GGGD and Secretary, Department of Social Services (Social services second review)
[2020] AATA 802
•3 April 2020
GGGD and Secretary, Department of Social Services (Social services second review) [2020] AATA 802 (3 April 2020)
Division:GENERAL DIVISION
File Number(s): 2018/7216 and 2018/7218
Re:GGGD
MXXR
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:3 April 2020
Place:Sydney
The Tribunal affirms the reviewable decision of AAT1
............................[sgd]............................................
Emeritus Professor P A Fairall, Senior Member
CATCHWORDS
SOCIAL SERVICES – overpayment of disability support pension, aged pension and wife pension – debt owed to Commonwealth – failure to disclose additional property – whether debts should be written off or waived – whether debts were the sole administrative error of the Commonwealth – any special circumstances to justify waiver the debts – decision affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Administrative Appeals Tribunal Act 1975 (Cth)
Acts Interpretation Act 1901 (Cth)
Criminal Code Act 1995 (Cth)CASES
Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190
Jordan v Secretary, Department of Family and Community Services [2004] FCA 1582
Phelps and Department of Family and Community Services [2000] AATA 638
SAJ; Secretary, Department of Family and Community Services [2002] AATA 430
Wendt and Secretary, Department of Social Security [1998] AATA 571
Meyer; Secretary, Department of Family and Community Services [2004] AATA 240
Lohner and Secretary, Department of Social Security [1994] AATA 676
Bazley and Secretary, Department of Family and Community Services [2002] AATA 593
Quiggin and Secretary, Department of Social Services (Social services second review) [2019] AATA 3324
Stafford and Secretary, Department of Social Services (Social services second review) [2018] AATA 2746
Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25
The Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72
SECONDARY MATERIALS
Guide to Social Security Law, 20 March 2020
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
3 April 2020
OVERVIEW
Given certain aspects of the case I have decided that the names of the parties should be anonymised pursuant to section 35 of the Administrative Appeals Tribunal Act 1975 (Cth).
GGGD migrated to Australia in 1954[1] or 1955.[2] In 1962, he bought a property in Sydney (referred to hereafter as number 105) with his two brothers as joint owners in equal shares.[3] In 1962, GGGD and MXXR wed,[4] and they started married life at number 105. In 1966, GGGD bought his brothers’ shares.[5]
[1] Applicant’s SFIC, para 6.
[2] GGGD, Affidavit, 17 May 2019, para 2.
[3] GGGD, Affidavit, 17 May 2019, para 12.
[4] Respondent’s SFIC, para 2.1.
[5] GGGD, Affidavit, 17 May 2019, para 12.
In 1978, GGGD and MXXR purchased number 103, the house next door.[6] They renovated the house and then moved in, living there for close to thirty years.[7] In March 2017, they moved back to 105.[8]
[6] Transcript, 14 June 2019, p 34 [30] and p 39 [10]. According to the respondent’s SFIC, number 103 was purchased in 1962: Respondent’s SFIC, para 2.2; but in evidence, GGGD stated that number 103 was purchased in 1978. The latter year is accepted by the respondent: Transcript, p 62 [40].
[7] Transcript, 14 June 2019, p 34 [40].
[8] Transcript, 14 June 2019, pp 31 [6]; 34 [35].
In those intervening years they sometimes rented out rooms in 105,[9] including to their son, who lived there after he married.[10]
[9] Transcript, 14 June 2019, p 57 [45].
[10] Transcript, 14 June 2019, p 57 [15].
In 1974, GGGD purchased a property for $19,500 in Queensland.[11] It was also renovated and rented out, initially to a family friend.[12] GGGD sold the property in April 2018 for $1,033,000,[13] and the transfer was settled in July 2018.[14] The Queensland property was, like 105, registered in his name alone.
[11] T12, p108.
[12] GGGD, Affidavit, 17 May 2019, para 16.
[13] T15, p138.
[14] Respondent’s SFIC, para 2.55.
GGGD’s English is very limited despite his long residence in Australia. It is accepted that he cannot read or write, either in English or in his home language. The Tribunal was told that GGGD’s English language skill was barely enough to ask for simple items in a shop, and that he spoke his home language at work. Given this significant handicap, his success is remarkable.
