White and Secretary, Department of Social Services (Social services second review)

White and Secretary, Department of Social Services (Social services second review) [2021] AATA 672 (29 March 2021)
Division:GENERAL DIVISION
File Number: 2020/2275
Re:Mr Paul White
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Ms A E Burke AO Member
Date:29 March 2021
Place:Melbourne

The Tribunal affirms the decision under review.
..................................[sgd]......................................
Ms A E Burke AO Member
Catchwords
SOCIAL SECURITY – Disability support pension - overpayment – undeclared assets - debt due to the Commonwealth – whether recovery of debt should be written off or waived – debt not attributable solely to error made by Centrelink –whether special circumstances – decision under review affirmed.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
Re Anderson and Secretary, Department of Families and Community Services [2002] 69 ALD 494
Re Callaghan and Secretary Department of Social Security [1996] 45 ALD 435
Groth and Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541
Kulakov and Secretary, Department of Social Security [1991] AATA 668
Ryde v Secretary, Department of Family and Community Services [2005] FCA 86
Secretary, Department of Social Security v Coralie Hales [1998] FCA 219
Secondary Materials
Guide to Social Security Law
REASONS FOR DECISION
Ms A E Burke AO Member

Mr White (the Applicant) sought a second-tier review of the decision made by the Secretary of the Department of Social Services (the Respondent) that he had a Disability Support Pension (DSP) debt of $45,130.76 for the period from 26 January 2015 to 17 April 2018.
On 26 September 2018, the Department of Human Services (Centrelink) sought to raise and recover a debt of $34,970.74 against Mr White on the basis that he had been paid at a rate higher than he was entitled to for the period, 5 December 2014 to 17 April 2018, as his assets were not taken into account in assessing his rate of DSP. Mr White requested a review of the decision and on review, the Authorised Review Officer (ARO) increased the debt to $45,130.76 for the period 28 January 2015 to 17 April 2018 based on a higher valuer of his Melbourne property.
Given Mr White’s terminal illness the application was heard by consent on the papers on 22 February 2021. Mr White was represented by his sister Ms Danielle Wren. Mr Brian Sparkes, Seconded Lawyer in the Litigation Branch of Services Australia, appeared for the Respondent.
BACKGROUND
Mr White is 56 years of age and is suffering a terminal illness. Mr White had to cease work as a self-employed Barrister on 26 June 2014 due to the complex nature of his serious illness. At the time of his DSP application, Mr White was not living in his principal place of residence, as he was in need of constant care. On 5 November 2014, Mr White was granted emergency access to the DSP due to financial hardship and the ordinary waiting period was waived. Subsequently, Mr White had been living between his principle place of residence in Melbourne and his property at Kyneton to be close to his family who have been providing care during this period.
Mr White was again hospitalized for his health condition as he had further deteriorated. His family were briefed by treating Doctors and subsequently Mr White was moved to a hospice with a life expectance of six to nine months.
On 28 October 2019, a departmental Authorised Review Officer (ARO) reviewed the decision to raise and recover a DSP debt of $34,970.74 stating:
As we discussed during our conversation on 1 October 2019, I have decided to change the decision.
Your entitlement to Disability Support Pension was recalculated by attributing the Bendigo Bank mortgage over your principle place of residence at Bouverie Street and your investment property at Market Street. This had the effect of increasing your assessable assets and the debt amount subsequently increased to $45, 130.76 for the period 28 January 2015 to 17 April 2018.
Findings of Fact
After careful consideration of the evidence, I have made these key findings:
You received Disability Support Pension from 5 November 2014 to 18 April 2018 when your Disability Support Pension was cancelled.
On 21 November 2014 you submitted a MOD R real-estate details questionnaire in relation to your new Disability Support Pension claim. At question 5 you advised you only owned 1 property located at Unit 71157 Bouverie Street, Carlton and it was valued at $475,000. According to our records this has been recorded as your principle place of residence since 5 November 2014.
On 22 February 2018 the department commenced a review of your Disability Support Pension following a data match that identified the following:
On 5 December 2014 you purchased a property at, Kyneton for $480,000 and you were the sole owner.
On 31 August 2004 you purchased, Melbourne for $322,500 and you were the sole owner.
According to our records you did not report these properties to the department. On 8 March 2019 you were sent a letter requesting details of your real-estate holdings.
On 29 March 2018 you contacted the department and submitted an income and assets update. You advised Kyneton was purchased on 5 December 2014. It is valued at $480,000. There is no mortgage or rental income from this property.
On 27 August 2018 you returned a questionnaire issued by the department advising that as of 5 November 2014 -, Melbourne from was valued at $450,000 with a mortgage of $330,000. As a result the department assessed $120,000 equity as your asset.
The department determined that as of 5 December 2014 your total assets were $620,000. Calculations were based on the following:
(i)Carlton which is your principle place of residence was exempt from the asset test.
(ii)You had $600,000 equity on the other two properties.
(iii)$5000 in other assets - contents and vehicle.
(iv)$15,000 in other financial assets such as bank deposits.
As a result on 25 September 2018 you were asked to repay a Disability Support Pension debt of $34,970.74 for the period 5 December 2014 to 17 April 2018 (debt number C8375830).
On 4 July 2019 you requested a review of this decision.
Your Bendigo Bank Mortgage is held over Market Street and Bouverie Street and it has been attributed accordingly. This resulted in the assessed asset value of Market Street increasing.
The debt was recalculated on 16 October 2019 and increased to $45,130.76 for the period 28 January 2015 to 17 April 2018.
In the period 28 January 2015 to 17 April 2018 you received Disability Support pension totalling $79,282.92.
You were entitled to receive $34, 152.16.
……………..
Subject to review the department identified that you had not correctly reported your financial investments and subsequent updates resulted in the debt being raised.
………………
The debt was due to you not reporting your assets correctly. As it was not due solely to an error by the department, recovery of the debt cannot be waived.
A debt may also be waived if there are special circumstances that make it desirable to waive. Circumstances need to be sufficiently unusual or uncommon to be considered special.
I am not satisfied there are special circumstances that existed at this time that make waiving the debt desirable.
This means you have a debt of $45,130.76 that must be repaid.
On 13 March 2020, the Social Services and Child Support Division of the Tribunal

