Re Goldthorpe and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1875
•18 October 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1875
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S 200600228
GENERAL ADMINISTRATIVE DIVISION ) Re LE (HILARY) GOLDTHORPE Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date18 October 2007
PlaceAdelaide
Decision The Tribunal affirms the decisions under review.
D.G. Jarvis
(Signed)
Deputy President
CATCHWORDS
SOCIAL SECURITY – Overpayment and cancellation of disability support pension – value of applicant’s interest in three properties – difficulty and expense resulting from attempts to sell two of those properties – one of properties part of estate of applicant’s mother – gift to applicant of residue of estate – applicant raised loan to meet shortfall in liquid assets of estate in order to have real estate transferred to her – meaning of “charge or encumbrance” – held that loan to meet shortfall was not a “charge or encumbrance” and should not be deducted from value of real estate – held that value of three properties was correctly assessed – held that overpayment did not arise solely as a result of administrative error – discussion of special circumstances – s 1237AAD(a)(ii) does not apply to failure to comply with Social Security (Administration) Act – failure to comply with that Act relevant to exercise of discretion to waive debt – decisions under review affirmed.
Social Security Act 1991 (Cth), ss 1121(1), 1236(1A) and 1237AAD
Social Security (Administration) Act 1999 (Cth), s 63
Fenton Nominees Pty Ltd v Valuer-General (1981) 27 SASR 258
Re Davis and Secretary, Department of Family and Community Services [2005] AATA 114
Re Fawthrop and Repatriation Commission (1994) 36 ALD 140
Re Kapust and Secretary, Department of Family and Community Services (2006) 90 ALD 462
Re Nock and Secretary, Department of Family and Community Services (2003) 77 ALD 172
Re Radovanovic and Secretary, Department of Family and Community Services (2000) 61 ALD 530
Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295
Re Williams and Secretary, Department of Employment and Workplace Relations [2005] AATA 1133
Rose v Department of Social Security (1990) 21 FCR 241
Secretary, Department of Employment and Workplace Relations and Donald (2006) 92 ALD 791
Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553
Wallace v Love (1922) 31 CLR 156
DC Pearce and RS Geddes, Statutory Interpretation in Australia, (6th Edition, 2006)
REASONS FOR DECISION
18 October 2007 Deputy President D G Jarvis 1. The applicant, Le (Hilary) Goldthorpe was granted a disability support pension (DSP) more than ten years ago. However, effective from 29 November 2005, Centrelink suspended Ms Goldthorpe’s pension because she failed to complete and return an income and assets review form within the required period.
2. On 27 February 2006, Centrelink decided to cancel Ms Goldthorpe’s pension on the grounds that her responses to subsequent notices and a further questionnaire were inadequate. I will refer to that decision as the “cancellation decision”.
3. Later again, on 21 March 2006, an officer of Centrelink, after taking into account the value of Ms Goldthorpe’s assets, decided that she had been overpaid DSP during the period from 25 September 2002 to 29 November 2005 to the extent of $29,565.67. I will refer to this second decision as the “assets test decision”.
4. Ms Goldthorpe requested reconsideration of both Centrelink decisions. The decisions were affirmed by an authorised review officer, and subsequently, following a further request by Ms Goldthorpe for review by the Social Security Appeals Tribunal (SSAT), by that tribunal. Ms Goldthorpe then applied to this tribunal for review of the SSAT decisions.
5. The assets that Centrelink took into account when making the assets test decision were first a vacant allotment owned by Ms Goldthorpe at 45 The Esplanade, Thompson Beach, second a joint interest in a property at 242 Dawkins Road, Lewiston (which Ms Goldthorpe owns jointly with one Colin Nissen) and thirdly a property at 8 Cynthia Street, Para Hills, which Ms Goldthorpe inherited as the residuary beneficiary of her late mother, who died in May 2002. This third property was transferred to her on 28 September 2002, and after that, it was appropriate to treat the property as an asset (see s 1158(1)(j) of the Social Security Act 1991 (Cth) (“SS Act”).
6. The effect of the grounds of Ms Goldthorpe’s application to this tribunal for review was as follows. She made certain allegations in relation to the conduct of the proceedings in the SSAT, and then asserted that she had sent many forms back to Centrelink in response to communications from Centrelink, that she “did not inherit” the Cynthia Street property from her mother but had sold it at a loss (referring to expenses she had incurred whilst holding the property and the expenses of sale) and (as to the Thompson Beach allotment) that she had been unable to sell it, had incurred substantial expenses in endeavouring to do so, and the allotment had been “grossly over-valued” by the Valuer-General’s Department (see exhibit R1, T1, pages 1 – 3).
