Ali v Secretary, Department of Social Services
[2022] FCA 499
•6 May 2022
FEDERAL COURT OF AUSTRALIA
Ali v Secretary, Department of Social Services [2022] FCA 499
Appeal from: Administrative Appeals Tribunal decision made on 9 November 2021 File number: QUD 421 of 2021 Judgment of: RANGIAH J Date of judgment: 6 May 2022 Catchwords: SOCIAL SECURITY - Social Security Act 1991 (Cth) – appeal from Administrative Appeals Tribunal – money received by applicant while receiving the Disability Support Pension assessed as income pursuant to s 1073 of the Social Security Act 1991 (Cth) – whether AAT erred in finding that the overpayment of DSP to applicant was a debt due to the Commonwealth and was legally recoverable pursuant to s 1223(1) of the Social Security Act 1991 (Cth) – applicant has not established any error of law– appeal dismissed. Legislation: Social Security (Administration) Act 1999 (Cth) s 68
Social Security Act 1991 (Cth) ss 1073, 1223(1), 1236, 1237A and 1237AAD
Cases cited: McDonald v Director-General of Social Security (1984) 1 FCR 354
Minister for Health v Thomson (1985) 8 FCR 213
Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; [1999] HCA 21
Sun v Minister for Immigration and Border Protection (2016) 243 FCR 220
Division: General Division Registry: Queensland National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 60 Date of hearing: 31 March 2022 Counsel for the Applicant: The Applicant appeared in person via MS Teams Counsel for the First Respondent: Mr B Dube via MS Teams Solicitor for the First Respondent: Sparke Helmore via MS Teams Counsel for the Second Respondent: The Second Respondent did not appear ORDERS
QUD 421 of 2021 BETWEEN: NAUSHAD ALI
Applicant
AND: SECRETARY, DEPARTMENT OF SOCIAL SERVICES
First Respondent
SHERENE ALI
Second Respondent
ORDER MADE BY:
RANGIAH J
DATE OF ORDER:
6 MAY 2022
THE COURT ORDERS THAT:
1.The appeal is dismissed.
2.The applicant pay the first respondent’s costs of the appeal.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
RANGIAH J:
The applicant, Mr Naushad Ali, appeals from a decision of the Administrative Appeals Tribunal (the Tribunal) made on 9 November 2021 determining that the applicant and his wife, the second respondent, have legally recoverable debts to the Commonwealth arising from overpayment of Disability Support Pension (DSP).
Mr Ali is self-represented in the appeal. Mrs Ali was joined as a party since she has an interest in the outcome, but she has not filed any Notice of Address for Service and has not otherwise participated in the appeal.
The Tribunal was concerned with deposits totalling $321,800 paid into the applicant’s Westpac bank account while he and his wife were in receipt of DSP. The first respondent (the Secretary) contended that the deposits should be assessed as income pursuant to s 1073 of the Social Security Act 1991 (Cth) (the Act). Mr Ali claimed that a single deposit of $800 was in respect of work done by his brother-in-law. He claimed that the remaining $321,000 was, in part, for payment of expenses associated with a building project he was assisting a friend with free of charge and, in part, as a loan from his friend.
The Tribunal rejected Mr Ali’s evidence and found that the deposits should be assessed as income. The Tribunal determined that there had been overpayment of DSP, which was a debt due to the Commonwealth, and was legally recoverable pursuant to s 1223(1) of the Act.
Mr Ali identifies the questions of law in the appeal as whether particular findings made by the Tribunal were manifestly unreasonable.
Procedural history
Mr Ali was in receipt of DSP from 16 August 2010 to 27 February 2018 (apart from some periods of suspension and cancellation) and has since received the age pension.
Mrs Ali has received DSP since 19 February 2009 (apart from some preclusion periods).
On 22 August 2019, Services Australia raised debts against Mr and Mrs Ali on the basis that the correct amount of self-employment income was not taken into account when payments of DSP were made to them. Mr and Mrs Ali requested review of the decisions to raise and recover the debts, but on 17 October 2019, the decisions were affirmed.