(first tier review) (‘AAT1’) affirmed the ARO’s decision. It found that:
There is no dispute that Mr White owns the property at, Carlton in which he lives, and this is his principal home, and as such the value of his interest in the property is disregarded for the purpose of the assets test. Mr White does not dispute the value of $475,000 which has been assigned by Centrelink.
There is no dispute that Mr White also owns an investment property at Melbourne which he purchased on 31 August 2004 for $322,500. Mr White accepts the value of $450,000 which has been assigned to this property.
Subsection 1 121 (1) of the Act then sets out that if there is a charge or encumbrance over a particular asset of the person, then the value of that asset is to be reduced by the value of the charge or encumbrance. In Mr White's case the tribunal has found he has a line of credit with the Bendigo Bank which is secured by mortgage over his Carlton and Melbourne properties.
Subsection 1 121 (4) provides:
1121 (4) If:
(a)there is a charge or encumbrance over assets; and
(b)the charge does not arise under section 1138; and
(c)the assets consist of assets whose value is to be disregarded under section 1 1 18 and other assets;
the amount to be deducted under subsection (1) is:
value of the charge or encumbrance x value of the other assets
value of all the assets
This means that the line of credit secured against Mr White's principal home as well as his investment property at Melbourne must be apportioned across these two properties to then determine the amounts that can be deducted from the asset values of the investment property. The tribunal has found the two properties are valued at $475,000 (Carlton) and $450,000 (Melbourne), a total of $925,000. The value of the line of credit has varied since November 2014, when Mr White was granted disability support pension.
The authorised review officer summarised the mortgage attribution for the Market Street property which the tribunal presented to Mr White; he did not dispute that the calculation applied the formula in subsection 1 121 (4) of the Act.
The following table summarises the level of the line of credit and the amount attributed to the Melbourne property and therefore the asset value as assessed by Centrelink.

Date

Mortgage Bendigo Bank

Mortgage amount attributed to Melbourne

Asset value - $450,000 less arrtributed mortgage amount.

5 November 2014

$396,944

$193,108

$256,892

1 July 2015

$533,474

$269,258

$180,742

1 July 2016

$556,041

$270,506

$179,494

1 July 2017

$561,802

$273,309

$176,691

1 July 2018

$577,284

$280,841

$169,159

1 July 2019

$590,073

$284,063

$165,937

The tribunal noted an arithmetical error in relation to the calculation of 1 June 2019, which was calculated at $284,063, whereas the correct figure is $287,063. Therefore the asset value attributed to Melbourne at 1 June 2019 should be $162,937 rather than $165,937. However this is outside the debt period and the effect of the error does not have a material bearing on the debt before the tribunal. The tribunal has reviewed the Centrelink calculations, and other than the period 1 June 2019, accepts Centrelink has assessed the value of Melbourne in line with subsection 1121 (4) of the Act.
Mr White told the tribunal he is the owner on title for the property at, Kyneton He told the tribunal that his family comes from Kyneton and after his health problems they urged him to move to the Kyneton area so as he can be closer to family support. With this in mind they purchased the Kyneton property which he could use for his purposes alone. The intention was that he could live in the property and ultimately he could derive value from the property whether that is as an asset or income. Mr White told the tribunal he and his family are contemplating selling this property and to use the proceeds to pay down his Bendigo Bank line of credit and the Centrelink debt.
Mr White told the tribunal that his family had taken advice from the family solicitor in 2014 and the solicitor recommended they set up a special disability trust and for the Kyneton and Melbourne properties to be transferred into the trust. He understood this is what his family wanted to arrange, so in 2014 when he contacted Centrelink about the disability support pension he discussed this arrangement with the Centrelink officer at that time, a person named … in the Abbotsford office, and he was advised that he did not have to disclose the Melbourne and Kyneton properties as they would be transferred into a special disability trust and therefore the properties do not have to be disclosed as part of his disability support pension claim. Mr White told the tribunal he recalls the discussion with the Centrelink officer but is unable to point the tribunal to any other specific evidence in relation to this discussion. Mr White therefore did not disclose the two properties at the time of his application, and did not do so afterwards, until the issue was identified as part of the current debt proceedings.
Mr White told the tribunal the Kyneton property was subsequently acquired by his family and the title was in his name alone. There is no encumbrance over this property, and he does not dispute the value of $480,000 placed on this property by Centrelink. Mr White told the tribunal that a special disability trust was not formally set up as was discussed with his family and both the Kyneton and Melbourne properties are in his name alone.
The authorised review officer listed Mr White's overall assets as follows:

Date

Bank savings

Other assets

Kyneton

Melbourne

Total

5 November 2014

$0

$500

$0

$256,892

$257,392

5 December 2014

$0

$500

$480,000

$256,892

$737,392

1 July 2015

$0

$500

$480,000

$180,742

$661,242

1 July 2016

$0

$500

$480,000

$179,494

$659,994

1 July 2017

$0

%500

$480,000

$176,739

$657,239

7 March 2018

$15,000

$5,000

$480,000

$176,739

$676,739

The tribunal has noted Mr White's submissions about the intention of his family to establish a special disability trust, and the properties at Kyneton and Market Street were to be transferred into such a trust once it was established. However there is no evidence that such a trust has ever been established and both properties at Sturt Street and Market Street have been in Mr White's name alone, and continue to be. The tribunal accepts both the Market Street and Sturt Street properties are to be included in Mr White's real estate assets. The value of the Sturt Street property is $480,000, and the value of the Market Street property is as outlined in paragraphs 21 and 22 above.
Does Mr White owe a debt to the Commonwealth?
The Centrelink material includes a MutliCal - Centrelink Debt Calculator which provides a detailed breakdown of the debt calculation with summary information of Mr White's assets and income which were applied to the calculation. This shows that Mr White was paid disability support pension in the amount of $79,282.92 in the period 28 January 2015, whereas taking into account his correct assets and income, he was entitled to $34,152.16. He was therefore overpaid $45, 130.76.
Section 1223 of the Act sets out that a debt to the Commonwealth will arise when a person obtains the benefit of a social security payment but was not entitled, for any reason, to that payment. Due to the level of his assets, Mr White was entitled to a lesser amount of the disability support pension than the amount paid to him in the relevant period. As a result Mr White incurred a debt to the Commonwealth.
The tribunal reviewed and accepts the Centrelink debt calculations which show that Mr White was paid in excess of his entitlement in the amount of $45,130.76 and that this overpayment constitutes a debt owed to the Commonwealth by Mr White.
……
The tribunal considered the evidence before it in relation to Mr White's circumstances carefully, including his personal and financial circumstances, his ongoing health issues and the circumstances of how the debt arose. However, having regard to the decisions of the Federal Court and the AAT referred to above, Mr White's circumstances are not sufficiently out of the ordinary to make them special circumstances. Accordingly, the tribunal decided that it was not appropriate to waive the disability support pension debt under section 1237AAD of the Act.

On 20 April 2020, Mr White sought a review of the AAT1 decision by this division of the Tribunal, as he disagreed with the decision made, stating:
Decision did not provide at all for the calculation errors by Centrelink — namely, it adopted the incorrect debt level of $330,00 against Melbourne which the majority of the 14 people I dealt with at Centrelink for the ARO internal review informed me would be more than sufficient to have the debt waived.
Accordingly, I held a very reasonable expectation that the final ARO decision would be for the debt to be waived. Instead, the final Centrelink ARO, who I had nothing to do with throughout, not only admitted its errors but went back and increased the Centrelink debt I owe by over $10,000 on the basis that I had not acted in good faith. The AAT 1st Review reasoned & found that I did act in good faith (see, e.g., para. 41) and should then have decided that Centrelink waive the debt just as I had been assured by several Centrelink staff that it would. At the very least, waived the $10,000-plus increase in the debt owed by me.
Please also note that this is in addition to another calculation error noted in the 1st AAT Review Decision at para. 21.
Decision did not address my submission that Centrelink erred in originally stopping my payments without notice in April 2018 and then, crucially, took in excess of 6 months to arrive at a debt amount in late October 2018 which they later changed and re-calculated again - It is my clear understanding, at the very least of all these administrative errors, gaps, multiple staff changes & delays, that Centrelink is required to have acted within 6 weeks to stipulate that a debt exists, not 6-plus months, and certainly not to go on and change the calculations anyway, years after the event. I say that this was indeed an “unfair or harsh outcome” per para. 31. Especially in a situation where it has been established that I received those initial payments in good faith.
Decision, above all else, did not give due and proper weight to the "special circumstances" of my situation.
First, my severe financial hardship, which the 1st AAT Review Decision did fully accept (see, e.g., para. 48), although stating that it takes something more on top of this under the Act.
Therefore, second, I say that the very sensitive situation with my health prognosis was given scant regard and did not take into account the perilous medical (life) prognosis I have. Life expectancy is a short-to-medium range estimate of 1.5 to 5 years, maximum. This should have constituted the "exceptional" or "distinguishes the (my) case from the ordinary or usual" circumstances that the Member's cited cases require. To be fair to the Member, he seemed very narrowly focused on strictly financial considerations only.
Third, I say the Member erred in not accepting the fact that, substantively, all of my mortgage loan is solely attributable to the Melbourne property and that my principal residence at Carlton is on the mortgage as a side-guarantee only, no debt is due to it and never has been. Moreover, in excess of $120,000 was compulsorily spent on capital works to the Melbourne building of which my unit is only one of 50. An old building, it had major structural flaws which I had no choice but to contribute to raising my Bendigo Bank mortgage way above its limit. Then there is the matter of Kyneton which was purchased on my behalf by my family for my care & having supposed to be placed in a Disability Trust as the Member accepted. I accept that the title was placed in my name, however there should be considerable weight given to the fact that I contributed nothing to it as an asset in name only. It really isn't mine to do with as I please. It is only there in Kyneton, where all my family are, as a very modest base in the country town for me to be cared for in this last period.
For each and/ or all these reasons, I submit that the Decision of the Tribunal in its 1st Review was wrong to have not given due consideration to these factors, and therefore the Centrelink debt should be waived in full.
ISSUES IN CONTENTION

