WZGY and Secretary, Department of Social Services (Social services second review)
[2020] AATA 863
•17 April 2020
WZGY and Secretary, Department of Social Services (Social services second review) [2020] AATA 863 (17 April 2020)
Division:GENERAL DIVISION
File Number(s): 2019/1303 & 2019/1326
Re:WZGY and CSYM
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:17 April 2020
Place:Sydney
The decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal is affirmed.
...........................[sgd].............................................
Emeritus Professor P A Fairall, Senior Member
CATCHWORDS
SOCIAL SECURITY – carers payment – age pension – wife pension – cancellation – overpayment – debt owed to Commonwealth – income and assets – deprivation of asset provisions – disposal of real property – beneficial owner of property – whether trust property – debt not recoverable – sole administrative error – waiver in special circumstances – whether payments received in good faith – debts discharged – decision affirmed
LEGISLATION
Acts Interpretation Act 1901 (Cth) s 13(1)
Administrative Appeals Tribunal Act 1975 (Cth) ss 35, 37, 42C(1)
Social Security Act 1991 (Cth) ss 1223(1), 1236, 1237A, 1237AADSocial Security (Administration) Act 1999 (Cth) s 66A
CASES
Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190
SECONDARY MATERIALS
Social Security Guide Part 6.7.3.30
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
17 April 2020
THE FIRST PROCEEDINGS
CSYM was born in 1952. Her husband, WZGY, was born in 1940. At various times since 1998 they have been in receipt of social security payments under the Social Security Act 1991 (Cth) (‘the Act’).
This is the second occasion on which the Administrative Appeals Tribunal (‘the Tribunal’) has conducted a second level review in connection with real property disposed of by CSYM in 2015.
The first proceedings arose as follows. On 21 February 2013, the Department of Social Services (‘the Department’) determined that CSYM was the beneficial owner of a Gold Coast home unit.[1] The value of the unit exceeded the assets test threshold for various social security payments and the Department therefore decided to cancel the social security payments of both CSYM and WZGY, and to raise debts against them. CSYM had been on the Wife Pension since 5 November 1998; WZGY on the Disability Support Pension (‘DSP’) since 5 November 1998, moving onto the Age Pension from 29 June 2005. The debts were therefore substantial. CSYM was required to repay $108,289.69 for overpayment of Wife Pension; and WZGY was required to pay $108,781.19 for overpayment of DSP and Age Pension. The combined debt was $217,070.88.[2]
[1] T5 at p 70, [1].
[2] T5 at p 70.
On 12 August 2015, the Social Services and Child Support Division of the Administrative Appeals Tribunal (‘AAT1’) upheld the Department’s ruling.[3] The AAT1 found that CSYM had a 100% beneficial interest in the Gold Coast unit and that it was not trust property. The Tribunal rejected her claim that the property was purchased with money advanced by third parties. There was no credible evidence that money had been provided by third parties for the purpose of buying the Gold Coast unit qua trustee. There were no express trust documents. There was no firm or credible evidence from which the Tribunal could infer an implied trust.[4] The combined debt of $217,070.88 was therefore properly raised.
[3] T5 at p 69.
[4] T5 at p 74.
I note in passing that at the time of the AAT1 decision the Gold Coast unit was subject to a contract for sale. On 18 July 2015, CSYM sold the Gold Coast unit for $1,425,000.[5] Settlement took place in October 2015 and settlement cheques were distributed to various parties: $353,220.15 to the Applicants, and cheques amounting to approximately $1 million went to various parties including three of CSYM’s children.[6] The manner in which these funds were disbursed is central to the present proceedings.
[5] T17 at p 179; T2 at p 12, [11].
[6] T17 at p 177; T24 at p 260; T28 at p 290.
In 2016 the Applicants reached an agreement with the Department under which the combined debt of $217,070.88 to the Commonwealth would be settled by payment of $150,000, in addition to the amount already paid towards the debt ($14,920.35). The additional $150,000 was duly paid.[7]
[7] Respondent’s Statement of Facts, Issues and Contentions, [40].
On 29 September 2016, the Administrative Appeals Tribunal (‘AAT2’) affirmed the AAT1 decision by way of a negotiated final agreement, and the debt was fully discharged.[8] The decision notes:
‘This amount [$150,000] is without prejudice to any application which may be made by CSYM and WZGY for the age pension, but is in no way binding on the Respondent dealing with any such application or applications’.
