Groves and Secretary, Department of Family and Community Services
[2005] AATA 235
•18 March 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 235
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2004/140
GENERAL ADMINISTRATIVE DIVISION ) Re PETER ROBERT GROVES Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal M J Allen, Member Date18 March 2005
PlacePerth
Decision The decision of the Social Security Appeals Tribunal made on 22 March 2003 to affirm decisions made by the respondent to cancel the applicant’s Parenting Payment (single) benefit, that the applicant had a debt to the Commonwealth, and that the debt should be recovered, is affirmed.
.............(sgd M J Allen) .................
Member
CATCHWORDS
Social Security – parenting payment – consideration of whether applicant has a debt due to the Commonwealth – applicant failed to notify Centrelink of the value of his interest in the estate of his deceased mother – applicant received the value of that interest when the executor of the estate finalised the administration and distributed the assets – finding that a debt is due by the applicant to the Commonwealth – consideration of whether the debt should be recovered – finding that applicant did not read notices setting out information to be provided to Centrelink when circumstances changed – finding that any administrative error by Centrelink was not the sole cause of the debt arising – consideration of whether special circumstances made it desirable to waive the debt – consideration of whether debt should be written off – decision of Social Security Tribunal affirmed
Social Security Act 1991 ss 500Q, 503, 1068A, 1118, 1129, 1236, 1237, 1237A, 1237AAD
Re Secretary, Department of Family and Community Services and Zangari (1958) 54 ALD 155
Re Saunders and Secretary, Department of Family and Community Services [2002] AATA 1256
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76
Re Beadle and Director General of Social Security (1984) 6 ALD 1
Re Boscolo and Secretary, Department of Social Security (1999) 53 ALD 277
REASONS FOR DECISION
18 March 2005 M J Allen, Member 1. This is an application by Mr Peter Groves (“the applicant”) for review of a decision made by the Social Security Appeals Tribunal (“SSAT”) on 22 March 2003. On that day the SSAT affirmed decisions made by a delegate of the respondent on 21 August 2003 to cancel the applicant’s Parenting Payment (“PP”) benefit with effect from 11 November 2002 because of the value of the applicant’s assets; and on 15 October 2003 to raise and recover an overpayment of PP of $8,854.21 for the period from 12 November 2002 to 19 August 2003.
2. At the hearing of the matter the applicant represented himself and the respondent was represented by Mr Holt, a Centrelink officer. The Tribunal received in evidence the documents filed pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (T1 – T46) together with Exhibit A1 (including attachments A1.1 – A1.25) tendered by the applicant, and Exhibits R1 – R4 tendered by the respondent. The applicant gave oral evidence on his own behalf.
3. The background to the matter is that the applicant was granted PP (single) in August 2001. In August 2003 Centrelink identified that the applicant had inherited interests in two properties and other assets, which it considered took the value of his assets beyond the allowable asset limit and shortly thereafter made the decisions referred to in para 1 above to cancel the benefit and to raise and recover a debt because of overpayment.
4. Those decisions were affirmed on internal review in November 2003 and subsequently affirmed by the SSAT in the decision under review.
5. Before the SSAT the applicant did not dispute the decision to cancel his PP or the decision that he had been overpaid and therefore had a debt. He did, however, dispute that the debt should be recovered. The SSAT concluded that the applicant had no entitlement to PP from 29 October 2002 and had received PP payments of $8,854.21 to which he was not entitled and that amount was a debt due by the applicant to the Commonwealth. The SSAT considered whether recovery of the debt should be waived pursuant to s 1237A(1) of the Social Security Act 1991 (“the Act”) or s 1237AAD of the Act and concluded that recovery should not be waived under either of those sections.
6. When the matter was heard in this Tribunal the applicant did not concede that the value of his assets exceeded the allowable limit, or that he had received PP payments to which he was not entitled. He also contended that if a debt was due then recovery of it should be waived under the relevant provisions of the Act.
7. I was informed at the hearing that a proportion of the outstanding debt had been recovered from the applicant and I was subsequently advised by the respondent that as at 8 September 2004 the amount of debt outstanding was $7,995.68.
Consideration
8. The first issue to be determined is whether the applicant has been overpaid PP and whether a debt is due by him to the Commonwealth.
