Worner and Secretary, Department of Employment and Workplace Relations
[2006] AATA 560
•28 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 560
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2006/50
GENERAL ADMINISTRATIVE DIVISION ) Re HERBERT WORNER Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT and WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Dr KS Levy, Member Date28 June 2006
PlaceBrisbane
Decision The decision under review is affirmed.
......................[Sgd]........................
KS Levy
Member
CATCHWORDS
SOCIAL SECURITY – parenting payment – assets limit – personal loan to company – overpayment – whether debt able to be waived – applicant’s assets above limit – decision affirmed.
Social Security Administration Act 1999I ss68(2), 72
Social Security Act 1991 ss500, 1118, 1121, 1122, 1223(1)
Re Hamlyn v Secretary Department of Family and Community Services [1999] AATA 446
Re Bahsa v Secretary Department of Family and Community Services (2004) 83 ALD 788
Re Gordon v Secretary Department of Social Security (1992) 27 ALD 381
Re Secretary, Department of Social Security and Von Hoff (1998) 54 ALD 227
Re Boyd v Secretary Department of Social Security (1994) 83 SSR 1221
Re Small v Secretary, Department of Employment and Workplace Relations [2005] AATA 1095
Re Unicomb v Secretary, Department of Social Security (1998) 50 ALD 405
Re Berrry v Secretary Department of Social Security (1995) AAT 10378, 28 August 1995
Re Beadle v Director-General Social Security (1985) 60 ALR 225REASONS FOR DECISION
Dr K S Levy, Member INTRODUCTION
1. Mr Herbert Worner, the applicant, received Parenting Payments from 4 January 2002. Due to a change in his financial circumstances involving investment by a company controlled by him and a loan by Mr Worner personally to that company, Centrelink determined that his assets exceeded the assets test limit.
2. A complex assessment officer at Centrelink undertook a detailed examination of Mr Worner’s affairs over a period of time. As a result, the respondent determined that the applicant had been overpaid parenting payment for the period 17 November 2003 to 20 April 2005 and raised a debt due to the Commonwealth of $11,799.55.
3. The applicant appealed to the Social Security Appeals Tribunal (SSAT), but the decision of Centrelink was affirmed by the SSAT on 13 December 2005.
ISSUES
4.The issues to be determined by the Tribunal are:
(a)Has Mr Worner been overpaid parenting payment?
(b)If the answer to (i) is yes, is the amount overpaid a debt due to the Commonwealth?
(c)Should any debts be recovered ie are there any grounds for waiver or are there special circumstances which justify non-recovery of any debt?
EVIDENCE
5.The following documents were admitted into evidence at the hearing:
·Exhibit 1 – Respondent’s Facts and Contentions (with an amended paragraph 62 which was tendered and admitted with this exhibit at the hearing)
·Exhibit 2 - Volume 1 of T documents admitted under section 37 of the Administrative Appeals Tribunal Act 1975
·Exhibit 3 – Volume 2 of T documents admitted under section 37 of the Administrative Appeals Tribunal Act 1975
·Exhibit 4 – Statement of Mr Luke Smith lodged 20 April 2006
·Exhibit 5 – Applicant’s Statement of Financial Circumstances dated 27 March 2006
6. The applicant provided evidence that he was previously in a de facto relationship and that he had two boys. The relationship ended, however, his former partner was not well enough to look after the children and consequently he took over care of them from 1 January 2006. His family situation complemented by his business activities and financial arrangements, resulted in his applying for and receiving for a period, parenting allowance.
7.His financial arrangements involve the following structure –
(a)The Sir Viva trust – a trustee company (Dreamtime Tours Pty Ltd) as trustee for a trust where the applicant was the sole director of the trustee company and with his children being the beneficiaries. The trust held the applicant’s principal residence for a period of time.
(b)Colas Australia Pty Ltd – this private company was established to conduct Mr Worner’s electrical contracting business. This company also received loans from the applicant for various purposes, including, the purchase of a rental property. For the overpayment period, the total loans owed to Mr Worner were $185,569.04.
(c)Another company, Translogical Pty Ltd was under the control of the applicant. The assets of this company were not significant in comparison with the other entities above.
(d)The applicant, Herbert Worner, transferred his house (the principal residence) from the Sir Viva trust to his name personally. The applicant also made loans to Colas Pty Ltd. This was essentially a $75,000 loan by way of mortgage to that company to purchase an investment property. The loan to Colas Pty Ltd was secured by mortgage over the applicant’s principal residence.