The Tribunal needs to consider the following relevant issues:
(a)whether Mr White was overpaid DSP;
(b)if so, is the debt recoverable; and if yes
(c)should the debt be waived due to administrative error pursuant to section 1237A of the Social Security Act 1991 ("the Act"); or
(d)whether special circumstances exist such that the debt should be waived pursuant to section 1237AAD of the Act.
RELEVANT LEGISLATION
DSP is an income support payment for people who are unable to work due to permanent physical, intellectual or psychiatric impairment. It is granted on the basis of an individual meeting certain requirements, both medical and non-medical. As with all social security payments, it is granted on the premise that an individual is unable to support themselves via any other means. The Act provides the mechanism for calculating the rate of pension payable to an individual, taking into consideration their income and assets.
Pursuant to section 55 of the Act, a person who is at least 21 years of age and not permanently blind, will have their rate of DSP calculated using the ‘Pension Rate Calculator A’ at the end of s 1064 of the Act. A person’s income and assets are taken into account in calculating the rate of DSP.
Section 1062 of the Act outline steps in rate calculation
(1) The following are the usual steps in the rate calculation process:
(a) start with a maximum basic rate;
(b) add any additional amounts that are subject to income or assets testing;
(c) apply the income and assets tests;
(d) add any additional amounts that are not subject to income or assets testing.
(2) The overall rate calculation process is usually described in an early Module of the relevant Rate Calculator.
Section 1064-A1 describes how the daily rate of the DSP is calculated, including at step 9 that the rate will be reduced by an individual’s assets:
The rate of pension is a daily rate. That rate is worked out by dividing the annual rate calculated according to this Rate Calculator by 364 (fortnightly rates are provided for information only).
Method statement
Step 1.   Work out the person's maximum basic rate using MODULE B below.
Step 1A. Work out the amount of pension supplement using Module BA below.
Step 1B. Work out the energy supplement (if any) using Module C below.
Step 3.   Work out the amount per year (if any) for rent assistance in accordance with paragraph 1070A(b).
Step 4.   Add up the amounts obtained in Steps 1, 1A, 1B and 3: the result is called the maximum payment rate.
Step 5.   Apply the ordinary income test using MODULE E below to work out the income reduction.
Note:            Module F contains provisions that may apply to working out the ordinary income of a person, and the ordinary income of a partner of the person, for the purposes of disability support pension.
Step 8.   Take the income reduction away from the maximum payment rate: the result is called the income reduced rate.
Step 9.   Apply the assets test using MODULE G below to work out the reduction for assets.
Step 10. Take the reduction for assets away from the maximum payment rate: the result is called the assets reduced rate.
Step 11. Compare the income reduced rate and the assets reduced rate: the lower of the 2 rates, or the income reduced rate if the rates are equal, is the provisional annual payment rate.
Step 12. The rate of pension is the amount obtained by:
(a)subtracting from the provisional annual payment rate any special employment advance deduction (see Part 3.16B); and
(b)if there is any amount remaining, subtracting from that amount any advance payment deduction (see Part 3.16A); and
(c)adding any amount payable by way of remote area allowance (see Module H).
Section 1118 identifies certain assets, including a person’s principal place of residence which are 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;
Section 1121 of the Act outlines the 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.
Section 68(2)(a) of the Social Security (Administration) Act 1999 (‘Administration Act’) empowers the Secretary to give a notice to a person to whom a social security payment (such as a DSP payment) is being paid, requiring that person to inform the Department (Centrelink) if a specified event or change of circumstances occurs or is likely to occur. Section 72 of the Administration Act requires the notice be given in writing, personally, or by post, or in any other manner approved by the Secretary; specifies how the information is to be given by the person to the Department; and specifies when the information is to be given. Section 72(3)(b) of the Administration Act provides that a person must give the information required to be given under the section 68 notice within 14 days after the day on which the event or change of circumstances occurs; or the day on which the person becomes aware that the event or change of circumstances is likely to occur.
Section 1223 of the Act outlines how debts arise 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.
Section 1237A(1) of the Act provides grounds for the decision-maker to waive recovery of any part of the debt. The Act provides that the decision-maker must waive a debt if it was attributable solely to an administrative error made by the Commonwealth and the debtor received the payments in good faith.
Section 1236 (1A) of the Act allows the decision-maker to write off a debt 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.
Section 1237AAD of the Act allows the decision-maker to waive all or part of the debt if they are 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 TRIBUNAL’S CONSIDERATION AND FINDINGS
EVIDENCE BEFORE THE TRIBUNAL
The evidence before the Tribunal included documents provided by the Respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975, referred to as the