[8] T21 at p 216
At this time WZGY was already on the Age Pension and CSYM was on a Carer’s Payment. On 5 December 2016 CSYM was transferred at her request to an Age Pension.
In the second level review the Tribunal made an order for confidentiality under s 35 of the Administrative Appeals Tribunal Act 1975 (Cth), using the letters CSYM and WZGY for the female and male Applicants respectively. I therefore adopt the same lettering.
THE SECOND PROCEEDINGS
On 12 January 2016, CSYM claimed a Carer Payment from 4 January 2016.[9] She was granted the Carer Payment effective from 4 January 2016 and on 5 December 2016 she was transferred at her request to an Age Pension.[10] As part of the application process for the Carer Payment she completed a Form relating to Income and Assets.[11] Part K of the form lists Real Estate recorded in her name by the Department. The Gold Coast unit is listed, with an Asset Value of $1,200,000. Her share is stated as 100%, with her partner’s share at 0%.[12] Question 19 states: ‘Are the real estate details complete and correct?’ Her answer is ‘No’. She was then asked to give correct details, and responded as follows:
Acquired by the real owners overseas.
No longer exist [sic].[13]
[9] T7 at p 87.
[10] T15 at p 168.
[11] T8 at p 95; T9 at p 111.
[12] T9 at p 120.
[13] Ibid.
On 12 January 2016 WZGY applied for the Age Pension, which he was granted from 23 June 2016.[14] As part of the application process he completed a Form relating to Income and Assets. Part L of the form, which both Applicants signed,[15] relates to Real Estate recorded by the Department against his name.[16] The Gold Coast unit is listed, with an Asset Value of $1,200,000. His share is stated as 0% and his partner’s share at 100%.[17] Question 18 states: ‘Are the real estate details recorded for you (and/or your partner’s) complete and correct?’ His answer is ‘No’. He was then asked to give the correct details, and responded:
Acquired by the real owners overseas
The property is no long exists [sic][18]
[14] T6 at p 78
[15] T8 at p 110.
[16] T8 at p 95.
[17] T8 at p 104.
[18] Ibid.
Only a few months before, in August 2015, AAT1 had rejected the proposition that the property had been ‘Acquired by the real owners overseas’. The Applicants were maintaining the position they had put, unsuccessfully, to AAT1. They did not disclose this in their respective applications, although in fairness it might be said that the matter was then subject to a second level review to the Tribunal.
In relation to the matter of gifting, both CSYM[19] and WZGY[20] answered ‘No’ to the question:
In the last five years have you (and/or your partner) given away, sold for less than their market value, or surrendered a right to, any cash, assets, property or income?
[19] T9 at p 122 (Application Form, Question 28).
[20] T8 at p 106 (Application Form, Question 27).
In May 2018 the Department requisitioned information from a conveyancing firm that handled the sale of the Gold Coast unit, showing that the Gold Coast unit was sold in July 2015 for $1,425,000. In October 2015 much of the money had been disbursed to various parties including the Applicants’ three adult children.
On 15 August 2018 the Department issued notices to each Applicant indicating that the amounts paid to the other parties out of the proceeds of sale of the Gold Coast unit had been assessed under the deprivation of asset provisions, resulting in overpayment amounts for CSYM[21] and WZGY[22] of $17,652.49 and $15,159.31 respectively.
[21] T20 at p 203.
[22] T19 at p 201.
On 23 October 2018, an Authorised Review Officer (‘ARO’) spoke to WZGY about the Age Pension debts raised against both parties.[23] He kept detailed notes of the conversation. WZGY repeated what he had told the previous Tribunal, namely that the property belonged to CSYM’s brother, who lived overseas. The property had been purchased with monies provided by third parties. The brother directed the proceeds of sale to go to people he trusted to return the money to him.[24] WZGY did not provide a compelling explanation as to why it was necessary to return the money to the brother using multiple parties.[25]
[23] T23 at p 257; T24 at p 261.
[24] T24 at p 257, 259.
[25] T23 at p 260.
