BASILIO TRANCHITA LAURINA TRANCHITA and SECRETARY, DEPARTMENT OF FAMILY, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2009] AATA 480
•26 June 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 480
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/1359
GENERAL ADMINISTRATIVE DIVISION ) Re BASILIO TRANCHITA
LAURINA TRANCHITAApplicant
And
SECRETARY, DEPARTMENT OF FAMILY, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date26 June 2009
PlacePerth
Decision The Tribunal affirms the decision of the Social Security Appeals Tribunal under review but remits the matter to the decision maker with a direction that the debts be written off for a further period, such period to be determined by the decision maker but to be not less than 12 months from the date of this decision. .........(sgd) Mr A Sweidan.........................
Senior Member
CATCHWORDS
Social Security – Age Pension – whether assets value limit exceeded – whether debt should be written off for a period – decision under review affirmed subject to debt being written off for a further period
LEGISLATION
Social Security Act 1991 ss.55, 1064, 11, 1118
Social Security (Administration) Act 1999 ss. 80, 44, 100(1), 68(2), 1223(1), 1236 and 1237AAD,
CASES
Re Gerhardt and Secretary, Department of Employment, Education and Training (AAT 10941, 17 May 1996)
Tranchita v Danehill Nominees Pty Ltd & ORS [2004] WASC 154
Beadle and Director- General of Social Security (1984) 6 ALD 1
Groth and Secretary Department of Social Security (1995) FCA 1708
Re Ivovic and Director General of Social Services (1981) 3 ALN N95
Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25
Timothy Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1
Re Martin and SDSS (1990) AATA 6482
Winterbotham and SDSS (1990) AATA 6499
Spence and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 25
Secretary, Department of Social Security v Hales (1998) 82 FCR 155 Davy v Secretary, Department of Employment & Workplace Relations [2007] AATA 1114REASONS FOR DECISION
26 June 2009 Mr A Sweidan, Senior Member Background
Decision under Review
1. The applicants seek a review of the Social Security Appeals Tribunal (SSAT) decision of 12 March 2008, which set aside the Centrelink decision cancelling Mr and Mrs Tranchita’s age pensions with effect from 6 September 2002 and raising recoverable debts of $35,601.40 each, and sent the matter back to the Centrelink Chief Executive Officer with the directions that:
(a)Mr and Mrs Tranchita’s rates of age pension be recalculated as at 6 September 2002 on the following basis:
a. The Australian Valuation Office is to value the three Mandurah properties as at 6 September 2002;
b. The value of Mr and Mrs Tranchita’s interest in the Mandurah properties as determined by the Australian Valuation Office is to be taken into account as an asset;
c. Mr and Mrs Tranchita’s interest in the other assets of the partnership Mandurah Quarry and Farm Operations are in accordance with the values in the 2002 financial statements;
d. The value of Mr and Mrs Tranchita’s interest in the B & L Tranchita Family Trust and the Family Trust’s interest in the Advance Unit Trust as at 6 September 2002 is to be assessed and taken into account;
e. Centrelink is to investigate whether the loan of $34,786.67 repaid to Bendigo
Bank by Mr and Mrs Tranchita in August 2003 is to be taken into account in recalculating the rate of Mr and Mrs Tranchita’s age pension;
f. Mr and Mrs Tranchita’s bank accounts total $17,738;
g. The asset values of Mr and Mrs Tranchita’s AMP shares and household
contents and personal effects are unchanged;
(b) If, after recalculation of Mr and Mrs Tranchita’s rates of age pension as at 6 September 2002 their rates of age pension are nil, their age pensions are to be cancelled with effect from 6 September 2002;
(c) If, after recalculation of Mr and Mrs Tranchita’s rates of age pension as at 6 September 2002 their rates of age pension are greater than nil, their age pensions are not to be cancelled with effect from 6 September 2002, but are payable at the appropriate rate;
(d) If age pension is payable to Mr and Mrs Tranchita in the period 6 September 2002 to 12 June 2006 Centrelink is to recalculate the rates of age pension payable to Mr and Mrs Tranchita during that period taking into account any revised valuations of the Mandurah properties previously obtained for dates in that period and recalculating the rates of Mr and Mrs Tranchita’s age pension as at the date or dates of such valuations;
(e) After recalculation of the rates of age pension payable to Mr and Mrs Tranchita Centrelink is to calculate the amounts of age pension overpaid to Mr and Mrs Tranchita in the period 6 September 2002 to 12 June 2006;
(f) The amounts of age pension overpaid to Mr and Mrs Tranchita in the period 6 September 2002 to 12 June 2006 are debts that must be recovered from them however recovery of the debts is written off until Centrelink has recalculated Mr and Mrs Tranchita’s rates of age pension, the amounts overpaid and resulting debts. At that time Mr and Mrs Tranchita’s financial situation should be investigated to determine if recovery of the debts should be written off for a further period or arrangements made for repayment of the debts, including repayment by instalments.
