Jasen v D.E.W.R
[2007] FMCA 1861
•13 November 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| JASEN v D.E.W.R. | [2007] FMCA 1861 |
| ADMINISTRATIVE LAW – Appeal from Administrative Appeals Tribunal – appeal against an assessment of debt owing to the Commonwealth for overpayment of newstart allowance when applicant’s assets exceeded the allowable limit – whether Tribunal erred in law in not allowing body corporate fees to be deducted under s.1121(1) of Social Security Act 1991 from assets for purpose of the Act – waiver of debt – whether Tribunal failed to take into account considerations relevant to the existence of special circumstances under s.1237AAD(b) of the Act – failure to determine whether any proportion of the debt was attributable solely to administrative error. WORDS & PHRASES – “a charge or encumbrance”. |
| Body Corporate and Community Management (Standing Module) Regulation 1997, s.99 Social Security Act 1991, ss.611(1), 1118, 1121(1), 1237A, 1237AAD(b) Veterans’ Entitlement Act 1986, s.52C |
| Paul v Minister for Immigration & Multicultural Affairs: ex parte Durairajasingham (2000) 168 ALR 407 [65] Re Beadle and Director – General of Social Security (1984) 6 ALD 1 Re Fawthorp v Repatriation Commission (1993) 36 ALD 140 Re Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 272 Repatriation Commission v Tsourounakis and Another (2007) 158 FCR 214 Ryde the Secretary, Department of Family and Community Services [2005] FCA 866 |
| Applicant: | CAROL DIANE JASEN |
| Respondent: | SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS |
| File Number: | MLG 21 of 2007 |
| Judgment of: | O’Dwyer FM |
| Hearing date: | 8 May 2007 |
| Delivered at: | Melbourne |
| Delivered on: | 13 November 2007 |
REPRESENTATION
| Counsel for the Applicant: | Ms F. Ryan |
| Solicitors for the Applicant: | Williams Winter |
| Counsel for the Respondent: | Mr R. Knowles |
| Solicitors for the Respondent: | Australian Government Solicitors |
ORDERS
THAT:
The application be amended to change the name of the respondent to, “Secretary, Department of Employment and Workplace relations”.
The appeal is allowed.
The decision of the Administrative Appeals Tribunal made on 27 September 2005 is set aside.
The matter be remitted to the Tribunal to be determined according to law.
The respondent pay the applicant’s costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 21 of 2007
| CAROL DIANE JASEN |
Applicant
And
| SECRETARY DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal from the decision of the Administrative Appeals Tribunal (the Tribunal) given on 27 September 2005. By that decision the Tribunal affirmed an earlier determination of the Social Security Appeals Tribunal (the SSAT) dated 13 November 2003 which had affirmed the decisions of the respondent to:
·raise and recover a newstart allowance debt of $19,998.62 for various debts between 12 February 1997 and 13 September 2001;
·cancelled a newstart allowance in February 2002 because the applicant's assets exceeded the limit;
·raise and recover a newstart allowance debt of $1354.23 for the period 14 December 2001 and 3 February 2002.
Grounds of Appeal
The applicant's stated grounds of appeal are:
i)The Tribunal misapplied s.1237A of the Social Security Act 1991 (the Act) by failing to determine whether any proportion of the debt was attributable solely to an administrative error by the respondent.
ii)The Tribunal misapplied s.1237A of the Act by holding that the applicant's failure to inform Centrelink on every occasion when her assets exceeded the allowable limit precluded any proportion of the debt from being attributable solely to an administrative error made by the respondent.
iii)The Tribunal erred in construing s.1121 of the Act by holding that the body corporate fees referrable to the Garrick Street property did not constitute a charge or encumbrance within the meaning of that section.
iv)The Tribunal failed to take into account considerations relevant to the exercise of special circumstances within the meaning of s.1237AAD(b) of the Act.
Particulars
The Tribunal failed to address and deal with the claim articulated by the applicant that during the period of over payment, the applicant was suffering financial difficulties relating to the loss of her job and a subsequent discrimination claim against her former employer.