In the sixties GGGD worked as a truck driver for the Post Master General, and in the seventies and eighties he worked as a handyman around residential properties.[15] In his last job for eight years he was a general assistant at a school until it closed.[16] MXXR does not appear to have been employed.
[15] Transcript, 14 June 2019, p 36 at [30].
[16] ST1, p 651.
On 17 November 1992, whilst living at number 103, GGGD made a claim for Disability Support Pension (‘DSP’) under the Social Security Act 1991 (Cth) (‘the SSA’) which was duly granted.[17] In 2002, he transferred to receiving Aged Pension.
[17] T6, pp 69 and 71.
On 19 November 1992, MXXR claimed Wife Pension,[18] which was duly granted. She transferred to receiving Aged Pension in November 2006.[19]
[18] T26, p 560.
[19] T9, p 79.
On 20 July 2017, the Department received a tip-off that GGGD and MXXR had undisclosed property in New South Wales and Queensland, as well as interests in a company and a Trust.[20] The matter was duly investigated. Third party searches confirmed that GGGD was the owner of two undisclosed properties, namely number 105, as well as the house in Queensland.
[20] T19, p 215.
On 6 April 2018, a warning letter was issued to the applicants relating to an evaluation of their circumstances by the Fraud Investigation Branch.[21]
[21] T19, p 217.
A departmental valuation determined that they owned real estate (other than their home at number 103) with a combined value of just over $2 million (with number 105 being approximated at just over a million, and the Queensland property at $800,000), and an estimated combined rental income of $36,400 per annum.[22]
[22] T19, p197; T19, p 210.
Either property taken alone would have disqualified them from receiving the pension under the asset test.
GGGD and MXXR’s pensions were cancelled on 12 December 2017.
On 14 February 2018, the Department raised a debt against GGGD for overpayment of DSP and age pension for the period 20 November 1992 to 12 December 2017, amounting to $284,403.76.[23]
[23] Debt number X7436539.
On 14 February 2018, the Department raised a debt against MXXR for overpayment of Wife Pension and Age Pension for the period 19 November 1992 to 12 December 2017, amounting to $284,201.37.[24]
[24] Debt number X6435671.
On 18 May 2018, an authorised review officer (‘ARO’) of the Department affirmed the decisions and advised GGGD[25] and MXXR [26] accordingly.
[25] T16, p 152.
[26] T17, p 159.
On 24 October 2018, the Social Services and Child Support Division of the Tribunal (‘AAT1’) by oral decision affirmed the decisions made by the ARO.[27]
[27] T2, p 11.
On 5 December 2018, the applicants applied to the Tribunal for review of the AAT1 decision.[28]
[28] T1, p 1.
After reviewing the available evidence, written submissions and supplementary submission filed by counsel, I affirm the decision of the AAT1. I set out my reasons below.
THE HEARING
The matter was listed for hearing on 14 June 2019.
MXXR did not attend the hearing due to frailty and poor health. GGGD was present with the assistance of an interpreter. He gave evidence in chief and was cross-examined by the respondent’s solicitor.
During the first few hours of the hearing GGGD became progressively less well, and the hearing was adjourned shortly after the resumption following lunch. In view of the health condition of both applicants, the parties agreed to proceed directly to final submissions, which were filed in February 2020.
The following material was before the Tribunal:
(a)Exhibit E1 Photographs of number 105;
(b)Exhibit E2 Title search for number 105;
(c)Exhibit E3 Photograph of number 103;
(d)Exhibit E4 Title search for number 103;
(e)Exhibit E5 Map of Queensland property;
(f)Exhibit E6 Title search for Queensland property;
(g)Exhibit E7 Transfer;
(h)Exhibits E8 T-documents and Supplementary T-documents.
I also note that a Deed of Renunciation pertaining to a Family Trust was admitted but not marked as an exhibit.[29]
The submissions
[29] Transcript, 14 June 2019, p 16.
GGGD’s 1992 DSP application was before the Tribunal. In that claim form GGGD wrote his home address as number 103, and stated that he had resided at that address for 30 years. He declared that he owned his own home outright. He declared that he did not own interest in any real estate in Australia or overseas, which was not previously disclosed. He declared a small amount of cash and a car valued at $1,500. He said that he did not have any other assets. He stated that his wife, MXXR, who resided at number 103, had assisted him to complete the form.
