Secretary, Department of Family and Community Services v Theodore Lymberopoulos & Dimitra Lymberopoulos - [2004] AATA 891

Administrative

Appeals

Tribunal

DECISION AND REASONS FOR DECISION [2004] AATA 891

ADMINISTRATIVE APPEALS TRIBUNAL ) N2003/1227

)N2003/1600

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And

THEODORE LYMBEROPOULOS &

DIMITRA LYMBEROPOULOS

Respondent
DECISION

Tribunal

Ms G Ettinger, Senior Member

Date25 August 2004

Place Sydney

Decision

Matter N2003/1227: The Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that the two flats, numbers 1 & 2 on the ground floor at 42 Waverley Street Belmore, NSW, property of Mr Theodore and Mrs Dimitra Lymberopoulos are not part of their principal home, and are assessable assets.

Matter N2003/1600: The Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that there are no grounds to justify waiving all or part of Mr Lymberopoulos’ debt of DSP to the Commonwealth incurred for the period 12 December 1997 to 4 May 2001.

Ms G Ettinger
Senior Member

CATCHWORDS

SOCIAL SECURITY –
N2003/1227 - DSP – meaning of principal home – single building divided into four flats – two flats let to tenants not part of the principal home – decision of SSAT set aside –
N2003/1600 overpayment – recalculated – waiver considered - section 1237A considered – special circumstances considered - no waiver - decision of SSAT set aside

LEGISLATION

Social Security Act 1991 sections 11(1), (5), (6), (7), (8), 1118 (1) (a), 1236, 1237A, 1237AAD

Social Security Act 1947 sections 4(7) to (9)

CASE LAW

Re Stewart and Secretary, Department of Social Security (1987) 11 ALD 470
Re Bowden and Repatriation Commission (1992) 15 AAR 325
Re Di Primio and Secretary, Department of Social Security (1993) 31 ALD 233
Ghata and Repatriation Commission AAT 5673 (25 February 1990)

Secretary, Department of Family and Community Services and Kulshrestha (2003) 73 ALD 438
Demovich and Secretary, Department of Family and Community Services [2004] AATA 647

Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari (2000) 98 FCR 140
Re Hewitt and Secretary, Department of Family and Community Services (2002) 68 ALD 552
Re Ovari and Secretary, Department of Employment, Education, Training and Youth Affairs (1997) 46 ALD 474
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince (1997) 50 ALD 186
Secretary, Department of Social Security and Hoy (1998) 52 ALD 477
Secretary, Department of Family and Community Services v Birgden (2003) 36 AAR 374
Jazazievska v Secretary, Department of Family and Community Services [2000] FCA 1484
Secretary, Department of Family and Community Services v Velis (2002) 70 ALD 255
Secretary, Department of Family and Community Services v Clark (2003) AATA 1169
Re Beadle and Director General of Social Security (1984) 6 ALD 1
Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553
Nehma and Secretary, Department of Family and Community Services [1999] AATA 219
Brittain and Secretary, Department of Family and Community Services [2000] AATA 161
Director- General of Social Services v Hales (1983) 47 ALR 281
Re Krzywak and Secretary, Department of Social Security (1988) 15 ALD 690
Re Ivovic and Director-General of Social Services (1981) 3 ALN N61
Secretary, Department of Social Security v Hulls (1991) 22 ALD 570
Secretary, Department of Social Security v Banks (1990) 23 FCR 416
Secretary, Department of Social Security v Ellis (1997) 46 ALD 1
Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464
Beadle v Director-General of Social Security (1985) 60 ALR 225

REASONS FOR DECISION

25 August 2004Ms G Ettinger, Senior Member

MATTERS FOR REVIEW

The Tribunal heard two applications on the same day, the Applicant in each case being the Secretary of the Department of Family and Community Services (“the Secretary”), who applied for review of decisions of the Social Security Appeals Tribunal (“SSAT”). The Respondents in Matter N3003/1227 were Mr Theodore and Mrs Dimitra Lymberopoulos, and in Matter N2003/1600, the Respondent was Mr Lymberopoulos.
In Matter N2003/1227, the Secretary appealed against the SSAT’s decision dated 25 June 2003, (T2), to treat the whole of the property at 42 Waverley Street Belmore, owned by Mr and Mrs Lymberopoulos as their principal home. The SSAT set aside the decision of a delegate of the Secretary, as affirmed by an Authorised Review Officer (“ARO”) (T33), in which it was held that flats 1 & 2 of the four flats at 42 Waverley Street Belmore, owned by the Respondents, and tenanted, were assessable assets for the purpose of the assets test, (section 1118(1)(b)(i) of the Social Security Act 1991 (“the Act”).
In Matter N2003/1600, the Secretary appealed against the decision of the SSAT, also dated 25 June 2003, to waive a debt of disability support pension (“DSP”) made to Mr Lymberopoulos for the period 12 December 1997 to 4 May 2001. The SSAT set aside the decision of a delegate of the Secretary, affirmed by an Authorised Review Officer (“ARO”) (T26), to raise a debt of $13,444.50 DSP overpaid to Mr Lymberopoulos. The ARO considered waiving the debt, and decided that it could not be waived because the debt did not arise due to sole administrative error.
On deciding to set aside the decision of the Secretary to raise a debt of $13,444.50, the SSAT in Matter N2003/1600 ordered that the matter be remitted to the Secretary for recalculation of the debt, which was to be waived in full, and any amounts already recovered, refunded to Mr Lymberopoulos. This had not been undertaken at the time of the Hearing at the AAT, because the Applicant submitted that the decisions of the SSAT had been stayed, and accordingly no action had been taken.
At the Hearing, the Secretary was represented by Mr G Lozynsky an advocate of Centrelink. Mr and Mrs Lymberopoulos represented themselves in Matter N2003/1227, and Ms J Finlay, principal solicitor of the Welfare Rights Centre, represented Mr Lymberopoulos in Matter N2003/1600. The Tribunal was assisted by an interpreter in the Greek language, Mr L Rorris. Mr Lymberopoulos and Mr A Guyatt, valuer of the Australian Valuation Office (“AVO”), gave oral evidence.
In matter N2003/1227, the documents lodged by the Secretary pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“T documents”) were admitted into evidence as Exhibit A2. Further documents before the Tribunal were an AVO valuation dated 28 April 2004 as Exhibit A1, and the Statement of Facts and Contentions of the Secretary, dated 22 April 2004, as Exhibit A3.
In Matter N2003/1600, the Respondent submitted the website, Guide to Social Security Law as Exhibit R1. Mr Lozynsky tendered the Certificate of Citizenship of the Respondent which was noted as Exhibit A1, the T-Documents as Exhibit A2, a document relating to a deferred annuity of Mr Lymberopoulos as Exhibit A3, and the Applicant’s Statement of Facts and Contentions dated 22 April 2004 as Exhibit A4.
At the conclusion of evidence, and certain submissions, Matter N2003/1600 was adjourned for the Applicant to submit recalculated figures related to the debt, and to give the parties a further opportunity of making final written closing submissions which were subsequently received.

