LISA ALLEGRETTA and DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
[2009] AATA 271
•17 April 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 271
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/3864
GENERAL ADMINISTRATIVE DIVISION ) Re LISA ALLEGRETTA Applicant
And
DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date17 April 2009
PlacePerth
Decision The Tribunal affirms the Social Security Appeals Tribunal decision of 12 July 2007, to raise and recover from the applicant a parenting payment debt of $29,691.91 incurred during the period 27 November 2003 to 22 August 2006. ....(sgd) Mr A Sweidan........
Senior Member
CATCHWORDS
Social Security – parenting payment – whether applicant received overpayment – whether value of assets exceeded limit – "common intention constructive trust" – whether debt should be waived - decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth), ss 500 a; 11(1) 1, 1(12); 1118, 1132(3); 1223; 1237A; 1236;
Social Security Administration Act 1999 ss 68 (2)
Guide to the Social Security Law Chapter 4.12.3.51
CASES
Agnew v Secretary, Department of Social Security [1999] FCA 837
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9,
Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Riddell v Secretary, Department of Social Security [1993] FCA 261
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
REASONS FOR DECISION
17 April 2009 Mr A Sweidan, Senior Member 1.Decision Under Review
1.1 The applicant Mrs Lisa Allegretta seeks a review of the Social Security Appeals Tribunal (SSAT) decision of 12 July 2007, which affirmed a decision made by a Centrelink delegate, to raise and recover a parenting payment debt of $29,691.91 incurred during the period 27 November 2003 to 22 August 2006.
2.Issues and Matters For Determination
2.1 Was Mrs Allegretta overpaid parenting payment during the period 27 November 2003 to 22 August 2006? If so;
2.1.2 Is there a debt due to the Commonwealth? And if so,
2.1.3 Should the debt be recovered?
2.2To determine these issues it is necessary for the Tribunal to consider:
2.2.1What is the date of effect of the transfer document relating to a half share of the fishing boat and cray licenses signed by Mrs Ioppolita Allegretta, the applicant and her husband
2.2.2Were the half share of the fishing boat and the craypot licences unrealisable assets
2.2.3Was the debt, or any part of the debt caused by sole administrative error and,
2.2.4Are there special circumstances that warrant the waiver of all or part of the debt
3.Facts and applicant’s Contentions
except where otherwise indicated the following matters are not in dispute
3.1 The applicant Lisa Allegretta is married to Damiano Allegretta. They own their home.
3.2 Mr and Mrs Allegretta have two children, who were under 16 years of age during the period 27 November 2003 to 22 August 2006 (the relevant period).
3.3 Mrs Allegretta has been paid parenting payment since 1995 and prior to that parenting allowance. She was paid parenting payment in part at the partnered rate and in part at the single rate during the relevant period.
3.4 During the period 8 January 1996 to 9 August 2006, Centrelink sent numerous letters to Mrs Allegretta requiring her to advise Centrelink if, amongst other things, she or her partner were involved in a private company, received a benefit from a private company, that benefit changed, they received income from employment or a business or their assets increased over the amount stated in the letters.
3.5 Mr Allegretta was paid newstart allowance during the period 28 February 2003 to 15 November 2003.
3.6 Mr Modesto Allegretta, Lisa Allegretta’s father-in-law, died on 3 March 2003 and probate of his will was granted on 28 May 2003.
3.7 On 27 June 2003 Mrs Allegretta’s husband telephoned Centrelink to advise he had set up a partnership, to enquire how a payment of $50,000 to the partnership would be regarded by Centrelink and to enquire about the effect of his mother giving him half of her crayfishing business would have on his entitlement to newstart allowance.
3.8 On 1 July 2003 Mr and Mrs Allegretta formed the C.D Allegretta & D Allegretta & L.R Allegretta partnership (the Partnership) with Mrs Allegretta’s brother in law, Cosimo Don.
3.9 Mr Allegretta told a Centrelink complex assessment officer (CAO) on 2 July 2003 that he would not be getting any equity in the partnership until probate was finalised which he said would be in November 2003. He was advised by the CAO to contact Centrelink immediately once the partnership was either registered or commenced, otherwise he could be overpaid newstart allowance.
3.10 On 14 July 2003 a CAO explained to Mr Allegretta that his newstart allowance payments would continue, as based on the information he had provided he was not receiving any benefits from the business and was not the legal owner of the fishing boat.
3.11 On 17 November 2003 Centrelink was advised that Mr Allegretta had returned to work and his newstart allowance payments were cancelled.