In relation to MXXR, the Age Pension New Claim Summary Form does not refer under ‘Assets’ to any real estate.[30]
[30] T9, p 80.
The respondent submits that the debts were properly raised against the applicants because at all relevant times their assessable assets exceeded the asset test threshold.[31] Counsel for the applicant agrees with this submission, which accords with the findings of the Department, the authorised review officer and AAT1.[32]
[31] Transcript ,14 June 2019, pp 3 [10], 6 [4] and 25.
[32] Applicant’s Closing Submissions (‘ACS’), para 84.
The overpayment is therefore recoverable by the Commonwealth as a debt under s 1223(1) of the SSA unless there is some basis for writing it off under s 1236 (debt not recoverable) or waiving it under either ss 1237A (sole administrative error) or 1237AAD (waiver in special circumstances).
The applicant and respondent agree that the criteria for applying s 1236 are not met.[33]
[33] Social Security Act 1991 (Cth) s 1236; see Transcript,14 June 2019, p 7 [45].
But Counsel for the applicant joined battle over ss 1237A(1) and 1237AAD, contending that these provisions in the SSA permit the debts to be waived.
With regard to s 1237A(1) the applicant’s counsel argues that the debts are not recoverable because the payments are attributable solely to an administrative error of the Department of Human Services (‘the Department’), and were received in good faith.[34] She says that the applicants did not contribute in any relevant way to the Commonwealth’s administrative error.
[34] Social Security Act 1991 (Cth) s 1237A.
The applicant’s counsel points to two social security claim forms previously made by GGGD, namely a 1989 unemployment claim form[35] and a 1991 Sickness claim form.[36] She also points to information provided by GGGD in his 1991 tax return. In the claim forms there is a reference to number 105 as a rental property. She offers this as evidence that it was known by the Department that he owned a rental property at the time of his DSP application in November 1992. She says that, given the previous disclosure of number 105, the Department was ‘aware’ or should have been aware that GGGD and MXXR were ineligible to receive any pension payments, and the decision to make those payments and thus create the debt is solely attributable to an administrative error of the Commonwealth.
[35] ST2, p 654.
[36] ST8, p 673.
As to the failure to disclose the Queensland property, she says that this occurred because of GGGD’s language difficulties.
Counsel for the applicant argues that the pension monies were received by the applicants in good faith. They had no intention to misrepresent their asset position. The debts did not result wholly or partly from either of them making a false statement, representation or failing or omitting to comply with a provision of the SSA. She argues that the Tribunal is therefore required under s 1237A to waive the debts.[37]
[37] Social Security Act 1991 (Cth) s 1237A.
With regard to s 1237AAD, she argues that there are special circumstances (other than financial hardship) as to why the debts should not be recovered.[38] She emphasises old age and infirmity, compounded by language difficulties, as reasons why the monies should not be repaid.
[38] Social Security Act 1991 (Cth) s 1237AAD.
LEGISLATION
Section 1237A of the SSA provides:
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
The Note to s 1237A provides that:
Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
Explanatory notes within the body of an enactment are taken to be part of the Act.[39] The reference to a debt being caused partly by administrative error and partly by one or more other factors suggests that s 1237A(1) raises issues of factual causation.
[39] Acts Interpretation Act 1901 (Cth) s 13(1).
Section 1237AAD provides:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
With regard to s 1237A(1), the Social Security Guide provides at 6.7.3.30:
When is a debt attributable solely to administrative error?
In general whenever a mistake has been made in administering a payment, the debt will arise ‘solely to an administrative error’ providing the recipient’s conduct has not contributed to the debt in any way.[40]
[40] 6.7.3.30.
Having given some examples, none of which apply to this case, the Guide continues:
The requirement that part of the debt must have arisen ‘solely’ from administrative error means that there must have been no other factors that caused the debt to arise or contributed to the debt arising. The part of the debt must have arisen as a result of administrative error alone.
In considering the meaning of sole attribution by an administrative error, one is guided by the comments of Selway J in Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190 who said at [35]:
The ordinary or usual interpretation of the phrase 'attributable solely to' is that it refers to the single or sole cause of the relevant act or event. The word 'attributable' means 'capable of being attributed'. It involves an objective assessment of causation. The words 'a debt attributable solely to an administrative error' can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.