Issues
2. The issues to be decided in this matter are:
·What was the net value of Mr and Mrs Tranchita’s assets at 6 September 2002?
·Should Mr and Mrs Tranchita’s age pensions have been cancelled from 6 September 2002?
·Were they overpaid pension during the period 6 September 2002 to 12 June 2006? And if so.
·Are the overpayments debts to the Commonwealth, which should be recovered?
Facts
3. Mr and Mrs Tranchita are homeowners.
4. Mrs Tranchita was already in receipt of age pension when her husband was granted age pension from 10 May 2001.
5. At the 10 May 2001, their combined assets comprised of:
582 AMP shares valued at $12,059;
6.6% interest in Mandurah Quarry and Farm Operations valued at $59,052;
2.62% interest in Advance Unit Trust held by B&L Tranchita Family Trust valued at $25,000
balance of bank accounts and term deposit - $65,724
household contents valued at $10,000
car valued at $18,000
total asset value $194,835
6. In addition Mr and Mrs Tranchita received Italian age pensions of $2,109.08 and $997.62 per annum respectively.
7. Centrelink sent letters to Mr and Mrs Tranchita on 10 May 2001 and 15 November 2001 requiring them to advise of increases in their income or assets, within 14 days.
8. On 6 September 2002 Mr Darryl Ferrara wrote to the shareholders of Mandurah Quarry and Farm Operations, including Mr and Mrs Tranchita, notifying them of the revaluation of Lot 1 Fremantle Road, Mandurah and of an offer to purchase their shareholdings. Enclosed was a copy of the valuation report from Knight Frank.
9. Centrelink was not advised of this revaluation.
10. On 5 February 2003 a Notice of Demand on Defaulting Syndicate members was sent to certain members of the Mandurah Quarry & Farm Operations syndicate, including Mr and Mrs Tranchita.
11. Mr and Mrs Tranchita paid their part of the outstanding loan on 11 February 2003.
12. This payment was confirmed by letter on 4 April 2003.
13. On 30 October 2003 Centrelink was provided with 2001/2002 tax returns for Mandurah Quarry and Farm Operations.
14. On 22 March 2004, Centrelink was provided with copies of the 2002/2003 tax returns and financial statements for the B&L Tranchita Family Trust.
15. On 20 December 2005 Centrelink sent Mr Tranchita a letter requiring him to provide the most recent tax returns, full financial reports and his estimate of the current market value of any individual assets held by each business he was involved in.
16. On 19 May 2005 and 22 August 2005 Centrelink received copies of 2003/2004 tax returns and financial statements for Advanced Unit Trust and the B&L Tranchita Family Trust.
17. On 2 May 2006, the above financial information resulted in Mr and Mrs Tranchita having debts of $1,626.87 each, for the period 25 February 2003 to 23 October 2005.
18. The 2005 Mandurah Quarry and Farm Operations Financial Statements were received by Centrelink on 2 June 2006. The value of the land and buildings at Mandurah Road was $6,250,000 from 2004.
19. On 8 June 2006 the title of the land owned by Mandurah Quarry and Farm Operations, Lot 1 on Plan 12382, was split into three, Lot 1 Mandurah Rd, Lot 105 Stock Rd and Lot 101 Fremantle Rd, Lakelands ( the Mandurah properties).