After the respondents requested further review of the decisions, an Authorised Review Officer set aside the decisions and substituted decisions that Mr and Mrs Ali owed slightly lower debts.
Mr and Mrs Ali then applied to the Social Services and Child Support Division (SSCSD) of the Administrative Appeals Tribunal for review of the Authorised Review Officer’s decisions. On 3 June 2020, the SSCSD set aside the decisions under review and substituted decisions that Mr and Mrs Ali did not have debts to the Commonwealth. The Member decided that deposits totalling $321,000 made to Mr Ali should not be assessed as income.
The Secretary then applied to the General Division of the Tribunal for review of the decision of the SSCSD. On 9 November 2021, the Tribunal decided to set aside the decision of the SSCSD and substitute a decision to the effect that Mr and Mrs Ali have legally recoverable debts to the Commonwealth.
The Tribunal’s decision
In its reasons for decision, the Tribunal observed that the central issue for determination related to Mr Ali’s receipt of the following deposits:
Date Details of transaction Amount deposited 5/07/2017 Deposit Mt Gravatt $ 50,000 18/08/2017 Deposit Janean R Cater Unit 11 Painting $ 800 22/08/2017 Transfer deposit at Mt Gravatt $ 185,000 16/11/2017 Transfer deposit at Mt Gravatt $ 75,000 20/12/2017 Deposit Mt Gravatt $ 11,000 Total $ 321,800
Mr and Mrs Ali gave evidence before the Tribunal. Mr Ali had a history of working as a landscaper and tree-lopper, which he had ceased some time before he began receiving the DSP. Mr Ali gave evidence that deposits totalling $321,000 were made to him by a Mrs Rahimullah for the expenses of building an extension to her home, including supply of building materials and labour costs of tradespersons.
Mr Ali’s evidence was that he had known Mrs Rahimullah’s deceased husband for many years. She contacted him in mid-2017 to assist in building an extension to her home. They agreed it would be cheaper for Mrs Rahimullah to purchase materials and pay individual tradespeople on a cash in hand basis. Mrs Rahimullah had agreed to transfer the funds for purchase of materials and payment of tradespeople to Mr Ali’s bank account. Mr Ali’s evidence was that he did not receive any remuneration for his assistance in supervising and paying for the construction on her behalf.
The Tribunal noted that Mr Ali’s bank statements for his Westpac account indicated that costs had been incurred for building and construction materials over time, but that some outgoings had involved expenditure of a personal nature.
The Tribunal observed that when questioned as to why there was no evidence of invoices for building materials purchased or contracts entered into for the project, Mr Ali had stated that Mrs Rahimullah had possession of those documents. Mr Ali said there was no need for him to retain any of the receipts as it was Mrs Rahimullah’s responsibility. When Mr Ali was asked why he was not expected to keep track of expenditure for the extension project as the project manager, he initially stated that he had kept track of expenses to the best of his ability, but when asked how he kept track of expenses, he stated that he did not track expenses and just supervised the job. When Mr Ali was pressed as to why he would not be expected to keep accurate records of $321,000 that had been spent, he insisted that he was never dishonest and he did not use any of the money for his personal use.
The Tribunal concluded that, “Mr Ali’s evidence was not credible with respect to his claims that all the expenditures incurred in his Westpac bank account went towards the construction of Mrs Rahimullah’s extension”. The Tribunal noted that about $388,000 had passed through Mr Ali’s account in the period from 5 December 2016 to 15 January 2019 and that many withdrawals went to expenditure of a personal nature. These included four $10,000 withdrawals transferred to his mortgage offset account for his home loan. The Tribunal was not satisfied as to the credibility of his explanations.
Mr Ali claimed that his withdrawals relating to personal expenses were funded from deposits from an insurance payout and from the sale of a vehicle. However, Mr Ali produced no corroborating evidence.