3.12 Centrelink sent a letter to Mrs Allegretta on 17 November 2003 which notified her, amongst other things, that her payment was worked out using both her and her partner’s incomes, that she had to advise within 14 days if either of them received income from a business or that income increased, or if the value of their combined assets increased to more than $212,500.
3.13 Under a written agreement dated 27 November 2003 Mrs Ippolita Allegretta, Mrs Allegretta’s mother in law, transferred a half share of the fishing boat Esperia 1 and a half share of 92 Rock Lobster Cray Pot Licences to Mr and Mrs Allegretta. In return they agreed to pay her 10% of the net earnings generated by the boat and pots to provide “all necessary financial support during her lifetime” and not to “sell, transfer or otherwise part with possession of the said Pots”.
3.14 Mrs Allegretta telephoned Centrelink on 2 March 2004 to advise that her partner had ceased work on 14 February 2004 and to enquire how his past work would impact on her current rate of parenting payment.
3.15 On 6 April 2004 the transfer of half of the craypot licences to Mr and Mrs Allegretta was registered by the Department of Fisheries.
3.16 Centrelink wrote to Mrs Allegretta in regard to her partner’s income on 7 September 2005 following a data matching exercise with the Australian Taxation Office (ATO).
3.17 On 4 October 2005 Mrs Allegretta signed a Parenting Payment Service Update Report stating in part, that neither she nor her husband were involved in a business or owned any other assets not already declared in the report.
3.18 Mr Allegretta made a claim for newstart allowance on 1 December 2005 and advised of his income from the Partnership, but not of the assets.
3.19 Following an interview with Mr Allegretta on 2 December 2005, a Centrelink officer noted that Mr and Mrs Allegretta’s assets were below $150,000.
3.20 On 15 August 2006 Mr Allegretta made another claim for newstart allowance and provided details about the Partnership and his and Mrs Allegretta’s assets, disclosing for the first time their ownership of the boat and craypot licences.
3.21 An assessment of Mr and Mrs Allegretta’s assets was made by a CAO on 30 August 2006, which resulted in Mrs Allegretta’s parenting payment being cancelled.
3.22 Centrelink further decided that from 27 November 2003 the value of Mr and Mrs Allegretta’s assets had been in excess of the asset limit that allowed parenting payment to be paid to her and raised a debt of $29,691.91.
3.23 On 11 May 2007 a Centrelink Authorised Review Officer (ARO) reviewed and affirmed the decision that Mrs Allegretta had been overpaid parenting payment and that the debt should be recovered.
3.24 The SSAT reviewed the ARO decision on 12 July 2007. The SSAT considered whether or not the boat and pots were unrealisable assets as contended by the applicant and decided that they were not. Consequently the ARO decision was affirmed based on: (a) the value of Mr and Mrs Allegretta’s assets being in excess of the limit that allowed parenting payment to be paid to her during the relevant period; (b) that the debt was not caused by sole administrative error; and (c) that Mrs Allegretta’s circumstances did not constitute special circumstances that warranted waiver of the debt all of which were contrary to the applicant’s contentions before the SSAT and this Tribunal.
4. Relevant Legislation
4.1 The relevant legislation is contained in the Social Security Act 1991 (the Act) and the Social Security Administration Act 1999 (the Administration Act).
4.2 S 500Q of the Act provides that parenting payment is not payable to a person if the value of his or her assets exceeds certain limits. If a person is partnered, the partner’s assets are also taken into account.
4.3 The assets value limits during the relevant period were as follows:
Date partnered rate single rate
parenting payment parenting payment
27 November 2003 $212,500 $149,500
1 July 2004 $217,500 $153,000
1 July 2005 $223,000 $157,000
1 July 2006 $229,000 $161,500
1 July 2007 $236,500 $166,750
4.4 s 11(1) of the Act states that an asset is property or money, either held inside or outside of Australia.
4.5 s 1118 of the Act lists the assets that are exempt from being included in the value of a person’s assets. Relevant to this matter is that Mr and Mrs Allegretta’s home is not included in the value of their assets.
5. Tribunal’s Findings
During the relevant period, were the value of Mrs Allegretta’s assets over the asset limit that allowed parenting payment to be paid to her?
5.1 At 27 November 2003 being the date on which the transfer document was signed Mrs Allegretta was in receipt of parenting payment at the partnered rate. According to the stamp duty paid on the transfer document the value of the 50% share of the fishing boat and 92 cray pots was $1,610,000.
