Jasen and Secretary, Department of Family and Community Services

[2005] AATA 939

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 939

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/1307

GENERAL ADMINISTRATIVE DIVISION

Re:         CAROL DIANE JASEN

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Senior Member

Date:             27 September 2005

Place:            Melbourne

Decision:The Tribunal affirms the decisions under review. 

(sgd) G.D. Friedman
  Senior Member

SOCIAL SECURITY - newstart allowance - overpayment - ownership of properties - whether assets exceeded allowable limit - recovery of debt - waiver 

Social Security Act 1991 ss 611(1), 1068, 1118, 1121, 1131, 1237A, 1237AAD

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Ryde v Secretary, Department of Family and Community Services [2005] FCA 866

REASONS FOR DECISION

27 September 2005  G.D. Friedman, Senior Member

1.      This is an application by Carol Diane Jasen (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 13 November 2003.  The SSAT affirmed the following decisions of Centrelink:

·a decision dated 3 February 2002 to raise and recover a newstart allowance debt of $19,998.62 for various periods between 12 February 1997 and 13 September 2001;

·a decision dated 26 March 2002 to cancel newstart allowance because the applicant’s assets exceeded the limit; and

·a decision dated 2 June 2003 to raise and recover a newstart allowance debt of $1354.23 for the period between14 December 2001 and 3 February 2002.

2.      The applicant represented herself at the hearing on 4 March 2005, and Ms D. Rasheva of counsel represented the applicant on 26 July 2005.  Ms K. Paul, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent).

3. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1-T49), as well as 13 exhibits (Exhibits A1-A13) tendered by the applicant.    

BACKGROUND

4.      The applicant was granted newstart allowance on 7 February 1994.  Between 12 February 1997 and 3 February 2002, the applicant received the following payments:

·   12 February 1997 to 25 February 1997   $372.42;

·   27 August 1997 to 12 May 1998   $6855.99;

·   28 September 1998 to 27 May 1999  $5177.40;

·   22 September 2000 to 13 September 2001              $7592.81;  and

·   14 December 2001 to 3 February 2002  $1354.23.

5.      On 7 January 2002 Centrelink received information that the applicant was the registered proprietor of properties at Bastings Street, Northcote (the Bastings Street property) and Spensley Street, Clifton Hill (the Spensley Street property).  On 9 January 2002 the applicant re-applied for newstart allowance.  She signed a customer declaration form which stated that she was a non-homeowner and owned no real estate.  On 29 January 2002 Centrelink received information that the applicant had been offered a loan of $130,000 in 1996 to purchase the Bastings Street property, and the security for the loan was a mortgage over the Spensley Street property.  Centrelink also received information that in 1989 the applicant had obtained a loan of $120,000 to purchase a property in Garrick Street, Port Douglas, Queensland (the Garrick Street property) and the security for the loan was the Spensley Street property.

6.      On 5 February 2002 Centrelink raised a debt of $19,998.62 for various periods between 12 February 1997 and 13 September 2001 on the basis that the applicant’s assets exceeded the allowable limit.  On 15 February 2002 the applicant submitted an income and assets review form to Centrelink and did not indicate that she had any assets or investment other than those known to Centrelink.  On 6 March 2002 the applicant said that she had stayed at the Bastings Street property as a house-sitter, and that her own home (the Spensley Street property) had been vacant.  On this basis Centrelink decided on 18 March 2002 to grant newstart allowance from 14 December 2001. 

7.      On 8 May 2002 the applicant provided an affidavit in which she stated that the Bastings Street property was beneficially owned by her son, Saeje Henshall.  On 31 March 2003 an authorised review officer of Centrelink affirmed the decision to raise the debt of $19,998.62. 

8.      On 3 March 2003 Centrelink affirmed the decision to raise and recover the debts, and advised the applicant that from 19 July 2001 the Bastings Street property was to be treated as an exempt asset and the Spensley Street property was an asset for the whole of the debt period.  On 2 June 2003 Centrelink raised a further debt of $1354.23 for newstart allowance paid between 14 December 2001 and 3 February 2002 on the basis that the applicant was not entitled to newstart allowance in that period, because the combined value of the Garrick Street property and the Bastings Street property exceeded the allowable limit for homeowners.  

9.      On 12 August 2003 an authorised review officer affirmed the decision to raise the second debt.  On 30 May 2003 the applicant sought review by the SSAT of the first two decisions, and on 15 August 2003 she sought review of the third decision.  On 13 November 2003 the SSAT affirmed all three decisions.  On 27 November 2003 the applicant lodged an application with the Tribunal for review of the SSAT decision.

