Crawley and Secretary, Department of Family and Community Services

[2005] AATA 325

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 325

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2004/866, Q2004/867

GENERAL ADMINISTRATIVE DIVISION		)
Re		WAYNE and KATHRYN CRAWLEY

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms M J Carstairs, Member

Date18 March 2005  

PlaceBrisbane

Decision

For reasons given orally at the hearing, the Tribunal sets aside the decisions under review and substitutes the decisions that:

(a) disability support pension be paid to Mr Crawley under the financial hardship provisions pursuant to s1129(2) of the Social            Security Act 1991 (the Act) from the date of cancellation on            8 March 2004; and

(b)      under s1131(3) of the Act, parenting payment (partnered) be            paid to Mrs Crawley with effect from 10 March 2004.

.................[Sgd]........................

M J Carstairs
  Member

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and entitlements – disability support pension and parenting payment – applicants’ pensions cancelled on basis of excess assets and reinstated at a later date – respondent refused back-payment of arrears – applicants meet the requirement of special circumstances – decision under review set aside and substituted accordingly.

Social Security Act 1991 ss 11, 1129, 1131

Social Security (Administration) Act 1999 s180

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

WRITTEN REASONS FOR ORAL DECISION

11 April 2005   Ms M J Carstairs, Member

1.      This is an application by Wayne and Kathryn Crawley (the applicants) for review of a decision made by the Social Security Appeals Tribunal (SSAT) affirming a decision made by a delegate of the respondent to refuse payment of disability support pension to Mr Crawley for the period from 8 March 2004 to 4 May 2004, and to refuse payment of parenting payment to Mrs Crawley for the period 10 March 2004 to 4 May 2004.

2.      At the hearing the applicants represented themselves.  The respondent was represented by Mr J Howard, a Centrelink advocate.  The Tribunal gave reasons orally after the hearing on 18 March 2005.  On 21 March 2005 Mr Crawley requested that the Tribunal provide written reasons for the decision. 

3. The Tribunal had before it the documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975 as well as exhibits marked A1 – A7 for the applicant and R1 for the respondent.

BACKGROUND

4.      Mr Crawley is aged thirty-eight and Mrs Crawley is thirty-three.  Mr Crawley was in receipt of disability support pension for a number of years and Mrs Crawley was in receipt of parenting payment (partnered).  In early 2004 following a revaluation of their five rental properties by the Australian Valuation Office (AVO), Centrelink determined that neither applicant was eligible to continue to receive their respective payments because their assets had increased in value above the limits allowed under the Act.   The cancellation decisions were made on 9 March 2004 for Mr Crawley’s disability support pension and 10 March 2004 for Mrs Crawley’s parenting payment (partnered).

5.      On 5 May 2004 Mr and Mrs Crawley requested that some of their assets be disregarded as they were unrealisable assets (T21, p99).  They were issued with, and then lodged, claims for consideration under what is known as the hardship provisions under the Social Security Act 1991 (the Act) on 11 May 2004.

6.      On 25 May 2004 Mr and Mrs Crawley were told that their claims under the hardship provisions had been successful and that they would be paid with effect from 11 May 2004.   This date was later changed to 5 May 2004 as it was on that date that the applicants had first requested that these provisions be applied to their payments.  The applicants the applicants then requested that they be paid under the hardship provisions with effect from 8 March 2004 rather than from 5 May 2004.

7.      On 11 June 2004, a decision was made to refuse this back payment to 8 March 2004.  The decision-maker considered that there were no special circumstances to do so under s 1129(2) of the Act (set out below).

8.      The applicants then requested that the decision be examined by an authorised review officer (ARO) on 24 June 2004 (T44, pp191-202).

9.      On 2 September 2004, an authorised review officer affirmed the decision not to pay arrears to the applicants for the period prior to 5 May 2004.  On 26 October 2004 the SSAT affirmed the decision under review, which is the decision not to pay arrears.  The SSAT however made plain that they considered that the decision to pay the applicants under the hardship provisions was incorrect.   That decision however was not under review by the SSAT.

EVIDENCE

10.     The applicants provided extensive additional information (exhibit A3) documenting their e-mail contacts with Centrelink at or around the time of the cancellation decisions.  Some of these contacts concerned a medical review of Mr Crawley’s disability support pension being conducted at about the same time as the review of their assets.  Mr Crawley said that he had received a letter dated 16 January 2004 (exhibit A5) which had advised him that his pension would be cancelled on medical grounds from 27 February 2004.  He later received a letter dated 18 March 2004 which stated that the cancellation on medical grounds would not occur.  However the cancellation of disability support pension on medical grounds was overtaken by the cancellation based upon assets (T13 and T14).

