Ma and Anor and Secretary, Department of Employment and Workplace Relations
[2006] AATA 1111
•21 December 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1111
ADMINISTRATIVE APPEALS TRIBUNAL )
) No D2006/3, 4
GENERAL ADMINISTRATIVE DIVISION ) Re HAI MA & KIM CHHORN HENG Applicants
And
SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Deputy President P E Hack SC Date21 December 2006
PlaceBrisbane (heard in Darwin)
Decision The Tribunal, in each proceeding, sets aside the decision of the Social Security Appeals Tribunal and remits the matter to the respondent for reconsideration in accordance with these reasons.
..............Signed..................
Deputy President
CATCHWORDS
SOCIAL SECURITY – Newstart allowance – mature age allowance – partner allowance – asset values – two properties – which property is the principal home – principal home where person spends the bulk of their time – determined principal home when applicants became committed to farming venture – liabilities related to carrying on of primary production to be deducted – failure to inform Centrelink of change in circumstance – waiver not appropriate – no special circumstances – Tribunal sets aside the decision under review
Social Security Act 1991 (Cth) ss 11(7), 611(1), 660YCJ(1), 771HF(1), 1118(1), 1121, 1121A, 1121A(1)(c),1121A(2), 1237AAD
Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58
Re Samek and Department of Social Security (1988) 16 ALD 295
Calverley v Green (1984) 155 CLR 242
Groth v Secretary, Department of Social Security (1996) 40 ALD 541
REASONS FOR DECISION
21 December 2006 Deputy President P E Hack SC Introduction
1.The applicants, Mr Hai Ma and Mrs Kim Chhorn Heng, are husband and wife. They migrated to this country as refugees from Cambodia in July 1982. Mr Ma is now 66 years old and Mrs Heng is 62.
2.From 1 February 1997 until 29 June 2001 both Mr Ma and Mrs Heng received Newstart allowance. On that latter date Mr Ma applied for, and was paid, mature age allowance. Mrs Heng received partner allowance from the same date.
3.On 13 December 2004 Centrelink decided that Mr Ma was not eligible to receive mature age allowance and that Mrs Heng was not entitled to receive partner allowance. Moreover it was determined that they had not been entitled to receive benefits between 12 May 1998 and 23 August 2004. Decisions were made to raise and recover significant debts, in excess of $50,000, from each of them.
4.The decisions were varied slightly in the Social Security Appeals Tribunal but affirmed in substance. Mr Ma and Mrs Heng seek a review in this Tribunal of the decisions.
Background
5.What follows comes essentially from the evidence of the applicants and from the documents that are before me. I have no reason to doubt the truthfulness of either of the applicants in recounting their history. Occasionally I had cause to wonder whether they fully comprehended questions directed to them but on matters of primary fact I accept their evidence.
6.After arriving in Australia the applicants settled initially in South Australia. After some two years there they moved to Victoria. In May 1989 they purchased a three bedroom house at Keilor Downs, a suburb in Melbourne’s outer west. The purchase price was $154,000.00.
7.From 1987 until 1996 the applicants, with help from their children, operated a milk bar at Sunshine. That business was sold at a price of $63,000.00 in December 1996.
8.On 28 January 1997 each of Mr Ma and Mrs Heng completed a claim for Newstart allowance. It was granted and paid, apparently, from 11 February 1997.
9.In late 1997 Mr Ma and Mrs Heng were visiting the Northern Territory for the purposes of a holiday. Mr Ma initially said that they were not, at that time, looking to acquire another business but Mrs Heng seemed to say the opposite. I rather suspect that that confusion arises from language difficulties. It seems to me inherently likely that they had in mind the possibility of acquiring a rural property with a view to developing it. Both of the applicants had come from agricultural backgrounds in Cambodia.
10.On 9 December 1997 Mr Ma and Mrs Heng purchased real property situated at 15 Duffs Road, Lambells Lagoon (also known as Humpty Doo) in the Northern Territory. The property was purchased for $127,950.00 and was some 14.3 hectares in area. At the time of purchase the land was uncleared vacant land. Mr Ma described it as “just bush”. Some of the purchase price came from a term deposit that they had, some was provided by their children[1]. They did not, at that time, nor subsequently, disclose the acquisition of the Lambells Lagoon property to Centrelink.
[1] The detail of the evidence appears in paragraphs 65 to 68 below.
11.They returned to Melbourne and their Keilor Downs property in late 1997. They next returned to the Northern Territory in August 1998 and commenced working on the Lambells Lagoon property. They started to clear the land and put in a bore. Electricity was connected on 11 August 1998. A demountable shed was acquired and put on the land. While this was occurring they were staying with friends in the Northern Territory.
