Wise and Secretary, Department of Family and Community Services [2002] AATA 3 (9 January 2002)

Last Updated: 11 January 2002

DECISION AND REASONS FOR DECISION [2002] AATA 3

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2000/667

GENERAL ADMINISTRATIVE DIVISION )

Re FRANK WISE

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member KL Beddoe

Date 9 January 2002

Place Brisbane

Decision The Tribunal sets aside the decision under review and in substitution therefor determines that the debt due to the Commonwealth be written-off in accordance with Section 1236 of the Social Security Act 1991.

(Sgd) KL Beddoe

SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY - Age Pension - Assets test - non-disclosure of value of asset - overpayment of pension - debt written off.

Social Security Act 1991 ss 1064-G3, 68, 1224(1), 1236, 1237AAD

REASONS FOR DECISION

9 January 2002 Senior Member KL Beddoe

1. The Applicant seeks review of a decision by the Respondent to raise and recover an overpayment of age pension amounting to $67,461. The overpayment is said to have occurred during the period 26 March 1992 to 28 September 1999 (T34). That decision was subsequently affirmed by the Social Security Appeals Tribunal.

2. The decision under review was based on a finding that the Applicant's assets exceeded the allowable assets limit. As at 1991, the relevant asset limit was quantified by Section 1064-G3 of the Social Security Act 1991 ("the Act") as $110,750.

3. At the hearing, Mr Keim of Counsel appeared for the Applicant and Mr McQuinlan represented the Respondent. The documents lodged in the Tribunal pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the "T" Documents and further documents were tendered and marked as exhibits. No oral evidence was presented.

4. I make the following findings of fact.

5. The Applicant was born on 19 November 1901. He has been an age pensioner for many years before the relevant dates in this case. There is a scarcity of documentation about the Applicant's pension affairs in earlier years but some documentation about these earlier times is found in Exhibit A which is a file of supplementary documents produced by the Respondent.

6. Those documents suggest, and there is no dispute, that, except for short breaks, the Applicant has lived on a property in Orme Road, Buderim for all of his life (Exhibit C).

7. By an application dated 12 March 1975, the Applicant made a claim for age pension. That claim form is entitled "Claim for Age Pension - Free of Means Test". At the time of completing the form the Applicant was 74 years of age. The form is limited in its scope and, for obvious reasons, did not require disclosure of income and assets. While it has been suggested that the Applicant was paid pension without making application for it, I am satisfied that he was paid pension at least from the time of his application dated 12 March 1975 (received by Department of Social Services 14 April 1975), payments commencing from 1 May 1975.

8. By a claim dated 10 October 1980, the Applicant completed a form "Application for Pension Increase". That form was completed by ticking the appropriate boxes and answering questions. The applicant indicated a negligible income confined to bank interest. While he disclosed interest from a bank account, he denied any other assets.

9. Subsequent reviews in 1981, 1982 and 1985 elicited similar details from the Applicant but no other assets were acknowledged by him.

10. There is a series of requirements issued to the Applicant over the years which asked the Applicant to notify assets if the value exceeded specified amounts.

11. Contact was made with Centrelink in 1999 by a daughter of the Applicant regarding his age pension payments. It transpired that Centrelink became aware that the property on which the Applicant resided was of 32 hectares and valued at a figure well in excess of the asset threshold amount.

12. In response to a requisition for information, the Applicant's representative notified details of the real estate including improvements and provided a copy of a Maroochy Shire Council rates notice. The rates notice showed a valuation at $109,000 at 19 January 1999. I understand that valuation to be a Department of Natural Resources valuation made on an unimproved basis in respect of Lots 46, 32 and 1, the lots disclosed as being owned by the Applicant.

13. The Australian Valuation Office advised Centrelink that the subject properties had the following values at the dates shown:

Date Value Whole Property House & Curtilage Value Value excluding H&C

16/03/92 $630,000 $250,000 $380,000

01/07/92 $630,000 $250,000 $380,000

01/07/93 $635,000 $255,000 $380,000

01/07/94 $670,000 $265,000 $405,000

01/07/95 $715,000 $285,000 $430,000

01/07/96 $760,000 $310,000 $450,000

01/07/97 $845,000 $350,000 $495,000

01/07/98 $900,000 $370,000 $530,000

01/07/99 $975,000 $400,000 $575,000

14. It is clear enough on the material that the inherent value of the land is because of its location and not because of improvements or anything else attributable to the Applicant. It has apparently been held by the Applicant's family (at least as to part) since 1901, being passed down from generation to generation. The holding was added to in earlier times and operated as a farm until the Applicant gave up farming in the late 1980s.

15. The property is now used by one of the Applicant's sons in conjunction with an adjoining property and is also used as the Applicant's residence from time to time.