THE ISSUES

The issue to be decided in Matter N2003/1227 was whether to treat the whole of the property at 42 Waverley St, Belmore, owned by Mr and Mrs Lymberopoulos as their principal home.
In Matter N2003/16000, the issues to be decided were:
· whether Mr Lymberopoulos incurred a debt of DSP for the period 12 December 1997 to 4 May 2001; if so,
· whether the debt of DSP for the period 12 December 1997 to 4 May 2001 had been correctly calculated; if so,
· whether the discretion to waive all or part of the debt should be exercised pursuant to sections 1237A or 1237AAD of the Act.

BACKGROUND

It was undisputed and I accepted that Mr and Mrs Lymberopoulos purchased a property at 42 Waverley St, Belmore as joint tenants in approximately 1968/9 (evidence of Mr Lymberopoulos). The property is divided into four self contained flats each having two bedrooms and two other separate rooms, which Mr Lymberopoulos described as kitchen, bathroom/toilet and laundry in his oral evidence. He told me he had carried out some renovations over the years, including the conversion of the car spaces into garages approximately ten years ago. The property remains on one title, with the couple occupying units 3 & 4, upstairs, and renting out units 1 & 2 which are downstairs.
What is relevant to the matters before me is that Mr Lymberopoulos whose date of birth is 10 February 1936, lodged a claim for DSP on 30 December 1997, and was paid DSP on the basis of his disclosure of his address (3/42 Waverley Street, Belmore), and personal details. Mrs Lymberopoulos was subsequently granted partner allowance.
I noted at T8, dated 31 October 2000, that the Secretary became aware that the Respondents owned a block of four self contained flats, two of which were then reported as being rented out at $340 per week. The Secretary then took action to adjust, and ultimately cancel the social security payments, and obtain a valuation of the property (T11), which indicated the value as $480,000.
Various notices were issued to the Respondents relating to their assets and income and entitlement to social security payments, which resulted in a debt of $13,444.50 being raised in relation to DSP paid to Mr Lymberopoulos for the period 25 December 1997 to 4 May 2001 (T22). This was followed by the decision of the ARO and an appeal by Mr Lymberopoulos to the SSAT, with the decision subsequently appealed by the Secretary to this Tribunal on 29 July 2003. I was mindful that notwithstanding that at T22 the date for commencement of the debt was shown as 25 December 1997, elsewhere in the documents, including at the SSAT, it was shown as 12 December 1997. This may make a small difference in recalculating the debt.

MATTER N2003/1227

THE LEGISLATIVE CONTEXT

Section 11(1) of the Social Security Act 1991 (“the Act”), defines “asset” as property or money, including property or money outside Australia.
The expression “principal home” is defined in sections 11(5) to (7) of the Act (section 11(1)). Section 11(5) is expressed in inclusive terms:

“A reference in this Act to the principal home of a person includes a reference to:
(a)if the principal home is a dwelling-house—the private land adjacent to the dwelling-house to the extent that the private land, together with the area of the ground floor of the dwelling-house, does not exceed 2 hectares; or
(b)if the principal home is a flat or home unit—a garage or storeroom that is used primarily for private or domestic purposes in association with the flat or home unit.

Note: for private land see subsection (6).

Section 11(6) provides that a reference in s. 11 (5) to “private land adjacent to the dwelling-house” is a reference to land that is adjacent to the dwelling-house and that is used primarily for private or domestic purposes in association with that dwelling-house.
Section 11(8) of the Act is also relevant; it provides:
“If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.”
Modules are used to calculate amounts of pension. Module G of Part 3.2 is used to calculate the assets reduced amount. The effect of section 1118(1) is that, in calculating the value of a person’s assets for the purposes of this Act, the value of the principal home must be disregarded.
“1118(1) In calculating the value of a person’s assets for the purposes of this Act …disregard the following:
(a) …
(b) if the person is a member of a couple - the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that:
(i) is a right or interest that gives the person reasonable security of tenure in the home;
…”