9. Section 503 of the Act relevantly provides that a person’s rate of PP is to be calculated, if the person is not a member of a couple, using a rate calculator provided at the end of s 1068A, which in turn requires regard to be had to the person’s income and assets. Section 500Q of the Act contains a table that sets out the maximum value limit of assets that a person may have.
10. It was not in dispute at the hearing that the limit for the period between 1 July 2002 and 30 June 2003 for a person who was single and a home owner (as was the applicant) was $145,250 and that for the period 1 July 2003 to 19 September 2003 the figure was $149,500.
11. Section 11(1) of the Act defines “asset” to mean ‘property or money (including property or money outside Australia)’. Section 11(2) relevantly provides that a reference to “the value of a particular asset” of a person is, “… if the asset is owned by the person jointly or in common with another person or persons, a reference to the value of the person’s interest in the asset”.
12. Section 1118 of the Act specifies a number of various types of assets, the value of which is to be disregarded in calculating the value of a person’s assets for assets testing purposes under the Act. Of possible relevance in the present case are ss 1118(1)(c) and (j), which are relevantly:
“(c) the value of any life interest of the person other than:
(i)a life interest in the principal home of the person, of the person’s partner or of both of them; or
(ii)a life interest created by the person, by the person’s partner or by both of them; or
(iii)a life interest created on the death of the person’s partner
…
(j) the value of any assets (other than a contingent, remainder or reversionary interest) to which the person is entitled from the estate of a deceased person but which has not been and is not able to be, received”.
13. It was common ground at the hearing that, if the value of the assets inherited by the applicant from his late mother were to be included in his assets at the relevant time, then the value of his assets would exceed the maximum permitted under the Act for the receipt of PP.
14. The applicant’s mother died in June 2002 and the applicant became entitled to a one quarter share in her estate, the major assets of which were a house in Attadale (“the mother’s house’), a half share in a second house in Attadale (“the grandmother’s house”), cash, and jewellery and other personal property. The Public Trustee administered the estates of the applicant’s mother and grandmother during 2002.
15. It is not in dispute that in October 2002 the Public Trustee completed its administration of the estates and the distribution of entitlements to the various beneficiaries, one of whom was the applicant (see T38 p140 and p144). At that time the applicant received cash of approximately $28,500, shares in listed companies valued at approximately $24,400, his share in the value of his grandmother’s house of $30,000, and his share of the value of his mother’s house of $117,500.
16. It was also not in dispute at the hearing that the applicant did not inform Centrelink of his receipt of the values set out in the previous paragraph until September 2003 (see T38).
17. There is no doubt that the applicant’s interest in the assets which made up his mother’s estate constitute assets as defined in s 11 of the Act for the purpose of applying the assets testing provisions of the Act: see Re Secretary, Department of Family and Community Services and Zangari (1958) 54 ALD 155, Re Saunders and Secretary, Department of Family and Community Services [2002] AATA 1256. What is in dispute in these proceedings is whether the value of all or some of those assets can be disregarded pursuant to s 1118(1)(c) or (j).
18. At the hearing the applicant asserted that his interest in his grandmother’s house should be disregarded because his aunt (his mother’s sister) had lived in his grandmother’s house for many years prior to and after his grandmother’s death, and that it was generally understood by the family that his aunt was entitled to live in his grandmother’s house for her lifetime – and that she therefore had a life interest in the grandmother’s house for the purposes of s 1118(1)(c).
19. This contention must fail because, whatever may have been the nature of the aunt’s interest in the grand mother’s house, there can be no question of the applicant having a life interest in that property and hence s 1118(1)(c) can have no application.
20. However, the applicant also contended that s 1118(1)(j) may be applicable in relation to the value of the applicant’s interest in his mother’s and grandmother’s houses because neither house generated any income and he derived no meaningful benefit from his interest in either asset. The applicant’s initial evidence was that his aunt lived in his grand mother’s house, that his mother’s house was used by his siblings when they visited Perth and that it might at some time in the future be sold, but no definite plans had been made. He said that his mother’s house had been painted (by his brother) in anticipation of sale.
21. Later in the hearing the applicant gave evidence that his grand mother’s house had already been sold and that his one eighth share had been approximately $80,000, which he had received in cash during 2004.
22. In my opinion s 1118(1)(j) has no application to the present circumstances because it deals with the situation where the administration of an estate is, for reasons outside the control of the person concerned, not finalised and not able to be finalised – so that the assets have not been distributed and it cannot be said that the person has received the value of the assets that would be distributed when the estate is duly administered: see Re Saunders (supra) at [30] and [31]. That is not the present case because there is no dispute that the Public Trustee had completed the administration and had distributed the assets of the estate to the beneficiaries, including the applicant, by October 2002. In the circumstances, I am satisfied that s 1118(1)(j) has no application in the present case.