It is useful to consider some past applications of s 1237A(1) in other matters. Generally, the section has not applied where the applicant fails to disclose critical information,[41] even where the error has arisen by reason of false information provided by a third party.[42] Nor where the applicant fails to answer a question by simply leaving it blank,[43] or where information provided by the applicant is such that the Department is required to perform some further complex valuation process in order to determine eligibility and entitlement, such as the valuation of a share portfolio.[44]
[41] See Jordan v Secretary, Department of Family and Community Services [2004] FCA 1582 (failure to disclose NEIS payments); Phelps and Department of Family and Community Services [2000] AATA 638 (failure to disclose that he was a full-time student receiving Austudy).
[42] See SAJ; Secretary, Department of Family and Community Services [2002] AATA 430 (the applicant’s partner falsely misstated his income, resulting in an overpayment to her).
[43] See Wendt and Secretary, Department of Social Security [1998] AATA 571 (the applicant left an answer to a question which related to her income blank on her claim form, leading to the inference that she had no income).
[44] See Meyer; Secretary, Department of Family and Community Services [2004] AATA 240, at [36]-[39].
Cases where s 1237A(1) has been successfully relied upon are relatively uncommon, but the following are noteworthy.
In Lohner and Secretary, Department of Social Security [1994] AATA 676 the applicant and his wife advised the Department that the wife was in receipt of payments from another Government Department, but this advice was not followed up by Departmental officers. The Department sought to recover a substantial overpayment. The Tribunal at [17] found that the circumstances leading to the overpayment arose solely from Departmental error:
17.
...(1) At the time of lodging his claim for Unemployment Benefit the applicant was issued with a Module P for his wife to complete. She completed this Module indicating at question 21 that she was in receipt of a payment from another Government Department. The response of ‘Yes’ to this question should have alerted the Department to provide the applicant and his wife with a Module I in order to obtain further details about that payment, but this was not done;
(2) The applicant then assumed that as he had advised the Department his wife received a War Widow’s Pension, he did not have to further advise of this fact on his income statements;
(3) The applicant’s rate of payment did not take into account his wife’s War Widow’s Pension; and
(4) Due to the failure by Departmental officers to properly carry out their duties, the applicant was paid an excess of benefits for which the Department must accept sole responsibility...
In Bazley and Secretary, Department of Family and Community Services [2002] AATA 593 at [34] the Tribunal found that there was administrative error on the part of the respondent in not investigating the applicant's indication in the claim that she was completing “other work”, and that having been:
…furnished with information which it had an obligation to examine and if necessary, clarify, in order for it to make a finding as the applicant's entitlement to carer pension, yet it failed to do so...
The Tribunal noted at [37] that:
…If there was any uncertainty, then Centrelink had a duty to clarify that uncertainty.
In Quiggin and Secretary, Department of Social Services (Social services second review) [2019] AATA 3324 the applicant referred to the existence of a company but failed to complete the required information module in his application for aged pension. The Department was therefore on notice of the existence of a possible corporate asset and that the applicant’s application was incomplete, but decided without further inquiry to grant his pension. The Tribunal therefore set aside the Departmental decision by reason of sole administrative error pursuant to s 1237A(1).
CONSIDERATION
Counsel for the applicant asserted that GGGD had informed the department of his asset position on at least three occasions prior to November 1992.
I address each in turn.
The claim for unemployment benefits made on 11 July 1989
Counsel for the applicant points to a claim for unemployment benefits made by GGGD on 11 July 1989.[45] Specifically, she points to a form headed ‘Statement’. She says the existence of the Sydney rental property was “made quite clearly at page 654”.[46] The following passage appears in clear legible handwriting:
I do own another house at [number 105] and the estimated value of that house is about $127,000…
[45] ACS, para 19; ST1 p 650.
[46] ST2, p 654; Transcript, 14 June 2019, p 44 [16].
