WHARTON and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 162

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 162

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/2711

GENERAL ADMINISTRATIVE  DIVISION		)
Re		KEVIN WHARTON

Applicant

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

Respondent

DECISION

Tribunal Mr R G Kenny, Senior Member

Date9 March 2010

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.................[Sgd].............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Benefits and entitlements – Disability support pension – House treated as principal home (exempt asset) – Majority of time spent living on boat - Boat to be treated as principal home – Overpayment of disability support pension - Debt due to the Commonwealth – No basis for writing off debt – No basis for waiver of debt – Decision affirmed

Social Security Act 1991 (Cth), ss 11, 1064, 1118, 1223, 1236, 1237A, 1237AAD

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82
Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 12 ALD 416; 6 AAR 259

REASONS FOR DECISION

9 March 2010 Mr R G Kenny, Senior Member    

BACKGROUND

1.      From 9 July 2004, Kevin Wharton was in receipt of the disability support pension which is a form of income support payable in accordance with the terms of the Social Security Act 1991 (Cth) (“the Act”). On 9 March 2009, a Centrelink officer determined that Mr Wharton had been overpaid in relation to his pension entitlements in the amount of $37,669.89 during the period from 9 July 2004 until 3 February 2009 (“the overpayment period”). It was also determined that this was a debt owed by Mr Wharton to the Commonwealth. The decision was affirmed by a Centrelink authorised review officer on 1 April 2009 and, in turn, by the Social Security Appeals Tribunal (“the SSAT”) on 25 May 2009.

ISSUES AND SUBMISSIONS

2.      It is common ground that, at all material times, Mr Wharton was qualified for the disability support pension and that the rate of those payments was dependent on his income and the value of his assets.  During the overpayment period, Mr Wharton owned a house at 11 Byron Street, Burnett Heads (the house) which was treated, in calculating the rate of Mr Wharton’s pension, as an exempt asset by Centrelink on the basis that it was his principal place of residence.  In the decision under review, the house was reassessed as being a non-exempt asset for which Mr Wharton received rent which was not declared by him as a component of his income.  Centrelink determined that, although Mr Wharton spent time at the house, his principal place of residence was “Lochiel”, a boat (the boat) which was owned by Mr Wharton and was undergoing a refit and repairs by him during the overpayment period. 

3.      The first issue for determination is whether the house was Mr Wharton’s principal place of residence during the overpayment period.  A second issue is whether Centrelink adopted the appropriate value of the house in assessing the rate of Mr Wharton’s disability support pension.

4.      Mr Wharton submitted that the boat was frequently uninhabitable because of the extensive work that was required and that, in those periods, he resided in the house.  He also submitted that the house had been overvalued by Centrelink in calculating his overpayment of disability support pension.

5.      Mr Guthrie submitted that Mr Wharton resided an average of five days per week on the boat and that, therefore, it, and not the house, was his principal place of residence.  Further, he submitted that, when the asset value from time to time of the house was taken into account as well as the rental income from it, Mr Wharton was entitled to receive disability support pension in the amount of $24,956.71 rather than the amount of $62,626.60 which he was paid in the overpayment period.  He submitted that the difference of $37,669.89 was a debt owed by Mr Wharton to the Commonwealth.  Mr Guthrie submitted that the only valuations of the house were those provided by the Australian Valuation Office (AVO) and that, in the absence of other evidence, those valuations should be accepted.  Mr Guthrie submitted that there was no basis for waiving or writing off the debt. 

EVIDENCE

Mr Wharton

6.      Mr Wharton purchased the house in July 2004 for $180,000.  At that time, it was tenanted by Mark Cawthray.  He entered into an agreement with Mr Cawthray whereby, in return for reduced rent to be paid by Mr Cawthray, Mr Wharton would be able to use part of a shed on the property for storage and would have a bedroom in the house allocated to him for his sole use.  That bedroom was furnished by Mr Wharton and the remainder of the house was furnished and maintained by Mr Cawthray.  Mr Wharton was responsible for payment of rates and insurance while Mr Cawthray was responsible for telephone and power expenses and with maintenance of the grounds.  Neither Mr Wharton nor Mr Cawthray is partnered.

7.      The boat required substantial renovation but was self-contained at the Burnett Heads Marina where it was moored and underwent maintenance.  Mr Wharton would stay at the house when it suited him and without pre-arrangement with Mr Cawthray.  He confirmed earlier statements that he has made to Centrelink and the SSAT that he lived on the boat for an average of 5 days per week during the overpayment period.  

8.      Mr Wharton does not dispute the calculation of the debt alleged against him by Centrelink and, indeed, has repaid the full amount.  He continues to experience difficulties with his spinal and associated conditions and is currently still in receipt of his full disability support pension in relation to these.

