Al Zohairy and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Anor [2010] AATA 41 (21 January 2010)

Last Updated: 21 January 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 41

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/0718

GENERAL ADMINISTRATIVE DIVISION		)
	Re		HANAA AL ZOHAIRY

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondents

DECISION

Tribunal

Mr S E Frost, Senior Member

Date 21 January 2010

Place Sydney

Decision

The decision under review is affirmed

...................[sgd]...........................
S E Frost
Senior Member

CATCHWORDS

SOCIAL SECURITY: Applicant in receipt of benefits – member of a couple – information about funds not disclosed - whether funds received were income – special circumstances not found – decision affirmed

LEGISLATION

Social Security Act 1991: s 8, 1236, 1237AAD

CASE LAW

Read v The Commonwealth [1988] HCA 26; (1988) 167 CLR 57

Secretary, Department of Social Security v Brian McLaughlin & Anor [1997] FCA 1456

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 100 ALD 9

REASONS FOR DECISION

	Mr S E Frost, Senior Member
21 January 2010

INTRODUCTION

1. Hanaa Al Zohairy has been receiving social security benefits for many years. From 1 December 2000 until 20 June 2005 she received special benefit. From 21 June 2005 she started receiving parenting payment.
2. The Respondents, referred to collectively in these reasons simply as “the Secretary”, contend that Mrs Al Zohairy has received much more in benefits than she is entitled to. The contention is that, during the period from 9 June 2004 to 20 June 2005, she was overpaid $9,353.19 in special benefit, and then from 21 June 2005 to 12 March 2008 that she was overpaid $25,657.16 in parenting payment.
3. The Social Security Appeals Tribunal (SSAT) affirmed the debts raised by Centrelink. Mrs Al Zohairy has applied for a review of the decision to raise and recover these debts.[1]

THE ISSUES

4. There are three issues. They are:

(a) whether Mrs Al Zohairy was overpaid special benefit;
(b) whether Mrs Al Zohairy was overpaid parenting payment; and
(c) if Mrs Al Zohairy has a debt to the Commonwealth, whether the debt should be written off or waived.

5. Issues (a) and (b) will turn on whether Mrs Al Zohairy’s husband, who was her partner for the whole of the periods under consideration here, received funds that can be classified as income for the purposes of the social security law. If he did, then as I understand things, Mrs Al Zohairy accepts that she has been overpaid to the extent claimed by the Secretary. This is because the amounts in question are at such a level that any entitlement to special benefit and parenting payment would evaporate.

THE RELEVANT LAW

6. The word “income” is defined in s 8 of the Social Security Act 1991 (the Act) as follows:

income, in relation to a person, means:
(a) an income amount earned, derived or received by the person for the person’s own use or benefit; or
(b) a periodical payment by way of gift or allowance; or
(c) a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).
[Notes omitted as irrelevant]

7. The definition contains a reference to “income amount”, which is also defined:

income amount means:
(a) valuable consideration; or
(b) personal earnings; or
(c) moneys; or
(d) profits;
(whether of a capital nature or not).

8. Subsections 8(4), (5) and (8), referred to in the definition of “income”, are not relevant to Mrs Al Zohairy’s circumstances.

THE FACTS

9. A claim for special benefit was made in December 2000 by Mrs Al Zohairy’s husband as claimant, with Mrs Al Zohairy shown as the claimant’s partner. In the claim form it was declared to Centrelink that:

• neither Mr nor Mrs Al Zohairy was earning any money;
• they had no bank, building society or credit union accounts;
• they had $180 cash;
• no money was expected from an annuity, superannuation, from any government department or “any other source”; and
• they had no investments, no interest in any real estate and no other assets in Australia or overseas.

10. The payment of special benefit to each of Mr and Mrs Al Zohairy was approved. In accordance with standard procedure, Centrelink sent Mrs Al Zohairy a notice on 3 January 2001 which informed her that she was obliged to tell Centrelink within 14 days about any events or changes in circumstances that might affect payment of the special benefit. The notice said:

