Tollefson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2008] AATA 961

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 961

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/0048

GENERAL ADMINISTRATIVE DIVISION		)
Re		ANNA-MARIE TOLLEFSEN

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member R W Dunne

Date29 October 2008

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

..............................................

R W DUNNE
    (Senior Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Carer Payment – charge or encumbrance over disregarded asset – overpayment of benefit – debt due to the Commonwealth – waiver of right to recover debt – special circumstances – write-off of debt – decision affirmed.

Social Security Act 1991 ss 1064(1), 1118(1)(a), 1121(1), 1121(3), 1223(1), 1236(1) and (1A), 1237A(1), 1237AAD

Social Security (Administration) Act 1999 ss 68(2), 72(1), 94(1)

Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Riddell v Secretary, Department of Social Security (1993) 30 ALD 31
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436
Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Re Woodward and Department of Family and Community Services [2001] AATA 818
Re Secretary, Department of Family and Community Services and Levenda and Anor (2002) 71 ALD 210

REASONS FOR DECISION

29 October 2008   Senior Member R W Dunne   

1.      This case involved most unfortunate circumstances.  The applicant, Ms Anna-Marie Tollefsen, had been receiving Carer Payment in respect of her mother and was also the carer for her 14 year old granddaughter.  On 9 June 2005, she borrowed funds, which were secured by mortgage over her principal home, and used part of the funds to purchase a residential property and to cover the costs associated with the purchase.  It was her intention to use the remainder of the borrowed funds for renovations to her home.  On 28 July 2006, she mortgaged the residential property and reduced the secured borrowings over her home.  As a result of these arrangements, the respondent (“Centrelink”) decided that she had been overpaid $12,535.98 in Carer Payment.  This overpayment was considered a debt, which was to be recovered from Ms Tollefsen.  She requested a review of the decision, which was affirmed by an Authorised Review Officer, and then applied to the Social Security Appeals Tribunal (“SSAT”) for review of the decision.  The SSAT affirmed Centrelink’s decision and Ms Tollefsen has applied to this Tribunal for further review.

2.      At the hearing, Ms Tollefsen represented herself and Mr Anthony Parker (from Centrelink Legal Services Branch) appeared for the respondent.  The Tribunal received into evidence the T documents (Exhibit R1) and the supplementary T documents (Exhibit R2) lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, together with the copy of a letter from Centrelink to Ms Tollefsen dated 12 June 2005 (Exhibit R3).

issues for the tribunal

3.      The following are the issues for the Tribunal’s consideration:

(a)Was there an overpayment of Carer Payment to the applicant under the Social Security Act 1991 (“Act”)?

(b)      If there was an overpayment of Carer Payment, what was the amount?

(c)Is the overpayment of Carer Payment a debt due to the Commonwealth?

(d)Should the debt be written-off?

(e)Should the debt be waived because there are “special circumstances”?

legislation

4. The following provisions of the Act and the Social Security (Administration) Act 1999 (“Administration Act”) are relevant in Ms Tollefsen’s case:

The Act

“1064 Rate of age, disability support, wife pensions and carer payment and of disability wage supplement (people who are not blind)

(1)      The rate of:

(a)      age pension; and

(b)disability support pension or disability wage supplement of a person who has turned 21; and

(c)      wife pension; and

(d)      carer payment; and

(f)       mature age allowance under Part 2.12A; and

(g)      mature age partner allowance;

is, subject to subsection (2), to be calculated in accordance with the Rate Calculator at the end of this section.

…

1118  Certain assets to be disregarded in calculating the value of a person’s assets

(1)In calculating the value of a person’s assets for the purposes of this Act (other than sections 198F to 198MA (inclusive), Division 1B of Part 3.10, Division 2 and sections 1133 and 1135A), disregard the following:

(a)if the person is not a member of a couple—the value of any right or interest of the person in the person’s principal home that is a right or interest that gives the person reasonable security of tenure in the home;

…

1121  Effect of charge or encumbrance on value of assets

(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 (other than Division 1B of Part 3.10), is to be reduced by the value of that charge or encumbrance.

…

(3)Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 1118.

…

1223  Debts arising from lack of qualification, overpayment etc.

(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.

…

1236  Secretary may write off debt

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

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

(a)the debt is irrecoverable at law; or

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

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

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

…

1237A  Waiver of debt arising from error

Administrative error

(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.