20. Mr and Mrs Tranchita’s pensions were cancelled from 6 August 2002 and debts of $36,387.86 raised.
21. Their claim for payment of pension under the asset hardship provisions was rejected on 8 August 2006 as they were not in severe financial hardship.
22. A Centrelink Authorised Review Officer reviewed the decisions and on 18 January 2008, set aside the original decision and substituted the decision that their payments should have been cancelled from the later date of 6 September 2002. This decision resulted in their debts being slightly reduced to $35,601.79.
23. As set out above on 12 March 2008, the Social Security Appeals Tribunal set aside the Centrelink decision and sent the matter back to Centrelink with directions of how the Tranchita assets should be assessed.
24. The Social Security Appeals Tribunal decision has been implemented as follows:
·the Australian Valuation Office (AVO) valued the three Mandurah properties as at 6 September 2002, 3 June 2003 and 3 June 2006, which were the reassessment dates during the period of the debt. Additionally their share of other assets held by the Mandurah Quarry and Farm Operations have been added to the asset value of their interest. See table 1 at paragraph 49.
·the AVO valued the main assets of the Advance Unit Trust as they were at 6 September 2002, 3 June 2003 and 3 June 2006. These assets comprised of properties at 12 Cavan Street, Bicton and 11/378 South Street, O’Connor. Refer to table 2 at paragraph 49.
·The loan of $34,786.67 repaid to Bendigo Bank by Mr and Mrs Tranchita in August 2003 has been taken into account in recalculating the value of Mr and Mrs Tranchita’s assets. Table 1 at paragraph 49 shows that the amount of the loan has reduced the value of their interest in 2002, and their bank balance has been reviewed in 2003 as per table 3 at paragraph 49.
·The values of their household and personal effects, shares and motor vehicle have been reassessed during the relevant period, as per information provided by their son Mr Ross Tranchita and is as shown in table 3 at paragraph 49.
25. The above reassessments resulted in the value of Mr and Mrs Tranchita’s assets remaining in excess of the threshold amount that allowed age pension to be paid to them during period 6 September 2002 to 12 June 2006, therefore the debts remain at $35,601.79 each.
26. The recovery of the debts has been written off, pending the result of Mr and Mrs Tranchita’s application to this Tribunal.
Legislation and Implementation
27. The legislation relevant to this decision is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).
28. Section 55 of the Act provides that a person’s age pension rate is worked out using the Pension Rate Calculator A at the end of section 1064.
29. Section 1064 of the Act requires the combined income and assets of a person and their partner to be taken into account in calculating the rate of age pension that is payable. A person is paid the lower of the rates calculated under each of the income and assets tests. The calculation of the rate of age pension also takes into account whether the person is a home-owner or non-homeowner.
30. Mr and Mrs Tranchita’s rate of pension was calculated under the asset test.
31. Section 11 of the Act defines an asset as being property or money and that the value of the asset is based on the value of the person’s interest in it. Generally, the value of the person’s interest may be reduced by the amount of any outstanding charge or encumbrance.
Should Mr and Mrs Tranchita’s age pensions have been cancelled from 6 September 2002?
32. Section 80 of the Administration Act provides that a person’s social security payment should be cancelled if they lose qualification to the payment, or the payment is not payable.
33. Section 44 of the Act provides that age pension is not payable to a person if the person’s age pension rate would be nil.
34. The value of Mr and Mrs Tranchita’s assets as calculated by Centrelink is set out below. There is no dispute about these calculations except as indicated below.
Asset value of Mandurah Quarry and Farm Operations at 6 September 2002.
35. In accordance with the SSAT directions, the Australian Valuation Office (AVO) valued the three Mandurah properties at 6 September 2002, September 2003 and September 2006. They were also requested to comment on the Knight Frank valuation of 6 August 2002.