12.I infer that in early October 1998 the applicants advised Centrelink of a new postal address at the Humpty Doo Post Office. I draw that inference from the change in address between letters sent on 28 September 1998 to the Keilor Downs property and those sent to a post office box address at the Humpty Doo Post Office on 12 October 1998. The letters of 12 October 1998 make reference to the payment of Remote Area Allowance, a benefit available only to those who live in remote areas which include Lambells Lagoon. I do not, however, infer that they told Centrelink of a new residential address.
13.Late in that year, probably in December and before the wet season, the applicants returned to Keilor Downs. They remained there for some months and then returned to the Northern Territory and continued clearing the land. An aerial photograph taken of the property in May 1999 shows that by then the block had been fully cleared and was 50% planted to mangoes. By the following year, when a further aerial photograph was taken on 8 May 2000, the property was fully planted to mangoes.
14.The applicants developed a pattern of spending the dry season in the Northern Territory tending to the mango trees and then returning to their Keilor Downs house for the wet season. According to Mrs Heng the general pattern was that they spent two to three months of each year in Melbourne and the balance of the time in the Northern Territory. On one occasion they spent two periods in Melbourne. It will be necessary to return to this aspect of the applicant’s living arrangements in due course but the foregoing will suffice for present purposes.
15.In June 2001, as a consequence, apparently, of Centrelink being informed that Mrs Heng had travelled overseas, the applicants were advised by Centrelink that Mr Ma was entitled to mature age allowance and Mrs Heng to partner allowance. They claimed those benefits on 29 June 2001 and were paid them thereafter. The claim forms, which appear to have been completed by someone other than the applicants, describe the “permanent home address” as the Lambells Lagoon address and the postal address as a post office box at Humpty Doo, Northern Territory. That for Mrs Heng (but not Mr Ma) described “the people you live with” as being a daughter, son-in-law and granddaughter of Mrs Heng.
16.In August 2004 Centrelink commenced an investigation into the applicants’ circumstances. Mr Ma’s payments of mature age allowance were suspended and ultimately cancelled on 21 October 2004 on the basis that his assets were above the allowable limit. Mrs Heng’s partner allowance was treated similarly.
17.On 13 December 2004 Centrelink decided to raise and recover from Mr Ma a debt of $55,164.80 representing payments of Newstart allowance and mature age allowance paid to him between 12 May 1998 and 23 August 2004 to which he was not entitled. On the same date Centrelink decided to raise and recover from Mrs Heng a debt of $54,883.56 representing payments of Newstart allowance and partner allowance paid to her between 12 May 1998 and 23 August 2004 to which she was not entitled. The applicants were notified of these decisions in writing dated 14 December 2004.
18.The decisions were affirmed on internal review and by an authorised review officer.
19.The applicants applied to the Social Security Appeals Tribunal for review. On 15 December 2005 that Tribunal remitted the matter back to Centrelink for the purpose of recalculating the debts in accordance with the reasons of that Tribunal. The recalculation was undertaken on the basis that the appropriate date to use as the date when the applicants commenced living in the Northern Territory was 11 August 1998 when power was connected.
20.The revised debts are $53,424.20 for Mr Ma and $53,142.96 for Mrs Heng. In each case the period of the overpayment is from 4 August 1998 to 23 August 2004.
21.The applicants now seek review in this Tribunal.
The legislation
22.The legislation in issue is the Social Security Act 1991 (Cth). By virtue of s 611(1) of that Act Newstart allowance was not payable to a person if the value of the person’s assets exceeds an allowable limit. The same is true of mature age allowance (by virtue of s 660YCJ(1) of the Act) and partner allowance (by virtue of s 771HF(1) of the Act).
23.Section 1118(1) of the Act provides that in determining the value of a person’s assets the value of the person’s principal home is exempted. The expression “principal home” is not defined in the Act however there are provisions that affect the way it is to be considered. In that context it is material to note s 11(7) of the Act which provides, so far as is presently relevant:
A residence of a person is to be taken to continue to be the person’s principal home during:
(a)any period (not exceeding 12 months) during which the person is temporarily absent from the residence
24.The allowable limits for a “homeowner couple”, as Mr Ma and Mrs Heng were at all material times, were as follows[2]:
(a)1 July 1998 - $178,500
(b)1 July 1999 - $181,500
(c)1 July 2000 - $189,500
(d)1 July 2001 - $200,500
(e)1 July 2002 - $206,500
(f)1 July 2003 - $212,500
(g)1 July 2004 - $217,500
[2]I have taken these figures from the Secretary’s statement of facts and contentions – they were not put in issue by the applicants so I have assumed them to be correct.
