HEWITT and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2010] AATA 845
•1 November 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 845
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/5548
GENERAL ADMINISTRATIVE DIVISION ) Re CAROL HEWITT Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Deputy President P E Hack SC; M J Carstairs, Senior Member Date1 November 2010
PlaceBrisbane
Decision The Tribunal:
1. affirms the cancellation decision of 13 May 2008;
2. varies the debt decision of 22 May 2009 by waiving 50% of the overpayment.
..............Signed..................
Deputy President
CATCHWORDS
SOCIAL WELFARE – overpayments and debt recovery – decision to cancel disability support pension – decision to raise and recover debt for disability support pension – right or interest in Wakerley house did not give applicant reasonable security of tenure in property – Wakerley house not applicant’s principal home – applicant not homeowner during period of receipt of disability support pension – Tribunal satisfied overpayment made to applicant – “special circumstances” – appropriate to exercise discretion under s 1237AAD of the Social Security Act 1991 (Cth) to waive part of debt – waiver of half of debt struck balance between need to recover public funds expended without authority and circumstances of case – decision to cancel disability support pension affirmed – decision to raise and recover debt varied by waiving 50% of overpayment
Social Security Act 1991 (Cth), ss 11(4), 1064, 1223, 1237AAD
Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
REASONS FOR DECISION
1 November 2010 Deputy President P E Hack SC; M J Carstairs, Senior Member Introduction
Ms Carol Hewitt is the registered proprietor of real property at Wakerley, a suburb on the outskirts of Brisbane. She acquired that land in August 2000 and thereafter contracted with a builder for the construction of a house.
From the time of completion of the house it has been occupied by, at least, Ms Hewitt’s daughter and her family. It is common ground that the Wakerley house had a value, at the material time, of $650,000.
From July 2000 until May 2008 Ms Hewitt received disability support pension. If, during that period, the Wakerley house was Ms Hewitt’s “principal home”, as that term is used in the Social Security Act 1991 (Cth), then Ms Hewitt was entitled to the disability support she was paid. If it was not, she has been overpaid $78,538.04 which is, in that event, a debt due to the Commonwealth. If there is such a debt Ms Hewitt says that her circumstances are such that the power in s 1237AAD of the Act to waive recovery of the debt ought be exercised in her favour.
Background
What follows is largely taken from Ms Hewitt’s Statement of Facts and Contentions. We did not understand the Secretary to dispute these matters. In about April 1999 Ms Hewitt moved to Brisbane from New South Wales where she had previously lived. She stayed initially with a friend, Mr Noel Wilson, in Mr Wilson’s house at Tingalpa. Mr Wilson was then, and remains, unwell, and Ms Hewitt assisted him even though she was in full time employment.
In August 1999 or thereabouts Ms Hewitt’s own health deteriorated such that she had to give up work for a number of months. When, in the middle of the following year, she felt able to resume work she went to Centrelink for assistance in obtaining employment. Ms Hewitt’s intentions were not, apparently, understood and her contact was treated as signifying an intention to claim a payment or concession card. She attended the Wynnum Centrelink Office on 10 August 2000 where it was suggested to her by a Centrelink Financial Information Services officer that she lodge a claim for disability support pension. Ms Hewitt completed and lodged a claim form on that day.
Some aspects of Ms Hewitt’s completed claim form warrant remark. Ms Hewitt gave Mr Wilson’s Tingalpa address as her “permanent home address”. In answer to questions about accommodation Ms Hewitt described her accommodation as “share house and expenses” and acknowledged that she received free accommodation. In response to the question of her ownership of a home she responded in the negative but added “I intend to purchase home to replace home in NSW sold April 99”.
In the meantime, on 7 August 2000, Ms Hewitt had executed a contract to acquire the vacant residential land at Wakerley for $120,000. The contract was completed on 31 August 2000. She did not then inform Centrelink of her interest in the real property because she had been told on 10 August 2000 that the house she intended to build would be an exempt asset and that she was obliged to inform Centrelink on its completion. Thereafter Ms Hewitt contracted for the construction of a house on the land. Construction appears to have been completed by early March 2001.
It had been Ms Hewitt’s intention to occupy the Wakerley house on completion however in February 2001 Mr Wilson suffered a further stroke which led her to decide to continue caring for him and, necessarily, to continue to stay at Tingalpa. Ms Hewitt’s daughter and son-in-law were, at that time, completing renovations of their own home in Coorparoo so Ms Hewitt suggested that the family move into the Wakerley house whilst those renovations were undertaken. They did so in mid-March 2001.