16. Exhibit 1, being the Australian Valuation Office valuation opinion, discusses the difference between the Department of Natural Resources valuations and its own valuation. In essence, the former are based on rural land values whereas the Australian Valuation Office has adopted a highest and best use basis of valuation. This assumes residential use taking advantage of "excellent panoramic views towards the coastline and the Coral Sea, as well as the elevated nature of most of the land....". I am satisfied that the subject land is in an area usually described as "the Buderim escarpment".

17. In essence then, this is a dispute as to quantum i.e. the correct amount of the value of the Applicant's land. Is it to be based on the hypothetical value of residential use on the Buderim escarpment? It seems that most of the land is in fact unsuitable for rural use except for light grazing.

18. Exhibit 1 includes a copy of a decision of the Land Court made in 1985 dealing with lots totalling in area 173.6 hectares not directly relevant. Only portion of the Land Court's judgment has been exhibited but it is clear from that portion of the text that the Land Court gave weight to a number of factors including market value.

19. It is relevant to note, however, that the subject property abuts "Wises Farm South". In the draft Maroochy Shire area plan that land is shown as "neighbourhood residential" while the subject land is described as "hillslope residential".

The Applicant's Submissions

20. The Applicant has always correctly disclosed his circumstances in response to questions asked of him over the years. He was not asked whether he lived on a farm.

21. Insofar as the formal letters issued to the Applicant by the Respondent's antecedents can be construed as requisitions for information they were difficult and inaccessible and were not compliant with the requirements of the Act and cannot be relied upon by the Respondent. In the circumstances it was reasonable for the Applicant to assume that he was not being asked questions about the land he lived on, a situation that had not changed over many years. Even if Document T8 can be construed as a valid notice under Section 68 of the Act it is ambiguous.

22. If an overpayment occurred it was caused by administrative error on the part of the Commonwealth. In the alternative, there are special circumstances in this case which justify waiver of the debt.

The Respondent's Submissions

23. The Applicant was subject to valid requisitions for information about his farm and he failed to advise these details. A 33 hectare property is a substantial property not easily ignored.

24. It is accepted that the Applicant did not knowingly fail to declare his assets insofar as he did not declare this 33 hectare property.

25. Write-off of the debt is the more appropriate course here rather than a waiver of the debt.

Consideration

26. I have no doubt that the formalised procedures of the Respondent and its antecedent had little impact on the Applicant. That is not to suggest that a person who turns a blind eye to the requirements of the Act is thereby to be treated as a special case under the Act.

27. I am satisfied that it is more likely than not that the Applicant was aware that he was receiving an age pension, that during the relevant time the pension was not universally available to men over 65 years of age, that he was required to satisfy an assets test to be eligible for the pension and that he had been asked to supply information to the Respondent and its antecedent from time to time.

28. I am also satisfied that it is more likely than not that the Applicant understood that his farm had a market value well in excess of the Department of Natural Resources (prev. the Valuer-General) valuation used for rating purposes. The Applicant's farm is located in a generally residential area and that was the situation throughout the relevant period. In those circumstances it is also reasonable to infer that both the Applicant and the Respondent would be aware that land on the Buderim escarpment had a special market value because it was sought-after land.

29. I am unclear as to why the Applicant's special situation was ignored by both the Applicant and the Respondent for such a long time.

30. However, the fact remains that the Applicant was paid pension which was not payable because of the assets test. Both parties contributed to the error but I am satisfied it is likely that neither of them did so knowingly.

31. In these circumstances I am satisfied that the Applicant failed to properly notify his assets when he was required to do so albeit that he did not knowingly do so.

32. In the result, payments of pension were incorrectly made because the Applicant omitted to comply with notified requirements to disclose his assets.

33. There is an overpayment of the subject amount which is a debt due to the Commonwealth within the terms of Section 1224(1) of the Act and I so find.

34. This is not a case where administrative error by the Commonwealth is the sole cause of the overpayment. Omission by the Applicant played a part.

35. There are special circumstances in this case. The Applicant was born in 1901 and at the time of the decision was over 100 years of age. He did not knowingly fail to comply with the provisions of the Act but he did unwittingly omit to comply. That was the cause of the quite substantial overpayment and the reason why a waiver under Section 1237AAD of the Act cannot be available in this case.

36. However, the circumstances of the Applicant are such that there is no capacity to repay this debt until the subject land is sold. In these circumstances it is appropriate to write-off the debt in accordance with Section 1236 of the Act while the present circumstances exist.

37. The decision under review will be set aside and there will be substituted a decision to write-off the debt in accordance with Section 1236 of the Act.

I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member KL Beddoe

Signed: Denise Burton

Secretary

Date/s of Hearing 12 April 2001

Date of Decision 9 January 2002

Counsel for the Applicant Mr S Keim

Solicitor for the Applicant Justin Crosby, Solicitors

Solicitor for the Respondent Mr R McQuinlan