WARSCHAUER and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS / SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2011] AATA 396

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 396

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/3733

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		LINDA WARSCHAUER

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS / SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS 

Respondent

DECISION

Tribunal Mr Egon Fice, Senior Member

Date8 June 2010

PlaceMelbourne

Decision The Tribunal affirms the decision of the Social Security Appeals Tribunal dated 4 August 2010.

..........[sgd] Egon Fice............

Senior Member

SOCIAL SECURITY – Disability Support Pension – Newstart Allowance – Family Tax Benefit – overpayments of rent assistance – homeowner – ineligible homeowner – joint proprietor – non-homeowner – administrative error – special circumstances

Social Security Act 1991 ss 11(4), 13(1), 1070B, 1070C, 1223, 1237A, 1237AAD

Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435

REASONS FOR DECISION

8 June 2010 Mr Egon Fice, Senior Member      

1.In February 2010 Centrelink, which administers social security payments on behalf of the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (the Secretary), issued notices to Ms Linda Warschauer indicating that she had been overpaid the Disability Support Pension, Newstart Allowance and Family Tax Benefit.  The reason for the overpayment was that Centrelink determined Ms Warschauer was not entitled to rent assistance during the periods she was paid the various social security payments to which I have referred.  Dissatisfied with Centrelink’s decision, Ms Warschauer sought review of that decision by an authorised review officer (ARO). 

2.In a letter dated 14 April 2010, the ARO advised Ms Warschauer that Centrelink’s decision to raise and recover debts in respect of Newstart Allowance and Disability Support Pension were correct.  The ARO determined that Centrelink’s decision regarding overpayment of the Family Tax Benefit was incorrect and recalculated the overpayments in respect of that social security payment.  In summary, the ARO determined that the following debts should be recovered from Ms Warschauer:

(a)Newstart Allowance - $2,869.61 for the period 3 June 2008 – 27 July 2009;

(b)Disability Support Pension - $2,380.41 for the period 2 April 2009 – 25 January 2010;

(c)Family Tax Benefit - $2,813.00 for the period 1 July 2004 – 30 June 2005;

(d)Family Tax Benefit - $3,043.90 for the period 1 July 2005 – 30 June 2006;

(e)Family Tax Benefit - $3,151.10 for the period 1 July 2006 – 30 June 2007; and

(f)Family Tax Benefit - $848.57 for the period 1 July 2007 – 5 October 2007.

3.Dissatisfied with the ARO’s decision, Ms Warschauer sought review by the Social Security Appeals Tribunal (SSAT).  In a decision made on 4 August 2010, the SSAT affirmed the ARO’s decision.  Ms Warschauer then lodged an application for review of the SSAT decision by this Tribunal on 31 August 2010. 

4.The issues which arise for my determination are:

(a)whether Ms Warschauer was a homeowner during the above periods and, as a consequence, entitled to receive rent assistance;

(b)whether an overpayment arose in the periods described;

(c)if there were overpayments of social security, whether the overpayments are recoverable debts; and

(d)whether all/or part of the debts should be waived or written off.

HOME OWNERSHIP

5.The qualification for rent assistance is dealt with in Chapter 3, Part 3.7, Division 1 of the Social Security Act 1991 (the Act).  The general qualifications for rental assistance set out in s 1070B, which provides:

1070BQualification—general rule

A person qualifies for rent assistance if the person satisfies:

(a)the common requirements set out in section 1070C; and

(b)any specific requirement, set out in a later section of this Division, applicable to the person’s social security payment.

6.Section 1070C sets out the common requirements for eligibility to rent assistance, including home ownership.  It provides:

1070CCommon requirements (about aged care residence, home ownership and rent)

The common requirements are that:

(a)  the person is not an aged care resident, and is not taken to be an aged care resident for the purposes of the Rate Calculator concerned; and

(b)  the person is not an ineligible homeowner; and

(c)  the person pays, or is liable to pay, rent, other than Government rent, in respect of a period in respect of premises in Australia; and

(d)  the person’s fortnightly rent is more than the rent threshold amount (see section 1070T).

7.The expression ineligible home owner is defined in s 13(1) of the Act in the following way:

ineligible homeowner means a homeowner other than:

(a)a person who is a homeowner by virtue of paragraph 11(4)(c); or

(b)a person who:

(i)is absent from the person’s principal home, in relation to which the person is a homeowner; and

(ii)is personally providing a substantial level of care in another private residence for another person who needs, or in the Secretary’s opinion is likely to need, that level of care in a private residence for at least 14 consecutive days; and

(iii)has been absent from the principal home for less than 2 years while providing care as described in subparagraph (ii); or

(c)a person who is in a care situation but is not residing in a retirement village; or

(d)a person who pays amounts for the use of a site for a caravan or other vehicle, or a structure, that is the person’s principal home; or

(e)a person who pays amounts for the right to moor a vessel that is the person’s principal home.