CONSIDERATIONS

In deciding whether the two rental flats (numbers 1 & 2), which form part of the building owned and partly occupied by Mr and Mrs Lymberopoulos who live in flats 3 & 4, as their principal place of residence, are an assessable asset for the purpose of applying the assets test to the Respondents, I had to take into account the evidence, both written and oral, case law, legislation and submissions and other documents before the Tribunal.
It was not in dispute, and I accepted that Mr and Mrs Lymberopoulos jointly own the whole of the property at 42 Waverley St, Belmore, which is on one title. They live in flats 3 & 4, and receive rental income for flats 1 & 2, all of which are quite separate units with separate entrances within the building. The argument put for the Respondents by the Welfare Rights Centre at the SSAT was that although the two rental units were an assessable asset, they had no separate assessable value because they could not be alienated separately.
As to value; I noted from T9 dated 6 November 2000, that the Respondents gave the value of the property as $400,000. Mr Lymberopoulos told me he was not certain where the figure came from, but that he had to have valuations for the Council every few years, implying the valuation had arisen out of such an exercise. He also said that any problems with the filling out of forms was due to the fact neither he nor his wife filled them out, rather relying on assistance from others. I was mindful that an interpreter’s assistance was required at the Hearing, and that the Respondents’ English may be limited, noting however that they were assisted in completing the forms by a Greek speaking accountant, and had advice from Greek community assistance, and that their adult children were born in Australia.
At T11 dated 17 January 2001, the Applicant’s valuer valued the whole property at $480,000, and the house and curtilage at $280,000. Historical valuations dating back to 1997 were at T11A/49B.
More recently, a valuation had been conducted by Mr Guyatt of the Australian Valuation Office who also gave oral evidence at the Hearing. His report dated 26 March 2004 was at Exhibit A1 before the Tribunal. Mr Guyatt described his method of valuing, which I noted included considering the value of surrounding properties and photographing these for his report. I was mindful of his valuations, in which he assigned market value for the property at 42 Waverley Street as follows:
At 26 March 2004:
Whole Property $825,000 Home & Curtilage $430,000
Part Property $395,000
At 26 March 2001:
Whole Property $620,000 Home &Curtilage$320,000
Part Property $300,000
I have noted the professional valuations, but am not required to go into detail with regard to the actual figures as my task here is to decide whether units 1 & 2 of the property at Waverley Street are assessable assets, or whether the whole property can be held to be the principal residence of Mr and Mrs Lymberopoulos as held by the SSAT. In making that decision, I have turned to the legislation and relevant decided cases such as Re Stewart and Secretary, Department of Social Security (1987) 11 ALD 470, Re Bowden and Repatriation Commission (1992) AAR 325, Re Di Primio and Secretary, Department of Social Security (1993) 31 ALD 233, Ghata and Repatriation Commission AAT 5673 (25 February 1990), Secretary, Department of Family and Community Services and Kulshrestha (2003) 73 ALD 438 Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari (2000) 98 FCR 140 and Demovich v Secretary Department of Family and Community Services [2004] AATA 647 for guidance.
Mr Lozynsky submitted that the question to be determined was the purpose for which the property was used rather than the nature of the property itself. On behalf of the Applicant, he made submissions citing the abovenamed decided cases. He submitted that based on what was held in the abovenamed cases, and on the use made of the property, it was possible to apportion a property between that used for a person’s principal home and that used for other purposes (Re Stewart and Secretary, Department of Social Security (supra), Re Bowden and Repatriation Commission (supra), Re Di Primio and Secretary, Department of Social Security (supra).

27. In coming to a decision I have noted that the Secretary has developed a set of guidelines to assist in defining certain terms used in Social Security Law. The guideline entitled "Defining the Principal Home" states relevantly:

"General Definition
The principal home is generally the home in which a customer or couple...lives for the greatest amount of time each year. The principal home includes an area of curtilage.
Self contained living areas
If a home includes a self contained living area this area MAY NOT be defined as part of a customer’s principal home, as shown in the following table.
Explanation: A self contained living area is an area with private or separate sleeping, cooking and bathroom facilities.

*IF the self contained living area is*	*THEN the area is...*
vacant	part of the customer’s principal home.
let to a near relative	part of the customer’s principal home."
let to a person other than a near relative	NOT part of the customer’s principal home.

I have considered the case law with regard to what constitutes a principal home. Various cases were referred to in Re Di Primio (supra) in considering a definition of “principal home” in sections 4(7) to (9) of the Social Security Act 1947 (“the 1947 Act”). That definition was drafted in similar terms to that appearing in sections 11(5) to (7) of the Act and the Tribunal said:
“64. While the 1947 Act sets out what is included in the principal home if it is a dwelling place or a flat or home unit, it does not specify how a place is determined to be a person's principal home. That has, however, been considered in a number of decisions and judgements, some of which were briefly summarised in my reasons for decision in a case of Re Kirkman and Secretary, Department of Social Security (1990) 20 ALD 400 in the passage at 402:

‘Although not defined in the Act, the term has been considered by this Tribunal in Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295 and Re Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58. In Re Clark and Secretary, Department of Social Security (Mr McMahon (then Senior Member), 4 November, 1986, No.2968, unreported) it was said that: “A characteristic of a person's home is that he usually resides there. It is by no means necessary, however, that both go hand in hand.”

In support, he referred to the judgment of Wilcox J in Hafza v Director-General of Social Security (1985) 60 ALR 674; 8 ALN N58 at 680-1 when, in considering what is meant by “a person’s usual place of residence” said: “Physical presence and intention will coincide for most of the time. But few people are always at home ... The test is whether the person has ... a continuity of association with the place ... together with an intention to return to that place and an attitude that that place remains ‘home’”: see Norman v Norman (1969) 16 FLR 231 at 236.
Without setting them out, I note that similar views have been expressed by Lord Denning MR in Herbert v Byrne [1964] 1 All ER 802, by the Court of Appeal in Beck v Scholz [1953] 1 All ER 814 and the High Court of Australia in Koitaki Para Rubber Estates Ltd v FCT (1941) 64 CLR 241 at 249.’ (pages 248-249)”.

