Frankic and Secretary Department of Family and Community Services
[2004] AATA 1239
•25 November 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1239
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2004/358
GENERAL ADMINISTRATIVE DIVISION ) Re DOMGOYA FRANKIC Applicant
And
SECRETARY DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Dr J D Campbell, Member Date25 November 2004
PlaceSydney
Decision The Tribunal affirms the decision under review.
[Sgd] Dr J D Campbell Member
CATCHWORDS
SOCIAL SECURITY - Newstart allowance - asset valuation - overpayment - sole administrative error - special circumstances
Social Security Act 1991, sections 11, 611, 1118, 1121, 1223, 1237A, 1237 AAD
REASONS FOR DECISION
25 November 2004 Dr J D Campbell, Member 1. In this matter Mr Frankic (“the Applicant”) seeks a review of the decision of the Social Security Appeals Tribunal (“SSAT”) dated 18 February 2004 which affirmed the decision of an authorised review officer (“ARO”) dated 2 October 2003 to raise and recover a debt of $39,584.99 arising from the overpayment of Newstart allowance between 1 October 1998 and 6 February 2003,. The ARO affirmed a decision dated 8 May 2003 made by an authorised delegate of the Secretary, Department of Family and Community Services (“the Respondent”).
2. The Applicant lodged a claim for Newstart allowance on 12 December 1995, in which he indicated that he had no assets or investments other than his place of residence, namely 17 Northumberland Street, Bonnyrigg NSW 2177. A review of this allowance was conducted in July 1997, with the Applicant submitting the following information as to his asset position in July 1997:
· property 37 Monash Street, Tugun Qld 4224 – estimate of current value $120,000 (Richardson & Wrench T153), mortgage $144,000 with Progressive Mortgage Co and with mortgage secured on 37 Monash Street, Tugun and another property 5 Willington Street, Arncliffe, the latter property being principal place of residence (T139, p589);
· property 5 Willington Street, Arncliffe NSW 2205 – estimate of current value $190,000, mortgage $144,000 with Progressive Mortgage Co with mortgage secured over both 5 Willington Street and 37 Monash Street, Tugun (T140);
· property 59 Warrener Street, Nerang Qld 4211 - with valuation of $110,000 (First National Real Estate), mortgage with Westpac of $168,000 with mortgage over this property and another property in Kahlua Court, Nerang Qld 4211 (T143);
· property 17 Northumberland Street, Bonnyrigg NSW 2177 - with an estimated value of $180,000 and a mortgage of $168,000 with Westpac (T142).
3. In his tax return for 1997, the Applicant claimed interest deductions relating to a $50,000 mortgage amounting to $3,608 for the property at 37 Monash Street, Tugun, with the remainder of the mortgage funding the purchase of 5 Willington Street, Arncliffe (T144).
4. The Applicant’s bank and mortgage company statement (T152) balances are as follows
15 July 1997 Westpac A/C 037-120 33-3730 $166,104.50
26 March 1997 Westpac A/C 032-075 11-9811 $168,068.83
20 June 1997 Westpac A/C 032-075 11-9811 $167,380.58 (T7, p52)
17 July 1997 for Progressive Mortgage Co A/C 51105 $142,943.95 (less mortgage on A/A = $71,471.97) (T7, p52).
5. As a consequence of the receipt of all this information the Respondent concluded on 12 August 1997 that the Applicant’s net assets were $132,000. As this exceeded the allowable amount of $125,750, the Applicant’s Newstart allowance was cancelled (T8, p54). On 19 August 1997 the Respondent (same officer) reconsidered the earlier decision and by accepting the valuations as provided, concluded that the Applicant’s net asset value was $110,184 (T9, p56).
6. On 12 November 1998, the Respondent cancelled the Applicant’s Newstart allowance on the grounds that his total net assets worth was $142,000 (T11), as the Australian Valuation Office (“the AVO”) had upgraded property values at Tugun and Nerang (T12).
7. On 27 November 1998, the Respondent requested that the Applicant provide them with “a letter from bank to state $50,000 from his principal home was used for the purpose of an investment property so that we can reduce his assets” (T14, p63). On 26 November 1998, the Applicant’s accountant wrote such a letter (Exhibit A11).