23. At the hearing the issue was raised as to whether the value of the applicant’s interest in the two houses in the relevant period should be disregarded under the financial hardship rules of the Act because they are “unrealisable” assets for the purposes of s 1129 of the Act. Section 1129(1)(d) of the Act requires that an application be lodged with the respondent to activate the hardship provisions and it was common ground at the hearing that the applicant had not lodged such an application at any time prior to the hearing. At T31 p109 is a record made by a Centrelink officer on 17 October 2003 recording that she had discussed with the applicant whether he could make a claim under the financial hardship provisions of the Act and whether the asset could be realised by him or borrowed against. Document T41 pg 174 is a note made on 3 November 2003 by the Authorised Review Officer (“ARO”) who reconsidered the decisions made in respect of the applicant and in which the ARO records that the applicant informed her that he had been sent information regarding the financial hardship rules (by the Centrelink officer who made the record of 17 October 2003) and that the ARO informed the applicant that the should take the time to read the material provided regarding those provisions. The applicant said in his evidence that he had put the material aside and did not make an application under the hardship provisions because he did not think he could meet all of the requirements and that he had not made any enquiries about borrowing against his interest in the properties in the estate.
24. In my opinion the failure of the applicant to make an application to the respondent under the hardship provisions of the Act, despite being aware of the existence of those provisions and being provided with information concerning them, and the fact that no decision has been made by the respondent on any such application or reviewed by the SSAT, means that it is not possible for me to consider the financial hardship provisions in relation to the applicant’s position.
25. I am satisfied on the evidence and material before me that the applicant’s interests in the estate of his deceased mother constituted assets of his, and that the value of those assets must be taken into account for the purpose of determining the applicant’s eligibility for PP. It is not in dispute that the applicant did not inform the respondent of the value of those assets in the relevant period and that the value, when added to the value of other assets held by the applicant, resulted in him having assets to a value in excess of the allowable maximum for PP purposes.
26. Accordingly, I am satisfied that the applicant received PP payments in the amount of $8, 854.21 to which he was not entitled, that by virtue of s 1223(1) of the Act those overpayments constitute a debt due to the Commonwealth by the applicant, and that it was appropriate to cancel the applicant’s PP benefits when the decision to do so was made.
27. The next question that must be considered is, therefore, whether the debt should be written off or the recovery of it waived pursuant to the provisions of the Act dealing with those issues.
28. French J observed in Secretary, Department of Social Security v Hales (1998) 51 ALD 695 at 695, 696 as follows:
“From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arises. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth.”
29. Section 1237(1) of the Act grants to the Secretary, and hence to this Tribunal by virtue of s43(1) of the AAT Act, the ability to waive the Commonwealth’s right to recover the whole or part of a debt due from a debtor only in the circumstances described in a number of specified sections of the Act. Two waiver sections are relevant in the current proceeding, namely s1237A and s1237AAD.
30. Section 1237A(1) of the Act provides that (subject to the proviso in s1237A(1A) that is not relevant in the present case) 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.”
31. Secondly, in certain circumstances a debt may be waived in the exercise of a discretion to do so. Section 1237AAD of the Act is as follows:
1237AAD. 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 false representation; or
(ii) failing or omitting to comply with a provision of this 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.
Mandatory waiver under s 1237A(1)
32. The applicant contended that the only reason the debt arose was because of deficiencies in the many notices that he received from Centrelink each fortnight informing him of his obligations to notify Centrelink of any changes in his income or assets situation.
33. The applicant told the SSAT that he had read the back of the first notice that he had received after being granted his benefit but had not bothered reading the back of subsequent notices as it was “Centrelink stuff which was non-specific and generalised” and that “it is like reading the back of a shopping docket. It is not specific enough”.
34. In his evidence to this Tribunal the applicant said that he must have read all of the notices that he received from Centrelink and that, so far as he could recall, he had read and understood the forms that he completed when originally applying for his benefits. He said that he had a general understanding that the receipt of benefits from Centrelink was subject to an income test but he had “no preconceived idea” about an assets test, despite answering many questions concerning his assets position.