The issues
25.The fundamental issue in this case is whether the assets of Mr Ma and Mrs Heng exceeded the allowable limit in the period in question. Additionally questions of waiver may arise.
26.The issues that the applicants seek to agitate are as follows:
(a)what was the applicant’s principal home;
(b)what was the value of the Keilor Downs property;
(c)what was the value of the Lambells Lagoon property;
(d)how should the contributions made by the children to the purchase price of the Lambells Lagoon property be regarded;
(e)should any debt be waived under,
(i)s 1237A of the Act on the basis of administrative error,
(ii)s 1237AAD of the Act on the basis of special circumstances.
27.In addition, the respondent puts in issue the proper treatment of the additional, but undeclared, income of the applicants from the mango farming venture and, if the applicants establish that the Keilor Downs property was always their principal home, the question of overpayment of remote area allowance.
28.The parties are agreed that I should find the facts to enable these questions to be answered and remit the matter to Centrelink to give effect to my conclusions.
What was the applicants’ principal home?
29.There is some learning in the Tribunal about what constitutes a “principal home”. The term is not defined in the Act but seemingly, and by reference to the adjective, is intended to refer to situations where occupation or residence of more than one home is in issue. The question that arises here, where the applicants resided for some months of the year in each of the Keilor Downs property and the Lambells Lagoon property, is which of those properties was their principal home.
30.A useful starting point is the decision of Senior Member Handley in re Dickeson and Secretary, Department of Social Security.[3] In that case, according to the headnote, the applicant had occupied a disused grain shed on a 320-acre property for some six to seven years. The shed was unlined, had minimal natural light, no running water, washing or toilet facilities and no kitchen. However the applicant slept there and prepared and consumed most of his meals there. Senior Member Handley said this:[4]
The words “home”, “house”, “residence” and “domicile” have all been extensively considered by the courts, but derive their meaning only by reference to a particular subject whether it be taxation, family law, tenancy, customs, probate, or social welfare.
In assessing the criteria of what constitutes a “home” a substantial degree of occupation is persuasive… whereas conversely occupation by occasional visiting is not … and living away from the family home in other premises causes the family home to no longer be the principal home … A “home” is likely to be a place where persons ordinarily eat, morning and night, and where they sleep, and in the case of adults have the characteristics of permanency … It is a concept of nature and “it is the place where the centre of gravity of one’s domestic life is to be found” …Where one chooses to live is relevant … and a reference to a “home” requires an affinity to its location and usage by the occupier … A home need not be a structure of four walls and a roof, but may be constituted by a caravan … or a campervan…or a yacht…
[3] (1989) 18 ALD 58.
[4] Ibid at pp. 61-2 (authorities and citations omitted).
31.A case somewhat closer to the present is Re Samek and Department of Social Security[5] a decision of Senior Member Hayes that is authority for the proposition that, as between two or more properties in which a person had a propriety interest, the person’s “principal home” would be the property in which the person spent the bulk of his or her time. It is useful, in the present context, to set out a somewhat lengthy extract from the decision:
The Act contains no definition of “the principal home”. In most cases, there will be no doubt about it. Typically, the principal home will be the family home, in the sense of being the home in which the couple whose assets are to be assessed have lived for most of their married lives while they have raised their children and in which, at the time of assessment, they continue to live. There will be no question but that they will remain living there for the foreseeable future.
A married couple might also, over the course of their lives, acquire other properties. They might ultimately develop a beach or country house, which is used by their family at odd times during the year for recreational purposes. They might also acquire what are clearly investment properties. In this context, the family home will remain the principal home, even though the couple, as they approach retiring age, might progressively shift the focus of their activities to the holiday house, possibly leaving the family home unoccupied for various periods over the year, or occupied by teenage or young adult children who might wish to remain in the city for study or work purposes. Again, notwithstanding this shift, there will be no difficulty in saying that the family home remains the principal home.
The concept of “the principal home” assumes, however, that there is more than one property that is used as a home. If one moves from home to home, then the home in which one spends most time would, logically, be the principal home. But in the context in which it appears, to talk of one home being a principal home, and another being a secondary home, the respective “homes” must be “property” which can be valued for the purposes of the Act. Thus, as between the city house and the holiday house owned by a retired couple in my earlier example, the city house would remain their principal home for as long as they spent the bulk of their time there. But once they spent the bulk of their time in their holiday house, it would become their principal home.
