Editors --- "Assurance of support debt: failure of Centrelink to investigate evidence of fraud by assuree; insufficiency of translation and lack of independent advice; special circumstances" [2011] SocSecRpr 3; (2011) 13(1) Social Security Reporter, Article 3

• LU and SECRETARY TO THE DFHCSIA
• Background
• The law
• Discussion
• Formal decision

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Assurance of support debt: failure of Centrelink to investigate evidence of fraud by assuree; insufficiency of translation and lack of independent advice; special circumstances

LU and SECRETARY TO THE DFHCSIA

(2010/867)

Decided: 5th November 2010 by D. Allen

Background

Lu had provided an Assurance of Support (AoS) in relation to Wang who had married his cousin, Zhang. The AoS had been provided by Lu because Zhang was in receipt of a disability support pension. About six months after entering Australia, Wang left the marriage and claimed special benefit on 11 January 2008. Centrelink later informed Lu by letter dated 14 April 2008 that Wang had claimed and been granted a special benefit which was a recoverable payment under the AoS entered into by him. The letter went on to inform him that the sum of $2885.99 had been paid to Wang and to state that ‘You must tell us if you are able to support Jin Wang either in full or in part during the AoS period’. Lu replied pointing out that Wang had withdrawn cash from the term deposit she had with the ANZ bank. By letter dated 15 April 2009 Centrelink wrote to Lu demanding payment of $15,515.42 being the amount of money paid to Wang during the AoS period.

The law

Where an AoS for a person has been given and accepted and that person receives a social security payment during the assurance of support period, 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). Section 1237 of the Act refers to waiver of a debt due to administrative error. Section 1237AAD of the Act states that 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. This is limited by s.1237 AAE(2) which states that the Secretary may only waive the debt if satisfied that waiver is justified on grounds other than one or more assurers being unaware of the effect of s.1061ZZGG or of regulations made under the Migration Act 1958, in connection with the assurance.

Discussion

Whilst the Tribunal accepted that there had been a three month delay in Centrelink notifying Lu of the grant of special benefit to Wang, it did not consider that the delay altered his liability under the AoS. Further, the Tribunal noted that the delay was consistent with the Guide which provided for deferral of the notice in circumstances where a Centrelink social worker considered that contacting the assurer would place the assuree at significant risk of harm. The Tribunal was also not persuaded by the argument that Lu should be released from the debt because Wang had not left because of domestic violence as alleged by her but because she had entered into a new relationship. Whilst there was evidence before the Tribunal that at least two applications for an Apprehended Violence Order (AVO) had been refused by a Local Court Magistrate, the Tribunal noted that the assuree’s claims of domestic violence had been supported by a social worker at the time of claim. The Tribunal found that there was no onus on Centrelink to conduct investigations and decide competing claims and that in the absence of competing evidence the agency was entitled to act on the material placed before it, which in this case had been the social worker report.

The Tribunal went on to consider Lu’s contention that he should not be held liable for the debt because he had made Centrelink aware as early as April 2008 that Wang had access to funds. Whilst Centrelink had initially acted on the information and obtained from the ANZ bank documentation showing the withdrawal of funds, it had later decided to close the investigation. In light of the ANZ bank documentation, the Tribunal described this decision as ‘absurb and indefensible’, finding that it amounted to misfeasance. Whilst the Tribunal accepted the Department’s submission that the primary liability pursuant to the AoS still lay with Lu and that he would be released from that liability only if recovery of some or all the special benefit improperly paid was obtained from Wang, it went on to hold that it was incumbent upon Centrelink to take all necessary steps to investigate evidence of any alleged fraud and to ensure that liability for monies improperly received was vested in the person responsible and not merely to rely upon the assurer to meet the debt. Ultimately, the Tribunal found that the actions of Centrelink, in not investigating the withdrawal of the sum of approximately $20,000 by Wang, were unfair and unjust, as all or part of the benefit paid may have been recoverable from the assuree following a proper investigation of the matter.

The Tribunal went on to consider Lu’s understanding of his liability. The Tribunal noted that Lu had stated in cross examination that he understood that if Wang had no food or money he had to support her but found that was not the same as Lu understanding that if the assuree sought a social security benefit from the Commonwealth he would be liable for the cost of that benefit. The Tribunal expressed serious misgivings about Centrelink’s procedures which had resulted in Zhang, who the Tribunal found to have a rudimentary grasp of English at best and a real interest in Lu being accepted as the assurer, being relied upon to translate the Centrelink document to Lu. The Tribunal commented that Centrelink’s attitude in not requiring an assurer to obtain independent legal advice was in direct contrast to more recent approaches taken by both the courts and the State legislatures as to guarantees (of which AoS is a species). In referring to ss.1237AAE(2) the Tribunal noted that whilst it applied to the provisions of s. 1061ZZGG, it did not refer to provisions such as the inability of the assurer to cancel or withdraw the AoS or to the full provisions of the undertaking given by the assurer. It was also silent as to the effect of inadequate translation.

The Tribunal considered the meaning of special circumstances by reference to the case law and found special circumstances in Centrelink’s failure to investigate the withdrawal of funds by Wang immediately prior to her applying for special benefit and the conditions under which Lu had signed the AoS. The failure of Lu to fully understand the extent of his obligations under the Act, the fact that he did not have independent advice, the circumstances where Zhang, who was a direct beneficiary of the AoS, acted as the would-be interpreter, in the Tribunal’s view amounted to special circumstances.

Formal decision

The AAT set aside the decision under review and substituted its decision, namely that the debt was waived under s.1237AAD of the Act.

[G.B.]