36. The AVO endorsed the Knight Frank valuation of the whole property and based their valuations of the individual properties on the rates per acre adopted by Knight Frank. The valuations for 6 September 2002 were $190,000, $1,600,000 and $4,460,000 respectively, giving a total asset value of $6,250,000.
37. Although Mr and Mrs Tranchita say that they do not agree with the valuations of Knight Frank or the AVO, they have not offered an alternative valuation. Both the Knight Frank and AVO valuations were carried out by professional valuers and are accepted by this Tribunal.
38. The value of the other assets of the Mandurah Quarry and Farm Operations are as per the 2002 financial statements and are as follows:
balance of National Australia Bank - $351
value of cattle - $6,204
plant and equipment - $34,173
Total $40,728
39. This brought the gross asset value of the Mandurah Quarry and Farm Operations to $6,290,728 and as there were outstanding bank loans of $544,478, the net asset value was $5,746,250.
40. Consequently the value of Mr and Mrs Tranchita’s 4431/67100 interest was $379,458.
Asset value of Advance Unit Trust at 6 September 2002.
41. The main assets of the Advance Unit Trust comprised of properties at 12 Cavan Street, Bicton and 11/378 South Street, O’Connor. These were valued by the AVO as being $620,000 and $750,000 respectively.
42. The gross value of $1,370,000 is reduced by the unsecured loan of $936,218 giving a net value of $433,782. In addition there were current financial assets of $121,042 giving a total net asset value of $554,824.
43. Mr Tranchita personally owned 24,855 units, or a 5.44% interest, which was valued at $30,182.
Asset value of B&L Tranchita Family Trust at 6 September 2002
44. From 1 January 2002 Centrelink has attributed Mr Tranchita with 100% of the income and assets of the B&L Tranchita Family Trust as per Part 3.18 of the Act.
45. The assets of the B&L Family Trust were comprised of 11,989 units in the Advance Unit Trust, which equate to a 2.62% interest, a beneficiary loan of $15 and Mr Tranchita’s beneficiary loan of $12,004 to the B&L Family Trust.
46. The asset value of the B&L Tranchita Family Trust 2.62% interest at 6 September 2002 was $14,536.
What was the value of Mr and Mrs Tranchita’s assets at 6 September 2002?
47. The Tribunal finds that the total value of Mr and Mrs Tranchita’s assets at 6 September 2002 was as follows:
Mandurah Quarry and Farm Operations - $379,458
B&L Tranchita Family Trust - $14,536.
Advancc Unit Trust - $30,182
Bank account balance - $17,737
Household & personal effects - $10,000
Vehicle - $17,000
Total $468,913
48. The Tribunal therefore finds that Mr and Mrs Tranchita’s pensions were correctly cancelled because the level of their assets was above the combined asset threshold amount of $443,500, which allowed age pension to be paid to a couple who are homeowners.
Were Mr and Mrs Tranchita overpaid pension during the period 6 September 2002 to 12 June 2006?
49. The values of Mr and Mrs Tranchita’s assets during this period are set out in the tables below.
Table one was compiled from the AVO valuations and tax returns.
Table 1. Asset value of Mandurah Quarry & Farms Operations:
Address Value in Sept 2002 4431/671
00
shareValue in Sept 2003 4431/67100
shareValue in 2006 4431/67100
shareLot 1 Mandurah Rd, Lakelands
$190,000
$12,544
$200,000
$13,204
Sold $930,000 in 2005
$60,000 in 2005
105 Stock Rd, Lakelands
$1,600,000
$105,657
$1,700,000
$112,260
$6,000,000
$396,211
101 Fremantle Rd, Lakelands
$4,460,000
$294,515
$4,600,000
$303,763
$17,500,000
$1,155,622
Other assets
$40,728
$3,685
$68,603
$4,528
$228,670
$15,096
Gross Total
$6,290,728
$416,401
$6,568,603
$433,755
$23,728,670
$1,566,929
Loans
$544,478
$35,953
$55,319
$3,651
$0
Net total
$5,745,250
$379,458
$6,513,284
$430,104
$23,728,670
$1,566,929
Table 2. Asset value of Advanced Unit Trust.