5.2 This amount is clearly in excess of the asset value limit.
5.3 Mrs Allegretta contends that the value of the boat and pots should not be included as part of her assets until 6 April 2004 being the date on which the Department of Fisheries registered the transfer of the licences and relies on a letter from her lawyers in support of this contention.
5.4 The Tribunal finds that the transfer took effect from 27 November 2003, the date it was signed.
5.5 This finding is based on the following evidence:
5.5.1there is nothing in the transfer document to indicate that the date of effect is any other than 27 November 2003;
5.5.2the Partnership had the beneficial use of the half share of the fishing boat and cray pot fishing licences (the fishing assets) from the start of the cray fishing season in November 2003;
5.5.3Mr and Mrs Allegretta received distributions from the Partnership of $12,047 and $21,283 respectively for the 2003/2004 financial year; and
5.5.4Mrs Ioppolita Allegretta was paid a share of the fishing profit for the 2003/2004 financial year.
5.6 The Tribunal finds that the agreement between Mrs Ippolita Allegretta and Mr and Mrs Allegretta constituted a common intention constructive trust under which beneficial ownership of a half share in the fishing assets vested in Mr and Mrs Allegretta with effect from 27 November 2003. This type of trust is described in chapter 4.12.3.51 of the Guide to the Social Security Law (the Guide) as follows:
A common intention constructive trust is created to enforce a promise and/or a gift. The following elements need to be demonstrated to establish the existence of a common intention constructive trust:
there must have been a common intention between the legal owner of the property and the beneficiary, regarding the beneficiary's beneficial ownership of the property,
this common intention is to be inferred as a fact from the words or conduct of the parties, the beneficiary must be able to show that they have acted to their detriment on the basis of the common intention as to the beneficial ownership of the property, and it must be a fraud on the beneficiary for the legal owner to assert that the beneficiary did not have the beneficial interest in the property.
5.7 The Tribunal notes the Federal Court case of Agnew V Secretary, Department of Social Security [1999] FCA 837, in which Mr and Mrs Agnew had given their farm to their sons when they left South Australia to take up employment in Western Australia and it was some 15 years later when the title of the farm was transferred to the sons. The Court found that a constructive trust had been created in 1980 and that the sons were the beneficial owners from then onwards.
5.8 In the Tribunal’s opinion Mrs Allegretta’s circumstances were similar to those of the Agnews in that beneficial ownership and possession of the boat and pots were given to her, her husband and brother in law prior to the legal transfer taking place and the evidence clearly shows that in the interim the Partnership used them to generate income.
5.9 In the Tribunal’s view Mr and Mrs Allegretta’s share of those assets should be included as part of their assets from 27 November 2003.
5.10 The applicant also contended that the value of the craypot licences during the relevant period would have been less than $32,000 per pot in 2003, as calculated by the SSAT. She has provided a report from Consolidated Marine Brokers (CMB) in support of her contention.
5.11 Based on the CMB valuation, the table below illustrates the value of Mr and Mrs Allegretta’s half share in the craypot licences over the relevant period:
Date Price per unit Price per 46 units 16 June 2003 $30,000 $1,380,000 23 August 2004 $31,000 $1,426,000 13 September 2005 $22,000 $1,012,000 16 August 2006 $22,000 $1,012,000
Accordingly the Tribunal finds that at all times during the relevant period, the value of Mr and Mrs Allegretta’s assets was in excess of the limit that allowed parenting payment to be paid to Mrs Allegretta.
6. Can The Half Share Of The Fishing Boat And Craypot Licences Be Regarded As Unrealisable Assets For Parenting Payment Purposes?
6.1 Assets can only be considered unrealisable assets if they cannot be sold, realised or used as security for borrowing (s 11(12) of the Act).
6.2 Mr and Mrs Allegretta allege that the transfer agreement signed with Mrs Ippolita Allegretta prevents the sale, transfer or otherwise parting with the craypots and that therefore they, and by association the half share of the boat, should be regarded as being unrealisable assets.
6.3 Mr Allegretta gave evidence at the hearing that while he was in prison, instead of being paid 10% of the net earnings of the fishing assets as per the transfer agreement, his mother opted for being paid $1,000 per month. He also stated that after being told of the rift between himself and his brother, his mother agreed in October 2006 that his brother could buy Mr Allegretta’s share of the boat. In addition he told the Tribunal that he had offered to sell some or all of his craypot licences to his brother at the same time, but that the offer had been refused.