8. On 1 December 1998 the Respondent (same officer as in communication of 12 November 1998) advised the Applicant again that Newstart allowance could not be paid from 12 November 1998 as he had total assets of $119,000 (T16, p65).
9. On 2 December 1998 the Respondent noted that the Tugun mortgage was to be increased by $55,000 from $72,000 to $127,000 “as the bank made him take his asset value off his property at Bonnyrigg in order to secure this property” (T17, p67).
10. On 3 December 1998 the Respondent (same officer) advised the Applicant that his Newstart allowance had been reinstated (T18, p68). Thereafter on 30 December 1998 (T20), 4 January 1999 (T21), 15 July 1999 (T33), 1 February 2000 (T48), 17 March 2000 (T49), 27 June 2000 (T50) and 30 June 2000 (T56) the Applicant was advised to contact the Respondent if, amongst many matters, the value of his assets exceeds $133,250; this being a figure which has increased slightly with each advice.
11. On 8 August 2002 (T70) the Respondent wrote to the Applicant requesting that he verify that Australian Taxation Records for financial year 2000/2001 are correct, when they indicate he had received rental income from the following properties:
17 Northumberland Street, Bonnyrigg
1004/71-75 Regent Street, Chippendale
11 Kahlua Court, Nerang
59 Warrener Street, Nerang
63 The Estuary Coombabah
37 Monash Street, Tugun
12. On 14 August 2002 the Applicant advised the Respondent of the following (T75, p204):
· 21 Manning Street, Warwick Farm purchased with monies from the sale of the two Nerang properties and $140,000 mortgage
· $240,000 owing on the property at 63 The Estuary, Coombabah and 37 Monash Street, Tugun
· $100,000 owing on 5 Willington Street, Arncliffe
13. On 14 August 2002, the Applicant completed the following real estate details:
· property No.1 (T78) – 5 Willington Street, Arncliffe, value estimated $300,000; mortgage Westpac $100,000
· property No.2 (T79) – 21 Manning Street, Warwick Farm, value estimated $400,000; mortgage Westpac $140,000
· property No.3 (T80) – 63 The Estuary Coombabah, value estimated $280,000; mortgage Interstar $241,000
· property No.4 (T81) – 37 Monash Street, Tugun, value estimated $220,000; no mortgage
14. On 2 September 2002 (T76, p216) the Applicant confirmed that he had the following mortgages:
· Interstar A/C 54379 current balance $240,000
· Westpac A/C 732-200 514827 current balance $140,000
· Westpac A/C 032-075 11-9811 current balance $100,000
15. On 3 September 2002 the Applicant informed the Respondent of changes in his circumstances and that he has not kept them advised of such changes as he thought Centrelink had access to his accountant (T59, p166). At this time the Applicant is recorded as having advised the following:
· he was still living at 5 Willington Street, Arncliffe, on which he still owes $140,000
· he purchased a property at 21 Manning Street, Warwick Farm in September 2001 and this had been funded by the sale of 11 Kahlua Court, Nerang; 59 Warrener Street, Nerang; 17 Northumberland Street, Bonnyrigg (T59, p167).
16. On 5 February 2003, the Respondent requested that the Applicant complete an assets schedule (T89) while continuing to pay Newstart allowance to the Applicant.
17. The Applicant made an application to Westpac in May 1996, for two amounts of $168,000 to purchase an established dwelling (5 Willington Street, Arncliffe) and to refinance 11 Kahlua Court and 59 Warrener Street, Nerang (T105). An application to further refinance 5 Willington Street and 21 Manning Street was made by the Applicant to Westpac on 8 November 2001, during which the Applicant sought funds of $382,000 (T105).
18. The AVO is recorded as providing the following information:
· 20 February 2003 (T106) – 21 Manning Street, Warwick Farm, valuation $450,000
· 19 February 2003 (T107) – 37 Monash Street, Tugun, valuation $230,000
· 21 February 2003 (T108) – 63 The Estuary, Coombabah, valuation $300,000
· 24 February 2003 (T109) – 1004/71-75 Regent Street, Chippendale, historical valuation $303,000
19. A search of the land and property information by the Respondent revealed that 17 Northumberland Street, Bonnyrigg had been purchased by the Applicant on 19 April 1995 for $181,000 and sold on 6 July 2001 for $277,000 (T111).