This table was compiled using the AVO valuations and the tax returns.
Address
Value in Sept 2002
Value in Sept 2003
Value in 2006
12 Cavan St, Bicton
$620,000
$370,000
$0 (sold)
11/378 South St, O’Connor
$750,000
$800,000
$950,000
Cash at bank + prepayment
$121,042
$210,925
$25,257
Total gross asset amount
$1,491,042
$1,380,925
$975,257
Amount of unsecured loan
$936,218
$748,800
$469,000
Total net asset AUT
$554,824
$632,125
$506,257
B & L Tranchita Family Trust 2.62%
$14,536
$16,561
$13,263
Beneficiary loan- B & L Tranchita Family Trust
$15
($857)
$4,040
Total B & L Tranchita Family Trust
$14,551
$15,704
$17,303
B Tranchita 5.44%
$30,182.42
$34,387
$27,540
Beneficiary loan-B Tranchita
$31
($1,778)
$8,379
Total B Tranchita
$30,213
$32,609
$35,919
Table 3. Total asset value of Mr and Mrs Tranchita’s assets, during the period 6 September 2002 to 12 June 2006.
The changes to bank account balances, household and value of car is based on verbal information from Mr Ross Tranchita.
Assets
Value in 2002
Value in 2003
Value in 2006
Mandurah Quarry and Farm Operations
$379,458
$430,104
$1,566,929
B & L Tranchita Family Trust 2.62%
$14,551
$15,704
$17,303
Advance Unit Trust, B Tranchita
$30,213
$32,609
$35,919
Bank account balances
$17,737
$5,439
$60,000
AMP shares
$2,700
$0
$0
Household and personal effects
$10,000
$10,000
$10,000
Car
$17,000
$12,500
$7,000
Total
$471,659
$506,356
$1,697,151
50. The asset threshold amounts above which age pension was not paid to a pensioner couple who owned their own home during the period 6 September 2002 to 12 June 2006 are as follows:
Dates
Asset threshold amounts
1 July 2002
$443,500
20 September 2002
$447,500
1 July 2003
$459,500
20 September 2003
$466,500
20 March 2006
$503,500
51. The Tribunal accordingly finds that the value of Mr and Mrs Tranchita’s assets was in excess of the threshold amount that allowed age pension to be paid to them during the period 6 September 2002 to 12 June 2006 and that they were each overpaid $35,601.79.
Are the overpayments debts to the Commonwealth?
52. Subsection 100(1) of the Administration Act states as follows:
100.(1) Subject to subsection (2), if:
a person who is receiving a social security payment is given a notice under subsection 68(2); and
the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and
the event or change of circumstances occurs; and
the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and
because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced;
the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs.
53. The Tribunal finds that as Mr and Mrs Tranchita failed to comply with the Centrelink notices issued to them under subsection 68(2) of the Administration Act their rate of age pension can be retrospectively reduced to nil from 6 September 2002.
54. Section 44 of the Act provides that a person loses entitlement to a payment if their rate is nil.
Subsection 1223(1) of the Act states as follows:
1223.(1) Subject to this section, if:
a social security payment is made; and
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.
55. The Tribunal finds that the age pension overpayments constitute legally recoverable debts under subsection 1223(1) of the Act.
Should the debts be recovered?
56. The Act provides that in certain circumstances the recovery of a debt can be written off, or partly or wholly waived.
Can the debts be written off for a period?
57. Section 1236 of the Act provides for a debt to be written off, that is, recovery is deferred to a later date, if the debt is irrecoverable at law, the debtor has no capacity to repay the debt, the debtors whereabouts are unknown or it is not cost effective for the Commonwealth to take action to recover the debt.
58. Mr and Mrs Tranchita’s debts were written off by the respondent until their application to this Tribunal has been finalised. In regard to their capacity to repay, it is clear that there are currently restrictions on the sale of their interest in the Mandurah Quarry and Farms Operations and their ability to use this interest to secure a loan.
59. Mr and Mrs Tranchita’s share of the proceeds of the sale of Lot 1 Mandurah Rd, Lakelands has in large part been used by them for living expenses.
