Reeves; Secretary, Department of Families, Community Services and Indigenous Affairs and Anor and
[2006] AATA 1502
•8 December 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1502
ADMINISTRATIVE APPEALS TRIBUNAL )
) N2006/744 N2006/746
GENERAL ADMINISTRATIVE DIVISION ) Re SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS & SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
(“CENTRELINK”)
Applicant
And
ALFRED REEVES & JANICE REEVES
Respondent
DECISION
Tribunal Ms N Isenberg, Senior Member Date8 December 2006
PlaceWollongong
Decision The decision under review is set aside and in its place it is decided that the decision of the Centrelink Authorised Review Officer made on 2 February 2006 is affirmed. ....................[sgd]..........................
Ms N Isenberg
Senior Member
CATCHWORDS
SOCIAL SECURITY – carer payment and disability support pension – debt due to the Commonwealth – whether debt should be waived – whether debt attributable “solely” to administrative error – whether there are “special circumstances” – the decision under review is set aside.
LEGISLATION
Social Security Act 1991; Sections 1223, 1237A, 1237AAD
Administrative Appeals Tribunal Act 1975; Section 37
CASE LAW
Re Beadle v Director General of Social Security (1984) 6 ALD 1
Re Secretary, Department of Family & Community Services v Jonauskas (2001) 65 ALD 553
Riddell v Secretary, Department of Social Security (1993) 30 ALD 31
Secretary, Department of Social Security v Hales (1998) 51 ALD 695
REASONS FOR DECISION
8 December 2006 Ms N Isenberg, Senior Member BACKGROUND
1. Mrs Reeves received a disability support pension and Mr Reeves a carer payment, with effect from 30 June 2000. Payments were made on the basis that they were not precluded by their combined assets from receiving their respective pensions. On 1 July 2001 Mr and Mrs Reeves converted some of their superannuation into an allocated pension. This affected their entitlements, and the disability support pension and carer payment were cancelled. Debts of $37,040.66 were raised for each. The Social Security Appeals Tribunal (“SSAT”), by majority, decided those debts were to be waived in full due to the existence of “special circumstances” in accordance with section 1237AAD of the Social Security Act 1991 (“the Act”); this being the decision under review.
ISSUES BEFORE THE TRIBUNAL
2. The issues before this Tribunal are whether there are recoverable debts totalling $74,081.32, and if so, whether the debts should be recovered.
THE HEARING
3. l had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence. Mr Reeves also provided some further documents relating to their current financial position.
4. Mr Reeves gave evidence on behalf of his wife and himself and was cross-examined on behalf of Centrelink. I also asked him questions.
CONSIDERATION OF EVIDENCE AND FINDINGS
5. At the outset I record that Mr Reeves was adamant, and I have no hesitation in accepting, that there was no intention whatsoever to obtain any benefit to which he and his wife were not entitled.
Is there a recoverable debt?
6. There was no dispute that Mr and Mrs Reeves had been paid a total of $74,081.32 more than that to which they were subsequently found to be entitled. Hence, there is a recoverable debt pursuant to section 1223 (1) of the Act.
Should the debt be recovered?
7. The Act makes provision, in limited circumstances, for debts to be waived.
Was the debt solely attributable to an administrative error by Centrelink?
8. The debt may be waived pursuant to section 1237A (1) if two conditions are met, namely: that the debt arose solely because of administrative error and the debtor received the payments in good faith.
9. Mr Reeves contended that had Centrelink been more vigilant in requiring financial statements from him and his wife, the over payment would not have arisen.
10. Centrelink’s position was that the Reeves’ were clearly required to inform Centrelink of changes in their financial circumstances and therefore if there was an “error” by Centrelink, which was not admitted, it could not be said to be solely due to Centrelink’s error.
11. The T-documents contain computer records of the letters sent to Mr and Mrs Reeves:
·25 January 2001: Mr Reeves was sent a notice by Centrelink requiring him to notify them if his combined income increased or if it “changed”. The notice stated he was to notify Centrelink if his combined assets exceeded $246,101.00 or if his combined financial investments exceeded $37,649.00.
·13 March 2001: Mr Reeves was sent a payment notice by Centrelink which also stated that he should notify Centrelink if his combined income increased or “changed” and to notify them if his combined assets exceeded $153,101.00 or his combined financial investments exceeded $37,649.00.
·3 April 2001: Mr Reeves was advised in writing that his carer payment had been reduced because the combined value of his and Mrs Reeves’ assets had increased due to the assessment of their combined superannuation assets. Combined assets were assessed at $410,506.00 while the deemed income from those assets was $34,585.72. The notice required Mr Reeves to advise if his combined income increased or changed, if his combined assets were more than $51,344.00 or if his combined financial investments exceeded $360,406.00.
·17 May 2001: Mr Reeves was sent a notice requiring him to check an income and assets statement and requesting him to advise Centrelink of any changes.
·20 August 2001: Mrs Reeves was sent a notice which advised her that Centrelink had recorded her combined annual income as $1,099.46. This notice also required her to advise Centrelink if “your and your partner’s combined financial investments are more than $37,649.00.” It also required her to advise if she started any new accounts or if her income increased.
12. On 23 March 2005, Mr Reeves approached Centrelink with a query in relation to age pension. During the course of the discussion, Mr Reeves mentioned, for the first time, that he was in receipt of an allocated pension.
13. Mr Reeves’ position was that none of the notices required Centrelink to be notified of anything in relation to superannuation or allocated pensions and, as such, any “administrative error” was not his.