…

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, the Administration Act or the 1947 Act; and

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

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

…”

The Administration Act

“68       Person receiving social security payment or holding concession card

…

(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:

(a)      inform the Department if:

(i)        a specified event or change of circumstances occurs; or

(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;

(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;

(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.

…

72     Provisions relating to notice

(1)A notice under this Subdivision:

(a)must be given in writing; and

(b)may be given personally or by post or in any other manner approved by the Secretary; and

(c)must specify how the person is to give the information or statement to the Department; and

(d)must specify:

(i)in the case of a notice under section 68 that requires the giving of more than one statement, each relating to the payment of the social security payment in respect of a period—the date by which the person is to give each statement to the Department; or

(ii)in any other case—the period within which the person is to give the information or statement to the Department; and

(e)must specify that the notice is an information notice given under the social security law.

…

94     Automatic cancellation—recipient not complying with subsection 68(2) notice

(1)Subject to subsection (2), if:

(a)a person who is receiving a social security payment is given a notice under subsection 68(2); and

(b)the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and

(c)the event or change of circumstances occurs; and

(d)the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and

(e)because of the occurrence of the event or change of circumstances:

(i)the person ceases to be qualified for the social security payment; or

(ii)the social security payment ceases to be payable to the person;

the social security payment is cancelled, by force of this subsection, on the day on which the event or change of circumstances occurs.

…”

background and evidence of applicant

5.      When questioned by me, Ms Tollefsen indicated that she did not dispute the following background facts that had been found by the SSAT:

(a)      She had been receiving Carer Payment in respect of her mother since 13 October 1997.  She also cared for her granddaughter on a permanent basis.

(b)      On 9 June 2005, Perpetual Trustees Victoria Limited loaned her a total of $422,500, made up of two loans – one for $372,500 and the other for $50,000.  She granted a mortgage over her home at Largs Bay as security for the loans.  She did not declare the loans to Centrelink.

(c)       She immediately commenced using funds from the $50,000 loan, but did not draw down the funds from the $372,500 loan until 8 August 2005. 

(d)      On 12 June 2005, Centrelink sent her a notice advising of her obligation to inform Centrelink if her circumstances changed (Exhibit R3).  In particular, it advised that she needed to inform Centrelink if her “assets or [her] combined assets other than financial investments are more than $153,217” or “if [her] assets change substantially” and if “[her] combined financial investments are more than $1,033” or if she receives “a lump sum amount of money or one-off payment from any source”.

(e)      On 9 August 2005, she settled the purchase of a residential property at West Lakes Shore for $340,000.  She did not declare the purchase of the property to Centrelink.

(f)       On 27 July 2006, she was granted a mortgage, secured over the West Lakes Shore property, in favour of Perpetual Trustees Victoria Limited in return for a loan of $213,909.82.  Settlement occurred on 28 July 2006.  On the same date (28 July 2006), the mortgage granted over her home was reduced to $318,221.94.

(g)      The total of the mortgages settled on 28 July 2006 was $532,131.76, including $100,000 which she planned to use for kitchen renovations as well as renovations to the three bathrooms in her home.  She did not inform Centrelink of these loans.

(h)      On 2 August 2006, she withdrew $100,000 from her Westpac savings account in cash.  She had approximately $40,000 left of this amount at the date of the SSAT hearing.

(i)        The total repayments for both mortgages were (at the time of the SSAT hearing) in excess of $3,500 per month, in addition to her living expenses and credit card debts.  She rented the West Lakes Shore property to her son, who was paying $350 per week in rent. 

(j)        As at 9 August 2005, the pensions asset test limit beyond which no pension was payable to a single home owner was $317,750.  This increased to $322,000 on 20 September 2005, to $325,000 on 20 March 2006 and to $330,000 on 1 July 2006.

6.      Ms Tollefsen’s evidence was that, because of her care responsibilities to her mother and her granddaughter, she had been unable to maintain paid employment.  She had decided to purchase the West Lakes Shore property for her future retirement and as accommodation for her son, who was a sole carer for his three children.  After obtaining the loan secured over her home, which was used to purchase the West Lakes Shore property, she realised that the financial arrangements had not been structured to her advantage.  The mortgage should have been granted over the West Lakes Shore property, instead of her home at Largs Bay.  She had not advised Centrelink of the loans arranged on 9 June 2005 or the purchase of the West Lakes Shore property on 9 August 2005.  As far as she was concerned, because she had borrowed $372,500 to purchase the West Lakes Shore property, she did not have an asset that needed to be declared for Centrelink purposes.