60. Accordingly the Tribunal is of the view that the debt should be written off for a further period, being not less than 12 months from the date of this decision.
Was the debt, or any part of the debt caused by sole administrative error?
61. Subsection 1237A(1) of the Act provides that a debt, or part of a debt, must be waived if it was caused solely by administrative error.
62. The meaning of word ‘solely’ was discussed in the case of Re Gerhardt and Secretary, Department of Employment, Education and Training (AAT 10941,17 May 1996), where the Administrative Appeals Tribunal stated:
“There is nothing…which indicates that any meaning should be given to “solely”other than its ordinary meaning. Applying those ordinary meanings to the subsection mean that the Secretary must waive the right to recover the proportion of the debt that is attributable only to the Commonwealth's administrative error. TheSecretary's duty to waive does not extend to those debts which are attributable to errors or other factors which are independent of the Commonwealth's administrative error. It makes no difference that those other errors or factors are minor. If those other errors or factors follow as a result of the Commonwealth's administrative error (i.e. they are incidental to the Commonwealth's error), then it may be that the debt is attributable solely to the Commonwealth's administrative error. Whether it is or is not attributable in that situation to the Commonwealth's administrative error will be a question of fact.”
63. The Tribunal finds that Mr and Mrs Tranchita had several opportunities to advise Centrelink of the revaluation of the land owned by Mandurah Quarry & Farms Operations:
·After receiving the letter and copy of valuation from Darryl Ferrara dated 6 September 2002;
·After receiving their copies of the 2002/2003 and subsequent tax returns completed by Mandurah Quarry & Farms Operations reflecting the new valuation figure of $6.250,000; and
·After 28 June 2004 when the matter of Tranchita v Danehill Nominees Pty Ltd & ORS [2004] WASC 154 (8 July 2004) was heard by the Supreme Court of Western Australia. The Tranchita referred to in that case is Vincenzo Tranchita, whose name appears on the Notice of Defaulting Syndicate Member and who is a son of Mr and Mrs Tranchita. The matter was about whether an injunction preventing the transfer of land should be extended and discussed the offers made by Fazio/Catalano to purchase other syndicate members shareholdings. Also discussed (at page 392 paragraph 5) was a letter addressed to Mr Vincenzo Tranchita and others dated 9 September 2002. This was written by certain syndicate members offering to sell their interests in the land at the recommended purchase price.
64. The Tribunal finds that the debts were not caused by sole administrative error, they were caused by Mr and Mrs Tranchita failing to notify Centrelink of the increased asset value of the land owned by Mandurah Quarry & Farms Operations. It is therefore not necessary for the Tribunal to determine whether the excess payments were received in good faith.
Are there special circumstances that warrant waiver of the debt?
65. Section 1237AAD of the Act provides for the possibility of waiving all or part of a debt on the grounds of special circumstances and states as follows:
1237AAD. The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
the debt did not result wholly or partly from the debtor or another person knowingly:
making a false statement or false representation; or
(ii) failing or omitting to comply with a provision of this Act or the 1947 Act; 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.
The term “special circumstances” is not defined in the Act however it has been extensively considered in case law and the most frequently cited cases are:
Beadle and Director- General of Social Security (1984) 6 ALD 1 where the Administrative Appeals Tribunal stated as follows:
...An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. 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 and Secretary Department of Social Security (1995) FCA 1708 where the Federal Court stated as follows:
...The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss...it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of Terziman follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. The enquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied...
