Greenwood and Secretary, Department of Employment and Workplace Relations

[2006] AATA 44

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 44

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2005/570

GENERAL ADMINISTRATIVE DIVISION		)
Re		DEBRA GREENWOOD

Applicant

And SECRETARY, DEPARTMENT
OF EMPLOYMENT AND
WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms M J Carstairs, Member

Date23 January 2006

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

M J Carstairs
  Member

CATCHWORDS

SOCIAL SECURITY – parenting payment – overpayment as value of assets above threshold – overpayment not due solely to administrative error – failure to correctly inform Centrelink of the change of asset value – waiver provisions do not apply – decision affirmed

Social Security Act 1991 s1223

Ryde v Secretary Department of Family and Community Services [2005] FCA 866
Secretary Department of Social Security v Hales (1998) 82 FCR 154

REASONS FOR DECISION

23 January 2006   Ms M J Carstairs, Member

1.      Under the Social Security Act 1991 (the Act) a person’s assets must be assessed to calculate their correct rate of social security payment.  Debra Greenwood has received parenting payment from Centrelink for some time.  She has now been told that during a period between 2003 and 2005 her assets were too high and parenting payment should not have been paid to her. 

2.      The circumstances that led to the overpayment relate to Mr and Mrs Greenwood re-organising their real estate holdings in 2003.  They have two properties, one being the home they live in, and the other a rental property.  In about October 2003, they sold one property at Diddillibah and purchased another at Woombye.  They held on to their property at Buderim, over which there was a mortgage.  

3.      Importantly, in terms of this overpayment of parenting payment, during 2003 they also moved into the Buderim property.  Previously this property was tenanted.   This contributed to the overpayment, because there are certain social security consequences that follow once Buderim became their principal place of residence, rather than it being the rented property.  The Act allows the value of mortgage debt to be offset against a rented property but not against a principal place of residence.  While Buderim was tenanted, its overall value was reduced by the mortgage.  Once they were living in it, Buderim was not taken into account for assets testing, but also any other investment property was not going to be reduced in value to take account of the mortgage.

4.      Cash was freed up by the sale of the property at Diddillibah in 2003, because the new investment property at Woombye was cheaper.  Mr and Mrs Greenwood intended to use the surplus money to improve the Buderim property. 

5.      Centrelink was not aware of the Greenwood’s overall asset profile until about May 2005 and continued paying parenting payment on a lower assessment of assets than was in fact the case.

THE ISSUES

6.      There are a number of issues that arise in this matter, including:

§  what were the Greenwood’s changes in assets test in 2003?;

§  what occurred in an interview at Centrelink on 7 November 2003?; and 

§  does Mrs Greenwood have a debt under the Act that now must be repaid?

WHAT WERE THE ASSETS CHANGES IN 2003 ?

7.      Mr and Mrs Greenwood purchased the new investment property at Woombye late in November 2003 for $322,500.  This was a cash sale.  The funds for the purchase were already in their Suncorp account as a result of the sale of Diddillibah for $480,402.  After the purchase of Woombye there was a balance in a Suncorp Account of $146,192 (document ST10). 

8.      It is worth noting that the assets limits for any payment of parenting payment at this time and later were as follows:

§  from 1 July 2003 ---- $212,500

§  from 1 July 2004  ---- $217,500

9.       Bearing in mind that no amount of the mortgage could be offset against the Woombye property, there is no question that at this point in time the combined value of real estate and money in the bank, quite apart from the value of any other assets (e.g. household effects, car), meant that Mrs Greenwood had exceeded the assets limit and was not eligible for parenting payment.

WHAT INFORMATION WAS PROVIDED AT THE CENTRELINK INTERVIEW ON 7 NOVEMBER 2003

10.     In what happened with the Greenwoods reporting their assets and any changes to them to Centrelink, Mr Greenwood attributed fault on Centrelink’s part to Brad Smith, a Centrelink Customer Services Officer, who conducted an interview with them on 7 November 2003.  Mr Greenwood said that this was his first experience of attending a Centrelink interview.  Mr Greenwood recalled telling Mr Smith a great deal about what he and his wife’s plans were for their real estate, including that they now were living in the Buderim home that had the mortgage on it, and that they were about to purchase another rental property, and intended to use spare cash for improvements on the Buderim property. 

11.     Mr Smith gave oral evidence about the interview.  Understandably with the length of time that has since passed, he had no direct recollection of the interview.   He gave evidence about his usual practices when conducting Centrelink interviews, and he drew some conclusions about the sequence of the interview taking place and the Greenwoods later phoning to provide bank account details.  Mr Smith concluded that it was most likely he who later added the bank balance in the Suncorp Account to the Parenting Payment Service Update, signed earlier by Mrs Greenwood at the interview on 7 November 2003 (T5).  I accept Mr Smith’s evidence on this.  I note that his evidence was consistent with his statement on T5 that Mr and Mrs Greenwood expected to have about $155,000 in their Suncorp Account, but that they did not have the details with them and would supply them later. 