The Tribunal failed to address and deal with the claim articulated by the applicant that during the period of over payment, the applicant experienced personal difficulties relating to her relationship with her son.
Background
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 – $5174.40;
·22 September 2000 to 13 September 2001 – $7592.81;
·14 December 2001 to 3 February 2002 – $1354.23.
No issue is taken by the applicant to the recitation of the facts set out by the Tribunal in its decision. Accordingly they are set out and adopted for the purpose of this judgment. They are as follows:
5. On 7 February 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 reapplied for newstart allowance. She signed a customer declaration form which stated that she was a non –home owner 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 investments 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 a 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 home owners.
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 December 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.
The evidence before the Tribunal was that Centrelink had made a number of administrative errors in respect of the applicant and the payment of the newstart allowance. One error was said to be in respect of the group certificates produced by Centrelink which indicated different amounts paid to her by way of newstart allowance. The other was to ascribe to the Spensley Street property a nil valuation.
The Tribunal's decision
After hearing evidence from the applicant and her son, Mr Henshall, together with evidence provided by a Complex Assessment Officer from Centrelink to the effect that the Bastings Street property should properly be considered to be held by the applicant on a constructive trust for her son, the Tribunal found that to be so and that the Bastings Street property should not be considered part of the assets of the applicant when determining whether she had exceeded the allowable limit.
The Tribunal then examined the legislation applicable, in particular s.611(1) of the Act which provides that newstart allowance is not payable if the value of a person's assets exceeds the allowed limit.
The Tribunal also considered the other applicable sections of the Act which set out what assets are to be disregarded in calculating whether a person's assets exceed the allowable limit (see s.1118 and s.1121 of the Act).
The Tribunal went on to make findings of fact as to the dates of purchase of the Spensley Street property, the period for which that property should be taken into consideration as an asset for calculation of whether the limit was exceeded and the valuation of the property at that time. The Tribunal further went on to make findings of fact concerning the Garrick Street property, the times when that property should be taken into consideration and the values to be applied in that consideration when calculating whether the applicant's assets exceeded the limit. Significantly, for the purposes of this appeal, the Tribunal found “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”.
Having done so, the Tribunal concluded that the applicant's assets did exceed the allowable limit for the times stipulated by Centrelink.
The Tribunal also found that the calculations of the overpayments which were under review were correctly calculated and remained due and payable to the Commonwealth as debts owed to the Commonwealth.
The Tribunal went on to consider the application of s.1237A of the Act which provides for a waiver of “a debt that can be said to be 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 commented to the effect that it “does not suggest that the applicant deliberately mislead 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”.
The Tribunal went on, however, to say that it “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”.
The Tribunal concluded by considering the significance of s.1237AAD of the Act. Having set out that section the Tribunal concluded, after reference to the authorities of Re Beadle and Director-General of Social Security (1984) 6 ALD 1, and Ryde the Secretary, Department of Family and Community Services [2005] FCA 866, and after taking 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, that it was satisfied that the circumstances of her case are not “unusual, uncommon or exceptional” and did not constitute special circumstances (other than financial hardship alone). The Tribunal concluded that the waiver provisions of s.1237AAD of the Act therefore did not apply.
The Tribunal found that the calculation of payments made to the applicant under newstart allowance as claimed by the respondent was correct, notwithstanding the apparent inconsistencies in those calculations appearing on Centrelink's group certificates. The Tribunal found that the periods referred to in the group certificates did not match the periods the subject of the debts alleged, and for that reason any comparison between the two was unreliable. The Tribunal found after examining the debt calculations that it was satisfied that they were an accurate representation of the amounts paid to the applicant.
The applicant's contentions
Administrative error
Counsel for the applicant contended that the Tribunal had made two errors in relation to s.1237A of the Act. The first is that it failed to determine whether any proportion of the debt was attributable solely to an administrative error by the respondent and secondly the Tribunal misapplied the section in holding that the applicant's failure to inform Centrelink on every occasion when her assets exceeded the allowable limit necessarily precluded any proportion of her debt from being attributable solely to an error by the Commonwealth.