20. The Respondent, with such information available for particular consideration, determined on 8 May 2003 that the value of the Applicant’s combined assets including real estate (less encumbrances) was in excess of the assets limit cut-off for Newstart allowance. As a consequence a debt was due and owed by the Applicant for overpayment of Newstart allowance for the period 1 October 1998 to 6 February 2003 in the amount of $39,584.99 (T115). This decision was reviewed and affirmed by the Respondent on 14 July 2003 (T119) and by the ARO on 2 October 2003 (T122).
ISSUES
21. The relevant issues in this matter are whether:
·the value of the Applicant’s total assets less encumbrances would have precluded payment of Newstart allowance during the period 1 October 1998 to 6 February 2003; and
·if so, was the overpayment the result of sole administrative error by the Respondent and did the Applicant receive such payments in good faith and should all or part of the overpayment be waived; and/or
·do special circumstances exist which would allow all or part of the overpayment to be waived, provided that the debt did not arise as a consequence of the Applicant making a false statement or failing or omitting to comply with a provision of the Social Security Act 1991 (“the Act”).
DECISION
22. For the reasons nominated later in this decision the Tribunal finds that:
(a)at all times between 1 October 1998 and 6 February 2003 the value of the Applicant’s assets less encumbrances exceeded the asset level that would have permitted the payment of Newstart allowance; and
(b)as a consequence the Applicant received an overpayment of Newstart allowance between 1 October 1998 and 6 February 2003 in the amount of $39,584.99 ; and
(c)the amount of $39,584.99 is a debt due and payable by the Applicant to the Commonwealth pursuant to section 1224 of the Act prior to 1 July 2001 and thereafter pursuant to section 1223(1) of the Act; and
(d)waiver of the debt due to sole administration error pursuant to section 1237A(1) cannot be sustained in this matter; and
(e)waiver of the debt due to special circumstances pursuant to section 1237AAD cannot be sustained in this matter.
APPLICANT’S EVIDENCE
23. The Applicant presented evidence to the Tribunal on three separate occasions, accompanied by a friend on all three occasions and by his accountant on the last occasion. The following details his evidence in relation to purchase and sale of properties during the relevant period, together with mortgages for the relevant property. The considerable amount of documentation described during the Applicant’s evidence is also specified below:
(a) Property No.1: 37 Monash Street, Tugun Qld – purchased 20 September 1996, purchase price $55,000 plus a unit in the Sands Motel. Value at time of purchase was $150,000. Finance provided by Progressive Finance Company of $55,000 (Exhibit A12). The AVO valuation on 28 October 1998 was $125,000 (Exhibit R1).
(b) Property No.2: 17 Northumberland Street, Bonnyrigg NSW - purchased May/October 1995, purchase price $180,000. Property was the Applicant’s principal place of residence until July 1996. Mortgage in 1998 was $143,825, Progressive Mortgage Company. Property sold 20 August 2001, sale price $277,000. Mortgage assumed by Commonwealth Bank on 16 November 1998 (Exhibit A4). The AVO valuation of 2 November 1998 was $212,000 (Exhibit R1).
(c) Property No.3: 11 Kahlua Court Nerang Qld - purchased 10 October 1994, purchase price $132,000. Mortgage with Westpac loan A/C 032-075 11-9811, balance as at 1 October 1998: $165,084. Mortgage also covers property No.4 until both properties are sold. Property sold 14 October 2001, sale price $127,000 (Exhibit A5). The AVO valuation 28 October 1998 was $135,000 (Exhibit R1).
(d) Property No.4: 59 Warrener Street, Nerang Qld - purchased on 29 October 1995, purchase price $132,000. Mortgage with Westpac A/C 032-075 11-9811 until sold on 14 October 2001 for $137,000. Mortgage was held jointly with 11 Kahlua Court. The AVO valuation on 28 October 1998 was $110,000 (Exhibit R1).
