Zimmer; Secretary, Department of Family and Community Services

[2005] AATA 136

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 136

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2003/336

GENERAL ADMINISTRATIVE DIVISION

Re: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And:WALTER JOHANN ZIMMER

Respondent

DECISION

Tribunal:       G. D. Friedman, Member

Date:             15 February 2005

Place:            Melbourne

Decision:The Tribunal sets aside the decision under review and substitutes a decision that the respondent owes a debt of $20,010.91 to the Commonwealth for overpayment of rent assistance between 21 November 1991 and 10 April 2002, and that the debt be recovered.

(sgd) G.D. Friedman

Member

SOCIAL SECURITY - disability support pension - rent assistance - ownership of property - whether held on trust ‑ overpayment ‑ debt to Commonwealth ‑ waiver

Social Security Act 1991 ss 11(4), 11(8), 13(2), 1064-D1, 1224(1), 1236, 1237A, 1237AAD

Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

15 February 2005   G. D. Friedman, Member

1.      This is an application by the Secretary to the Department of Family and Community Services (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 21 February 2003.  An authorised review officer of Centrelink had affirmed a Centrelink decision dated 13 June 2002 to raise and recover a debt of $20,010.91 in rent assistance paid to Walter Johann Zimmer (the respondent) during the period 21 November 1991 to 10 April 2002.  The SSAT set aside the decision under review and substituted a decision that there is no debt in respect of rent assistance owed by the respondent for the period from 21 November 1991 to 10 April 2001, but that the respondent owes a debt of $2212.71 to the Commonwealth in respect of rent assistance for the period from 11 April 2001 to 10 April 2002.

2. With the consent of the parties, the Tribunal decided to make a decision on the review application without holding a hearing. The material before the Tribunal comprised the documents lodged under s 37 of the Administrative Appeals Tribunal Act1975 (T1-T33) and submissions dated 22 March 2004 and 6 January 2005 by Mr M. Todd, a Centrelink advocate, on behalf of the applicant, plus two exhibits (Exhibits A1 and A2) lodged on behalf of the respondent.

BACKGROUND

3.      The respondent was in receipt of disability support pension.  From 21 November 1991 he received rent assistance on the basis that he was paying rent to his mother on a property at Loongana Street, Rye (the property), where he lived.  On 11 April 2002 Centrelink cancelled rent assistance because the respondent was found to be the registered proprietor of the property.  On 13 June 2002 Centrelink decided to raise and recover a debt of $20,010.91, being the amount of rent assistance the applicant received in excess of his entitlement.

4.      On 27 August 2002 an authorised review officer affirmed the decision.  On 3 October 2002 the respondent lodged an application with the SSAT for review of the decision.  On 21 February 2003 the SSAT decision set aside the decision and substituted another decision, as set out in paragraph 1.  On 28 March 2003 the applicant lodged an application with the Tribunal for review of the SSAT decision.

5.      The issues before the Tribunal are whether the respondent owes a debt to the Commonwealth as a homeowner and, if so, whether there are grounds for the debt to be waived or written off.

EVIDENCE

6.      In oral evidence to the SSAT the respondent stated that between 1982 and 1991 he was receiving disability support pension and was living in a caravan which he moved from site to site.  He said that on 11 October 1991 his mother (Mrs Zimmer) arrived in Australia on a visitor’s visa.  He said that before her arrival she had deposited substantial sums into a bank account in Australia.  He told the SSAT that initially she lived with him in his caravan, but she wanted to purchase a house, and so, at the suggestion of a real estate agent, he purchased the property using his mother’s funds.  On 20 November 1991 he registered the property in his name because of difficulties involved in the purchase of a house by a foreign resident.

7.      The respondent noted that there was agreement that he pay Mrs Zimmer $120 per week in rent.  A document signed by the respondent and Mrs Zimmer on 13 October 1991 (translation T20, page 95) states:

On 13/10/91 I, Elisabeth Zimmer, will buy the house at 11 Loongana Street, Rye, in the name of my son Walter Zimmer, because I do not have a nationality and am forced into this by the Australian law.  My son Walter Zimmer will pay me $120 a week rental allowance.

