Timms and Secretary, Department of Family and Community Services [2002] AATA 869 (1 October 2002)

Last Updated: 1 October 2002

DECISION AND REASONS FOR DECISION [2002] AATA 869

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/658 and Q2001/867

GENERAL ADMINISTRATIVE DIVISION )

Re PAULINE TIMMS PAULINE TIMMS AS EXECUTOR OF THE ESTATE OF REX TIMMS (DECEASED)

Applicants

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr O Rinaudo, Member

Date 1 October 2002

Place Brisbane

Decision The Tribunal affirms the decision under review.

(Sgd) O Rinaudo

Member

CATCHWORDS

SOCIAL SECURITY - disability support pension and wife's pension - overpayment - whether debt properly raised - whether debt can be waived or written-off

Social Security Act 1991 s 8, 1073, 1223, 1237

Succession Act 1981 s 56

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

REASONS FOR DECISION

1 October 2002 Mr O Rinaudo, Member

Decision under Review

1. The applicant appeals a decision of the Social Security Appeals Tribunal made on 29 June 2001 to affirm a decision made by Centrelink on 2 February 2001 (as affirmed by an Authorised Review Officer on 2 March 2001) to raise and recover a debt of wife pension and, in respect of Rex Timms (Deceased), age pension in the amount of $8,269.60 each, paid in the period 1 November 1999 until 31 October 2000.

Evidence

2. The exhibits tendered at the hearing were as follows:

* Exhibit 1 "T" Documents

* Exhibit 2 Letter from Pauline Timms and attachments dated 27.3.02

* Exhibit 3 Statement - Brenda Herbert dated 16.4.02

* Exhibit 4 Centrelink printout - Pension Assessable Assets Summary and Other Asset Summary

* Exhibit 5 Centrelink printouts showing payments to Mrs Timms; repayment details and asset details

* Exhibit 6 Centrelink letter dated 21.11.01 to the applicant regarding Carer Payment

* Exhibit 7 Memo from Peters Doig & MacMillan, Chartered Accountants to Rex and Pauline Timms dated 12.12.01 and attachments

* Exhibit 8 Letter dated 22.10.01 from Pauline Timms enclosing details of medical reports

3. Mrs Timms gave evidence to the Tribunal. Mrs Timms had a number of concerns about the way she had been treated by Centrelink. In particular, she was most upset about the concurrence of the raising of the debt and her husband's severe illness and subsequent death on 23 April 2001.

4. Mrs Timms was also concerned about mistakes, which she said Centrelink had made, on a number of occasions and in a number of different instances, in dealing with her and her late husband. The Tribunal has sympathy for Mrs Timms in respect of some of her dealings with Centrelink and in particular cancellation of payments, which were later reinstated, for which she has not received an apology.

5. These issues were, however, largely irrelevant to the substantive matter which Mrs Timms described to the Tribunal as follows. She and her husband had purchased shares in a company Cloudy Bay Developments Limited ("Cloudy Bay") which had purchased a partially developed industrial estate comprising approximately 55 hectares of land in 1972. Although there is some difference when Mr and Mrs Timms may have bought shares individually in the company, it is sufficient for present purposes to say that they and other shareholders contributed to the company over many years without any return. A dividend was declared and paid upon the sale of the asset in the sum of $27,930 for Mrs Timms and her late husband. Mrs Timms' main argument was that this money should be regarded as a distribution of capital and not income. Mrs Timms did not believe that she nor Mr Timms had a debt to Centrelink.

6. Mrs Timms also suggested that she was entitled to a carer pension which she did not receive, the amount of which should be offset against any debt that might be established to be due and owing.

Issue for the Tribunal

7. The issue to be determined by the Tribunal in this case is whether the amount paid to Mr and Mrs Timms from Cloudy Bay Developments Limited was in the nature of dividends and therefore income or an asset.

Discussion of the Issues

8. For the period of the overpayment, namely 1 November 1999 to 31 October 2000, Mr Timms was in receipt of Disability Support Pension and Mrs Timms was in receipt of Wife's Pension.

9. On 12 November 1999 Mrs Timms wrote a letter to Centrelink advising that "we have sold an asset to the value of $38,000". Taxation notice of assessments for Mr Timms for the year ending 30 June 2000 shows that he had a taxable income of $32,877 [T11 p73] and that Mrs Timms had a taxable income of $33,313 [T11 p72].