7. In her evidence Ms Goldthorpe said that she had raised loans from two friends to meet the expenses she incurred in holding and selling or attempting to sell the Cynthia Street and Thompson Beach properties, and also to meet a shortfall between the liquid assets of her mother’s estate and the amount required to meet debts, pecuniary legacies to third parties and expenses of administration. The loans were discharged from the proceeds of sale of the Cynthia Street property, and Ms Goldthorpe contemplated that the amount of the loans should be deducted from the value of her real estate assets.
Issues Before the Tribunal
8. The application to review the assets test decision involves the following issues:
· what was the value of the three properties in question during the relevant period;
· should the loans raised by Ms Goldthorpe, or any part of such loans, be deducted from the value of the Cynthia Street property;
· should the difficulties, expenses and delay in selling or attempting to sell the Cynthia Street and Thompson Beach properties be taken into account;
· should the value of the Cynthia Street property be reduced by a loan raised by Ms Goldthorpe to fund the shortfall between the liquid assets of Ms Goldthorpe’s mother’s estate and the amount required to pay out the debts, pecuniary legacies to third parties and expenses of administration; and
· should the debt arising from any overpayment of DSP, or a portion of it, be waived or written off.
9. I have concluded that the value of the three properties was correctly assessed and that the debt was correctly raised. I therefore find it unnecessary to review the grounds on which the cancellation decision was made, since Ms Goldthorpe was not entitled to the DSP on the grounds that her assets exceeded the maximum amount for entitlement to DSP, and the decision to cancel her pension should be affirmed for that reason.
10. It is, however, necessary to have regard to the communications passing between Ms Goldthorpe and Centrelink in order to determine whether the debt should be waived or written off pursuant to relevant provisions of the SS Act.
11. Ms Goldthorpe did not dispute the correctness of Centrelink’s calculation of her entitlement to DSP, if (contrary to her contention) it was proper for Centrelink to have taken into account the above assets or her interest in them, and if the values used by Centrelink were correct.
Value of properties as assessed by Centrelink
12. The value of the Cynthia Street property and of Ms Goldthorpe’s interest in the two other properties at various relevant dates is conveniently summarised in one of the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) (exhibit R1, at page 305) as follows.
Date
Property
Value
$
Total value of Ms Goldthorpe’s interest
$01/07/2002 Dawkins Road 120,000 60,000 Thompson Beach 15,000 15,000 75,000
28/09/2002 Dawkins Road 120,000 60,000 Thompson Beach 15,000 15,000 Cynthia Street 120,000 120,000 195,000
01/07/2003 Dawkins Road 160,000 80,000 Thompson Beach 45,000 45,000 Cynthia Street 135,000 135,000 260,000
01/07/2004 Dawkins Road 200,000 100,000 Thompson Beach 90,000 90,000 Cynthia Street 165,000 165,000 355,000
01/07/2005 Dawkins Road say 200,000 100,000 Thompson Beach say 90,000 90,000 Cynthia Street 175,000 175,000 365,000
13. The respondent relies on the above values in the present proceedings. As appears from the section 37 documents, the values are based on information provided to Centrelink by the Australian Valuation Office. The last value of the Thompson Beach allotment was assessed by the South Australian Valuer-General at $105,000.00 as at 1 July 2005, and the value used by Centrelink is accordingly less than that valuation.
Course of the proceedings before the Tribunal
14. On the first day of the hearing, Ms Goldthorpe referred to certain further documents which did not appear to have been included in the s 37 documents. She also claimed that she had other documents, which she had not brought to the hearing, whereby she had provided relevant information to Centrelink. She also produced certain Post Office receipts in support of this assertion. In view of Ms Goldthorpe’s assertions I adjourned the hearing to enable both parties to conduct further searches for relevant documents, and to produce them at the resumed hearing.
15. At the resumed hearing Ms Goldthorpe produced and tendered a number of relevant documents, including a copy of her late mother’s Will, certain information relating to the value of the Thompson Beach property, and statutory declarations from the persons from whom Ms Goldthorpe had borrowed money in order to meet the expenses of holding and endeavouring to sell that property and the Cynthia Street property. She also produced a copy of an income and assets form dated 27 May 2005 (exhibit A12) to which I will refer below.