6.4 On the evidence before the Tribunal it is clear that Mrs Ippolita Allegretta was at all relevant times responsive to the changing financial and personal circumstances of the family and was willing to alter the terms of the transfer agreement accordingly. Consequently the Tribunal is of the view that the fishing assets were not unrealisable.
6.5 Moreover even if the Tribunal were to find that the assets were unrealisable, the Tribunal finds that the notional ordinary income from them, together with income from the Partnership and income from Mr and Mrs Allegretta’s employment would have precluded Mrs Allegretta from receiving any payment of parenting payment, either at the single or partnered rate, throughout the relevant period.
6.6 Notional ordinary income from the licences has to be taken into account in accordance with s 1130C and 1132 of the Act.
6.7 These sections set out how the financial hardship rules apply to parenting payment at the single and partnered rates respectively. They provide that an adjusted fortnightly rate of ordinary income is to be deducted from a person’s maximum payment rate of social security income support payment.
6.8 S 1132(3) of the Act provides that the adjusted fortnightly rate of ordinary income of a person who is not a financial hardship farmer is an amount per fortnight equal to the sum of:
the person's fortnightly rate of ordinary income (other than income from assets); and
the person's fortnightly rate of ordinary income from assets that are not assets tested; and
either:
the person's fortnightly rate of ordinary income from unrealisable assets; or
the person's notional fortnightly rate of ordinary income from unrealisable assets;
whichever is the greater; and
an amount per fortnight equal to $1 for each $250 of the value of the person's assets (other than disregarded assets
6.9 The table below shows the asset value of the craypots as provided by Consolidated Marine Brokers and the commercial lease values of the pots as supplied by the Australian Valuation Office.
Date Asset value of craypots per unit Commercial lease value of craypots per unit 16 June 2003 $30,000 $2,000 23 August 2004 $31,000 $2,000 13 September 2005 $22,000 $1,200 16 August 2006 $22,000 $1,200
Date Notional income per fortnight Applicant’s and husband’s share of notional income Maximum partnered rate per fortnight Maximum single rate per fortnight 16 Jun 03 $1,326.95 $663.46 $347.30 $440.30 23 Aug 04 $1,371.15 $685.57 $421 $464.20 13 Sep 05 $937.08 $468.54 $432 $476.30 16 Aug 06 $937.08 $468.54 $444.20 6.10 The notional ordinary income from the craypots must therefore be calculated as follows:
6.11 It is clear as shown in the above table that the notional ordinary income from the licences alone, without the inclusion of any notional ordinary income from the fishing boat, income from the Partnership or Mr and Mrs Allegretta’s income from employment, precluded any entitlement to the parenting payment during the relevant period.
7. Is There A Debt To The Commonwealth?
7.1 As Mrs Allegretta was overpaid during the relevant period calculated at both the single and partnered rates it is clear that she has a debt to the Commonwealth in accordance with s 1223 of the Act.
8. Was Any Part Of The Debt Caused By sole administrative error?
8.1 s 1237A of the Act allows waiver of a debt. or part of a debt, if it was caused by sole administrative error and the excess payment was received in good faith.
8.2 In the Tribunal’s opinion no part of the debt was caused by sole administrative error. It was clearly caused by Mrs Allegretta failing to inform Centrelink of the commencement of the partnership and the transfer of the fishing assets until August 2006.
8.3 Mrs Allegretta gave evidence that although there were times when she did not receive Centrelink letters, she had been in receipt of a parenting payment since about 1990 and knew that income could reduce her payments, but claimed she had not understood from the letters that she had to advise of increases in assets. The Tribunal rejects this claim.
8.4 The Tribunal notes that the Centrelink letters sent to Mrs Allegretta clearly stated she had to advise if her and her husband’s combined assets increased to more than a specific stated amount and it is clear that she failed to do so.
8.5 Mrs Allegretta also claims that in early June 2004, following a request from Centrelink, she took a bundle of documents into Centrelink’s Spearwood office comprising of a letter from the Department of Fisheries notifying of the transfer of the boat and fishing licences, a copy of the transfer document that had been stamped to show how much stamp duty had been paid and a profit and loss statement for the 2003/2004 financial year which had been completed by her accountant. She said that she had filled out a written statement in regard the transfer of the fishing assets and was told that the papers would be sent to someone else for processing. Mrs Allegretta also alleged that she provided 2004/2005 and 2005/2006 profit and loss statements and tax returns to Centrelink around November of the relevant years.