YOU MUST TELL US IF ANY OF THESE THINGS HAPPEN OR IS LIKELY TO HAPPEN
you or your partner start paid work or any form of profession, trade, business or self employment;
...
you or your partner start to receive or stop receiving income, your or your partner’s income changes from the rate last notified or the income shown above is incorrect;
...
the value of your and your partner’s assets goes over $285,000.00;
...
you or your partner receive any type of income from an overseas source;
you receive a lump sum amount of money or one-off payment from any source;
...
WHAT IS INCOME
Income includes personal earnings, sick or holiday pay, sick or accident insurance, compensation, bank interest, net profit from a shop or business, gifts or allowances (including an allotment or a dependent’s allowance) of a regular nature, superannuation, retiring allowance or similar payments, payments for long service leave, income assessed from financial investments under the extended deeming rules (see above), an annuity, income from a deceased estate, income from rent, boarders or lodgers, miner’s pension, overseas pension, war (disability) pension, government assistance, receipt of a lump sum payment of money or one-off payment from any source, the value of board and/or lodging received in return for services, and profit on withdrawal from some managed investments or rollover/superannuation funds in some situations.
Income does not include Family Tax Benefit, health insurance benefits, pay and allowances received by Defence Force Reservists (Army, Navy and Air Force), unless you are in full-time continuous service.

11. Similar notices were sent to her on 8 January 2001, 5 September 2001, 20 September 2001, 7 February 2002, 11 February 2002, 12 February 2002, 13 May 2002, 24 July 2002, 15 August 2002, 19 August 2002, 14 February 2003, 5 December 2003 and 8 December 2003.
12. On 31 May 2004 Centrelink wrote to Mr and Mrs Al Zohairy to advise that information had been received which indicated they were working and not declaring income. On 7 June 2004 Mrs Al Zohairy telephoned Centrelink and, using an interpreter, said her husband was not working and she did not know why such an allegation had been made.
13. In July 2005, shortly after she and her husband were granted permanent residency, Mrs Al Zohairy applied for parenting payment. In her claim she said that she had lived at her current address (“the Liverpool property”) for one year. Mrs Al Zohairy said that she and her partner paid Mr Al Zohairy’s sister, the registered proprietor of the Liverpool property, $250 per week in rent.
14. Mrs Al Zohairy also said in her parenting payment claim that neither she nor her partner, Mr Al Zohairy, had done any paid work in the last 12 months and neither she nor her partner was currently employed. She also said that neither she nor her partner received any pension, allowance or other payment from overseas.
15. On 20 July 2005, Centrelink issued to Mrs Al Zohairy a notice saying that she was to be paid parenting payment at a rate of $360.30 from 5 August 2005. The notice also told her that she must tell Centrelink within 14 days about events or changes to her circumstances that might affect payment of her parenting payment. Relevantly, this notice said:

You must tell us if any of these things happen or are likely to happen:
...
your total personal income goes over $62.00 a fortnight;
your partner’s total personal income goes over $0.06 a fortnight; or
...
your and your partner’s combined assets goes over $223,000.00 (if you or your partner is a homeowner) or $336,500.00 (if neither you nor your partner is a home owner);
you or your partner receive a lump sum amount of money or one-off payment from any source.

ABOUT INCOME
Income includes money you receive or will receive when you (or your partner):
start work or recommence work, change jobs, or start any form of business or self employment;
...
receive income from overseas;
...
receive a lump sum amount of money or one-off payment from any source.

16. Notices expressed in the same terms were sent to Mrs Al Zohairy on 2 December 2005, 19 December 2005, 12 January 2006, 23 June 2006 and 5 July 2006.
17. It is appropriate now to detail some of the financial affairs of Mr Al Zohairy (Mrs Al Zohairy’s partner for the purposes of the social security law) during the periods to which this application refers.

RECEIPT OF MONEY FROM OVERSEAS

18. Between 9 June 2004 and 20 June 2005 (the period during which the Secretary claims Mrs Al Zohairy was overpaid special benefit), a total of $157,420 was deposited, from overseas, into a Westpac account in Mr Al Zohairy’s name. In the period 21 June 2005 to 12 March 2008 (the period during which the Secretary claims Mrs Al Zohairy was overpaid parenting payment) a further $287,985.65 was deposited into the account, again from overseas. Neither Mr nor Mrs Al Zohairy declared to Centrelink the existence of this bank account at or about the time it was opened. Neither of them declared the deposits to Centrelink at or about the time they were made.
19. There are conflicting explanations for the deposits.
20. One version characterises a proportion of the deposits ($254,450 in total) as a “loan” to Mr Al Zohairy from his father, repayable if and when the father arrived to live in Australia. As to this version there is a document at T48-423 of the documents provided to the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, apparently made by the father, the English translation of which declares and confirms:

“...that I have sent my son Khalid Mijbil Kmair Al-Zohery the amount of A$254,450 (Australian Dollars Two Hundred fifty-four Thousand Four Hundred and Fifty only) during the period extending from 03/04/2004 through 20/06/2008 for the purpose of supporting him to settle the instalments of the house he bought in Liverpool, Sydney, Australia. I sent him this amount of money as a loan, so he is indebted to me and he has to pay it off later.”

