Barnouti and Secretary, Department of Social Services (Social services second review) - [2022] AATA 1063

Barnouti and Secretary, Department of Social Services (Social services second review) [2022] AATA 1063 (9 May 2022)
Division:GENERAL DIVISION
File Number(s): 2021/2006
Re:Ramzi Barnouti
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Mr S Evans, Member
Date:9 May 2022
Place:Sydney

The decision under review is affirmed.
..................................[SGD]......................................
Mr S Evans, Member
CATCHWORDS
SOCIAL SECURITY – age pension debt – real estate held overseas not declared – bank accounts not declared – bank deposits and gifts not declared – rental income not declared – shares not declared - whether the applicant owes a debt to the Commonwealth – whether the debt should be written off or waived – good faith –– decision under review affirmed.
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Re Rosemarie Beadle and Director-General of Social Security [1984] AATA 176
Secretary, Department of Social Security v Coralie Hales [1998] FCA 219
Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569
SECONDARY MATERIALS
Social Security Guide
REASONS FOR DECISION
Mr S Evans, Member
9 May 2022

Ramzi Barnouti (the Applicant) seeks review of a decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) dated 4 March 2021, affirming a a decision of the Secretary of the Department of Social Services (the Secretary) requiring him to repay $137,469.63 to the Commonwealth for overpayment of age pension between 16 December 2005 and 7 February 2019 (the debt period).
For the reasons which follow the decision under review will be affirmed.
BACKGROUND AND EVIDENCE
The Applicant and his wife immigrated to Australia from Iraq on 15 December 2005. The following day they lodged a claim for age pension. On 23 December 2005 Centrelink wrote to the Applicant informing him that he had been granted age pension from 16 December 2005 payable at the maximum rate.
Upon being granted age pension, the Applicant was informed in writing of his reporting obligations. Subsection 68(2) of the Social Security Administration Act 1999 (Cth) (the Administration Act) provides that the Secretary may give a notice that requires a person to inform the Department if a specified change of circumstances occurs or a person becomes aware that a specified event or change of circumstances is likely to occur.
On 23 December 2005 correspondence was sent to the Applicant by Centrelink which stated in part:
WHAT YOU MUST TELL US
You must tell us within 14 days (28 days if residing outside Australia} if any of these things happen, or may happen. You can tell us by writing to us, by phoning or you can come in and talk to us at any of our offices. This is an information notice given under the social security law.
Income
(income means your gross income before payment of any tax, or if self employed, your net profits after allowable deductions).
if your combined income, not including financial investments or maintenance increases,
if you or your partner start work or recommence work;
if you or your partner start any form of profession, trade, business or
self employment;
if you or your partner buy or sell any shares or managed investments;
if you or your partner receive any bonus shares;
if you or your partner receive a lump sum amount of money or one-off
payment from any source.
…
Assets
if your combined assets other than financial investments are more than
$336,750.00;
if your and your partner's combined financial investments are more than
$1,000.00 (this is $1,000 more than the value of financial investments we
have recorded for you);
if you or your partner start any new accounts;
if you or your partner gift assets or sell them for less than their value;
If your or your partner's assets change substantially.
On 22 September 2006 both the Applicant and his wife signed a Centrelink Income and Assets form which they lodged with Centrelink on 26 September 2006. They confirmed that they had no sources of income apart from Centrelink payments and their only assets were household contents valued at $10,000, a motor vehicle valued at $8,000 and savings of $1,200.77 in a bank account. They also confirmed that they held no interest in real estate in Australia or elsewhere.
The Applicant continued to receive age pension at the full rate. He was also regularly sent reminders outlining his reporting obligations in similar terms to that which was sent upon grant of age pension. The Respondent’s Statement of Facts, Issues and Contentions sets out 24 additional occasions in which the Applicant was reminded in writing of his reporting obligations prior to September 2012. On 9 September 2012 the Applicant was informed by Centrelink that the information used to calculate his age pension payments included a combined annual income of $24.60.
The Applicant lodged another Income and Assets form with Centrelink on 15 August 2013. He confirmed that he had no sources of income apart from Centrelink payments and his only assets were household contents valued at $15,000 and a motor vehicle valued at $10,000. He also acknowledged holding $1,534 in two CBA bank accounts and that he held an interest in his own home (the Fairfield property).
Following this declaration, Centrelink wrote to the Applicant on a further seven occasions reminding him of his reporting obligations and notifying him of the income and assets on which his rate of age pension was based.
The Property in Iraq
Prior to immigrating to Australia, the Applicant owned a property which he built between 2001 and 2004 in Baghdad (the Iraq property). He began residing in the Iraq property in February 2004. The building consisted of his doctor’s surgery on the ground floor and residential accommodation on the upper floor. Another floor was rented to commercial tenants. These facts are not in contention.
In his written submission dated 30 July 2021 the Applicant claims that after 2003, criminals began stealing businesses using fake documents to control and sell properties in Iraq. The Applicant fled to Jordan in 2004 and was informed that his property had been ‘overtaken’ by these criminals. He believed that he had lost everything including the Iraq property, when he immigrated to Australia. The Applicant claims to have maintained this belief until October 2008.
The Applicant gave evidence that he travelled from Australia to Jordan in April 2008 and stayed for about three months. Whilst in Jordan he gave either an agent or his sister the certificate of title for the purpose of selling the Iraq property.
