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Social Security Reporter |
Assurance of support debt: waiver due to special circumstances
(2010/226)
Decided: 30th March 2010 by J. Toohey
Aneese and his wife, Indrawes, came to Australia from Egypt in March 2004. As a condition of their permanent residence visas, their son-in-law, Zaki, signed an assurance of support by which he agreed:
• to provide sufficient direct or indirect financial assistance to ensure they would not rely on any form of social security benefit in Australia;
• to repay any special benefit paid to them in the first two years after they arrived in Australia;
• that Centrelink could use its debt recovery powers to recover any debt that arose on account of payments to them; and
• that he understood that he could not withdraw his undertaking once they were granted visas.
Zaki signed an assurance of support on 6 October 2003. A further condition of his parents-in-law’s visas was that he lodge assurance of support bonds with the Commonwealth Bank which he did on 21 November 2003, of $3500 and $1500 for Aneese and Indrawes respectively.
The two-year period covered by the assurance of support therefore ran to 12 March 2006. Within that time, Aneese and Indrawes applied for, and were granted, special benefit.
The decision under review was that Zaki must repay $15,571.15 (less the amount of the bonds) being the special benefit paid to his parents-in-law during the assurance of support period.
Zaki did not dispute that he signed an assurance of support, that he understood its terms, that it was a binding agreement, or that it could not be withdrawn once his parents-in-law were granted visas. He did not dispute that his parents-in-law received special benefit payments within the assurance of support period. He argued that he should not be required to repay the amount of the debt because of special circumstances.
Aneese first approached Centrelink for financial assistance about November 2004 and Centrelink arranged a meeting with Zaki. On 14 January 2005, Zaki signed a statement requesting consideration of the financial hardship the family was experiencing and had no objection to the $5000 bonds being released to pay his parents-in-law and he was willing to pay back ‘any extra payment’ as well.
Aneese again approached Centrelink about May 2005 and asked for a small amount of assistance. He and his wife were granted around $100 per fortnight between them. He was happy with this because he calculated that payments over the remainder of the assurance of support period would not exceed the $5000 bonds given by Zaki.
Aneese went back to Centrelink in early June 2005 to ask for a loan to buy a walking frame for his wife. He calculated that the cost of about $200 would still be within the amount of the bonds.
Aneese maintained that Centrelink calculated the amount of special benefit on the basis that it would not exceed the bonds. The AAT accepted the Secretary’s contention that it was the maximum Aneese and Indrawes could receive while still living with Zaki, and coincidental that it would not exceed the bonds.
When Aneese asked for money for a walking frame, he maintained that the Centrelink officer suggested, rather than continue to ask for small amounts, he and his wife move into their own accommodation where they would be eligible for approximately $400 per fortnight plus rent assistance. Aneese asked how this would affect Zaki’s assurance of support and he was reassured by the officer that Zaki would only be liable to the extent of the $5000 bonds.
Aneese had sent Zaki $5000 from Egypt to pay the bonds. This is why Aneese viewed the bonds as his own funds against which he could borrow and he did not intend that Zaki should incur any greater cost on his, or his wife’s, account.
On 9 June 2005, Zaki and Aneese met with Centrelink where Zaki said he made it clear he could not pay more than the bonds of $5000 because he was unemployed at the time. He wrote a statement which was placed on the file:
I, Ashraf Zaki, understand that assurance of support will be paid to Mr and Mrs Aneese. It is explained to me that I would be liable for all payment even if it exceeds the bond. However, I totally agree to be liable for the bond amount ($5000) while I don’t agree to be liable for any extra.
Zaki said he instructed Centrelink not to pay his parents-in-law beyond the limit of the bonds and he left the meeting believing he would be liable only to that extent; he would not have allowed his parents-in-law to leave his home otherwise.
Aneese said had he known that Zaki would be liable for more than the amount of the bonds, he and his wife would not have moved from his home in July 2005 when they did but would have stayed another eight months until the assurance of support period expired.
On 15 June 2005, Centrelink sent identical letters to Zaki about Aneese and Indrawes advising each had been granted special benefit, ‘a recoverable payment’, from 23 May 2005. The letters continued:
This means that an account is being kept of the amount which you will be required to repay to the Commonwealth. Centrelink will send you regular statements, approximately every three months, advising you of the updated amount you owe. You can also ask for a statement at any time.
A $3500 bond was deposited for this assurance of support [with the Commonwealth Bank]. ...
Once the amount you owe on the Assurance of Support account(s) for any people covered by this bond is greater than the bond amount, the bond will be taken from the bank and credited towards your account(s). You will be required to repay any balance owing on our account(s) which is not covered by the bond. We will contact you when it is time to repay the account. If the amount that you owe on your account(s) is less than the bond at the end of the Assurance of Support period, the balance will be refunded.
Both letters referred to a bond of $3500, however the bond for Indrawes was $1500.
Centrelink did not write to Zaki again until 20 January 2006 when it sent him a letter about Aneese, stating:
We are writing to you about ... Mr Aneese. This letter gives an indication of the amount you will be required to repay.
The current balance of your account is $2,395.90 [being the amount paid to Mr Aneese from 23 May 2005 to 9 September 2005].