(e)All three companies in (a), (b) and (c) above were incorporated during the overpayment period. Colas Pty Ltd and Translogical Pty Ltd were de-registered on 22 April 2005 and 8 April 2005, respectively.
8. During the overpayment period (17 November 2003 to 20 April 2005), Centrelink sent a number of notices to the applicant. The contents of these were, the Tribunal was informed, in accordance with the example letter provided dated 8 September 2003 (see T41 folios 111-113).
9. The applicant referred the Tribunal to Annexure B of the Department’s Statement of Facts and Contentions (Exhibit 1). In particular, he emphasised that he had received many notices from Centrelink and that the wording seemed to be generic, as a result, the applicant did not read all the detail in subsequent letters, particularly those during the overpayment period. He referred to the letter of March 2002, June 2002 and 8 September 2003, and stated that he assumed that any information contained in subsequent letter had the same generic information as the earlier letters. He referred specifically to the information under the heading Going Outside of Australia and that there was reference to the requirement to tell Centrelink about changes in circumstances of trusts etc. The applicant stated that he read only the sections Income Maintenance Period and What you Should Tell Us. In cross-examination the applicant conceded that there were further dot points underneath the heading Going Outside Australia such as reference to lending money or If your assets change substantially, and agreed that those notes did apply to him.
10. In cross-examination the respondent’s advocate referred the applicant to a subsequent letter dated 8 March 2004 (T42 folio 114 to 116). At folio 115, the letter shows a heading Changes to Income and Assets. While the applicant stated that he assumed this letter (and other subsequent letters) had the same format and information as the earlier letters and when asked whether he considered advising the Department of changes in his assets, he answered “No”. Likewise, when asked whether he advised Centrelink of the transfer of property from the trust to his own name he answered “No”. When asked whether money he loaned to Colas Australia Pty Ltd was advised through Centrelink, he stated “No”. He also stated in cross-examination that the investment property held by Colas Pty Ltd was sold approximately one month before the hearing for $153,000. This amounted to a profit of over $65,000.
11. Evidence was provided by Mr Luke Smith who is a complex assessment officer with Centrelink. He has been responsible for management of Mr Worner’s case with Centrelink since 2004. He stated that in 2004 he discussed the income and assets test with Mr Warner in relation to his private trust and his private companies. After those discussions, Mr Worner lodged amended tax returns and financial statements for that financial year. In the following financial year, Mr Smith also had financial statements which he provided to Mr Smith.
12. Mr Smith indicated that he had financial records for the 2002/2003 financial year and has since used similar documents to make an assessment for the 2003/2004 financial year. Mr Smith was referred to his assessment of Mr Worner’s position, which is contained at folios 366 and 367 of Exhibit 3. Mr Smith clarified Mr Worner’s personal assets were $185,569 which is a loan owed to him by Colas Pty Ltd. Mr Smith also clarified for the Tribunal that the amount referred to relates to net assets.
13. Mr Smith was cross-examined by Mr Worner. While the applicant appears to have some difficulty in understanding how the total assets determined by the complex assessment officer were arrived at, Mr Smith agreed that the figure shown in his assessment of $334,139, related to Mr Worner’s total assets. On questioning by the Tribunal, Mr Smith stated that this figure included all assets held as recorded by Centrelink and also included company assets. Mr Smith further stated that this figure indicated to him that the applicant was over the asset limit.
14. On re-examination by Ms Heffner, Mr Smith clarified the asset limits – that is, as at March 2004, was $149,500 and from 1 July 2004, the asset test for a single home owner was $153,000.
15. The applicant made submissions which reiterated that he may have misunderstood certain facts or requirements. The respondent reiterated the department’s position concerning the facts and highlighted that despite the notices sent to Mr Worner concerning the overpayment period, the respondent also indicated that letters in a different format were sent to the applicant throughout the overpayment period on six occasions. These were sent on 8 September 2003 (T41 folio 113); 8 March 2004 (T42 folios 114-116); 16 June 2004 (T74 folios 209-211); 18 June 2004 (T75 folios 212-214); 2 July 2004 (T83 folios 258-260); 8 July 2004 (T92 folios 271-273).
16. The respondent made submissions in relation to the statutory provisions which are relevant in this matter. The respondent also referred the Tribunal to Re Hamlyn v Secretary Department of Family and Community Services AAT [1999] AATA 446.