“T documents”. Mr White provided a statement and supporting medical evidence.
Centrelink records indicated that:
·On 11 November 2014, Mr White applied for the DSP stating on his application form he was living in lodgings and paying board.
·On 21 November 2014, Mr White lodged a Real Estate details form with Centrelink in which he advised he owned one property at Carlton, which he had purchased in 1997.
·On 5 December 2014, Mr White purchased a property in Kyneton, there was no mortgage or rental income associated with this property.
·On 22 February 2018, Centrelink reported that matched data from the state government had determined Mr White owned a property in Kyneton which he had not declared to Centrelink.
·On 31 January 2018, Centrelink reported that matched data from the state government had determined Mr White owned a property in Melbourne, purchased in 2004 which he had not declared to Centrelink.
·On 27 February 2020, Mr White confirmed to Centrelink ownership of his current residential address in Carlton stating that he owned the property outright and paid no rent; owned the property at Kyneton where he spent significant time receiving care from family and held a property in Melbourne over which he had a mortgage.
On 21 February 2021 Dr Robert Power, Mr White’s general practitioner advised the Tribunal:
Mr White’s original carcinomas of the bladder, prostrate, bowel and kidney have broadly metastasised with no prospect of recovery.
He has moved to a pleasant hospice with a respectful life expectancy of 6 to 9 months.
With this regrettable prognosis at front of mind, for Paul’s peace and his struggling family’s comfort, we request that this debt owed and paid be waived please.
CONSIDERATION
The Respondent contented Mr White had not disclosed the ownership of his rental property in Melbourne at the time he claimed the DSP, nor did he advise Centrelink that he had purchased a property in Kyneton in 2014.
The Respondent contended that the value of Mr White’s Melbourne property (taking into account the proportional value of the loan over this property) and the Kyneton property exceed the asset test threshold for the full rate of DSP which Mr White was paid. As a consequence, Mr White was overpaid DSP and has a recoverable debt to the Commonwealth.
The Respondent contended there was no dispute about the value of the properties, nor the calculation of Mr White’s debt.
Mr White disputed the amount of his debt, arguing that Centrelink had not appropriately considered the loan over his properties when calculating his debt and believed that the increase of $10,000 applied by the ARO should be waived.
Mr White argued he had been advised by Centrelink he was not required to disclose his properties in Melbourne or Kyneton, as these assets were to be transferred into a special disability trust. Mr White argued he had been advised that the properties would therefore not have to be disclosed as part of his DSP claim.
The Tribunal found that Mr White had been overpaid DSP as he had failed to advise Centrelink of the ownership of his properties in Melbourne and Kyneton. The Tribunal finds that whilst Mr White believed a disability trust was to be established by his family, into which his properties were to be transferred had never taken place. There was no evidence to support Mr White’s assertion the he had relied upon Centrelink advice that he had no need to disclose these properties. The Tribunal could find no evidence that this advice had been provided to Mr White by Centrelink. The Tribunal also noted that this advice would be contrary to the characteristics of special disability trusts as contained in the Social Security Guide, as it clearly states that a means test concession can only be grated if a trust legally exists. The Tribunal noted the Social Security guide provided:
Before the means test concessions can be granted, a trust must legally exist. In general, for a trust to then be considered a 'special disability trust', it must meet the following requirements:
·the principal beneficiary (also known as beneficiary) must have a severe disability,
·have only one principal beneficiary (i.e. the person for whom the trust is established),
·the primary purpose must be to provide for the care and accommodation needs of the principal beneficiary,
·have a trust deed, or be established via a will, that contains all of the compulsory clauses set out in the model trust deed (for trusts established before 20 September 2006, the trustee can be issued with a waiver notice for certain requirements),
·have more than one trustee OR a professional trustee,
·comply with the legislative requirements,
·provide annual financial statements and a statutory declaration to Centrelink or DVA, and
·conduct independent audits when required.
Additionally, at no stage did Mr White advise Centrelink of his actual assets in this period regardless of numerous notices advising him of his obligation to do so. The Tribunal relied upon the calculations of the ARO and found this was a correct calculation of the debt