A person who owns a residential property in the city and who is in the habit of living there, but who spends the bulk of his or her time travelling around the country, living in hotels, and pursuing business or recreational activities from those hotels, can still be regarded as retaining the city property as his or her principal home. While the person spends more time in hotels each year that at home, he or she has no proprietary interest in the hotel room and so cannot be regarded as setting up a home which can be regarded as such as to make the city home a secondary one. So it is I believe with the applicants in this case. For a period, when they were camping on their bush block and contemplating building on it, spending comparatively small amounts of time at their other property in Haberfield, they were “at home” in Inverell, with their bush block being their “principal home”, and their Haberfield property being their secondary place of residence. So also, when they moved off the bush block and into rental accommodation, that rental property, in which they had a legal interest, became their principal home.
.
[5] (1988) 16 ALD 295.
32.I turn then to a consideration of the evidence relating to the Lambells Lagoon property.
33.Power was connected to the property on 11 August 1998. So far as I can tell the demountable shed that provided shelter was put onto the property in that same year and, I infer, after electricity was connected. Over the years the demountable shed has been made more and more comfortable in the sense of there being kitchen appliances and other appliances acquired, in the main, second-hand. The fabric of the shed has, to a large extent, been scavenged from the local tip. I have photographs, taken at the conclusion of the process, that show a level of comfort of the type that is to be commonly found in residences in this country. Despite that the living area is very small and the general setup is quite rudimentary. As I understand the evidence there are two demountable sheds. Between them is a breezeway in which is to be found the kitchen. In the kitchen area includes a table and a number of chairs. There is a microwave oven, a rice cooker and a sink. There is, as well, a basic bathroom which includes a water closet connected to a septic tank. From the descriptions of the witnesses and the photographs I conclude that the level of comfort is rudimentary and basic but nonetheless the structure that is there is liveable and is one in which the applicants and members of their family live for much of each year.
34.I should also add that I do not doubt that at all times the Keilor Downs property provided a much greater level of comfort, as well as far greater space, than did the Lambells Lagoon property however in my view the question of principal home or not is not determined by reference to comparable levels of comfort although that may play a role in determining the issue.
35.By August 1999 the mango growing operation had reached the stage that a business name, H & K Mango Farm, was registered with the Northern Territory Department of Justice. I have made mention of the evidence of aerial photographs that show that by May 1999 the block had been fully cleared and was 50% planted to mangoes. By the following year, when a further aerial photograph was taken on 8 May 2000, the property was fully planted to mangoes.
36.The first partnership tax return appears to be that for the year ended 30 June 2001. That shows that a fuel tank was acquired on 17 November 2000 and that a mango shed was acquired on 18 March 2001. There was no income in that year. The first income was received in the year ended 30 June 2002 but in that year the partnership made a net loss of $5,429.00. The following year the partnership made an operating profit of $12,140.00 which was divided equally between the applicants.
37.As it seems to me the first question is whether the Lambells Lagoon property ought be regarded as being a residence. In my view it must. The legislation does not draw any qualitative distinctions. A residence is where a person resides; where the person ordinarily eats, morning and night, and where they sleep. It is not to the point that the residence may be basic, if it serves the purpose of providing the place where the person ordinarily eats and sleeps then it amounts to a residence.
38.The Lambells Lagoon property is to be contrasted to a shed, built on a rural property to provide shelter during the course of a working day, and used for that purpose by people who sleep elsewhere. It does not detract from that conclusion that the level of comfort is rudimentary or that the fabric and fittings of the building have been acquired at very little cost.
39.And the same conclusion must be reached in relation to the Keilor Downs property. It also is a residence.
40.Which of these two residences is to be regarded as being the principal home of the applicants? It is not open to doubt that it was not a residence before, say, August 1998 when electricity was connected. And I do not consider that it could be regarded as being the principal home at any time during 1998. I reach that conclusion on the basis that the point in time when the Lambells Lagoon property answered the description of principal home coincides with the point of time when the mango farming venture was firmly established. I link the issue of principal home with the issue of the establishment of the farming venture because of s 11(7) of the Act. In my view the applicants must be regarded as having been temporarily absent from the Keilor Downs property until the point was reached when, having regard to the development of the farm, it could be said that they were committed to the farming venture. Once it could be said that they were committed to the farming venture then they were committed to spending most of the year at the Lambells Lagoon property.
41.Prior to that time their presence at the Lambells Lagoon property should be regarded as being a temporary absence from the Keilor Downs property, that is, the farming venture was still tentative. By virtue of s 11(7) Keilor Downs continued to be their principal home. But by the time that the land had been fully cleared and 50% planted to mangoes and they, in effect, told the world by the registration of a business name that they were carrying on business as primary producers of mangoes from the Lambells Lagoon property, it seems to me that they ought be regarded as having committed themselves to the farming venture and, in doing so, adopted the Lambells Lagoon property as their principal home. That point had been reached by 24 August 1999 and I propose, in a somewhat arbitrary manner, to choose 1 August 1999 as the point at which I am satisfied that the Lambells Lagoon property had become the applicants’ principal home.
