Galluzzo and Secretary, Department of Social Services (Social services second review)

Galluzzo and Secretary, Department of Social Services (Social services second review) [2020] AATA 2836 (11 August 2020)
Division:GENERAL DIVISION
File Number: 2019/6828
Re:Lee’Ann Galluzzo
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Dr L Bygrave, Member
Date:11 August 2020
Place:Sydney

The decision under review is set aside and, in substitution, the Administrative Appeals Tribunal decides:
·Mrs Lee’Ann Galluzzo was not entitled to receive carer payment in the period from 16 June 2015 to 12 March 2019.
·Pursuant to section 1223 of the Social Security Act 1991 (Cth), the whole of the amount of carer payment made to Mrs Lee’Ann Galluzzo in the period from 16 June 2015 to 12 March 2019 is a debt recoverable by the Commonwealth.

.......[sgd]................................................................
Dr L Bygrave, Member
CATCHWORDS
SOCIAL SECURITY – carer payment debt – where applicant’s assets exceed the assets value limit – failure to comply with reporting obligations – two investment properties – rental income – share portfolio – whether the debt can be waived or written off – no sole administrative error – no special circumstances – debt period increased – decision under review set aside and substituted
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Dranichnikov v Centrelink [2003] FCAFC 133

Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76
REASONS FOR DECISION
Dr L Bygrave, Member
11 August 2020
INTRODUCTION