10.     The issues before the Tribunal are whether the applicant’s assets exceeded the allowable limit for the grant of newstart allowance; and, if so, whether the overpayments to the applicant constitute recoverable debts to the Commonwealth.

EVIDENCE

11.     In oral evidence the applicant stated that she purchased the Spensley Street property in 1974 and informed Centrelink of the purchase.  She said that she changed her address frequently, for a number of reasons, and kept Centrelink informed at all times.  The applicant told the Tribunal that in 1996 she used the Spensley Street property as security for the purchase of the Bastings Street property for Mr Henshall, because he did not have a regular income or sufficient savings.  She said that she lent him $15,010 for the deposit and obtained finance in her name, although the house was for her son’s exclusive use. 

12.     The applicant emphasised that she has kept the mortgage and title in her name because the cost of transferring the property to Mr Henshall is prohibitive.  She said that Mr Henshall makes all mortgage payments directly to the bank, and pays all outgoings including council rates.  He is responsible for all maintenance and repairs, and collects rent from tenants who live with him.  She said that she and Mr Henshall consider the property to be his, and he has never paid rent to her.

13.     In written submissions, after the hearing, the applicant emphasised that the correct amounts of payment of newstart allowance were those stated on the Centrelink group certificates as these were the true records of payment provided to her for submission to the Australian Taxation Office.  She said that she had, at all times, provided information to Centrelink that was correct and that accurately reflected her living arrangements at the time that she provided the information, particularly as her circumstances and address changed frequently.   

14.     The applicant stated that she purchased the Garrick Street property in 1989 as an investment, subject to a loan of $120,000 from the Westpac Bank.  She said she had advised Centrelink of the acquisition of the Garrick Street property in 1993, when she applied for social security benefits.  She said that the property was mortgaged as its own security to the Commonwealth Bank in 1997.  She also said that Centrelink was aware of this, but has failed to deduct the mortgage encumbrance and body corporate fees, from the asset value of the property.  

15.     With respect to the debts, the applicant stated that she had no cause to believe that she had received benefits to which she was not entitled in any of the debt periods.  Under cross-examination she said that she had lived in the Spensley Street property, except for a short period when she occupied her late mother’s apartment.  She agreed that she would expect Mr Henshall to re-pay the loan for the deposit on the Bastings Street property, if he decided to sell the property.  She was adamant that Centrelink documents listing her as a non‑homeowner were incorrect. She said she had no knowledge of the documents, as they do not have her initials and therefore she had not seen them.

16.     In oral evidence Mr S. Henshall said that the applicant had lent him $15,000 for the deposit for the purchase of the Bastings Street property, and that he has lived there for nearly 10 years.  He said that he and the applicant have an agreement that the house belongs to him and he is free to sell it at any time.  He said that he pays all outgoings and has made numerous repairs, which he would not have done if the property did not belong to him.  Under cross-examination Mr Henshall agreed that he would re-pay the loan from the applicant if he sold the property, and that the applicant makes no decisions about the property.

17.     In oral evidence Mr J. Sherlock, a Complex Assessments Officer with Centrelink, stated that, after hearing the oral evidence from the applicant and Mr Henshall, he was satisfied that the applicant meets Centrelink criteria for concluding that the applicant holds the Bastings Street property as a constructive trust for Mr Henshall as the beneficial owner.  Therefore, the property should not form part of her assets for the purpose of calculating her entitlement to newstart allowance.

18.     In respect of the zero valuation given to the Spensley Street property by Centrelink in September 2000, Mr Sherlock stated that there were a number of possible explanations, including an error by Centrelink and the applicant’s advice that she was temporarily absent from the property.  In respect of the debt calculations he explained that group certificates showing the applicant’s income were not reliable.  Under cross-examination he maintained that the calculations by Centrelink were correct, even if some information provided by the applicant to the Australian Tax Office was incorrect.

CONSIDERATION OF THE ISSUES

19. Section 1068 of the Social Security Act 1991 (the Act) sets out the criteria for the calculation of newstart allowance. Section 611(1) of the Act provides that newstart allowance is not payable if the value of a person’s assets exceeds the allowable limit. Section 1118 of the Act describes certain assets to be disregarded in calculating the value of a person’s assets. Section 1121 of the Act allows for the value of an asset to be reduced by the amount of an outstanding loan in certain circumstances, for example the value of a charge or encumbrance, but not if the charge or encumbrance applies to an asset to be disregarded under s 1118 of the Act. Section 1131 of the Act provides that a person may qualify for a benefit under the hardship provisions even if that person’s assets exceed the allowable limit.