The Tribunal found that Mr Ali’s evidence was not credible in circumstances where he failed to substantiate any of the expenditure incurred from the construction costs associated with Mrs Rahimullah’s renovation. The Tribunal accepted the Secretary’s contention that it was impossible to ascertain with any certainty the expenses that were actually incurred by Mr Ali in relation to Mrs Rahimullah’s project, distinct from his personal expenditure. He did not provide any corroborative material with respect to expenditure by way of receipts or other records.
Mr Ali had submitted an email from a construction company providing a quotation for the cost of Mrs Rahimullah’s extension. The Tribunal did not accept that this quotation was proof of expenditure actually incurred, but was merely a cost estimate for work which ultimately did not proceed.
The Tribunal noted that Mr Ali had initially told Services Australia that the costs of labour and materials for Mrs Rahimullah’s extension was $160,000. He then stated that the remaining $110,000 was also spent on materials and labour but did not have any details of where this money went and that he would need to investigate further.
Mr Ali had provided a valuation of Mrs Rahimullah’s property extension stating the valuation of the property to be $365,400. The Tribunal did not accept that this was evidence of the expenditure incurred for work undertaken.
The Tribunal found that it had no way of delineating expenditure incurred by Mr Ali for the construction of Mrs Rahimullah’s renovation from his own personal expenditure.
Mr Ali had given evidence that he had a verbal agreement with Mrs Rahimullah in approximately June or July 2017 to assist with building the extension to her home. He tendered a signed agreement apparently signed by both parties in August 2017. That agreement stated that Mrs Rahimullah had:
…engaged Mr Naushad Ali to work as a Project Manager (Representative) for the extension of my 3- bedroom house… I further state Mr Ali is not contracted for wages. The money which I have deposited into his Westpac account the sum of $50,000 is to pay for the material and labour. I further agree to deposit the balance of $270,000 on or before December 2017 into his account. This amount will include his loan of $25,000 with interest free. Mr Ali agrees to pay me back when he sells his house at [address redacted].
The Tribunal observed that the first deposit for $50,000 from Mrs Rahimullah had been made on 5 July 2017, predating the signed agreement. Mr Ali was unable to provide an adequate explanation as to why that occurred.
Mr Ali claimed that $25,000 of the $50,000 deposit made on 5 July 2017 was a loan made to him by Mrs Rahimullah. The Tribunal observed that no collateral was provided by Mr Ali, no interest was charged on the loan and he was not required to pay the principal amount until some undetermined time in the future. The Tribunal did not regard the alleged loan agreement as being bona fide.
The Tribunal concluded that the deposits totalling $321,000 should be assessed as income pursuant to s 1073 of the Act. The Tribunal was not satisfied that the explanations put forward by Mr Ali were credible, particularly because of the lack of corroborative evidence regarding the expenditure for the renovation. The Tribunal considered there were substantial discrepancies in Mr Ali’s claims, with much of those claims being uncorroborated.
The Tribunal noted that Mr Ali claimed that the deposit of $800 received on 18 August 2017 was for services provided by his brother-in-law who owed Mr Ali a sum of money. Mr Ali stated that his brother-in-law had done some painting work for an individual and in return the individual deposited the funds for the work directly into Mr Ali’s account to pay for the cost of flights Mr Ali had purchased for his brother-in-law. Mr Ali denied that he had personally provided painting services, except for Mrs Rahimullah, and said that this was done in a voluntary capacity only. The Tribunal was not satisfied with Mr Ali’s explanation for the $800 deposit and considered that amount should similarly be assessed as income pursuant to s 1073 of the Act.
The Tribunal noted the evidence given by Mrs Ali. Her evidence did not alter the Tribunal’s views.
The Tribunal observed that on 11 April 2016, Mr Ali was sent a notice from Services Australia pursuant to s 68(2) of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) informing him that he was receiving his entitlement to DSP on the basis of a combined annual income of $21.58. The Tribunal found that Mr Ali should have treated the $321,800 received between 5 July 2017 and 20 December 2017, as income, in circumstances where both respondents had been notified that their entitlement to DSP was calculated on the basis of a combined annual income of $21.58. The Tribunal determined that DSP paid to both respondents during the period from 5 July 2017 to 20 December 2017 was based on an incorrect combined annual income.