The applicant, Mrs Lee’Ann Galluzzo, was in receipt of carer payment from 25 May 2015 to 12 March 2019 on the basis of the care she provided her brothers. This entitlement was calculated on the basis of her declared assets and income provided to the Department of Human Services (now Services Australia[1]) (Centrelink) on 26 May 2015.
[1] On 26 May 2019, the Prime Minister announced the establishment of Services Australia and, on 1 February 2020, it became an executive agency in the Social Services portfolio.
In response to a Centrelink Request for Information letter dated 13 December 2018, Mrs Galluzzo provided new information about her assets and income to Centrelink on 22 January 2019 and 14 February 2019. Based on this new information, Centrelink reassessed Mrs Galluzzo’s entitlement to carer payment and decided on 28 March 2019 that she had been overpaid carer payment and owed a debt in the amount of $55,514.41 for the period from 1 July 2016 to 12 March 2019. Mrs Galluzzo requested a review of this decision and an authorised review officer of Centrelink determined on 12 July 2019 that her carer payment debt was $55,628.93 for the period from 1 July 2016 to 12 March 2019.
Mrs Galluzzo applied for review to the Social Services and Child Support Division (SSCSD) of the Administrative Appeals Tribunal (the Tribunal) and, on 2 October 2019, the SSCSD affirmed Centrelink’s decision made on 12 July 2019.
On 22 October 2019, Mrs Galluzzo applied to the General Division of the Tribunal for review.
The matter was heard by the Tribunal in Sydney on 17 June 2020. Mrs Galluzzo attended the hearing and provided oral evidence by conference telephone. Following the hearing and in accordance with a Direction made by the Tribunal, further written submissions and evidence were filed by Mrs Galluzzo on 26 June 2020 and 7 July 2020, and written submissions were filed by the Secretary’s representative on 17 June 2020 and 6 July 2020.
ISSUES
The issues for determination by the Tribunal are whether:
·Mrs Galluzzo has a debt to the Commonwealth due to an overpayment of carer payment and, if so, the amount of the debt; and, if so
·there are any grounds for writing off or waiving all or part of the debt.
RELEVANT LEGISLATION
The relevant statutory provisions are set out in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act 1999 (Cth) (the Administration Act).
The rate of carer payment is calculated in accordance with section 1064 of the Act and is affected by a person’s income and assets. Section 8 of the Act defines ‘income’ as an amount earned, received or derived by a person for their own use or benefit. Section 11 defines ‘assets’ as property or money. Section 1121 states the value of an asset is reduced by the value of a charge or encumbrance.
Relevant to this matter, section 1064-G1 of the Act sets out how to calculate the effect of a person’s assets on their maximum payment rate. This involves working out whether a person’s assets exceeds their assets value limit. The assets value limit for Mrs Galluzzo, as a single person who is a homeowner, between 25 May 2015 and 12 March 2019 was:
·25 May 2015:             $775,500
·1 July 2015:                $779,000
·20 September 2015:   $783,500
·1 January 2016:         $783,500
·20 March 2016:          $788,250
·1 July 2016:                $791,750
·20 September 2016:   $793,750
·1 January 2017:         $542,500
·20 March 2017:          $546,250
·1 July 2017:                $550,000
·20 September 2017:   $552,000
·1 January 2018:         $552,000
·20 March 2018:          $556,500
·1 July 2018:                $561,250
·20 September 2018:   $564,000
·1 January 2019:         $564,000
Section 1223 of the Act provides that, where a person obtains the benefit of a social security payment they were not entitled to, the amount of the payment is a debt due to the Commonwealth. Provisions to write off or waive a debt are set out in sections 1236, 1237A and 1237AAD of the Act.
The Administration Act sets out the statutory reporting obligations of a person in receipt of a social security payment. Section 66A stipulates a general requirement for a person who has made a claim for a social security payment to inform the Department of ‘an event or change of circumstances’ that may affect their payment within 14 days. Subsection 68(2) of the Administration Act also states that the Secretary may give a written notice to a person that requires them to inform the Department if a specified event or change of circumstances occurs that may affect their payment. Section 72 of the Administration Act outlines the provisions for a notice under section 68, including that it must be in writing and must specify how the person is to give the information to the Department.
EVIDENCE
Evidence before the Tribunal comprises:
·documents filed by Centrelink in relation to Mrs Galluzzo (Exhibit T);
·Mrs Galluzzo’s oral evidence to the Tribunal on 17 June 2020; and
·documents filed by Mrs Galluzzo on 26 June 2020.
Mrs Galluzzo’s claim for carer payment
Mrs Galluzzo’s husband died on 15 February 2015 and she was subsequently paid bereavement allowance until 24 May 2015.[2]
[2] Exhibit T-T16, page 328.
On 26 May 2015, Mrs Galluzzo lodged a Claim for Carer Payment form with Centrelink, which she had signed on 25 May 2015.[3] Mrs Galluzzo set out her personal details in this form, which included her permanent address at Old Toongabbie (property ‘A’) and a declaration that she had provided care for her eldest brother from 16 October 2009.
[3] Exhibit T-T4, pages 69-79.
Mrs Galluzzo also lodged an Income and Assets form with Centrelink on 26 May 2015.[4] In this form, Mrs Galluzzo declared she did not receive any income and provided details about her home contents, personal effects and vehicles assets (valued at $50,114); savings and investments ($4,224.21); and 50% ownership of a townhouse at Pendle Hill (investment property ‘B’) (valued at $550,000 with a mortgage of $122,481). She also answered ‘no’ to a question about whether she received income including ‘amounts received regularly from any other source’.[5]