The difficulty with this submission is that in evidence GGGD categorically denied filling out the 1989 application form. He gave evidence that he never applied for unemployment benefits. He said that, when he was in hospital, someone came to visit him to assist with filling out the document. He believed the person was a Centrelink official. He later received a call from Centrelink regarding unemployment benefits, where he informed Centrelink he was not obtaining any benefits. His evidence at the hearing, translated by the interpreter, was as follows:
He asked Centrelink to … show some evidence that he applied for benefits. He looked at the paper and then they told him that’s not his signature and it’s not you that’s getting the unemployment benefits, it’s other people that are getting it in your name. They looked through all the papers that had and it was the same signature as this one here on this page here [654]. They told him to go and then they’re going to find the person that’s receiving the benefit. After a week – they told him that – they came back a week later and they told him that the person who was getting the unemployment benefits under his name had left Australia. I’ve never seen this page and they’ve got all records at Centrelink of what happened at that time. My name is there, the signature is not mine on this page on page 654.[47]
[47] Transcript, 14 June 2019, p 47 [17].
At the hearing GGGD was exceedingly vague about the circumstances in which this form was completed. He gave this evidence:
The person that came to the hospital, he said he was from Centrelink and he filled in all the - the whole form and then he just asked me to sign it and then he took the papers and left. He showed him that he wrote down what he’s supposed to write down. I was very sick, I didn’t really know what was going on. I couldn’t breathe.[48]
[48] Transcript, 14 June 2019, p 51[12].
The 1989 claim form can hardly be relied upon as proof of a disclosure when the applicant denies that it is his document.
There are other hurdles to overcome with the applicant’s submission. First, the period of time before this purported ‘disclosure’ and the later claim for DSP – namely some three years later. I do not think that a disclosure made in 1989 could be reasonably regarded as a disclosure for the purposes of the 1992 DSP or Wife Pension application. I note in passing that under Commonwealth law there is a duty not to make a false statement or omission at the time of making a claim for a social security benefit.[49]
[49] Criminal Code, s 136.1.
Second, the Queensland property is not referred to in the July 1989 document. Counsel for the applicant says he did not disclose it because he was misinformed by the interpreter as to the meaning of a key question. Her argument is that he did not, on this and other occasions, disclose the Queensland property because he mistakenly thought that he did not need to disclose property that was not a farm.[50] The difficulty with this argument is that it assumes that but for his mistaken belief he would have disclosed the Queensland property, in which case the pension would not have been approved and the debt would not have been created. But any such mistaken belief was his, not the Department’s. An erroneous belief such as suggested by the applicant’s counsel does not support the finding that the debt is solely attributable to an error by the Commonwealth.
[50] Applicant’s Closing Submission (ACS), para 24.
In any event, I hold doubt as to whether GGGD held such a belief. Such a belief, if true, would imply that one could own multiple non-farm rental properties without failing the asset test. One might well struggle to find any person who would regard such a belief as reasonable, or indeed, hold such a belief. And if GGGD held such a belief, why did he disclose number 105 which was also not a farm? Moreover, and making allowances for age and ill health, GGGD’s evidence did not reassure me as to the authenticity of this belief.
Counsel for the applicant accepted that when their pensions were cancelled, GGGD and MXXR owned between them well over three million dollars’ worth of real estate.[51] They do not appear to have been financially naïve. The very fact that they had accumulated such assets from inauspicious beginnings suggests a degree of financial acuity. There was also a family trust in the wife’s name.[52] GGGD is not a naïve individual, and is not socially isolated or financially unsophisticated.
The Sickness Benefit Claim Form – 18 November 1991.
[51] As noted above the Queensland property was sold for just over one million on 6 August 2018 and each of the Sydney properties was worth over a million.
[52] MXXR entered into A Deed of Renunciation as a Beneficiary under the trust on 12 April 2018.
Counsel for the applicant then points to the 1991 application for sickness benefits signed by both GGGD and MXXR.[53] The claim form is dated 18 November 1991.
[53] Transcript, 14 June 2019, p 52 [45]; ACS, para 29.
She correctly points to the fact that the Sydney investment property was disclosed along with a valuation and income details.[54]
[54] ACS, para 36 and 39.
The Form R Real Estate details which were provided in the claim form were completed in response to an affirmative answer to the question: “Do you own or have an interest in any real estate/farm (apart from the home you live in)?”[55] In this form, GGGD and MXXR’s property at number 105 is clearly disclosed (Q3):
(a)Number 105 is described as “commercial premises” (Q2);
(b)The legal description given is “house” (Q10);
(c)In response to the question “Who are the owners of the property?” it is stated that GGGD and MXXR are each 50% owners (Q4);
(d)He received $100 pw gross rent from the property (Q5); and
(e)There is an estimated value of $138,000 (Q13).