42.By that time, as well as the clearing and planting that had been undertaken, they had erected a basic structure in which to eat and sleep on a daily basis. The registration of the business name on 24 August 1999 can be seen as final confirmation that the applicants were committed to the farming venture and the notion that most of their year would be spent in the Northern Territory.
43.Viewed in this way the trip to the Lambells Lagoon property in 1998, which seems to have commenced in about August when electricity was connected, was a temporary absence from their principal home which did not exceed 12 months because they left before the onset of the 1998/1999 wet season. That is so, in my view, notwithstanding that in this time they erected the demountable and commenced making it habitable.
44.They returned after the wet season. The evidence was not at all precise but I infer that they returned in about April 1999. After another 4 months work on the property I consider that they were committed to the farming venture and to the Lambells Lagoon property becoming their principal home. The evidence was to the effect that once the mango growing venture was started they spent, on average, about 9 months of the year at Lambells Lagoon and about 3 months at Keilor Downs.
45.The applicants pressed the submission that the Keilor Downs property continued as their principal home and that visits to the Lambells Lagoon property were temporary absences from the principal home. While I accept that that is so for the first year (1998) I consider that once they were committed to the farming venture they were committed to spending the greater part of each year in the Northern Territory. Whilst the issue is not one of mere arithmetic where, as here, there is a disproportion between the time spent between the two residences it may be more readily concluded that that where the much greater time is spent should be regarded as being the principal home.
What was the value of the Keilor Downs property?
46.Exhibit 4 in the proceedings is a detailed valuation of the property at 11 Gottard Court, Keilor Downs undertaken by Mr Jason Rawsthorn, a certified practising valuer in the employ of the Australian Valuation Office. Mr Rawsthorn’s conclusions were not challenged nor contradicted by the applicants. As is proper practice, the valuer has listed comparable sales that support the conclusions that he has reached about the value of the property at the various times. I have no hesitation in accepting this evidence and, from it, concluding that the value of the Keilor Downs property was as follows:
(a)1 July 1999 - $175,000.00
(b)1 July 2000 - $190,000.00
(c)1 July 2001 - $205,000.00
(d)1 July 2002 - $220,000.00
(e)1 July 2003 - $245,000.00
(f)26 April 2006 - $260,000.00.
47.There is no valuation as at 1 July 2004. Were that to become relevant it would be appropriate to regard the value as at that date as being $255,000.00. I accept that there is no evidence of that figure but it seems to me to be a reasonable inference to be drawn from the valuations accepted as at 1 July 2003 and 26 April 2006.
What was the value of the Lambells Lagoon property?
48.I have a valuation report of this property prepared by Mr Paul O’Kelly, a senior valuer with the Australian Valuation Office. It is based upon an inspection and valuation undertaken by a valuer who has since retired from the Australian Valuation Office. It was not accepted by the applicants and I am unable to accept it. It suffers from the fundamental defect that the process of reasoning by which the valuer has arrived at particular values is simply not shown.
49.The report notes that the property was acquired in December 1997 for $127,950.00. The valuer, by reference to aerial photographs, has concluded that by 17 May 1999 the block had been fully cleared and 50% planted to mangoes. Presumably on the basis of that planting a valuation of $208,000.00 has been reached as at 1 July 1999. Even with the clearing and planting I have some difficulty in seeing how, in a little over a year and a half the value could go from $127,950.00 to $208,000.00. I note, in that regard, that as at 21 November 2003 the land had a Valuer-General’s unimproved capital valuation of $150,000.00. It seems to me that the valuer must have attributed an entirely unrealistic value to the growing trees.
50.My difficulty is compounded by the complete absence of the process of reasoning by which the valuer has arrived at the values given. In the result I am unable to accept that the valuation report on the Lambells Lagoon property is able to be relied upon. In ordinary circumstances such a conclusion would mean that the matter would be returned to Centrelink to enable the task of valuation of this property to be undertaken again. But, in the unusual circumstances of this case, the parties urged me, if I considered it possible, to ascertain for myself the valuation of the Lambells Lagoon property.
51.The starting point is the purchase of the land for $127,950.00 in December 1997. That is the value of the land at that time. An appropriate finishing point seems to me to be the market appraisal undertaken by a local real estate agent in November 2005 which suggested a “marketable” range of $200,000.00 to $210,000.00. One would not ordinarily accept an appraisal of a real estate over a valuation by a registered valuer however where, as here, I conclude that the valuer’s approach is flawed the real estate appraisal appears sound (by reference to purchase price, value of improvements and the Valuer General’s valuation) and is the best evidence available.