[4] Exhibit T-T4, pages 80-93.
[5] Exhibit T-T4, page 91.
On the basis of the information provided by Mrs Galluzzo in these forms, she was paid carer payment at the maximum single rate from 25 May 2015 to 12 March 2019.[6]
[6] Exhibits T-T14, page 234 and T-T16, pages 329-331.
Correspondence from Centrelink to Mrs Galluzzo
In the period between 24 July 2015 and 15 March 2019, Centrelink sent correspondence to Mrs Galluzzo about her carer payment to her property ‘A’ address:
·On 24 July 2015, Centrelink’s letter to Mrs Galluzzo included the following statement about the calculation of her carer payment:
Information used for calculating your regular payment
Total Assets……. $268,702.50
Annual Income…. $74.00 [7]
[7] Exhibit T-T14, page 234.
This letter also stated:
What you must tell us
You must tell us within 14 days…if any of the changes listed below happen or are likely to happen to you…
Income: Your or your partner’s gross income changes. Changes means your income starts, stops, recommences or amounts vary. Gross income includes, but is not limited to:
-    Earnings: Employment income…
-    Other income: Income from rent…lump sum payments, other regular payments…or income from any source…
Financial Investments: Financial investments attract deemed income. Tell us if there is a change of $2,000 or more to the value of your and/or your partner’s combined financial investments. Including but not limited to buying and selling shares…
Assets: If the value of your and/or your partner’s combined assessable assets change by $1,000 or more. Assets include, but are not limited to, the value of goods, cars, boats, furniture, money, investments, real estate…
Gifting assets: When you give away any assets (including cash or investment) or sell any assets for less than market value.[8] [emphasis added]
[8] Exhibit T-T14, page 235.
·On 7 September 2015, a letter from Centrelink informed Mrs Galluzzo ‘how to report her employment income and other changes in circumstances’ and also listed the circumstances Mrs Galluzzo must tell Centrelink about, including changes to her income, assets and investments.[9]
[9] Exhibit T-T14, pages 238 and 240-241.
·On 21 September 2015, Centrelink’s letter to Mrs Galluzzo included the statement:
Changes to Your Reporting
Important
Information about your Carer Payment
-    As your circumstances have changed, you are no longer required to report every two weeks to get paid unless you start working again…
-    You must tell us within 14 days about changes in circumstances affecting your payment (see the enclosed form ‘Changes you must tell [Centrelink] about’ for details).
…
Changes you must tell us about …
Income, Assets and Investments…[10] [emphasis in original]
·On 24 October 2016, a letter from Centrelink to Mrs Galluzzo informed her about changes to the assets test, including why the changes were being made, how the assets test works and changes to the assets test from 1 January 2017.
[10] Exhibit T-T14, pages 242-246.
Centrelink also sent correspondence to Mrs Galluzzo about the amount of her carer payment, information used for calculating her payment including her ‘total assets’ and ‘annual income’, and her requirement to inform Centrelink about any changes to her circumstances:
·On 14 March 2017, the letter from Centrelink stated:
Information used for calculating your regular payment
Total Assets……. $273,295.00
Annual Income…. $74.00[11] [emphasis in original]
[11] Exhibit T-T14, page 250.
·On 14 March 2018, the Centrelink letter stated:
Information used for calculating your regular payment
Total Assets……. $279,054.60
Annual Income…. $74.00[12] [emphasis in original]
[12] Exhibit T-T14, page 253.
·On 10 August 2018, Centrelink sent an Income Statement for 30 June 2018 that listed Mrs Galluzzo’s income and assets as:
Income Type
Financial Investment Income … $74.00 (Annually)
Real Estate/Business Income … $10,140.00 (Annually)
Asset Type
…
Real Estate … $285,652.10 … Date of Effect 14 March 2018.[13] [emphasis in original]
[13] Exhibit T-T14, page 260.
·On 13 December 2018, the Centrelink letter stated:
Information used for calculating your regular payment
Total Assets……. $301,930.60
Annual Income…. $474.33 …
Your Carer Payment has been reduced because the value of your assets has increased.[14] [emphasis in original]
[14] Exhibit T-T14, page 266.
·On 14 March 2019, the letter from Centrelink stated:
Information used for calculating your regular payment
Total Assets……. $283,753.67
Annual Income…. $474.33[15] [emphasis in original]
·On 15 March 2019, the Centrelink letter stated:
Your Carer Payment Eligibility
INFORMATION USED FOR CALCULATING YOUR FINAL PAYMENT
Total Assets…. $929,595.00
Annual Income…$14,386.79[16] [emphasis in original]
[15] Exhibit T-T14, page 269.
[16] Exhibit T-T14, page 272.
Reconciliation of Mrs Galluzzo’s entitlement to carer payment by Centrelink
On 1 November 2018, the Australian Taxation Office (ATO) uploaded Bank Interest Match Data to Centrelink based on information in Mrs Galluzzo’s 2017 income tax return: this match data showed Mrs Galluzzo had received $3,859 in gross interest in the 2016–2017 financial year.[17]
[17] Exhibit T-T16, page 333.
Centrelink wrote to Mrs Galluzzo on 14 November 2018, 4 December 2018 and 6 February 2019 requesting information about her bank interest income.[18] Centrelink also wrote to Mrs Galluzzo on 13 December 2018, requesting she provide information about her income and assets.
[18] Exhibit T-T14, pages 276-281.
In response, Mrs Galluzzo provided Centrelink with the following documents on 22 January 2019:
·A Mod R Real estate details form completed on 21 January 2019 in which Mrs Galluzzo declared she owns three properties, and provides details about a property at Taree (investment property ‘C’) that she purchased on 3 July 2017 for the price of $305,000 and receives gross rental income of $340 per week.[19]
[19] Exhibit T-T6, pages 99-106.
·Mrs Galluzzo’s individual tax return for 1 July 2016 to 30 June 2017 that included the following information about her income:
othe amount of her carer payment allowance ($19,374);