11.     Mr Crawley produced evidence of the contacts that he had made with Centrelink regarding Centrelink’s requests for them to provide financial details, these contacts including those dated 26 February 2004; 1 March 2004; 6 March 2004; 10 March 2004 (five times); 12 March (three times); by letter dated 18 March 2004 (p16 exhibit A3); 23 March 2004; 24 March 2004; 26 March 2004; 29 March 2004 (two letters); and 17 April 2004.  Mr Crawley said that there were other contacts made, the evidence for which he could not produce.  He said that at no time was he told by Centrelink about the possibility of their Centrelink payments continuing under the hardship provisions.

12.     Mr Crawley said that he wished to call evidence at the hearing from the Centrelink customer service officer with whom he had been dealing at the time of the cancellation, but in view of the considerable documented material supporting a high level of contact with Centrelink the Tribunal said it was unnecessary to call this evidence.

13.     Mr Crawley referred to his statutory declaration provided to the SSAT (T1, p45) that set out that when the payments were cancelled the family was left in a desperate situation, so that moneys owed as credit card debt increased to $5,000.  The applicants also had to borrow from their children’s savings accounts.  In oral evidence Mr Crawley said that their financial circumstances required that they stop the regular monthly payments of rates on the rental properties. 

14.     Exhibits A1 and A2 were statements showing balances in Queensland Police Credit Union and The Rock Building Society.  The applicants said that their properties were placed on the market as quickly as they could, one sold in 2004 and they have sold another of the properties in recent weeks.  The applicants no longer need to sell further properties, having re-arranged their assets.

CONSIDERATION OF THE ISSUES

15.     This question of special circumstances in this case requires that consideration be given to the nature of the decision under review.  Centrelink has made plain in the Statement of Facts and Contentions (exhibit R1) that the correct decision was made when granting the applicants their respective payments under the hardship provisions from 5 May 2004..  That decision is not under review before this Tribunal for reasons that include that the applicants have not sought review of the decision, it being one favourable to them.

16. The SSAT in turn made plain that they considered the decision to pay the applicants under the hardship provisions was incorrect. Centrelink has not adopted the SSAT’s reasoning. If Centrelink had done so, they might have chosen to change the original decision once the matter was on appeal before this Tribunal, which is a course which is open under s180 of the Social Security (Administration) Act 1999 (the Administration Act).

17.     However they have not done so and the Statement of Facts and Contentions (exhibit R1) makes quite clear that Centrelink maintains that the applicants were correctly paid under the hardship provisions from 5 May 2004.  It is not necessary for the Tribunal to understand the reasoning behind that decision because that is not the decision under review before the Tribunal. 

18.     The correctness of the decision to pay under the hardship provisions, however, is the starting point for the decision under review, which is the decision to refuse to pay arrears at an earlier date on the basis of the special circumstances of the applicants’ case.  The starting point for the decision accepting that the hardship provisions applied, is an acceptance that the applicants had unrealisable assets as defined under section 11 of the Act.

19.     Section 11 of the Act provides as follows:

11.(12)  An asset of a person is an unrealisable asset if:

(a)       the person cannot sell or realise the asset; and

(b)       the person cannot use the asset as a security for borrowing.

11.(13)  For the purposes of the application of this Act to a social security pension (other than a pension PP (single)), an asset of a person is also an unrealisable asset if:

(a)       the person could not reasonably be expected to sell or realise the asset; and

(b)the person could not reasonably be expected to use the asset as a security for borrowing.

20.     This then is read with s1229 which provides:

1129.(1)  If:

(a)       either:

(i)a social security pension is not payable to a person because of the application of an assets test; or

(ii)a person's social security pension rate is determined by the application of an assets test; and

(b)       either:

(i)sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A, 1126, 1126AA, 1126AB, 1126AC and 1126AD (disposal of assets) do not apply to the person; or

(ii)the Secretary determines that the application of those sections to the person should, for the purposes of this section, be disregarded; and

(c)the person, or the person's partner, has an unrealisable asset; and

(d)the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and

(e)the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;

the Secretary must determine that this section applies to the person.

1129.(2)  A decision under subsection (1) takes effect:

(a)on the day on which the request under paragraph (1)(d) was lodged with the Department; or

(b)if the Secretary so decides in the special circumstances of the case—on a day not more than 6 months before the day referred to in paragraph (a).

21.      The Tribunal has had to consider the meaning of and application of the expression "special circumstances" as used under s 1129(2) on many occasions. The decision of the Tribunal in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 has become an oft-quoted benchmark as to the interpretation of "special circumstances". In that case the Tribunal said (at 3):-

"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."