I have also considered the judgment of the Full Court in Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari (2000) 98 FCR 140 (O'Connor, Heerey and Finkelstein JJ) which binds this Tribunal.

At the hearing before the Tribunal in Re Ovari and Secretary, Department of Employment, Education, Training and Youth Affairs (1997) 46 ALD 474, it had found that:
“30. There is no dispute that the Monash property is used as the Óvári family residence and as the business premises of AGAZO International. The Department accepts that 53.33% of the value of the property should be regarded as a business asset, consistent with taxation acceptance of such an apportionment, and the Tribunal finds accordingly. The Monash property is a business asset in the sum of $109,326.50.”

The Full Court noted that the expression “principal home” had not been defined in the regulations and said that it “… could not be doubted that a suburban residence of the kind described was a home of the respondent’s family” (page 143). It added that the “… adjective ‘principal’ is directed to excluding holiday homes and the like …” but considered that there was no suggestion that the residence in question was a holiday home. Their Honours continued:

“… Provided the property in question is properly characterised as a principal home, the regulations do not provide for apportionment by reference to any non-domestic uses to which the home may be put. This is in contrast with the specific provision in s 51(1) of the Income Tax Assessment Act 1936 (Cth) where the words ‘to the extent to which’ have been held to authorise and require apportionment: Ronpibon Tin No Liability v Federal Commissioner of Taxation (1949) 78 CLR 47, 55, 58-59.” (page 143)

Their Honours then turned to the focus of the Regulations for the purposes of the case before them i.e. the value of the student’s assets and said:

“The regulations are concerned with the value of assets. To the extent that a person or a person's family has assets, such assets can be turned into money and the person is less in need of taxpayer-funded financial support for study. The regulations fix an arbitrary limit under which a person may have assets and still receive support. Thus the focus is on value, that is to say the money equivalent of assets.
There was no evidence, nor did the AAT find, that the market value of the Monash property was increased or decreased by the fact that it was partly used for business purposes. Given the nature of the property, such a variation seems inherently unlikely. Nor was there any evidence or finding that some physical part of the property was exclusively used for business purposes.”

In beginning its consideration of apportionment with the words, “Provided the property in question is properly characterised as a principal home”, the Full Court made it clear that it is not appropriate to ask first whether a place is used for business purposes. Rather, the first question to ask is whether or not the place is the person’s principal home. Once it is decided that a place is a person’s principal home, there is no room to apportion any part that may be used for business purposes.
I was mindful that in Ovari (supra), the facts concerned the assets in relation to eligibility for a student’s living allowance, and the fact that pursuant to the relevant Regulations, the student’s principal home was excluded from those assets. I was mindful that Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari (supra) was considered against a background that there was no evidence or finding that some physical part of the property was used exclusively for business purposes. This was a very different situation from that of the Respondents in this case, where the evidence was that the building in question was divided into four separate flats with separate facilities and separate entrances within the building. As stated above, the Respondent couple occupied flats 2 and 3 on the upper floor of the building, whilst they let flats 1 and 2 on the ground floor to separate tenants.
Whilst I have noted that the Tribunal in Re Hewitt and Secretary, Department of Family and Community Services (2002) 68 ALD 552 found that the Act did not provide for apportionment, I have preferred to rely on the authority of Demovich (supra) and Kulshrestha (2003) 73 ALD 438, where it was held that the separate dwellings on the title of the principal home were not part of it, but assessable assets.
Secretary, Department of Family and Community Services v Kulshrestha (supra), concerned a doctor who had built extensions to his home such that a part of the property became a separate living area, divided by a door which could be locked to ensure complete privacy. The separate house had its own driveway, letterbox, kitchenette, laundry, lounge and bedroom with en suite bathroom, and the two sections were numbered 47 and 47A. Dr Kulshrestha had leased the separable portion of his house to a tenant under a residential tenancy agreement and was receiving rental income, and "all utilities apart from water [were] metered separately and charged separately."
The Tribunal in giving consideration to the Ovari decision said:
"...the Full Court made it clear that it is not appropriate to ask first whether a place is used for business purposes. Rather the first question to ask is whether or not the place is the person’s principal home. Once it is decided that a place is a person’s principal home, there is no room to apportion any part that may be used for business purposes."

In Re Bowden and Repatriation Commission (1992) 15 AAR 325, a case dealing with an entitlement to a service pension, similar assets test restrictions were applicable to those in the present application. The ex-serviceman had leased a flat that formed a part of his house to a tenant in an arm’s length transaction. There was no separate title to the flat, and it was not an asset which he could sell or mortgage. It was said at paragraph 12 that:

"It seems clear Parliament intended not only that a "principal home" could constitute only a part of an unsubdivided property, but also that any separately let part of a property would not constitute part of a "dwelling-house".”

Accordingly there was clear authority to support the view that the separate flats in the building owned and partially occupied by Mr and Mrs Lymberopoulos were assessable assets and not part of the Respondents’ principal home.

DECISION

In matter N2003/227, the Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that the two flats, numbers 1 & 2 on the ground floor at 42 Waverley Street Belmore, NSW, property of Mr Theodore and Mrs Dimitra Lymberopoulos are not part of their principal home, and are assessable assets.