ogross interest from her bank accounts ($3,859);
odividend income from ownership of shares in 11 companies;
ogross rental income from investment property ‘B’ ($23,851); and
oadjusted taxable income ($30,055) and estimated total income ($49,379).[20]
[20] Exhibit T-T6, pages 107-115.
·Mrs Galluzzo’s individual tax return for 1 July 2017 to 30 June 2018 that included the following information about her income:
othe amount of her carer payment allowance ($20,159);
odividend income from ownership of shares in 12 companies;
ogross rental income from investment property ‘B’ ($23,769);
ogross rental income from investment property ‘C’ ($17,973); and
oadjusted taxable income ($31,168) and estimated total income ($64,915).[21]
·A handwritten statement signed by Mrs Galluzzo and dated 22 January 2019 that declared she no longer has possession of a vehicle (valued in her Income and Assets form completed on 26 May 2015 at $23,614[22]) as it was given to her son in 2016. Ms Galluzzo also declared the 2003 Holden Commodore (valued in her Income and Assets form completed on 26 May 2015 at $6,000) was valued at $2,000.[23]
·CommSec transaction summary records for the 2016–2017 financial year and 2017–2018 financial year that show Mrs Galluzzo’s purchase and sale of shares between 22 August 2016 and 9 April 2018.[24]
·Council rates notice for investment property ‘C’.[25]
·BMT Capital Allowance and Depreciation Schedule for investment property ‘B’.[26]
[21] Exhibit T-T6, pages 116-127.
[22] Exhibit T-T4, page 83.
[23] Exhibit T-T6, page 128.
[24] Exhibit T-T6, pages 129-138.
[25] Exhibit T-T6, page 139.
[26] Exhibit T-T6, pages 140-174.
On 14 February 2019, Mrs Galluzzo also provided to Centrelink:
·The balance of Mrs Galluzzo’s home loan for property ‘A’ that shows she owes the bank $309,956.[27]
[27] Exhibit T-T6, pages 178-179.
On the basis of this information, Centrelink calculated that Mrs Galluzzo had a carer payment debt in the amount of $55,628.93 for the period from 1 July 2016 to 12 March 2019. This decision was made on the basis that Mrs Galluzzo’s income and the value of her assets exceeded the allowable limits for her to receive carer payment from 1 July 2016.[28] Amongst other matters, Centrelink calculated that Mrs Galluzzo’s:
[28] Exhibit T-T6, pages 190-195.
·assets and income as at 1 July 2016 included:
o100% ownership of investment property ‘B’ that was valued at $550,600 and had no mortgage (Mrs Galluzzo repaid the mortgage using her late husband’s superannuation);
oannual income from investment property ‘B’;
oshares; and
obank savings.
·actual assessable assets totalled $608,186 on 1 July 2016;
·bank account balances totalled $390,027 on 1 January 2017; and
·actual assessable assets totalled $1,001,796 on 1 January 2017.[29]
Mrs Galluzzo’s evidence to the Tribunal
[29] Exhibit T-T11, pages 192-193.
Mrs Galluzzo provided extensive oral evidence to the Tribunal at her hearing on 17 June 2020. Mrs Galluzzo said she provided all relevant information about her circumstances to Centrelink when she lodged her claim for carer payment on 26 May 2015. She said she completed the Claim for Carer Payment and Income and Asset forms with the assistance of staff at a Centrelink office because she understood that property ‘A’ and investment property ‘B’ were still held in the joint names of her and her late husband. Mrs Galluzzo said she advised the Centrelink staff that her husband had died in February 2015 and she expected to receive approximately $600,000 when his estate was settled, and probate was finalised. Mrs Galluzzo told the Tribunal she recalled this amount included about $300,000 from her late husband’s superannuation fund and $300,000 from his life insurance.
Mrs Galluzzo told the Tribunal she completed and provided Centrelink with other forms within two weeks of submitting her claim for carer payment on 26 May 2015. She said that these forms are not contained in the documents provided by Centrelink and she does not have a copy of the forms. She said the other forms she provided to Centrelink included a Mod R Real estate details form in which she declared she owned 100% of investment property ‘B’.
Mrs Galluzzo said she did not understand that in accordance with inheritance law, she was the sole owner of properties ‘A’ and ‘B’ as she was not aware that her husband’s interest (as joint tenant) in the properties passed to her (as surviving joint tenant) when he died in February 2015. She reiterated that she relied on advice of staff at the Centrelink office to assist her with completing the form for carer payment: she said this was in part because she did not understand the information that was required by Centrelink, and partly because she was distressed and grieving following her husband’s death.
In a statement dated 2 April 2019, Mrs Galluzzo provided details about her circumstances in 2015. Mrs Galluzzo wrote that after her husband died suddenly in February 2015:
…I received bereavement payment for 6-7 weeks after which I returned to…Centrelink to apply for carers payment and carer allowance advising of the value of my investment property, assets and pending monies from life insurance, superannuation, income protection etc that I was due to receive. I also asked if it mattered how many properties I owned and was told no it didn’t matter.
I again returned to…Centrelink for some help finding a job and was told I could apply for New Start allowance [sic]. I was…then told I did not qualify due to my assets. I explained I had not received the payments from life insurance etc as yet. I told him [Centrelink staff member] I was struggling and asked if I could apply for hardship as I had no money to put food on the table. To which I was told sorry I can’t help you. I found a myself a job and reported my wage to Centrelink weekly or fortnightly. As I was still grieving the loss of my husband I found I could not sustain working, caring for my brothers as well as my family and so resigned in late August 2015. On my last report [to Centrelink] I was told I no longer had to report unless I got another job.[30]
[30] Exhibit T-T9, page 186.