[55] ST8, p 673.
Despite this information being provided, the Queensland property was not disclosed even though it was also assessable. There is no response provided to question 4 on the form under Asset Details, which states: “Please give details of any other assets you or your partner have (other than investments or real estate already disclosed)”.
Counsel for the applicant says that the words in parenthesis properly interpreted mean that any previous disclosure to the Department made for any other purpose absolves the applicants from an obligation to make a fresh disclosure at the time of making the claim. I do not accept this. It is perfectly open to interpret the words in parenthesis to mean ‘not otherwise disclosed or declared elsewhere in the present application form’. This is more consistent with the duties on claimants to provide accurate information at the time of making a claim, discussed above in these reasons. The claimant is in the best possible position to provide current information to the Department to enable eligibility to be assessed.
Counsel for the applicant agrees that the Queensland property was not disclosed in the 1991 sickness claim. But she argues that information was provided to the Commonwealth in GGGD’s 1991 tax return, where the existence of the Queensland property could have and should have been inferred. The failure to disclose the Queensland property in November 1991 is not rectified by anything contained in the December 1991 tax return.
In relation to the 1992 DSP claim, the 1991 Sickness Claim (like the 1989 unemployment form) fails to establish prior disclosure of the applicants’ property at number 105, let alone the Queensland property.
The 1992 DSP claim process required a contemporaneous disclosure to avoid any attribution of fault to the applicant for the creation of this debt. Any reliance on a prior disclosure invites consideration of the question as to whether the failure to make a contemporaneous disclosure contributed to the error - such that it cannot be said that the error is solely attributable to the Commonwealth.
The 30 December 1991 Tax ‘Disclosure’
Counsel for the applicant points to what she describes as the third disclosure, namely GGGD’s income tax return.[56] She says that the amount disclosed as rent exceeded that which might have been derived from the Sydney investment property alone,[57] and that:
By disclosing his receipt of rental income from the [Queensland] property, [GGGD] had also disclosed his ownership of that property.
[56] ACS, para 40–44; ST4 p 657.
[57] ACSpara 42(d).
GGGD did not allocate his rental income between two rental properties,[58] and the suggestion that the Department was able to infer the existence of a rental property in Queensland from disaggregated gross rental figures is simply untenable. I do not accept that this was by any stretch a disclosure of the Queensland property.[59]
Relevance of non-disclosure of the Queensland property
[58] ST4, p 659 [17].
[59] ACS, para 44.
The simple fact is that GGGD did not at any stage disclose the Queensland property. Counsel for the applicant argues that this does not matter. She says that the failure to disclose the Queensland property:
is immaterial to the outcome of the respondent’s determination to pay the benefits to [the applicants] since the ownership of the [Sydney] property alone exceeded the asset and income thresholds in 1989 and the income thresholds in 1991’[60]
[60] ACS, para 46.
The applicant’s failure to disclose the Queensland rental property is not ‘immaterial’ to the question posed by s 1237A(1). Under s1237A(1) a debt that is attributable solely to an administrative error made by the Commonwealth must be waived if the debtor received the payments that gave rise to the debt in good faith. It is probable if not certain that had GGGD disclosed the Queensland property at the time of making the DSP application, the pension would not have been approved, and therefore the debt would not have arisen. The applicant is not entitled to assume that the Secretary would have ignored such disqualifying information and that his disclosure would have made no difference. There is an air of unreality about this argument.
Good faith
At the time of claiming DSP in November 1992, GGGD failed to declare his property at number 105 explicitly and did not at any stage disclose the existence of the Queensland property.
Counsel for the applicant suggested that GGGD was misled by an interpreter who did not “adequately interpret the form”.[61] There is indeed a reference to an interpreter on the back of the Asset Statement for the 1989 Unemployment Claim Form.[62] But I have already described the difficulty I have with this form, given the doubt previously noted as to whether it was completed by GGGD at all. He eschewed this form at the hearing.
[61] ACS, p 22[99].
[62] ST2, p 655.
