Djuric and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 279 (24 April 2009)

Last Updated: 24 April 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 279

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/5343

GENERAL ADMINISTRATIVE DIVISION		)
	Re		LAURY DJURIC

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Dr M Denovan, Member

Date 24 April 2009

Place Brisbane

Decision

The Tribunal affirms the decision under review.

...............[Sgd]...............................
Member

CATCHWORDS

SOCIAL SECURITY – Disability support pension debt – Australian Valuation Office valuation of real property correct – Meaning of “severe financial hardship” – Meaning of “special circumstances” – No proportion of debt attributable solely to an administrative error made by the Commonwealth – No basis for write off of debt – No basis for waiver of debt – Decision under review affirmed

Social Security Act 1991 (Cth), ss 1064 (Module G), 1223(1), 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 (Cth), ss 68(2), 100(1)

Dranichnikov v Centrelink [2003] FCAFC 133; (2003) 75 ALD 134

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

Re Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729

Secretary, Department of Education, Employment, Training and Youth Affairs v Prince [1997] FCA 1565; (1997) 50 ALD 186

REASONS FOR DECISION

24 April 2009

Dr M Denovan, Member

1. Laury Djuric (the applicant) is a disability support pensioner and home-owner and has a number of property assets. After reviewing the value of those assets, Centrelink (the respondent) determined that the applicant had been overpaid an amount of Disability Support Pension (“DSP”) for the period 2 July 2004 to 19 June 2008, and that the overpayment was a debt that should be recovered. The applicant then sought review of the decision. On review, the DSP debt was reduced from $9,756.49 to $8,573.10. In all other respects his claim was refused, and is the subject of the application for review before this Tribunal.
2. In order to resolve the dispute in this case, the Tribunal must:
   • firstly, determine whether the applicant has been overpaid DSP; and
   • secondly, determine whether part or all of the DSP debt should be written off or waived.
3. After carefully considering the evidence, I have decided the applicant has a DSP debt of $8,573.10, and that there are no grounds for the debt to be waived or written off. I have therefore decided to affirm the decision under review. I explain my reasons below.

THE FACTUAL BACKGROUND

4. The applicant was in receipt of DSP at all material times.
5. On 2 July 2004, the applicant signed a contract to purchase a property at Innisfail for $138,000. At that point in time, the applicant also had an ownership interest in three other properties, located at Coomera, Beenleigh and Mango Hill. The assets of the applicant at that time were as follows:

Motor vehicle $2,500 + household personal effects $5,000	$7,500
Coomera property ($285,000 - $197,669)	$87,331
Beenleigh property (1% property interest) ($79,000 - $76,492)	$25
Mango Hill property	$75,000
Innisfail property	$0
Westpac bank account	$1,703
Total	$171,559

6. Whilst the applicant is adamant that he informed Centrelink of the purchase of the property at Innisfail, Centrelink has no record of being informed by him. Accordingly, Centrelink did not take that property into account when assessing the applicant’s assets.
7. The applicant advised Centrelink on 2 February 2005 that the value of the property at Mango Hill had increased to $95,000.
8. On 29 April 2005, the applicant attended an interview to provide proof of his current circumstances. There is no indication in Centrelink records that the applicant informed Centrelink about the Innisfail property at that time.
9. On 12 July 2006, the Innisfail property was sold for $198,000.
10. An income and assets update was carried out by the respondent on 19 October 2006, and Centrelink subsequently obtained Australian Valuation Office (“AVO”) valuations of the properties at Mango Hill and Coomera as at December 2006 of $110,000 and $285,000, respectively.
11. A letter from Centrelink dated 3 December 2007 informed the applicant that an Australian Taxation Office (“ATO”) data matching exercise had been carried out and Centrelink had become aware of the purchase and sale of the property at Innisfail. This information prompted Centrelink to carry out a more detailed review of the applicant’s assets.
12. The applicant sold the property at Coomera on 13 December 2007 for $360,000.
13. A decision was made by Centrelink on 16 July 2008 to raise and recover a DSP overpayment in the amount of $9,756.49, for the period 2 July 2004 to 19 June 2008.
14. On 19 August 2008, the applicant requested review of that determination.
15. An Authorised Review Officer varied the decision on 12 September 2008. The officer determined that there was a DSP debt in the amount of $8,573.10 for the period 2 July 2004 to 24 June 2008.
16. On 14 October 2008 the Social Security Appeals Tribunal (“SSAT”) affirmed the decision under review.
17. The applicant applied to this Tribunal for review on 12 November 2008.