Mrs Galluzzo confirmed at the Tribunal hearing that she was employed part-time in August 2015 but ceased work after a couple of weeks because she was unable to cope.
She said was still grieving for her husband when her mother died on 22 September 2015 and then her mother-in-law died in April 2016.
At the Tribunal hearing, Mrs Galluzzo said she could not recall whether she received and read all the correspondence to her from Centrelink. She said that after she completed the forms that were provided to Centrelink on 26 May 2015 and within the next two weeks, she believed that she had submitted all the relevant information for Centrelink to calculate her entitlement to carer payment. In a statement sent to the Tribunal with documents on 26 June 2020, Mrs Galluzzo wrote:
In regard to letters from Centrelink I would have read the back of one letter after my application was rejected in order to respond. Therefore why then would I read the back of every letter if they were all the same…[31]
[31] Written statement from Mrs Galluzzo to the Tribunal on 26 June 2020.
Mrs Galluzzo was asked specific questions at the hearing about the information contained in correspondence sent to her from Centrelink. For example, Mrs Galluzzo was asked about the letter from Centrelink dated 24 July 2015, which set out her carer payment was calculated on the basis that her total assets were $268,702.50 and her annual income was $74.00; she answered that she ‘never looked at the figures’ and does ‘not understand thresholds’. She was also asked how the stated amount of $74.00 annual income could be consistent with the gross rental income of $440 per week she was receiving from investment property ‘B’. Mrs Galluzzo reiterated that she did not know how Centrelink calculated her income or assets.
Mrs Galluzzo told the Tribunal that she did not realise she was required to provide Centrelink with information about changes in her financial investments such as buying and selling shares, or her purchase of investment property ‘C’ in July 2017. She said she was told by Centrelink staff in September 2015 that she only was required to report employment income and she could own multiple investment properties without affecting her eligibility for or rate of carer payment.
Both in a written statement dated 2 April 2019 and at the Tribunal hearing, Mrs Galluzzo stated unequivocally that she provided Centrelink with ‘all the information regarding pending payments and assets’ from her late husband’s estate in May and June 2015.[32] However, Mrs Galluzzo was unable to tell the Tribunal any information about when probate was finalised for her husband’s estate or when she received the two amounts of $300,000 she said were deposited into her bank account. In view of the relevance of this evidence, I directed Mrs Galluzzo to file any documents that related to probate and/or bank statements for 2015 and 2016 that could show when Mr Galluzzo’s estate was finalised. Mrs Galluzzo complied with this Direction on 26 June 2020.
[32] Exhibit T-T9, page 187.
Documents filed with the Tribunal by Mrs Galluzzo on 26 June 2020
On 26 June 2020, Mrs Galluzzo filed with the Tribunal, amongst other documents:
·Individual tax return for 1 July 2014 to 30 June 2015 that stated her taxable income was $39,045.
·Individual tax return for 1 July 2015 to 30 June 2016 that included the following information about her income:
ogross wages ($1,636);
othe amount of her carer payment allowance ($8,641);
ogross interest ($5,635);
odividend income from ownership of shares in seven companies;
ogross rental income from investment property ‘B’ – 50% owned ($10,856); and
oadjusted taxable income ($32,604) and estimated total income ($28,943).
·A cheque from Construction & Building Industry Super dated 16 June 2015 for the amount of $327,179.20 and a statement that shows a cheque for $327,179.20 was deposited into Mrs Galluzzo’s bank account on 23 June 2015.
·Documents related to probate for Mr Galluzzo, which show the Supreme Court granted Letters of Administration to Mrs Galluzzo on 17 June 2015. The Letters of Administration refer to an attached Inventory of Property, ‘Annexure “B” to the affidavit of LEE-ANN MAREE GALLUZZO sworn at…29 April 2015’, that lists Mr Galluzzo had:
osole ownership of property that totalled $725,895 in superannuation, death benefit, and income insurance; and
o50% ownership of property ‘A’ and investment property ‘B’ (with Mrs Galluzzo the other joint owner) and the value of his share of these properties totalled $600,000.
·PAYG Payment Summaries sent to Mrs Galluzzo from Centrelink for 2017, 2018 and 2019 for the purposes of her income tax returns.
·A letter from Ms Anne Craven (psychologist) dated 27 September 2016 which set out that Mrs Galluzzo had presented with anxiety and low mood.
In a further written statement, Mrs Galluzzo noted that she understood reporting obligations because she had officially taken care of her mother’s finances from 2006, and her husband’s death in February 2015 was ‘extremely difficult’ and she subsequently found it ‘hard to function’.[33]
[33] Written statement from Mrs Galluzzo to the Tribunal on 26 June 2020.
Findings of fact
Based on the documentary evidence before the Tribunal, I make the following findings of fact about Mrs Galluzzo’s income and assets:
·From the date Mrs Galluzzo’s husband died, she was the sole owner of property ‘A’ and investment property ‘B’. Property ‘A’ is the principal home of Mrs Galluzzo and therefore exempt from the assets test. Investment property ‘B’ was valued variously at $400,000 (Inventory of Property attached to the Letters of Administration dated 17 June 2015) and $550,000 with a mortgage of $122,481 (Income and Assets form dated 26 May 2015). Mrs Galluzzo was also receiving 100% of gross rental income from investment property ‘B’.
·As at 29 April 2015, Mrs Galluzzo had a documented inventory of her late husband’s property, which included:
o$725,895 in superannuation, death benefit and income insurance payments; and
o50% ownership of property ‘A’ and investment property ‘B’ with Mrs Galluzzo.
·In her Claim for Carer Payment and Income and Asset forms dated 26 May 2015, Mrs Galluzzo declared she:
oowned 100% of assets (house contents, motor vehicles, boat and trailer) valued at $50,114;
odid not receive any income; and
oowned 50% of investment property ‘B’.
·However, as at 25 May 2015, Mrs Galluzzo’s actual income and assets included:
o100% of assets (house contents, motor vehicles, boat and trailer) valued at $50,114;