The ARO reminded WZGY that on 29 September 2016 the second level review of the Tribunal (‘AAT2’) had affirmed the AAT1 decision that the Gold Coast unit was at all relevant times owned by CSYM beneficially, and was not held in trust for someone else, and that the proceeds of sale should have been brought into account in assessing their social security payments.[26] The ARO indicated that he did not consider that it was open to him to make a contrary finding.[27]
[26] T21 at p 216.
[27] T23 at p 260.
The ARO noted that on 12 January 2016, CSYM claimed Carer’s Payment and advised the Department that she and her husband did not own any real estate apart from their home. She advised instead that the Gold Coast unit had been ‘Acquired by the real owners overseas’.[28]
[28] T28 at p 290.
On 1 November 2018 the ARO wrote to each Applicant informing them that they were not entitled to social security payments from the date of application. The debt amounts were varied as follows:
(a)For CSYM, a debt of $33,988.01 for the period 4 January 2016 to 7 August 2018;[29]
(b)For WZGY, a debt of $28,101.40 for the period 23 June 2016 to 30 October 2018.[30]
[29] T28 at p 288; 2018/S129744; debt number X7453751.
[30] T28 at p 284; 2018/S129743; debt number X0452533.
On 26 February 2019 the Social Services and Child Support Division of the Administrative Appeals Tribunal (‘AAT1’) affirmed the decision of the ARO.[31]
[31] T2 at p 10.
On 11 and 12 March 2019 respectively WZGY[32] and CSYM[33] applied to the Tribunal for review of the decisions made by AAT1. The Applicants state that the law was not applied correctly and new evidence is available.
[32] T1 at p 1; online reference number BJF4RJ.
[33] T1 at p 5; online reference number ZYH2X2.
The Respondent’s Statement of Facts, Issues and Contentions was lodged on 8 August 2019.
The joint applications were heard on 20 January 2020. WZGY and CSYM appeared in person. They were unrepresented.
The Tribunal admitted into evidence the s 37 materials (the ‘T’ documents), and a letter dated 8 October 2019 from Centrelink headed ‘Statement of Account’, which assumed considerable importance for reasons explained below.
CONSIDERATION
In summary, the Department decided in February 2013 that CSYM was the beneficial owner of the Gold Coast unit.[34] On 18 July 2015 the unit was sold. On 12 August 2015, AAT1 held that she was the beneficial owner, finding that there was insufficient evidence to determine that she was not the beneficial owner.[35]
[34] T5 at p 70, [1].
[35] T5 at p 69.
On 12 January 2016, CSYM claimed a Carer Payment[36] and WZGY applied for the Age Pension,[37] and asserted in their respective claims forms that the Gold Coast unit (sold six months before) ‘no longer exists’.
[36] T7 at p 87.
[37] T6 at p 78.
When CSYM applied for social security on 12 January 2016 she had already sold the Gold Coast property. One might reasonably assume that she was aware of the AAT1 decision of 12 August 2015 rejecting her claim that the unit was held as trust property. Her response to the question regarding ownership of the Gold Coast unit (‘Acquired by the real owners overseas. No longer exist [sic]’) is to that extent disingenuous.[38] The same can be said of WZGY’s application for the Age Pension. He was aware that AAT1 had held that the unit was owned beneficially by his wife.
[38] T28 at p 292.
Moreover, the Applicants maintained that they had not gifted any property in the previous five years. The proceeds of sale were not received in trust for anyone else. Their negative answers to this question cannot be reconciled with the disbursements to various parties including their three adult children.
On 29 September 2016, AAT2, acting under s 42C(1) of the Administrative Appeals Tribunal Act 1975 (Cth), affirmed the AAT1 decision of 12 August 2015 and recorded the terms of an agreement reached by the parties.[39] In summary, the joint debts of $217,070.88 were to be settled by the payment of $150,000 by the Applicants in full and final settlement of their combined liability to the Commonwealth. AAT2 affirmed the AAT1 decision under which the Gold Coast unit was at all relevant times owned by CSYM beneficially, and was not held in trust for someone else, and should therefore have been taken into account in assessing their social security payments.
[39] T21 at p 216.
On 26 February 2019, in the present proceedings, the first level review of the Tribunal (‘AAT1’) found, consistently with the 29 September 2016 AAT2 decision, that the property was an asset of CSYM. It is hard to see how any other decision was open, given the previous findings of the Tribunal.
