Tramonte and Secretary, Department of Family and Community Servic Es

[2004] AATA 26

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 26

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/1134

GENERAL ADMINISTRATIVE  DIVISION		)
Re		PAOLO TRAMONTE

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal REAR ADMIRAL A R HORTON AO

Date16 January 2004

PlaceSydney

Decision The decision under review is affirmed

[Sgd] REAR ADMIRAL A R HORTON AO

CATCHWORDS

SOCIAL SECURITY – recovery of debt – overpayment of Newstart Allowance – claim form for Allowance recorded rental property  - Real Estate Form (Module R) not submitted with claim for Newstart Allowance - rental property income not taken into account – waiver of debt for period to 7 October 1999 - applicant denies receipt of advice dated 8 October 1999 showing fortnightly income on which Allowance based – Real Estate Form (Module R) not requested by applicant nor provided by respondent – Module R not submitted - rental income not shown on subsequent periodic Application for Payment Forms required for Newstart Allowance – error not attributable solely to administrative error by respondent – no special or unusual circumstances – recovery of debt not waived 

Social Security Act 1991 – ss8, 657, 658, 1068G, 1223, 1224, 1237A, 1237AAD

Social Security (Administration) Act 1999 – s2371

Acts Interpretation Act 1901 - ss28A, 29

Evidence Act 1995 – s163

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

Hales v Secretary, Department of Social Security (1983) 47 ALR 281

Re Hart and Secretary, Department of Family and Community Services [2000] AATA 210

REASONS FOR DECISION

16 January 2004 REAR ADMIRAL A R HORTON AO       

1.      This is an application to review a decision of the Social Security Appeals Tribunal (“SSAT”) dated 2 July 2003 that affirmed a decision of an authorised review officer (“ARO”) of Centrelink dated 21 May 2003, to raise and recover a debt resulting from the overpayment of Newstart Allowance to Mr Paolo Tramonte (“the Applicant”).

2.      At a hearing before the Administrative Appeals Tribunal, on 8 December 2003, Mr Tramonte was self-represented.  Ms J Green, an advocate from the Centrelink Service Recovery Team appeared for the Secretary, Department of Family and Community Services (“the Respondent”).   The Tribunal was assisted by an interpreter fluent in the Italian language. 

3. The Tribunal took into evidence the documents provided by the Respondent pursuant to s37 of the Administrative Appeals Tribunal Act1975, a blank Centrelink Application for Payment Form  (Exhibit R1) and the Respondent’s Statement of Facts and Contentions (Exhibit R2).  Mr Tramonte gave oral evidence, as did his wife, Mrs Rosina Tramonte.

BACKGROUND

4. On 4 February 1999, Mr Tramonte lodged a claim for Newstart Allowance, identifying in this claim that he owned an investment property at 88 Flowerdale Road, Liverpool. Newstart Allowance was granted from 19 April 1999. However, in calculating Mr Tramonte’s Newstart allowance, Centrelink failed to take into account the “real” value of the investment property or the rent received from that property from the period 4 February 1999 to 5 October 2001. On 13 September 2002, the Respondent decided to raise and recover the overpayment as a debt of $15, 121.41. Following requests for review by Mr Tramonte, parts of the debt were waived under s1237A(1) of the Social SecurityAct 1991 (“the Act”) as those parts of the debt were “attributable solely to an administrative error made by the Commonwealth” and the payments had been received in good faith.   

5.      For the remaining $5,450.73, an ARO decided on 21 May 2003 that there were no grounds for waiver of this debt. The reason for this was that Mr Tramonte had received a letter on 8 October 1999 stating that his Newstart Allowance was based on income of $40.26 per fortnight and that he was required to advise Centrelink within 14 days if the amount was incorrect. The ARO determined that as Mr Tramonte was in receipt of this advice, the overpayment had not occurred solely due to an error on the part of Centrelink, and that payment had not been received in good faith (s1237A).  The issue before the Tribunal is therefore only in relation to the claimed overpayment of $5,450.73.

FACTS

6.      Mr Tramonte ceased work in early 1999 when the steel works in which he was employed, closed down.  His subsequent claim for Newstart Allowance, lodged in February 1999, recorded that he owned and lived in a property at 87 Flowerdale Road, Liverpool, and owned, or partly owned, an additional property at 88 Flowerdale Road.  This was confirmed by Mrs Tramonte In an accompanying Module P (Partner Details).  Mr Tramonte was not issued with, nor did he complete the required Real Estate Form (Module R) and as a result, Centrelink did not, at that time, take property value and rental income into account in ascertaining eligibility for the Newstart Allowance.