MATTER N2003/1600

THE CLAIM

In Matter N2003/1600, the Secretary appealed against the decision of the SSAT dated 25 June 2003, to waive a debt of disability support pension (“DSP”) made to Mr Lymberopoulos for the period 12 December 1997 to 4 May 2001. The SSAT set aside the decision of a delegate of the Secretary, affirmed by an Authorised Review Officer (“ARO”) (T26), to raise a debt of $13,444.50 DSP overpaid to Mr Lymberopoulos. The ARO had considered waiving the debt, and decided that it could not be waived because the debt did not arise due to sole administrative error.
The SSAT ordered that the matter be remitted to the Secretary for recalculation of the debt, which was to be waived in full, and any amounts already recovered, refunded to Mr Lymberopoulos. This had not been undertaken at the time of the Hearing at the AAT, because the Applicant submitted that the decision of the SSAT had been stayed, and accordingly no action had been taken.
I was not satisfied that the debt had been correctly calculated, and adjourned the Hearing to give the Applicant the opportunity of presenting the correct figures for the debt claimed. This it did, using the new Centrelink debt calculator, “Multical’, and submitting that the debt was $13,427.58. It may yet need adjusting on the basis that the debt either commenced on 12 December or 25 December 1997.
At the Hearing, the Secretary was represented by Mr G Lozynsky an advocate of Centrelink. Ms J Finlay, principal solicitor of the Welfare Rights Centre, represented Mr Lymberopoulos. The Tribunal was assisted by an interpreter in the Greek language, Mr L Rorris. Mr Lymberopoulos gave oral evidence.

THE ISSUES

The issues were:
· whether Mr Lymberopoulos incurred a debt of DSP for the period 12 December 1997 to 4 May 2001; if so,
· whether the debt of DSP for the period 12 December 1997 to 4 May 2001 had been correctly calculated; if so,
· whether the discretion to waive all or part of the debt should be exercised pursuant to sections 1237A or 1237AAD of the Act

THE LEGISLATIVE CONTEXT

The relevant sections of the Act in relation to the debt of DSP were:
“Section 1223
Debts arising from lack of qualification, overpayment

etc.
1223(1) Subject to this section, if:
(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
…
SECT 1237A
Waiver of debt arising from error
Administrative error
1237A(1) 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.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
…
Proportion of a debt
1237A(3) For the purposes of this section, a proportion of a debt may be 100% of the debt.
…
SECT 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 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.”

SUBMISSIONS AND CONCLUSIONS

the applicant

Mr Lozynsky submitted that the debt arose because Mr Lymberopoulos failed to fully declare details of his real estate holdings to the Applicant, and was hence overpaid DSP during the period 12 December 1997 to 4 May 2001, and that the debt was accordingly recoverable. Mr Lozynsky submitted that Mr Lymberopoulos made a false statement on his claim for the benefit (T4) with regard to flats occupied by the Mr Lymberopoulos and his wife, and those let to tenants. In particular, Mr Lozynsky submitted that the Respondent failed to disclose that he and his wife resided only in the top floor flats of the building by only referring to flat 3/42 Waverley St as his home address (T4). Further, due to the fact Mr Lymberopoulos did not correctly disclose rental income from tenants, his social security entitlements had been incorrectly calculated which led to the overpayment. Mr Lozynsky submitted that the situation was compounded by Mr Lymberopoulos not replying correctly to correspondence to Centrelink a number of times regarding the level of his income.
Mr Lozynsky submitted that it was the responsibility of the Respondent to take all reasonable steps to ensure that the declarations to Centrelink were correct. He submitted that the consequence of Mr Lymberopoulos’ actions was that he had incurred a debt due to the Commonwealth pursuant to section 1223 of the Act because he had received payments to which he was not entitled, and had provided insufficient and misleading details of his property ownership and rental income when he claimed DSP in 1997, as well as failing to notify Centrelink of changes to his circumstances in the years following. Mr Lozynsky submitted that Mr Lymberopoulos could have contacted Centrelink if he was uncertain about how to complete the form, and noted that the Respondent had attended at the offices of Centrelink several times over the debt period. He rejected the submissions of Ms Finlay that the form was misleading.
Mr Lozynsky also made submissions regarding sections 1237A and 1237AAD of the Act which I have noted in the paragraphs which follow. In summary however, he submitted the debt could not be waived due to sole administrative error (section 1237A of the Act), because the payments were not received in good faith, neither were there special circumstances available to waive all or part of the debt pursuant to section 1237AAD of the Act. He mentioned Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 in regard to section 1237A of the Act.

the respondent

Ms Finlay argued on behalf of Mr Lymberopoulos that the Tribunal could not be satisfied from the documents before it that the calculations of debt were correct, and submitted an incorrect test had been used. She referred also to the statements of the SSAT in that regard, and submitted further that there was no debt incurred in particular for the period 6 November 2000 to 4 May 2001 because Centrelink was entitled to rely on the estimated value of $400,000 which Mr Lymberopoulos provided in regard to his real estate. She claimed this had been reasonable, and that he had not deliberately misrepresented details of the asset. She argued in the alternative that if the Tribunal held that there was a debt, it could be waived pursuant to section 1237A of the Act.
Ms Finlay submitted further, referring to T4, that Theo Kotselas had assisted Mr Lymberopoulos to complete the form. His telephone number was given on the form, and she submitted that if Centrelink had been uncertain of any aspect of this, staff from Centrelink could have contacted Mr Kotselas. Ms Finlay submitted that Mr Lymberopoulos had disclosed his annuity income, and was in no way deliberately trying to mislead. She submitted that the Applicant had incorrectly emphasised the question and answer on T4, inquiring as to whether Mr Lymberopoulos had an interest in real estate, because he had answered correctly that he did not own other real estate in Australia other than the real estate in which he and his wife lived. All the flats were on one title and could not be sold separately, she submitted. She claimed, if anything, the form at T4 was ambiguous, particularly as regards the question of owning real estate, and regarding the terms “boarders and lodgers”. Ms Finlay submitted that Mr Lymberopoulos’ take on filling it in, was reasonable.
Ms Finlay claimed therefore that Mr Lymberopoulos had received the payments in good faith, (Secretary, Department of Education, Employment, Training and Youth Affairs and Prince (1997) 50 ALD 186), and that any error which had arisen was sole administrative error of Centrelink. She submitted that the debt should accordingly be waived pursuant to section 1237A of the Act, and relied on Re Secretary, Department of Social Security and Hoy (1998) 52 ALD 477.
Ms Finlay submitted that in the alternative, the discretion to find special circumstances pursuant to section 1237AAD should be exercised to waive the debt. She argued that administrative errors could be held to be special circumstances in certain cases (Secretary, Department of Family and Community Services vBirgden (2003) 36 AAR 374). I noted she submitted that amongst others, the special circumstances in this case were:

the ambiguous questions in the claim form;
Centrelink’s failure to make inquiries of Mr Kotselas regarding Mr Lymberopoulos’ situation;
Centrelink’s tardiness in obtaining further valuation of the property;
Centrelink’s incorrect calculations;
the lack of policy and certainty regarding the issue of what is a person’s principal home; and
what value can be ascribed to assets which cannot be realised without selling the principal home.

the tribunal

In order to come to the correct and preferable decision, I had to take into account the evidence, submissions, legislation and case law. I refer to my decision in the paragraphs above where I held that flats 1 and 2 at 42 Waverley St, Belmore were not part of the principal home of Mr Theodore and Mrs Dimitra Lymberopoulos, and that they are assessable assets. I have noted also the recalculation of Mr Lymberopoulos’ debt arising from the calculations of Centrelink, for the period 12 December 1997 to 4 May 2001, now $13,427.58 which may however need adjustment for the date of commencement of the debt as 25 December 1997.

whether mr lymberopoulos incurred a debt of dsp for the period 12 december 1997 to 4 may 2001

Mr Lymberopoulos applied for DSP on 21 December 1997, and in his claim form, advised “No” in reply to the question at T4/18, “Do you own or have an interest in any real estate in Australia or overseas?(apart from the home you live in or a farm)”. Further he advised in reply to whether he received money from others, that he had “boarders or lodgers”. Those replies were subsequently shown to be incorrect because Mr and Mrs Lymberopoulos live in flats 3 and 4 and have tenants who pay rent in flats 1 and 2. I have held in the paragraphs above, that flats 1 and 2 at 42 Waverley St, Belmore were not part of the principal home of Mr Theodore and Mrs Dimitra Lymberopoulos, and that, notwithstanding they are on one title and cannot be alienated separately, they are assessable assets.
There was no disagreement between the parties, and I accepted the claim form was completed with the assistance of a Greek speaking accountant, Mr Kotselas whose name and telephone number appears on the form. Mr Lymberopoulos also consulted the Greek Community Centre, and has two adult children aged in their early thirties who are Australian born. I accepted also that he attended at the Centrelink offices on various occasions as submitted by Mr Lozynsky, and could have made relevant inquiries if had been concerned with any ambiguities on Centrelink forms. I reject Ms Finlay’s argument that Centrelink should have contacted Mr Kotselas to make further inquiries, and accept that the Agency must be able to rely on the community to complete its forms accurately. The evidence before me was that Mr Lymberopoulos received Centrelink forms on a number of occasions. I am mindful that it was his responsibility to take all reasonable steps to ensure that his declarations to Centrelink were correct.
As Mr Lymberopoulos’ pension entitlements were calculated on an incorrect basis due to his declarations, he received payment to which he was not entitled, and accordingly a debt to the Commonwealth was incurred pursuant to section 1223 of the Act.
I have noted the recalculation of the debt by Centrelink and accept that it is $13,427.58 provided the apparent confusion between 12 December and 25 December 1997 can be sorted out.

whether the discretion to waive all or part of the debt should be exercised pursuant to sections 1237A of the act

I was mindful that pursuant to section 1237A of the Act waiver of a debt must be made if it has arisen due to sole administrative error of the Commonwealth. In considering this section, I first considered whether the overpayments of DSP for the relevant period had been received in good faith by Mr Lymberopoulos.
I noted that Ms Finlay submitted Mr Lymberopoulos had, when applying for DSP (T4), disclosed his annuity income, and had filled in the form to the best of his knowledge with the assistance of Mr Kotselas, an accountant. Further, that he was in no way deliberately trying to mislead.
The leading case on good faith in relation to income support payments is SDEETYA v Prince (1997) 50 ALD 186. Finn J in Prince (supra), which dealt with provisions of legislation relating to Ausstudy, stated as follows:
“For my own part, I consider the burden of the formula in the s 289 setting to be obvious enough. Its concern is with the state of mind of a person concerning his or her receipt of the payment: if that person knows or has reason to know that he or she is not entitled to a payment received – ie is not entitled o use the moneys received as his or her own – that person does not receive the payment in good faith. Absent such knowledge or reason to know, the receipt would be in good faith.”