orental income from investment property ‘B’; and
o100% ownership of investment property ‘B’ valued at $550,000 with a mortgage of $122,481.
·As at 16 June 2015, Mrs Galluzzo’s assessable assets also included:
oa cheque for $327,179.20 from Construction & Building Industry Super.
·A grant of Letters of Administration to Mrs Galluzzo occurred on 17 June 2015. This included an attached inventory of her husband’s property. There is no information before the Tribunal about when or if she received the outstanding balance of Mr Galluzzo’s $725,895 in superannuation, death benefit and income insurance payments.
·On 24 July 2015, Centrelink advised Mrs Galluzzo in writing that she was paid carer payment from 25 May 2015 based on:
ototal assets of $268,702.50; and
oan annual income of $74.00.
·Centrelink provided multiple letters to Mrs Galluzzo in the period from 24 July 2015 to 14 March 2019 that contained incorrect information about her income and assets. Mrs Galluzzo did not contact Centrelink to correct or clarify this information.
·Prior to 22 January 2019, Mrs Galluzzo did not inform Centrelink about:
ogross rental income she received from investment property ‘B’ while she was paid carer payment from 25 May 2015 to 12 March 2019;
oshares she bought and sold between 22 August 2016 and 9 April 2018;
oher purchase of investment property ‘C’ on 3 July 2017 and subsequent gross rental income she received in the amount of $340 per week; and
oher gift of a motor vehicle (valued in May 2015 at $23,614) to her son in 2016.
CONSIDERATION
Issue 1: Was Mrs Galluzzo overpaid carer payment and if so, for what period?
Section 1223 of the Act provides that, where a person is paid a social security payment that they were not entitled to receive, the amount of the payment is a debt to the Commonwealth.
As set out in paragraph 9 above, the assets value limit for Mrs Galluzzo (as a single person who is a homeowner) on 25 May 2015 was $775,500.
I am satisfied the evidence before the Tribunal shows that, on 25 May 2015, Mrs Galluzzo’s income and assets included:
·100% of assets (house contents, motor vehicles, boat and trailer) valued at $50,114;
·100% ownership of investment property ‘B’ valued at $550,000 with a mortgage of $122,481; and
·gross rental income from investment property ‘B’.
I also find that on 16 June 2015, Mrs Galluzzo received a cheque in the amount of $327,179.20. This means that as of 16 June 2015, Mrs Galluzzo’s assets were at least $804,812. This calculation is based on her 100% ownership of house contents, motor vehicles, boat and trailer ($50,114) and investment property ‘B’ ($550,000 - $122,481 = $427,510), and her receipt of the cheque in the amount of $327,179.20 dated 16 June 2015.
Based on the evidence, I am satisfied that Mrs Galluzzo was not entitled to receive carer payment from 16 June 2015 because the value of her assets exceeded her assets value limit of $775,500. For completeness, I find there is no evidence before the Tribunal that shows Mrs Galluzzo’s assessable assets were below the assets value limit at any time between 16 June 2015 and 12 March 2019.
I therefore find that Mrs Galluzzo was overpaid carer payment for the period from 16 June 2015 to 12 March 2019, and this amount is a debt that is recoverable by the Commonwealth in accordance with section 1223 of the Act. The Secretary is asked to recalculate the amount of Mrs Galluzzo’s carer payment debt on the basis of this finding.
Issue 2: Are there any grounds for writing off or waiving all or part of Mrs Galluzzo’s carer payment debt from 16 June 2015 to 12 March 2019?
As a general rule, if a person has a debt to the Commonwealth, they are required to repay the debt. However, the Act sets out particular situations where a debt may be written off, which means that repayment of the debt is postponed for a definite or indefinite period; or waived, meaning that the debt does not need to be repaid.
Should Mrs Galluzzo’s carer payment debt be written off?
Section 1236 of the Act sets out the circumstances in which a debt may be written off. Subsection 1236(1A) states that the Secretary may decide to write off a debt if it is irrecoverable at law, the person has no capacity to repay it, the person’s whereabouts are unknown, or it is not cost-effective for the Commonwealth to try to recover the debt.
As there is no evidence the conditions in subsection 1236(1A) are met, I am satisfied Mrs Galluzzo’s carer payment debt for the period from 16 June 2015 to 12 March 2019 should not be written off.
Should Mrs Galluzzo’s carer payment debt be waived by reason of ‘administrative error’?
Section 1237A of the Act sets out that the Secretary must waive the right to recover the portion of a debt that is attributable solely to administrative error by the Commonwealth if the person received the payments in good faith. This means that I must be satisfied the debt occurred solely because of administrative error and the person correctly believed they were entitled to receive the payments.
I also have had regard to the decision by Wilcox J in Secretary, Department of Family and Community Services v Sekhon,[34] in which his Honour stated:
However, it seems to me, the Tribunal failed to consider the significance of the inclusion, in s 1237A(1), of the word “solely”. For the subsection to have effect, the “proportion” of the debt – in this case, it is common ground, that would be the whole of it – must be “attributable solely” to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes. [emphasis added] [35]
[34] [2003] FCA 76.
[35] Ibid [41].
In view of Mrs Galluzzo’s extensive submissions that she provided all relevant information to Centrelink on 26 May 2015 and within the following two weeks, I now consider whether her carer payment debt for the period from 16 June 2015 to 12 March 2019 occurred solely because of administrative error by Centrelink and whether she received the payments in good faith.
Based on the evidence, I am satisfied that Mrs Galluzzo had a document from 29 April 2015 (the Inventory of Property of Mr Galluzzo’s estate) listing her late husband’s property that she would inherit. This document includes an amount of $725,895 in superannuation, death benefit and income insurance payments (notably a higher amount than the payments of $600,000 Mrs Galluzzo said she told to Centrelink). I am also satisfied that probate from Mr Galluzzo’s estate was granted to Mrs Galluzzo on 17 June 2015, a date approximately three weeks after she completed her claim for carer payment on 25 May 2015.