12.     This was recorded in T5 as follows:

We sold our home at …Diddillibah for $495,000.  After paying out debt and the like we ended up with approximately $270,000.  We have put down $112,000 on a property at …Woombye and this is due to settle on 28/11/03.  After fees and such there will be $155,000 or so in our Suncorp account and we intend to use a lot of this in extensions on the house….(at) Buderim, which was our rental property.  We lived there, went to Diddillibah and then moved back.  I do not have my exact bank account details at the moment but will have these in the next couple of days.  I will supply these details so as all records can be updated accordingly

13.     Mr Greenwood’s recollection was that the interview was lengthy and that he and his wife provided Centrelink with much more information than appeared in Mrs Greenwood’s signed statement.  Mr Greenwood stated that he told Mr Smith that the $470,000 proceeds from the sale of Diddillibah had been placed into a bank account.  This is not mentioned in the signed statement and I do not accept that Mr Greenwood did so.

14.     Mr Smith’s computerised note of the interview (T6) was not completed until a few days later - 10 November 2003 (T6):

Custoemr (sic) and partner called to office – interview conducted – ……they sold there (sic) house at Diddillibah and move back to Buderim – are intending to buy a house as a rental – will advise when settled – they did not have exact bank balance at i/v – rang today 10/11 and advised it is $159,304.66….as this money will be spent on renovations to their home they will notify if/as it drops – nfa—rate drop due to bank balance….

15.     Mr Greenwood stated that when they purchased the investment property at Woombye later that month, Suncorp offered them the choice of using the Woombye house or the Buderim house as security but when they were told that using the Woombye property would involve a mortgage transfer fee, they declined that option.   After the debt was raised in 2005, and the effects of having the mortgage on their home rather than over the investment property were explained to them, Mr and Mrs Greenwood transferred the mortgage to the Woombye property.  They are now eligible to receive parenting payment again.

16.     It is fair to say that Mr Greenwood, who represented his wife at the hearing, had his own perceptions of the overall effects of their real estate transactions in 2003.  He acknowledged in the hearing that until recently they lacked any knowledge about asset limits and about the consequences of moving into the house that was secured by the mortgage.  If he had known that, they could easily have arranged their affairs differently, to minimise those social security consequences.  Mr Greenwood says this was not, and should have been, explained to him at the interview on 7 November 2003. 

17.     As I understand Mr Greenwood’s argument, I was asked to speculate about what could have occurred if Mr Smith had told them about these matters and so enabled Mr and Mrs Greenwood to make different arrangements, which might have allowed them to remain eligible for some parenting payment.  It seems to me that this question falls squarely within matters that come within the ambit of the provisions for the scheme for “Compensation for Detriment Due to Defective Administration”.  Centrelink has decided that they are not eligible under this scheme and this Tribunal does not review these matters.

18.     My task is to apply the legislation to the facts as they stand, not to other facts that might have pertained if Mr and Mrs Greenwood had better knowledge of the legislation, and had made other arrangements with their properties, including transferring the mortgage earlier than they did.

19.     The respondent’s investigations before the hearing revealed additional information which showed other omissions by Mr and Mrs Greenwood including not notifying Centrelink that the proceeds of the sale of Diddillibah were deposited in a previously undisclosed bank account, and not telling Centrelink when they commenced receiving rent for the Woombye property.  

20.     A comparison of the Greenwoods actual bank balances (documents ST6-ST10) revealed a rather different picture from that presented in Mrs Greenwood’s signed statement on 7 November 2003 (T5):

§  On 31 October 2003, $480,402 was deposited to a Suncorp Account (A/c 1).

§  On 6 November 2003, $470,000 was transferred from A/c 1 to Suncorp Account A/c 2.

§  On 19 November 2003, $323,807 was transferred from A/c 2 to Buderim Law Trust Account, leaving a balance of $146,192.

§  On 31 December 2003, $145,685 was transferred from A/c 2 to A/c 1.

IS THERE A DEBT THAT SHOULD NOW BE REPAID?

21. Above the assets limits set out in paragraph 8, no parenting payment is payable to a person. The debt provisions in the Act are cast in wide language. Section 1223(1) of the Act provides that a debt will arise if social security payments (such as parenting payment) are made when the person was not entitled for any reason to obtain that payment. Section 1223(1AB) further provides that a person is not entitled if the payment was not payable, or the payment was made as a result of a false statement.  