I note that the 1991 Sickness Benefit Form was co-signed by MXXR.[63] She apparently assisted GGGD to complete the 1992 DSP application Form.[64]
[63] ST8, p 674.
[64] T7, page 76.
The respondent’s representative submits that this is not simply a case of failing to disclose the existence of investment properties but of ”positive misrepresentation” and “consistent positive misrepresentation” from 1992 onwards that GGGD and MXXR did not own any investment property.[65] He argued:
This is important, not only for sole administrative error, but also for the good faith argument. It was not only in those real estate forms that accompanied the disability support pension application, but also in many, many subsequent letters, where there were duties imposed on [the applicants] to disclose any income, such as, in particular, rental income, and real estate properties, and [the applicants] in my contention failed to comply with those obligations.[66]
[65] Transcript, 14 June 2019, p 20 [14], [24].
[66] Transcript, 14 June 2019, p 20 [30].
Failure to provide information relevant to a social security claim may result in criminal sanctions and is a very serious matter. The respondent’s representative referred to s 136.1(1) of the Commonwealth Criminal Code which provides, inter alia, that a person commits an offence if he or she makes a statement in a document knowing that the statement is false or misleading and the statement is made in connection with an application or claim for a benefit.[67] Section 136.1(4) deals with reckless conduct.
[67] See Criminal Code Act 1995 (Cth), Schedule – The Criminal Code.
This is not the occasion to consider whether the applicant knowingly or indeed recklessly made any false statement or representation or knowingly failed or omitted to comply with a provision of the Code. The respondent acknowledged that this was not fraud case,[68] but he reserved his position on the question of bad faith.[69] A knowing representation or omission would be evidence of a criminal offence under sections 136.1 and 137.1 of the Criminal Code, as noted by the respondent.
[68] Transcript, 14 June 2019, p 20 [39].
[69] Transcript, 14 June 2019, p 62 [22].
Counsel for the applicant denies that any false statement or representation was made by either applicant. She says there was no omission to comply with the Act, and that there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt.
In all the circumstances it is impossible to my mind to justify a positive finding that GGGD acted in good faith when he applied for DSP. I make a similar finding in respect of MXXR’s claim for Wife Pension and subsequently, Aged Pension.
Failing to advise of changed circumstances
In the present case the applicants received multiple letters from the respondent over a number of years requiring updated information about their changing circumstances. For example, on 24 November 1992, MXXR was advised:
Under sections 172 and 173 of the Social Security Act 1991 you must tell us within 14 days…if any of these things happen or are likely to happen…If your combined assets go above $160,500.[70]
[70] T26, pp 560 and 561.
The respondent outlined many other occasions where the applicant had been notified of their reporting requirements.[71]
[71] Respondent’s SFIC, para 2.26 – 2.44.
There are many cases where the reach of s 1237A has been curtailed by the applicant’s subsequent failure to inform Centrelink of a change of circumstances. A recent example is Stafford and Secretary, Department of Social Services (Social services second review) [2018] AATA 2746 at [78], where the Tribunal noted:
78. …It is at least arguable that, had the Applicant fully complied with the reporting requirements imposed on him, the debt for which he now finds himself liable might not have accrued. Without further evidence it is ultimately impossible to determine if this would have been the case. However, it is certainly not the case that, given his failure to comply with the reporting requirements made clear in the notices sent to them, the debt in question can be blamed solely on an administrative error on the part of the Commonwealth.
79. In the circumstances, section 1237A of the Act has no application to the facts of this case and the debt in question cannot be waived under section 1237A of the Act.
Counsel for the applicant’s suggestion that there was nothing to report because their circumstances had not changed overlooks at the very least the escalating value of their real estate.
My conclusions on matters of fact relevant to s 1237A(1) are:
(a)Neither GGGD nor MXXR disclosed the existence of the Queensland property in November 1992 when making their respective claims for DSP and Wife Pension or at any time prior to 8 February 2018;[72]
(b)The existence of number 105 as an assessable property was disclosed to the Department in 1991 (in GGGD’s application for sickness allowance);
(c)I make no finding with respect to the alleged disclosure in the 1989 unemployment claim form;
(d)GGGD and MXXR failed to disclose the existence of number 105 when applying for DSP and Wife Pension in 1992 respectively;
(e)There is insufficient evidence before the Tribunal to justify a finding that GGGD or MXXR even contemplated whether the 1991 disclosure of number 105 was sufficient for the purposes of a claim for DSP and Wife Pension in 1992. I am left in doubt as to whether they believed in November 1992 that “no disclosure was required”, because number 105 had been “previously disclosed”;
(f)I draw a negative inference from the fact that they took no steps in 1992 or thereafter to ensure that all relevant matters were disclosed to the Department.[73]
(g)In any case, the failure to disclose the Queensland property is fatal to a claim of sole attributable error.