Re Ivovic and Director General of Social Services (1981) 3 ALN N95 where the Administrative Appeals Tribunal stated as follows:
…The reference to special circumstances “by reason of which” a person liable “should be released” requires, in our view, that there must exist in the circumstances of the case, a factor or factors which justify the making of an exception in whole or in part to the principle of liability which the Act otherwise establishes…Thus whilst keeping the dominant principle of [recovery of debt] in mind, [the decision maker] must nevertheless be prepared to respond to the special circumstances of any particular case by reason of which strict enforcement of the liability created by the section would be unjust, unreasonable or otherwise…
Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 where the Federal Court stated as follows:
…There is less overstatement if the words “unusual” or “uncommon” 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…
Timothy Davy and Secretary Department of Employment and Workplace Relations 2007 AATA 1,114 where Deputy President Forgie stated at paragraph 80 in part as follows:
…“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances…that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it…He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement…The system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act…
66. The Tribunal agrees with the SSAT finding that Mr and Mrs Tranchita did not ‘knowingly’ or deliberately fail to advise of increases in their assets, therefore waiver of the debt under section 1237AAD of the Act can be considered.
67. They have asked for their financial hardship to be considered a special circumstance. It is their belief that they should be paid age pension because they can not sell or borrow against their share of Mandurah Quarry & Farms Operations until the current litigation is finalised.
68. In considering whether or not their financial circumstances constituted a special circumstance, the Secretary considered the following case law:
In Re Martin and SDSS (1990) AATA 6482 that the Tribunal commented:
(a)'When the hardship to be caused does not amount to severe hardship, it is not sufficient to establish "special circumstances".
In Winterbotham and SDSS (1990) AATA 6499 the Tribunal asked and answered the question:
Should there be any difference between one who invests his money in stocks and shares and one who invests in real estate? Neither should expect the tax-payer to support him while he holds on to assets he could well realise and use to support himself (at 25).
And in Spence and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 25 (10 January 2008) the Tribunal made the following comments in regard to financial hardship:
Ms Spence gave evidence of financial hardship. She receives approximately $900 a fortnight. She is a single parent with three children. Her son remains partially financially dependent upon her.
Ms Spence pays $480 rent fortnightly for the three bedroom house where she lives with her son who only pays $60 per week board. That is not sufficient to cover his costs but he cannot afford to pay more. It is very difficult for Ms Spence to live on what is left over and her finances are always tight.
The dispute with Centrelink has been ongoing for some time and is a constant source of stress to Ms Spence. As a result of worrying about the debt, she has difficulty getting more than 3-5 hours sleep, feels depressed and worries that she will have to pay back $5,000 that Centrelink repaid her. There has been a great deal of confusion in interpreting the SSAT decision and different Centrelink officers seem to have given her conflicting information about it.
I agree that Ms Spence’s circumstances are unfortunate and, as was submitted on her behalf, she is someone with ‘a great deal on her plate’. However, taxpayers are entitled to expect that in the ordinary course money paid to people which they are not entitled receive will be recovered: Secretary, Department of Social Security v Hales (1998) 82 FCR 155. Recently, in Davy v Secretary, Department of Employment & Workplace Relations [2007] AATA 1114, 9 March 2007 at 80…
I have come to the conclusion that while Ms Spence’s circumstances are unfortunate there is nothing unusual, exceptional or uncommon about her situation so as to set her apart from others in receipt of Centrelink benefits that recovery of the debt would not be unjust or unreasonable as she has had the benefit of the money to which she was not entitled.
69. The Tribunal finds that Mr and Mrs Tranchita’s circumstances are not unusual or uncommon and do not warrant the exercising of the discretion to waive all or part of the debt under section 1237AAD of the Act.
Decision
70. The Tribunal decides that, following the recalculation of the value of Mr & Mrs Tranchita’s assets, the Social Security Appeals Tribunal decision of 12 March 2008 should be affirmed in that Mr and Mrs Tranchita’s age pensions should be cancelled from 6 September 2002 and debts of $35,601.79 each be recovered, but that the matter should be remitted to the decision maker in accordance with a direction from this Tribunal that the debts be written off for a further period, such period to be determined by the decision maker but to be not less than 12 months from the date of this decision.
I certify that the 70 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Swedian, Senior Member
Signed: ........(sgd) Lan Huynh...............................................
AssociateDate/s of Hearing 11 June 2009
Date of Decision 26 June 2009
Applicants’ Representative Mr R Tranchita
Respondent’s Representative Ms M ConlonAdvocate, Centrelink Legal Services and Procurement Branch
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