APPLICANT’S POSITION

18. Mr Djuric is adamant that he informed Centrelink of the purchase and sale of the property at Innisfail. He contends that he should not have to repay a debt that was a result of overpayment due to administrative error.
19. Mr Djuric disputes the valuation used by Centrelink for the property at Mango Hill. It is Mr Djuric’s position that Centrelink did not ask him to have the property valued. If they had done so he would have sought several valuations and not relied on just one, as Centrelink has done.
20. Mr Djuric claims that he has always provided Centrelink with all information requested about his financial affairs and his assets. It is the case that occasionally his mail is not delivered to his address. Sometimes it is inadvertently placed in the letter-box of a neighbour. Mr Djuric contends that if he has failed at times to provide Centrelink with information requested by letter, it would only be because he did not receive those requests. Mr Djuric maintains that because of his poor English, it was his usual practice to take any written requests to the Centrelink office, where he would usually see a Centrelink officer named Trevor.
21. Mr Djuric was the owner of nine properties at one point in time. He lost much of his assets when he separated from his wife. He lost a further $95,000 because he trusted a number of people he met through the internet. Two of these people were women who purportedly wanted to have a relationship with him. He sent money to both women, and also to a man who asked for assistance. When Mr Djuric’s sister and husband visited recently, he could not afford to provide food for them. Upon their departure, his sister gave him $500 as she could see that he was struggling financially.

CONSIDERATION

22. The rate of disability pension is affected by the level of a person’s income and assets[1]. The asset value limit as at 1 July 2004 for a single person who is a home-owner was $153,000, increasing to $157,000 from 1 July 2005, $161,500 from 1 July 2006 and $166,750 from 1 July 2007.
23. The respondent’s position is that the overpayment of DSP occurred because the correct value of the applicant’s assets was not taken into account.
24. With the exception of the property at Mango Hill, Mr Djuric does not dispute the asset values now used by Centrelink.
25. Mr Djuric has not provided a valuation for the property at Mango Hill. He claims he does not know what the property is worth. However, it is his position that it is insufficient to rely on one valuation, such as that provided by the AVO. Mr Djuric estimated the value of the property to be $95,000 on 2 February 2005. That value was used by Centrelink up until 11 December 2006, when an AVO estimate indicated that the property was worth $110,000. Mr Djuric was informed by Centrelink of this valuation and did not dispute it until this hearing. He has not provided an alternative valuation. In general, the AVO is conservative in its estimates. I note, for example, that the property at Innisfail valued by the AVO at $165,000 sold for $198,000, and the property at Coomera valued by the AVO at $285,000 sold for $360,000. In the absence of any alternative estimate, I do not do any disservice to Mr Djuric by accepting the valuations of his real property assets provided by the AVO. I accept the valuation provided by the AVO for all properties, including the Mango Hill property. I note that the AVO later increased the estimated value of the Mango Hill property to $145,000. That higher valuation only affects 12 days of the time period in the decision under review.
26. In any case, the increase in the valuation of the Mango Hill property has contributed to only a small part of the increase in the value of Mr Djuric’s assets, and therefore has also only contributed to a small part of the overpayment. At the beginning of the period under review, the applicant’s assets were worth $171,559. On 30 May 2008, the applicant’s assets were valued at $233,794. The greatest increase in value was by the Innisfail property ($60,000 in two years). This accounts for the majority of the net increase in Mr Djuric’s assets.
27. Section 68(2) of the Social Security (Administration) Act 1999 (“the Administration Act”) requires a person to let Centrelink know about matters that might affect their payment.
28. Subsection 100(1) of the Administration Act provides that if a person is given notice of their requirements under s 68(2) of that Act, the social security payment rate is reduced the day on which the change in circumstances occurs.
29. As a result of the applicant’s property values increasing and changes to the encumbrances on those properties, the overall value of the applicant’s assets increased. Mr Djuric informed Centrelink of some, but not all, of these changes. I accept that Mr Djuric was given notice under s 68(2) of the Administration Act. In spite of what might have been his honest intentions, Mr Djuric failed to given notice of all of the relevant changes. Accordingly, his DSP can be retrospectively reduced under s 100(1) of the Administration Act from 2 July 2004.
30. The overpaid DSP, totalling $8,573.10, constitutes a legally recoverable debt under s 1223(1) of the Social Security Act 1991 (“the Act”).
31. There are two mechanisms available under the Act which permit a DSP debt not to be recovered.
32. The first of these is s 1236 of the Act which provides that a debt can be written off in limited circumstances. In brief, this section provides that a debt can be written off if the debtor has no capacity to repay the debt. If a debtor is able to repay the debt by way of periodic payments (as Mr Djuric is currently doing) then, unless recovery would cause severe financial hardship, the debtor is taken to have the capacity to repay the debt.
33. Whilst not defined in the Act, the term “severe financial hardship” has been regarded by this Tribunal as requiring circumstances that go beyond straitened financial circumstances. A person must experience financial suffering of a severe and extreme nature[2].
34. Mr Djuric, to his credit, has provided an asset base for himself that is considerably greater than the majority of people in receipt of DSP. In addition to owning his own home, car and household possessions, he has assets in excess of $250,000. His circumstances are not such that they would be regarded by this Tribunal as severe financial hardship. I therefore find that there is no basis for the DSP debt to be written off pursuant to s 1236 of the Act.
35. The second mechanism which allows for a debt not to be recovered is provided by ss 1237A and 1237AAD of the Act. These sections provide for the debt to be waived in certain circumstances.
36. Section 1237A requires the Secretary to waive that proportion of a debt that is attributable solely to an administrative error made by the Commonwealth, if the debtor received the payments in good faith.
37. Mr Djuric claims that administrative error occurred when the Centrelink officer failed to make a note of him reporting the purchase of the Innisfail property. Even if this is correct, it is not the sole reason for any part of the DSP debt: Mr Djuric had reason to know that the valuation of his assets relied upon by Centrelink to assess his rate of DSP was incorrect. This is because Centrelink sent Mr Djuric eight letters between 10 March 2004 and 10 June 2008 informing him of the value of the assets that were being used to assess his DSP. The inaccuracy of that information that Centrelink relied upon (including the absence of their knowledge of the purchase and subsequent sale of the property at Innisfail) should have been obvious to Mr Djuric. The DSP debt was attributable at least in part to the fact that Mr Djuric’s assets were worth more than Centrelink had been advised. No proportion of the DSP debt is attributable solely to an administrative error made by the Commonwealth.
38. Further, even if the DSP debt was due solely due to administrative error, it was not received in good faith. In the matter of Secretary, Department of Education, Employment, Training and Youth Affairs v Prince[3], Finn J stated:

“If that person knows or has reason to know that he or she is not entitled to a payment received ... that person does not receive the payment in good faith”.

39. Mr Djuric had reason to believe that his assets were under-assessed by Centrelink. He therefore did not receive the overpayment in good faith.
40. Section 1237AAD of the Act provides for the possibility of waiving all or part of a debt on the grounds of “special circumstances”. For this section to apply, the debt must not result either in part or in full from the debtor knowingly making a false representation.
41. Whilst special circumstances are not defined in the Act, the approach to be taken in interpreting and applying the discretionary provisions has been dealt with by the Tribunal and the Federal Court in numerous circumstances.
42. In Re Beadle and Director-General of Social Security[4] it was said that:

“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”.

43. In Dranichnikov v Centrelink[5], the Full Federal Court considered the meaning of special circumstances and observed that:

“....what is required will be circumstances which distinguish the case in consideration from the usual case. There will be a requirement that the circumstances are such that takes the case out of the ordinary...”

44. Whilst difficult to deal with, Mr Djuric’s losses (due to his internet relationships and separation from his wife) do not take his case out of the ordinary.
45. I am satisfied that Mr Djuric’s circumstances were not out of the ordinary such as would justify a finding of special circumstances. Waiver of the DSP debt would mean that he would have the benefit of public money in circumstances in which he was not entitled to it. He has had the benefit of the money and there is no injustice in requiring him to repay money for which he had no entitlement.
46. I am satisfied that there are no circumstances which are unusual, uncommon or exceptional so as to justify a finding of special circumstances in this case.
47. That being so, I find that it is not possible to exercise discretion to waive Mr Djuric’s DSP debt.
48. The debt due to the Commonwealth cannot be written off or waived under the discretionary provisions of the Act. Accordingly, I affirm the decision under review.

CONCLUSION

49. The Tribunal affirms the decision under review.
    

I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Dr M Denovan, Member

Signed: ...................[Sgd]..........................................................

Mátyás Kochárdy, Research Associate

Date of Hearing 2 April 2009 (in Caloundra)

Date of Decision 24 April 2009

The Applicant was self represented

For the Respondent Jasmine Forsyth, Centrelink

---

[1] See s 1064, Module G, of the Social Security Act 1991.
[2] Re Stubbs and Secretary, Department of Families and Community Services [2003] AATA 729.
[3] [1997] FCA 1565; (1997) 50 ALD 186 at 189.
[4] (1984) 6 ALD 1 at 3.
[5] [2003] FCAFC 133; (2003) 75 ALD 134 at 148.