Andy Soames and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2013] AATA 693
•27 September 2013
[2013] AATA 693
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/5357
Re
Andy Soames
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Senior Member A K Britton
Date 27 September 2013 Place Sydney Decision Summary
The decision made by the Social Security Appeals Tribunal on 7 November 2012 to raise and recover a debt form Mr Soames, in the sum of $5,520.62, is affirmed.
.................[SGD].......................................................
Senior Member A K Britton
CATCHWORDS
SOCIAL SECURITY — Debt recovery — Disability support pension — Whether the debt can be waived — Whether the Applicant knowingly made a false statement or representation to Centrelink — Meaning of “knowingly” — Inference of actual knowledge drawn — Decision affirmed
LEGISLATION
Social Security Act 1991 (Cth) - s 1123; 1124; 1126AA; 1236(1A); 1237A; 1237AAD
Social Security (Administration) Act 1999 (Cth) – s 66A(2); 68; 74(1;)
CASES
Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435
Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553
Soames and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 473
Soames v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] FCA 938
REASONS FOR DECISION
Senior Member A K Britton
27 September 2013
On 8 July 2013 I made a decision affirming five of six decisions made by the Social Security Appeals Tribunal, challenged by Mr Andy Soames (Soames and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 473 (the July 2013 decision). An appeal brought by Mr Soames against that decision was dismissed (Soames v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] FCA 938).
These reasons concern the sixth decision challenged by Mr Soames, namely the decision made by the Social Security Appeals Tribunal on 7 November 2012 to raise and recover from him a debt owed to the Commonwealth as a result of an overpayment of Disability Support Pension (DSP) in the sum of $5,520.62. The debt related to payments made to Mr Soames during the period 29 July 2010 to 15 March 2011 (the debt period).
In the July 2013 decision I found that the debt had been correctly calculated and could not be waived under s 1237A of the Social Security Act 1991 (Cth) (the Act) or written off under s 1236(1A) of that Act. I decided to defer making a decision about whether the debt could be waived under s 1237AAD of the Act. For convenience the relevant passage from the July 2013 decision is set out below:
Can the debt be waived because of special circumstances?
[79] Section 1237AAD of the Act gives the decision-maker the power to waive all or part of a debt if satisfied, among other things, that “there are special circumstances (other than financial hardship alone) that make it desirable to waive [the debt]”.
[80] That power can only be exercised if the decision-maker is satisfied that (s 1237AAD):
(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; ...
[81] The Secretary did not address whether the debt in part or whole was the result of Mr Soames knowingly making a false statement or a false representation or failing or omitting to comply with a relevant legislative provision. I have decided to defer making a decision about whether the debt can be waived under s 1237AAD until the parties have been given an opportunity to make submissions on this issue. I direct:
(a)Within 14 days of the date of this decision the Secretary must advise the Tribunal and Mr Soames in writing, whether she contends that the debt cannot be waived because of s 1237AAD(a) of the Act. If contended that that s 1237AAD(a) applies, the Secretary must also provide to the Tribunal and Mr Soames brief written submissions in support.
(b)If the Secretary contends that s 1237AAD(a) applies, Mr Soames is invited to provide brief written submissions to the Tribunal and the Secretary on that issue which must be provided within 14 days of receipt of the Secretary’s submissions.
In submissions filed with the Tribunal on 16 July 2013 the Secretary contended that the power to waive the debt under s 1237AAD of the Act could not be exercised because the debt resulted from Mr Soames’ failure to comply with s 66A(2) of the Social Security (Administration) Act 1999 (Cth), (the Administration Act).
On 23 July 2013 Mr Soames attended the Tribunal and requested an extension of six weeks to file his submissions and gave these reasons for that request:
Reasons for my request are that I don’t have the financials [sic] to find a lawyer, I don’t have legal aid and I am trying to obtain help from different sources.
That request was granted in part and Mr Soames was given a further two weeks (to 15 August 2013) to provide submissions in reply.