21. In this same document there follows a table setting out ten separate amounts of money said to have been lent, from 3 April 2004 to 20 June 2008, including, on 3 April 2004, two separate amounts, one of $58,000 and another of $30,000.
22. An alternative explanation for at least some of the deposits into Mr Al Zohairy’s Westpac account is reported in a document (described in its English translation as “Payment of an Amount”) which says (T44-411):

I, the undersigned, Adnan Kadhim Abada, of Australia, Sydney, Punchbowl, have handed in Mr Khaked Mijbil Gumair Al Zohairy an amount of 88,000 (Eighty eight thousand Australian Dollars) on 03/04/2004, being for: my brother Massoud Kadhim Abada of Iraq, Baghdad, had received an amount of (US$70,000) thousand American Dollars from Mr Thair Mijbil Gumair Al Zohairy of Iraq, Baghdad, Jamila the Second, the brother of Mr Khalid Mijbil Gumair Al Zohairy in return to and an exchange to the amount that I gave him, with the testimony of the two witnesses named below.
[apparently signed and witnessed]
Acknowledge receipt of an amount
I received the amount of 88,000 eighty eight thousand Australian Dollars from Mr Adnan Kadhim Abada in return to and an exchange to the amount that was paid by my brother Thair Mijbil Gumair Al Zohairy in Iraq to Mr Massoud Kadhim Abada, and accordingly, I have signed with the testimony of the two witnesses above.
[apparently signed by Mr Al Zohairy]

23. It will be seen that the amount claimed by Mr Abada to have originated with Mr Al Zohairy’s brother in Iraq is also claimed by Mr Al Zohairy’s father to have been lent by him, the father, to Mr Al Zohairy. Solicitors representing Mr and Mrs Al Zohairy, in a letter dated 21 May 2008 to Centrelink (T44-399/401) noted that:

One significant sum, namely $88,000.00 received by Mr Al Zuhairy on or about 3 April 2004 from a person known as Adnan Kadhim Abada was monies paid by Mr Al Zuhairy’s brother to Mr Abada’s brother in Iraq. To save the risk of transferring such monies from overseas to Australia the parties agreed to have the monies paid in Iraq and received in Australia. Effectively the $88,000 are monies belonging to Mr Al Zuhairy’s brother and are payable back to him. Annexed hereto and marked ‘C’ is a copy of the agreement relating to the above.

24. The annexure marked ‘C’ is the “Payment of an Amount” document referred to above, in which I discern no statement to the effect that the moneys “... belonging to Mr Al Zohairy’s brother ... are payable back to him”.
25. Curiously, the amounts of $58,000 and $30,000, claimed by both Mr Al Zohairy’s father and by Abada to have been paid to Mr Al Zohairy on 3 April 2004, were not deposited into Mr Al Zohairy’s Westpac account until 9 June 2004 and 23 June 2004 respectively.

THE MORTGAGE ON THE LIVERPOOL PROPERTY

26. On 4 August 2005, Mr Al Zohairy applied to Royal Guardian Mortgage Corporation for a loan of $300,000 to purchase the Liverpool property. Mr Al Zohairy’s sister, Khawla Gumair, was the registered proprietor of the property at the time. She had purchased it in 2004, but she claims to have held it in trust for Mr Al Zohairy. This was said to be because, as a temporary resident at the time, he was not allowed to own the property himself.
27. In any event, Mr Al Zohairy now purchased the property, for $380,000, with the assistance of the $300,000 borrowed from Royal Guardian. Over the next two years or so, Mr Al Zohairy paid more than $216,000 over and above the minimum required repayments, so that by February 2008 the outstanding balance on the loan was only about $66,000.

MR AL ZOHAIRY’S EMPLOYMENT

28. In his application for the Royal Guardian loan, Mr Al Zohairy stated that he had been employed for the last 11 months by AA NSW Flooring. This was information that he had not provided to Centrelink. In support of the claim that he was employed, Mr Al Zohairy provided a letter from AA NSW Flooring, signed by “M. Aeaid, Manager”, in the following terms:

This letter is to certify that Mr. Khalid Al Zohairy is employed by AA NSW Flooring since 19 Sep. 2004 as a Tiller on basis of permanent full time. He currently earns $1,150.00 gross per week.