The Tribunal found that the subsequent overpayment of DSP to both respondents was a debt due to the Commonwealth and was legally recoverable pursuant to s 1223(1) of the Act. The Tribunal was of the view that the respondents had the capacity to pay the debts raised against them and found that the debt should not be written off pursuant to s 1236 of the Act. The Tribunal also found that there was no basis for waiver of the debt under s 1237A of the Act. Further, the Tribunal found that there was no basis for waiver under s 1237AAD of the Act.
The Tribunal made the following orders:
Pursuant to section 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets aside the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal, dated 3 June 2020, and substitutes it with a decision that:
(a)Mr Naushad Ali (First Respondent) has a legally recoverable debt to the Commonwealth arising from the overpayment of his Disability Support Pension in an amount to be recalculated on the basis that the following deposits received by him are to be assessed as income, pursuant to section 1073 of the Social Security Act 1991 (Cth):
(i)Deposit of $50,000 made on 5 July 2017;
(ii)Deposit of $800 made on 18 August 2017;
(iii)Deposit of $185,000 made on 22 August 2017;
(iv)Deposit of $75,000 made on 16 November 2017; and
(v) Deposit of $11,000 made on 20 December 2017.
(b)Mrs Sherene Ali (Second Respondent) has a legally recoverable debt to the Commonwealth in an amount to be recalculated on the basis that the above deposits received by Mr Naushad Ali are assessed as income of her partner; and
(c)Both Mr Naushad and Mrs Sherene Ali (the Respondents) recalculated debts to the Commonwealth are recoverable in full; and
(d)The matter be further remitted to the Applicant to recalculate the Respondents debts in accordance with this decision.
The applicant’s case
Mr Ali’s Further Amended Notice of Appeal identifies the grounds as follows:
a)The Tribunal has not disclosed a reasonable basis, or any basis, for its finding at [56] that the $25,000 loan agreement between Mrs Rahimullah and Mr Ali should not be regarded as a bona fide loan agreement.
b)Although number of matters fell for consideration in this case, a pertinent issue was whether the deposits of $321,000 fell within s1073 of the Act, having regard to the nature of deposits fell within Social Security Guide at 4.3.2.10 inter-alia exempt from income, payment for reimbursement for expenses are not regarded as income.
c)The Tribunal observe that on 11th April 2016 Mr Ali sent a notice from the agency pursuant to Section 68(2) of Administration Act. Applicant submit that he provided additional submission and evidence to AAT prior to hearing, that he complied with the notification obligations. No notice was issued in 2017, there is a gap of 16 months from the period notice was issued on 16th April 2016 to 5th July 2017. First deposit of $50,000 was made to Mr Ali’s Westpac account material and labour.
The Further Amended Notice of Appeal also states that the following questions of law are raised:
a)Whether Tribunal finding at paragraph (65) of the decision the contested deposits in total of $321,000 in the Westpac account should be treated as income under 1073 of the Act was manifestly unreasonable such amount, should not necessarily attracts the operation of s1073 of the Act as it contradicts with written agreement between the parties.
b)Whether the Tribunal finding at Paragraph (66) of the decision pursuant to the section 68(2) of the Act was manifestly unreasonable.
c) Whether the Tribunal’s finding at paragraph (56) of the decision that the loan agreement was not ‘bona fide’ was manifestly unreasonable.
The applicant’s written submissions assert that the first question of law is whether the Tribunal’s finding in para [65] of its reasons that the contested deposits totalling $321,000 should be treated as income under s 1073 of the Act was manifestly unreasonable as it contradicts the written agreement between Mr Ali and Mrs Rahimullah. The submissions assert that the Tribunal disregarded the, “contract/agreement which was signed by both parties”. The submissions contend the Tribunal did not specify under what section of the Act it exercised its power to disregard a legally binding contract. It is submitted that the agreement supports Mr Ali’s contention that the deposits were for the payment of materials and labour only and did not represent payment to Mr Ali for his own use or benefit.