20.     In reaching its decision the Tribunal takes into account the oral evidence and written material, including the submissions made by the parties.

21.     The Tribunal accepts that the applicant disagrees with the debt calculations by Centrelink and that she believes the calculations should accord with the group certificates provided by Centrelink for taxation purposes.  However, the Tribunal agrees with Ms Paul that the dates listed on the group certificates do not exactly match the debt periods.  Therefore, this comparison is unreliable.  The Tribunal has examined the debt calculations and is satisfied that they are an accurate representation of the amounts paid to the applicant.  For these reasons the Tribunal finds that the debt amounts are correct.

22.     In respect of whether the applicant’s assets exceeded the allowable limit, the Tribunal accepts the evidence from Mr Henshall and Mr Sherlock and finds that, at all relevant times, the Bastings Street property was held by the applicant as a constructive trust for Mr Henshall.  This was conceded by Ms Paul in written submissions after the hearing. 

23.     The Tribunal finds that the applicant purchased the Spensley Street property in 1974.  The Tribunal also finds that the property was exempt from the assets test from 15 May 2001, when it became the applicant’s principal residence, and she was assessed as being a homeowner.  For the purposes of the assets test the value of the property must be considered only until 15 May 2001.  In 1995 the applicant advised Centrelink that the property was valued at $220,000.

24.     The Tribunal finds that the applicant purchased the Garrick Street property in 1989, as an investment secured against the Spensley Street property, with a loan of $120,000.  The Tribunal finds that the original loan was transferred to a different loan of $96,000 in 1995, and re-financed in 1997 by a loan secured against the property itself.  The Tribunal agrees with the respondent that the assessable value of the Garrick Street property was $160,000 in 1997, $200,000 in 2000 and $220,000 in 2003.  The value of the property should not be reduced by the amount of body corporate fees, as these do not constitute a charge or encumbrance under the Act; and the property is not an exempt asset for the purposes of the assets test.

25.     In all the circumstances, and taking into account the applicable asset limits, the Tribunal finds that during the relevant periods the applicant’s assets exceeded the allowable limit.  Therefore, the applicant was not entitled to receive the amounts she received in newstart payments as calculated by Centrelink.  As a result of the overpayments, the applicant owes a debt to the Commonwealth in the amounts specified in the decisions under review.  

26. On the question of whether the debts should be recovered, the Tribunal notes that s 1237A of the Act provides for waiver 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 Tribunal takes into account that the applicant has provided detailed information about her contact with Centrelink over a number of years and her belief that Centrelink has been solely responsible for any errors leading to overpayment. The Tribunal does not suggest that the applicant deliberately misled Centrelink with a view to claiming benefits to which she was not entitled, or that Centrelink did not make errors in recording information in respect to the applicant’s assets. However, the Tribunal is satisfied that the applicant did not inform Centrelink on every occasion that her assets exceeded the allowable limit, so that Centrelink was not solely responsible for the debts.

27. Section 1237AAD of the Act provides for waiver of the debt in certain other circumstances:

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.

28.     In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held that the special circumstances, referred to in s 1237AAD(b), must be unusual, uncommon or exceptional.  In Ryde v Secretary, Department of Family and Community Services [2005] FCA 866 Branson J stated that the hardship or unfairness should be sufficient to justify departure from the general rule in the particular case.

29.     The Tribunal takes into account the applicant’s evidence that she suffered financial difficulties and a number of personal difficulties that forced her to change her address a number of times.  However, although the applicant’s overall situation may have been difficult, on balance the Tribunal is satisfied that the circumstances in this case are not unusual, uncommon or exceptional, and do not constitute special circumstances (other than financial hardship alone). Therefore, the waiver provisions of s 1237AAD of the Act do not apply.

30.     Therefore, the applicant owes a debt to the Commonwealth in the amounts listed in the decisions under review, and the debt cannot be waived.

DECISION

31.     The Tribunal affirms the decisions under review.

I certify that the thirty-one [31] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Senior Member

(sgd)       Catherine Thomas

Clerk

Dates of hearing:  4 March 2005, 26 July 2005
Date of decision:  27 September 2005

Advocate for applicant:                Self-represented (4 March 2005)

Counsel for applicant:                  Ms D. Rasheva (26 July 2005)
Advocate for respondent:            Ms K. Paul, Centrelink