Editors --- "Assurance of support debt: waiver; special circumstances" [2006] SocSecRpr 20; (2006) 8(2) Social Security Reporter, Article 9

• SECRETARY TO THE DEWR and PHAN
• Background
• Legislation
• Evidence and submissions
• Findings of the AAT
• Formal decision

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Assurance of support debt: waiver; special circumstances

SECRETARY TO THE DEWR and PHAN

Decided: 2nd February 2006 by R. Perton

Background

Phan signed an assurance of support pursuant to the request of his brother, in favour of Ms T.D. Phan. Ms Phan was not related to the assurer and she migrated to Australia as the spouse of a friend of Phan’s brother, on 9 April 2002. Ms Phan applied for newst artallowance (NSA) and was paid from 28 October 2002 until 6 June 2003 in the sum of $5387.82. Ms Phan gave birth to a son in March 2003 and from 7 June 2003until 10 February 2004 was paid parenting payment partnered (PPP) in the sum of$5147.99.

In January 2005 Centrelink advised Phan, as assurer, of a debt in the sum of $10,459.44 and proceeded to garnish his wages. Phan appealed to the SSAT which waived the debt on the basis of special circumstances. The Secretary appealed that decision.

Legislation

Section 596A of the Act, in effect, requires Centrelink to undertake investigations before granting NSA where there is an assurance of support in place.

596A A person is not qualified for newstart allowance in respect of a period if the Secretary is satisfied that throughout the period:

(a) an assurance of support was in force in respect of the person (in this section called the assuree); and

(b) the person who gave the assurance of support was willing and able to provide an adequate level of support to the assuree; and

(c) it was reasonable for the assuree to accept that support.

However, Ms Phan was paid NSA without Centrelink conducting any check as to whether her surety could provide support to her. Given Centrelink’s failure to undertake the checks prescribed in s.596A, it was arguable that the payment of NSA to Ms Phan was due solely to administrative error. Section 1237A of the Act provides for waiver of debt in certain circumstances if a payment has been made because of administrative error. However, Phan, as the assurer, could not benefit from s.1237A(1), as Ms Phan received the payments, not he.

The only waiver provision available to Phan was that found in s.1237AAD on the ground of special circumstances.

1237AAD. 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 false representation; or

(ii) failing or omitting to comply with a provision of this Act or the 1947Act; 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.

Evidence and submissions

The Tribunal found no evidence to suggest that Ms Phan, Phan or any other person made false statements or failed to comply with a provision of the Act. In her application for PPP lodged on 6June 2003, Ms Phan indicated that an Assurance of Support was in effect. Centrelink’s file notes at the time of the grant of both NSA and PPP showed that Centrelink was fully aware of the date she arrived in Australia. Phan kept Centrelink informed of changes of his address at all times when receiving NSA himself. He therefore met the requirement in s.1237AAD(a) of the Act.

Phan provided written and oral evidence concerning his dealings with the then Department of Social Security(DSS) in relation to an assurance of support debt in 1992 whereby he had provided an assurance of support for six extended family members who migrated from Vietnam. DSS contacted him when claims were lodged for benefits. He was sent a letter when the amount of special benefit paid to his aunt and uncle was$340.40 and was asked to let the DSS know if he could support them. He described DSS procedures at that time which included his attending an interview and signing documentation, which he provided copies of to the Tribunal. He had acknowledged in writing he would be liable for the debt arising out of the DSS payments and made separate arrangements with other relatives for them to assist and the debt was repaid. He said that he expected Centrelink to follow the same procedures in relation to the assurance of support provided for Ms Phan.

He expected Centrelink to contact him if Ms Phan applied for a benefit. He also expected Ms Phan or her husband to let him know if she planned to do so. He anticipated making an agreement with relatives of Ms Phan for repayment and/or assisting her to find a job instead of claiming benefits. Phan advised the Tribunal that he had no contact with his brother’s friend since signing the assurance of support. He did not know that Ms Phan had arrived in Australia or that she had claimed NSA or PPP. He only learned of her arrival date and the claim for benefits after the two year period covered by the assurance of support had expired. He said that since Centrelink had taken steps to enforce a debt against him, he and his brother had tried to locate Ms Phan and her husband without success. His brother no longer worked with Ms Phan’s husband. She had moved house to an unknown location. He had tried to obtain Ms Phan’s address through Centrelink but was refused on privacy grounds.

He submitted that his situation was one of special circumstances. Centrelink did not follow legislative requirements or its own policy guidelines when it failed to contact him when Ms Phan first applied for NSA. He said he was thereby denied the opportunity to make arrangements or agreements with Ms Phan’s husband and family for her financial support. He indicated that he knew many Vietnamese small business owners and believed that he could have obtained employment for Ms Phan rather than her having to claim benefits.

He told the Tribunal that his personal circumstances had changed since the SSAT hearing. His most recent contract position had ended and he was looking for work again. He was being paid NSA. He and his wife had separated since the SSAT hearing and the subsequent appeal by DEWR against the waiver of the debt.

Centrelink submitted that there were no special circumstances that would justify waiving the debt. Centrelink relied on the case of Re Mandlawi and Secretary, Department of Family and Community Services [2005] AATA 236, in which a person provided an assurance of support for a person who was not a relative or friend, as an appropriate precedent for the Tribunal to follow. The Tribunal in Mandlawi found that the applicant’s situation could not be described as special circumstances.

Findings of the AAT

However, the Tribunal found the facts to be different from Mandlawi, and declined to follow it. The assuree in Mandlawi had not declared that she was subject to an assurance of support when applying for special benefit and the assurer was able to contact the assuree and her husband to attempt to negotiate a resolution of the matter. The Tribunal accepted that all of the abovementioned circumstances in Phan’s case constituted special circumstances that were out of the ordinary and that there was hardship or unfairness that was sufficient to justify departure from the general rule in the particular case.

Formal decision

The Tribunal affirmed the SSAT decision that the debt be waived on the basis of special circumstances.

[I.T.]