Shortly after the house at Wakerley was completed Ms Hewitt called into the Wynnum Centrelink office to inform Centrelink of the fact of completion. She took up with a male person on the counter, informed him of completion and was asked whether she was still living at the Tingalpa address. She said that she was and was told that she was only required to inform Centrelink if her address changed. No note was made by Centrelink of this advice.
On 1 May 2001 Ms Hewitt’s disability support pension was cancelled because her assets (as Centrelink understood them to be) exceeded the allowable limit. Ms Hewitt lodged a “pension re-claim” on 3 May 2001. That form gave her address as the Tingalpa address and noted that Ms Hewitt had “(b)ought home at Wakerley”. A note compiled by the officer who assisted Ms Hewitt on that occasion recorded Ms Hewitt’s address as the Wakerley address (and telephone number). There is a further note of contact made with the same officer on 7 June 2001 and signed by Ms Hewitt. On this document the Tingalpa address was originally recorded however it has been crossed through and the Wakerley address shown.
Ms Hewitt’s disability support pension was restored after her “re-claim”, seemingly with effect from 18 June 2001. The letter of 21 June 2001, that notified Ms Hewitt of that grant, informed her that she was required to notify Centrelink if her assets exceeded $232,357.05. There were further instances over the ensuing years when Ms Hewitt confirmed to Centrelink that her asset details remained the same as they had been when disability support pension had first been granted.
In April 2008, and in anticipation of Ms Hewitt being transferred to the age pension, Centrelink sent Ms Hewitt a document to be completed and returned. The document described her as a “non homeowner”. Ms Hewitt corrected the document to describe herself as a homeowner and telephoned the Centrelink call centre where she discussed the circumstances of the purchase of the house at Wakerley and the reason for her staying at Tingalpa. These matters prompted Centrelink to investigate the value of the Wakerley house (on the basis that it was not an exempt asset) over the years since purchase. The conclusion was reached that Ms Hewitt was not entitled to disability support pension and had not been since 26 July 2000 because the value of the Wakerley house exceeded the permissible threshold.
That conclusion was reflected in two decisions - one on 13 May 2008 to cancel Ms Hewitt’s disability support pension, the other on 6 February 2009 to raise and recover a debt of $90,997.71 for disability support pension paid to Ms Hewitt between 29 July 2000 and 6 May 2008. The decision to cancel was affirmed on internal review on 30 June 2008. On 22 May 2009 the debt decision was varied on internal review by reducing the debt to $78,538.04. Those decisions were affirmed by the Social Security Appeals Tribunal on 12 October 2009. Proceedings were commenced in this Tribunal on 19 November 2009.
The issues
There are three issues that fall to be determined:
(a) was the Wakerley house Ms Hewitt’s “principal home”;
(b) if it was not, has she been overpaid disability support pension in the amount, and for the period, claimed;
(c) are the circumstances such that the debt, or part of it, ought be waived.
Legislation
Section 1064 of the Social Security Act 1991 (Cth) requires that the rate of disability support pension be calculated in accordance with the Rate Calculator at the end of that section. That Rate Calculator prescribes a number of steps, including, relevantly, Step 9,
“Apply the assets test using Module G below to work out the reduction for assets”.
Module G directs attention to the question of whether the person is a homeowner. Section 11(4) of the Act deals with that question in this way:
“For the purposes of this Act:
(a) a person who is not a member of a couple is a homeowner if:
(i) the person has a right or interest in the person’s principal home; and
(ii) the person’s right or interest in the home gives the person reasonable security of tenure in the home; …”
There are, and were, subsequent references to “principal home”[1] in the Act but those references do not assist in resolution of the present issue.
[1] Originally found in s 11(5)-(8) of the Act, but, with effect from 1 January 2007 in s 11A.
By virtue of s 1223[2] of the Act, where amounts are paid to a person not entitled to receive them the amount paid is a debt due to the Commonwealth. It is not suggested here that there was not a debt, and a debt in the amount claimed, if Wakerley was not Ms Hewitt’s principal home.
[2] The wording of s 1223 was amended in 2001 but its substance has not altered. The earlier provision referred to amounts “not payable”.
Finally, reference needs to be made to s 1237AAD of the Act. It reads:
“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.
Note 1: Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.
Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.”
A homeowner?
It is accepted on behalf of the Secretary that Ms Hewitt is not, and was not at any material time a member of a couple. And it is not in issue that Ms Hewitt has a right or interest in the Wakerley house. The critical issues are whether it is her principal home and whether her legal interest gives her reasonable security of tenure.