13/10/91 in Rye

(signed)

Walter Zimmer

Zimmer, Elisabeth

8.      The respondent said that he made the mortgage repayments until the loan was discharged in April 2001.

9.      The respondent told the SSAT on 12 February 2003 that his intention was for Mrs Zimmer to seek Australian citizenship or permanent residence, after which the property would be transferred into her name.  He said that for various reasons she returned to Austria in April 1995, and he continued to maintain the property and meet all capital and interest expenses.  He said that he considered these to be equivalent to rent payments to Mrs Zimmer.  The respondent noted that Mrs Zimmer died in 1998, and the property formed part of her estate in Austria.  He said that he has not made payments to the estate since her death, and that his intention was to send the proceeds of sale to Austria to be added to the estate.  He was not able to produce a copy of Mrs Zimmer’s will or any other document that listed the contents of her estate.

10.     In its Statement of Facts and Contentions the applicant states that on 18 June 2003 the property was registered as having a new owner and the respondent had moved to Austria. 

11.     In a statement dated 13 May 2004 (Exhibit A1) Ms E. Roten, Senior Social Worker, Australian-German Welfare Society Inc. said that the respondent returned permanently to Austria about one year previously.  She stated that she had assisted the respondent and Mrs Zimmer on numerous occasions with their health, immigration, legal and real estate problems.  She noted that Mrs Zimmer’s only will was in Austria, and had been drawn up before she came to Australia.      

CONSIDERATION OF THE ISSUES

12. Section 1064-D1 of the Social Security Act 1991 (the Act) sets out the qualification for rent assistance:

1064‑D1  An additional amount to help cover the cost of rent is to be added to a person's maximum basic rate if:

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

(b)the person is not an aged care resident; and

(c)the person pays, or is liable to pay, rent (other than Government rent); and

(d)the rent is payable at a rate of more than the rent threshold rate; and

(e)the rent is in respect of premises in Australia; and

(f)either of the following applies:

(i)if the person is not a member of a couple, or is a member of an illness separated couple, a respite care couple or a temporarily separated couple and is entitled to be paid family tax benefit—the person’s maximum Part A rate of family tax benefit does not include rent assistance;

(ii)if the person is a member of a couple other than an illness separated couple, a respite care couple or a temporarily separated couple, and the person, or the person’s partner, is entitled to be paid family tax benefit—the maximum Part A rate of family tax benefit of the person, or the person’s partner, does not include rent assistance.

Section 11(4) of the Act sets out the definition of homeowner:

11.(4)      For the purposes of this Act:

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

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

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

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

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

(A)the person's principal home; or

(B)the partner's principal home; or

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

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

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

(i)the person has sold the person's principal home not more than 12 months previously; and

(ii)the person is likely to apply some or all of the proceeds of the sale in acquiring another residence that is to be the person's principal home.

…

11.(8)      If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.

Section 13(2) of the Act defines rent as:

13.(2)      Amounts are rent in relation to the person if:

(a)the amounts are payable by the person:

(i)as a condition of occupancy of premises, or of a part of premises, occupied by the person as the person's principal home; or

…

13.     In its Statement of Facts and Contentions the applicant said that the respondent has made contradictory statements about his accommodation since 1991, and his evidence should not be viewed as credible.  The applicant submitted that there was no independent evidence that the property was part of Mrs Zimmer’s estate, and that no probate documents were lodged in Victoria.  The applicant submitted that Mrs Zimmer transferred funds into Australia, but that there was no evidence that the funds were used to purchase the property.  The applicant noted that $48,931.95, the largest deposit, was withdrawn on 25 September 1991, which pre-dates the date on which Mrs Zimmer was supposed to have formed the intention to purchase the property.  The applicant noted that Mrs Zimmer did not arrive in Australia until 11 October 1991, and submitted that the funds deposited into and withdrawn from her account could have belonged to the respondent. 

14.     The applicant stated that the respondent only claimed that Mrs Zimmer owned the property after Centrelink began investigating the matter in April/May 2002.  The applicant submitted further that the statement by Mrs Zimmer (T13, page 39), received by Centrelink on 11 April 2002, that the respondent was paying her $120 per week to rent her caravan was inconsistent with other claims that he was paying $120 per week to Mrs Zimmer to rent the property.  The applicant suggested that the claims on behalf of the respondent, that he made additional payments totalling $60,921.56 between November 1991 and April 2001, out of $90,000 he received in social security benefits, meant that two-thirds of his total income was spent on accommodation, and that this was not credible.

15.     In a letter to Centrelink dated 26 June 2002 (T17) Mr J. Bennison, solicitor, stated that he acted for the respondent in the purchase of the property.  He submitted that the respondent purchased the property in his own name and held it as trustee for Mrs Zimmer, and that the property forms part of her estate in Austria.  In a letter dated 14 July 2004 to the Tribunal (Exhibit A2), Mr Bennison submitted that the respondent held the property for Mrs Zimmer as a bare trust, without a formal deed.

