Kelly and Secretary, Department of Social Services (Social services second review)
[2021] AATA 775
•7 April 2021
Kelly and Secretary, Department of Social Services (Social services second review) [2021] AATA 775 (7 April 2021)
Division:GENERAL DIVISION
File Number: 2020/2862
Re:Michael Kelly
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member P E Nolan
Date:7 April 2021
Place:Brisbane
The Tribunal affirms the decision under review.
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Senior Member P E Nolan
CATCHWORDS
SOCIAL SECURITY – review of decision to raise and recover a rent assistance debt – whether Applicant overpaid rent assistance –whether the debt should be recovered in part or in full – whether special circumstances exist - decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
CASES
Burgess v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 783
REASONS FOR DECISION
Senior Member P E Nolan
7 April 2021
INTRODUCTION
The Applicant seeks review of a Decision of the Social Services and Child Support Division (AAT1) delivered on 7 April 2020, which affirmed the Decision of the Department of Social Services (the Department) to restore a rent recovery debt of $28,826.08 for the period from 5 September 2007 to 28 November 2016 (the Debt Period). Those debts are made up of amounts paid by way of rent assistance (RA) that were paid to Mr Kelly during the Debt Period. Mr Kelly testified before the Tribunal by telephone after making an affirmation and also relied on documents which were before the Tribunal.
THE ISSUES
The issues are:
(i)Whether the Applicant has been overpaid in the amount of $28,826.08.
(ii)Whether the debt should be recovered in full or in part.
HISTORY OF THE MATTER
Mr Kelly and his son were the sole Directors of a company, Texton Pty Ltd (Texton). The purpose of the company was to make it the owner of a Trust which could be best described as a Family Trust called “The Kelly Family Trust” which was, on any view, a discretionary Trust in itself. The Trust Deed was registered in 1993, as was the company. The Trust acquired a property at Agnes Water (the property). This is where Mr Kelly and his family resided since that acquisition. During the hearing Mr Kelly indicated that the property was purchased sometime in 1993 but he couldn’t recall the details. As to why it was placed into a family trust, he was fairly vague but it appears he may have had some issues with respect to a failed relationship that had started with a woman after his wife died. This is really not relevant. The critical fact is that the property was used and resided in by Mr Kelly and his family and treated for all intents and purposes as their family home. Unfortunately, the payments to keep the company registered ceased, and as a matter of law the property then reverted to the Commonwealth. Subsequently Mr Kelly revived the fees and had himself appointed as trustee. These circumstances again are not that relevant, as the issue is whether the rent was paid.
Entitlement to rent assistance
Mr Kelly, having become the new trustee, submitted more documentation and became the sole Director. In the material that Mr Kelly supplied to the Department he claimed that he was paying rent by way of paying the overheads on the property and funding any repairs or restoration that needed to be done. Section 1070B of the Social Security Act 1991 (the Act) allows rent assistance for the person if they were paying rent to an owner of a property. In this case Mr Kelly was receiving a Disability Support Pension and was advised that the Pension would include rent assistance. As such he advised the Department, with documentation which was not challenged, that he was paying rent in an amount of $230 per week. Subsequently, in April 2015, Mr Kelly was granted an aged pension and advised that rent assistance would be included in that. Again, he informed the Department that he was paying rent and that it was private rent at $300 per week. It should be added for completeness that prior to all of this, on 4 September 2007, Mr Kelly submitted a claim for Newstart Allowance and listed his home address as that of the property in question. Again, he claimed to be paying rent in an amount of $230 per week. In essence, there were a number of claims by Mr Kelly that he was paying rent, which had resulted in him getting rent assistance from the Commonwealth. In his evidence before the Tribunal, and apparently also at AAT1 (from reading of the Decision), Mr Kelly maintained that he simply paid the rent out of his own pocket, in effect to himself. I note that he made comment about putting the money on the table and they then used it to keep the property going and in effect “run the property”. Section 1070B of the Act allows rent assistance for a person if they are paying rent; although “rent” doesn’t have a special meaning, it has been held to be an amount of money paid to another so as to allow the person to occupy the premises as their principal home: see Burgess v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 783. This decision was concerned with the purposes of a definition of rent for the purposes of receiving rent assistance. Nothing of the sort has occurred here. The critical facts with respect to Mr Kelly’s payments are that there is no actual record showing any moneys paid across by Mr Kelly to the owner of the property. Nor is there a record to show that the Trust received money and/or submitted taxation documents to show its income or expressed in any correspondence reference to the income. There are just no documents whatsoever. There is nothing by way of bank documents for Mr Kelly to show moneys being deducted on a regular basis for a fixed amount, and in a nutshell, he used the premises as his own and funded it out of his pay. Also, there is no material to show the landlord had a right to evict the Kellys. To this extent there is no question that he is entitled to rent assistance because there just was no rent. His payments have nothing to do with the occupancy, nor is there any suggestion that the trustee (whoever it may have been from time to time) was in a position to exclude him from the premises. As such that aspect of the claim must fail and there is no possibility in my view of any rent being ever paid by the Kellys.
Write-off
This brings me to the second point of the Appeal as to whether there are circumstances in which the debt should be not recovered. Section 1236 of the Act sets out circumstances where a debt can be written off. None of these circumstances apply in the case here. For example, a debt is recoverable at law from the debtor who has the capacity to repay the rent (I will deal with this later). Thirdly, the debtor’s whereabouts are clearly known. The fact is he appeared before the Tribunal, and there is no suggestion that it is not cost effective for the Commonwealth to take action to recover the debt. As such none of the requirements apply.
Sole administrative error
Furthermore, section 1237A of the Act provides for the right to recover all or part of the debt to be waived if the debt is attributable solely to administrative error by the Commonwealth and the payments received in good faith. That has not been challenged at all. Mr Kelly’s main contentions are that he should not have to pay the money back. The evidence in the material is clear about the fact that there has been no error here. The debt is not solely attributable to any administrative error by the Commonwealth.
Special circumstances
Section 1237AAD of the Act is also relevant in that it provides the right to recover all or part of a debt to be waived if the debt was not the result of a knowing false statement or false representation and there are special circumstances (other than financial) which make it desirable to waive the debt. There has been no error in terms of knowledge in this particular matter. It is clear that Mr Kelly acted on the basis that his money was going towards the rent, but that is a mistake more than a knowing falsehood. What is, in fact, incorrect is that there was rent being paid and Mr Kelly knew what he was doing with his money and as such this is not a situation where the payments are otherwise.
Finally, there is no basis for saying that special circumstances exist. It would appear from the Respondent’s Statement of Facts and Contentions that money is being deducted at the moment in the amount of $15 per week from Mr Kelly’s pension and he told me in the hearing that this was not causing him any financial detriment although it certainly wasn’t making it any easier for him. A small amount like that could not be reasonably seen to be causing any special circumstance and to be fair to Mr Kelly nor does he say that it does.
The decision under review is affirmed.
I certify that the preceding 9 (nine) paragraphs are a true copy of the reasons for the decision herein of
Senior Member P E Nolan
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Associate
Dated: 7 April 2021
Date of Hearing: 5 March 2021 Applicant: Mr Michael Kelly Solicitor for the Respondent: Ms Gillian Gehrke
Services Australia
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