16. The resumed hearing was further adjourned, and after that I again requested Ms Goldthorpe to produce certain further documents relevant to her evidence. These included a copy of the settlement statement in relation to the sale of the Cynthia Street property, and a copy of the statement of the administration of the estate to show the extent of the shortfall between the liquid assets of the estate and the amount necessary to meet debts, pecuniary legacies and expenses of administration. Counsel for the respondent, Ms C Knight, also advised Ms Goldthorpe, by a letter sent to her after the resumed hearing, that she proposed to ask her further questions regarding certain matters about which she had previously given evidence, so that Ms Goldthorpe could produce any further documents she had that would assist her to answer the proposed further questions.
17. Shortly before the further adjourned hearing, Ms Goldthorpe sent a letter advising that she did not propose to attend because of the stress that she had experienced on the earlier occasions when she had appeared before the tribunal, and she said that she would leave the matter in my hands to determine. She also provided a medical report from her general practitioner, who confirmed the adverse effect on her of the earlier hearings, and inquired whether the process could be “managed” without her having to go to another hearing. In the circumstances, I decided not to exercise my discretion under s 42B of the AAT Act to dismiss the application for non-attendance. I requested Ms Knight to complete the respondent’s case, which she did.
18. I subsequently caused Ms Goldthorpe to be advised of the identity of the further witness whom Ms Knight called on the final day of the hearing, and of the further documents produced that day by the respondent. I also gave her the opportunity to be informed of the further evidence and documents, but she has not sought to be so informed. I therefore proceed to determine this matter on the basis of the evidence before me.
Legislation
19. DSP is subject to an assets test, the details of which are set out in the rate calculator in s 1065-A1 of the SS Act. To calculate a reduction for assets, such as real estate, Module G is used, which provides a method statement for “work(ing) out the effect of a person’s assets on the person’s maximum payment rate”. A person’s assets value limit depends on such matters as whether he or she is a member of a couple, and whether the person, or his or her partner, is receiving a pension or benefit or is a home owner.
20. Section 1223(1) of the SS Act provides that the overpayment of a social security payment is to be treated as a debt due to the Commonwealth.
Cynthia Street Property
21. As mentioned above, Ms Goldthorpe inherited this property from her late mother. By her Will (exhibit A1) Ms Goldthorpe’s mother appointed Public Trustee as sole executor and trustee. The Will provided for a number of pecuniary legacies, and for the residue of the estate to go to Ms Goldthorpe.
22. Records from Public Trustee that were tendered by the respondent on the final day of the hearing (exhibit R9) indicate that Ms Goldthorpe paid $21,404.45 to Public Trustee on 10 September 2002, to enable Public Trustee to meet the debts of the estate, the amount of the pecuniary legacies, and the cost of administration and transferring the Cynthia Street property to Ms Goldthorpe.
23. Ms Goldthorpe had earlier referred to her inheritance of the property as “a liability”, as there were not sufficient funds in the estate to pay debts, the expenses of administration and the legacies provided for in her mother’s Will, and if she did not pay the shortfall to the estate to enable Public Trustee to make the requisite payments, it would have been necessary for Public Trustee to have sold the property. I interpolate that in that event there would nevertheless have been a surplus of net assets that would have been paid to Ms Goldthorpe as the residuary beneficiary of the estate. Ms Goldthorpe also referred to threats she received from one of the beneficiaries of the Will, namely the Church of Jesus Christ of Latter-Day Saints (referred to by Ms Goldthorpe as “the Mormans”), who she says threatened to take the house if she did not pay the amount left to them by her late mother.
24. Ms Goldthorpe gave evidence that more than $46,000.00 had to be paid out before she could receive a transfer of her mother’s house from the estate, and that she had to borrow money in order to pay the legacies. One of the persons from whom she borrowed money was a friend, Colin Nissen. In a statutory declaration (exhibit A10), Mr Nissen confirms that he lent Ms Goldthorpe money which was repaid from the proceeds of sale of the house. He also says that he was witness to threats made by “a Morman person” for her to get out of the house as “the Church owns the house” (exhibit A10). The respondent issued a summons requiring Mr Nissen to give evidence, but, I was informed, was unable to serve the summons. However, I am satisfied from Ms Goldthorpe’s evidence and the contents of her mother’s Will (exhibit A1), the statutory declaration of Mr Nissen (exhibit A10) and information as to the administration of the estate that the respondent obtained from Public Trustee (exhibit R9) that Ms Goldthorpe did borrow from Mr Nissen the shortfall in the liquid assets required to meet the legacies (as well as debts and costs of administration) to enable Public Trustee to transfer the Cynthia Street property to her. I further find that the amount of that shortfall was $21,404.45 (see exhibit R9).
