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[2009] AATA 95
General information, not legal advice.
Administrative Appeals Tribunal of Australia
2009-02-13
Original judgment source is linked above.
DECISION AND REASONS FOR DECISION [2009] AATA 95
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
....................[Sgd]..........................
SOCIAL SECURITY - newstart allowance - financial assessment - imposition of liquid asset waiting period - application of ordinary waiting period - whether applicant was in severe financial hardship - the decision under review is affirmed.
Re Fawthrop and Repatriation Commission [1993] AATA 359; (1994) 36 ALD 140
Re Biddlecombe and Secretary, Department of Family and Community Services [1999] AATA 528
Re Radovanovic and Secretary, Department of Social Security [2000] AATA 729; (2000) 61 ALD 530
Re Williamson and Secretary, Department of Family and Community Services [2003] AATA 652
2. That decision was affirmed by a Centrelink Authorised Review Officer ("ARO") on 17 August 2007 and by the Social Security Appeals Tribunal ("SSAT") on 24 October 2007. Mr Clark subsequently sought review by the Administrative Appeals Tribunal.
3. Mr Clark gave evidence at a hearing on 30 October 2008. Ms Phyllis Lee appeared for the Secretary, Department of Education, Employment and Workplace Relations ("the Respondent"). For reasons that will be explained later, the hearing was adjourned after all evidence had been taken, in order that the Respondent could make further inquiries as to Centrelink processes in this matter. A Directions hearing followed on 15 January 2009 in order to expedite matters, one reason for the delay being the illness of the Respondent' representative.
4. The Tribunal took into evidence the documents (T Docs) provided pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, a statement by Mr Clark dated 30 October 2008 (Exhibit A1), a bundle of documents (143 pages) forwarded to the Respondent by Mr Clark which concern an injury he received in the United States and the subsequent legal proceedings (Exhibit A2), bank statement of Mr Clark (Exhibit A3), the Respondents Statement of Facts and Contentions dated 27 October 2008 (Exhibit R1) and three letters from Centrelink to Mr Clark (exhibits R2, R3, R4).
6. The liquid assets test waiting period is defined in section 598 of the Act, which relevantly provides:
(1) Subject to subsections (4A), (5), (6), (7) and (8), if:
(a) the value of a person's liquid assets exceeds the person's maximum reserve on:
(i) the day following the day on which the person ceased work or ceased to be enrolled in a full time course of education or of vocational training; or
(ii) the day on which the person claims a newstart allowance; and
(b) the person is not a transferee to a newstart allowance;
the person is not qualified for a newstart allowance for a period unless the person has served the liquid assets test waiting period in relation to the claim before the beginning of that period.
Note 3: for transferee to a newstart allowance see subsections 23(6) and (7).
Note 4: for serving the liquid assets test waiting period see subsection 23(10).
(5) If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while serving a liquid assets test waiting period, the Secretary may determine that the person does not have to serve the whole, or any part, of the waiting period.
Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and 19C(3) (person who is a member of a couple).
Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).
(Subsections (4A), (6) and (8) are not relevant to this matter)
7. It is clear from the above that the consideration of the value of liquid assets takes place on the day following cessation of work, which in this matter, is also the day on which the claim was made.
8. Subsection 598(2) of the Act provides that the liquid assets test waiting period is to be calculated in accordance with subsections (2A), (2B) and (2C), which provide:
(2A) Work out the number of formula weeks (disregarding any fractions of a week) in relation to the claim using the formula:
liquid assets means the person's liquid assets.
maximum reserve amount means the maximum reserve in relation to the person under subsection 14A(1).
(a) if the person is not a member of a couple and does not have a dependent child - $500; or
(2B) If the number of formula weeks is equal to or greater than 13 weeks, the liquid assets test waiting period in relation to the claim is 13 weeks.
(2C) If subsection (2B) does not apply, the liquid assets test waiting period in relation to the claim is the number of weeks equal to the number of formula weeks.