No new evidence has been presented by the Applicants in these proceedings with regard to the ownership of the unit. The situation is as it was when the matter was finally resolved by the Tribunal on 29 September 2016, when the Tribunal affirmed that the Gold Coast unit was not trust property but was at all relevant times owned by CSYM beneficially and that it should have been taken into account in assessing their social security entitlements. There is no evidence before the Tribunal in the present proceedings that any of the children had a beneficial ownership in the Gold Coast unit, or that the money was given to them for the purpose of returning it to persons who did have such an interest.[40] I agree with the previous determination by the Tribunal and nothing has been put in the present proceedings which challenges it, even assuming that it was open to challenge.
[40] CSYM ($137,625); WZGY ($215,595.15); and the children received amounts of $400,000, $250,000; $250,000; and WS received $100,000: see T17 at p 177; T24 at p 260; T28 at p 290.
Deprivation rules
It remains to consider whether the Applicants deprived themselves of the proceeds of sale of the unit. The evidence before the Tribunal shows that the property was sold for $1,425,000 on 18 July 2015.[41] CSYM’s three children received $900,000, WS received $100,000, and nearly $400,000 was received by the Applicants.[42] CSYM disposed of more than two thirds of the sale proceeds without receiving any monetary consideration.
[41] T28 at p 290.
[42] Respondent’s Statement of Facts, Issues and Contentions, [37].
Section 1126AC of the Social Security Act 1991 (Cth) (‘the Act’) provides:
(2) Subject to this section, if the amount of the relevant disposal, or the sum of that amount and the amounts (if any) of other disposals of assets previously made by the person, the person's partner, or the person and the person's partner, during the income in which the relevant disposal took place (whether before or after they became members of the couple), exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the assets of the person and in the value of the assets of the partner for the period of 5 years starting on the day on which the relevant disposal took place:
(a) one-half of the amount of the relevant disposal;
(b) one-half of the amount by which the sum of the amount of the relevant disposal, and the amounts (if any) of other disposals of assets previously made by the person, the partner, or the person and the partner, during the income year in which the relevant disposal took place, exceeds $10,000.
The Respondent’s Statement of Facts, Issues and Contentions notes that the Secretary accepts that the $150,000 paid to the Commonwealth in settlement of the debt arising from the first Tribunal proceedings may be deducted and on that basis finds that the Applicants’ combined assets as at 15 August 2018 (the date on which the Department issued notices to the Applicants) included $1,244,095.15.[43] This figure took into account the final reconciliation of the sale amount together with the $150,000 negotiated settlement amount together with the $10,000 allowable gift limit under the section.
[43] Respondent’s Statement of Facts, Issues and Contentions, [40].
My conclusion with respect to the deprivation issue is that CSYM deprived herself of one million dollars by way of gifts as outlined above and that the assets available to the couple as from the date of disposal of the Gold Coast unit from 18 July 2015 was not less than $1,244,095.15. This amount exceeded the relevant asset threshold when they applied for social security benefits on 12 January 2016 (when the allowable threshold was $1,170,000) and when the debt notices were issued on 15 August 2018 (when the allowable threshold was $816,000).[44] The asset limit threshold was changed on 1 January 2017.[45]
[44] Respondent’s Statement of Facts, Issues and Contentions, [41].
[45] T24 at p 259.
There is no evidence to suggest that the children or WS had any interest in the Gold Coast unit. On the basis of the evidence before the Tribunal in the previous and present proceedings, my conclusion is that these disbursements were by way of gift.
This conclusion implies that they were not entitled to receive their respective pensions and the overpayments were correctly raised as debts owed to the Commonwealth by reason of s 1223(1) of the Act. I agree in this respect with the conclusion reached by the Tribunal in its first level review.
The overpayment is therefore recoverable by the Commonwealth as a debt under s 1223(1) of the Act unless there is some basis for writing it off under s 1236 (debt not recoverable) or waiving it under either ss 1237A (sole administrative error) or 1237AAD (waiver in special circumstances).
LEGISLATION
Debt not recoverable
Section 1236 provides:
(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(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.
I note that the debt has already been repaid and there is no suggestion that the debt is irrecoverable at law. The criteria for applying s 1236 are not met.