10. The accountant for Mr and Mrs Timms confirmed that the supplementary income on the 2000 tax returns was in the nature of dividends from Cloudy Bay Developments Ltd to the extent of $27,930 each for Mr and Mrs Timms. This is also apparent from the tax returns which are T15 in the T documents. The Tribunal is satisfied in this case that Mr and Mrs Timms were mistaken about the nature of the investment in New Zealand. As Cloudy Bay Developments Ltd had invested in land in New Zealand, it appears that Mr and Mrs Timms considered that their investment was in assets. What they in fact owned was shares in the company with the company owner of the land.

11. The Tribunal also acknowledges the submission by Mrs Timms that for many years this was a loss-making proposition and it was only on the sale of the shares that a dividend was declared and monies actually paid to Mr and Mrs Timms. However, the money paid to Mr and Mrs Timms was clearly a dividend and was clearly treated by their accountant as income and was considered by the Taxation Department as taxable income in the 1999/2000.

12. This Tribunal agrees with the Social Security Appeals Tribunal that Mrs Timms did not intend to mislead Centrelink about her financial position. The Tribunal also accepts that the applicant was undergoing an extremely stressful period during this time as a result of Mr Timms' illness and subsequent death.

Legislation

13. Income is defined in sub-section 8(1) of the Social Security Act 1991 ("the Act") as follows:

"(a) income amount earned derived or received by the person for the person's own use or benefit; or

(b) a periodical payment by way of gift or allowance; or

(c) a periodical benefit by way of gift or allowance; but does not include an amount that is excluded under sub-section (4), (5), (7A) or (8)."

14. The exclusions referred to are not relevant in this case and the dividend paid to Mr and Mrs Timms is income in their hands. Section 1073(1) of the Act provides that monies received by the applicant must be maintained over a twelve month period. That section says:

"1073(1) Subject to points 1067G-H5 to 1067G-H20 (inclusive), 1067L-D4 to 1067L-D16 (inclusive), 1068-G7AA to 1068-G7AR (inclusive), 1068A-E2 to 1068A-E12 (inclusive) and 1068B-D7 to 1068B-D18 (inclusive), if a person receives, whether before or after the commencement of this section, an amount that:

(a) is not income within the meaning of Division 1B or !C of the Part; and

(b) is not:

(i) income in the form of periodic payments; or

(ii) ordinary income from remunerative work undertaken by the person; or

(iii) an exempt lump sum.

The person is, for the purposes of this Act, taken to receive on fifty-second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount."

15. Having regard to the provision of section 1073(1), the dividend paid to Mr and Mrs Timms must be regarded as income received on a weekly basis and therefore renders each of them ineligible for the payment for Disability Support Pension and Wife's Pension throughout the period.

16. The amount paid to them which was not payable as a result of the level of their income is a debt pursuant to section 1223 of the Act. That section says:

"Recipient not qualified for payment or amount not payable

1223(1) Subject to subsection (1B), if an amount has been paid to a person by way of social security payment or fares allowance on or after 1 October 1997 and;

(a) the recipient was not qualified for the social security payment or fares allowance when it was granted; or

(b) the amount was not payable to the recipient;

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

17. Having determined that there is a debt, the Tribunal must consider whether the debt can be waived or written off. In this case the debt cannot be waived pursuant to section 1237A as the debt did not occur as a result of administrative error.

18. The Tribunal must also consider whether waiver may be open to the applicants pursuant to section 1237AAD. Whilst the Tribunal is satisfied that Mr and Mrs Timms did not knowingly make a false statement, or knowingly fail to comply with the provisions of the Act, waiver under this section does not appear possible as there are no special circumstances, having regard to the definition in that term in the case of Re Beadle and Director-General of Social Security (1984) 6 ALD 1, which would make it appropriate to waive the debt in this case. In Beadle, the Tribunal said:

"An expression such as 'special circumstances' is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

19. The Tribunal has had regard to the circumstances surrounding Mr Timms' illness and death and, whilst the Tribunal sympathises with Mrs Timms as to the extremely difficult period she must have been going through at the time the debt was raised by Centrelink, Mr Timms' illness and death, of itself, does not constitute special circumstances having regard to the fact that Mrs Timms is not in a difficult financial position and can afford to repay the debt.

20. It is acknowledge that as the executor of Mr Timms' estate, Mrs Timms is liable for the debt in this regard: section 56 of the Succession Act 1981 is applicable.

21. In all the circumstances the Tribunal affirms the decision under review.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Mr O Rinaudo, Member

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

S Oliver

Associate

Date of Hearing 21 May 2002

Date of Decision 1 October 2002

The Applicant Appeared in Person

For the Respondent Mr S Letch, Departmental Advocate