(e) Property No.5: 5 Willington Street, Arncliffe NSW, purchase date 20 May 1996, purchase price $192,000. Mortgage with Westpac loan A/C 032-075 11-9811, period 15 October 2001 to 21 October 2003. Balance $146,846 (12 October 2001) (T105A) and $99,397 (24 January 2003) (T105A).
(i)Mortgage with Westpac loan A/C 037-120 33-3730. Between 15 July 1996 to 6 September 2001 loan security included 5 Willington Street and the two Nerang properties (Exhibit A9).
Loan amount at 10 October 1998 was $163,600 (T105B).
Loan amount at 3 September 2001 was $145,327 (T105B).
Between 7 September 2001 and 14 October 2001 the loan security included 5 Willington Street and 11 Kahlua Court, Nerang (Exhibit A9). Loan amount at 15 October 2001 was $102,904 (T105B).
Between 15 October 2001 and 13 November 2002 the loan security was a mortgage over 5 Willington Street, Arncliffe (Exhibit A9). Loan was paid out on 13 November 2002 (T105B).
(ii) Mortgage Westpac A/C 464107:
Between 13 November 2002 and 17 December 2003 securities for this loan were mortgages over properties at 5 Willington Street and 21 Manning Street, Warwick Farm.
For the period 18 December 2003 to 3 February the security for the loan was a mortgage over the property at 5 Willington Street, Arncliffe.
(f) Property No.6: 1004/71-75 Regent Street, Chippendale NSW - purchase date 28 October 1998, purchase price $257,000. Mortgage with Commonwealth Bank with loan security being a mortgage over Regent Street and 17 Northumberland Street, Bonnyrigg, mortgage amount $244,600. Property sold on 21 December 2001 for $303,000 (Exhibit A6).
(g) Property No.7: 63 The Estuary Coombabah Qld - purchase date 8 August 2000, purchase price $255,000. Mortgage of $240,000 with Interstar with loan security being a mortgage over properties at 63 The Estuary, Coombabah and 37 Monash Street, Tugun (Exhibit A13). Property sold on July 2003 for $303,000.
(h) Property No.8: 21 Manning Street, Warwick Farm - purchase date 19 September 2001, purchase price $420,000. Mortgage with Commonwealth Bank $251,339.12 (Exhibit A5). Mortgage increased on 16 December to $380,000; with continued loan security with mortgage over 21 Manning Street, Warwick Farm and 5 Willington Street, Arncliffe (Exhibit A14) and further increased to $535,000 on 26 March 2004 (Exhibit A11). It is also noted that Westpac loan A/C 464107 had securities for this loan between 13 November 2002 and 17 December 2003 mortgages for the properties at 21 Manning Street, Warwick Farm and 5 Willington Street, Arncliffe. Thereafter between 17 December 2003 and 3 February 2004 the security for the Westpac loan was a mortgage over 5 Willington Street, Arncliffe (Exhibit A9).
24. The Applicant also detailed at length the difficulties he experienced during the period in question, which included an admission under schedule to the St George Hospital Mental Health Facility on 20 March 2001 to 29 March 2001, and again from 7 June 2001 to 27 June 2001. On both occasions the reason for the admission is recorded as relapse of bipolar disorder, a condition for which he has a number of previous admissions and treatments. It was noted that during both admissions the issue of the Applicant’s capacity to make informed decisions at the time was raised, particularly in relation to the buying and selling of properties (Exhibit A2, A6).
CONSIDERATION AND FINDINGS
25. In addressing the particular issues raised in this matter, the Tribunal experienced difficulty in ascertaining the particulars of purchase price and sale price of each property and the relevant mortgages tied to each property. In detailing the particulars as it has done, the Tribunal acknowledges the assistance given by both parties. The Tribunal notes the following statutory framework within which this matter is to be decided:
(a) section 11 of the Act which defines assets, exempt assets, value and principal home;
(b) section 611 of the Act which defines the assets test and the level of assets which if exceeded precludes the payment of Newstart allowance;
(c) section 680 of the Act which defines other asset level, which if exceeded, precludes the payment of sickness allowance;
(d) section 1118(1) of the Act excludes the value of the persons’s interest in their principal home in evaluating the value of a person’s assets;
(e) section 1121 of the Act details the effect of a charge or encumbrance on value of assets as follows:
(i) the value of the charge or encumbrance in an asset is to be subtracted from the value of the asset;
(ii) the value of the charge or encumbrance over assets does not apply to a charge or encumbrance over the principal home;
(iii) a mechanism to calculate the amount to be disregarded where a charge or encumbrance is held over both the principal residence and other assets.