52.The Valuer General’s valuations after purchase (which both the applicants and the respondent accept) are,
(a)1 July 2000 - $131,000.00
(b)1 July 2003 - $150,000.00.
53.No capital improvements or work had been undertaken by 30 June 1998 so it seems safe to treat the value at that date as being the purchase price, $127,950.00. Thereafter the applicants spent a total of $29,393.00 putting in a bore and irrigation equipment, $4,500.00 in acquiring a demountable shelter and $3,900.00 in acquiring mango trees. These figures come from the applicants’ supplementary submissions and additional evidence (by way of invoices) admitted, with the consent of the respondent, following the hearing in Darwin. Doing the best I can, I conclude that these improvements would add, say, $30,000 to the land value. Thus I would determine the valuation of the Lambells Lagoon property as at 30 June 1999 to be $157,950.00, which I would round up to $160,000.00.
54.If, as seems to me to be correct, the property had a value in the $200,000.00 to $210,000.00 range – say $205,000.00 - as at November 2005 then I would increase the value by $7,500.00 annually from the year ended 30 June 2000 to the year ended 30 June 2005.
55.It is, as well, necessary to determine a value to be attributed to that part of the Lambells Lagoon that was a “private home” as defined i.e. the dwelling-house and curtilage. The valuer from the Australian Valuation Office assessed the home and curtilage at various figures in the range from 47% to 53% of the overall value. I propose to adopt the same approach, using 50% and rounding the figures where necessary.
56.On this basis I determine the valuations to be as follows:
Date Total value Home & curtilage
9 December 1997 $127,950 $64,000
30 June 1998 $127,950 $64,000
30 June 1999 $160,000 $80,000
30 June 2000 $167,500 $85,000
30 June 2001 $175,000 $87,500
30 June 2002 $182,500 $90,000
30 June 2003 $190,000 $95,000
30 June 2004 $197,500 $100,000
30 June 2005 $205,000 $102,500
1 November 2005 $205,000 $102,500.
57.I do not propose to value separately what the valuer has described as plant and equipment – the amounts involved are quite trivial.
58.I again emphasise that I would not ordinarily undertake this task of valuation but do so at the express urgings of the parties who, understandably, are anxious to bring what has been a long and arduous process to an end without any further delay.
How should the contributions made by the children to the purchase price of the Lambells Lagoon property be regarded?
59.The evidence of the applicants, not challenged, was that part of the purchase price of the Lambells Lagoon property had been provided by the children. The applicants sought, from that fact, to argue that these “financial contributions … could not be characterised as an asset of” the applicants.
60.I am unable to accept this argument for two reasons. First, there is very little evidence about the amount that was provided. In the Social Security Appeals Tribunal the applicants estimated that they had borrowed $20,000.00 from their children. I am prepared to assume in the applicants’ favour that that is correct.
61.But the applicants hold the entirety of the legal interest in the land. They would only hold less than a full interest beneficially if the payment of part of the purchase price by others had the effect of creating a resulting trust in favour of those who provided the funds. But there can be no resulting trust where the monies paid had the character of a debt. The applicable legal principal was explained by Gibbs C.J. in Calverley v Green[6] in these terms:
… if the purchase money is provided by two or more persons jointly, and the property is put into the name of one only, there is, in the absence of any such relationship [that gives rise to the presumption of advancement], presumed to be a resulting trust in favour of the other or others. For the presumption to apply the money must have been provided by the purchaser in his character as such – not, e.g., as a loan.
[6] (1984) 155 CLR. 242 at p. 246.
62.In my view, on the basis of such evidence as there is, the payments made by the children towards the purchase price fall to be regarded, at best, as loans rather than payments that could point towards a resulting trust.
63.Given the suggestion in the evidence that monies were lent to enable the applicants to acquire the Lambells Lagoon property it is necessary to consider s 1121 and s 1121A of the Social Security Act.
64.The first cannot have application because there is no charge or encumbrance over the land. The latter section is in these terms:
“(1) For the purposes of working out the value of a person’s assets under this Act, if:
(a)the person is:
(i)a primary producer; or
(ii)a family member of a primary producer; and
(b)the person has assets (including real property) that are, in the Secretary’s opinion, used for the purposes of carrying on that primary production; and
(c)the person also has liabilities that are, in the Secretary’s opinion, related to the carrying on of the primary production;
then:
(d)section 1121 does not apply in relation to the assets referred to in paragraph (b); and
(e)those assets are taken to be a single asset (in this section called the primary production asset); and
(f)the value of that single asset is worked out under subsection (2).
(2) The value of a person’s primary production asset is worked out in the following way:
Method statement
Step 1.Add together the value of the assets referred to in paragraph (1)(b): the result is called the unencumbered value.