7.      Ms Tollefsen’s further evidence was that her mother had recently passed away.  This had been emotionally and physically draining for her and she was concerned about the difficulties that would arise for her in attending to the funeral arrangements.  She had suffered from sleep deprivation and anaemia caring for her mother in the period immediately prior to her death.  From her perception, in caring for her mother for the lengthy period that she had, there had been considerable savings to the Government and she did not believe that she should be penalised for this.  Following her mother’s death, she believed there would be “financial chaos” for her.  She had debts to pay, including funeral costs for her mother and ongoing education expenses for her granddaughter.  Whilst her mother had been alive, she had been in receipt of a Norwegian pension, which had been twice as much as her own pension.  Her mother’s pension had been of considerable assistance in helping her cope with her mother’s care and medical expenses.

consideration

Was there an overpayment of Carer Payment to the applicant under the Act?

8. Based on the evidence before me, I am satisfied that there has been an overpayment of Carer Payment to Ms Tollefsen for the period 9 August 2005 to 28 July 2006. For completeness, I am satisfied that the arrangement involving the loan transactions in which Ms Tollefsen was a party was not a home equity conversion agreement as defined in s 8(1) of the Act. I am also satisfied that, in relation to the second loan of $50,000 obtained on 9 June 2005, the deemed income attributable to this loan was not sufficient to effect her rate of Carer Payment in 2005.

If there was an overpayment of Carer Payment, what was the amount?

9.      I have reviewed the debt calculation set out in the Debt Calculator (Exhibit R2, T17).  I am satisfied that Centrelink correctly calculated the overpayment of Carer Payment by means of the Debt Calculator and that the amount is $12,535.98.

Is the overpayment of Carer Payment a debt due to the Commonwealth?

10. I understand from her evidence that Ms Tollefsen accepts that she has been overpaid Carer Payment during the period from 9 August 2005 to 28 July 2006. As I have said, I am satisfied that the overpayment and the debt calculations have been correctly determined by Centrelink. Section 1223(1) of the Act provides that, where a Social Security payment (such as Carer Payment) is made and the recipient was not entitled to the payment, the amount is a debt due to the Commonwealth by the recipient and is taken to arise when he or she obtains the benefit of the payment. In the case of Ms Tollefsen, I agree with the conclusion reached by the SSAT. I am satisfied that the overpayment of Carer Payment of $12,535.98 is a debt recoverable by the Commonwealth under s 1223(1) of the Act.

Should the debt be written-off?

11. Under s 1236(1A), the respondent may write-off a debt, for a stated period or otherwise, only in the following situations:

(a)      If the debt is irrecoverable at law.  I have already found that the debt in the present case is recoverable at law.

(b)      If the debtor has no capacity to repay the debt.  On the evidence before me, I am satisfied that the applicant has capacity to repay the debt.

(c)If the applicant’s whereabouts are unknown.  This exception is not presently applicable. 

(d)      If it is not cost effective for the Commonwealth to take action to recover the debt.  Having regard to the evidence and the submissions put by Mr Parker, I accept that it is cost effective for the Commonwealth to take action (or to continue to take action) to recover the debt.

It follows that the debt of $12,535.98 is not capable of being written-off, for a stated period or otherwise, pursuant to s 1236(1A) of the Act.

Should the Debt be waived because there are “special circumstances”?

12.     Under s 1237AAD, the Tribunal may waive the right to recover all or part of the debt if it is satisfied that there are special circumstances (other than financial hardship alone) that make it desirable to waive the debt.   The expression “special circumstances” has been considered on numerous occasions by Courts and Tribunals.  In the case of Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal said (at page 3):

"...

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 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."  (emphasis added)

13.     In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court’s decision in Re Beadle, observed that special circumstances:

"... would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. ..."

14.     In Riddell v Secretary, Department of Social Security (1993) 30 ALD 31, the Full Court of the Federal Court said at page 38:

"Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."

