Hopkins and Secretary, Department of Social Services

[2013] AATA 725

[2013] AATA 725

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/4408
Re	Mary Hopkins
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member Jill Toohey
Date	9 October 2013
Place	Sydney

The decision under review is affirmed.

................[sgd]........................................................

Senior Member Jill Toohey

CATCHWORDS

SOCIAL SECURITY – debt – disability support payment – overpayment – whether debt correctly calculated – whether special circumstances – decision under review affirmed

LEGISLATION

Social Security Act 1991 ss 1236, 1237A, 1237AAD

CASES

Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9; [2007] FCA 25

Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
Re Hopkins and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 50

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

REASONS FOR DECISION

Senior Member Jill Toohey

9 October 2013

BACKGROUND

1. This matter concerns whether Mrs Mary Hopkins has a debt to Centrelink on account of an overpayment of disability support pension (DSP) and, if so, whether she should be required to repay the debt.

2. Mrs Hopkins was granted DSP on 13 July 1995.  She was paid at the maximum rate until 2 November 2004 when her payment was suspended for failing to provide Centrelink with information about a trust (the Trust) that was set up by her father for the benefit of her children with Mrs Hopkins as trustee.  In January 2005, her payment was cancelled.  She has not claimed, or been paid, a social security payment since then.

3. In July 2006, Centrelink raised a debt of $84,046.16 against Mrs Hopkins for the period from 20 December 1995 to 2 November 2004.

4. In January 2010, the Tribunal, constituted by Deputy President Handley, set aside Centrelink’s decision and remitted the matter to Centrelink to re-assess Mrs Hopkins’ entitlement to DSP on the basis that:

   (a)for the period up to 1 January 2002 (when there were amendments to the social security law concerning assets and income from trusts), certain properties which had been taken into account in assessing Mrs Hopkins’ income were assets of the Trust; and

   (b)for the period from 1 January 2002 to 2 November 2004, 40 per cent of the Trust’s assets should be attributed to Mrs Hopkins as an attributable stakeholder of the Trust.

5. Deputy President Handley said he recognised Mrs Hopkins’ sincerity and he accepted that she had not sought any gain for herself from the Trust arrangements.  He accepted that, at the relevant times, she did not understand how the legislation applied to the assets and income of trusts.  He accepted that she was financially straitened, but he did not think that circumstances were sufficiently special to warrant waiver of the whole or part of the debt: Re Hopkins and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 50.

6. Following Deputy President Handley’s decision, Centrelink recalculated Mrs Hopkins’ debt as $66,547.04.  She disputed that decision.

7. On review, the Social Security Appeals Tribunal (SSAT) heard evidence concerning errors by Mrs Hopkins’ accountant in her tax returns over several years.  The SSAT set aside Centrelink’s decision and remitted the matter to Centrelink to recalculate the debt in accordance with Mrs Hopkins’ corrected tax returns.  As a result, Centrelink recalculated her debt to be $41,935.44.

8. Mrs Hopkins disputed Centrelink’s recalculation of the debt.  On review, the SSAT decided the calculation was correct, and there was no reason Mrs Hopkins should not have to repay the debt in full.  Mrs Hopkins seeks review of that decision. The Tribunal conducted a hearing on 30 September 2013 and a further written submission provided to the Tribunal by Mrs Hopkins on 1 October 2013 has also been taken into consideration.

   Is the calculation of the debt correct?

9. Mrs Hopkins’ father set up the Trust for the benefit of Mrs Hopkins’ children in 1982.  She is the sole trustee.  Over time, the Trust has bought and sold properties.  Its assets currently include three properties, and a café which Mrs Hopkins manages.

10. Prior to 1 January 2002, a trustee in whose name the legal title of property was vested was assessed for the purposes of Centrelink’s income and assets tests as being the legal owner of the property.  A trustee who derived no benefit under a trust was not affected by the income and assets tests for the purposes of social security payments.  Changes to the social security law on 1 January 2002 had the effect of attributing income from affected trusts to “attributable stakeholders”.

11. Mrs Hopkins’ interest in the Trust, which included a commission from the Trust, only came to light by way of a data-matching exercise with the Australian Tax Office in 2004.  I accept Mrs Hopkins’ evidence that she honestly believed she was not required to declare to Centrelink matters concerning the Trust, and I accept she was not aware of changes to the legislation from 1 January 2002.

    The period from 1 January 2002 to 2 November 2004

12. The details of the relevant legislation, the Trust’s various dealings, and Mrs Hopkins’ income and personal financial dealings during the period from 1 January 2002 to 2 November 2004 are set out in detail in the decision of Deputy President Handley in Re Hopkins and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 50 at paragraphs [21] to [40] and, in shorter form, in the SSAT’s decision of 30 August 2012. They are not in dispute and it is not necessary to repeat them here.

13. Mrs Hopkins does not dispute that, from 1 January 2002 to 2 November 2004, the changes to the social security legislation concerning trusts meant she was overpaid $33,200.39.  I am satisfied that is correct.

    The period from 20 December 1995 to 31 December 2001

14. The period in question is that prior to 1 January 2002.

15. At the hearing on 30 September 2013, the details of the legislation and the calculation of the overpayment were discussed at length with Mrs Hopkins.  It was apparent that she had read Deputy President Handley’s decision (summarised at paragraph 4 above) as meaning that she had no debt for the period prior to 1 January 2002.  On this basis, she had calculated her total debt as $33,200.39, leaving $8,735.05 in dispute (the total recalculated debt raised by Centrelink being $41,935.44).