Sole administrative error
Section 1237A of the Act provides:
(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.
The Note to s 1237A provides that:
Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
Explanatory notes within the body of an enactment are taken to be part of the Act.[46] The reference to a debt being caused partly by administrative error and partly by one or more other factors suggests that s 1237A(1) raises issues of factual causation.
[46] Acts Interpretation Act 1901 (Cth) s 13(1).
With regard to s 1237A(1), the Social Security Guide provides at Part 6.7.3.30:
When is a debt attributable solely to administrative error?
In general whenever a mistake has been made in administering a payment, the debt will arise ‘solely to an administrative error’ providing the recipient’s conduct has not contributed to the debt in any way.[47]
[47] Part 6.7.3.30.
In Sekhon and Secretary, Department of Family and Community Services [2003] FCAFC 190 Selway J said, at [35]:
The ordinary or usual interpretation of the phrase 'attributable solely to' is that it refers to the single or sole cause of the relevant act or event. The word 'attributable' means 'capable of being attributed'. It involves an objective assessment of causation. The words 'a debt attributable solely to an administrative error' can be paraphrased as meaning that the only cause that objectively can be ascribed to the relevant debt is an administrative error.
Did Centrelink make an error in processing the applications for social security? The ARO considered that Centrelink failed to scrutinise CSYM’s ‘unadorned assertion’ that she did not have a beneficial interest in the property or the proceeds of sale.[48] The ARO stated:
The department should never have accepted your statement and should not have granted your payment without evidence of how the sale proceeds for [the Gold Coast unit] had been distributed.
While there is an administrative error from the department, you have nevertheless contributed to the occurrence or your debt in the statement that you made. The [Gold Coast unit] was not “Acquired by the real owner overseas” and the sale proceeds were not distributed to any single person, they were instead distributed to you, your husband [and other parties including your children]. [49]
[48] T28 at p 292.
[49] T28 at p 292.
The next question is whether the Applicants contributed to the administrative error made by Centrelink. Did the statements made by the Applicants in their applications on 12 January 2016 contribute to the error made by the Department in failing to scrutinise their claims more carefully?
On 12 August 2015 AAT1 found that CSYM was the beneficial owner of the Gold Coast unit. Therefore, as a matter of law, any disposal of the proceeds of sale for less than value was liable to be assessed as a gift. The statement on 12 January 2016 that no gifting had occurred in the previous five years was factually and legally incorrect. It was at odds with the finding of the first level review of the Tribunal.
It would seem that in completing the asset statements the Applicants maintained a position with respect to the status of the Gold Coast unit that was at odds with the finding of AAT1. This no doubt coloured their negative answer to the question about gifting.
I am persuaded that the statements made by the Applicants in their applications on 12 January 2016 contributed to the error made by the Department in failing to scrutinise their claims more carefully.
Even if it is accepted that the Applicants did not contribute at all to the administrative error made by the Commonwealth, it is hard to see that the social security payments were received in good faith. The Applicants were well aware of the disputed history relating to the ownership of the Gold Coast unit. Indeed, in January 2016 when they applied for the Age Pension that dispute had yet to be finally resolved by the Tribunal.
The solicitor for the Respondent notes that the Applicants had an obligation arising from s 66A of the Social Security (Administration) Act 1999 (Cth) to advise Centrelink of any event or change of circumstances that might affect the payment of that social security payment. The fact that exactly five months before, on 12 August 2015, AAT1 had made an important ruling about the property, namely, that she was the beneficial owner, was something that should have been brought to the attention of Centrelink in January 2016 when they applied for the Age Pension.[50]
[50] T5 at p 69.
In their favour it might be said that they did not fully appreciate the implications of the deprivation rules relating to gifts. This raises a question as to whether a person can be said to be acting in good faith if they are acting in ignorance of the law. It may well be that for certain purposes an ‘innocent’ mistake as to the legal consequences of an act or omission will not preclude a finding of good faith.
In the present factual setting, it is not necessary to answer this question, because I find that the answers given to the specific question relating to gifting, as well as the Applicants’ statements relating to the ownership of the Gold Coast property, contributed to the error made by the Department in failing to examine more fully issues relating to the disposal of the Gold Coast property. It cannot fairly be said that in all the circumstances the error identified by the ARO in respect of processing their claims for the Age Pension was solely attributable to an administrative error of the Department.