Step 2.Add together the value of the liabilities referred to in paragraph (1)(c): the result is called the total liability.
Step 3.Take the total liability away from the unencumbered value: the result is the value of the person’s primary production asset.
(3)If the result under Step 3 of the Method statement is less than nil, the value of the primary production asset is taken to be nil.”
65.I accept that at the relevant times the applicants were primary producers. The difficulty I have is in being satisfied that the applicants have liabilities that are related to the carrying on of the primary production. I have a document apparently signed by Chendra Kim and Rattanak Kim (relatives of the applicants) as well as the applicants that, on one view of it, suggests that they lent $20,000.00 to the applicants. But no date is given for this transaction and there is no evidence that any funds so lent were used in acquiring primary production assets. I am not satisfied that that document sufficiently evidences a liability of the applicants related to the carrying on of primary production.
66.Next, I have a statement dated 21 November 1997 from a daughter of the applicants, Muy Keav Ma. It refers to a loan of $5,000.00 to the applicant’s bank account, although no date is specified. Attached to it appears to be the deposit slip butt, stamped by the bank, showing a deposit to the applicants account of $5,000.00. I am unable to read the date beyond that it was in 1997. But given that the applicants’ bank statements, which are before me, show a deposit of $5,000.00 I am prepared to infer that it represented a loan from that daughter to the applicants.
67.Finally, I have an unexecuted statutory declaration from another daughter, Muy Leng Ma, that speaks of a loan of $10,000.00 made by her to the applicants to enable them to buy the property in December 1997. The statement suggests that she prepaid a term deposit in order to provide those funds. The applicants’ bank statements show a deposit of $20,000.00, described as “term deposit prepaid or matured” on 14 November 1997.
68.And I am prepared to infer, as well, that these debts are liabilities related to the carrying on of primary production because they went into the applicants’ bank account immediately prior to settlement of the purchase price of the Lambells Lagoon property and formed part of a withdrawal of $70,322.00 that I infer went to the purchase.
69.Despite the unsatisfactory nature of the evidence I am prepared to accept that at all times from November 1997 onwards the applicants had liabilities totalling $15,000.00 that need be taken into account in Step 2 of the Method Statement in s 1121A(2) of the Social Security Act. The evidence otherwise leaves me not satisfied that there are other liabilities that need to be taken into account in this way.
Other Assets
70.In supplementary submissions lodged after the conclusion of the hearing the applicants raised issues regarding the values to be given to term deposits, motor vehicles and shares.
71.Mr McQuinlan accepted, as the applicants contended, that the Centrelink calculations of the applicants’ assets were erroneous to the extent that financial investments of $15,420 and $22,462 were shown in the summary of assets from 1 October 1998 to 1 July 2004[7]. It was accepted by the respondent that these investments, comprising term deposits, matured in 1997 and were used to acquire the Lambells Lagoon property.
[7]Pages 714 – 726 of the s 37 documents.
72.The submissions forwarded made reference to the fact of sale of one motor vehicle and ascribed values to others. By agreement with Mr McQuinlan the applicants were given further time to put on evidence of this sale but have been unable to do so. I thus propose to proceed on the basis that there is no evidence before me to doubt the values adopted by Centrelink for the applicants’ motor vehicles. If, when the respondent undertakes the process of reconsideration of the debt that I propose, the applicants are able to satisfy him about the sale of the vehicle (and assuming it would make a difference to the result), I am confident that the respondent would take this into account in the reconsideration.
73.The documentary evidence establishes that the applicants jointly held Commonwealth Bank shares. So far as I can ascertain the shares had the following values:
·1 July 1997 - $3,396.25
·1 July 1998 - $6,106.75
·1 July 1999 - $8,403.50
·1 July 2000 – no figures available, say, $10,052[8]
·12 June 2001 (sold) - $11,701.26
[8]I have selected a figure at the midpoint between the established values as at 1 July 1999 and 12 June 2001.
74.In addition the applicants provided copies of documents that demonstrated the extent of capital expenditure at the Lambells Lagoon property. I have taken these into account in undertaking the valuation of Lambells Lagoon.
Should any debt be waived under s 1237A of the Act?
75.This section, in sub-section (1), provides as follows:
Subject to subsection (1A), the Secretary must waive the right to recover the proportion 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.
76.Thus, the issues that arise are,
(a)was the debt (or part of it) attributable solely to an administrative error made by the Commonwealth; and,
(b)were payments received in good faith.
77.Mr McQuinlan, who appeared for the Secretary, conceded the issue of good faith. It is then necessary to consider only whether any debt arising from an overpayment is attributable solely to administrative error on the part of the Commonwealth.