(f) section 1223(1) details that overpayment of a social security benefit is a debt due to the Commonwealth
(g) section 1237A(1) of the Act which deals with waiver due to sole administrative error
(h) section 1237AAD of the Act which deals with waiver due to special circumstances.
26. The Tribunal also finds that the assets value limits applicable to the Applicant pursuant to section 611 of the Act for the period October 1998 to March 2003 were as follows:
1 July 1998 $125,750
1July 1999 $127,750
1 July 2001 $133,250
1 July 2001 $141,000
1 July 2002 $145,250
27. In addressing the value of the Applicant’s assets as at 1 October 1998, the Tribunal notes the following relevant details in relation to each property owned at that date:
(a) 37 Monash Street, Tugun – value nominated by Applicant is $120,000 as at 1 October 1998. The Tribunal also notes the AVO valuation at $125,000. The Tribunal notes that Progressive Mortgage Company provided $55,000 for the purchase of this property (Exhibit A3) and that this was an additional amount to the $90,000 to finance his Bonnyrigg property making the total value on the mortgage on the Bonnyrigg property $145,000. The Tribunal concludes that the value of this asset to the Applicant at 1 October 1998 was $120,000 with no mortgage or encumbrance being held over that property. This is further confirmed by an examination of the Applicant’s taxation records for years ending 30 June 1998, 30 June 1999 and 30 June 2000, where no interest on borrowed money is offset against the rent received for 37 Monash Street (T126 and thereafter).
(b) 17 Northumberland Street, Bonnyrigg – value determined by AVO as at 2 November 1998 was $212,000. Mortgage with Progressive Mortgage Company of $143,825, which includes the $55,000 in relation to 37 Monash Street, Tugun. The Tribunal concludes that the value of this asset is $68,175.
(c) 59 Warrington Street, Nerang – value determined by AVO as at 28 October 1998 was $110,000, the same as the Applicant’s estimate. Mortgage with Westpac loan A/C 032-075 11-9811 – amount $165,084 as at 1 October 1998 with the mortgage covering both properties, namely 59 Warrener Street Nerang and 11 Kahlua Court, Nerang.
(d) 11 Kahlua Court, Nerang – value determined by AVO as at 28 October 1998 was $135,000. Applicant’s estimate in 1997 was $120,000 (T143, p606). The Tribunal accepts the AVO valuation, recognising that both the valuation and the Applicant’s estimate are not far apart, with the valuation being assessed at a more relevant time. As detailed when discussing the Applicant’s property, a mortgage was held by Westpac over both properties as at 1 October 1998 amounting to $165,084 (A/C 032-075 11-9811). Further, the Tribunal notes that at 1 October 1998, a further mortgage was held over three properties, namely 5 Willington Street, Arncliffe, this being the Applicant’s principal home, and the two Nerang properties. The Tribunal notes that at 1 October 1998 this mortgage was held by Westpac, with the account number being 037-120 33-3730 and the relevant balance being $163,600. The Tribunal also notes that 5 Willington Street, Arncliffe was purchased in 1996 for $192,000, and estimates its value at that level for the purpose of calculation pursuant to section 1121 of the Act.
In calculating the amount of charge to be deducted pursuant to subsections 1128(1) and (4) of the Act, the Tribunal notes the formula:
value of charge x value of other assets
Value of all assets
which in this circumstance equates to 163,600 x 245,000
245,000 = 192,000
namely $91,720.
In calculating the value of the two assets together, namely 11 Kahlua Court, Nerang and 59 Warrener Street, Nerang, the Tribunal finds that the combined net value of the two assets is $245,000 less $91,720 less $165,084, namely minus $11,804.
28. In summary the value of the Applicant’s property assets as at 1 October 1998 is $120,000 + $68,175 - $11,804, which equals $176,371. It is to be noted that in the valuation as stated, no value has been placed on the Applicant’s other assets, which have been recorded over time, and for the purposes of this exercise is ignored although being relevant.