In furtherance of the grounds under s.1237A, the applicant contended that the Tribunal failed to ask itself the right questions. It was submitted that the section required the Tribunal to ask itself first whether the respondent made an error and then whether any proportion of the debt is attributable solely to that error. It was contended that the word “proportion” necessitated, in circumstances where Centrelink was not solely responsible for the debts, to apportion responsibility and make adjustments to the debt accordingly.
Body Corporate fees
The next contention of the applicant was that under s.1121(1) of the Act, in calculating the value of an asset any charge or encumbrance over that particular asset should be deducted to determine whether assets of the applicant exceeded the allowable limit.
In support of that contention, reference was made to s.99 of the Body Corporate and Community Management (Standing Module) Regulation 1997. This Queensland legislation had application to the Garrick Street property where there were extant outstanding body corporate fees at the time calculations were made. At the last known period, they were as high as $32,000. Over the relevant periods, however, whilst they were initially lower, they progressively increased to $32,000. It was not possible during the hearing before me to determine whether at relevant times a deduction of the then outstanding body corporate fees would have brought the applicant within the allowable asset limit.
It may very well prove that when these calculations are done, the applicant may still exceed the allowable limit. However, this exercise was never undertaken and the Tribunal rejected the submission that body corporate fees were a charge or encumbrance to be taken into consideration under s.1121(1) of the Act. Accordingly, it falls to me to determine whether the Tribunal was correct in dismissing them, as it did, for the purposes of s.1121(1).
Section 1121(1) provides:
(1)If there is a charge or encumbrance over a particular asset of the person, the value of the asset, for the purposes of calculating the value of the person’s assets for the purpose of this Act (other than Division 1B of Part 3.10), is to be reduced by the value of that charge or encumbrance.
The relevant provision of s.99 of the Queensland legislation provides:
(3)A liability to pay a body corporate debt in relation to a lot is enforceable jointly and severally against each of the following persons:
(a)a person who was the owner of the lot when the debt became payable;
(b)a person (including a mortgagee in possession) who becomes an owner of a lot before the debt is paid.
The applicant contends that, based upon the nature and description given to the body corporate debt as set out in s.99(c) of the Queensland legislation, such body corporate debts are properly considered a charge or encumbrance over a property. The applicant relied on the decision of the Tribunal in Re Fawthrop and Repatriation Commission (1993) 36 ALD 140 (Fawthrop’s case) where it considered the meaning and application of the terms “a charge or encumbrance” in the context of very similar provisions in the Veterans’ Entitlement Act 1986 at s. 52C. The respondent curiously, in my view, also relied on this decision to support his contention as set out below.
Waiver of debt
The final submission on the part of the applicant relates to s.1237AAD(b) of the Act. That provision provides for the waiver of a debt where special circumstances (other than financial hardship alone) make that desirable. Whilst the applicant conceded that the Tribunal had stated the test applying under that section correctly, she contended that the Tribunal did not identify the circumstances that brought her within the section. In that regard the applicant contends that the Tribunal failed to address an aspect of the claim which amounts to a failure to deal with a significant integer of her claim, accordingly amounting to an error of law.
The applicant in support of her contention referred to her evidence about her difficult circumstances resulting in her inability to reside in her principal home, her difficulties arising out of a work place incident with a work colleague who had a substantial history of mental illness and the very serious allegations made against her in her work place. She spoke of a restraining order taken out on her behalf and the fact that she had to leave her employment for that reason. It is contended that the Tribunal failed to give proper regard and consideration to these aspects of the evidence when considering s.1237AAD and when the Tribunal found that there were no special circumstances justifying a waiver of the debt.
The respondent's contentions
Administrative error
The respondent contends that in respect of the first and second grounds of appeal relating to s.1237A of the Act, it was open to the Tribunal to find on the evidence before it that there was no administrative error in respect of the apparent contradiction between the Centrelink group certificates and the amounts claimed by way of debt. Further it was submitted that the apparent error in ascribing a nil value to the Spensley property, at the relevant time, would not have affected her entitlement to the newstart allowance as a proper attribution of its value at the relevant time would not have precluded her entitlement. This is an error on the face of the material which on closer analysis appears to have had no consequence.