[72] Respondent’s SFIC, para 2.51.
[73] ST8, p 674.
The creation of the debts owed to the Commonwealth by GGGD and by MXXR cannot be said to be solely attributable to a Commonwealth administrative error. The applicants were entitled to be paid on the basis of information provided at the time of their claim.
I therefore find that the debts owed by GGGD and MXXR are not solely attributable to an administrative error by the Commonwealth.
Section 1237AAD – special circumstances
Section 1237AAD provides a second string to the applicant’s bow. The question posed by s 1237AAD(b) is whether there are special circumstances, other than financial hardship alone, that justify the waiving of the loan, either in whole or part.
In Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33], Besanko J noted that it was an overstatement to equate “special” circumstances with “exceptional” circumstances. It was not the intention of Parliament to confine the exercise of discretion to an exceptional case. His Honour noted that:
There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case...
The couple is now elderly; GGGD is 84, and MXXR is 77. The medical issues suffered by the applicant and his wife are significant. GGGD suffers from chronic obstructive pulmonary disorder and requires ongoing care by a respiratory physician, and had a bypass in 2004.[74] MXXR suffers from Parkinson’s disease, anxiety and depression and experiences tremors of the hands, legs and head.[75] No doubt the present proceedings weigh heavily on them and have taken an inevitable toll. But it is not possible to discern any special feature of their health conditions that would take the case outside the unfortunate but predictable deterioration of health that often accompanies old age. Poor health and language difficulties in particular are not uncommon.
[74] Applicant’s SOFIC, para 75-76.
[75] Applicant’s SOFIC, para 17.
In the present case the language difficulties experienced by GGGD presented a handicap, but there were also ready means available to him to assist with translation of the various letters and notices he received, including asking for help from members of his family: see The Secretary, Department of Family and Community Services and Jonauskas [2001] AATA 72. GGGD and MXXR do not appear to be financially naïve in financial or administrative affairs. At the very least they were careless as to how they went about providing this critical information to the Department. In this context it is noteworthy that the applicants had the additional strong support of their adult children, and their two sons attended the hearing in person.[76] It is hard to believe that given their overall asset position, which included two residential investment properties and a valuable Sydney property, that questions were not raised in anyone’s mind as to GGGD and MXXR’s entitlement to social security payments. They were not alone in the world and it is clear that their son took a keen interest in their financial affairs. It is indeed surprising that over this entire period of time no-one questioned whether their relative affluence might render them ineligible to receive regular social security payments.
[76] Transcript, 14 June 2019, p 65 [10].
The size of the debt, the lengthy period of time over which it accumulated and GGGD’s English language difficulties are distinctive features of the case. On the balance, however, is hard to discern why such factors should be accorded special status.
There is no doubt that the applicants received a substantial amount of money over the past quarter of a century that they were simply not entitled to. Despite the obligation to repay these monies, the applicants will remain in a strong asset position. Given that the properties were purchased before September 1985 they are not liable to capital gains tax.[77] The circumstances of this case are in my view far removed from being sufficiently special to justify a discretionary waiver of the debt.
[77] T19, p 209.
There are no “special circumstances” under s 1237AAD applicable to either GGGD or MXXR such that the debt owed by either applicant should be waived.
CONCLUSION
The decision of AAT1 is affirmed.
I certify that the preceding 93 (ninety three) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member.
94.
...........................[sgd].......................................
Associate
Dated: 3 April 2020
Date of hearing: 16 October 2019 GDDD: In person MXXR
Counsel for the Applicant:
Solicitors for the Applicant:
Solicitors for the Respondent:
Not available
Ms J Gartlan
Mr A Tiedt
Armstrong LegalDr S Thompson
Department of Human Services
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