25. Ms Goldthorpe said that she obtained a second loan from another friend, Michael Mundie, of $35,000.00. In a statutory declaration (exhibit A11) Mr Mundie states that he lent this money to Ms Goldthorpe when she was trying to sell the property at Cynthia Street, as Ms Goldthorpe could not pay real estate agent fees, advertising expenses, auctioneer’s fees, utilities charges and maintenance costs.
26. In her evidence Ms Goldthorpe also said that she paid considerable amounts of money to different land agents in connection with earlier unsuccessful attempts to auction the property, and paid other amounts, including rates and taxes and various expenses in order to prepare the property for sale and then sell it. There is some confirmation of these matters in the statutory declarations of Messrs Nissen and Mundie, to which I have already referred, but there are no satisfactory detailed particulars of the amounts of each of the expenses or the dates when they were incurred.
27. Ms Goldthorpe eventually sold the Cynthia Street property in December 2005 for $197,500.00, and her evidence was that this was at a loss. She said that she repaid the loans to Mr Nissen and Mr Mundie, and also interest on the loans, out of the net proceeds of sale.
28. Centrelink obtained rental records from the Office of Consumer and Business Affairs, namely two Lodgement of Security Bond forms for the Cynthia Street property (exhibit R4). One rental agreement commenced on 20 December 2002 which shows a bond having been paid of $720.00 but it does not stipulate the weekly rental amount. This bond was refunded on 4 February 2003. The other Lodgement of Security Bond form for the Cynthia Street property is dated 23 March 2003 showing a bond amount of $740.00 and a weekly rental amount of $185.00. The records do not show if or when this bond was refunded. Ms Goldthorpe gave evidence that she had let the property out “for a few months” and that the reason she had not notified Centrelink of that rental income was that she considered the property as a liability with on-going expenses.
29. Ms Goldthorpe claimed that she had previously advised Centrelink that she had acquired the Cynthia Street property, because she had referred to this property in forms that she had sent back to Centrelink. However, I found Ms Goldthorpe’s evidence confused and unreliable, and do not accept her claim. She did not say when she advised Centrelink of her acquisition of the property, and her assertion is inconsistent with her stated strongly held view that the property was a liability. She also said that she had told Centrelink about the death of her mother, but did not suggest that she had provided any information as to her mother’s estate or her interest in the estate. The respondent called Susan Caroline Chown, a Centrelink officer, to say that she had reviewed Centrelink’s file relating to Ms Goldthorpe, and there was no record of Ms Goldthorpe ever having advised Centrelink of her ownership of the Cynthia Street property. Ms Chown said that she became aware of this property as a result of property searches which she arranged to have undertaken. The search results were communicated to Centrelink on or about 29 September 2005. There is no reference in the section 37 documents to Ms Goldthorpe’s interest in the Cynthia Street property prior to then. I accept Ms Chown’s evidence, and find that Ms Goldthorpe did not notify Centrelink at any time prior to the end date of the relevant period, namely 29 November 2005, that she had acquired the Cynthia Street property.
Thompson Beach Property
30. Ms Goldthorpe disputed the value attributed to this property of $90,000.00 as at 1 July 2004, having regard to its value of only $45,000.00 one year earlier. She also produced an invoice from the District Council of Mallala (exhibit A4) which gave a capital value of the property of $85,000.00.
31. She gave evidence of a number of attempts to try to sell the property, which attempts included unsuccessful auctions and engaging different land agents, but she said she has not received an offer of an appropriate amount. She said that she is advertising the property for $90,000.00. This accords with the figure used by Centrelink, and is less than the value of $105,000.00 arrived at by the Valuer-General for the financial year 2005/2006. I note that in disallowing an objection by Ms Goldthorpe to that valuation, the Valuer-General referred to three sales of adjacent allotments in the Esplanade at Thompson Beach for amounts between $105,000.00 and $112,000.00 between August and October 2004 (see exhibit A3).
32. Mr Mundie and Mr Nissen state in their statutory declarations that they have been paying the expenses related to Ms Goldthorpe’s efforts to sell the land at Thompson Beach, such as advertising expenses, and that the amounts they paid were included in their loans to Ms Goldthorpe. However, the Thompson Beach allotment remains unsold, and at the conclusion of the hearing there was no evidence that it had been sold.
Dawkins Road Property
33. Ms Goldthorpe owns a property at 242 Dawkins Road, Lewiston jointly with Mr Nissen. Ms Goldthorpe said that she agreed with the values used by Centrelink for this property (as set out in paragraph 12 above), except that she was concerned with the increase in value which occurred on 1 July 2004, and thought the value then should have been $180,000.00, not $200,000.00.