22.     Mr Howard submitted the discretion should not be exercised because there is no evidence that the applicants were unrealisable during the period 8 March 2004 to 5 May 2004.  This argument, however, is not sustainable in the face of the earlier part of Mr Howard’s submission that these same assets were unrealisable on 5 May 2004.  It cannot be the case that the applicants’ actions of putting their rental properties on the market somehow made them unrealisable in May 2004, at which time there was the possibility of them being sold because they were on the market, but these same assets were not unrealisable in March 2004.  At that time the applicants did not have the opportunity to quickly put the properties on the market or take other action to adjust their financial circumstances. 

23.     Taking all the evidence into account, the circumstances that are special are the following:

§  The applicants were very vocal in later 2003 and early 2004 in telling Centrelink that they could not afford the costs associated with providing answers to the financial questions that they were being asked by Centrelink during the time that they were being reviewed for their assets.. 

§  Mr Crawley was first told by letter dated 9 March 2004 (T12) that his disability pension was cancelled from 8 March 2004, that is, the day before the letter from Centrelink was dated.  The letter to Mrs Crawley was dated the same day that her cancellation commenced, that is, 10 March 2004.  Assuming that each letter would take a day or so to reach the applicants, this left them with no time in which they might commence to re-arrange their financial circumstances in advance of the cancellation of their payments. 

§  As pointed out at the hearing the letters advising the cancellation are insufficient as notices of decision.  The disability support pension cancellation letter (T12) did not advise Mr Crawley about appeal rights.  Another letter was sent (T13) but it, like the cancellation letter sent to Mrs Crawley, incorrectly states the relevant section of the Act under which the cancellation took place.

§ As set out more fully at the hearing, more likely than not there was a discretion available for Centrelink to consider setting a later date of effect under s118 of the Administration Act for each of the cancellation decisions (T13 and T14) whicht would have allowed the applicants to re-organise their financial affairs. That is, the date of effect of the cancellation decisions could have been set prospectively rather than retrospectively.

§  Mr Crawley was making daily contact in some instances, and was repeatedly throughout March trying to obtain help and answers from Centrelink, and in particular was alerting Centrelink to their concerns about the effects of the cancellation of their payments.  They requested that the cancellations be treated instead as temporary suspensions.  At the very least this request should have alerted someone in Centrelink to advise them that while this could not be done, (as it cannot, under the Act) alternative consideration could be given to an application under the financial hardship provisions.  The applicants should have been supplied with the forms to apply under the hardship provisions when they were making these enquiries. 

§  The evidence shows that the applicants were, between March and May 2004, in financial hardship.  This is one of their special circumstances. 

24.     It is not an easy task for a person to quickly re-arrange financial circumstances, particularly when real estate is involved.  The properties appear to have been quite tightly leveraged and certainly the family’s ability to sustain repayments on the mortgages must have relied on the continuation of income support payments from Centrelink.  Selling property involves contact with real estate agents for marketing; obtaining valuations for price setting; all the properties were mortgaged and it appeared from tax returns that there was a fine balance sustained with rental income and repayments as well as other outgoings; and the applicants had to consider the additional costs that accompany selling property.  All these things take some time, and would not have been assisted by the withdrawal of the income support payments at short notice.  The lack of notice of the cancellations meant that they were given no leeway with time and they were not given the assistance of timely information from Centrelink. 

25.     The Tribunal agrees with Mr Crawley’s submission that the relevant time for considering special circumstances was at the time of Centrelink’s decision to pay them under the financial hardship provisions.  The Tribunal rejects Mr Howard’s submission that the Tribunal should take into account the subsequent successful sales of some of the properties.  Clearly the exercise of this discretion relates to past events.  It is a provision for backdating a payment.  It is not relevant that the applicants survived this difficult period and, because of subsequent sales, are in a better financial position.  The exercise of this discretion for special circumstances must be considered at or about May 2004.

26.     For the reasons given above the correct or preferable decision is to exercise the discretion in this case.  There are unique and unusual circumstances in that the applicants lost their income support payments without any effective notice being given to them and despite repeated requests for help. They were not given the relevant information about a provision in the assets testing sections in the Act when their cancellations were directly based upon these assets testing provisions.  Additionally, they were placed in unnecessary and severe financial hardship between March and May 2004.

27.      The Tribunal also takes into account, though this has less significance for the exercise of this discretion, that the notices of the decisions to cancel were defective. 

28. The Tribunal sets aside the decision under review and substitutes the decision that disability support pension be paid under the financial hardship provisions pursuant to s 1129(2) of the Social Security Act 1991 from the date of cancellation of Mr Crawley’s disability support pension on 8 March 2004, and under s 1131(3) in regard to Mrs Crawley’s parenting payment (partnered), with effect from 10 March 2004.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M J Carstairs, Member

Signed:         Camille Banks
  Associate

Date/s of Hearing  18 March 2005 
Date of Decision  18 March 2005
Date of Written Reasons           11 April 2005

The Applicants were self represented       
For the Respondent                  Mr J Howard, Departmental Advocate