Mr White owed the Commonwealth. Therefore, the Tribunal finds that Mr White owed a debt to the Commonwealth of $45,130.76 for the period 28 January 2015 to 17 April 2018 based on the determination of the ARO that Mr White had been overpaid DSP, as his assets exceeded the income test set out in the Act.
The Tribunal then explored if any of the debt was attributable to administrative error on the Respondent’s part; or if there were special circumstances to write off or waive all or part of the debt.
Writing-off the debt
The Tribunal, standing in the shoes of the Secretary, has the discretion to write-off the debt under s 1236 of the Act.
The Respondent submitted Dr White’s debt could not be written off under s1236 of the Act for the following reasons:
·the debt was not irrecoverable at law;
·Dr White had the capacity to repay the debt;
·recovery of the debt would not cause Dr White severe financial hardship; and
·his whereabouts were known, and it was cost-effective for the Commonwealth to recover the debt.
Based upon the evidence before it, the Tribunal finds it is not reasonable to write off the debt under section 1236 of the Act as Mr White does not meet the requirements of this section of the Act.
Waiver the debt on the basis of administrative error
Under section 1237A of the Act, the Tribunal has a discretion to waive the right to collect the debt, if it was due solely to administrative error and the payment was received in good faith.
The Respondent submitted that the debt had not arisen as a result of administrative error, and consequently section 1237A of the Act was not satisfied. The Respondent argued that the debt had arisen through Mr White’s failure to advise the department of his ownership of his Melbourne investment property and his second residence at Kyneton.
Mr White contended that the debt was solely attributable to a department error and should be waived in its entirety, as the majority of the 14 people he dealt with at Centrelink for the ARO internal review informed him the incorrect calculation of the Market Street property utilised in his debt calculation would be more than sufficient to have the debt waived.
The Respondent contented the absence of sole administrative error excluded Mr White’s ability to have the debt waivered under section 1237A of the Act and as such it was irrelevant whether or not he had received the overpayments in good faith.
Regardless of their contention that the matter of good faith did not apply, the Respondent for completeness outlined numerous determinations which have address the quite specific question of whether a payment was received in good faith.
The Tribunal relied upon the concise and often quoted finding in Falconer and SDSS (1996) 41 ALD 187 where the AAT determined:
Did the recipient know that the amount had been paid contrary to the Act? If a recipient knows or had reason to know that they were not entitled to a payment they received, they cannot be said to have received the payment in good faith.
The Tribunal considering all the evidence before it found that Mr White’s debt had arisen through his failure to advise Centrelink of his rental property in Melbourne and his second residence in Kyneton and cannot be waived under section 1237A(1) of the Act as it was not attributable solely to administrative error. As the Tribunal had found the debt cannot be waived on the basis of sole administrative error it did not address whether the money had been received in good faith.
Waiver of all or part of the debt in special circumstances
The Tribunal, standing in the shoes of the Secretary, also has the discretion to waive all or part of Mr White’s to debt in special circumstances. For the discretion to be exercised, all three conditions contained in subsections (a), (b), and (c) of section 1237AAD must be satisfied.
Knowingly
In order to waive part or all of the debt under section 1237AAD of the Act, the Tribunal must be satisfied that Mr White did not knowingly make a false representation to Centrelink or fail to comply with the relevant legislative provisions. The term ‘knowingly’ has not been defined in the Act, although it has been considered extensively by the Tribunal in similar circumstances.
In Re Callaghan and Secretary Department of Social Security [1996] 45 ALD 435, Deputy President Forgie said at [445]:
There is nothing in section 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 that he or she is failing or admitting to comply with a provision of the Act. The 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 of omission.
In Re Anderson and Secretary, Department of Families and Community Services [2002] 69 ALD 494, the Tribunal stated at [496]:
[…] it is open to the Tribunal to infer that the applicant has actual knowledge of his obligations under the act where there are opportunities for that knowledge to be gained when there are no obstacles to him acquiring knowledge. In this case, the applicant has had the opportunity to gain an understanding of his obligations under the Act to the provision of advice letters to him from the respondent. The Tribunal is not aware of any obstacles that would prevent Mr Anderson from understanding those letters and gaining that knowledge.
Mr White argued in his submission to the Tribunal he had not knowingly provided false information to Centrelink, and that the AAT1 had indeed found he did not deliberately or knowingly provide Centrelink with false information and had at all times acted in good faith.
The AAT1 stating:
Considering the first requirement, there is no evidence before the tribunal that Mr White deliberately or knowingly provided Centrelink with false information. The tribunal so finds. The tribunal therefore went on to consider the remainder of section 1237AAD of the Act.
The Respondent contended Mr White had failed to comply with the provisions of the Act as he had provided false information about ownership of two substantial properties, which he owned in addition to his principle place of residence. The Respondent argued Mr White had signed his DSP application form declaring he had provided information correctly and that he understood giving false or misleading information was a serious offence.
The Respondent therefore contended given these circumstances Mr White’s debt could not be waived as section 1237AAD of the Act was not enlivened. The Respondent argued

Mr White’s debt had risen as a direct consequence of his failure to comply with his obligations under social security law.
In Anderson and Secretary, Department of Families and Community Services [2002] 69 ALD 494 the Tribunal stated at [496]:
[…] It is open to the Tribunal to infer that the applicant has actual knowledge of his obligations under the act where there are opportunities for that knowledge to be gained when there are no obstacles to him acquiring knowledge. In this case, the applicant has had the opportunity to gain an understanding of his obligations under the Act to the provision of advice letters to him from the Respondent. The Tribunal is not aware of any obstacles that would prevent Mr Anderson from understanding those letters and gaining that knowledge.”