34. Centrelink also obtained rental information in relation to the Dawkins Road property. This indicates that four security bonds were lodged and refunded in respect of tenancy agreements over this property between 20 May 2002 and 17 March 2003. Centrelink commenced an investigation into whether Ms Goldthorpe’s DSP or the debt that was raised against Ms Goldthorpe should be further affected by rental income, but did not pursue this, and that issue is not before me in the present proceedings.
Consideration
35. I will now address in turn the issues that I identified in paragraph 8 above.
What was the value of the three properties?
36. Ms Goldthorpe acknowledged in her evidence that there were only two respects in which she challenged the values used by Centrelink to arrive at the assets test decision. First, she thought that the Thompson Beach value as at 28 September 2002 should have been $13,000.00 not $15,000.00, and second she claims that the value of the Dawkins Road property should have been assessed at $180,000.00, instead of $200,000.00 as at 1 July 2004.
37. As I said above, the valuations made by Centrelink were based on the Australian Valuation Office valuations (see the copy reports included in exhibit R1, T14, pages 180 – 181). Valuations by government officials should not lightly be departed from, having regard to their statutory obligations and the significance of the use that may be made of the valuations arrived at. This is apparent from the judgment of Wells J at first instance in Fenton Nominees Pty Ltd v Valuer-General (1981) 27 SASR 259 at 261 – 264, where his Honour explained the significance of the role of the South Australian Valuer-General (although his remarks may not necessarily be apposite where, as in the present proceedings, the effect of the proceedings would not be to set aside the government’s valuation of the property in question).
38. Quite apart from this consideration, the valuations used by Centrelink were not inconsistent with the price that Ms Goldthorpe was asking for the Cynthia Street and Thompson Beach properties, as I understood her evidence. There is no other evidence before me as to the value of the properties, other than indirect references to value referred to in invoices for rates. I accept the values relied upon by the respondent. In any event, even if the slightly reduced values contended for by Ms Goldthorpe are used, the overpayment of pension would only be reduced minimally by $87.59 (see exhibit R10). This amount is de minimis, that is, it is too insignificant to warrant the tribunal varying the decision under review. I am not satisfied that the values should be reduced to this minor extent, or that the debt raised by the Commonwealth should be reduced accordingly.
Should the loans be deducted from the value of the Cynthia street property?
39. As mentioned above, Ms Goldthorpe obtained loans from Messrs Nissen and Mundie on the basis that she would repay them when the Cynthia Street property was sold.
40. Provision is made for deducting outstanding loans from the value of assets in s 1121 of the SS Act. Section 1121(1) provides as follows.
“(1) If there is a charge or encumbrance over a particular asset of the person, the value of the asset, for the purposes of calculating the value of the person’s assets for the purposes of this Act … is to be reduced by the value of that charge or encumbrance.”
41. The two loans in question in the present proceedings were not secured on or attached to any of Ms Goldthorpe’s properties. The arrangement for repayment did not impede Ms Goldthorpe in selling the property, and if she had defaulted in the arrangement for repayment, the lenders would not have had any interest in the proceeds of sale, but would have been in the position of unsecured creditors. In my opinion, (with the possible exception of the loan from Mr Nissen for the shortfall to enable Ms Goldthorpe to have the Cynthia Street property transferred to her, which I will discuss below) the arrangement as to repayment did not amount to a charge or encumbrance within the meaning of s 1121(1) of the SS Act.
Should the difficulties, expense and delay in selling or attempting to sell the Cynthia Street and Thompson Beach properties be taken into account?
42. I have referred above to Ms Goldthorpe’s evidence as to the difficulties and expense she encountered in her endeavours to sell the Thompson Beach allotment and the Cynthia Street property. However, Ms Goldthorpe did not make an application to request the respondent that s 1129 of the SS Act should apply to her on the grounds that she had an unrealisable asset. In any event, I am not satisfied that the assets were unrealisable or that they could not be used as a security for borrowing, or that it would not be reasonable to expect her to realise or borrow against the asset (see s 11(12) and 13(3) of the SS Act). Furthermore, there is no basis on which the relevant expenses could be deducted from the value of the three properties. These matters are, however, potentially relevant to the issue of whether the debt should be waived on the grounds of special circumstances, and I will refer to this aspect below.
Should the loan to fund the shortfall in liquid assets of the estate to enable Ms Goldthorpe to acquire the Cynthia Street property be deducted from its value?