On 1 August 2013 Mr Soames sought a further extension of three months to file his submissions. Later that day he revised his request and sought a six months extension. Both requests were refused.
No submissions in reply have been received from Mr Soames. In my opinion Mr Soames has been given a reasonable opportunity to make submissions on the s 1237AAD issue. Therefore I have decided to proceed to determine the question of whether the debt can be waived in the absence of any submissions from Mr Soames.
These reasons should be read in conjunction with the July 2013 decision, in particular paras. [69] to [81].
Can the power to waive the debt under s 1237AAD be exercised?
Section 1237AAD of the Act states:
Waiver in special circumstances
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.
…
The Secretary contends that the debt arose because Mr Soames knowingly failed to inform Centrelink that he had over $1M, which would have disqualified him from receiving the disability support pension. The Secretary contends that that failure constitutes a failure to comply with s 66A(2) of the Administration Act, which provides:
General requirement to inform of a change of circumstances etc.
…
Person receiving a social security payment or holding a concession card
(2) If:
(a)either:
(i) a social security payment (other than utilities allowance or seniors supplement) is being paid to a person; or
(ii) a person holds a concession card; and
(b)an event or change of circumstances occurs that might affect the payment of that social security payment or the person's qualification for the concession card;
the person must, within 14 days after the day on which the event or change occurs, inform the Department of the occurrence of the event or change.
…
Section 68 is also relevant. It provides:
Person receiving social security payment or holding concession card
Person receiving social security payment or holding concession card
(1)Subsection (2) applies to a person to whom a social security payment (other than utilities allowance or seniors supplement) is being paid.
(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;
(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
…
The failure to comply with a section 68 notice is made an offence by s 74(1) of the Administration Act.
Mr Soames was in receipt of the DSP between about 1995 and March 2011. During that period he was regularly sent section 68 notices. Between May 2010 and March 2011 Mr Soames was sent five section 68 notices. Each included a statement of the value of his assets: $350,000 (11 May 2010), $407,190 (3 August 2010, 26 October 2010, 23 December 2010 and 1 March 2011). All contained the following (or broadly similar wording):
If the details on this statement are correct there is no need to contact Centrelink. If your circumstances have changed please contact us within 14 days.
…
What you have to tell Centrelink
This request is an information notice given under social security law. This means you must give Centrelink all the information Centrelink needs to assess your payment.
Giving false or misleading information is a serious offence. The information you give us may be checked under Centrelink’s data matching programs.
You must tell Centrelink within 14 days (28 days if residing outside Australia) if any of the things listed below happen or are likely to happen to you and/or your partner. If any of these changes happen, the amount of payment you get may change. If you are paid too much because you don’t tell Centrelink about any of these changes when you have to, Centrelink may make you pay it back.
…
You must tell us if you and/or your partner… get money from a superannuation or rollover fund … [or] … change the value of your assets or financial assessments by more than $1000 [or]… get any money from ANY other source…
Not telling us or giving false or misleading information is a serious offence. If you are not sure about the information you need to provide, please contact us as soon as possible.
On 3 August 2010, prior to his departure to Syria, Centrelink wrote to Mr Soames in these terms:
Your plans to travel
This letter will tell you what will happen to your Centrelink payments while you are outside Australia.
…
What affects your payments while you’re away?
Your payment will continue to be affected by any changes that would normally impact on it. For example if your income or assets change…
On 22 March 2011 Mr Soames approached Centrelink to seek an adjustment of his rate of DSP on the grounds that he had spent the proceeds from the sale of a business and property in 2009. At this point, Centrelink requested Mr Soames to provide a copy of his bank statements and discovered that around $520,000 had been deposited into his Commonwealth Bank Australia (CBA) business account in mid-July 2010, a further $535,759.90 was deposited a couple of weeks later, and, on the day he left for Syria, 4 August 2010, $1,090,040 was withdrawn from that account.
A file note made by a Centrelink officer following an interview with Mr Soames recorded:
Customer reluctantly brought the final statement from his CBA account on that day [22 March 2011]. He took back his bank statement and did not want me to get a copy of it.