In those circumstances, a failure on the part of the Tribunal, as alleged, to have made an examination to what degree a proportion of the debt claimed is attributable to administrative error is a failure with no material outcome.
In any event, the respondent submits, and in my view correctly, it was not in error. A “fair reading" of the decision incorporates the principle that the Tribunal's reasons should receive a “beneficial construction” and should not be “construed minutely and finely with an eye keenly attuned to the perception of error”. (See Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 272). The Tribunal's reasons demonstrate that it was cognisant of the fact that s.1237A referred to “the proportion of a debt that is attributable solely to administrative error made by the Commonwealth”.
In that regard reference is made to paragraph 26 of the Tribunal's decision. In that paragraph the Tribunal referred to “a debt that is attributable solely to an 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”. This paragraph, in my view, evinces the Tribunal's awareness of the need to have regard to the proportion of any debt. So much is evident from the Tribunal's use of the word “proportion” and its reference to several “debts” as distinct from a single “debt”.
It is implicit, it was submitted, that the Tribunal found that no proportion of the debt was attributable solely to an administrative error made by the Respondent. The Tribunal reached its finding on the basis that, at least to some degree, the applicant's own conduct had contributed to “the debts”. In my view, on the material before it, the Tribunal's finding was open to it.
The respondent in its written submissions referred to the material before the Tribunal that supports the finding that was open to it to make. In essence, it was the failure of the applicant to provide the requisite information concerning her assets during the relevant periods that was the cause for the over payments that have been claimed by the respondent.
To the submission by the applicant that there was an obligation imposed upon the Tribunal to make enquiry as to whether there was a proportion of the debt that was attributable solely to an administrative error made by the Commonwealth, the respondent contends that it did so and the extent to which the applicant relies upon this ground, it is misconceived. The Tribunal in its findings and reasons, the respondent contends, and I agree, undertook this task and concluded that the respondent “was not solely responsible for the debts”.
In respect of the grounds for appeal concerning s.1237A of the Act, I find the submissions and contentions of the respondent persuasive. Accordingly the application, insofar as it relates to the first two grounds associated with s.1237A, must fail.
Body Corporate fees
In relation to the third ground of appeal concerning an alleged error on the part of the Tribunal in holding that the body corporate fees referable to the Garrick Street property did not constitute a charge or encumbrance, the respondent submitted that the Tribunal was not in error. In support of that submission the respondent referred to the authority of Fawthorp’s case where the Tribunal considered the meaning of “charge” and “encumbrance” in an equivalent statutory context in the Veterans’ Entitlement Act 1986 at s.52C.
The respondent in written and oral submissions, in essence, contended that those terms connoted a requirement that the charge or encumbrance, for it to be such within the meaning of s.1121(1), needs to be secured against the property in the same, or similar fashion, as a registered mortgage against freehold title. The respondent sought to argue that the liability to pay body corporate fees under the applicable Queensland legislation attached to the individual who owned or acquired the property - it attached to two classes of individuals, an owner, or successor in title, who became jointly and severally liable for the debt. They were the ones to whom the body corporate must look for payment, leaving the property, so to speak, unaffected by the debt.
The respondent’s analysis of Fawthrop’s case as being supportive of the interpretation proffered by the respondent of what is a charge or encumbrance for the purposes of the Act is, in my respectful view, wrong. If anything, the argument buttresses the argument that such body corporate fees are properly to be considered a charge or encumbrance under s.1121(1) of the Act.
In the recent Full Court decision of the Federal Court in Repatriation Commission v Tsourounakis and Another (2007) 158 FCR 214 (the Tourounakis case) the majority (Dowsett and Edmonds JJ, Spender J being silent on this aspect) considered the meaning of “charge or encumbrance” as those terms are used in almost identical legislation under s.52C of the Veterans’ Entitlement Act 1986. In that case, their Honours considered whether an equitable entitlement to compensation amounted to a charge or encumbrance over a property that should be deducted from the assets of a veteran when calculating his entitlement to a war service pension which was subject to an assets test. In an examination of the authorities and legal definitions of the terms (at pp 239 to 240) they concluded that it was an encumbrance on the property within the meaning of that term under s.52C.