43. By clause 4 of her Will (exhibit A1), Ms Goldthorpe’s mother gave the whole of her real and personal estate to Public Trustee upon trust to call in or sell and convert into money her estate (or all such parts of the estate as did not consist of money), and then to pay out of the resulting fund her funeral and testamentary expenses, debts and duties and a number of pecuniary legacies, and to stand possessed of the residue of her estate for Ms Goldthorpe. It is therefore clear that the value of Ms Goldthorpe’s interest in her mother’s estate would be the net value of the estate after payment of debts, legacies and the costs of administration.
44. As I have said, in order to have Public Trustee transfer the Cynthia Street property to her it was necessary for Ms Goldthorpe to pay the shortfall to Public Trustee. She borrowed the amount of the shortfall for that specific purpose, and agreed to repay the amount she borrowed out of the proceeds of sale when the property was sold.
45. I was not referred to the departmental policy document in respect of unsecured loans. However, I note that paragraph 4.6.6.30 of the document, which is entitled “Guide to the Social Security Law”, (the “Guide”), provides as follows, under the subheading “Unsecured loans”.
“If a customer has an unsecured loan AND provides evidence that the loan was specifically obtained to purchase the asset, the outstanding amount of the loan IS deducted from the value of the asset.”
46. The above paragraph of the Guide is consistent with views expressed by this tribunal in Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295 and Re Nock and Secretary, Department of Family and Community Services (2003) 77 ALD 172. In a number of other cases, the above policy was referred to by the tribunal but not applied, because the tribunal was not satisfied that on the facts the loans in question were obtained for the purpose of acquiring the property in question. I refer for example to Re Radovanovic and Secretary, Department of Family and Community Services (2000) 61 ALD 530; Re Davis and Secretary, Department of Family and Community Services [2005] AATA 114; and Re Kapust and Secretary, Department of Family and Community Services (2006) 90 ALD 462.
47. After the conclusion of the hearing I asked counsel for the respondent, Ms Knight, to advise whether the portion of the loan to Mr Nissen raised by Ms Goldthorpe to discharge the shortfall in the liquid assets of the estate to obtain a transfer of the Cynthia Street property should be deducted from the value of the property for the purpose of assessing the value of that asset, in accordance with the provisions of paragraph 4.6.6.30 of the Guide.
48. Counsel’s response was to point out that the statutory declaration of Mr Nissen made no reference to his having lent money to meet the shortfall in the liquid assets of the estate. Counsel also referred to her inability to cross-examine either him or Ms Goldthorpe on this matter (because the summons could not be served on Mr Nissen and Ms Goldthorpe has failed to attend the further resumed hearing). Ms Knight further submitted that there was insufficient evidence to deduct the shortfall amount from the value of the assets on which the debt had been based. She further pointed out that in any event, it was Ms Goldthorpe’s choice to have the property transferred to her rather than for the executor to realise the assets and pay the net balance of the estate to her, and that payment of a “transfer fee” did not constitute the purchase of a property.
49. Whilst the non-attendance of Ms Goldthorpe and Mr Nissen has made my task more difficult, as mentioned above I am satisfied from the evidence Ms Goldthorpe gave on the first resumed hearing, and from the copy Will and documents obtained from Public Trustee, that Ms Goldthorpe did borrow the shortfall from Mr Nissen in order to have the Cynthia Street property transferred to her. However, I consider that this did not constitute the obtaining of a loan to purchase that asset for the purposes of paragraph 4.6.6.30 of the Guide. It could not be said that Ms Goldthorpe was purchasing the property; rather, she merely paid the shortfall in the liquid assets in order to have the property transferred to her by Public Trustee, instead of receiving the net proceeds of the estate after Public Trustee had carried out the trust for conversion provided for in the Will. Similarly, it could not be said that Public Trustee had sold the property to Ms Goldthorpe; rather, Public Trustee merely administered the estate in the way requested by Ms Goldthorpe.
50. In any event, whilst I can appreciate that it would be reasonable to deduct from the value of an asset the amount of a loan specifically obtained to purchase it, as contemplated by the Guide, I do not think that any such deduction would be permitted under s 1121(1) of the SS Act, which refers to reducing the value of an asset if there is a “charge or encumbrance” over the asset in question (see paragraph 40 above). The words “charge or encumbrance” are not defined in the SS Act. In Wallace v Love (1922) 31 CLR 156 at 164, Knox CJ and Starke J considered the meaning of the word “encumbrances” when considering a direction in a Will and that the trustees should distribute the estate in a certain way when the estate was free from all “encumbrances” including certain annuities. Their Honours referred to the technical meaning of that word, but decided that in its context the word should be given a wider meaning. They said:
“The word “encumbrances,” in its ordinary connotation, means that a person or estate is burdened with debts, obligations or responsibilities. True, the word is in law especially used to indicate a burden on property, a claim, lien or liability attached to property (see Oxford Dictionary, under title “Encumbrance”). But when we remember that the whole estate of the testator is liable in the hands of his executor for payment of debts and the expense of administering his estate, it is not an extravagant use of language to say that his “whole estate is not free from encumbrances” until those debts and expenses are paid. The estate would, in fact, be burdened with those debts, and no technical use of the word “encumbrance” can alter that result.”