9. Liquid Assets and Maximum Reserve are defined in subsection 14A(1) of the Act as follows, and as relevant to this matter, subsection 14A(1) provides:
(1) In Parts 2.11, 2.11A, 2.12, 2.14 and 2.23A:
liquid assets, in relation to a person, means the person's cash and readily realisable assets, and includes:
(a) the person's shares and debentures in a public company within the meaning of the Corporations Act 2001; and
(b) amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately); and
(c) amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person;
maximum reserve, in relation to a person, means:
(a) if the person is not a member of a couple and does not have a dependent child - $2,500; or
10. Subsection 14A(5) enables the amount of certain payments made by a person to be disregarded for the purposes of determining the amount of a person's liquid assets. It provides as follows:
(a) a person has or had a debt not related to the person's principal home or to any other residential property in which the person holds or held, solely or jointly, any right or interest; and
(b) since becoming unemployed or incapacitated for work or study (as the case requires), the person has, in order to discharge the debt in whole or in part, made a payment that the person was not obliged to make; and
(c) since becoming unemployed or incapacitated for work or study (as the case requires), the person had not already made such a payment in order to discharge that debt in part;
the amount of the payment referred to in paragraph (b) is to be disregarded for the purposes of determining the amount of the person's liquid assets.
11. Subsection 19C relevantly defines severe financial hardship as it affects a person who is not a member of a couple
(2) A person who is not a member of a couple and who makes a claim for parenting payment, austudy payment, special benefit, disability support pension, carer payment or one of the following allowances:
is in severe financial hardship if the value of the person's liquid assets (within the meaning of subsection 14A(1)) is less than the fortnightly amount at the maximum payment rate of the payment, benefit, pension or allowance that would be payable to the person:
12. Ordinary waiting period is defined as 7 days that starts on the persons start date vide sections 620 and 621 of the Act.
13. Section 1121 of the Act refers to charges or encumbrances over an asset, and relevantly provides:
1121 Effect of charge or encumbrance on value of assets
(1) 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 (other than Division 1B of Part 3.10), is to be reduced by the value of that charge or encumbrance.
Note: this section does not apply to an asset to which section 1121A (primary production assets) applies.
(2) Subsection (1) does not apply to a charge or encumbrance over an asset of a person to the extent that:
(a) the charge or encumbrance is a collateral security; or
(b) the charge or encumbrance was given for the benefit of a person other than the person or the person's partner.
(a) there is a charge or encumbrance over assets; and
(b) the charge does not arise under section 1138; and
(c) the assets consist of assets whose value is to be disregarded under section 1118 and other assets;
the amount to be deducted under subsection (1) is:
aid to the interpretation of subsection 14A(5) which provides for certain payments to be disregarded for the purposes of calculating a persons liquid assets. The paragraph is extracted below:
When voluntary one-off payments on non-housing debts are NOT liquid assets
A customer or their partner can make a voluntary payment on a debt after becoming unemployed or incapacitated, with the amount being disregarded in calculating the customer's liquid asset level. This applies only if:
The payment can still be disregarded if the customer makes the payment while serving a LAWP - that is, after the claim is processed. In this case, the claim may need reassessing to reduce the length of the LAWP".
15. Mr Clark was made redundant from his employment in a mowing service on 6 February 2007. On 7 February 2007, the date accepted by Centrelink as his eligible date for NSA, a St George Bank transaction statement showed a balance of $6,715.45. Mr Clark accepted that this was a statement of his account. That statement also showed a debit from the account of $4000 on 23 February 2008, and a further debit of $20 on the same day in respect of an internet fee.
16. The evidence of Mr Clark is that he transferred the $4000 to an account in the United States, as an obligatory payment for services earlier provided by his lawyers in regard to his claim for damages in respect of injuries he suffered on 1 June 2004. He attested that a Bank of America online banking document on file (T19) refers to an account held by his lawyers in the United States, Rackohn and Rackohn. The document does not identify the account holder; it shows that $US 3,110 was transferred into the account on 23 February 2007, that amount less monthly account keeping fees still being in the account as at 13 September 2007, this being the last entry on the document.
17. As noted, Exhibit A2 comprises a bundle of papers in respect of the proposed litigation in the United States. Of relevance to the matter before me, Mr Clark was injured when he slipped and fell whilst leaving a property belonging to USA Hostels in June 2004. Subsequent legal proceedings against that company were undertaken by Dominguez Law firm of Los Angeles on a "no win no fees basis" (Exhibit A1), his litigator attorney being Roni J Hardy. In late 2005, Mr Clark visited the United States, as required by his attorneys, in order to attend meetings in respect of his claim. Mr Clark notes in his statement (Exhibit A1), and confirmed in oral evidence, that Mr Hardy provided "(an) advance (for a period of one year) for air fare and one month accommodation". Mr Hardy provided an E ticket to and from California, and funded the first month's accommodation.