16.     In reaching its decision, the Tribunal takes into account the written material including submissions made on behalf of the parties.

17.     In respect of whether the respondent had a right or interest in the property for the purposes of the Act, the Tribunal notes that a trust is a fiduciary relationship where one person holds property for the benefit of another.    

18.     A bare trust is defined in Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 281 as:

…a trust under which the trustee…hold[s] property…without any…further duty to perform,…[in relation to the trust], except to convey it [the trust property] upon demand to the…beneficiaries.

The Tribunal notes that the respondent held the title in his name, he took out a mortgage in his name, and he was able to deal with the property as his own when he sold it.  There is no material before the Tribunal to suggest that Mrs Zimmer or her executors consented to the mortgage or sale of the property or that they were required to consent. 

19.     The Tribunal agrees with the applicant’s submission that the respondent has made contradictory statements about his accommodation since 1991. The Tribunal notes that the respondent has produced no documents supporting his assertion that the property forms part of Mrs Zimmer’s estate.  Similarly, there is no evidence that the funds transferred to Australia by Mrs Zimmer were used for the purchase of the property.  The Tribunal accepts that the largest deposit, $48,931.95, was withdrawn on 25 September 1991, which was before Mrs Zimmer formed the intention to purchase the property, and before she arrived in Australia on 11 October 1991.

20.     The Tribunal takes into account that the respondent provided a receipt for $420, paid to Mr H. Brausam on 29 February 1992 for four weeks’ rent of the caravan, and finds that this is inconsistent with his claim that he was paying $120 per week to Mrs Zimmer in rent.  The Tribunal accepts the submission from the applicant that the respondent only stated that Mrs Zimmer owned the property after Centrelink commenced an investigation into ownership of the property; that he made additional payments totalling $60,921.56 between November 1991 and April 2001, out of $90,000 he received in social security benefits, meant that two-thirds of his total income was spent on accommodation, and that this was not credible. The Tribunal also agrees that the respondent’s evidence regarding the moneys he spent is not credible.  It is not plausible that he paid rent to Mrs Zimmer to live in the house and made the other payments he claimed to have made, while his only income was $150.80 per week in disability support pension at the time.  Consequently, the Tribunal is not satisfied that the agreement dated 13 October 1991 represents a genuine intention of the parties.

21. For these reasons, the Tribunal finds that the property was not held as a bare trust and that the respondent had a right or interest in the property (s 11(4)(a)(i) of the Act). The Tribunal also finds that the respondent had a right to occupy and use the property and had a reasonable security of tenure (s 11(4) (a)(ii) of the Act), and was a homeowner (s 11(4)(a) of the Act). Therefore, the respondent was an ineligible homeowner under s 1064-D1 of the Act, and did not qualify for rent assistance. The Tribunal finds that rental assistance received by the respondent in the relevant period constitutes overpayments of $20,010.91; and a debt to the Commonwealth in that amount, under s 1224(1) of the Act.

22. Section 1236 of the Act provides that debts may be written off under certain circumstances. The Tribunal finds that the debt is recoverable at law, so there are no grounds to write off the debt.

23. Section 1237A of the Act provides for waiver of a debt arising from 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.

1237A.(1A)  Subsection (1) only applies if:

(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or

(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;

whichever is the later.

The Tribunal finds that the debt was not attributable solely to administrative error by the Commonwealth. As a result, the debt cannot be waived under s 1237A of the Act.

24. Section 1237AAD of the Act provides for waiver of the debt in certain circumstances:

1237.AAD    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.

25.     In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the Tribunal held that the special circumstances, referred to in s 1237AAD(b) of the Act, must be unusual, uncommon or exceptional. There is no material before the Tribunal to suggest that the circumstances in this case are unusual, uncommon or exceptional. Therefore, there are no special circumstances (other than financial hardship alone); so the waiver provisions of s 1237AAD of the Act cannot apply.

DECISION

26.      The Tribunal sets aside the decision under review and substitutes a decision that the respondent owes a debt of $20,010.91 to the Commonwealth for overpayment of rent assistance between 21 November 1991 and 10 April 2002, and that the debt be recovered.

I certify that the twenty-six [26] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  Not applicable: hearing on the papers
Date of decision:  15 February 2005

Advocate for applicant:                Mr M. Todd, Centrelink