Some further reference need be made to the facts. Ms Hewitt’s daughter and her family continued to live at the Wakerley house during the relevant period and Ms Hewitt continued, throughout that period, to live, for the main part, at Tingalpa. During that time Ms Hewitt visited the family at Wakerley on a regular basis and frequently stayed there overnight. Up until May 2008 Ms Hewitt visited the Wakerley house, on average, three to four times each week, although she did not generally stay overnight on each of these occasions. Not surprisingly, Ms Hewitt’s visits were often associated with a need to care for one or more of the grandchildren when Ms Hewitt’s daughter or son-in-law were not available. An extreme example of this was around the birth of the third child in August 2004. Ms Hewitt’s daughter was hospitalised for a month prior to the birth so during this period, and following the birth, Ms Hewitt was a frequent visitor and frequently stayed overnight.
The entitlement of Ms Hewitt’s daughter and son-in-law to reside at the Wakerley house is governed by an agreement drafted by a solicitor acting for Ms Hewitt and executed in May 2002 by Ms Hewitt (as licensor) and by her daughter and son-in-law (as licensees). The document recites that Ms Hewitt is the registered proprietor of the Wakerley property, that she “currently lives with a friend … in a dwelling house” (i.e. the Tingalpa house) and that, since 9 March 2001, Ms Hewitt has allowed her daughter, son-in-law and family to live in the Wakerley house. By its operative parts the agreement granted to the daughter, son-in-law and family a licence to reside in the house for a period of 50 years and on payment of a fee of $1.00. The licensees are not required to pay rent or any other licence fee however they are obliged to pay, or reimburse Ms Hewitt, outgoings for rates, utilities, insurance, land tax and the like. The licensees have agreed to maintain the house in a good, clean and tidy condition and that they will not undertake any alterations or additions without obtaining Ms Hewitt’s consent.
The licence is revokable upon default by the licensees provided that the default is not remedied within 30 days after the giving of a written notice to remedy the default. The agreement otherwise expires after 50 years, upon the death of any of the parties, upon the absence of the licensees from the house for a period in excess of 60 days (without Ms Hewitt’s consent) or upon the irretrievable breakdown of the marriage between the daughter and the son-in-law.
The other operative condition that warrants attention is that which takes effect if Ms Hewitt proposes relocating from Tingalpa. If Ms Hewitt advises the licensees that she proposes to do so the licensees are obliged to purchase a residence (either detached dwelling or a lot in a community title scheme) of approximately similar market value to the Wakerley house and approved by Ms Hewitt. Upon purchase, the licensees are obliged to grant to Ms Hewitt a licence to occupy the newly purchased residence upon terms comparable to those in the May 2002 licence agreement.
Importantly, the May 2002 licence does not entitle Ms Hewitt to reside in the Wakerley house. No doubt, Ms Hewitt’s daughter and son-in-law are quite content to permit her to reside there however the agreement grants to them quiet enjoyment of the house. There is not, for example, a reservation of any area in the house for the use and enjoyment of Ms Hewitt. Thus it would seem to us that any attempt by Ms Hewitt to assert a right to occupy all or part of the house (absent reliance upon the default clause) would constitute a breach of the covenant of quiet enjoyment. In these circumstances Ms Hewitt has a right or interest in the Wakerley house but that right or interest does not give her reasonable security of tenure in the property.
We would, in any event, conclude that the Wakerley house is not Ms Hewitt’s principal home. On the material before us we are unable to be satisfied that she has ever occupied the house as a residence. Ms Hewitt’s primary residence throughout has been at Tingalpa. True it is that she has spent considerable time, including many overnight stays, at the Wakerley house however Ms Hewitt did so, invariably, in her role as a grandmother rather than as the ordinary resident of the house.
We do not find it necessary to consider how the address at Tingalpa ought be described, i.e. whether it is Ms Hewitt’s home or residence, principal or otherwise. It is enough for us to say that we are well short of satisfied that the Wakerley house could be regarded as Ms Hewitt’s principal home.
That being so, Ms Hewitt was not a homeowner during the times that she received disability support pension.
A debt to the Commonwealth
Given the conclusion we have reached, the Wakerley house was an asset whose value had to be brought into account when determining Ms Hewitt’s entitlement to disability support pension. We do not understand there to be any challenge to the correctness of the calculation of the overpayment. The starting date from which it has been determined that Ms Hewitt was not entitled to receive disability support pension, 21 March 2001, appears to coincide with the date on which Ms Hewitt’s daughter and family occupied the Wakerley house.