Waiver in Special Circumstances
Section 1237AAD provides
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
The question posed by s 1237AAD(b) is whether there are special circumstances, other than financial hardship alone, that justify the waiving of the loan, either in whole or part.
In Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25 at [33], Besanko J noted that it was an overstatement to equate ‘special’ circumstances with ‘exceptional’ circumstances. It was not the intention of Parliament to confine the exercise of discretion to an exceptional case. His Honour noted that:
There is less risk of overstatement if the words ‘unusual’ or ‘uncommon’ are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case...
I have already found that the debts arose at least partly from the Applicants’ failure to disclose the gifting arrangements made from the proceeds of selling the Gold Coast unit. Section 1237AAD raises the question whether their negative answers to the question about gifting amounts to the making of a false statement. This is a fine line. It is one thing to say that a statement contributed to an error, another to find positively that it was a false statement.
I have regard to the fact that the gifting statements were made on 12 January 2016, before the finalisation date of the second level review in the first proceedings, namely, 29 September 2016.[51] It may be that litigants are entitled to maintain their position on disputed facts until all avenues of appeal are fully exhausted. However, the various factual claims in question had been aired and rejected by the Department, the ARO and by AAT1. These included the claim that money had been provided by third parties for the unit’s purchase; that it belonged to a Church; and that sale proceeds were paid to multiple parties so that it could be returned to the true owner.
[51] T21 at p 216
The failure to disclose the fact that substantial disbursements were made primarily to the Applicants’ adult children in October 2015 upon settlement of the sale of the Gold Coast unit was at the very least a significant omission. To the Applicants’ three adult children $900,000 was transferred, and $100,000 to another person, ostensibly for the purpose of paying the ‘true’ owner. The arrangement stretched credulity at best, but in any event all this had been thoroughly aired and rejected by the Tribunal on 12 August 2015 in the first level review.[52] The issues were not re-agitated before me by the Applicants in the second level review.
[52] T5 at p 69.
It was a serious matter not to refer to these very substantial disbursements, whether or not they maintained that the transfers were not properly characterised as ‘gifts’. One might go further and describe the statement that there had been no gifting in the previous five years as a false statement.
But even if I am wrong in this, I do not think that there are any ‘special circumstances’ under s 1237AAD such that the debt owed by either CSYM or WZGY should be waived. The Applicants did not address this issue specifically, choosing to base their claim for debt relief solely on s 1237A(1) - sole administrative error.
While I recognise that WZGY is elderly and suffers from some serious health issues, without wanting to be unduly insensitive, such health issues are not atypical for persons of his age.
Moreover, it cannot be doubted that the Applicants have received a significant amount of social security money to which they were not entitled. The settlement arrangements entered into between the Applicants and Centrelink involved in each case a significant discount to the Applicants. As to the future, it would seem that at the expiration of the five year period from the date of gift specified under the deprivation rules the Applicants may re-apply for the Age Pension.
I am not persuaded that there are special circumstances (other than financial hardship alone) that make it desirable to waive the debts.
There is however a final matter to be considered.
Have the debts been discharged?
The hearing of this matter was punctuated at an early stage by the Applicants’ assertion that the debts had been paid pursuant to a final settlement. The solicitor representing the Department at the hearing was, he said, surprised by this development, which had not been conveyed to his office by the Department.
It appeared that WZGY contacted Centrelink on 26 September 2019 and offered to pay $24,985 in full and final settlement of his debt of $28,101.40.[53] He also offered to pay $24,985 in final settlement of CSYM’s debt of $33,988.01.[54] It appears that on 26 September 2019 two amounts of $24,985 were transferred to Centrelink in final settlement of their debts.
[53] Transcript, Monday 20 January 2020 at p 14, line 16.
[54] Transcript, Monday 20 January 2020 at p 17, line 36.
A Centrelink file note dated 26 September 2019 records this arrangement. A note dated 30 September 2019 states:
Customer was advised of discount amount and due date. Cus was also wanting to stop the AAT2 review cus advised he would need to call them.
A file note dated 2 October 2019 relating to WZGY’s account indicates a waiver amount of $3,214.66 and a finalisation amount of $28,101.40.