·first deposit for $520,000 was mainly money from sold property
·second deposit of $500,000 was money withdrawn from super
On the basis of that information a decision was made to cancel Mr Soames’ DSP as his assets, assessed at $997,250, were about $200,000 above the “asset cut-off limit”, the maximum value of assets a person (in Mr Soames’ position) can hold before becoming ineligible for DSP.
There can be no argument that: (i) prior to 22 March 2011 Mr Soames did not inform Centrelink that over $1M had been deposited into his CBA account in July 2010 which he withdrew the following month; (ii) the deposits and subsequent withdrawal constitute “an event or change of circumstances … that might affect the payment of [DSP]’” to Mr Soames for the purpose of s 66A of the Administration Act; (iii) Mr Soames was required under that provision to notify Centrelink within 14 days of the $1M plus being deposited into and withdrawn from his CBA account.
Nor can there be any argument that the subject debt resulted at least in part because Centrelink had not been notified of the $1M plus deposited into and withdrawn from Mr Soames’ bank account and, as a consequence had not taken it into account in assessing his eligibility for DSP. Accordingly, in deciding whether the power to waive the debt under s 1237AAD can be exercised the central question is whether Mr Soames knowingly failed to comply with the obligation under s 66A of the Administration Act to notify Centrelink of the $1M plus deposited into and withdrawn from his CBA account.
Findings and conclusions
The meaning of the word “knowingly” in s 1237AAD of the Act was considered in Re Callaghan and Secretary, Department of Social Security (1996) 45 ALD 435, in which the Tribunal observed (at [48]):
There is nothing in s 1237AAD which suggests that the word "knowingly" should be given any meaning other than that a person has actual knowledge, rather than constructive knowledge, that he or she is making a false statement or representation or that he or she is failing or omitting to comply with a provision of the Act. That actual knowledge is to be ascertained by reference to the statements of the person as to his or her actual state of knowledge at the time and to events surrounding the false statement or the act or omission.
In Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553 the Tribunal rejected the submission that the word “knowingly” in s 1237AAD extended to “reckless indifference” holding that it meant “actual knowledge” (at [73]).
Adopting that approach, the issue to be determined is whether Mr Soames had actual knowledge that he was required to notify Centrelink of the $1M plus deposited into, and withdrawn from, his CBA account.
In the assessment of whether Mr Soames had actual knowledge of the requirement to notify Centrelink of any change of circumstances that might affect the payment of DSP, the following matters are relevant.
First, prior to and throughout the debt period, Mr Soames received numerous section 68 notices informing him of the requirement to advise Centrelink if there was a change in his financial position.
Second, file notes made by Centrelink officers indicate that Mr Soames contacted Centrelink on a number of occasions prior to leaving for Syria to make enquiries about the application of the income and assets rules. See for example the following file made note made by a Centrelink officer on 13 May 2009:
[C]ustomer attended csc – has just sold his business and wanted to explore investment options. is considering an allocated pension … discussed how this will impact on his housing rent, and advised that his pension will also be reduced. [A]dvised income and asset test. Discussed if money was put into super under age pension age it is not as assessable asset. [C]ustomer wanted to go and talk to fin[ancial] planner at bank.
In addition, Mr Soames contacted Centrelink on a number of occasions to ask for “details of all income and assets on record to be sent [to him]”. (See, for example, file notes made by Centrelink officers on 1 May 2009, 9 Oct 2009 and 10 November 2009).
Third, two days before he left for Syria, Centrelink wrote to Mr Soames and reminded him of the obligation to report any change in his circumstances.
Mr Soames has not provided written submissions about whether the power to waive the debt under s 1237AAD can be exercised. In the original proceedings he did not expressly address that issue but did make a number of submissions of possible relevance. In fairness to him I have taken them into account in considering whether he knowingly failed to notify Centrelink of a change in circumstances.