78.I have no doubt that the applicants had great difficulty in communicating with Centrelink officers and that conversely, Centrelink officers had a great deal of difficulty in conversing with the applicants. And I have no doubt that many of the answers shown on Centrelink forms were not provided by the applicants. But in my view none of this matters in this case. That is so because the debt arose because the applicants did not inform Centrelink that they had acquired the Lambells Lagoon property. That failure to inform was not an error on the part of the Commonwealth; it was an error on the part of the applicants whose responsibility it was to inform Centrelink of changes to their circumstances including, relevantly, the acquisition of real property.
79.It follows that I do not consider that waiver under s 1237A of the Social Security Act is appropriate in the present case.
Should any debt be waived under s 1237AAD of the Act?
80.Section 1237AAD provides:
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 a 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 that to write off the debt or part of the debt.
Mr McQuinlan accepted that the overpayment did not result from a knowing failure on the part of the applicants, that is, that the element in paragraph (a) was satisfied. The live issue is whether there are any special circumstances.
81.The expression “special circumstances” is not apt to be defined with any degree of precision. In Groth v Secretary, Department of Social Security[9] Kiefel J spoke of the requirement of circumstances that distinguish the particular case from others.
[9] (1996) 40 ALD 541 at p 545
82.Mr Tranthem, the solicitor for the applicants, particularly relied upon:
(a)the applicants’ limited English skills;
(b)their limited understanding of the way in which governments operate;
(c)their limited social interaction;
(d)the fact that they will be left, at the end of their working lives, with large debts.
83.As against that, Mr McQuinlan pointed out that the applicants have unencumbered real property assets of a significant value.
84.I do not consider those matters, or the applicants’ circumstances generally, warrant a description of special circumstances.
85.I am not satisfied that debt ought be waived pursuant to s 1237 AAD.
Findings of Fact
86.For the purposes of the respondent’s task of recalculating the debts I summarize my findings on the matters in issue as follows:
(a)the Keilor Downs property was the applicants’ principal home up to and including 31 July 1999;
(b)the Lambells Lagoon property was the applicants’ principal home from 1 August 1999 and remains so;
(c)the value of the Keilor Downs property was,
(i)as at 1 July 1999 at $175,000.00,
(ii)as at 1 July 2000 at $190,000.00,
(iii)as at 1 July 2001 at $205,000.00,
(iv)as at 1 July 2002 at $220,000.00,
(v)as at 1 July 2003 at $245,000.00,
(vi)as at 1 July 2004 at $255,000.00,
(d)the Lambells Lagoon property is a primary production asset as that term is used in s 1121A of the Social Security Act;
(e)the value of the Lambells Lagoon property and the house and curtilage portion was,
Total House/curtilage
(i)9 December 1997 $127,950 $64,000
(ii)30 June 1998 $127,950 $64,000
(iii)30 June 1999 $160,000 $80,000
(iv)30 June 2000 $167,500 $85,000
(v)30 June 2001 $175,000 $87,500
(vi)30 June 2002 $182,500 $90,000
(vii)30 June 2003 $190,000 $95,000
(viii)30 June 2004 $197,500 $100,000
(ix)30 June 2005 $205,000 $102,500
(x)1 November 2005 $205,000 $102,500.
(f)in working out the value of the Lambells Lagoon property for the purposes of s 1121A of the Act, the applicants had liabilities (as that term is used in s 1121A(1)(c) of the Act) totalling $15,000.00 at all material times;
(g)the applicants did not hold the financial investments of $15,420 and $22,462 shown on pages 714 to 726 of the s 37 documents after November 1997;
(h)if it is necessary otherwise to have regard to the value of other assets of the applicants, the respondent should use the values adopted to date at pages 714 to 719 of the s 37 documents unless the respondent is able to be satisfied in the meantime that the applicants sold a vehicle;
(i)the applicants received remote area allowance up to and including 31 July 1999 when, on my findings, they were not entitled to receive it. This is to be taken into account when the debt is re-calculated.
87.I conclude by expressing my appreciation to the representatives of the parties, Mr Tranthem for the applicants and Mr McQuinlan for the respondent, for their assistance in a difficult and complex hearing.
88.I would set aside the decision of the Social Security Appeals Tribunal and remit the matter to the respondent for reconsideration in accordance with these reasons.
I certify that the 88 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC
Signed: .................Signed.....................................................
Leisa Pendle, AssociateDates of Hearing 22 November 2006 and 19 December 2006
Date of Decision 21 December 2006
For the Applicant Mr I Tranthem, Darwin Community Legal Centre
For the Respondent Mr R McQuinlan, Centrelink Legal Services
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