The written submissions identify the second issue as whether the Tribunal’s finding at para [66] of the decision concerning s 68(2) of the Administration Act was manifestly unreasonable. Mr Ali submits that the Secretary could not prove that there was any change of circumstances in April 2016 that required Mr Ali to give the Department a statement within 14 days of the notice. He contends that the deposits into his account by Mrs Rahimullah did not commence until 5 July 2017. Mr Ali also submits that since the deposits were payment for material and labour only and did not represent payment to him for his own use or benefit, s 68(2) of the Administration Act did not apply to his circumstances. Mr Ali also submits that there was no evidence that would give rise to the Tribunal’s view that he knowingly failed to comply with his notification obligation.
The written submissions allege that the third question of law is whether the Tribunal’s finding at para [56] that the loan agreement was not bona fide was manifestly unreasonable. Mr Ali submits that the Tribunal has not disclosed any reasonable basis, or any basis, for finding that the loan agreement was not bona fide.
The submissions assert that the $25,000 loan was assessed as income, whereas s 8 of the Act indicates that a gift alone is exempt from assessment.
Mr Ali also asserts that the loan was made interest free because both he and Mrs Rahimullah are Muslim and their religion prohibits charging interest for loans.
In his written submissions in reply, the Mr Ali submits there was an onus on the Tribunal to establish that he was self-employed and that the contested deposits were income. He submits that he had sufficient funds of his own in his Westpac account to cover the costs of his personal expenditure and that the Tribunal failed to take into account evidence to that effect. He also alleges that the Tribunal was biased.
As to the Tribunal’s finding that the first deposit from Mrs Rahimullah was made before the date of the signed agreement, Mr Ali submits that this was not a relevant matter.
The Secretary submits that the findings made by the Tribunal were open to it on the evidence and that the applicant seeks, in effect, impermissible merits review of the Tribunal’s decision.
Consideration
In his oral submissions, Mr Ali described the “key issue” as the Tribunal’s application of s 68 of the Administration Act in circumstances where that provision is submitted to have had no application.
At para [65] of its reasons, the Tribunal observed that on 11 April 2016, Mr Ali was sent a notice from Services Australia pursuant to s 68(2) of the Administration Act informing him that he was receiving his entitlement to DSP on the basis of a combined annual income of $21.58. The Tribunal went on at para [66] to find that Mr Ali and Mrs Ali should have treated the $321,800 he received between 5 July and 20 December 2017 as income.
Section 68(2) of the Administration Act, provides:
(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a) inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
…
The notice provided to Mr Ali under s 68(2) of the Administration Act is dated 11 April 2016. It indicated that he would receive a regular payment of $658.70 calculated on the basis of a combined annual income of $21.58. Under the heading, “What you must tell us”, the notice stated:
You must tell us within 14 days (28 days if residing outside Australia) if any of the changes listed below happen or are likely to happen to you and/or your partner (if you have one). If you get a fortnightly Reporting and Income Statement, report your earnings or changes in circumstances on your reporting day.
The “changes listed below” in the notice included changes to income.
A second, almost identical notice was sent to Mr Ali on 27 February 2018. A notice was addressed to Mrs Ali on the same day.
Mr Ali argues that s 68(2) of the Administration Act and the notices themselves have no application to his circumstances because none of the deposits were made within 14 days of the dates of the notices. However, that argument involves a misconstruction of the notices. The notices required Mr and Mrs Ali to inform the Department of the occurrence of changes in income within 14 days of such changes happening. The deposits commenced with a deposit of $50,000 on 5 July 2017. The deposits were, the Tribunal found, income. Accordingly, Mr and Mrs Ali were required to notify the Secretary no later than 14 days after those deposits were made. The Tribunal did not misinterpret either the notices given to Mr and Mrs Ali or s 68(2) of the Administration Act.
