Diner and Department of Family and Community Services [1999] AATA 44 (27 January 1999)

Last Updated: 10 February 1999

Administrative

Appeals

Tribunal

DECISION AND REASONS FOR DECISION [1999] AATA 44

ADMINISTRATIVE APPEALS TRIBUNAL )

) No T98/52

GENERAL ADMINISTRATIVE DIVISION )

Re MICHAEL IAN DINER and EVELYN DINER

Applicants

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Deputy President A M Blow OAM, QC.,

Date 27 January 1999

Place Hobart

Decision The decisions under review are affirmed.

[Sgd A Blow]

Deputy President

CATCHWORDS

Social Security - jobsearch allowance - partner allowance - assets test - recovery of overpayment - discretion to waive recovery.

Social Security Act 1991 -ss.1121(1), 1224(1)

REASONS FOR DECISION

27 January 1999 Deputy President A M Blow OAM, QC.,

1. This is an application for the review of decisions made by a delegate of the Secretary of the Department of Social Security on 14 August 1997 to raise and recover overpayments from each of the applicants. Both decisions were affirmed by the Social Security Appeals Tribunal on 19 March 1998.

2. The applicants are husband and wife. On 12 January 1996 Mr. Diner made a claim for jobsearch allowance. On 14 January 1996 Mrs. Diner made a claim for partner allowance. On 15 January 1996 they provided information about their assets.

3. As at 12 January 1996 the applicants had the following assets (I need not state which of the applicants owned each asset):

(a) Their residence at 375 Hobart Road, Youngtown.

(b) A property at 175 Elphin Road, Newstead, which was subject to a mortgage securing a principal sum of $84,000.

(c) A property at 11 Verdun Street, Mowbray, which was subject to a mortgage securing a principal sum of $57,781.

(d) A property at 3 Beatty Street, Mowbray, which was subject mortgage securing a principal sum of $41,192.

(e) A property at German Town Road, St. Marys, which had been mortgaged to secure a debt of $92,000 that was paid off on or about 3 January 1996.

(f) A Hyundai Sonata motor vehicle.

(g) A cheque account with the ANZ Bank, in which there was a credit balance of $496.58.

(h) A cash management fund account with the Island State Credit Union, in which there was a credit balance of $88,385.71.

(i) An on-call savings account with the same credit union, in which there was a credit balance of $1,288.20.

(j) A term deposit (No. 39602) of $10,341.57 in the same credit union.

(k) Household contents.

4. In forms completed by Mr. Diner on 15 January 1996, he stated that the property at German Town Road, St. Marys was mortgaged and that he owed $92,000 pursuant to the mortgage over that property. Relying on that information, and on other information provided by the applicants as to their assets and liabilities, a delegate of the Secretary of the Department of Social Security decided on 9 February 1996 to grant jobsearch allowance to Mr. Diner, and apparently also to grant partner allowance to Mrs. Diner, with effect from 19 January 1996, that date being the first pay day after the lodgment of their claims. Subsequently departmental officers discovered that the mortgage debt owing in relation to the property at German Town Road, St. Marys had been paid in full prior to the applicants' claims for jobsearch allowance and partner allowance having been made. Fresh calculations were undertaken as to the applicants' relevant ! assets and liabilities. As a result, it was decided that the applicants' allowances should never have been granted. Both were cancelled on 26 May 1996.

5. On 14 August 1997 a delegate of the Secretary of the Department of Social Security decided to raise and recover from Mr. Diner a jobsearch allowance overpayment of $1,694.44 in respect of the period 19 January 1996 to 26 May 1996, and to raise and recover from Mrs. Diner a partner allowance overpayment of $2,409.70 in respect of the same period. Those are the decisions under review in these proceedings.