First, Mr Soames’ main complaint directed at Centrelink is that he was allegedly not told about the “rules on gifting”. By this I understand him to be referring to the provisions in the Act which provide that where a person has disposed of assets for no or inadequate consideration, the amount of the disposition is included in the calculation of the value of their assets when assessing the person’s pension entitlement (ss 1123, 1124, 1126AA of the Act). Taken at its highest Mr Soames’ claim of not being told about the “rules on gifting” does not assist him because, for the purpose of s 1237AAD, it is enough that he knowingly failed to inform Centrelink of the deposit and withdrawal of $1M plus in 2010. It is not also necessary to establish that he was aware of the consequences of “gifting” that money.
Second, he asserted that despite selling his business, SDS Foods, and business property for about $1M in 2009, he was a “hopeless businessman” and uneducated. Even if it is accepted that Mr Soames lacked business acumen this does not establish that he was unaware of the requirement to notify Centrelink of a change in his financial circumstances and knowingly failed to do so.
Third, he stated that he had been living with depression and other health problems for over three decades and throughout that period was preoccupied with caring for and fighting on behalf of his (now) adult son who he contends was the victim of “inhumane abuse and torture” by various people and organisations. I understand Mr Soames to submit that as a consequence he could not reasonably be expected to know of, and comply with, Centrelink’s notification requirements. While I accept that Mr Soames has a number of health problems and expended a great amount of time caring and advocating for his son, this does not establish that in mid-2010 he was unaware of the requirement to notify Centrelink of any change in his circumstances and did not knowingly fail to do so. Indeed his actions in contacting Centrelink on numerous occasions throughout 2009 and 2010 to discuss, among other things, the application of the asset and income rules and portability rules, and, as required, to notify Centrelink of his trip to Syria, suggest that he was not so preoccupied so as to be unable to attend to Centrelink requirements.
While there is no direct evidence that Mr Soames knowingly failed to inform Centrelink of his change of circumstances brought about by the deposit and withdrawal of over $1M into his CBA account, in my opinion that inference can safely be drawn from the evidence taken as a whole. Mr Soames’ conduct in notifying Centrelink that he would be travelling to Syria is consistent with him having knowledge of the requirement to notify Centrelink of a relevant change of circumstances. It goes without saying that $1M is not a small amount of money that might understandably be overlooked. Even if it is accepted that Mr Soames did not read the section 68 notices sent to his Australian address during that part of the debt period while he was overseas (for which there is no evidence) it is improbable that he had not read any of the notices sent throughout the 15 years he was in receipt of the DSP. His conduct in making enquires about the information held by Centrelink about the value of his assets and the application of the assets and income rules indicates that he understood that Centrelink held information about his income and assets, which was used to calculate his rate of pension. Coupled with what can only be described as the unusual set of circumstances which led Mr Soames to arrange for over $1M plus to be deposited into his bank account only to be withdrawn in cash cheques a few weeks later, on the day he departed for Syria, these factors lead me to conclude that the decision not to notify Centrelink of those transactions was a deliberate one.
For these reasons I am satisfied that Mr Soames was positively aware of his obligations to report his change of circumstances to Centrelink and knowingly failed to do so. It follows that the pre-condition to the exercise of the power to waive the debt under s 1237AAD of the Act is not met.
Decision
In the July 2013 decision I addressed the other issues raised by the decision made by the Social Security Appeals Tribunal on 7 November 2012, namely whether the debt had been correctly calculated and whether it could be waived or written-off under any applicable provision of the Act, apart from s 1237AAD. Having found that the power to waive the debt under s 1237AAD of the Act cannot be exercised the correct and preferable decision is to affirm the decision under review.
I certify that the preceding 35 (thirty -five) paragraphs are a true copy of the reasons for the decision herein of Senior Member A K Britton ............................[SGD]............................................
Associate
Dated 27 September 2013
Date(s) of hearing 18 June 2013 Date final submissions received 16 July 2013 Applicant In person Solicitors for the Respondent Sparke Helmore
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