7. On 8 October 1999, Centrelink forwarded a letter – described as a Recipient Notification Notice under s657 of the Act - to Mr Tramonte, advising him of his normal fortnightly payment details, and stating that this payment was based on a Total Fortnightly Income of $40.26, (which took account of the income of Mrs Tramonte, employed by Miller’s Fashion Club). The letter laid out a number of requirements including the requirement to advise “income changes from the rate last notified or if the income shown above is incorrect”.  A definition of income was also provided; the relevant inclusion for the purposes of the matter before the Tribunal being “income from rent”.  Mr Tramonte gave evidence that he did not receive that letter, attested to by Mrs Tramonte in her oral evidence.    Subsequently, similar letters, (also described as Recipient Notification Notice, at least until 17 March 2000 on the information before the Tribunal) referring to “information used for calculating your regular payments” and containing the same requirements relating to the provision of information in respect of income and rent, were forwarded periodically to Mr Tramonte.   The letters in evidence, to 9 March 2001, show minimal adjustment to Total Fortnightly Income from the figure given above.  

8.      On 27 July 2001, following advice from the Australian Tax Office that Mr Tramonte had declared rental income in 1999/2000, Centrelink sought advice from Mr Tramonte and forwarded various forms, including Module R, for completion.  A follow-up letter of 14 August 2001 suspended Newstart Allowance pending receipt of a response.  In September 2001, Mr Tramonte advised the property value as $160,000 and the gross rental income as $190 per week vide Module R form dated 18 September 2001. On 6 October 2001, he was advised that the Newstart Allowance had been cancelled.   That remains the situation to the present.

9.      The debt of $5,450.73 refers to the period from 8 October 1999 to 5 October 2001, and relates to an overpayment of Newstart Allowance because the Respondent was not aware of the net income being received from the rental property.  On 6 October 2001, when the value of the property was also taken into account by Centrelink, Mr Tramonte became ineligible for Newstart Allowance because his total assets exceeded the permissible limit.      

EVIDENCE 

10.     As noted above, both Mr and Mrs Tramonte claim that the letter of 8 October 1999, which would have drawn their attention to a Total Fortnightly Income of $40.26 and the requirements to provide timely advice to Centrelink of any changes in asset and income, was not received.  Mr Tramonte has limited English language skills and relies on his wife or children to read and interpret correspondence.  He confirmed that the earlier letter granting the Allowance dated 25 March 1999 was received as were letters in respect of the requirement to complete the periodic Continuation Forms.  These were completed by his wife, but when asked whether he knew what was on them, he replied “yes, of course”.   He stated that he would normally take the forms to the Centrelink office.   In respect of letters from Centrelink following the letter of 8 October 1999, he stated that sometimes the mail went inadvertently to neighbours.

11.     Mr Tramonte stated that he did not know how Newstart Allowance was calculated, but he believed he had provided all relevant information, pointing to the fact that at the outset, he had noted ownership of the investment property in his claim form, as had his wife.  He assumed Centrelink was taking rental income into account, given he had advised his ownership of the property.  He said he was first aware that there was a problem when he received the initial letter advising him of a debt of some $15,000.   Mr Tramonte did not dispute the calculation of the overpayment, but he did dispute the claim that he was responsible for such overpayment, on the basis that Centrelink had the necessary information to calculate the correct rate of payment.  Since being advised of the claimed overpayment of $5,450.73, he has been paying the Respondent $40 per fortnight.

12.     Mrs Tramonte, also born in Italy, migrated to Australia as an infant.  She confirmed that she assists Mr Tramonte by interpreting correspondence and verbal communications, and in completing necessary documentation.  She stressed to the Tribunal that the claim form for Newstart Allowance did not have any question relating to property rental income, and that the module R Form had not been provided.  That they had individually referred to their investment property on the respective forms when Mr Tramonte was claiming Newstart Allowance was clear evidence of their honesty.  Mrs Tramonte told the Tribunal that the letter of 8 October 1999 had not been received, but that both she and her husband had advised Centrelink as required and where necessary.  Hence the receipt of the initial letter of 14 October 2002 advising of a debt of $15,121 came as a terrible shock. 

CONSIDERATION AND DECISION

Was the letter of 8 October 1999 received?

13. Mr Tramonte, supported by his wife, gave evidence that the letter, dated 8 October 1999, was not received. The Respondent submitted that pursuant to s237(1) of the Social Security (Administration) Act1999,  the letter should be deemed to have been received, citing Re Hart and Department of Family and Community Services [2001] AATA 210. s237(1) relevantly states:

“(1)      If notice of a decision under the social security law is:

…

(c)sent by prepaid post to the postal address of the person last known to the Secretary;

notice of the decision is taken, for the purposes of the social security law, to have been given to the person.”

14.     The Acts Interpretation Act1901 at s 28A and s29, and the Evidence Act1995 at s 163, support the above, both providing that a document is served  by sending it by per-paid mail to the address of the place of residence last known to the person in receipt of the document

15.     There is no evidence before the Tribunal that the letter was either incorrectly addressed or mishandled.  Accordingly, and considering the legislation, the relevant case law, and the facts of this case, the Tribunal must find that the letter of 8 October 1999 was is deemed to have been received by Mr Tramonte.