14. I do not agree.
15. Mr and Mrs Reeves “purchased” an allocated pension on 1 July 2001 for $292,126.61, while Mrs Reeves’ allocated pension was purchased for $72,127.84. The annual income paid to the couple from those pensions was ascertained to be:
Financial Year Mr Reeves Mrs Reeves 2001/2002 $20,000.00 $7,000.00 2002/2003 $22,825.00 $7,892.00 2003/2004 $27,828.00 $7,740.00 2004/2005 $27,828.00 $7,740.00
16. While I do not necessarily accept Centrelink’s contention that the acquisition of the allocated pension was a “new financial investment” about which Centrelink had to be notified, it is clear to me that the pension provided an income stream, and that was a matter about which Centrelink should have been notified, because the Reeves’ income did in fact “change”.
17. Mr Reeves contended that Centrelink was on notice that they had been withdrawing sums from their superannuation account because of a letter he had written on 20 October 2000:
“Sufficient funds were available in our company fund to continue paying a wage until June 2000. Since then we have been drawing down on our Superannuation Fund to sustain our living and medical expenses.”
18. However at that time, this was withdrawal of capital from the superannuation fund, and, as such, was not treated as income. The capital in the superannuation fund was being depleted. I do not accept that this sufficed to put Centrelink on notice. The effect of the purchase of the allocated pension was to change the nature of some of the superannuation funds and was specifically undertaken, according to Mr Reeves’ evidence, to provide an income stream. In any event, the change in structure so as to provide the income stream by way of the allocated pension was some months after this correspondence with Centrelink.
19. It was conceded on behalf of Centrelink that it may have been prudent to have made more enquiries about the Reeves’ assets and income; however, in my view, it is inescapable that the Reeves failed to advise Centrelink of the “changes” to their finances as specifically requested by Centrelink in the various notices sent to them.
20. I therefore find that there was no administrative error on Centrelink’s part.
Are there “special circumstances” that make it desirable to waive the debt?
21. A further provision of the Act allows for waiver of debts in what is termed “special circumstances”:
1237AAD Waiver in Special Circumstances
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 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.
22. The term “special circumstances” has been examined by the Administrative Appeals Tribunal and the Federal Court. In Re Beadle v Director General of Social Security (1984) 6 ALD 1 at 3, Toohey J stated:
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. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.
23. The Reeves’ circumstances were examined by the SSAT. The majority members of that Tribunal came to the conclusion that the Reeves’ circumstances were unusual, exceptional or uncommon, such that recovery of the debt would be unjust or unreasonable. Included in their findings were criticisms of Centrelink’s “poor administration”. I have already expressed my views in this respect in paragraphs 16 and 17.
24. Centrelink submitted that the discretion available in section 1237AAD of the Act should not be exercised in circumstances where a recipient has not complied with his or obligations to advise Centrelink of changes in their circumstances. I was referred to Re Secretary, Department of Family & Community Services v Jonauskas (2001) 65 ALD 553 where the applicant was careless in failing to read the back of notices sent to him by Centrelink and the Tribunal saw no grounds for finding special circumstances to justify waiving the debt.
25. Perhaps somewhat naively, Mr Reeves, who otherwise appears from the voluminous T-documents to have been most particular in his correspondence with Centrelink, relied on the information he had given Centrelink in October 2000, prior to the acquisition of the allocated pension.
26. I asked Mr Reeves about the advice he had received about the effect of the allocated pension on their Centrelink benefits. He told me his accountant conceded he knew nothing in that regard and suggested Mr Reeves get advice elsewhere. Mr Reeves recalled that he had previously seen a financial adviser who wanted several thousand dollars upfront before providing any advice, as well as an ongoing annual fee. Because of that experience he did not seek the advice that was recommended by his accountant. With the benefit of hindsight, it might at least have been prudent to have sought information from Centrelink as to the likely impact of the proposed purchase of the allocated pension.
27. Centrelink contended that the ill health of the couple is not unusual or uncommon when compared to other carer payment and disability support pension recipients. I do not agree with this interpretation of the cases. There is no class of persons against whom a person’s circumstances are to be measured: see, for example, Riddell v Secretary, Department of Social Security (1993) 30 ALD 31.
28. I accept that Mrs Reeves remains in poor health following her kidney transplant: she becomes easily short of breath and takes a lot of medication. Mr Reeves, who continues to perform all the household duties because of his wife’s condition, is optimistic as to the prognosis of his cancer.
29. The minority member of the SSAT noted, in effect, that “special circumstances” are unlikely in the absence of financial hardship (per Secretary, Department of Social Security v Hales (1985) 51 ALD 695). While there is no “rule” to this effect, all the circumstances need to be weighed.
30. Mr and Mrs Reeves have assets in excess of $370,000 in financial investments. They have their own (unencumbered) home, estimated by Mr Reeves to be worth over $320,000.
31. While there is no doubt they are in generally poor health and that there was no intention whatever to defraud the Commonwealth, it remains that they have had the benefit of nearly $75,000 to which they were not entitled. What is more, they have the capacity to pay back that amount.
32. I note, with some irony, as pointed out by Mr Reeves, that in repaying the debt, their financial worth is correspondingly depleted, and therefore their (means tested) entitlement to the age pension is likely to increase.
DECISION
33. The decision of the SSAT is set aside and in its place it is decided that the decision of the Centrelink Authorised Review Officer made on 2 February 2006 is affirmed.
I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member
Signed:.............[sgd].................................................................
AssociateDate of Hearing 15 November 2006
Date of Decision 8 December 2006
Appearance for the Applicants Ms Hannelore Schuster
Appearance for the Respondents Self-represented
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