35. The applicant said that he has a good ability to index paperwork so that he knows where to look for future reference if he needs to, but he tries not to remember things that he reads. Although during the relevant period he had advised the Child Support Agency about changes in his assets position he did not think it was necessary to tell Centrelink about this because he didn’t realise that the new assets acquired from his mother’s estate would affect his Centrelink payments. He said that changes to his immediate income were most relevant to him during the period in question.
36. The applicant said that sometime after the SSAT hearing he had examined all the various fortnightly notices that he had received from Centrelink and noticed that the format changed in approximately December 2001. Exhibit A1.7 is a Centrelink notice dated 7 December 2001, on the reverse of which is a list of all the matters that a recipient of a benefit must inform Centrelink if any change occurs. The matters include changes of income or assets. Exhibit A1.8 is a similar Centrelink notification dated 7 January 2002 but, for reasons that were not made apparent at the hearing, the list of matters about which a benefits recipient must notify Centrelink was modified such that a three line paragraph under the heading “Customers overseas” was inserted into the middle of the list of matters to be notified. The applicant’s evidence was that this change meant that the list of matters to be notified was now misleading because the matters to be notified that appeared under that heading relating to overseas customers would have been ignored by him.
37. The applicant contended that the change to the format of the document constituted an administrative error by Centrelink that was the sole cause of his debt arising.
38. For the purposes of s 1237A(1), I am prepared to assume (although I make no finding) that the change to the format of the notification letters could constitute an administrative error on the part of Centrelink to the extent that the insertion of the paragraph relating to people overseas might, in some circumstances, mislead a recipient. However, as Wilcox J emphasised in Secretary, Department of Family and Community Services v Sekhon [2003] FCA 76 at [41] the significance of the word “solely” in that section must not be overlooked. “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.”
39. In the present case I am satisfied on the evidence that the applicant did not in fact read all of the notices that he received from Centrelink and that the evidence that he gave to the SSAT is an accurate reflection of his approach to them. I am satisfied that the applicant knew from the application forms that he completed that his assets situation was relevant to his ongoing entitlement to PP and the amount of such benefits that he would receive. His failure to provide Centrelink with the information needed concerning the changes to his assets situation was primarily due to his failure to read and understand the notification requirements to which he was subject. His failure to read carefully the fortnightly notifications meant that, even if the change in format of the notices constituted an administrative error, the debt was principally attributable to his failure to provide information. It cannot be said that the debt is solely attributable to administrative error on the part of Centrelink.
40. Having reached that conclusion, it is unnecessary for me to determine whether or not the applicant received the payments from Centrelink in good faith as required by s 1237A(1).
Discretionary waiver under s 1237AAD
41. The SSAT acknowledged that the applicant’s circumstances had been difficult and stressful in the months prior to and during the periods in question in these proceedings. However, the SSAT concluded that the circumstances could not be said to be “unusual, uncommon or exceptional” or “out of the ordinary” and that, therefore, the special circumstances waiver possibility in s 1237AAD of the Act was not satisfied.
42. At the hearing the respondent did not contend that the requirements in s 1237AAD(a) were not satisfied ie that the applicant had not knowingly made a false statement or representation or failed to comply with a provision of the Act. However, the respondent contended that no special circumstances existed that were sufficient to satisfy the requirements of paragraph (b) of the section and that paragraph (c) was not satisfied in the present case because the applicant in fact had sufficient funds in his bank account to repay the debt.
43. What should be regarded as special circumstances is an issue that confronts this Tribunal regularly. Reference is frequently made, with approval, to the decision of the Tribunal in Re Beadle and Director General of Social Security (1984) 6 ALD 1 at 3, that one should look for circumstances that are unusual, uncommon or exceptional. They need not be unique, but they must have a particular quality of unusualness that permits them to be described as special. In Re Boscolo and Secretary, Department of Social Security (1999) 53 ALD 277 at 281, 282 French J described the core of the requirement as being that there be something unusual or different to take the matter out of the ordinary course, but without requiring that the case be extremely unusual, uncommon or exceptional.