29. As a consequence of the Tribunal’s findings, the Tribunal further concludes that the Applicant was not entitled to payment of Newstart allowance as at 1 October 1998 as the value of his assets ($176,371) exceeds the asset value limit for the financial year 1998/1999, namely $125,750.
30. The Tribunal next notes that the Applicant purchased the property at 1004/71-75 Regent Street, Chippendale on 28 October 1998 for $257,000. The funding for this purchase was secured from the Commonwealth Bank with a mortgage over the nominated property and 17 Northumberland Street, Bonnyrigg in an amount of $244,600 with the Commonwealth Bank paying out the Progressive Mortgage Company mortgage of $143,825. From this analysis the Tribunal concludes that the value of the Applicant’s property assets as a consequent of this transaction increased to $176,371 + $257,000 + $143,825 - $244,600 = $332,596. This again is a value which exceeds the value limit of $125,750 for the 1998/99 financial year.
31. The Tribunal observes that the next property transaction occurred on 8 August 2000 when 63 The Estuary, Coombabah was purchased for $255,000 with a $240,000 loan from Mortgage Interstar with loan security being mortgagees on the stated property and 37 Monash Street, Tugun. In asset value, the Applicant’s value of assets increased by $15,000 as a result of this transaction.
32. The next property transaction occurred on 20 August 2001 when the Applicant sold 17 Northumberland Street, Bonnyrigg for $277,000 and paid $247,000 to the Commonwealth Bank to extinguish the mortgage held over the stated property and 1004/71-75 Regent Street, Chippendale.
33. As a consequence the Applicant’s asset value increased by $351,000 in that the mortgage was discharged ($247,000) and the sale amount received was $65,000 more than their previous valuation.
34. On 7 September 2001, the Applicant sold 59 Warrener Street, Nerang for $137,000, with no definition as to use of proceeds.
35. On 19 September 2001, the Applicant purchased 21 Manning Street, Warwick Farm for $420,000, with a mortgage of said property and 5 Willington Street of $251,339.31. On a stand alone transaction this has increased the asset value by $169,000, without even considering the issues that the mortgage was also over the principal place of residence.
36. On 15 October 2001, the Applicant sold 11 Kahlua Court, Nerang for $127,000, with $47,761.91 being deposited in Westpac loan A/C 037-120 33-3730, reducing that balance to $102,903. While the other Westpac loan A/C 032-075 11-9811 remained at $146,000.
37. As a consequence of the four transactions, the Tribunal concludes that the Applicant’s asset value has further increased by the sale of 17 Northumberland Street associated with a reduction in the Commonwealth Bank mortgage (net 35,000), the reduction in the Westpac loan A/C 037-120 33-3730 mortgage $47,761 and the accumulation of another asset (net value $169,000).
38. The next transaction occurred on 21 December 2001, when the Applicant sold Regent Street, Chippendale for $303,000. The evidence is silent as to disbursements however documentation would indicate a sum of $272,479.59 was paid to Commonwealth Bank to discharge two loans (Exhibit A5).
39. The Tribunal concludes that at the end of 2001, the Applicant owned properties at 37 Monash Street, Tugun (value $125,000), 21 Manning Street, Warwick Farm (value $420,000) and 63 The Estuary, Coombabah (value $255,000) together with a principal place of residence (5 Willington Street, Arncliffe). The Tribunal further notes that the value of these assets is $800,000 and that such a valuation is conservative in that the valuations used reflect purchase prices or a valuation made in 1998.
40. The Tribunal further notes that charges against these properties include 37 Monash Street (NIL), 21 Manning Street, Warwick Farm (Commonwealth Bank $251,000), 63 The Estuary Coombabah (Interstar $240,000) and the two Westpac mortgages secured on 5 Willington Street, Arncliffe (principal place of residence). The Tribunal concludes that at year end 2001, the value of the Applicant’s property assets is $309,000 ($800,000 - $491,000) and that such a value is a conservative value. As this value of $309,000 exceeds $141,000 (asset test limit for financial year 2001/2002), the Applicant is precluded from receiving Newstart allowance at years end 2001, or at any time during the period 1 October 1998 to the end of December 2001.