18. Mr Clark stayed on in California until February 2006; he notes in his statement, and again he confirmed in oral evidence, that Mr Hardy advised in late January that he would be "calling in my debt for the airfares, accommodation" before the case went to trial. In the event, Mr Hardy died in June 2006, and Rackohn and Rackohn became Mr Clark's attorneys.
19. An email from Rackohn to Mr Clark, dated 24 July 2006 (A2 p 27) notes "The costs are advanced by the firm. When the case settles the costs will be reimbursed by the firm. ...". In the event, the matter did not proceed, being withdrawn by Mr Clark in October 2007. There is no documentary evidence, nor did Mr Clark provide any oral evidence, as to any costs attributable to his arrangements with Rackohn and Rackohn.
20. As to any claims from Dominguez, Mr Clark refers in his statement (paragraph 20) to a demand "on or around 20 November 2006" from that firm for reimbursement of advances in the sum of $US3,110 for deposit in an account number in the Bank of America. Mr Clark stated in evidence that he had received an updated invoice for $US3600 about 15 February 2007, which he assumed may have included court costs. He could only afford $4000 ($US3110) which was transferred to a Bank of America account on 23 February 2007. The evidence of Mr Clark is that this is the Bank of America account previously referred to.
21. Mr Clark stated that on about 20 February 2007, he had visited Centrelink at Southbank (Brisbane) and proffered the above invoices as evidence of his legal debt to the firms in USA. He told the Tribunal that such evidence had been refused, nor was a photocopy made of the documentation. Subsequently he destroyed or misplaced that documentation. It was in that context that the Respondent undertook to make further enquiries within Centrelink.
22. Mr Clark stated that transfer of the money did not occur until 23 February because of a shortage of funds. That explanation does not account for the fact that he held adequate funds in the St George account in early February. Nor is there any explanation as to why the $US 3,110 transfer remained untouched in the unnamed Bank of America account for many months - the statement of account concludes with the last entry of 13 September 2007. Mr Clark gave evidence that he had received no response to his request for confirmation of receipt of the payment by Rackohn and Rackohn.
23. A letter to Mr Clark from Advanced Credit Management dated 17 April 2007 in respect of a debt of $15560.01 - which Mr Clark said encompassed much of an outstanding debt for medical and living expenses after his accident in 2004 - states that "as all previous demands for payment have been ignored ..." and demands immediate payment. This is a credit card debt with the National Australia Bank which had referred the matter (or sold on perhaps) to Advanced Credit Management. Mr Clark submitted that this debt should have been taken into account when considering his financial position on 7 February 2007, and had Centrelink done so, he would not have been found liable for a LAWP.
Evidence of Mr Laurie Handcock - Authorised Review Officer.
24. As the ARO that affirmed the original decision to impose a LWAP from 7 February 2007 to 3 April 2007, Mr Handcock was called by the Respondent to give telephone evidence. In his notes of 17 August 2007 (T17), which followed a discussion with Mr Clark, Mr Handcock wrote:
"Ian had contended that he had to repay a loan but could not do so until all the funds were together to repay it in full. I queried this with him and he confirmed that this was the case - that he had a loan extended to him by a law firm in the USA on a no win no fee basis and the loan was for airfares and accommodation etc. I then pointed out that in order to gain the benefit of s14 of the Act he would have had to repay the debt or part of it on a one off basis not having done so previously - he then said he had done this ???(given his previous contention was that he had to preserve the funds in an account until ALL the debt could be repaid in full I was left with a view that perhaps he was adopting some flexibility in his approach to fully and faithfully explaining his circumstances). He said that he had about $1600 by the date he lodged his claim (20.02) and that the rest had been paid towards his loan. I asked what proof he had of this and he advised only emails since destroyed. I advised that I found it unlikely that a law firm would not send letterhead documentation of a loan of the magnitude he alleged (he owed more than $15000 according to him) and I was not prepared to accept that this debt was repaid or that the debt even existed without more substantial proof than his say so (particularly given the flexible nature of his answers to questions about the "loan"). He also did not give a clear explanation of how the funds were paid to this so called Law Firm in the USA and he advised they did not give him a receipt ..."