44. Apart from pointing to the circumstances in which the debt arose, the applicant also contended that there were a number of other circumstances that were sufficiently special to make it desirable to waive the debt. Part of Exhibit A1 is a letter dated 15 July 2004 written by the applicant in which he set out the circumstances on whicht he relied. In summary, the matters were:
(a)the applicant’s belief that Centrelink had been informed of his interest in his mother’s estate by his former wife, who (the applicant believed) had informed Centrelink in order to distract the applicant from preparing for contested proceedings in the Family Court;
(b)the applicant was a single parent who had the care of his children for 50% of the time;
(c)the applicant was involved in a number of school and community matters that required his attention;
(d)he was attempting to deal with a State government department regarding an application to subdivide some land and to obtain Legal Aid for the preparation of the Family Court proceedings;
(e)he was under considerable stress because of the above that had required him to consult his general practitioner.
45. At the hearing the applicant also said that his health continued to be affected by the consequences of a plane crash in which he was involved in 1986 (see T pp 7 – 12). In addition, the applicant said that although he had received cash for his share of his grandmother’s house and from the other assets referred to above, and expected eventually to receive a substantial amount of cash from his share of the sale of his mother’s house, his financial position was precarious. At the time of the hearing he expected that he and his former wife would negotiate a settlement of their dispute in the Family Court, but the applicant subsequently informed the Tribunal that a settlement had not been reached and that the matter would proceed to a defended hearing.
46. In relation to the applicant’s health, the pages of the T documents referred to in the previous paragraph regarding the consequences of the 1986 plane crash date from 1989 and 1991. The applicant is obviously an intelligent man who has chosen to involve himself in a number of community organisations, as well as deal with what appears to have been a stressful break up of his marriage. In the absence of more recent medical evidence concerning any ongoing consequences of the injuries suffered in the plane crash, I am not prepared to assume that the applicant’s functioning on a day - to - day basis is materially affected by any such consequences.
47. Overall, although I agree with the SSAT’s assessment that the applicant has been through a difficult and stressful period, I have concluded that the applicant’s debt to the Commonwealth was principally due to his failure to provide the information that he was required to provide regarding his assets. He has received a substantial amount of cash from his mother’s estate and will, in due course, receive a further substantial amount when his mother’s house is sold. There is, in my opinion, nothing about the applicant’s circumstances either at the time the debt arose or subsequently that could be said to give the applicant’s case the particular quality of unusualness or difference as to take the matter out of the ordinary and enable it to be described as special. Persons in receipt of social security payments are frequently living in stressful or financially straitened circumstances. The applicant’s financial position cannot be described as straitened and the fact that he has a busy life looking after his children, attempting to resolve his matrimonial problems and land problems cannot give his circumstances the necessary special characteristics.
48. Accordingly, I conclude that the requirements of s 1237AAD(b) are not satisfied. It is not, therefore, necessary for me to consider whether the requirements of paragraph (c) are satisfied for the purposes of s 1237AAD. It is however necessary for me to consider whether the debt owed by the applicant should be written off (ie its recovery deferred for a period of time – which may mean that the debt is never recovered). A debt may be written off under s 1236(1A):
“… if, and only if,
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt’.
49. It was not contended at the hearing that the requirements of paragraphs (c) or (d) of s 1236(1A) would be satisfied. In relation to paragraph (a) of that sub-section, a debt can only be taken to be irrecoverable at law in the circumstances described in s 1236(1B). On the evidence before me, I am satisfied that none of those circumstances exist and, hence, the requirements of s 1236(1A)(a) are not satisfied.
50. For the purposes of s 1236(1A)(b), s 1236(1C) provides that a debtor is taken to have a capacity to repay a debt if the debt is recoverable by means of deductions from social security payments – unless recovery by that means would result in the debtor being in a severe financial hardship. On the evidence before me, I am not satisfied that the applicant can be said to be in severe financial hardship if deductions were to be made from any future social security payments to which he might be entitled. The applicant has a considerable amount of money in the bank and expects to receive a further substantial amount on the sale of his mother’s house. Although some of this money will be required to settle proceedings between the applicant and his former wife, there is nothing to indicate that the applicant will have a degree of substantial financial hardship. I find that none of the circumstances that would enable the debt owed by the applicant to the Commonwealth to be written off are made out.
Conclusion
51. For the reasons set out above my decision is that the decision of the SSAT should be affirmed.
I certify that the 51 preceding paragraphs are a true copy of the reasons for the decision herein of M J Allen, Member
Signed: ......................(sgd N Wee)..............................
AssociateDate/s of Hearing 8 September 2004
Date of Decision 18 March 2005
Solicitor for the Applicant Self represented
Advocate for the Respondent Mr Aaron Holt
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