15.     More recently, in Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 44 AAR 436, Besanko J reviewed various earlier decisions involving the concept of special circumstances. He noted the comments made by Branson J in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866, regarding the test for “special circumstances”. In Angelakos (at page 445) he said:

“I note her Honour’s reference to the Tribunal in the case before her probably overstating the test. I also note that the authorities have emphasised time and again the importance of maintaining flexibility in determining what constitutes special circumstances. The danger is that the test will be overstated if the word ‘exceptional’ is emphasised. It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case. It may not be easy to postulate the ordinary or usual case other than in quite general terms and, in doing so, close attention must be given to the particular statutory context.”

16.     It appears Ms Tollefsen may not have been fully or properly advised in relation to the loans she obtained on 9 June 2005 and the security to be used in respect of those loans.  There was no evidence to suggest that, whatever advice she did receive, was negligent.  She obviously became aware of the mistake and sought to remedy the situation in July 2006.  I can appreciate that she is experiencing difficult times following the death of her mother and in having the ongoing care of her granddaughter on a limited income, after her mortgage repayments and other debts (including her mother’s funeral expenses) are taken into account.  A not dissimilar situation occurred in Re Woodward and Department of Family and Community Services [2001] AATA 818, where the applicant was in receipt of Carer Pension in respect of her mother. In the period she received the pension, her mother entered a nursing home, but the payments continued. The respondent determined to raise and recover a debt, on the basis that there had been no notification by the applicant of her mother’s entry into the nursing home.  The Tribunal (Member Ms N Bell) was satisfied that the applicant had been exceptionally dependent on her mother for emotional and domestic support, guidance and advice.  During the period her mother was in the nursing home, she was “distraught and disorganised, focusing only on matters pertaining to her mother’s welfare” and she did so “to the detriment of other aspects of her life, including her finances, the maintenance of her house and car and the payment of bills”.  Member Bell found that the applicant’s circumstances were “special” within the meaning of s 1237AAD and that the debt raised by the respondent should be waived.  In my view, Ms Tollefsen’s circumstances are not the same as the applicant in Re Woodward.  The circumstances of the overpayment of Carer Payment to her are quite different.  In the way they occurred they are unfortunate, but they are not “unusual” or “uncommon”, so as to be “special”. 

17.     Ms Tollefsen’s circumstances are similar to what occurred in Re Secretary, Department of Family and Community Services and Levenda and Anor (2002) 71 ALD 210. There, the respondents signed a contract to purchase an investment property and obtained a loan to cover the purchase price and associated costs. Although they intended that their principal residence would only be included as additional security, the loan contract contained a clause that security for the loan would be taken in the form of a mortgage only over their principal residence. After the purchase of the investment property the respondents commenced receiving Social Security payments. They did not declare the property as an asset. After becoming aware of the property and the existence of the mortgage over the principal residence, Centrelink decided that their assets exceeded the allowable limits for the payments they had received and sought to raise and recover certain of the payments. The Tribunal (Member Mr G D Friedman) found that the respondents had legal advice before signing the loan agreement and had ample opportunity to ensure they understood and agreed with its contents. Member Friedman also found that the value of the mortgage over the respondents’ principal residence could not be subtracted from the value of the investment property. The overpayments were a debt properly recoverable by Centrelink. The respondents’ circumstances were not unusual, uncommon or exceptional and, as such, were not special. Member Friedman concluded that there was no unfairness to the respondents due to the application of the Act.

18.     In Ms Tollefsen’s case and applying the decision of Member Friedman in Re Levenda, I am satisfied that her financial circumstances, whilst they may be straitened and stressful at times, are not such that they can be categorised as “special”.  I am, therefore, of the view that Ms Tollefsen’s circumstances are not such as would warrant the waiving of the debt of $12,535.98, and I so find.

19.     At the conclusion of the hearing, Mr Parker made reference to the possibility of an alternative notional entitlement to Newstart Allowance and offered to arrange for assistance to be given to Ms Tollefsen to explore this avenue. 

decision

20.     The Tribunal affirms the decision under review.

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne

Signed:         ...........J Coulthard............................................
  Associate

Date of Hearing  7 July 2008
Date of Decision  29 October 2008
Advocate for the Applicant       Self-represented

Advocate for the Respondent   Mr A Parker

Centrelink Legal Services Branch