Mela Sterrantino and Secretary, Department of Social Services

[2015] AATA 182

[2015] AATA 182

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2014/2697
Re	Mela Sterrantino
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Dr Ion Alexander, Member
Date	27 March 2015
Place	Sydney

The reviewable decision is affirmed.

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Dr Ion Alexander, Member

CATCHWORDS

SOCIAL SECURITY – debt – overpayment of age pension – whether all or part of debt should be waived or written off – decision affirmed

LEGISLATION

Social Security Act 1991 (Cth) ss 1118, 1236, 1237A, 1237AAD

CASES

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

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

Dranichnikov v Centrelink (2003) 75 ALD 134

REASONS FOR DECISION

Dr Ion Alexander, Member

27 March 2015

BACKGROUND

1. Mrs Sterrantino is an 85 year old woman who has received age pension since 1992.

2. When age pension payments were made from 19 March 2008 to 27 August 2013 (the relevant period) the only assets taken into account in calculating the rate of age pension payable to Mrs Sterrantino were the balance in a savings account of $252 and a term deposit of $25,858.00.

3. However, evidence obtained from the Commonwealth Bank (CBA) in 2013 showed that at the commencement of the relevant period Mrs Sterrantino had a term deposit which she had not disclosed and the term deposit Centrelink had notice of had a greater balance than she had declared. Also, from 15 September 2009 to 15 August 2011, Mrs Sterrantino had a further CBA deposit account containing the proceeds from the sale of her primary residence in June 2009.

4. After selling her home Mrs Sterrantino rented a house. In July 2011 Mrs Sterrantino purchased another property.

5. Mrs Sterrantino had failed to notify Centrelink of the sale of her property, her changes of residence or of the existence of all of her bank accounts and their balances.

6. During this period Ms Sterrantino was receiving the maximum rate of age pension.

7. On the 8 November 2013 a letter was sent to Mrs Sterrantino advising her that she owed a debt of $40,385.61 as a result of overpayment of the age pension from 20 March 2008 to 31 January 2013 on the basis that the correct amount of her investments in the CBA had not been taken into account in applying the income and asset tests to calculate the rate of payment of age pension payable during this period.

8. On 2 January 2014, an authorised review officer reconsidered the decision and determined that Mrs Sterrantino was overpaid age pension from 19 March 2008 to 27 August 2013 and calculated the overpayment to be $43,610.37.

9. On 28 April 2014 the Social Security Appeals Tribunal (SSAT) affirmed the decision.

10. In this proceeding Mrs Sterrantino seeks review of the SSAT’s decision.

11. Mrs Sterrantino was unable to attend the hearing and was represented by her daughter and Centrelink nominee, Ms Begonia.

12. Ms Begonia explained that her mother has become quite frail and has rarely left her home for several years.

    ISSUES

13. The relevant legislation in this matter is set out in the Social Security Act 1991 (the Act).

14. There is no dispute that Mrs Sterrantino had financial assets in the period 19 March 2008 to 27 August 2013 which were not taken into account when calculating her age pension entitlement.

15. There is no dispute that Mrs Sterrantino was overpaid age pension and that the debt was correctly calculated.

16. For completeness, I note that pursuant to s 1118(2)(c) of the Act, if a person sells their principal home and intends to use the proceeds to purchase another residence, the proceeds from the sale are exempt from the assets test for a period of 12 months or until a home is purchased or until the person no longer intends to buy a home, whichever comes first. Pursuant to s 1118(2B) of the Act, the Secretary can extend the exemption period to 24 months if the person who sold their principal home is making reasonable attempts to purchase another residence within a reasonable time after the sale and the person has experienced delays beyond their control in purchasing another residence. At the hearing Ms Begonia explained that she and her brother identified a house for their mother which was purchased in July 2011 but that Mrs Sterrantino continued to rent a property to live in and did not move into this home until some 18 months later. In my view, the evidence did not establish that the requirements for the exercise of the discretion were met.

17. Therefore, the issue in this proceeding is whether the debt should be recovered from Mrs Sterrantino or whether there are grounds for some or all of the debt to be written off or waived.

    CONSIDERATION

18. Debts to the Commonwealth must be recovered from a person unless the Secretary (or the Tribunal) is satisfied a debt should be written off (which has the effect of postponing recovery of the debt) or waived pursuant to a provision contained in Part 5.4 of the Act.

19. Section 1236 states that:

    (1)Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.

    (1A)The Secretary may decide to write off a debt under subsection (1) if, and only if:

    (a)   the debt is irrecoverable at law; or

    (b)   the debtor has no capacity to repay the debt; or

    (c)   the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or

    (d)   it is not cost effective for the Commonwealth to take action to recover the debt.