25. The attention of Mr Handcock was drawn to the SSAT decision of 24 October 2007 wherein that tribunal noted that Mr Clark had disagreed with the record of conversation, in that the $15,000 referred to was not a legal debt but a credit card debt. Mr Handcock accepted that he had assumed - incorrectly as it transpired - that the debt was for legal costs. He stated that had he known otherwise, he may have reached a different conclusion.
26. In the light of acceptance that the legal debt of Mr Clark was in the order of $US3,110, Mr Handcock was asked by the Tribunal whether, in his opinion, Mr Clark's debt was of a kind to which subsection 14A(5) of the Act may apply, as conveniently summarised in paragraph 3.1.2.30 of the Guide to Social Security Law. His response was in the affirmative, subject to confirmation on the balance of probability that the transfer of money to the USA on 23 February 2007 was the first payment he had made since becoming unemployed to meet that legal debt and that it had been made to an account held by one of the US law firms.
27. As to the claim by Mr Clark that his offer of invoice(s) to Centrelink Southbank to confirm the requests for payment of legal costing in the USA had been refused, Mr Handcock suggested that was unusual and contrary to Centrelink procedures, but he had no knowledge of the circumstances, nor was he situated at Southbank.
28. At the conclusion of the hearing on 30 October 2008, the Respondent undertook to further investigate the Centrelink processes in respect of the claim by Mr Clark that he was unable to lodge or have photocopied at Centrelink at Southbank, documentary evidence by way of invoices in respect of his legal debts (to which paragraph 21 refers). Ms Lee submitted that she was unable to find any evidence to support the contention of Mr Clark that he offered documentary evidence which was refused - furthermore, her investigation confirmed that such would have been in contravention of Centrelink procedures.
29. Mr Clark then narrowed down the issue, stating that he had sought to present relevant invoices to the officer at Southbank who actually made the NSA decision on 14 March 2007. The Respondent undertook to ascertain whether the relevant officer had recall of the circumstances, and hence a resumed hearing to finalise this matter was scheduled.
30. In response to the Tribunal, Mr Clark stated that he had no further information or evidence to enable confirmation that the Bank of America account (T19) related to Dominguez Law or Rackohn and Rackohn. Nor was he in receipt of acknowledgement of the payment of the claimed debt.
31. Ms Lee for the Respondent confirmed that she had spoken to the relevant officer at Centrelink at Southbank who had no recollection of Mr Clark seeking to lodge documents in relation to the legal debt. She stated that she had confirmed that had such documents been tendered they would have been acknowledged on file in accordance with established procedures. Mr Clark was unable to offer any further information in respect of this matter other than to state that his attempt to lodge invoice documentation was refused because "of the form it was in", namely, there was no letterhead or other adequate identification.
32. Mr Clark stood by his position that he had offered email invoice documentation to Centrelink on 14 March 2007, but this was not accepted. He further submitted that he believed the credit card debt should have been taken into account when calculating his liquid assets; had Centrelink done so, there would have been no liquid asset waiting period.
33. Mr Clark submitted that he was penalised because he had not paid the outstanding debt to Dominguez Law/Rackohn and Rackohn prior to becoming unemployed. Had he been able to do so, his asset value would have been significantly reduced; unfortunately, he was not in a financial position to do so because of a delay in receipt of back pay from his employer. Finally, Mr Clark submitted that in the period under review, he was in severe hardship, made more so by a variety of medical costs. As to the unnamed Bank of America account, Mr Clark reiterated that the Bank would not provide details as to the "ownership" of the account; Mr Clark postulated that the account may be that of the late Mr Hardy, that is subject to the circumstances of a deceased estate which would explain the lack of no transactions, but he agreed he had no evidence to support this suggestion.
34. Ms Lee referred the Tribunal to Re Fawthrop and Repatriation Commission [1993] AATA 359; (1993) 36 ALD 140 wherein that tribunal considered the words "charge and "encumbrance" and concluded - in a matter related to veterans' affairs - that in the context of the word "security", both words denoted a liability in relation to a claim or lien attached to a property. Ms Lee submitted that this conclusion, followed as it was by the tribunal in Re Radovanovic and Secretary, Department of Social Security [2000] AATA 729; (2000) 61 ALD 530, could be applied in this case in that the credit card debt is unrelated to the Applicant's St George bank account and is not secured against it, it being an unsecured liability.