The Tribunal found it implausible that Mr White had been provided advice by Centrelink that he was not required to declare his assets to Centrelink when he applied for the DSP, as he understood his family were creating a disability trust for his care at the time of his application. Additionally, the Tribunal found it implausible that Mr White, a legally trained individual who had practised at the Victorian Bar was not aware of his obligations to declare all his assets when he signed a declaration to Centrelink omitting his substantial property holdings.
The Tribunal could well imagine at the time Mr White made his DSP application he was in a difficult situation, dealing with the significant complexities of his illness and living out of his home so he could receive care. During this period, Mr White’s ability to cope would have also been exacerbated by his mental health concerns and having to give up his career as a barrister. That this may have led Mr White to mistakenly complete his declaration of real estate forms. Whilst Mr White’s condition stabilised for a period allowing him to return to his primary residence, he also spent significant time at his Kyneton residence so he could be near his family. The Tribunal noted that during this period, Mr White had received numerous letters from Centrelink asking him to advise of any changes in his circumstances. At no stage did Mr White correct the record about the ownership of his properties until Centrelink commenced proceedings to recover his overpayment.
The Tribunal whilst not having received direct evidence from Mr White about his actual knowledge under the Act, could not concur with the AAT1 finding that there was no evidence that Mr White had provided false information to Centrelink. The Tribunal considered that

Mr White’s signed declaration clearly indicates he had provided a falsehood to Centrelink when he declared he had no other properties. The Tribunal considered that Mr White, a qualified lawyer would have had actual knowledge of his requirements under the Act.
The Tribunal found Mr White by omitting to declare his properties on numerous occasions had knowingly made a false representation to Centrelink and failed to comply with the relevant legislative provisions and therefore his debt could not be waived as section 1237AAD paragraph (a) of the Act had not been satisfied.
Special circumstances
Whilst the Tribunal was not required to consider Mr White’s special circumstances, as he could not succeed in his application as he had not fulfilled all the requirements of the section. The Tribunal given the tragic nature of this case did briefly address Mr White’s genuine concerns and those of his family.
The expression ‘special circumstances’ has not been defined in the Act. However, the meaning of special circumstances has been considered extensively by the Federal Court and the Tribunal.
In Ryde v Sec Department of Family and Community Services [2005] FCA 886, Branson J said at [26]:
[…] the evident purpose of s 1237AAD is to enable a flexible response to the wide range of circumstances which could give rise to hardship or unfairness, the statutory requirement for special circumstances discloses an intention to proscribe waiver in ordinary cases. The hardship or unfairness to which French J referred must be understood to be hardship or unfairness sufficient to justify departure from the general rule in the particular case.
In Groth v Secretary Department of Social Security [1995] FCA 1708, Kiefel J said at [545]:
[…] for present purposes it is sufficient to observe that it requires something to distinguish Mr Groth’s case from others, to take it out of the usual ordinary case. That was, I consider, the only enquiry to be undertaken in this case. It would of course follow if one to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
The Respondent contended that Mr White’s circumstances were not special, and it was not desirable to waive his debt. The Respondent concedes that Mr White’s health circumstances are indeed special but that of itself is insufficient to waive the debt.
The Respondent took the Tribunal to the matter of Re Kulakov and SDSS (1991) 63 SSR 879 where the Member found:
There is no dispute between the parties and it is agreed that the applicant is qualified to receive an invalid Pension on medical grounds and that such pension would be paid were it not for the preclusion period. However, the Tribunal is satisfied and so finds that on the basis of the decision in Re Bolton (supra) ill health alone cannot be held to be a special circumstance.
The Respondent argued Mr White circumstances were no different to the vast majority of Centrelink recipients and did not make his circumstances exceptional. The Respondent argued that Mr White’s financial situation was superior to the majority of Centrelink recipients as he owns two properties with a significant net value. The Respondent contends that Mr White simply could not assert financial hardship.
The Respondent argued the Tribunal has to undertake a two-stage approach, first it must find special circumstances and then exercise its discretion noting the matter of SDDS and Hales (1998) 82 FCR 154 where his Honour Justice French found:
It may be that there will be few cases in which the Secretary will be satisfied that there are special circumstances in the absence of financial hardship. It may be that there are few cases in which having found special circumstances to exist, the Secretary would exercise the discretion to waive in the absence of financial hardship.
The Respondent argued the Tribunal should not exercise its discretion to waiver the debt as Mr White had knowingly made false declarations, his situation overall was no different to other DSP recipients, that his ill health alone was not grounds for special circumstances, he was not in financial hardship, as he has the financial means to repay the debt.
Ms Wren on behalf of her brother advised the Tribunal that it was a very emotional time for the family facing the prospect of Mr White’s early death, but the family had decided they must respect him by helping him get his pressing affairs in order. Mr White and his family asked for help to compassionately settle his case due to his exceptional circumstances that being the terrible prognosis of his illness being incurable and indeed, terminal.
Mr White argued in his submission to the Tribunal that his extremely financial hardship should be considered as a special circumstance in accordance of the Act and that was acknowledged as serious by the AAT1. Mr White argued he was relying on a line of credit which remains over its limit with a stop placed on it, that his extreme financial difficulties means his family are assisting him meet his significant personnel costs and large health expenses. Mr White argued his family will continue to bear this cost.
Mr White contends in his submission to the Tribunal, that was he was not given the opportunity to properly go through in detail and explain to the AAT1 just how serious his health prognosis was. Mr White argued the AAT1 hearing had concluded when his financial circumstances were dealt with in depth, however, the AAT1 had not explored or considered his very serious illness as a “highly unusual, rare special factor”. Whilst Mr White accepted that the AAT1 had found that he had done everything in good faith and had noted his financial hardship, they had not considered his other ‘unusual or out of the ordinary’ factors.
Mr White in has written submission underlined in the case of Hassan and Secretary, Department of Social Services [2018] AATA 4618 at 60, where the Member found:
Having regard to the case law, in applying special circumstances the Tribunal must consider the individual circumstances of the case and be satisfied that those circumstances involve some aspect that is unusual or uncommon and that having regard to those circumstances it would be unjust, unreasonable or otherwise inappropriate for the debt to be recovered.
Mr White also underlined SDSS v Hales (1988) 82 FCR 154 where French J discussed the breadth of discretion in s.1237AAD noting:
The evident purpose of s.1237AAD is to enable a flexible response to the wide range of situations which could give rise to hardship or unfairness in the event of a rigid application of a requirement for recovery of debt. It is inappropriate to constrain that flexibility by imposing a narrow or artificial construction upon the words.
Ms Wren on behalf of Mr White and his family asked the Tribunal to waive Mr White’s Centrelink debt in full, both the amount outstanding and the amount repaid to date, as he has been found to have acted in good faith always, is experiencing extreme financial hardship and worst of all a horrible terminal illness.
The Tribunal based upon the evidence before it, finds that Mr White’s circumstances were not sufficiently unusual, uncommon or exceptional so as to make his case different from the ordinary and otherwise special. Therefore, his circumstances did not satisfy section 1237AAD(b) of the Act.
The Tribunal did not find Mr White was facing extreme financial hardship, the Tribunal could see from Mr White’s bank statements he still had a mortgage over his principal place of residence and his property in Melbourne and had significant credit card debt. However, the Tribunal considered Mr White had numerous assets he could release to satisfactorily cover all his debt and still have sufficient means on which to maintain his life comfortably. Given that Mr White’s treating doctor has advised Mr White is currently in a hospice he will not leave, he is sadly not in need of three places of residence.
The Tribunal did not find that Mr White’s medical issues amounted to special circumstances. Whilst the Tribunal understands that this seems at odds with Mr White’s terminal illness and is very sympathetic to Mr White’s obvious health issues, both physical and mental, these are the very impairments which lead to an individual being found to be eligible to receive the DSP are not out of the ordinary. The Tribunal found that ill health alone was not sufficient grounds to waiver the debt. Whilst Mr White should be able to enjoy his final days in peace without the issue of a debt over his head, he is not facing any particular financial hardship, as he could simply release his assets that he is not living in and pay back his Centrelink debt.
The Tribunal found Mr White had knowingly made a false representation to Centrelink and failed to comply with the relevant legislative provisions when he did not declare to Centrelink his property in Melbourne and his property in Kyneton. Regardless of who purchased the property in Kyneton and the reason for doing so, the property was in Mr White’s name and therefore this asset should have been declared to Centrelink when purchased.
Whilst this is not the most delicate thing to write in a decision for a man facing a terminal illness for the sake of Mr White’s family, the Tribunal notes that a Centrelink debt is not extinguished at the death of a debtor instead, the estate becomes the debtor. The Social Security Guide notes:
To recover a debt from an estate, the debt needs to first be raised against the estate, and notice of the debt sent to the executor. This is not a garnishee notice. If there are sufficient funds in the estate to repay the debt, the debt must be repaid. If there are insufficient funds, then the debt will be permanently written off as irrecoverable.
The Tribunal having considered all the evidence placed before it, finds that Mr White’s situation was not unusual, uncommon or exceptional, markedly different from the usual run of cases, special, or out of the ordinary to make it desirable to waive the portion of his debt not attributable to administrative error.
DECISION
The decision under review is affirmed.

