Editors --- "Application for benefits using a false identity: whether overpayment, whether false statement resulted in debt, waiver" [2006] SocSecRpr 23; (2006) 8(2) Social Security Reporter, Article 12

• SECRETARY TO THE DEWR and QX2006/1
• Background
• The law
• The Department’s submissions
• QX’s submissions
• The issues
• Formal decision

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Application for benefits using a false identity: whether overpayment, whether false statement resulted in debt, waiver

SECRETARY TO THE DEWR and QX2006/1

(2006/372)

Decided: 28th April 2006 by P. E. Hack and M. J. Carstairs

Background

QX2006/1 (‘QX’) was born in 1956. He commenced using an assumed name in or before June 1988 and from that time no longer used his birth name for any purpose. The AAT accepted his explanation that he genuinely believed he was at risk and had assumed a new identity for that reason. On 5 June 1992 he made a claim for special benefit (‘SB’) and for job search allowance (‘JSA’) in the assumed name and gave a date of birth as May 1953. He did not answer the question on the claim form ‘Full name at birth (if different from present name)’. On 15 June 1992 he lodged another claim for JSA using the assumed name and May 1953 birth date. In answer to the question about whether he had a different name at birth, he wrote the assumed name. QX was paid an amount of $281.90 by way of SB for the period5 June 1992 to 11 June 1992. Between 12 June 1992 and 14 January 1993 he was paid JSA in the amount of $4369.45.

On 18 January 1993 QX made a claim for newstart allowance (‘NSA’) using the assumed name and the May 1953birth date. He was paid a total of $82,813.19 in NSA between 15 January 1993and 9 May 2002.

On 10 May 2002 QX lodged a claim for disability support pension (‘DSP’). The claim was made in the assumed name with the May 1953 birth date. The 'No’ box was ticked to the question ‘Do you, or have you ever had, any other name(s)? ...’ He was paid DSP totalling$34,987.54 between 10 May 2002 and 21 April 2005.

In June 2004 Centrelink commenced an investigation into QX’s identity. He was interviewed by Centrelink officers on 14 October 2004 and provided his ‘real’ name and family details and made reference to the reason for having adopted the assumed name and identity. In late April 2005 Centrelink cancelled payment of DSP to QX. He was invited to lodge an application using his ‘true and correct’ name. He did and it was granted with effect from 5 May 2005.

On 2 June 2005 overpayments were raised in excess of $120,000. The decision to raise and recover the overpayments was affirmed by the original decision maker on 6 June 2005 and by the authorised review officer (‘ARO’) on 21 July 2005. The ARO increased the amount of the debt by $1107. On 16 December 2005 the SSAT set aside the decision and determined that QX had not been overpaid. The Secretary sought a review by the AAT of this decision.

The law

The AAT considered three features of the legislative scheme– the qualifying criteria for each payment, the procedural provisions and the overpayment provisions.

The AAT noted that it was not in issue that QX satisfied the qualifying criteria for each of the payments received.

The AAT then considered the overpayment provisions - s.1224 of the Act up until 30 June 2001 and thens.1223. Section 1224 provided:

If:

(a) an amount has been paid to a recipient by way of social security payment; and

(b) the amount was paid because the recipient or another person:

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

(ii) failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000 or the 1947 Act;

the amount so paid is a debt due by the recipient to the Commonwealth.

On and from 1 July 2001overpayments were governed by s.1223 of the Social Security Act which provided:

(1) Subject to this section, if:

(a) a social security payment is made; and

(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

(1AB) Without limiting by implication the circumstances to which paragraph (1)(b) applies apart from this subsection, a person who obtained the benefit of a social security payment is taken not to have been entitled to obtain the benefit if the payment should not have been made for any one or more of the following reasons:

....

(b) the person for whose benefit the payment was intended to be made was not qualified to receive the payment;

(c) the payment was not payable;

(d) the payment was made as a result of a contravention of the social security law, a false statement or a misrepresentation;

The Department’s submissions

The Department’s primary argument was:

(a) the claims made embraced a proposition that a person, whose true name was the assumed name and whose true date of birth was in May 1953,existed;

(b) that person did not exist;

(c) in each claim a statement was made by the respondent that the information provided was correct;

(d) payments were made to him in reliance upon that statement;

(e) that statement was false in one or more particulars because the person in whose name (and birth date) the claim was made did not exist.

That is, the amount paid was paid because the respondent made a false statement. Alternatively, the Department submitted that there were several individual false statements or representations. Alternatively, it was submitted that QX had failed to comply with the duty not to make knowingly or recklessly false statements.