We are satisfied that there has been an overpayment in the amount claimed which is, by virtue of the statute, a debt due to the Commonwealth.
Waiver
There being no suggestion (sensibly) that the over payment has arisen solely as a consequence of administrative error on the part of the Commonwealth, the only possible basis on which waiver could be, and is, advanced is that under s 1237AAD of the Act, ie “special circumstances”.
The Secretary does not contend, correctly in our view, that the overpayment arose from any knowing falsity or failure to comply on the part of Ms Hewitt. The critical question is whether the circumstances of Ms Hewitt’s case are “special”.
It is not necessary nor appropriate to canvass the vast jurisdiction about the meaning of “special circumstances”. It will suffice to say that in Groth v Secretary, Department of Social Security[3] Kiefel J spoke of the need for there to be,
“something to distinguish [the] case from others, to take it out of the usual or ordinary case”.
Her Honour spoke of “unfair, unintended or unjust” outcomes as out of the ordinary.
[3] [1995] FCA 1708; (1995) 40 ALD 541 at 545.
There are, in our view, features of the present case that collectively warrant Ms Hewitt’s case being regarded as “special”.
First, but not, in itself, unusually, Ms Hewitt suffers from poor health, principally from recurrent idiopathic pericarditis but from other conditions as well[4]. Next, it seems to us to be important to emphasise that Ms Hewitt has at all times been scrupulously honest in her dealings with Centrelink. We say that, not on the basis that honesty is in some way to be rewarded; on the contrary, honesty in dealings with Centrelink is to be expected. But it is relevant that Ms Hewitt’s answers to questions at all times have been honest and fulsome. Thus, from the outset she told Centrelink that she intended to purchase a home to replace the one in New South Wales sold prior to moving to Queensland. She described her accommodation at Tingalpa, correctly, as “share house and expenses”.
[4] They are described in greater detail in Exhibit 4.
It is the fact that the “pension re-claim” form, completed by a Centrelink officer and signed by Ms Hewitt, referred to the fact of the Wakerley house purchase. It would seem, by inference, that the Centrelink officer did not appreciate that Ms Hewitt’s address remained as the Tingalpa address despite the purchase of the Wakerley house. That would certainly explain the alteration of the address recorded on the note from the 7 June 2001 discussions. It is unfortunately true that Centrelink, seized of all relevant information regarding Ms Hewitt’s circumstances, did not appreciate the disparity in recorded addresses. Such error is understandable, given the volume of information processed daily by Centrelink. But it is not solely the cause of the overpayment.
On the occasion in April 2008 that Ms Hewitt became aware that she was regarded as a homeowner she immediately notified Centrelink of the error.
It is, as well, significant that Ms Hewitt has not profited from the arrangement as might ordinarily be expected from ownership of a property not amounting to a principal home. Ordinarily, such properties are income earning so it is understandable why the legislature has determined that they be treated as assets. But, as the Secretary’s submissions point out there has been a benefit to Ms Hewitt, and to her family, from the arrangement, but the benefit is considerably less than that which would have arisen from a rental property.
In part, what makes Ms Hewitt’s situation different from the norm is that the present situation would have been avoided had Centrelink appreciated the inconsistency apparent in the records maintained by it. Had the inconsistency between owning the Wakerley house and sharing a house and expenses at Tingalpa been noted, the matter would have been resolved much earlier.
We do not doubt that Ms Hewitt would not have foregone the receipt of disability support pension to voluntarily care for Mr Wilson. That is, we consider it probable that she would have commenced living in the Wakerley house as a principal home from the outset had she been aware that it would be treated as an asset that would disentitle her to disability support pension if she did not do so.
These matters, we think, make Ms Hewitt’s circumstances unusual. It is appropriate to exercise the discretion to waive part of the debt and we think that waiver of half of the debt strikes a balance between the need to recover public funds expended without authority and the circumstances of Ms Hewitt’s case. We would then affirm the cancellation decision of 13 May 2008 but would vary the debt decision of 22 May 2009 by waiving 50% of the overpayment.
I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC and M J Carstairs, Senior Member.
Signed: ...........Signed…….................................................
AssociateDate of Hearing 17 September 2010
Date of last submissions 11 October 2010
Date of Decision 1 November 2010
Counsel for the Applicant Mr L Alford
Solicitor for the Applicant Welfare Rights Centre Inc
Solicitors for the Respondent Sparke Helmore
0
0
0