76. I certify that the preceding 75 (seventy-five) paragraphs are a true copy of the written reasons for the decision of Ms Anna Burke, AO Member

..........[sgd]........................
Associate
Dated: 29 March 2021

Date of hearing 22 February 2021

Representative for the Applicant Ms Danielle Wren-White

Advocate for the Respondent

Solicitors for the Respondent

Mr Brian Sparkes

Services Australia,
Litigation Branch

[2021] AATA 672

29 March 2021

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Appeal

Remedies

Date	Mortgage Bendigo Bank	Mortgage amount attributed to Melbourne	Asset value - $450,000 less arrtributed mortgage amount.
5 November 2014	$396,944	$193,108	$256,892
1 July 2015	$533,474	$269,258	$180,742
1 July 2016	$556,041	$270,506	$179,494
1 July 2017	$561,802	$273,309	$176,691
1 July 2018	$577,284	$280,841	$169,159
1 July 2019	$590,073	$284,063	$165,937

Date	Bank savings	Other assets	Kyneton	Melbourne	Total
5 November 2014	$0	$500	$0	$256,892	$257,392
5 December 2014	$0	$500	$480,000	$256,892	$737,392
1 July 2015	$0	$500	$480,000	$180,742	$661,242
1 July 2016	$0	$500	$480,000	$179,494	$659,994
1 July 2017	$0	%500	$480,000	$176,739	$657,239
7 March 2018	$15,000	$5,000	$480,000	$176,739	$676,739