The letter then repeated the second paragraph from the first letter (above). There does not appear to be a letter concerning Indrawes. Zaki said he paid little attention to the letter and that the amounts in it made no sense to him.
On 20 January 2006, Centrelink wrote to the Commonwealth Bank asking for a cheque for $2395.90 to Centrelink and a cheque for the balance of $1104.10 to Zaki. The bank issued the cheque to Zaki on 6 February 2006.
Centrelink conceded it was an administrative error to ask the bank to release the bond at this point, when the assurance of support period had not yet expired and while special benefit was still being paid to Aneese and Indrawes.
Zaki took the cheque as confirmation that Centrelink had accepted that he would only be liable to the extent of the bonds.
The next correspondence from Centrelink to Zaki was on 20 May 2006, after the assurance of support period had expired. Regarding Aneese, Centrelink wrote:
... an account of $7,785.57 had been calculated... [which] will be partly covered by the $3500 bond ... therefore the outstanding balance of your account is $5,389.67.
Regarding Indrawes, Centrelink wrote: an account of $5,389.67 had been calculated, [which] will be partly covered by the $3500 bond ... therefore the outstanding balance of your account is $5389.67.
Zaki received these letters but said he did not pay them much attention.
On 20 September and 30 October 2006 Centrelink wrote to Zaki stating that he was required to pay $13,175.24.
On 20 November 2006 Centrelink wrote to Zaki to say the debt was $11,675.24. This amount appears to have taken account of the bond of $1500 for Indrawes. Zaki said he contacted Centrelink and was told not to worry about it. He heard nothing further until 9 May 2008 when Centrelink wrote again to say he was required to pay $11,675.24.
On 7 August 2008 Centrelink advised the Australian Taxation Office of the debt and asked for $11,675.24 to be withheld from any money due to Zaki.
On 25 September 2008 Centrelink advised Zaki that the amount owing was $10,218.27. Zaki then contacted Centrelink and sought review of the decision to recover the debt.
Where an assurance of support for a person has been given and accepted and that person receives a social security payment during the assurance of support period, and there is a relevant determination in effect, the assurer is liable to pay the Commonwealth the amount of the social security payment: ss.1061ZZGG, 1061ZZGH of the Social Security Act 1991 (the Act).
A person who is liable to pay an assurance of support debt has a debt due to the Commonwealth: s.1227(1) of the Act.
The AAT was satisfied that Zaki had a debt to the Commonwealth because of his assurance of support debt.
Centrelink calculated $15,571.14 (less the amount of the bonds) and the AAT agreed with this amount.
A debt may be waived if it did not result wholly or partly from the debtor knowingly making a false statement or a false representation, or failing or omitting to comply with the relevant legislation; and there are special circumstances, other than financial hardship alone, that make it desirable to waive; and it is more appropriate to waive than to write off the debt or part of the debt: s.1237AAD.
The AAT accepted the evidence of Zaki and Aneese that Aneese and Indrawes acted on the advice of a Centrelink officer that they would be better off financially if they moved out. They would not have moved from Zaki’s home when they did but for this advice. The AAT accepted that Aneese asked how this would affect Zaki. However the AAT found it unlikely that an officer positively told them that Zaki would not be liable beyond the extent of his bond but it accepted that they were given confusing, and possibly misleading, information that did nothing to alert them to the true situation.
The AAT considered that the situation was not helped by Centrelink’s letter of 15 June 2005 as it did not specify any amounts; it indicated that regular statements would be sent but they were not; and it indicated that Centrelink would contact Zaki when it was time to repay the account, which did not happen. This was not helped by some other letters, some of which the AAT found to be ‘frankly difficult to follow’.
The AAT accepted that Zaki believed his ‘instruction’ would be carried out even though it ran counter to the undertaking he originally gave and that he regarded the bond in much the same way as Aneese, in effect as a fund they could borrow against.
Centrelink did not notify Zaki approximately every three months as it had said it would, and later returned part of the bond. Nothing in Centrelink’s conduct before 20 January 2006 gave Zaki reason to clarify his liability. It was reasonable for him to rely on Centrelink’s conduct and, in doing so, his liability grew.
The AAT said there were strong policy reasons for not waiving assurance of support debts lightly, however it was satisfied that special circumstances existed in this case which made it desirable to waive some, though not all, of the debt. The AAT considered that Zaki should not have ignored Centrelink’s letter of 20 January 2006 and should at least have contacted Centrelink about it. Had he done so, he would have discovered his continuing liability. He should not have simply assumed that Centrelink had accepted his ‘instruction’. He could have calculated his parents-in-law’s special benefit, determined when it would equate to the bonds, and gone back to Centrelink to clarify his position at that point. He might also have contacted Centrelink in September 2005 when he again became employed to see if that changed his position at all. By not doing any of these things, the AAT considered he was equally responsible for the debt he incurred.
The AAT was satisfied that special circumstances existed that made it desirable that 50 per cent of Mr Zaki’s debt of $15,571.14 be waived.
The decision under review was set aside and in its place the AAT substituted the decision that 50 per cent of Zaki’s debt to Centrelink be waived.
[S.P.]
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URL: http://www.austlii.edu.au/au/journals/SocSecRpr/2010/27.html