As set out in my findings at paragraph 40 above, as at 16 June 2015, Mrs Galluzzo’s assets were at least $804,812, an amount that exceeded the assets value limit of $775,500 that was relevant to her circumstances on 25 May 2015. I find that, if Centrelink had been aware of all the relevant information about Mrs Galluzzo’s income and assets at this time, she would not have been granted carer payment due to the value of her assets.
I am satisfied that, while Mrs Galluzzo may have verbally informed Centrelink staff about monies she expected to receive from her late husband’s estate, there is no evidence she declared this in writing to Centrelink. There is no evidence before the Tribunal that Mrs Galluzzo provided documentation to Centrelink such as the Inventory of Property of Mr Galluzzo’s estate or the Letters of Administration dated 17 June 2015, or informed Centrelink about the cheque she received for $327,179.20 on 16 June 2015 within 14 days as she was required to do pursuant to section 66A of the Administration Act. I note that Mrs Galluzzo’s reporting obligations were set out in Part K of the Claim for Carer Payment she signed on 25 May 2015.
I am also satisfied that Centrelink sent multiple letters to Mrs Galluzzo from 24 July 2015 that provided clear information about:
·the value of her total assets and the amount of annual income that was used to calculate her carer payment; and
·her requirement to inform Centrelink within 14 days of any changes to her income, financial investments, assets or gift of assets.
I find that Mrs Galluzzo neither informed Centrelink the information contained in the letters about her income and assets was not correct; nor advised Centrelink about rental income she received from her investment properties, changes to her investments including transactions of shares and purchasing a further investment property, or her gift of a motor vehicle as she was required by sections 68 and 72 of the Administration Act until 22 January 2019 after Centrelink requested further information from her.
I have also considered Mrs Galluzzo’s submissions that she did not understand the information contained in the Centrelink letters including how her annual income and total assets were calculated; and that she was grieving for her husband, her mother and her mother-in-law following their deaths.
At the outset, I acknowledge Mrs Galluzzo would have experienced an extremely difficult and emotional time with the death of her husband, mother and mother-in-law over a period of 15 months. I also acknowledge that during this period Mrs Galluzzo continued to provide care for her two older brothers, who both have an intellectual disability, and support her adult children.
However, I find Mrs Galluzzo’s assertion that she did not understand the information contained in Centrelink correspondence about her income and assets implausible. It is simply not consistent with her evidence that, amongst other matters, she:
·managed the financial affairs of her mother from 2006 until 2015;
·was involved with the management of her own financial affairs, which included probate of her late husband’s estate between April 2015 and June 2015;
·was employed for a short period in August 2015;
·owned and received rental income from investment property ‘B’ from 2002;[36]
·bought and sold shares from August 2016 to April 2018;
·purchased an investment property ‘C’ in July 2017 and received rental income from this property; and
·understood about cross collateralisation of her properties.
[36] Exhibit T-T6, page 143.
In view of this evidence, I am satisfied that Mrs Galluzzo has a sufficient understanding of financial matters that means she is able to read and understand the information contained in Centrelink correspondence.
I also note that the information contained in the Centrelink letters was completely different to Mrs Galluzzo’s actual financial circumstances. For example, the Centrelink letter dated 24 July 2015 recorded her annual income as $74.00, at the same time that she was receiving rental income from property ‘B’ and had filed an income tax return for the 2014–2015 financial year that showed her taxable income was $39,045. This letter also stated Mrs Galluzzo’s assets were $268,702.50, less than one month after she deposited a cheque for $327,179. Subsequent letters from Centrelink throughout 2015, 2016, 2017, 2018 and 2019 all contain similar substantial differences between the amounts of her annual income and total assets recorded in Centrelink letters and the actual amounts of her assets and income.
I also find that Mrs Galluzzo’s statements about (mis)information she was told by staff at the Centrelink office, particularly that her carer payment was unaffected by her investment properties, inconsistent with Centrelink correspondence that informed her she was required to tell Centrelink within 14 days if (amongst other matters) she received income from any source and her financial assets changed in value by $2,000 or more.
I make these findings noting Mrs Galluzzo’s oral evidence to the Tribunal was inconsistent and, at times, obtuse; which raised clear concerns about the credibility of her evidence. For example, Mrs Galluzzo referred on a number of occasions to being in ‘severe financial hardship’ around the time she lodged her claim for carer payment even though she signed an affidavit in April 2015 that listed her husband’s property that was vested in her and received a cheque for $327,179.20 on 16 June 2015 that she deposited into her bank account on 23 June 2015, less than four weeks after she lodged her Claim for Carer Payment.
For these reasons, I cannot be satisfied the carer payment debt occurred solely due to administrative error and Mrs Galluzzo received the payments in good faith. This means Mrs Galluzzo’s carer payment debt cannot be waived pursuant to section 1237A of the Act.
Should Mrs Galluzzo’s carer payment debt be waived by reason of ‘special circumstances’?
Section 1237AAD of the Act provides that all or part of a debt may be waived in ‘special circumstances’. This waiver can only be applied where:
·the debt did not result wholly or partly from a person ‘making a false statement or misleading representation’ or failing to comply with a provision of the Act; and
·there are circumstances ‘other than financial hardship alone’ that are deemed ‘special’ and make it desirable to waive the debt; and
·it is more appropriate to waive rather than write off the debt.