I noted also the Applicant’s submission citing Jazazievska v Secretary Department of Family and Community Services [2000] FCA 1484 in connection with Mr Lymberopoulos. He submitted that Cooper J in the context of section 1237A of the Act, stated:
“A person does not act in good faith where the person turns a blind eye to circumstances which raise doubt as to the entitlement of the person to receive and retain the payment or refuses to make reasonable inquiries where doubt exists.”
Ms Finlay submitted that Mr Lymberopoulos did not suspect that his claim form had been incorrectly completed, and would accordingly not have made further inquiries. He was confident that Mr Kotselas had completed the form correctly for him. She submitted Mr Lymberopoulos neither intentionally intended to mislead Centrelink, not turned a blind eye, and that accordingly the payments were received in good faith.
Mr Lymberopoulos gave evidence in both matters before me, and I found him evasive in his replies to me, and noted in particular in relation to the issue of filling in the claim form for DSP, that he was not prepared to disclose what he had instructed Mr Kotselas to write on the claim form. He also said to me that he did not know what it was Mr Kotselas was writing. However, I did not find that he had knowingly given incorrect replies on his claim form, nor that he had reason to know that he was not entitled to the payments received. Applying Prince (supra), and noting the other relevant case law in this area, I was not able to find that good faith had been breached.
I then moved to consider whether waiver could be made pursuant to section 1237A of the Act, and was mindful that there is a considerable body of case law on sole administrative error. I was mindful that a debt which has arisen solely due to sole administrative error must be waived pursuant to section 1237A of the Act if the debtor received the payments in good faith, mindful that it must indeed be “sole” administrative error.
The Applicant relied on the case of Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190 in relation to sole administrative error. He submitted that in the case of Secretary, Department of Family and Community Services v Velis (2002) 70 ALD 255, it was held that there must have been no other factors that caused the debt to arise or contributed to it arising, and that this applied in relation to section 1237A of the Act.
Mr Lozynsky submitted that no sole administrative error could be found in this case because Mr Lymberopoulos had provided incomplete and misleading information which had led to the debt arising. Mr Lozynsky also relied on Secretary, Department of Family and Community Services v Clark (2003) AATA 1169 in which the Tribunal commented as follows at paragraph 23 of the decision:
“The Tribunal accepts that the recipient of a pension must take some responsibility to inquire and understood (sic) her obligations in respect of the pension payment. It is not unreasonable to assume an interpretation of a term referred to in many letters received from Centrelink, which has no basis and simply say that you do not understand.”
Mr Lozynsky submitted that the failure of the Respondent to notify Centrelink of increases in rent received, and to make appropriate inquiries provided other factors which led to the debt arising.
I accepted the submissions of the Applicant that Mr Lymberopoulos, having had several opportunities to give accurate information, contributed to the errors in calculation of the debt by his inaccurate disclosures on his Centrelink forms.
I have noted Ms Finlay’s argument that any debt for the period 6 November 2000 to 4 May 2001 should be waived for administrative error because Centrelink was entitled to rely on the estimated value of $400,000 which Mr Lymberopoulos provided in regard to his real estate. She claimed this had been reasonable, and that he had not deliberately misrepresented details of the asset, but that Centrelink had been tardy (some three months), in obtaining a further valuation. She acknowledged that the valuation obtained by Centrelink was substantially higher, $480,000 for the property, but submitted that given policy and the delays, reliance should be had on Mr Lymberopoulos’ estimated figure. Ms Finlay referred me to the Guide to the Social Security Law (“the Guide”) at 4.6.6.10 (General Provisions for the Valuation of Assets), which provides that where a customer is asked to provide an estimate of the value of their property, and this is accepted by Centrelink as reasonable and used to calculate a rate of payment, any new valuation applies from the first payday after it is received unless “there is evidence that the customer deliberately misrepresented details of the asset, then the value may be applied from a date earlier than the date of the valuation.” She submitted that Mr Lymberopoulos had not deliberately misrepresented the value of his asset, and accordingly, the effect of the Applicant’s policy was that no debt should be raised for the period 6 November 2000 to 4 May 2001.
Mr Lozynsky disagreed with the submission regarding the period 6 November 2000 to 4 May 2001, and submitted that the Guide stipulates in relation to the customer’s valuation that it should be accepted “IF it appears reasonable, AND it is unlikely that payment would be affected even if the actual value was significantly higher.” He submitted that the latter applied in the case of Mr Lymberopoulos and accordingly, because his rate of pension was being assessed under the pension assets test and not the income test, any variation in the valuation value, would ultimately affect his rate of payment. Therefore, he submitted, the Australian Valuation Office valuation, and not the estimated value given by Mr Lymberopoulos should be applied.
Taking into account Clause 4.6.6.10 of the Guide and the submissions before me, I preferred those of Mr Lozynsky, because notwithstanding that Mr Lymberopoulos’ estimated value was reasonable, the later Australian Valuation Office valuation which was higher, affected his payments when used to calculate his benefits. Accordingly, the debt for the period 6 November 2000 to 4 May 2001 could not be waived on the basis claimed.
However I was still able to consider the whole of the debt period and noted that in the alternative, Ms Finlay also raised the whole period of the debt in regard to waiver. She argued that the claim form was ambiguous, and submitted that the debt arose as a result of Centrelink applying the incorrect income test from 12 December 1997.
I have noted Ms Finlay’s submissions that there was a delay in the obtaining of a further valuation by the Applicant. I have noted that the period was a three months period, and also that applying Clause 4.6.6.10 of the Guide, the Australian Valuation Office valuation should be applied.
I was mindful of Ms Finlay’s other concerns regarding administrative error as detailed above, and address them here. I do not consider any ambiguity which may exist on the claim form as administrative error. It is my impression that most forms are difficult particularly for people whose first language is not English, but note that there is provision for interpreters at no additional cost available to such persons, and that ultimately it is the responsibility of any claimant to reply correctly and truthfully to all questions asked in relation to benefits. On the basis of the claim form at T4, I consider that Centrelink was entitled to take Mr Lymberopoulos’ details on his form on face value, and do not consider that Centrelink needed to make further inquiries. Rather, it was Mr Lymberopoulos who should have inquired further when he was given further opportunities to submit his data on other occasions after 12 December 1997.
I have already held that Flats 1 and 2 in the Respondent’s building are assessable assets, and that the debt arose due to incorrect disclosures on Mr Lymberopoulos’ claim form, and accordingly, any error was not the sole administrative error of the Commonwealth. Accordingly, the debt cannot be waived pursuant to section 1237A of the Act. I then moved to consider the issue of “special circumstances”.

