 8064, delivered 30 June 1992. In that matter, even though the period of residence in the dwelling was only one week, the Tribunal was satisfied that the applicant had genuinely moved into the home as her principal place of residence and had moved all her property there and intended to stay there continuously for a long period of time. The Tribunal was satisfied that the applicant's quick change of mind was adequately explained by changes in her circumstances.

44. This is a borderline case, however, on a fine balance we are satisfied that during the short period in February 1991 when Mr Parzatka was looking for employment on Phillip Island his house there did not become his settled or usual place of abode or his principal place of residence. We consider the facts to be similar to those the Tribunal found in Re Kedem. We find that the time on Phillip Island in February 1991 was an attempt to see whether living there was feasible. Mr Parzatka may well have intended to make the house his principal place of residence if he found employment within a reasonable distance, but he did not find such employment and we are satisfied that therefore the house at Phillip Island did not become his principal place of residence after his return from overseas.

(i) that Mr Parzatka has not resided in the dwelling as his principal

place of residence; and

(ii) that he does not intend so to reside within a reasonable time.

Thus we are bound to make a direction that Mr Parzatka is to be deemed not to be a prescribed person in relation to the dwelling. As pointed out by Mr Smart, s.37(6A), (which is set out in paragraph 26 of these reasons) is therefore applicable. It provides that the amount of assistance paid to Mr Parzatka shall be treated as if it should not have been paid. A direction under s.5 could not have been made prior to February 1992, when the house was put up for sale and it was therefore clear that Mr Parzatka no longer had any intention to reside in the house "as his principal place of residence". However the Federal Court held in Tania Theologidis v The Secretary, Department of Community Services and Health [1991] FCA 306; (1991) 30 FCR 234, 14 AAR 117 that the effect of s.37(6A) is that, where a direction is made under s.5 of the Act, all the assistance paid is recoverable by the Commonwealth.

46. Under s.37(1) of the Act assistance which should not have been paid is referred to as "an amount overpaid" and under s.37(3) it is a debt due to the Commonwealth. However s.37A of the Act provides:

"37A.(1) The Secretary may, on behalf of the Commonwealth:

(a) write off an amount overpaid;

(b) waive or defer the right of the Commonwealth to recover an amount

overpaid; or

(c) allow an amount overpaid to be repaid to the Commonwealth in

instalments.

(2) In this section, `amount overpaid' has the same meaning as in

section 37."

47. On this aspect Mr Smart asked the Tribunal to follow the decisions of Re Jensen and Secretary to the Department of Community Services and Health, Decision No. 6403, delivered 21 September 1990, and Re Constantino and Department of Health, Housing and Community Services, Decision No. 7925, delivered 4 May 1992. Both those decisions set out a list of factors which are relevant to a decision whether or not an overpayment should be recovered. That list was first formulated by the Tribunal in Re Ward and Secretary, Department of Social Security (1985) 7 ALN 66 by summarising the matters pointed to as relevant by the Federal Court in Director-General of Social Services v Hales [1983] FCA 81; (1983) 47 ALR 281. The factors are as follows:

(a) the fact that the applicant has received public monies to which he

was not entitled;

(b) the way in which the overpayment arose, in particular whether it

was a result of fraud or innocent mistake;

(c) the financial circumstances of the applicant;

(d) the prospect of recovery;

(e) whether a compromise is offered;

(f) whether recovery should be delayed if there is a prospect that the

circumstances of the person may improve; and

(g) compassionate considerations and whether any financial hardship may

result.

48. In both Re Jensen and Re Constantinou the Tribunal decided that recovery of the overpayment should not be waived or deferred, although there was no suggestion of fraud or any lack of bona fides. The dwellings in both matters had been sold at a profit and the applicants were not suffering financial hardship. We are satisfied that in this matter a consideration of the relevant factors leads to a different conclusion.

49. Our findings on and considerations as to the factors set out above are as follows:

As to (a), it must be acknowledged that Mr Parzatka has received monies

to which we have found he was not entitled. As to (c), we consider that

the overpayment arose as a result of a lack of knowledge of the

requirement that Mr Parzatka live in the house as his principal place

of residence. As to (c), we accept Mr Parzatka's evidence as to his

financial circumstances. He said that the time of the hearing he was

unemployed, had no savings and was about to become a father. He was

still living with his parents but hoped, once the dwelling was sold, to

buy another house closer to available employment to provide a home for

himself, his girlfriend and their child. As to (d), there is no

prospect of recovery of the assistance paid from Mr Parzatka at

present. He has been unable to find employment as a chef since the job

at Merrijig came to an end in October 1991. His one attempt at

alternative work was unsuccessful. As the house is on the market that

provides a future prospect of recovery. As to (e), Mr Parzatka does not

offer a compromise because he has no funds and because the respondent

has never made clear the basis on which it is claimed he has been

overpaid. The fact that the respondent has constantly changed the basis

on which it claims Mr Parzatka has received an overpayment of

assistance must be very confusing for Mr Parzatka. It appears to us

perfectly reasonable that in those circumstances he has mad no offer of

compromise. As to (f), if recovery were to be delayed until Mr Parzatka

sells his dwelling, he would have funds available with which to make

the repayment. It would of course reduce the balance available to him

to purchase a new home but as Mr Parzatka did not pay for his land and

did most of the building himself he should still realise a significant

profit on the sale. As to (g), there are no additional relevant

circumstances beyond those set out above.

50. Sheppard J said in Director - General of Social Services v Hales, at pp 322-3, that the fact that a person has received public money to which he or she was not entitled must always be a paramount consideration. On the other hand, bearing in mind also the matters set out in the last paragraph, and particularly those as to Mr Parzatka's lack of knowledge of his obligations under the Act, the complexity of the legislation and Mr Parzatka's lack of means, it appears to us that the appropriate action to take under s.37A is to decide that the right of the Commonwealth to recover the amount overpaid be deferred until the dwelling at Lot 155 (No.20) Dolphin Street, Smith's Beach Estate, Phillip Island, is sold. Of course, if the house has been sold since the hearing, the amount overpaid should be recovered from the proceeds of the sale.