6. At all material times the applicants were married homeowners with no dependants. Under s.529(3) of the Social Security Act 1991 ("the Act") as at January 1996, such persons were ineligible for jobsearch allowance and partner allowance if the value of the relevant net assets of both of them exceeded $167,500 (their "assets value limit"). The respondent contends that at all material times the value of the applicants' relevant net assets exceeded that figure, that they were therefore not eligible for the allowances that were granted to them, and that the decisions under review should therefore be affirmed.

7. The Act requires the applicants' residence not to be taken into account in calculating the value of their assets. Also, s.1121(1) of the Act provides as follows:-

"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, is to be reduced by the value of that charge or encumbrance."

8. Taking those provisions into account, the respondent contends that as 12 January 1996, for the purposes of the Act, the applicants' assets and their values were as follows:-

Assets Values

Equity in 175 Elphin Road, Newstead (value $124,000

less mortgage debt of $84,000) $40,000.00

Equity in 11 Verdun Street, Mowbray (value $68,000

less mortgage debt of $57,781) $10,219.00

Equity in 3 Beatty Street, Mowbray (value $45,000

less mortgage debt of $41,192) $ 3,808.00

Property at German Town Road, St. Marys $70,000.00

Motor vehicle $ 5,000.00

Cheque account $ 496.00

Cash management fund account $88,385.71

Credit union account $ 1,288.00

Term deposit $10,341.00

Household contents $ 7,000.00

Total $236,537.71

9. The total figure exceeds the applicable assets value limit of $167,500. The respondent therefore contends that the applicants were ineligible for jobsearch allowance and partner allowance.

10. At the hearing Mr. Diner, who represented himself and his wife, challenged the respondent's figures on the following bases:-

(a) He contended that the property at Verdun Street, Mowbray was worth $56,000, not $68,000.

(b) He contended that the property at German Town Road, St. Marys was worth $20,000, not $70,000.

(c) He contended that the sum of $92,000 ought to be deducted in relation to the property at German Town Road, St. Marys as a mortgage debt.

(d) He contended that the motor vehicle was worth $2,000, not $5,000.

(e) He contended that the household contents were worth $2,000, not $7,000.

(f) He contended that at the relevant time he had trade debts of $25,500, and that that amount ought therefore be deducted.

11. There was considerable discussion at the hearing as to the correctness of the figures in relation to bank and credit union accounts. As I understand it, Mr. Diner eventually accepted the correctness of the respondent's figures in relation to such accounts. The figures are substantiated by documentary evidence from the bank and credit union included in the documents furnished to the Tribunal pursuant to s.37 of the Administrative Appeals Tribunal Act 1975.

12. Under s. 1121(1) of the Act, which I have set out above, the applicants' trade debts could only be taken into account in determining the value of their assets if they were secured by "a charge or encumbrance over a particular asset". Trade debts are almost invariably unsecured. There is no suggestion that any of the applicants' trade debts were secured by charges or encumbrances over any assets. I therefore reject the applicants' contention that the trade debts should be taken into account.

13. As I have said, the German Town Road property was mortgaged to secure a debt of $92,000, which was paid off on or about 3 January 1996. The repayment of that sum came about as the result of a fire at the property at 375 Hobart Road, Youngtown. The property was insured. A claim was made on the insurance policy. On 15 December 1995, Mr. Diner signed a partial release whereby he agreed to accept $110,000 by way of settlement in respect to the destruction of a building referred to as "Building No. 1" under the relevant insurance policy and its contents. By that document, Mr. Diner authorised the insurance company to pay $100,000 to the firm of solicitors through whom he had obtained the loan that was secured by the mortgage over the German Town Road property. The insurance company paid the solicitors directly by cheque dated 2 January 1996. Mr. Diner gave evidence that when he applied for a jobsearch allowance on 12 January 1996 he was unaware that tha! t payment had been made. He has pointed that interest was charged under the mortgage up to 15 February 1996, and that the discharge of mortgage was not registered until 6 February 1996. However, as I have said, the mortgage debt had been paid off by the time Mr. Diner claimed jobsearch allowance.