20. Mrs Sterrantino owns her own home and retains a significant sum, well in excess of the amount of the debt, in several CBA term deposits which continue to provide additional income. She was receiving a fortnightly pension of $711.42 of which $50 was withheld for debt repayment resulting in net payment of $661.42. The debt, as at November 2014, was $42,908.47.

21. I am satisfied Mrs Sterrantino has capacity to repay the debt and therefore the debt cannot be written off pursuant to s 1236.

22. Section 1237A of the Act provides that 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.”

23. I am satisfied that there is no evidence that any of the debt was attributable solely to an administrative error made by the Commonwealth therefore no part of the debt can be waived pursuant to s 1237A.

24. Section 1237AAD of the Act 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, the Administration Act or the 1947 Act; and

    (b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

    (c)it is more appropriate to waive than to write off the debt or part of the debt.

25. It is conceded by the Respondent that Mrs Sterrantino did not incur the debt by knowingly making a false statement or false representation or failing or omitting to comply with the Act or other acts.

26. Therefore, the remaining issue is whether there are “special circumstances”, other than financial circumstances alone, which make it desirable to waive all or part of the debt.

27. In Dranichnikov v Centrelink (2003) 75 ALD 134 the Full Federal Court said at [66]:

    … what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary…

28. The Tribunal stated in Re Beadle and Director-General of Social Security (1984) 6 ALD 1:

    An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur.

29. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 the Federal Court stated:

    … The phrase “special circumstances”, it has been said, although imprecise is sufficiently understood not to require judicial gloss… it is sufficient to observe that it would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary…

30. Ms Begonia submits that Mrs Sterrantino has always been fiercely independent and had always managed her own affairs but in recent years she has become more dependent and is in poor health so that she requires significantly more assistance at home and would be better supported with full time care in an aged care facility.

31. Mrs Sterrantino does not wish to move to an aged care facility and the additional care she needs is provided by Ms Begonia and her brother with some assistance from home care nurses.

32. Nevertheless, Mrs Sterrantino continues to manage her own financial affairs and has not provided her children with power of attorney.

33. Ms Begonia contends that her mother has poor English language and reading skills and would not have been able to understand the documents sent to her by Centrelink. She also explained, however, that the documents would have been picked up by her brother from the PO Box and given to her mother unopened and would generally remain unopened.

34. I note that Mrs Sterrantino’s son has always lived in the family home with his mother and runs his own horticultural business.

35. Ms Begonia conceded that Mrs Sterrantino did not seek any assistance from either herself or brother with regard to any Centrelink documents until 2013 when Mrs Sterrantino’s pension had been suspended and Ms Begonia became her Centrelink nominee.

36. As an example of Mrs Sterrantino’s independence Ms Begonia explained that the sale of the principal residence in 2009 was managed by Mrs Sterrantino and her solicitor without the assistance of her children.

37. At the SSAT Ms Begonia had suggested that her mother was in hospital for a significant portion of the time during the debt period so that that she could not attend to the purchase of a new property or attend to her affairs. This was not supported by information provided by Mrs Sterrantino’s GP, Dr Oey, who in a letter dated 23 April 2014 noted that during the relevant period Mrs Sterrantino was in hospital from 18 September 2008 to 30 October 2008; 15 July 2011 to 8 September 2011 and 24 November 2012 to 7 February 2013.

38. The first hospital admission was for the treatment of leg ulcers, the second for a fractured femur and third for fractured hip, conditions which are commonly seen in the elderly.

39. The evidence demonstrates that Mrs Sterrantino is an elderly lady who continues to receive a fortnightly part age pension and has significant assets in that she owns her own home and has considerable savings in the bank which provide additional income.

40. It is clear that Mrs Sterrantino has been an independent person who has successfully managed her own affairs and wishes to continue albeit with some assistance from her two children.

41. I accept that she has health problems consistent with her age but there is no evidence presented that she suffers any cognitive impairment.

42. The reasons for her failure to notify Centrelink of changes in her circumstances or to respond to correspondence are unclear. It would appear that she simply ignored the correspondence and the claim she lacks English skills does not explain why she could not seek assistance from her son who was living with her during the relevant period. Also she clearly had sufficient skills to sell her principal residence and manage her financial affairs.

43. There is also no satisfactory evidence of financial hardship occasioned by the debt.

44. Therefore, for the reasons set out above, I am satisfied that there are no special circumstances which make it desirable to waive all or part of the debt.

    DECISION

45. For reasons set out above, I am satisfied that there are no grounds on which some or all of the debt can be written off or waived.

46. The decision under review is affirmed.

I certify that the preceding 46 (forty - six) paragraphs are a true copy of the reasons for the decision herein of Dr Ion Alexander, Member

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Associate

Dated 27 March 2015

Date of hearing	5 March 2015
Advocate for the Applicant	Ms K Begonia
Solicitors for the Respondent	Ms G Thangasamy, Department of Human Services