At p.240 their Honours stated:
The word “charge” as a noun is defined relevantly as “a liability to pay money laid upon a person or estate.” The word “encumbrance” is described as a “burden on property: a claim, lien, liability attached to property; as a mortgage, a registered judgment, etc…”. Both cases demonstrate that a “claim”, a “burden” or a “responsibility” may be an encumbrance. There is no suggestion that it must relate to the payment of money. We see no reason to exclude a claim in equity from that list of “encumbrances”. However the claim must “rest as a charge upon land, lessening its value to the owner …” or be a “burden” upon it. To say that a property is burdened with an obligation or responsibility generally means that a particular person’s interest in that property is so burdened. As Isaacs J said in Davies 34 CLR 174, the encumbrance is “on the clean title otherwise existing”.
The body corporate fees payable on the Garrick Street property during the relevant period, in my view, arise out of the applicant’s ownership of the property - it is a burden she bears through her proprietorship of the property, which burden she is not released from by sale of the property, but which is also passed onto any successor in title if such body corporate fees remain unpaid at the time of transfer.
An outstanding liability to pay body corporate fees, arising as it does out of her proprietorship of the property, prevents her, for instance, from offering a “clean title” to a prospective purchaser. A prudent purchaser would insist before settlement on their payment, otherwise he would assume the burden of their payment by the act of purchase. Those fees clearly constitute a burden on the property for any prospective purchaser because of the provisions of s.99.
In the same way as an obligation to provide equitable compensation by an owner of property, as in the Tourounakis case, imposes a burden on that property, in my view, an obligation on a property that also flows to a successor in title to pay unpaid body corporate fees, also places a burden on the property and is as a consequence an “encumbrance” within the meaning of s.1121(1) of the Act which should have been deducted when determining whether the applicant’s assets exceeded the limit allowed.
The Tribunal, therefore, was in error in disregarding the body corporate fees. In respect of the debt owed and the decision to cancel the newstart allowance, the respondent may prove to have been in error once the necessary calculations are made.
Waiver of debt
In respect of the last ground of appeal on the question of whether s.1237AAD of the Act was properly applied by the Tribunal, the respondent contends that it was. In support of that contention the respondent highlights that this Court has jurisdiction to determine whether the Tribunal had committed an error of law and does not have jurisdiction to conduct a merits review. It is noted that the applicant contended in her submissions that “the relevant circumstances of the receipt of the overpayment, which the Tribunal completely failed to examine”.
The respondent contends that the assertion is not supported by the facts. It is clear from the Tribunal's decision that it did give consideration to those relevant circumstances where in paragraph 29 it stated that:
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.
In respect of the respondent's contentions on this appeal point I agree. In short, it is obvious that the Tribunal did give due regard to the circumstances of the applicant as contended by her in evidence and in written material. It is not incumbent upon the Tribunal, as suggested by the applicant, for the Tribunal to mention or grapple with each item of evidence in reaching its conclusion about the absence of special circumstances. (See Paul v Minister for Immigration & Multicultural Affairs (2001) 113 FCR 396 [1] [79]; ReMinister for Immigration & Multicultural Affairs: ex parte Durairajasingham (2000) 168 ALR 407 [65]).
I am satisfied the Tribunal applied the correct test. It correctly quoted the statutory provisions, and referred to relevant case law about the construction of this provision. I am satisfied that the Tribunal considered the material before it, including the evidence about the claim of the existence of special circumstances. The Tribunal reached a factual finding which was open to it on the material before it.
It exhibited probative logic in reaching its conclusion. Clearly, in my view, the Tribunal has not committed an error of law and this ground must fail.
Conclusion
For the above reasons the applicant must fail on three of the four grounds relied on. However, in respect of the ground based upon the Tribunal’s error in misapplying s.1121(1) of the Act, she has been successful. Accordingly, the Tribunal’s decision should be set aside and remitted to the Tribunal for determination according to law.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of O’Dwyer FM
Associate: Gail Car
Date: 13 November 2007
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