51. I note that in Re Fawthrop and Repatriation Commission (1994) 36 ALD 140, Deputy President Forgie and Members Horrigan and Keane considered provisions in the Veterans’ Entitlements Act 1986 (Cth) that used the expression “charge or encumbrance”, and concluded at [27]:
“… the word “charge” must also be given its narrower meaning to denote a liability, the performance of which is secured and the word “encumbrance” to mean a claim, lien or burden attached to a property.”
I agree with respect with the tribunal’s interpretation of the section there under consideration, but I note that the relevant section was expressed not to apply to a charge or encumbrance that was “an excluded security”. The definition of that expression indicated that it was appropriate to give the words “charge or encumbrance” the narrower, technical legal meaning referred to by Knox CJ and Starke J in Wallace (supra).
52. The social security legislation has been described as remedial legislation “in that it gives benefits to persons and thereby remedies Parliament’s perceptions of injustice”: Rose v Department of Social Security (1990) 21 FCR 241 at 244. I think that the word “encumbrance” in s 1121(1) of the SS Act is capable of both the wider and narrower meanings adverted to by Knox CJ and Starke J, and that the word should be given its wider meaning in s 1121(1) in accordance with the principle of statutory interpretation to the effect that remedial or beneficial provisions should be interpreted liberally where they are ambiguous (see generally DC Pearce and RS Geddes, Statutory Interpretation in Australia, (6th Edition, 2006) at [9.2] – [9.5]).
53. I have accordingly concluded that the words “charge or encumbrance” in s 1121(1) refer to situations where the relevant loan or liability is the subject of a security over property, or is a debt or burden that is attached to the property in the sense that it must be discharged before the property can be dealt with. The loan of the shortfall, which Ms Goldthorpe raised in order to acquire the property from Public Trustee, did not have to be discharged before Ms Goldthorpe sold the property, and did not otherwise impede her in selling the property. Although Ms Goldthorpe had agreed to repay the loan out of the proceeds of sale, there was no security for her agreement. I accordingly consider that the above paragraph from the Guide is inconsistent with s 1121(1) of the SS Act, and should not be applied, even if (contrary to my view) Ms Goldthorpe could be said to have obtained a loan of the shortfall in order to purchase the Cynthia Street property.
Should the debt be waived or written off?
54. Section 1237A(1) of the SS Act provides in effect 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.
55. I am satisfied that Ms Goldthorpe did not advise Centrelink that she had inherited the Cynthia Street property, and as mentioned below, that she did not provide an adequate response to an Income and Assets Update form. I find that there was no administrative error, and there is no basis for waiving any part of the debt under s 1237A(1).
56. Section 1237AAD of the SS Act gives the Secretary (which this tribunal standing in the shoes of the Secretary may also exercise) power to waive a debt in special circumstances. It provides as follows:
“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 than to write off the debt or part of the debt.”
57. Ms Knight argued that s 1237AAD(a) did not apply to Ms Goldthorpe, because the overpayment of DSP resulted from her having knowingly made a false statement or false representation, having regard to her responses to question 24 of an Income and Assets Update form of May 2005 (Exhibit A12). Ms Knight relied on Re Williams and Secretary, Department of Employment and Workplace Relations [2005] AATA 1133 and cases there cited as to the meaning of the word “knowingly”. However, those authorities dealt with the meaning of the words “in good faith” in s 1237A of the SS Act. There appears to be some conflict between decisions of this tribunal as to whether the word “knowingly” in s 1237AAD(a) extends to constructive knowledge or recklessness, as opposed to conscious or deliberate behaviour (see Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553, where the tribunal refers to this conflict of authority).