41. Comments made within the previous paragraph as to the conservative value of the property assets is reinforced when one notes the Applicant’s estimates for each property when he lodged the appropriate modules on 18 September 2002:
· 37 Monash Street, Tugun $220,000
· 21 Manning Street, Warwick Farm $400,000
· 63 The Estuary, Coombabah $280,000
42. The Tribunal again concludes that, at 18 September 2002, the value of the Applicant’s property assets was $409,000 ($900,000 less charges as detailed in the previous paragraph of $491,000). Further the Tribunal observes that this asset value exceeds the allowable asset value of $145,250 for financial year 2002/2003.
43. The Tribunal observes that this state of affairs continues with the observation that the loan amount in Westpac loan A/C 037-120 33-3730 was paid out on 13 November 2002 (this loan was secured with a mortgage on principal residence at 5 Willington Street). Further the Tribunal notes that on 13 November 2002 a new Westpac loan A/C 464107 was secured with loan security being mortgages on 21 Manning Street and 5 Willington Street (principal residence). No details of the amount involved in this new loan are available.
44. In summary the Tribunal concludes that as a result of the analysis undertaken, the value of the Applicant’s property assets during the period 1 October 1998 to 6 February 2003 exceeded the allowable limit for asset value in each of the relevant financial years. The Tribunal further concludes that as a consequence the Applicant did not qualify for the payment of Newstart allowance during the period 1 October 1998 to 6 February 2003.
45. The Tribunal further finds that the Applicant has been overpaid an amount of $39,584.39 during the period 1 October 1998 to 6 February 2003, and pursuant to section 1223(1) and 1224 of the Act, this is a debt due and payable by the Applicant.
46. In addressing the issue of sole administrative error pursuant to section 1237A(1) of the Act, the Tribunal has been particular in detailing the interactions between the parties leading up to the decision to cancel the Applicant’s Newstart allowance on 12 August 1997 and a week later on 19 August 1997 to grant continuance of Newstart allowance. Both decisions appear to be made against a similar factual background, with the Tribunal unable to discern the reasoning behind the reversal on 19 August 1997.
47. The Tribunal further notes a similar activity when on 12 November 1998 the Respondent again cancelled the Applicant’s Newstart allowance on the grounds that the value of the Applicant’s assets exceeded the relevant asset limit. Within three days in early December 1998 the earlier decision was affirmed followed again by a reversal of their decision on 3 December 1998. Again the Tribunal finds little comfort from the reasoning nominated at the time for such reversal and expresses concern at a relative short term decision timeframe and a decision apparently made without collection of relevant and material facts (eg. what properties did the Applicant own at that stage and what were the financing or mortgage arrangements and against which property were such properties secured.)
48. It would appear to the Tribunal, if these were the only issues, it would be fair to conclude that the Applicant may have at that time formed the opinion, not unreasonably so, that the value of his assets were below the threshold value, and that his Newstart allowance would continue.
49. The Tribunal, however, observes that the Applicant purchased a property in Chippendale on 28 October 1998 and later sold it on 21 December 2001 together with a reordering of loan finance and change in loan security with mortgages held over different properties. The more important issue is that the Applicant did not inform the Respondent of such activities, having been advised on many occasions that he must report such changes to the Respondent to ensure correctness of Newstart allowance payments.
50. The Tribunal finds that the value of the Applicant’s property assets exceeded the asset level which would permit Newstart allowance to be paid, thereby inferring that the decision made by the Respondent on 3 December 1998 was incorrect. The Tribunal concludes that any administrative error made by the Respondent at that time was based on inadequate information, as the Applicant failed to provide the purchase and mortgage information associated with the acquisition of the Chippendale property on 28 October 1998, the later date being the date of sale completion.
51. The Applicant failed to disclose any information relating to his property transactions until 8 August 2002, when the Respondent wrote to the Applicant requesting that he verify Australian Taxation Office (“ATO”) records which indicate that he had received rental returns from a number of properties of which the Respondent had no knowledge. The Tribunal notes that the Applicant admits to not having kept the Respondent informed of his property asset changes in a phone call to the Respondent on 3 September 2002. The Tribunal also notes the property documentation written by the Applicant on 14 August 2002 and apparently received by the Respondent on 18 September 2002 in which no mention is made of the Chippendale property, which by that stage had been sold in December 2001.