Note:     for approved respite care see subsection 4(9), for in a care situation see subsection

13(9), for retirement village see subsections 12(3) and (4), for homeowner see subsection 11(4) and for principal home see section 11A.

8.The expression homeowner is defined in s 11(4) of the Act in the following way:

(4)For the purposes of this Act:

(a)a person who is not a member of a couple is a homeowner if:

(i)     the person has a right or interest in the person’s principal home; and

(ii)     the person’s right or interest in the home gives the person reasonable security of tenure in the home; and

(b)a person who is a member of a couple is a homeowner if:

(i)     the person, or the person’s partner, has a right or interest in one residence that is:

(A)the person’s principal home; or

(B)the partner’s principal home; or

(C)he principal home of both of them; and

(ii)     the person’s right or interest, or the partner’s right or interest, in the home gives the person, or the person’s partner, reasonable security of tenure in the home; and

(c)a person (whether a member of a couple or not) is a homeowner while:

(i)     the whole or a part of the proceeds of the sale of the person’s principal home are disregarded under subsection 1118(2); or

(ii)     the value of a residence, land or a structure is disregarded under subsection 1118(2).

Note:       see also section 1145‑1157 (retirement villages).

9.In order to determine whether Ms Warschauer was a homeowner as that expression is defined in the Act, I need to examine more closely all of the evidence dealing with home ownership. 

10.An officer from the Australian Valuation Office (AVO) conducted a Title Search in the name of Linda Warschauer in June 2007 and discovered there were two Titles in Ms Warschauer’s name.  The properties in her name were identified as 711 Orrong Road, Toorak and 35 Glenferrie Road, Malvern.

11.A Title Search obtained by the Secretary on 9 February 2011 disclosed that the registered joint proprietors of 711 Orrong Road, Toorak were Idelma Maria Warschauer, Fritz Frederick Warschauer and Linda Frederica Warschauer.  The address of all proprietors was said to be 711 Orrong Road, Toorak.  The Secretary also obtained a Transfer of Land document lodged with the Office of Titles Victoria on 24 December 2003.  That document disclosed a transfer from Fredelma Nominees Pty Ltd to the current joint proprietors I have referred to above.  Ms Warschauer’s signature appears on that Transfer of Land document and in cross-examination, she confirmed that was her signature.  Therefore, I find that Ms Warschauer was aware of the fact that she became a joint proprietor of the 711 Orrong Road property on or about 23 December 2003, when the Transfer of Land was dated by hand. 

12.Ms Warschauer lodged written submissions with the Tribunal on 15 April 2011.  In those submissions, Ms Warschauer said that the 711 Orrong Road property had always been her parents’ family home.  She grew up there and spent her childhood living there.  In her statement, Ms Warschauer said that in 2003 the trustee company, Fredelma Nominees Pty Ltd, via her brother, whom she referred to as Fred, instituted the transfer of that property from the family trust to the three individuals as joint proprietors.  Ms Warschauer also referred to another document, described as a Deed, by which it was agreed that Ms Warschauer’s mother could live at the 711 Orrong Road property for as long as she chose.  She could also have the property sold and the proceeds used to buy her an alternative place of residence. 

13.I had in evidence before me a document described as a deed which appears to have been prepared by Darrer Muir Fleiter Lawyers, of 670 Canterbury Road, Surrey Hills.  The parties to that deed, which is dated 23 September 2004, are Mr Fritz Warschauer, Ms Warschauer and her mother Idelma Warschauer.  The signatures on the deed were witnessed by a person described as Mr John Thompson.  When Ms Warschauer was shown what appears to be her signature on that deed, she denied that it was hers.  Mr John Thompson was not called to give evidence. 

14.While Ms Warschauer’s evidence raises some serious questions about the validity of the deed, it does not, for the purposes of this matter, alter the fact that Ms Warschauer was a joint proprietor of 711 Orrong Road, commencing 23 December 2003.  The deed simply confirmed that all three joint proprietors had the right to reside in the 711 Orrong Road property, and, if the property was sold and another property substituted, in that substituted property. 

15.