The Department argued that QX could not obtain the benefit of the waiver provision in s.1237AAD of the Act because he knowingly made a false statement or false representation or failed to comply with a provision of the Act.

QX’s submissions

QX submitted that he did not make false statements or false representations by adopting a different name as he was entitled to do so. As he would have been entitled to identical payments had he applied in his birth name(this was conceded by the Department) any false statements or representations made did not bring about a payment of benefits to which he was not entitled.

QX submitted that there had to be, and there was not, a causal connection between the making of a false statement or false representation and the receipt of payments.

The issues

(a) Was there a false statement or false representation (or misrepresentation)?

(b) Was there failure or omission to comply with (or a contravention of) the social security law?

(c) If either or both of (a) or (b) were answered in the affirmative, was a social security payment made because of (or as a result of) those matters?

(d) If there was a debt should it be waived in reliance on s.1237AAD of the Act?

Discussion

The AAT found that a person could assume and use any name provided its use is not calculated to deceive or to cause pecuniary loss: Earl Cowley v Countess Cowley [1901] AC 450, 460; Lowe v Evans [1989] 1 Qd R295, 296; Director-General, Department of Community Services v The Adoptive Parents [2005] NSWCA 385. They also found that QX was entitled to assume a new name and did not do so with any intention to defraud. Therefore by adopting the assumed name and using it to claim social security benefits QX did not make a false statement or a false representation. The AAT then considered the use of the false date of birth and found that it was a false statement for QX to give a date of birth in May 1953 when completing the various claim forms.

The AAT accepted that there had been two other false statements on claim forms. The first was QX’s failure to provide any answer to the question Full name at birth (if different from present name) on the June1992 JSA claim form and the second was the answer no given by QX to the question Do you, or have you ever had any other name(s)? in the claim for DSP.

The AAT rejected the Department’s primary argument as it considered that there was a person who, for his own reasons, had adopted a different name and birth date. But there was only ever one person. The AAT did not accept that the claim form conveyed a false statement in this respect.

The AAT concluded that the false statements that they had identified were knowingly false.

The AAT then stated that the critical issue in regard to the debt provisions in the Act was causation – that is, whether the payments were made because of (or as a result of) the false statements and/or the failure to comply with the Act. The AAT stated that in order for there to be a debt the falsity (false statements and the failure to comply with the Act) must be the immediate cause of the payment. In other words it must be shown that the payment would not have been made had the true position been revealed. The falsity must either go to a qualification issue or a payability issue, for example, residence or age requirements for aged pension or the range of other matters set out in the Act, such as income and assets tests. In this case the AAT found that identical payments would have been made had QX applied using his birth name and his correct date of birth.

The AAT referred to the decision of the Full Court of the Federal Court in Director-General of Social Services v Hangan [1982] FCA 262; (1982) 45 ALR 23.

Toohey J, at page 33 said:

In my view the Administrative Appeals Tribunal in the present case should have asked itself whether any of the payments of child endowment made to Mrs Hangan between 1972 and 1978 were made as a result of any failure on her part to comply with s.104A and whether any of those payments would have been made had there not been such a failure.

The AAT concluded that the payments received by QX were not paid because of, or as a result of, any falsity because they would have been paid had the ‘true’ position been disclosed. The falsity was not, in this case, material to the payment.

Special circumstances waiver

The AAT finally looked at the issue of waiver and set out the three elements that must be satisfied to invoke s.1237AAD namely:

· that the debt did not result wholly or partly from the debtor knowingly making a false statement or false representation or knowingly failing or omitting to comply, with a provision of the legislation:s.1237AAD(a);

· that there are special circumstances (other than financial hardship) that make it desirable to waive: s.1237AAD(b); and,

· that it is more appropriate to waive than to write off:s.1237AAD(c).

Based on the earlier findings the AAT held that although QX knowingly made false statements and there was a knowing failure to comply with the legislation, the debt did not result from that falsity. The AAT also found that there were special circumstances within the meaning of that phrase as stated in Dranichnikov v Centrelink (2003)75 ALD 134 at 148. The AAT considered that the sections of the legislation under consideration were designed to protect the revenue and permit the recovery of payments made in excess of an entitlement. In this case they held that if there was a debt, the fact that QX had an equivalent, but not claimed, entitlement took the case out of the ordinary run of cases and gave it a ‘special’ character.

Finally, there was no evidence that would suggest that any benefit would be gained by writing off any debt (or part of it) and the AAT concluded that it would be more appropriate to waive than to write off any debt found to exist.

Formal decision

The AAT affirmed the decision of the SSAT.

[C.E.]