58. The failure to give requisite information to Centrelink in response to a requisition is not a breach of the SS Act, but rather, a breach of s 63 of the Social Security (Administration) Act 1999 (Cth) (Administration Act) which (among other things) in effect authorises the Secretary to notify a benefits recipient that he or she is required, within a specified time, to give specified information to the Secretary. Under s 63(4), if the person does not comply with the requirement, the payment that the person is receiving is not payable. It is curious that s 1237AAD(a)(ii) does not refer to a breach of the Administration Act, as well as the SS Act itself. Perhaps this was an inadvertent omission when the SS Act was amended. However, I consider that a breach of this aspect of the Administration Act is a matter that can be taken into account in the exercise of the discretion conferred by s 1237AAD.
59. A further condition precedent to the exercise of discretion under s 1237AAD is that there should be special circumstances within the meaning of s 1237AAD(b). In the present matter, it could perhaps be argued that the need to raise a loan to meet the shortfall in the liquid assets of the estate in order to receive a transfer of the Cynthia Street property, and the asserted difficulties, delay and expense entailed in Ms Goldthorpe’s endeavours to sell that property and the Thompson Beach property would constitute special circumstances. In Secretary, Department of Employment and Workplace Relations and Donald (2006) 92 ALD 791 I reviewed a number of authorities dealing with the concept of special circumstances at [43] to [48].
60. However, in the present matter the evidence before me as to the matters referred to in the preceding paragraph is most unsatisfactory, and I find it unnecessary to decide whether there are special circumstances, or whether the debt resulted from Ms Goldthorpe knowingly making a false statement or false representation. Ms Goldthorpe acknowledged that she was aware that she was under an obligation to notify Centrelink if her circumstances changed. She did not do so, because she failed to advise Centrelink that she had become the owner of the Cynthia Street property.
61. Further, I agree with Ms Knight’s submission that Ms Goldthorpe’s response to the Income and Assets Update form (exhibit A12) was most unsatisfactory. It appears from exhibit A12 that Centrelink issued that form to Ms Goldthorpe on 10 May 2005, and that she signed and dated it 27 May 2005. Ms Goldthorpe ticked the “Yes” box in answer to question 24 as to whether she or her partner owned any real estate apart from her own home. However, her further answers to that question were confused and inadequate, and likely to mislead anyone dealing with her response to the form. The form stipulated “If you have more than one property, provide an attachment with the required details.” Ms Goldthorpe did not do this. She referred in the form to “Para Hills” in answer to a question as to the location or address of the property, and did not give the street address of the property. This incomplete response had the potential to cause confusion, because she herself lived at Para Hills. She then referred to “Thompson Beach” in response to a request to disclose the type of property. She then gave a figure of approximately $200,000.00 in answer to a request for “value of whole property”. In the course of her evidence she was asked how she arrived at this figure, but her response was vague and unsatisfactory, and was unlikely to be the sum of her assessment of the values of the Cynthia Street property and the Thompson Beach property, having regard to her evidence as to her asking price for those properties. Further, she made no mention in the form of her interest in the third property, being the property at Gawler River which she owned jointly with Mr Nissen.
62. I find that Ms Goldthorpe’s responses to question 24 and her failure to inform Centrelink that the Cynthia Street property had been transferred to her constituted a breach of her obligations under s 63 of the Administration Act, whereby persons receiving social security benefits are required to comply with a notification to provide specified information to the Secretary within a specified time. Ms Goldthorpe’s failure to comply with these obligations has led me to conclude that even if I were satisfied that the overpayment did not result from Ms Goldthorpe knowingly making a false statement or false representation or that special circumstances existed within the meaning of s 1237AAD(b) of the SS Act, it would not be appropriate to exercise my discretion under that section to waive the right to recover all or part of the debt for the overpayment of pension.
63. There is no evidence before me that would indicate that it would be more appropriate to write off the debt rather than waive it, but this issue does not arise in view of my conclusion that it would not in any event be appropriate in the circumstances of this matter to exercise my discretion under s 1237AAD to waive all or part of the debt.
64. I now refer again to the cancellation decision. In view of my conclusion that the value of Ms Goldthorpe’s assets as at 21 March 2006 exceeded the assets value limit provided for in s 1064-GI of the SS Act, I am satisfied that I should affirm that decision, and it is not necessary for me to further review that decision or the grounds on which it was made.
Decision
65. The Tribunal affirms the decisions under review.
I certify that the 65 preceding paragraphs are
a true copy of the reasons for the decision
herein of Deputy President D G JarvisSigned: .....................................................................................
L. Wunderer AssociateDate/s of Hearing 24 July 2007, 13 August 2007 and 3 September 2007
Date of receipt of final
submissions 2 October 2007
Date of Decision 18 October 2007
Counsel for the Applicant In person
Counsel for the Respondent Ms C Knight
Solicitor for the Respondent DLA Phillips Fox
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