Income, assets and  overpayment 

16.     The original debt, of $15,121.41 as calculated and advised by the Respondent on 13 September 2002 was raised as Mr Tramonte exceeded the assets test.  Following various waivers of portions of this calculated debt, the residual debt is $5,450.73.  This figure reflects the overpayment of Newstart Allowance between 8 October 1999 and 5 October 2001. The overpayment occurred as Centrelink did not calculate the rent received from the investment property as income.   S8(1) of the  Act defines income as “an amount earned, derived or received by the person for the person’s own use or benefit” and as noted above, the Recipient Notification Notice letter from Centrelink of 8 October 1999, and subsequent periodic letters, defined income to include “income from rent”. The Recipient Notification Notice also referred to s657 and s658 of the Act, as in force at that time, which respectively provided that an applicant notify Centrelink of any change in circumstances, including changes in income, and lodge a periodic Application for Payment Form which required notification of income changes.

17.     Mr Tramonte does not dispute the overpayment figure of $5,450.73 ; rather he argues that any mistake in calculation was made by Centrelink, as he provided all necessary information.   Accordingly, and on the information before it, the Tribunal is satisfied, and so finds, that the overpayment, which Centrelink is claiming must be recovered from Mr Tramonte has been calculated correctly at $5,450.73.

Recovery of debt

18. Payment of social security benefits to which an applicant is not entitled are recoverable under the provisions of s1223(1) of the Act, which states:

“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”

19. s1237A(1) of the Act provides that:

“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.”

Whilst certain components of the original debt of $15,121.41 were waived under the provisions of s1237A(1) of the Act, the Respondent submitted that such a waiver does not apply in the matter before the Tribunal, as the debt did not arise “solely from an administrative error of Centrelink” but arose because of the failure of Mr Tramonte to advise income from rent . 

20. The evidence before the Tribunal is that Mr Tramonte was specifically advised by the Centrelink letter of 8 October 1999 that his Newstart Allowance was calculated on a total fortnightly income of $40.26, which clearly did not encompass the net rent he was receiving from his investment property. That letter also required him to advise Centrelink of changes to income of himself or his wife, which included income from rent. That was not done, not deliberately or by deceit, but by omission. Similar fortnightly income details and the same instructions regarding changes to income were contained in subsequent periodic Recipient Notification Notices, and again no advice in respect of rental income was forthcoming. Hence the failure of Centrelink to properly calculate what, if any, Newstart Allowance was payable, was due to the failure by Mr Tramonte to provide details of rental income. A contributory factor was the administrative error by Centrelink, which failed to provide Mr Tramonte with a Module R form, which when complete, would contain rental details. Notwithstanding, that administrative error was not the sole reason for the shortcoming and hence Mr Tramonte cannot benefit from the provisions of s1237A(1) of the Act, as reinforced by the note under subsection (1). Thus Mr Tramonte is liable for the recovery of the debt.

Waiver in special circumstances

21. s1237AAD of the Act addresses the circumstances in which the recovery of a debt may be waived. Ss1237AAD(b) refers to “special circumstances (other than financial hardship alone) that make it desirable to waive”.. The Respondent submitted that as Mr Tramonte still owns 88 Flowerdale Road Liverpool, and receives rent from that property, and as his wife is still working, there are no special circumstances that would justify a waiver of the debt.  The Respondent referred to the Director-General of SocialSecurity v Hales (1983) 47 ALR 281, in which Sheppard J stated that notwithstanding hardship – which the Respondent submitted did not exist in this matter – the recovery of payments to which a person was not lawfully entitled, must be a paramount consideration.

22.     “Special circumstances” was addressed by the Tribunal with Toohey J presiding in Re Beadle v Director-General of Social Security (1984) 6 ALD 1, wherein it was 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 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 Tribunal concludes that “special circumstances” are not present in this matter, and hence the debt cannot be waived.  Mr Tramonte and his wife own their own home and investment property without encumbrances. He is currently in receipt of rent for the investment property..  He is currently paying off the debt, in anticipation of being required to do so, at $40 per fortnight, which the Respondent accepts as being a reasonable rate of recovery, and which he, Mr Tramonte, believes he could continue to pay if this review is not in his favour.  He is in receipt of the disability support pension.  Two children live at home, but they seemingly are self sufficient, their ages being 24 and 30.  In February 2001, he sought release of superannuation benefits on the grounds of financial hardship, but that option, were it to be approved, was not taken up; there was no reason given to the Tribunal in relation to that request.  On the evidence before it, the Tribunal decides that there are no special or unusual circumstances, and hence recovery of the debt cannot be waived.

24.     In reaching this decision, the Tribunal acknowledges that at the outset when claiming Newstart Allowance, Mr Tramonte advised Centrelink that he had an investment property. There is no suggestion of any impropriety on his part, or indeed that of his wife, it seems that they acted in good faith and perhaps assumed that relevant information was being taken into account.  That was unfortunately not the case, as such information in respect of rental income was not provided, the onus, particularly after 8 October 1999, being on Mr Tramonte. 

25.     The Tribunal therefor affirms the decision of the SSAT that Mr Tramonte has an overpayment debt of $5,450.73 recoverable by the Commonwealth.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of REAR ADMIRAL A R HORTON AO

Signed:         A. Krilis
  Associate

Date/s of Hearing  8 December 2003
Date of Decision  16 January 2004
Representative for the Applicant               Self-represented
Solicitor for the Respondent  Ms J Green