14. In my view the state of Mr. Diner's knowledge, the date to which interest was charged, and the date on which the mortgage was discharged are all irrelevant to the determination of the value of the applicants' assets as at 12 January 1996. As at that date, there was still a registered mortgage over the German Town Road property. Whilst that registered mortgage might well have constituted a "charge or encumbrance" within the meaning of s.1121(1), there was no longer any money owing to the mortgagee under that mortgage, and therefore the "value of that charge or encumbrance" for the purposes of s.1121(1) was zero. Prior to the repayment of the mortgage debt, Mr. Diner had a contractual right to the payment of $110,000 by the insurance company, and that contractual right itself constituted an asset. For these reasons I reject the applicants' contention that the sum of $92,000 ought to be deducted ! in respect of the mortgage of the German Town Road property when calculating the value of their assets.

15. I do not need to make any findings as to the applicants' other contentions as to the values of assets. The amounts involved in the remaining disputes concerning other assets are as follows:-

Assets Disputed amounts

11 Verdun Street, Mowbray $ 9,000

German Town Road, St. Marys $50,000

Motor vehicle $ 3,000

Household contents $ 5,000

Total $67,000

16. Even if I were to make findings in favour of the applicants as to each of these four remaining matters, the result would be that their relevant net assets at the relevant date would have been worth $169,537.71. As that figure exes the assets value limit of $167,500 referred to in paragraph 5 above, favourable findings as to the four outstanding matters would not make any difference to the result of these proceedings.

17. The applicants' relevant net assets exceeded the amount of their assets value limit when Mr. Diner made his claim for jobsearch allowance on 12 January 1996. The position was unchanged when Mrs. Diner made her claim for partner allowance on 14 January 1996. Neither allowance should ever have been paid to either of them. I therefore conclude that the amounts paid to them, namely $1,694.44 paid to Mr. Diner and $2,409.70 paid to Mrs. Diner, were overpaid. They were overpaid as a result of the Department relying on the information supplied by Mr. Diner, which falsely (but not necessarily dishonestly) represented the applicants' then financial position.

18. It follows that the amounts so paid are debts due by the applicants to the Commonwealth by virtue of s.1224(1) of the Act, the relevant parts of which read as follows:-

"If:

(a) an amount has been paid to a recipient by way of social security payment; and

(b) the amount was paid because the recipient or another person:

(i) made a false statement or a false representation; or

...

the amount so paid is a debt due by the recipient to the Commonwealth."

19. Under Part 5.4 of the Act, the respondent has discretionary powers to write off or waive, wholly or partly, debts recoverable by the Commonwealth. The power to write off a debt is conferred by s.1236, but can only be exercised in certain situations where it would be impossible or impracticable to recover the money. No such circumstances exist in this case. The power to waive the Commonwealth's right to recover a debt, or part of a debt, is limited by s.1237(1) of the Act to cases involving the circumstances described in ss.1237A, 1237AA, 1237AAA, 1237AAB, 1237AAC or 1237AAD of the Act. Those sections respectively relate to situations where an administrative error has been made by the Commonwealth, situations where a debtor has been convicted of an offence and inability or unwillingness to repay the debt has been taken into account in sentencing, debts of less than $200, situations involving agreements to settle civil actio! ns for less than the full amounts owing, situations where there has been an unclaimed entitlement to family payment or family allowance, and special circumstances not involving the making of any false statements. On the facts of this case, none of those sections confers any discretion on the Secretary. Therefore there is no basis upon which the recovery of the debt owing by either applicant can be waived, or either debt written off, wholly or partly.

20. It follows that I must affirm both of the decisions under review.

I certify that this and the eight (8) preceding pages are a true copy of the decision and reasons for decision herein of

Deputy President A M Blow OAM, QC.,

Signed: .....................................................................................

Personal Assistant

Date/s of Hearing 12 November 1998

Date of Decision 27 January 1999

Representative for the Applicants Mr Diner appeared for himself and Mrs. Diner

Representative for the Respondent Mr Justin Kearney for the Department