CONSIDERATION
17. Much of the evidence emphasised by the applicant revolves around whether he misunderstood his obligations and attributed this to confusing letters from Centrelink. He noted in that respect three letters dated March 2002, June 2002 and 8 September 2002, all of which referred to requiring the applicant to advise Centrelink about activities with trust and financial investments. Those references appear under the heading Going Outside Australia. Mr Worner had read this information and determined it did not apply to him. He noted the references contained Generic information and that he did not read the notes which were included as part of subsequent letters from Centrelink.
18. The respondent’s advocate contended that those letters were outside the overpayment period. She argued the letters of relevance were those dated 8 March 2004, 16 June 2004, 18 June 2004, 2 July 2004 and 8 July 2004 and that the information in these letters were as per the format and wording of Annexure C to the respondent’s Statement of Facts and Contentions.
19. While the format of Annexure B reveals a poor design and does not facilitate clear communication of the requirements to someone in Mr Worner’s position, Annexure B contains information which is not logically related to whether the applicant was Going Outside Australia. For example, changes in private trusts or private companies, lending money to someone, and where assets change substantially, are relevant more generally and not only apply to the category of Going Outside Australia. Nevertheless, the Tribunal accepts that the design of that form was so poor and ambiguous that the applicant was confused by it and could not be expected to clearly understand his obligations.
20. The five letters referred to by the respondent’s advocate which were issued during the overpayment period were of a different design (see paragraph 49 and Annexure C of the respondent’s Statement of Facts and Contentions). The information there under the heading Going Outside Australia is limited. The information under the heading Changes to Income and Assets includes specific information relevant to Mr Worner. For example, it refers to –
· If you make an investment or transfer all or part of an investment.
· If you are involved in or receive a benefit from a private trust or private company.
· If the nature of your involvement in or the benefit you derive from a private trust or private company changes.
· If you lend money to someone.
· If your assets other than financial investment are more than $270,743.
· If your assets change substantially.
21. It is clear, for the period of the overpayment, that the information on the letters change in form and in content. While it was the applicant’s responsibility to read the information, the fact that the information provided was different is apparent and that anyone of the six items above were relevant to the applicant’s circumstances. It would have put him on notice had he read those forms, that he should have enquired about the extent of his obligations and/or provided the changed circumstances to Centrelink. The Tribunal does not accept that the applicant is not responsible for reporting that information.
22. The responsibility of the applicant to provide written notices is clearly provided for in s72 of the Social Security Administration Act 1999 and the applicant’s responsibility to inform the Department of a specified event or change of circumstances is clearly provided for in s68(2) of the Social Security Administration Act 1999. It is apparent that the Department’s statutory responsibilities were satisfied. It is equally apparent that the applicant’s statutory responsibilities were not complied with.
23.Turning now to the questions in issue. These are dealt with below:
Question 1 – Has the applicant been overpaid parenting allowance?
24. In determining whether Mr Worner has been overpaid it is relevant to ascertain the extent of Mr Worner’s assets and whether they exceeded the asset test limit.
25. His asset position was initially submitted by the respondent to be:
17 Nov 2003
1 July 2004
Sir Viva Trust
n/a
n/a
Colas Australia Pty Ltd
Loan - $185,569.
Property - $75,000.
Loan - $185,569.
Property - $120,000.
Translogical Pty Ltd
$2,132.
$2,132.
Dreamtime Tours Australia Pty Ltd
n/a
n/a
Mr Worner’s personal assets
Savings - $0.00
Household contents and personal effects - $3,000.
Savings - $0.00
Household contents and personal effects - $25,000.
Total Assets
$265,701.
$332,701
Asset Limits
$149,500
$153,000
26. The applicant’s total assets, as submitted by the respondent, were amended to be as follows, at the date of the hearing to be $188,569 as at 17 November 2003 and $210,569 as at 1 July 2004.
What is the relevant law in relation to this matter?
27. Section 500 of the Social Security Act 1991 (the Act) outlines the rate of pension which is payable in relation to parenting payments. Section 500Q of the Act provides that parenting payment is not payable if the person’s assets exceeds the asset value limit as prescribed.