22. In other words, s1223(1) applies both where there is fault or omission on the part of the person who receives the payment, and where there is no fault. Having assets above the limits set by the Act means, simply, that Mrs Greenwood was not entitled to parenting payment – a ‘no fault’ outcome. I was also satisfied that there was some fault in how this occurred, because Mrs Greenwood provided information that was false – in the sense of incorrect. I was satisfied that Mrs Greenwood has a debt under s1223(1) of the Act because the level of her assets exceeded what was allowable.

23.     I find that Mr and Mrs Greenwood made errors in reporting their assets to Centrelink and this led to Centrelink assessing their assets at too low a level.  Mr and Mrs Greenwood did not provide crucial pieces of information. 

24.     I accept that Mrs Greenwood was sent a number of notices that required her to advise if her combined assets went above certain limits.  Her assets were always above the limits cited to her in the letters.  Mr Greenwood acknowledged that he did not read the backs of Centrelink letters setting out obligations to advise if assets went above $212,500.  From what Mr Greenwood told me, and I accept as true, he was labouring under the belief that because they observed that their parenting payments reduced after the interview on 7 November 2003, they were being assessed correctly. 

25.     Nonetheless, having heard Mr Greenwood’s evidence there was no doubt in my mind that the Greenwoods were attempting to act honestly in their dealings with Centrelink. I concluded that Mr Greenwood completely misunderstood what information was required and he was blinkered by taking a global view of their overall assets.  From his perspective there were certain borrowings that underpinned their property holdings and it was of no consequence on that global view that the mortgage was on one property rather than another.  From his perspective their overall assets (and their equity) did not change substantially in the course of selling and repurchasing in 2003. 

26.     I accept Mr Greenwood’s evidence that he tried to convey this information to Mr Smith along with the figure of what amount they expected to have left after they had carried out some improvements on Buderim.  However this was not the information that Centrelink needed.  They needed correct and complete information including accurate bank balances.  I was satisfied that Mr and Mrs Greenwood did not provide this.

27.     In deciding whether there is a debt under the Act I cannot take into account what might have been if different facts pertained.  The Act requires that the assets reflect the real picture, and when the full facts are revealed the conclusion is inescapable that Mr and Mrs Greenwood’s assets were at a level at which they could not lawfully be paid parenting payment. 

28. Many people incur social security overpayments on the basis of misunderstandings or ignorance. These nonetheless are debts, because of the width of a provision such as s1223(1). Such debts should be recovered unless the person can bring their case within the waiver provisions of the Act.

29.     It does not seem to me that Mr and Mrs Greenwood can invoke the waiver provisions here.  I do not accept that the debt arose solely because of administrative error on Centrelink’s part. The obligation lay with Mrs Greenwood to provide accurate information about the level of their assets.  The information Mrs Greenwood provided in November 2003 (T5) is not accurate and does not reflect the true picture of their assets at that time.  Mrs Greenwood signed that statement which gives a completely inaccurate picture of what their total assets were.  The parenting payment was assessed accordingly. 

30.     I was satisfied that this is not a debt that has arisen solely from administrative error on the part of the Commonwealth.  Mr Greenwood said at the hearing that he was not suggesting that Centrelink was solely responsible.  I agree with his acknowledgment.  There were too many omissions by the Greenwoods including, in particular:

§  not advising when the property was purchased at Woombye or its purchase price and the subsequent rental of that property; and

§  not telling Centrelink that they had $470,000 in a Suncorp account in November 2003.

31.     I was urged by the respondent to find that Mr and Mrs Greenwood did not receive the parenting payment in good faith.  I do not have to make a finding on this but it seemed to me after hearing Mr Greenwood that he was simply confused. 

32.     Mr Greenwood did not make any particular claims for special circumstances by reason of which the debt should be waived.  He certainly pressed his concerns that more information could have been provided to him, particularly the information on what the assets limits are for parenting payment. 

33.     However the main rule is that social security payments incorrectly paid from the public purse should be recovered.  The special circumstances discretion is available for those cases where the circumstances are out of the ordinary, and where there would be hardship or unfairness if the requirements for recovery of debts was rigidly applied: Ryde v Secretary, Department of Family and Community Services [2005] FCA 866; Secretary Department of Social Security v Hales (1998) 82 FCR 154. I did not consider that this was such a case. It seems that Mr and Mrs Greenwood are in a better than average financial situation. The overpaid parenting payment is being recovered by withholding part of the ongoing payments of parenting payment. This will take time, but it is an appropriate form of recovery and should continue.

DECISION

34.     The Tribunal affirms the decision under review.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Ms M J Carstairs, Member

Signed:         Mr J Mills
  Legal Research Officer

Date/s of Hearing  16 December 2006
Date of Decision  23 January 2006
For the Applicant  Mr B Greenwood
For the Respondent                  Ms S Oliver, Departmental Advocate