Mark Cawthray 

9.      Mr Cawthray gave evidence.  He confirmed the terms of the agreement he had with Mr Wharton concerning reduced rent in exchange for Mr Wharton’s use of storage facility on the property and the use of a bedroom at his own discretion.  He was not able to give a precise account of the extent that Mr Wharton stayed at the house.  In part, this was because Mr Cawthray was regularly absent from the house for his own work purposes.  However, he considered that the estimate of an average of 5 days per week by Mr Wharton on the boat, rather than at the house, was correct.

Other evidence 

10.     In evidence were statements from Tony Koufos, proprietor of the Burnett Heads Marina.  On 13 February 2009, he wrote that, to his knowledge, Mr Wharton resided on the boat at the Marina rather than in his house.  In a later statement, he wrote that his opinion had been based on his observations of Mr Wharton’s activities at the Marina.

11.     Also in evidence was a valuation report concerning the house completed by the AVO.  It listed annual valuations from May 2004 to May 2008.  These increased from $180,000 to $250,000. 

12.     Centrelink’s calculations of the amount of disability support pension which were paid to Mr Wharton, the amounts that he should have been paid and the difference between the two amounts were also in evidence.

CONSIDERATION 

13. It is not disputed that Mr Wharton is not a member of a couple or that he is the owner of both the boat and the house. The rate of payment of the disability support pension is determined using the rate calculator at the end of s 1064 of the Act. Under s 11 of the Act, the term “asset” includes property and I am satisfied that this includes both the house and the boat. In evidence were extracts from the Guide to the Social Security Law (the Guide) and associated Centrelink “e-references”. These provide assistance to those who administer the Act. The Tribunal, whilst not bound to apply those policy guidelines may do so and, indeed, will usually apply them unless there are cogent reasons in a particular case for not doing so[1].  In this case, there is no material before me to indicate that they should not be applied.  In e‑reference 108.07450[2], a boat is included in the concept of a home.  In para 4.6.3.30 of the Guide, the principal home is described as the one in which the person “lives for the greatest amount of time each year”[3]. 

[1] See Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409; Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 12 ALD 416; 6 AAR 259 at 267; and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.

[2] See T3/45.

[3] See T3/46.

14. Mr Wharton did not spend all of his time on the boat because of the arrangement he had with Mr Cawthray to use the facilities at the house. However, his evidence is that, during the overpayment period, he spent an average of 5 days per week living on the boat. That is consistent with the evidence of Mr Cawthray and Mr Koufos. I am satisfied that Mr Wharton did live for an average of 5 days per week on the boat during the overpayment period and that this was his principal home during that time. The Act provides that the value of a person’s interest in his principal home is exempted from the assets test[4].  In Mr Wharton’s case, this was not the house and it follows that the house was not an exempt asset during the overpayment period and that its value and the rental income it generated were to be taken into account when calculating the rate of Mr Wharton’s disability support pension.

[4] See s 1118 of the Act.

15.     I have noted Mr Wharton’s objection to the valuation of the house adopted by Centrelink.  This was the valuation given by the AVO.  In the absence of any alternative valuation to that provided by the AVO, I am satisfied that the AVO valuation was appropriately adopted by Centrelink. 

16. Mr Wharton has not challenged the debt calculations provided by Centrelink and I am satisfied that he was paid $37,669.89 in excess of his entitlement during the overpayment period. Under s 1223 of the Act, this is a debt owed by him to the Commonwealth.

Writing off or waiving the debt  

17. Provision is made for a debt to be written off under s 1236 of the Act. However, as the debt has been repaid by Mr Wharton, this does not arise in this matter. A debt may be waived under s 1237A of the Act but only where it arose solely from administrative error made by the Commonwealth. That is not the situation in this matter. A debt may also be waived under s 1237AAD of the Act where there are “special circumstances” to justify doing so. In Groth v Secretary, Department of Social Security[5], Keifel J observed that special circumstances:

would require something to distinguish ... [the] ... 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.

[5] (1995) 40 ALD 541at 545.

18. Mr Wharton advised that there were no special circumstances in his case on which he wished to rely. On the evidence before me, I am satisfied that this concession was properly made and that the debt should not be waived under s 1237AAD of the Act.

DECISION

19.The decision under review is affirmed.

I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member

Signed: .............[Sgd]................................................................
              Kate Slack, Research Associate

Date/s of Hearing  23 February 2010
Date of Decision  9 March 2010
Applicant was self-represented
Solicitor for the Respondent     Joe Guthrie, departmental advocate