28. The respondent argues that the applicant was a “home owner” and as a result he had reasonable security of tenure (ReBahsa v Secretary Department of Family and Community Services (2004) 83 ALD 788). The result of his being “a single home owner” is that during the whole of the overpayment period, the asset limit which was relevant to him is as follows:
As at 17 November 2003 and up to 30 June 2004 - $149,500
From 1 July 2004 to 20 April 2005 - $153,000
29. Also relevant in determining whether the applicant has been overpaid, s1118, 1121, 1122 and 1223(1). These sections are as follows:
“SECT 1118 Certain assets to be disregarded in calculating the value of a person's assets
1118 (1) In calculating the value of a person's assets for the purposes of this Act (other than sections 198H, 198HA, 198HB, 198J, 198JA, 198JB, 198K and 198L, subparagraph 501E(1)(d)(iv), Division 1B of Part 3.10 and sections 1125, 1126, 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;
(b) if the person is a member of a couple – the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that is a right or interest that gives the person or the person’s partner reasonable security of tenure in the home;:(i) is a right or interest that gives the person reasonable security of tenure in the home; and
(ii) is not a granny flat interest in the home;
(b) if the person is a member of a couple - the value of any right or
interest of the person in one residence that is the principal home of the
person, of the person's partner or of both of them that:(i) is a right or interest that gives the person or the person's partner reasonable security of tenure in the home; and
(ii) is not a granny flat interest in the home;
(c) the value of any life interest of the person (other than a life
interest in the principal home of the person, of the person's partner or ofboth of them or a life interest created by the person, by the person's partner or by both of them);
(d) the value of any superannuation pension of the person;
(e) any amount that is:(i) received by the person within the immediately preceding period of 90 days; and
(ii) is excluded from the definition of "income" in subsection 8 (1) by subsection 8 (4) or (5);
(f) if the person has not reached pension age - the value of any
compulsorily preserved superannuation benefit of the person;
(g) if:(i) the person has a granny flat interest in the person's principal home;
and
(ii) the granny flat interest gives the person reasonable security of tenure in the home; the value of the granny flat interest;
(h) the value of any contingent, remainder or reversionary interest of the
person (other than an interest created by the person, by the person's partner or by both of them);
(j) the value of any assets (other than a contingent, remainder or
reversionary interest) to which the person is entitled from the estate of a deceased person but which has not been, and is not able to be, received;
(k) the value of any medal or other decoration awarded (whether to the
person or another person) for valour that is owned by the person otherwise than for the purposes of investment or a hobby;
(m) the value of:
(i) any cemetery plot acquired by the person
for the burial of the person or the person's partner; and
(ii) any funeral expenses paid in advance by theperson in respect of the funeral of the person or the person's partner;
(n) if:
(i) personal property of the person is designed for use by a disabled
person; and
(ii) the person, the person's partner, a dependent child of the person or a dependent child of the person's partner is disabled; the value of the property;
(p) if:
(i) personal property of the person is modified so that it can be used by a disabled person; and
(ii) the person, the person's partner, a dependent child of the person or a dependent child of the person's partner is disabled; the part of the value of the property that is attributable to the
modifications;
(q) if the person is provided with a motor vehicle under the schemeadministered by the Commonwealth known as the gift car scheme - the value of that motor vehicle;
(r) if the person has sold a residence that was the principal home of the
person on terms and has purchased, also on terms, another residence that is the principal home of the person - so much of the balance due to the person in respect of the sale as will be applied by the person in respect of the purchase of the other residence.
(2) If:
(a) a person sells the person's principal home; and(b) the person is likely, within 12 months, to apply the whole or a part of the proceeds of the sale in acquiring another residence that is to be the person's principal home; so much of the proceeds of the sale as the person is likely to apply in acquiring the other residence is to be disregarded during that period for the purposes of this Act.
(3) For the purposes of this section, if:
(a) the value of any assets of a person or, if the person is a member of a couple, of the person and the person's partner, that consists of the contents of a principal home and of other personal effects that are used primarily within the principal home does not exceed $10,000; and
(b) the assets are used primarily for private or domestic purposes; the value of the assets is to be taken to be $10,000 unless the person satisfies the Secretary that the value of the assets is less than $10,000.
(4) This section has effect subject to sections 1145 to 1157 (retirement
villages).
1121.
(1) If there is a charge or encumbrance over a particular asset of thethe person's assets for the purposes of this Act, is to be reduced by the
value of that charge or encumbrance.
(2) Subsection (1) does not apply to a charge or encumbrance that is an
excluded security.
(3) Subsection (1) does not apply to a charge or encumbrance over assets
that are to be disregarded under section 1118.
(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 undersection 1118 and other assets; the amount to be deducted under section (1) is: value of the charge or encumbrance X value of the other assets value of all the assets
(5) For the purpose of this section, a charge or encumbrance is an excluded
person, the value of the asset, for the purposes of calculating the value of
security to the extent that:
(a) the charge or encumbrance is a collateral security; or(b) the charge or encumbrance was given for the benefit of a person who is not a party, or the partner of a party, to the charge or encumbrance.