16. Mrs Hopkins’ understanding of Deputy President Handley’s decision was not correct.  Its effect was only to remove from the calculation of the debt prior to 1 January 2002 the value of the properties that belonged to the Trust.  However, the rate of DSP to which Ms Hopkins was entitled prior to 1 January 2002 was still affected by factors including income she was deemed to have derived from the Trust, and the value of certain gifts she had made to the Trust.

17. Centrelink has provided detailed calculations of the overpayment to Mrs Hopkins from December 1995 to 31 December 2001.  They show for each fortnight the reason for the overpayment and the amount.  These calculations demonstrate that, between 20 December 1995 and 31 December 2001, there was a period when the assets test determined the rate of pension Mrs Hopkins was eligible to receive, and another period when the income test determined the rate of payment.

18. While Mrs Hopkins had some difficulty with the concept of deemed income, she did not dispute the basis of the deemed income, that she received the income identified by Centrelink or that she made the gifts to the Trust identified by Centrelink.

19. An examination of the total amounts calculated by Centrelink as owing for each year from 20 December 1995 to 31 December 2001 shows a total overpayment of $8,692.85, a difference of $42.20 from the $8,735.05 Mrs Hopkins had calculated for that period. Having considered the calculations in detail, I am satisfied that this small discrepancy is due to the fact that the calculations available to the Tribunal were by financial rather than calendar year, and Mrs Hopkins accepted this.

20. I am satisfied that the figure calculated by Centrelink is correct and that the overpayment for the period 20 December 1995 to 31 December 2001 is $8,735.05.  When combined with the balance which is not in dispute, I am satisfied that Centrelink’s calculation of the total debt owed by Mrs Hopkins of $41,935.44 is correct.

    Are there any special circumstances by reason of which Mrs Hopkins should not have to repay the debt?

21. A debt may be written off, meaning, in effect, that recovery is deferred, if: it is irrecoverable at law; the person has no capacity to repay it; the person’s whereabouts are unknown; or it is not cost-effective to try to recover the debt: s 1236 of the Social Security Act 1991.

22. Although Mrs Hopkins is in difficult financial circumstances, I am not satisfied that she had no capacity to repay the debt, or that there is any other ground for writing off the debt in her case.

23. By s 1237A(1),  a debt must be waived if it is attributed solely to administrative error and was received in good faith.  As there is no evidence that the overpayment was due to an administrative error, this provision cannot apply in Mrs Hopkin’s case.

24. A debt may be waived if it did not result wholly or partly from the debtor knowingly making a false statement or a false representation, or failing or omitting to comply with the relevant legislation; and there are special circumstances, other than financial hardship alone, that make it desirable to waive; and it is more appropriate to waive than to write off the debt or part of the debt: s 1237AAD.

25. The Act does not define “special circumstances” and gives no guidance as to its meaning in s 1237AAD.  It has been observed many times by the Courts and this tribunal that the expression is “by its very nature incapable of precise or exhaustive definition” and will depend on the particular case.  The circumstances “must have a particular quality of unusualness that permits them to be described as special”: Re Beadle and Director-General of Social Security (1984) 6 ALD 1. See also Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9; [2007] FCA 25.

26. In Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693, Deputy President Forgie said:

    … “special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system.

27. In Davy, there being no injustice or unfairness to the applicant that was not “visited, or potentially visited, upon all other recipients of social security payments under the Act”, the Tribunal was not satisfied it was desirable to waive the debt under s 1237AAD of the Act.

28. Mrs Hopkins is now aged 69.  She has a number of health problems including the wrist and shoulder conditions for which she was originally granted DSP, osteoarthritis, reflux, diabetes and dental problems.  Health problems of themselves do not constitute special circumstances (see, for example, Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464) and, despite her health problems, Mrs Hopkins continues to manage the café owned by the Trust. I am not satisfied that her health problems amount to special circumstances.

29. Mrs Hopkins is also in quite difficult financial circumstances.  By the terms of the Trust Deed, she is entitled to draw a commission but not an income, for clerical services performed for the Trust.  She has never sought to profit from the Trust which she regards as solely for the benefit of her children.  She gave evidence that she lives very frugally.  She draws just enough commission to cover her basic expenses such as car registration, utilities and food.  Her adult children help her with small amounts of money from time to time and they help with repairs and maintenance around her home and the café.  She does not go out, she buys second-hand clothes and she does her own hair.  Her medical expenses are bulk billed.  She does not have a mortgage and no outstanding debts of any size.

30. Mrs Hopkins agreed, when it was put to her during the hearing, that it is fair to say that things are difficult financially but she manages to get by.

31. I have no doubt that Mrs Hopkins is struggling financially but I am not satisfied that her circumstances when considered with the whole are special such that all or part of debt should be waived.

32. Mrs Hopkins would now qualify for the age pension, subject to the usual income and assets tests.  Despite her difficult circumstances, she has not applied for any sort of social payment since 2004 when her DSP was cancelled.  She feels embarrassed at the prospect, and feels she should be able to manage on her own.  Whether any age pension would be affected now by the income and assets tests is not clear but it would be in her interests to apply and test her eligibility.

    CONCLUSION

33. For the reasons I have given, I am satisfied that Centrelink’s calculation of Mrs Hopkins overpayment of $41,935.44 is correct.  I am not satisfied there are any special circumstances by reason of which she should not be required to pay the debt in full.

34. I affirm the decision under review.

I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member Jill Toohey

...................[sgd].....................................................

Associate

Dated 9 October 2013

Date of hearing	30 September 2013
Date final submissions received	1 October 2013
Applicant	In person
Advocate for the Respondent	Mr G Lozynsky, Legal Services Division, Department of Human Services