Editors --- "Disability support pension debt: principal home; special circumstances waiver" [2010] SocSecRpr 57; (2010) 12(4) Social Security Reporter, Article 12

• HEWITT and SECRETARY Of THE DFHCSIA
• Background
• The issues
• The law
• Discussion
• Formal decision

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Disability support pension debt: principal home; special circumstances waiver

HEWITT and SECRETARY Of THE DFHCSIA

(2010/825)

Decided: 1st November 2010 by P. Hack and M. Carstairs

Background

Hewitt was the registered proprietor of land at Wakerley, a Brisbane suburb, where she built a house which, upon completion in early 2001, was occupied by her daughter and grandchildren.

From April 1999 Hewitt resided at Tingalpa (another Brisbane suburb) where she cared for a friend who was unwell. Later, after herself ceasing work for health reasons, Hewitt applied in 2000 for disability support pension (DSP), noting in her application that her permanent home address was at Tingalpa, and that she there received free accommodation but shared house expenses. From the time the Wakerley house was occupied by her daughter and grandchildren, Hewitt continued to visit the Wakerley property several times each week, often staying overnight, and often assisting in the care of her grandchildren. An agreement was drawn up between Hewitt and her daughter which granted the daughter and family the right to live at Wakerley for 50 years on payment of a $1 fee, with provisos that they maintain and not alter the house without permission, and with explicit proviso for Hewitt to occupy the Wakerley property should she elect to relocate from Tingalpa.

After the Wakerley house was completed she notified Centrelink of its completion and of her living situation at Tingalpa, but no note was made by Centrelink of this advice. From July 2000 to May 2008 Hewitt received DSP. In 2001 her DSP was cancelled and then re-granted after review of her assets, the Centrelink notes of which recorded her address at Wakerley, though one document disclosed the address initially as Tingalpa but this had been crossed out and replaced with ‘Wakerley’. In the ensuing years there were other instances when Hewitt confirmed to Centrelink that her asset details remained as they had been when DSP was granted to her.

In April 2008 in anticipation of transfer to age pension, Hewitt was sent a document by Centrelink which referred to her as a ‘non home owner’. When Hewitt corrected this and advised Centrelink of her circumstances, the value of her Wakerley house was investigated and the DSP overpayment was raised.

The issues

In this matter the central issues were whether a property owned by Hewitt could be said to be her principal home, and whether her interest in that property gave her reasonable security of tenure, notwithstanding that she resided in the main at another address. A further question was whether any resulting overpayment of DSP should be waived.

The law

The Social Security Act 1991 (the Act) requires by s.1064 that the rate of DSP be calculated by reference to, amongst other things, the assets held by a person, and makes allowance for whether the person is a ‘homeowner’. That term is defined by s.11(4) of the Act to mean –

11(4) (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; ...

The effect of these sections is that asset limits (and, so, eligibility for DSP) vary if an applicant is or is not a homeowner.

If amounts are paid under the Act which ought not to have been paid, the amount overpaid is a debt (s.1223). Debts can, however, be waived if the requirements of s.1237AAD are met. That section provides –

1237AAD. 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 a false representation; or

(ii) failing or omitting to comply with a provision of this Act, the Administration 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.

Discussion

The Tribunal noted that, although the agreement with her daughter contained various provisos the operation of which would enable Hewitt to return to live in the Wakerley property, the agreement did not contain any entitlement for Hewitt to reside at Wakerley until the circumstances covered by those provisos (for instance, upon making alterations without permission, or advice by Hewitt of her proposed relocation from Tingalpa) actually arose. Indeed, the Tribunal concluded, any attempt by Hewitt to assert a right to occupy the Wakerley house other than under the provisos in the agreement, would constitute a breach of her daughter’s right to quite enjoyment of the property. As such the Tribunal concluded that although Hewitt had a right or interest in the Wakerley house she did not have reasonable security of tenure in that property, as required by s.11(4) of the Act. Further the Tribunal was not satisfied that she had ever occupied the Wakerley house as a residence, and that her stays at Wakerley were principally in her role as grandmother rather than as an ordinary resident of that home. The Tribunal thus concluded that Hewitt was not a homeowner, as defined in the Act, during the period in which she received DSP. As such, the Wakerley property had to be considered as an asset for the purpose of calculating her entitlement to DSP, and so the debt arose.

The Tribunal then considered whether there was a basis for waiver of the resulting debt due to ‘special circumstances’. The Tribunal noted the comments inGroth v Secretary, Department of Social Security [1995] FCA 1708 that, to be ‘special’, there needed to be something ‘out of the usual or ordinary case’. In concluding that such circumstances did here exist, the Tribunal noted Hewitt’s ongoing health problems, her honest dealings with Centrelink, the failure of Centrelink to appreciate the disparity in addresses apparent in the documentation recorded on her file, and the fact that Hewitt had not profited from the arrangement with her daughter as would have occurred had, for instance, the Wakerley property been rented out in the usual way. The Tribunal also noted that, had Hewitt become aware of the implications for her DSP of continuing to live at Tingalpa, she would have commenced living in the Wakerley home as her principal residence from the outset.

The Tribunal determined that Hewitt’s circumstances were, indeed, special and that in consequence 50% of the debt should be waived.

Formal decision

The decision to raise the debt was affirmed, but the amount of the debt was reduced by waiving 50% of the overpayment.

[P.A.S.]