(6) This section has effect subject to sections 1145 to 1157 (retirement
villages).Debts arising from lack of qualification, overpayment etc.
1223.(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.”
30. Under s1223(1) of the Act, if the value of the loan is an asset and the amount of the mortgage limit to the company to fund the investment property cannot be reduced under s1118, then the asset limit will have been exceeded by the applicant and there will be no entitlement to parenting payment in the overpayment period. Consequently, there would be a debt due to the Commonwealth.
31. However, in assessing these sections, the Tribunal must consider the circumstances as a whole in which the various amounts have been paid or lent. A contract or loan in the normal commercial sense requires a legal contractual arrangement to repay the amount loaned on demand or at a time in accordance with the loan contract. This may be expressed or implied and will depend on the intention of the parties. It will also be determined by the legal nature of the loan and not its economic effects (Re Gordon and Secretary Department of Social Security [1992] 27 ALD 381 cited in Re Secretary, Department of Social Security and Von Hoff [1998] 54 ALD 227).
32. In this case, the parties are Mr Worner and Colas Pty Ltd (the latter having Mr Worner as the sole director). He is also the sole trustee of the Sir Viva Trust. He originally transferred his house to that Trust and then later transferred his house back to himself.
33. The purpose of the legislation is a beneficial one for those who are recipients of allowances such as parenting payment allowance, and subject to meeting the criteria of eligibility. In this case, the legality of the financial arrangements of the applicant was not challenged, only the reporting arrangements and consequential eligibility. The applicant’s loan to Colas Pty Ltd was not submitted by the respondent to not be a commercial loan arrangement, but merely that the $80,000 mortgage should not be deductible as it is to be disregarded under s1118.
34. The applicant’s circumstances involves a loan due from Colas Pty Ltd and the loan created involved raising funds of $80,000 via a mortgage over the applicant’s residential property. This is a normal arrangement when a person makes a property investment. To not allow the deduction of the mortgage seems to ignore part of the effect of the loan transaction. Section 1118 refers to disregarding the value of the right or interest in the person’s principal place of residence. However, the fact that a loan is secured by mortgage over the principal place of residence is a different matter, and to assess the value of the loan as an asset but to disallow the value of the mortgage which were borrowed funds to create the loan, is in conflict with the effect of s1121(1). The value of the charge (that is, the $80,000 loan) is to be a reduction to the applicant’s assets (that is, to the face value of the loan) under s1121(1) [Re Boyd and Secretary Department of Social Security [1994] 83 SSR 1221]. The value of the loan is to be the face value of the loan, which is $185,569 (see paragraph 62 of the respondent’s Statement of Facts and Contentions) and the mortgage amount outstanding is $80,000 (see paragraph 61 of the respondent’s Statement of Facts and Contentions). Considering s1121 firstly, the net assets for the purpose of s1122 is $108,569 (as at 17 November 2003) and $130,569 at 1 July 2004.
35. I note the respondent’s submission that the value of the mortgage (ie $80,000) should not be deductible. In that respect, the respondent referred the Tribunal to Small and Secretary, Department of Employment and Workplace Relations [2005] AATA 1095. Relevantly, that case itself relied on the decision of Branson J in Unicomb v Secretary Department of Social Security [1998] 50 ALD 405. That was a case where a loan was made to the applicant, who was the father of a person whose company ultimately received the loan. It was a case similar to the present one in many respects and where Branson J said that one must look at the “whole transaction”, and in doing so she concluded that the applicant did make a loan to his son’s company within the meaning of s1122. “The value of the applicant’s asset thereafter for the purposes of the Act included so much of that amount as remained unpaid.”. In the present case, similar to the finding in Unicomb, there was no evidence to suggest that Mr Worner did not make a loan to Colas Australia Pty Ltd in a legal sense.
36. However, the Respondent submitted that the statutory requirements about the value of the principal home is to be disregarded [see s1118(3)]. Likewise, it was submitted that any charge over that asset cannot be offset against the loan [s1121(3)]. The respondent submitted that the statutory authorities are to be read strictly. It was argued that even though an unfairness may appear to result from recognition of the asset (the loan or mortgage) but non-recognition of the liability (due to it not being over the same property as the loaned monies), that is the law as it has been prescribed by the Parliament [Re Berry v. Secretary Department of Social Security (1995) AAT 10378, 28 August 1995].