29. The letterhead of this supposed employer, AA NSW Flooring, shows as its address the same address as the Liverpool property (although with a change to one letter in the street name). The telephone number is the number that Mr and Mrs Al Zohairy have had as their home phone number since moving into the property. It is also the same phone number that Mr Al Zohairy disclosed on his loan application to Royal Guardian, but he indicated that it was his work number, choosing to leave blank the space for his home number. The letter from AA NSW Flooring was accompanied by two other documents, claimed to be payslips, in Mr Al Zohairy’s name.
30. AA NSW Flooring appears to be a business owned by Mr Al Zohairy’s brother, Aeaid Mijbil Qumayir Suh Al Zuhairy. No doubt he is the “M. Aeaid” whose name was borrowed for the purpose of the employment letter provided to Royal Guardian.
31. I find that the employment letter and the two alleged payslips are fabrications, and that Mr Al Zohairy was involved in fabricating them.

THE INCONSISTENCIES IN THE INFORMATION PROVIDED TO CENTRELINK

32. In an interview with Centrelink officers on 20 March 2008, Mr Al Zohairy admitted that he had made up the claim about having been employed by AA NSW Flooring so that he could obtain the loan from Royal Guardian. In that same interview he told the officers that he had worked at Marrickville Metro shopping centre for four or five months; this was another piece of information that had not previously been disclosed to Centrelink.
33. A solicitors’ letter to Centrelink dated 21 May 2008 provided information about Mr Al Zohairy’s employment with Starlink Pty Ltd between May and August 2005. Income from employment with Starlink had not previously been declared to Centrelink.
34. In the interview on 20 March 2008 Mr Al Zohairy told Centrelink that the deposits to his Westpac account from overeas had been a gift from his father. He thought he had declared it to Centrelink. His account that the deposits were a gift differs from his father’s view which was expressed in a declaration dated 26 October 2008 (referred to above), that the money was a “loan, so he is indebted to me and he has to pay it off later”.
35. In that interview Mr Al Zohairy was also asked why, if he was the owner of the Liverpool property after he purchased it in 2005, he was still receiving rent assistance. The note of his response is “Even though the house was mine, I claimed RA for more money”.

HAS MRS AL ZOHAIRY BEEN OVERPAID SPECIAL BENEFIT AND PARENTING PAYMENT?

36. The Secretary has provided very comprehensive and helpful submissions dealing with the notion of “income” in s 8 of the Act. Much of what follows is based on those submissions, with which I agree.
37. In Read v The Commonwealth [1988] HCA 26; (1988) 167 CLR 57, Brennan J said this about the definition of “income” as it appeared in the Social Security Act 1947 (the forerunner to the 1991 Act):

The definition is exhaustive: the term “income” means what it is defined to mean; it does not mean what “income” would be understood to mean if the definition were not in the Act. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide. The definition is wide enough to embrace receipts of a capital nature as well as receipts of income, for “income” is defined to mean, inter alia, any moneys, valuable consideration or profits irrespective of the means by which or the source from which those moneys, etc. are received.

38. French J (as he then was) similarly took a wide view of income in Secretary, Department of Social Security v Brian McLaughlin & Anor [1997] FCA 1456:

The definitions of “income” and “income amount” in the Social Security Act 1986 (sic) indicate that like their statutory predecessors they are of wide application. This meets the public policy requirement that “public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide” - Read v The Commonwealth [1988] HCA 26; (1989) 167 CLR 57 at 69 (Brennan J). The purpose of the applicable provisions of the Act is to “maintain a basic level of income for those who [are] unable to receive sufficient income to provide for themselves” - Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 at 136.
...
However wide the scope of the term “income”, in my opinion it would not extend to a bona fide loan. Counsel for the Secretary argued to the contrary, submitting that even if characterised as a loan the payments made to the McLaughlins were for their immediate benefit, alleviating their need for the support provided by the disability and partner allowances.
...
The primary submission of the Secretary was that the amounts paid to the McLaughlins constituted “moneys” within the definition of “income amount” in s 8. The moneys were received by the McLaughlins and were for their own use or benefit. On this basis it was said the payments satisfy the requirements of the definition of “income” in s 8(1).
...
The definition of “income” extends to income amounts “received” by a person. There is no requirement in the Act that such amounts are received in exchange for anything. They may therefore extend to gifts. This is reinforced by the extension of the definition of “income” to “a periodical payment by way of gift or allowance”.
There is no requirement in the definition for the payment received to constitute a net gain. Absent such a requirement a payment of money received by a person for that person’s own use or benefit is a payment of an income amount. No doubt examples may be generated and multiplied of apparently startling or unfair results of this construction. The receipt of the proceeds of the sale of a house or a lottery win may constitute “income” for the purposes of the Act. Such debates, however, are best reserved for the legislature. ...