8.6 The Tribunal finds having regard to Centrelink records and on the balance of probabilities that Mrs Allegretta did not provide information in regard to the fishing assets in June 2004. The Tribunal notes that:
8.6.1the only recorded contact around June 2004 was on 29 July 2004 in regard to a Health Care Card for one of her daughters;
8.6.2Centrelink records show that no letters were sent requesting information about the Partnership until September 2005;
8.6.3Mrs Allegretta told Centrelink on 9 September 2005 that she had not received any other income during the 2003/2004 financial year. This was incorrect, as the 2003/2004 Partnership tax returns show that she and her husband were paid distributions of $3,046 and $12,047 respectively;
8.6.4she signed a Parenting Payment Update form on 4 October 2005 indicating that she was not involved in a business and did not have any other assets other than those disclosed on the form. She did not disclose that she and her husband received distributions and salary from the Partnership.
8.7 There is no evidence to support the applicant’s claim that documents were provided to Centrelink in June 2004 showing the increase in assets. It is also unlikely in the Tribunals’ opinion that Mrs Allegretta would have provided Centrelink with the transfer documents at that time in any event given her claim that at June 2004, she was unaware of the need to advise Centrelink if her assets increased and no letter had been sent to her at that time specifically requesting those documents.
8.8 Mrs Allegretta gave evidence that the transfer document was provided again to Centrelink around December 2005 when her husband claimed newstart allowance. While it appears that information about the income from the Partnership was given, the Centrelink record dated 2 December 2005 indicates that the value of the fishing assets was not disclosed.
8.9 The Tribunal finds that it was not until Mr Allegretta made another claim for newstart allowance on 22 August 2006 that Centrelink was advised of the transfer of the fishing assets and provided with a copy of the transfer document.
9. Are There Special Circumstances That Warrant The Waiver Of Any Part Of The Debt?
9.1 The Federal Court decision in Angelakos and Department of Employment and Workplace Relations (2007) 100 ALD 9 comprehensively considered the issue of special circumstances. In that case Besanko J considered the observations in the matter of Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, particularly paragraphs 25 and 26 where Branson J stated that:
.......the Tribunal concluded that the applicant's circumstances “do not differ from those of many income support recipients”. In the context in which the Tribunal reached this conclusion, it is to be understood as having made a judgment that neither hardship nor unfairness made it desirable to waive all or part of the applicant's debt because the applicant's circumstances were commonplace rather than special. While, as French J pointed out in Hales, the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for “special circumstances” discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.'
9.2Besanko J commented at paragraph 33 of Angelakos that:
I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional' is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual' or ‘uncommon' are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.
9.3 His Honour also considered the following remarks of the Full Court in Riddell v Secretary, Department of Social Security[1993] FCA 261 (at 23):
“Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”
9.4 The Tribunal considered Mrs Allegretta’s circumstances during the relevant period and currently. Clearly her circumstances were and continue to be difficult.
9.5 In Angelakos, the Federal Court considered the test for determining whether there are "special circumstance" in a particular case. The Court said (at 18):
“...The danger is that the test will be overstated if the word “exceptional” is emphasised. It was not the intention of parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.”
9.6 In Re Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, the Tribunal emphasised that special circumstances are those that “make it desirable to waive”, which “necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system”.
9.7 The Tribunal finds that Mrs Allegretta’s circumstances do not distinguish her situation from others who have a social security debt and that waiver under s 1237AAD of the Act is not appropriate in this instance.
10. Should The Debt Be Written Off For A Period Of Time?
10.1 s 1236 of the Act provides that a debt may be written off, i.e. not recovered for a period of time and be recovered at a later date, if amongst other things, the person does not have the capacity to pay the debt at the present time.
10.2 The Tribunal is of the view that Mrs Allegretta has capacity to repay the debt, based on her financial circumstances. She is currently having money withheld from her fortnightly payments of carer allowance, is working part time and she and her husband receive income from the D & LR Allegretta partnership which was set up on 1 July 2006.
11. Decision
11.1 The Tribunal affirms the Social Security Appeals Tribunal decision of 12 July 2007, to raise and recover from the applicant a parenting payment debt of $29,691.91 incurred during the period 27 November 2003 to 22 August 2006.
I certify that the 11 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: ....(sgd) T Freeman..........
AssociateDates of Hearing 21 October 2008 and 17 February 2009
Date of Decision 17 April 2009
Appearing for the Applicant Self representedAppearing for the Respondent Ms M Conlon
Centrelink Legal Services Branch
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