37. I accept that submission as being the correct position of the law. Therefore, the true financial position of “net assets” of the applicant cannot be taken into account for the purposes of assessing eligibility for parenting payment.
38. Consequently, the applicants assets as at 17 November 2003 ($185,569) and at 1 July 2004 ($210,569) exceed the statutory asset limits, that is $149,500 and $153,000 respectively. There was therefore, no entitlement to Parenting Payment during the period in question and the applicant has been overpaid amounts as submitted by the Respondent.
Question 2 - Is the total amount overpaid a debt due to the Commonwealth?
39. In answering this question, s1223(1) is to be interpreted quite strictly. The amounts overpaid are therefore debts due to the Crown.
Question 3 – Should the Debt be recovered?
40. In relation to this question, the amounts to be recovered, generally speaking, must be repaid unless of 3 possibilities can be established: Write-off, Waiver or Special Circumstances as recognised by the law.
Can the debt be written off?
41. A debt can be written off under section 1236 only if it is irrecoverable. The relevant provisions are:
“Secretary may write off debt
1236.(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
1236.(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.”
42. There was no evidence which indicated that the applicant’s circumstances are not recoverable at law. Therefore write off is not appropriate.
Can the debt be waived or are there Special Circumstances?
43. It was submitted by the Respondent that a debt can only be waived in circumstances specified in sections 1237A and 1237AAD:
“Waiver of debt arising from error
Administrative error
1237A.(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.
Waiver in special circumstances
1237AAD. 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 false representation; or
(ii)failing or omitting to comply with a provision of this 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.”
44. In applying these provisions to the present case, section 1237A(1) is only relevant where there is an administrative error.
45. I am not satisfied that circumstances which gave rise to the debt in respect of Mr Worner’s overpayment was attributable solely to administrative error of Centrelink. There may have been some inadequacy in the information conveyed in the forms sent to the applicant by Centrelink prior to the debt period but the overpayment period involved the respondent providing different and more meaningful forms and information. However, it is clear that the overpayment arose as a result of the applicant’s failure to provide all his circumstances and changes of his assets to the Respondent in a timely way.
46. The requirements were clearly stated to the applicant in communications provided by the respondent. However, by his own admission, he failed to read them. He was careless in protecting his position as he did not read the information on the form and did not make any further enquiries with Centrelink as to his responsibilities. Therefore, he did not satisfy his responsibilities in informing Centrelink as to changes in assets and other relevant information required. Consequently, I find that no part of the debt can be waived under section 1237A(1).
47. The second waiver provision in this case is section 1237AAD. That section provides:
“1237AAD. 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 false representation; or
(ii)failing or omitting to comply with a provision of this 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.”
48. All three of the limbs of section 1237AAD must be satisfied before the debt may be waived. In relation to the first limb, the question is whether the lack of information provided, that is, the continuation of inaccurate information upon which the overpayment was calculated, was done with the applicant’s knowledge. In this respect, the Tribunal does not make a finding that the applicant failed to report the required information knowingly.
49. In relation to the second limb of that section, it must be determined whether there are special circumstances (other than financial hardship alone) which make it desirable to waive the debt. Determining whether the circumstances are “special”, depends on the purpose of the power in that section. In Beadle v Director-General Social Security (1985) 60 ALR 225 at 228, the Full Court of the Federal Court determined that limits of that term cannot be specified with any real precision.
50. The applicant in his evidence stated that he assumed the information in the Centrelink forms was the same as previous information provided and that he did not read the instructions provided in any of the letters during the debt period. He was therefore not diligent in his attention to his responsibilities as the receipt of the overpayments continued over a period of almost 18 months. He clearly failed or omitted to comply with the relevant requirements.
51. The Tribunal is not satisfied that either the debt is due solely to the Commonwealth’s administrative error, or that Mr Worners’ circumstances are “special”. He has some difficult financial circumstances but that is quite the norm in cases such as this. There are no circumstances which satisfy the legal requirements to waive the debt.
52. For these reasons, the decision under review is affirmed.
I certify that the 52 preceding paragraphs are a true copy of the reasons for the decision herein of Dr KS Levy, Member
Signed: .....................................................................................
J Mills, Legal Research OfficerDate/s of Hearing 28 April 2006
Date of Decision 28 June 2006
Mr Worner acting on his own behalf
For the Respondent Ms C Heffner, Departmental advocate
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2
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