39. The amounts received from overseas are undoubtedly “moneys” received by Mr Al Zohairy for his own use or benefit and are therefore “income” for the purposes of s 8 of the Act. They were used not only to make payments to Royal Guardian in relation to the mortgage, but also for general living expenses.
40. I find that the overseas money was received as a gift, and I reject the suggestion that it was received as a loan from Mr Al Zohairy’s father. There is only the father’s statement to that effect, and I do not find that to be a reliable document. I find it no more reliable than Mr Al Zohairy’s more recent statement that he holds the Liverpool property on behalf of his father. It is surprising, if that is the case, that his father’s statement dated 26 October 2008 makes no reference to that arrangement. It is not a piece of information that he shared with Royal Guardian when he made his loan application. It also conflicts with his statement in the interview on 20 March 2008 that “the house was mine”.
41. The unavoidable conclusion is that Mr Al Zohairy received, during the two relevant periods, very significant amounts of money for his own use and benefit which neither he nor his wife declared to Centrelink. These amounts are “income” for the purposes of s 8 of the Act. Their receipt means that Mr and Mrs Al Zohairy did not “stand in actual need” (Read supra) of the special benefit or parenting payments that were made to Mrs Al Zohairy; this is the case even though Mrs Al Zohairy herself did not receive the moneys, because he and she were members of a couple during the relevant periods.
42. Mrs Al Zohairy has been overpaid special benefit to the extent of $9,353.19 for the period 9 June 2004 to 20 June 2005, and parenting payment to the extent of $25,657.16 for the period 21 June 2005 to 12 March 2008. The amounts overpaid represent debts to the Commonwealth, which should be recovered unless there is reason to write them off or waive them.

CAN THE DEBTS BE WRITTEN OFF?

43. A debt may be written off under subsection 1236(1) of the Act for a stated period or otherwise if, and only if, pursuant to subsection 1236(1A):

(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) it is not cost effective for the Commonwealth to take action to recover the debt.

44. None of these circumstances apply in Mrs Al Zohairy’s case. In particular, in relation to paragraph (b), the Secretary’s representative informed me during the hearing that Mrs Al Zohairy currently receives parenting payment (at the single rate, since she and her husband separated in March 2009) of $499.30 per fortnight, plus $659.52 per fortnight in family tax benefit. She clearly has the capacity to repay the debts by instalments.

SHOULD THE DEBTS BE WAIVED?

45. Section 1237AAD of the Act is a discretionary provision, pursuant to which the Secretary may waive the right to recover all or part of a debt if, among other things, there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt. This particular provision enables a flexible response to a wide range of situations which could give rise to hardship or unfairness due to rigid application of a requirement for recovery of debts.
46. The phrase “special circumstances”, used in s 1237AAD, is not defined in the Act; however, it has been judicially considered on numerous occasions in connection with the above provision or similar provisions, including:

• Re Beadle and Director-General of Social Security (1984) 6 ALD 1, where the Tribunal said, at 3:

The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. ... This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

• Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541, where Kiefel J in the Federal Court said, at 545:

... it is sufficient to observe that it would require something to distinguish [the] case from others, to take it out of the usual or ordinary case.

• Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; (2007) 100 ALD 9, where Besanko J in the Federal Court stated, at 18:

There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ [as referred to in Beadle] are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.

47. There is nothing about Mrs Al Zohairy’s circumstances that warrant the exercise of the “special circumstances” waiver discretion in s 1237AAD of the Act. She received social security payments to which she was not entitled, and the general expectation is that overpayments made to social security recipients should be recovered. There is nothing particularly unusual or out of the ordinary in her personal, living or family circumstances. She has some health issues, as referred to in Exhibit A1, and she is now a sole parent, having separated from her husband. However, none of this tips the balance in her favour, at the expense of the Australian taxpayer.
48. Further, Mrs Zohairy’s financial position is neither straitened nor exceptional, such as to constitute “special circumstances”. She is currently repaying her debts by modest fortnightly withholdings from her social security entitlement. This repayment arrangement does not impose upon her a level of hardship or unfairness that would warrant her case being treated as anything other than the routine example of a social security overpayment that the Commonwealth should recover.

DECISION

49. The decision under review is affirmed.
    

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S E Frost, Senior Member

Signed: ........................[sgd]........................................................

M.Corcoran, Associate

Date of Hearing 26 October 2009

Date of Decision 21 January 2010

Solicitor for the Applicant Appeared in person

Solicitor for the Respondent Ms R Harlock, Centrelink Legal Services

---

[1] Debts were also raised against Mr Al Zohairy. He similarly applied to this Tribunal for review of the decisions as they related to him, but his application has since been withdrawn.