A file note dated 2 October 2019 relating to CSYM’s account indicates a waiver amount of $8777.27 and a finalisation amount of $33,988.01.
On 8 October 2019 WZGY asked for a statement of account, and followed up this request on 14 October 2019.
At the Tribunal’s request, the Department wrote a letter to Centrelink to WZGY to clarify the account details. This letter, dated 20 January 2020, and addressed to WZGY, outlines the Repayment History.
WZGY filed various documents with the AAT Registry, including a letter (dated confusingly 14 and 15 January 2020) in which he stated that he had cleared the debts but paid too much by a large margin. He said that Centrelink refused to refund the overpayment. He referred to a Centrelink document dated 8 October 2019 headed ‘Statement of Account’ covering the period 8 April 2019 to 8 October 2019, which he said indicated that he was owed an amount of $28,101.40 by reason of a double payment or overpayment.
The solicitor for the Respondent was unaware of any repayment by the Applicants and the hearing was adjourned to enable the solicitor to obtain instructions. Upon resumption the solicitor confirmed that each of the debts had in fact been paid and that there was nothing owing.
WZGY continued to assert that the letter of 8 October 2019 showed that he had overpaid $28,101.40 which, he said, was now owed him by the Department. It was apparent that this was in fact the main reason why, after settling the account, he had proceeded with the second level review. He claimed that his attempts to gain a final and clear answer from the Department had been met with bureaucratic indifference.
I adjourned the matter until 29 January 2020 to enable the solicitor for the Respondent to seek further clarification. Upon resumption, he tendered a letter dated 22 January 2020 that Centrelink had written to WZGY which stated as follow.
This is a letter to confirm that on the date of this letter (22 January 2020), you owe nothing to the Commonwealth… and the Commonwealth owes nothing to you.
This state of affairs is reflected in the letter addressed to you entitled “Statement of Account” and dated 8 October 2019.
That letter, for your Age Pension debt number X0452533, shows that on 2 October 2019, the balance of your debt of $28,101.40 was extinguished as a result of:
·You paying $24,985.00 to the Department on 26 September 2019; and
·The Department waiving $3,214.66 by agreement with you for the balance of the debt dated 2 October 2019.
In particular, the letter of 2 October 2019 does not indicate that the Commonwealth owed you $28,101.40 on that date.
WZGY was not persuaded. He persisted in his claim that Centrelink owed him $28,101.40. He pointed to the 8 October 2019 ‘Statement of Account’ and in particular, the fact that the amount of $28,101.40 appeared in the last line of the column, which he interpreted as to be indicating an outstanding debt owed to him.
In the hope that this matter may be brought to a final conclusion, I note that the document dated 8 October 2018 headed ‘Statement of Account’ is merely a transaction record recording the date of transactions leading to the discharge of the debt of $28,101.40. The amounts paid, taking into account all debits and credits, is that which was owed: $28,101.40. The fact that an amount of $28,101.40 appears in the last line of the transaction record does not indicate an outstanding amount. Rather, it indicates that the debt has been fully repaid.
I note also that this document is consistent with Centrelink file notes relating to the accounts of both Applicants. The October account for WZGY records that a sum of $24,985 was paid twice on 26 September 2019 with receipt numbers ending in 48 and 49. It also records that $24,985 was debited to his account on 30 September 2019 and transferred to CSYM’s account. The notation on WZGY’s October account is ‘3dpty Debt’. On 30 September 2019 an amount of $24,985 is recorded against CSYM’s account as ‘Blk from 3dpty’.
WZGY did not provide any bank statements to support his claim that Centrelink still owed him money.
I am satisfied that the negotiated settlement sum has been fully paid, as verified by Centrelink’s letter of 22 January 2020, which is before the Tribunal.
CONCLUSION
My conclusion is that the first level decision of the Tribunal in the present proceedings should be affirmed. The decision of AAT1 is affirmed.
I certify that the preceding 83 (eighty-three) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member
.........................[sgd]...............................................
Associate
Dated: 17 April 2020
Date(s) of hearing: 20 and 29 January 2020 Applicant: In person and by phone Solicitors for the Respondent: Dr S Thompson, Services Australia
Key Legal Topics
Areas of Law
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Judicial Review
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Procedural Fairness
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Standing
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Statutory Construction
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