The term ‘special circumstances’ is not defined in the legislation; however, decisions by the Tribunal and the Federal Court have considered the issue of special circumstances on many occasions. In every case, the individual circumstances of the case were examined to determine whether the circumstances were such that it would be unjust, unreasonable or inappropriate for the debt to be recovered. Reduced to its simplest, the decision-maker is required to consider whether there are circumstances in the particular case that suggest an exception should be made and the usual rule should not apply: see, for example, Dranichnikov v Centrelink [2003] FCAFC 133 at [65]-[66]; see also Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33].
I make two further observations about ‘special circumstances’ that must be present for me to exercise the discretion in section 1237AAD of the Act.
First, all the limbs in section 1237AAD of the Act must be satisfied to waive a debt by reason of ‘special circumstances’. This means that I must be satisfied that a person did not make any false statements or fail to comply with a provision of the Act and that it is appropriate to waive rather than write off the debt, as well as find there are special circumstances in the case.
Second, a debt can only be waived by reason of special circumstances where there are circumstances in addition to financial hardship; financial hardship on its own is not sufficient to make a finding of special circumstances. I note that most recipients of social security benefits are likely to experience some level of financial hardship; however, there is nothing unusual about that in isolation from other factors.
Mrs Galluzzo told the Tribunal she continues to provide care for her two older brothers who have an intellectual disability. She said that her brothers have previously not accepted care from anyone else and her need to care for them limits her opportunities for employment. Her brothers are in receipt of disability support pensions and reside in the home originally owned by Mrs Galluzzo’s mother.
Mrs Galluzzo continues to receive carer allowance for the care she provides her brothers in the amount of $260 per fortnight. She receives gross rental income of $795 a week from her investment properties ‘B’ and ‘C’, and $68 per month from interest from shares.[37] Her assets include investment properties ‘B’ and ‘C’ that she owns unencumbered and are valued at $519,000 and $327,000 respectively.[38] Mrs Galluzzo also owns property ‘A’, her principal home, that she valued at $960,000 with a home loan offset amount of $309,546.
[37] Exhibit T-T12, page 201.
[38] Exhibit T-T12, page 197.
Despite Mrs Galluzzo’s income and assets, she advised the Tribunal that the imposition of the carer payment debt would place her in ‘severe financial hardship’ because her ‘home is cross collateralized with [her] investment property’ and she has ‘associated costs with maintaining the properties as well as everyday living expenses’.[39] She said her husband’s death in February 2015 was devastating for her and she provided a report by a psychologist after the hearing dated 27 September 2016.
[39] Written statement from Mrs Galluzzo to the Tribunal on 26 June 2020.
I accept that Mrs Galluzzo would have experienced an extremely difficult period after the deaths of her husband, mother and mother-in-law in 2015–2016. I also accept that Mrs Galluzzo continues to provide care to her older brothers. Unfortunately, however, this does not take her situation out of the ordinary or usual case. Further, I cannot agree with Mrs Galluzzo’s submission that repaying her carer payment debt would place her in ‘severe financial hardship’: this is because her assets include her principal home and two investment properties (owned unencumbered) and she receives an annual income of more than $48,000 (including carer allowance). As set out in paragraphs 51 and 53 above, I have also made findings that Mrs Galluzzo failed to comply with provisions in the Administration Act and this precludes the debt from being waived under section 1237AAD of the Act.
For these reasons, I find that Mrs Galluzzo’s carer payment debt cannot be waived in accordance with section 1237AAD of the Act.
DECISION
The decision under review is set aside and, in substitution, the Tribunal decides that:
·Mrs Galluzzo was not entitled to receive carer payment in the period from 16 June 2015 to 12 March 2019.
·Pursuant to section 1223 of the Act, the whole of the amount of carer payment made to Mrs Galluzzo in the period from 16 June 2015 to 12 March 2019 is a debt recoverable by the Commonwealth.

I certify that the preceding 72 (seventy -two) paragraphs are a true copy of the reasons for the decision herein of Dr L Bygrave, Member

......[sgd]..................................................................
Associate
Dated: 11 August 2020

Date of hearing: 17 June 2020

Date final submissions received: 7 July 2020

Applicant: Self-represented

Solicitors for the Respondent: Dr Stephen Thompson, Services Australia

[2020] AATA 2836

11 August 2020

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Remedies

Date of hearing:	17 June 2020
Date final submissions received:	7 July 2020
Applicant:	Self-represented
Solicitors for the Respondent:	Dr Stephen Thompson, Services Australia