Mr Ali submits that the Tribunal’s finding at para [64] of its reasons that deposits of $321,000 should be assessed as income under s 1073 of the Act was manifestly unreasonable. He submits, in particular, that the Tribunal was not entitled to go behind or disregard the written agreement between Mr Ali and Mrs Rahimullah, which was a legally binding contract.
It is plain that the Tribunal had regard to the signed agreement between Mr Ali and Mrs Rahimullah. The Tribunal set out the terms of that agreement at para [53] of its reasons. The Tribunal observed that the first deposit of $50,000 from Mrs Rahimullah on 5 July 2017 predated the signed agreement and that Mr Ali was unable to satisfactorily explain that discrepancy. Further, the Tribunal was unwilling to accept that there was any bona fide loan agreement for an amount of $25,000. It is apparent that the Tribunal did not regard the agreement as being genuine and was unwilling to give that written agreement any weight in deciding whether the $321,000 amounted to income.
In Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; [1999] HCA 21, Gleeson CJ and McHugh J observed at [40]:
…Someone who disagrees strongly with someone else’s process of reasoning on an issue of fact may express such disagreement by describing the reasoning as “illogical” or “unreasonable”, or even “so unreasonable that no reasonable person could adopt it”. If these are merely emphatic ways of saying that the reasoning is wrong, then they may have no particular legal consequence.
It was not unreasonable, or illogical, or irrational for the Tribunal to decline to accept the written agreement between Mr Ali and Mrs Rahimullah as being genuine and declining to give it any weight. Rather, the Tribunal provided cogent reasons for its unwillingness to accept the agreement as providing any probative value.
Mr Ali alleges that the Tribunal’s finding at para [56] of its reasons that the loan agreement was not bona fide was manifestly unreasonable. He argues that the Tribunal did not disclose any reasonable basis, or any basis, for finding that the loan agreement was not bona fide.
The Tribunal was not willing to find that the loan agreement was bona fide because no collateral was provided by Mr Ali, no interest was charged and there was no requirement to repay the principal until he sold his family home at some undefined point in the future. Further, the authenticity of the written agreement was undermined by the fact that the first deposit predated the agreement. Mr Ali had submitted that the loan was interest-free because he and Mrs Rahimullah are Muslim, and their religion prohibits the charging of interest for loans. It was, however, a matter for the Tribunal to give that submission the weight it considered to be appropriate. The Tribunal evidently declined to give weight to the submission. That must have been influenced by the Tribunal’s findings that various other parts of Mr Ali’s evidence were not credible. The Tribunal’s finding that the loan agreement was not made bona fide has not been shown to be unreasonable, irrational or illogical.
Mr Ali submits that there was an onus on the Tribunal to establish that he was self-employed and that the contested deposits were income. However, concepts of onus of proof are generally inapposite in proceedings before the Tribunal: McDonald v Director-General of Social Security (1984) 1 FCR 354 at 356; Minister for Health v Thomson (1985) 8 FCR 213 at 223–224; and see generally Sun v Minister for Immigration and Border Protection (2016) 243 FCR 220 at [64]-[79]. Mr Ali’s submission cannot be accepted in the present statutory context.
The Tribunal was satisfied upon the material and evidence before it that the deposits into Mr Ali’s bank account were income. The Tribunal took into account that it was within the power of Mr Ali to produce evidence of matters including details of payments made from the deposits and the sources of funds used for payment of his personal expenses. It has not been demonstrated that there was any legal error in finding that Mr and Mrs Ali owed debts to the Commonwealth.
Mr Ali also makes a bare assertion that the Tribunal was biased. That assertion is unsupported by any particulars and cannot be accepted.
Conclusion
Mr Ali has not established any of the errors of law alleged to have been made. The appeal must be dismissed.
There is no evident reason to depart from the usual order that costs should follow the event. Mr Ali will be ordered to pay the Secretary’s costs of the appeal.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rangiah. Associate:
Dated: 6 May 2022
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