The second property which was held by Ms Warschauer was that known as 35 Glenferrie Road, Malvern.  Ms Warschauer testified that the 35 Glenferrie Road property was purchased in my name at a time when she commenced to carry on her podiatry business.  In fact, a Title Search discloses that Ms Warschauer became the sole registered proprietor of the 35 Glenferrie Road property on 9 February 2005.  Although Ms Warschauer’s accountant, Ms Tanya Bourke, in a letter to Centrelink dated 21 September 2007, said that the 35 Glenferrie Road property was 100 per cent commercial, in a Module R provided to Centrelink and dated 3 April 2007,

Ms Warschauer described the premises as commercial premises and shop/dwelling upstairs. 

16.There was a loan agreement in evidence before me indicating that on 13 October 2004, Fredelma Nominees had lent Ms Warschauer $475,000 for the purposes of acquiring 35 Glenferrie Road.  That seems to accord with an AVO valuation supplied in September 2007.  At that date, the AVO valued the property at $525,000.  In Module R, Ms Warschauer also indicated that she received $330 per week rental from the 35 Glenferrie Road property, the tenant being described as Vicpodiatry Services Proprietary Limited.  There was no evidence of Vicpodiatry Services paying any rental to Ms Warschauer. 

17.Ms Warschauer’s evidence was that she did at times live at the Glenferrie Road property but was living at both the Orrong Road property and Glenferrie Road property from time to time.  She testified that between February 2005 and May 2007, she predominantly resided at the Orrong Road property.  Ms Warschauer nevertheless insisted that she paid rent for her accommodation at the Orrong Road property.  However, other than her testimony, there was no objective evidence before me that Ms Warschauer paid any rent in respect of residing at the Orrong Road property.  With respect to Ms Warschauer, I cannot accept her testimony about paying rent to be an accurate statement.  At all relevant times, Ms Warschauer was a joint proprietor of the Orrong Road property with legal and equitable rights regarding the use of that property.  She was aware of that fact.  There was no legal basis upon which she could be compelled to pay rent to any person for residing at that property. 

18.Ms Warschauer entered into an agreement with a third party to sell the Glenferrie Road property on 27 May 2007, settlement being set for 27 August 2007.  The price obtained on the sale of that property was $780,000.  Despite the apparent significant capital gain on the sale of that property, Ms Warschauer testified that she received nothing from that sale.  Irrespective of the accuracy of that statement, I say nothing further about it because it does not go to the heart of the dispute which I am required to determine.

19.I also had in evidence before me a number of letters written by Centrelink to Ms Warschauer between March 2004 and September 2009 stating that she was required to inform Centrelink of any changes in her earnings or circumstances, including changes to her income and assets.  Ms Warschauer did not notify Centrelink of any change in her circumstances.  In the Parenting Payment service update form completed by Ms Warschauer on 9 July 2004, she stated that she paid $200 per week rent for her accommodation.  Centrelink’s records on 23 August 2005, 28 February 2006, 13 September 2006 and 22 March 2007 record Ms Warschauer stating that she was a non-homeowner paying private rent.  In fact, the entry for 22 March 2007 indicates a rental payment amount of $995 per month.  I have already referred to Module R which was lodged with Centrelink on 3 April 2007.  On that document, Ms Warschauer, when asked how many properties she owned or had an interest in, referred only to the Glenferrie Road property.

20.The address details on Ms Warschauer’s electronic record with Centrelink indicate her place of residence as follows:

(a)1 November 2003 – 711 Orrong Road, Toorak;

(b)7 January 2005 – 35 Glenferrie Road, Malvern;

(c)3 June 2008 – 711 Orrong Road, Toorak; and

(d)19 April 2010 – 1/708 Orrong Road, Toorak.

21.

Given the above evidence, there can be no doubt that Ms Warschauer was a homeowner, as that expression is defined in s 11(4)(a) of the Act, between 1 July 2004 and 25 January 2010.  I find that the objective evidence discloses

Ms Warschauer had a right in the 711 Orrong Road property which was her principal place of residence.  Furthermore, that right clearly afforded her reasonable security of tenure in the home as there was no legal basis to exclude her from residing there.  It follows that I must find Ms Warschauer was a homeowner for the purposes of the Act during the relevant periods described by the Secretary.

22.In fact, Ms Warschauer is properly described as an ineligible homeowner because she does not fall within the exemptions set out in s 13(1) of the Act.   It follows that Ms Warschauer, being an ineligible homeowner, was not a person qualified to receive rent assistance during the periods described by the Secretary. 