whether the discretion to waive all or part of the debt should be exercised pursuant to section 1237aad of the act

Section 1237AAD of the Act provides a discretion for the consideration of “special circumstances”, which may result in the Secretary waiving the right to recover all or part of a debt if satisfied that the person did not knowingly make a false statement or false representation, and there are special circumstances other than financial hardship alone, that make it desirable to waive the debt. There is quite a deal of case law on this area, and the discretion is exercised by taking into account all the circumstances of the case, that is, an aggregate of all the circumstances of the case.
I have noted the statements of the Federal Court in Re Beadleand Director General of Social Security (1984) 6 ALD 1, as follows:
“An expression such as “special circumstances” is by its very nature incapable of precise of exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend on 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.”
Mr Lozynsky submitted that the discretion should not be exercised in Mr Lymberopoulos’ favour because he had not complied with his obligations to advise Centrelink of changes to his circumstances. He submitted that if the Tribunal did not accept that Mr Lymberopoulos had made a false statement, then it should accept the submission that he had been careless. He referred to Re SDFaCS and Jonauskas (2001) 65 ALD 553 where it was held that the applicant had been careless in failing to read the back of notices sent to him by Centrelink. Mr Lozynsky submitted no special circumstances should be found to waive any of the debt owed by the Respondent.
Ms Finlay on the other hand submitted that any mistakes Mr Lymberopoulos made on his form were innocent mistakes, due to the ambiguous nature of the claim form, and submitted that he had taken all reasonable steps to comply with his obligations and inform Centrelink of his circumstances. She submitted the Respondent had not knowingly made a false statement, and that he had disclosed information about his home. It had been his home for 30 years Ms Finlay submitted, and the Respondent was not able to sell any of the flats without selling his family home. Ms Finlay referred me to the Explanatory Memorandum to the Bill for the Bill for the Social Security Legislation Amendment (Carer Pension and Other Measures) Act 1995 in which a reintroduction of a special circumstances waiver which did not exclude innocent mistake, (such as that of Mr Lymberopoulos, she submitted), was discussed. She denied that Mr Lymberopoulos had been reckless as Jonauskas (supra) had been held to have been.
Ms Finlay also proposed that administrative error could be held to be a special circumstance (Secretary Department of Family and Community Services v Birgden (supra)), and referred to the decision in Re Nehma and Secretary, Department of Family and Community Services [1999] AATA 219 and Brittain and Secretary, Department of Family and Community Services [2000] AATA 161. I have reviewed those cases and consider that any departmental error, for example in calculations, in this case, arose due to the incorrect disclosures of Mr Lymberopoulos.
I then turned to consider the totality of the circumstances surrounding Mr Lymberopoulos’ claim that special circumstances should be found in his case to waive all of part of his debt of DSP. I have taken into account the relevant case law, the submissions of both parties, many of which have been dealt with in the paragraphs above in relation to the section 1237A argument.
I accept that Mr Lymberopoulos has been assessed as being eligible for DSP, so that he has certain disabilities. He has told me that he is in straitened circumstances, and that were it for not the children, “we would have died in the gutter”. However that does not distinguish him from a whole group of people who are recipients of social security benefits. The financial aspects of Mr Lymberopoulos’ life do not amount to a special circumstance. He is living in his own home, he has some annuity income, and he receives rental income from two flats in his building.
I noted that in Director-General of Social Services v Hales (1983) 47 ALR 281 at 321 Sheppard J said:
“The legislation provides for the payment of a variety of benefits to different classes of people who will usually have one thing in common; they will be impecunious and in straitened circumstances.”
I turned then to consider Mr Lymberopoulos’ health and his family’s health issues. He mentioned blood pressure and a stomach operation some five years previously. However there was no item of a medical nature so compelling that I could find it to be so unusual, uncommon or exceptional as to qualify as a special circumstance.
There are many other cases where the issue of special circumstances has been considered, and the principles applied. Re Krzywakand Secretary, Department of Social Security (1988) 15 ALD 690, Re Ivovic and Director-General of Social Services (1981) 3 ALN N61, Secretary, Department of Social Security v Hulls (1991) 22 ALD 570, Secretary, Department of Social Security v Banks (1990) 23 FCR 416 and Secretary, Department of Social Security v Ellis (1997) 46 ALD 1.
Having considered the above, and Mr Lymberopoulos’ circumstances I find that there has been nothing so unusual, uncommon or exceptional in viewing the totality of circumstances in his case so as to warrant applying the discretion regarding special circumstances to waive the debt of DSP.
There were no submissions made about whether the debt should be written off pursuant to section 1236 of the Act. I have considered the issue and given the situation of the Respondent, his presence in Australia, his capacity to repay the debt over a period, and other indicia related to write off, I did not decide write off of the debt was appropriate.

DECISION

N2003/1227: The Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that the two flats, numbers 1 & 2 on the ground floor at 42 Waverley Street Belmore, NSW, property of Mr Theodore and Mrs Dimitra Lymberopoulos are not part of their principal home, and are assessable assets.

N2003/1600: The Tribunal sets aside the decision of the Social Security Appeals Tribunal and finds that there are no grounds to justify waiving all or part of Mr Lymberopoulos’ debt of DSP to the Commonwealth incurred for the period 12 December 1997 to 4 May 2001.

I certify that the 88 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Ms G Ettinger

Signed: ...............................................................
Associate

Date of Hearing 29 April 2004;
final submissions in N2003/1600 18 & 24 May and 7 June 2004

Date of Decision  25 August 2004
For the Applicant  Mr G Lozynsky, Advocate
For the Respondent                  Self Represented in N2003/1227
For the Respondent                  Ms J Finlay, Principal Solicitor, Welfare Rights Centre, in N2003/1600