52. The administrative errors discussed above being either an omission or a decision made by the Respondent based on less than adequate information cannot be considered a sole administrative error as the Applicant clearly embarked on a course of conduct from October 1998 to withhold pertinent information from the Respondent.
53. The Tribunal therefore concludes that any overpayment up to 18 September 2002 has not resulted from sole administrative error.
54. It is evident to the Tribunal that on the face of documentation provided by the Applicant on 22 September 2002, the Respondent should have ceased payment of Newstart allowance in a much shorter timeframe. The Tribunal accepts that the Respondent may have found it necessary to further investigate the issues however, continued payment of Newstart allowance to 6 February 2003 involves an unnecessarily excessive time delay. This is more so the case when the Tribunal considers that pertinent evidence as to loan security was not collected from the banks until after the hearing commenced; and in so far as the Commonwealth Bank is concerned, remains less than adequate.
55. The Tribunal believes that the failure to move more expeditiously to cancel Newstart allowance in circumstances such as outlined in this matter as occurring from early September 2002 could constitute sole administrative error. However in this matter the Tribunal is mindful that the Applicant’s property assets were extensive and involved properties in two states, as well as changing loan arrangements, all of which take time to unravel. Further the Tribunal understands the need of a decision maker to collect adequate pertinent material in a matter, which has been the subject of disputation over a number of years.
56. The Tribunal also notes that the Applicant’s failure to provide information over time, has made the task more difficult for the Respondent , with the latter having to seek retrospective and current valuation of properties with the AVO, as well as collect extensive information from several financial institutions.
57. Finally, the Tribunal notes that the Applicant was of a view that when he submitted the property returns in August 2002 to the Respondent, that the value of his assets may have grown to the point that they exceeded the nominated level, particularly in light of movements in the property market.
58. The Tribunal concludes that waiver of overpayment due to sole administrative error pursuant to section 1237A(1) of the Act is not made out in this matter for the reason that, it has not been made out to the Tribunal satisfaction that the delay in cancelling the Applicant’s Newstart allowance between September 2002 and 6 February 2003 was necessarily an administrative error, let alone a sole administrative error. Further, the Tribunal would have difficulty in concluding that the Applicant did not have knowledge that the value of his assets exceeded the cut off value level of assets and hence any receipt of overpayments monies received in that period would have to be viewed in that light.
59. In addressing waiver in special circumstances pursuant to section 1237AAD of the Act, the Tribunal is mindful of the Applicant’s part physical and mental health conditions. The Tribunal has read carefully the various clinical notes detailed during the Applicant’s hospitalisation in the first half of 2001, and in turn respects the Applicant for his ability to cope and develop his life circumstances as he has done. It would appear to the Tribunal that the Applicant’s medical conditions do not constitute special circumstance in this matter, as there is no evidence before the Tribunal that his medical condition has created circumstances, other than over a short period of some days, that have interfered with his ability to make decisions and/or alternatively interfere with his capacity to interact with others.
60. Further the Tribunal notes that over time, and with his medical disabilities, he has been able to grow and further evolve his business skills in property and financial transactions. In such circumstances, the Tribunal concludes that they do not constitute unusual or uncommon circumstances which may be considered special circumstances.
61. Finally, in relation to waiver pursuant to section 1237AAD, the Tribunal would have to be satisfied that the debt did not arise as a consequence of the Applicant omitting or failing to comply with a provision of the Act. The Tribunal finds that the Applicant’s failure to provide necessary information about his properties in a timely basis, amounts to a failure to comply with a provision of the Act.
62. In summary the Tribunal finds that waiver of the debt pursuant to section 1237AAD is not appropriate in the circumstances of this matte.
DETERMINATION
63. The Tribunal affirms the decision under review.
I certify that the 63 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell, Member
Signed: Alessandra Krilis
AssociateDate/s of Hearing 1 July 2004, 9 September 2004
Date of Decision 25 November 2004
Representative for the Applicant Self
Advocate for the Respondent Hannelore Schuster
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