DEBT DUE TO THE COMMONWEALTH

23.Part 5.2 of Chapter 5 of the Act deals with amounts recoverable by the Commonwealth.  In particular, s 1223 of the Act deals with debts arising from, amongst other things, overpayment.  It provides:

1223Debts 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.

24.The rent assistance received by Ms Warschauer between 1 July 2004 and 25 January 2010 clearly bestowed a benefit on Ms Warschauer to which she was not entitled.  That is because I have found that she was an ineligible homeowner for the purposes of the Act.  It necessarily follows that to the extent that Ms Warschauer was overpaid for the period I have referred to above, those monies amount to a debt due to the Commonwealth by Ms Warschauer. 

WAIVER OF DEBT DUE TO ADMINISTRATIVE ERROR

25.Although Ms Warschauer did not expressly refer to the waiver of the debt provisions in the Act, there was a suggestion by her that Centrelink had provided her with incorrect or misleading and inappropriate advice.  Section 1237A(1) of the Act provides:

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.

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).

26.There was no objective evidence before me of any error made by Centrelink or any of its officers which caused Ms Warschauer to be paid rent assistance to which she was not entitled.  In fact, the evidence clearly points to the fact that the overpayment was due to Ms Warschauer’s insistence that she was not a homeowner, in spite of objective evidence to the contrary.  For that reason, no right to a waiver under s 1237A arises.

WAIVER IN SPECIAL CIRCUMSTANCES

27.Section 1237AAD of the Act provides:

1237AADWaiver 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.

Note 1:Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

Note 2:This section has effect subject to section 1237AAE in relation to an assurance of support debt.

28.First limb of s 1237AAD makes it clear that waiver in special circumstances does not apply where a person has knowingly made a false statement or false representation.  The term knowingly is not defined in the Act.  Deputy President S A Forgie in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435 said, after referring to various cases decided by the Federal Court of Australia and the Supreme Court of New South Wales, at 445:

(48)There is nothing in s 1237AAD which suggests that the word “knowingly” should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.

29.

In Ms Warschauer’s circumstances, given that she agreed that the signature on the Transfer of Land relating to the 711 Orrong Road property was her signature, there can be no doubt whatsoever that she was aware that the property had been transferred from Fredelma Nominees Pty Ltd to her, her mother and brother as joint proprietors.  The document which she signed expressly stated so.  Despite

Ms Warschauer’s insistence that she always thought that property was the family home and that she paid rent to her mother because she thought it was the proper thing to do, that statement simply makes no sense in light of her knowledge that she was a joint proprietor of the 711 Orrong Road property.  Furthermore, there was no evidence of a rental agreement or of any payment other than Ms Warschauer making a self-serving statement to that effect.  The Module R document which she lodged with Centrelink is plainly false in the sense that Ms Warschauer had actual knowledge that it was incorrect at the time she made it.  The numerous electronic documents retained by Centrelink where she updated her circumstances also describe her as a non‑homeowner.  All of these declarations were false.  Therefore, I find that s 1237AAD cannot apply to Ms Warschauer’s circumstances, despite the many illnesses she has described she suffers from.  They do not excuse her from making false statements or false representations to Centrelink.

CONCLUSION

30.Despite Ms Warschauer’s claims to the contrary, I have found that she was a homeowner for the purposes of the Act between 1 July 2004 and 25 January 2010.  During that period, she had at all times held a legal and equitable interest in property at 711 Orrong Road, Toorak as a joint proprietor.  Those rights gave her reasonable security of tenure in the home.  She did not qualify for rent assistance because she was an ineligible homeowner and therefore did not satisfy the common requirements set out in s 1070C of the Act.  Therefore, Ms Warschauer was not entitled to receive rent assistance during the period in question.

31.To the extent that Ms Warschauer received rent assistance payments from Centrelink to which she was not entitled, those overpayments constituted a debt owed to the Commonwealth.

32.In view of my findings regarding ownership of the 711 Orrong Road property, and the statements Ms Warschauer made to Centrelink both in writing and as recorded by Centrelink in its electronic database, I have found that Ms Warschauer’s debt should not be waived.  It follows that the decision made by the SSAT on 4 August 2010 was correct.  I affirm that decision.

I certify that the thirty two [32] preceding paragraphs are a true copy of the reasons for the decision herein of
Senior Member Egon Fice

Signed: .........[sgd].....................................................................
  E. Montalto, Associate

Dates of Hearing                   15 April 2011
Date of Decision                   8 June 2011

Representative for the Applicant               Self Represented, appearance by telephone

Representative for the Respondent          T. Noonan, Centrelink Advocacy Branch