35. The Respondent also referred me to Re Biddlecombe and Secretary, Department of Family and Community Services [1999] AATA 528 and Re Williamson and Secretary, Department of Family and Community Services [2003] AATA 652 where those tribunals found that unsecured liabilities do not reduce the value of a person's liquid assets. Thus, the only payment of debt that might be considered to reduce the liquid assets of Mr Clark for the purposes of subsections 14A(1) and 14A(5) of the Act is the payment of his legal debt. In relation to that matter, there was no evidence before the Tribunal that such payment was made to the appropriate US creditor for the purposes of discharging a debt.
36. Following the interpretations and conclusions in the above decisions as to secured and unsecured liability, I find that the National Australia bank credit card debt cannot be considered against Mr Clark's liquid assets as recorded in his St George Bank account on 7 February 2007, this being the relevant date for the calculation of any liquid asset waiting period. That debt was not such as could be considered secure against the St George account.
37. Instead, should I find to my reasonable satisfaction that the $US3110 electronic transfer to the USA on 23 February 2007 was to an account held by the appropriate legal identity, that is Rackohn and Rackohn or Dominguez Law, then the single issue to be considered will be whether such payment is of a character to which subsection 14A(5) of the Act applies. If that be the case, then that payment can be taken into account when reconsidering the value of liquid assets held by Mr Clark on 7 February 2007 and in calculating the applicable LAWP.
38. There is no evidence before me to confirm that the internet transfer of $4000 on 23 February 2007 was to an account in the name of Dominguez Law or Rackohn and Rackohn. Equally there is no evidence to confirm that the account is in the name of Mr Clark or any other person. That the transferred funds ($US 3,110) remained untouched in that account for a further 9 months - and what happened thereafter is unknown - merely deepens the mystery. Suffice that it seems unlikely that a legal entity would not bring such funds to a general business account.
39. In the circumstances, and given that Mr Clark has no receipt for any such payment, I cannot be reasonably satisfied that Mr Clark can benefit from the provisions of subsection 14A(5) which allow a one-off voluntary non-housing debt payment to reduce the liquid asset level used in the calculation of the LAWP. The evidence of Mr Clark is that he received a demand for reimbursement of $US3,110 from Dominguez in October 2006, and an updated invoice for $US3600 in mid February 2007. In the circumstances, the question must be asked as to why Mr Clark did not effect payment in late January 2007 (when his St George account at T19 page 48 showed a balance of $5,438) or even earlier if the funds were available, and thus prior to claiming NSA and being subject to an assessment of his liquid assets and the applicable LAWP that was applied.
40. On balance therefore, I find that the 8 week LAWP was appropriately calculated and imposed. It remains to consider whether some or all of this LAWP should be waived because of severe financial hardship.
41. Whilst subsection 598(5) of the Act provides for a discretion to waive some or all of the LAWP in certain circumstances, subsection 19C(2) of the Act is quite specific in defining the basis for assessment as to whether Mr Clark suffered from severe financial hardship. The value of Mr Clark's liquid assets must be less than the fortnightly amount of the maximum payment of NSA - this being approximately $450 per fortnight.
42. The balance of Mr Clark's St George bank account, as shown at T19 pp 45 - 48, was above this amount for the period 7 February 2007 (when he became eligible for NSA) to 23 February 2007 and again from 15 March 2007 to 3 April 2007 (when the LAWP ended). There are no bank account details before me for the period 24 February 2007 to 14 March 2007 nor was any indication given in the course of the hearings as to the bank balance of Mr Clark during this period. Nor did Mr Clarke provide any evidence in respect of particular hardship suffered during this specific period. In the circumstances, I am unable to find that in the whole period under consideration, Mr Clark was in severe financial hardship as defined.
43. To summarise, I find that the LAWP of 8 weeks non-payment of newstart allowance has been correctly calculated and applied, as has the further one week ordinary waiting period. On the evidence before me, there is no reason to waive any or all of the LAWP as severe financial hardship is not deemed to exist.
44. The decision of the Social Security Appeals Tribunal of 24 October 2007 is affirmed.
I certify that the 44 preceding paragraphs are a true copy of the reasons for the decision herein of Rear Admiral A R Horton AO, Member.