The Applicant writes that he received $602,263 for the sale of the Iraq property which he spent on purchasing, renovating and fitting out the Fairfield property.
In cross examination by the Respondent’s representative, the Applicant was asked to clarify how much money he received from the sale of the Iraq property. He told the Tribunal he did not remember the amount but that it was ‘around 700’ thousand dollars.
Taken to the reviewable decision where it is mentioned in paragraphs [26] that deposits were made in December 2008 and February 2009 of $602,625 and $325,449.92 respectively, it was put to the Applicant that he received more than $700,000 from the sale. The Applicant clarified that he was referring to $US, which he said was approximately AU$900,000.
The Fairfield Property
Settlement documents confirm the Fairfield property was purchased by the Applicant on 27 March 2009 for $395,000. In his oral evidence the Applicant confirmed this to be the case and that the property was unencumbered.
A record exists of the Applicant contacting the Fairfield office of Centrelink on 15 April 2009 with the customer service officer (CSO) recording in part [1]:
… [the Applicant] has advised that he has purchased a new home at…Fairfield for $395,000 and settlement occurred on 27/03/09 but [the Applicant] was unable to move into new home until 13/04/2009…
[The Applicant] states that his sister in Jordon sent him the money to purchase this property in his her name until she arranges to immigrate
into australia in the next year or so. [the Applicant] states that will provide documents to verify that his sister paid for the property.
[Emphasis added]
[1] T24/1045.
On or about 13 April 2009 the Fairfield property became the principal home of the Applicant and his wife.
In cross examination the Applicant clarified that he spent $50,000 within the year after the funds from the sale of the Iraq property were transferred to Australia. Asked by the representative of the Secretary what he did with the remainder of the money and he said he bought many things including furniture.
Pressed further as to what he did with the remainder of the proceeds of the sale of the Iraq property, the Applicant confirmed he had purchased shares. He said the shares are registered in his name but they belong to his wife.
The Share Portfolio
In a statement dated 1 February 2019 the Applicant writes that he owned 1000 shares in Santos that they were acquired around 2009-2010.[2]
[2] T19/642.
The Applicant told the Tribunal he does not know how to buy or sell shares nor does he know how much he spent buying shares, which he claims were purchased on his behalf by his son in 2008.
Asked about his share portfolio, the Applicant claimed not to know what shares he currently owned or the value of the shares. He also gave evidence that he did not have the certificates of shareholdings.
Undeclared bank accounts and rental income
Section 192 of the Administration Act empowers the Secretary or a delegate to require any person to give information or documents relevant to Centrelink customers receiving their correct entitlement. On 23 October 2018 Centrelink sent a notice to National Australia Bank (NAB) pursuant to section 196 of the Administration Act.
NAB responded to the notice on 5 November 2018 confirming that the Applicant had one open NAB account and six previously closed accounts.[3] Details were provided to Centrelink including statements for the bank account opened 17 August 2011 and closed on 17 February 2016.
[3] T17/440.
On 4 January 2019 Centrelink sent a letter to the Applicant asking for an explanation for deposits totalling $1,900,154.09 into the open NAB account held in his name. The letter set out that the deposits were made between 13 January 2006 and 15 October 2018.
The Applicant replied to the letter on 14 January 2019. He wrote that in relation to the NAB account for which the statement containing the deposits had been provided ‘I do not have it’ and ‘I do not know anything about it’. In a handwritten explanation he speculated that somebody may be using his details to ‘transfer’ money without his knowledge. He also attached details of what he said were details of the NAB account he ‘used to organise all [of his] payments in one account’ and confirmed he did not have more than $10,000 at any one time.
In a written submission provided prior to the hearing the Applicant contends he had forgotten about the NAB account which he had opened in 2002 when he visited Australia. He claims to have replied to the Centrelink letter on 14 January 2019 ‘without even checking’.
On 14 January 2019, shortly after receiving the request for an explanation of the deposits, the Applicant and his wife also signed a Centrelink Real Estate Details Form in which they acknowledged they owned the Fairfield property and confirmed it was unencumbered and being rented for $550.00 per week.
On 22 January 2019 Centrelink wrote to the Applicant informing him that his age pension had been reduced because the combined value of his and his wife’s assets had increased. The correspondence also included the information used to calculate his reduced age pension payments.
Total Combined Assets ......................................$654,372.00
Combined Annual Income .....................................$31,529.58
On 30 January 2019 Centrelink wrote again to the Applicant in similar terms. He was informed that his age pension was to be reduced owing to:
Total Combined Assets ......................................$864,372.00
Combined Annual Income .....................................$31,529.58
On 30 January 2019 the Applicant made a written statement in which he accounted for the deposits into his NAB account between 13 January 2006 and 15 October 2018. Notably, he claimed that the amounts were transferred from ‘Arab Bank – Jordan’ by his sister, his wife’s nephew and his wife’s cousin. Upon their arrival in Sydney, the Applicant claims to have transferred the money back to ‘their accounts immediately’.[4]
[4] T11/247.
That day the Applicant also attended the Fairfield Centrelink office. A Centrelink file note records the Applicant told the CSO that when he arrived in Australia in 2005 he had a property in Iraq. The Applicant reported selling the property in approximately 2008 or 2009 and using the proceeds to purchase the Fairfield property. He stated that the proceeds of the sale of the Iraq property were deposited into a NAB account. The CSO’s note records that ‘[he Applicant] stated that he lived in the property he purchased in Fairfield until approx. 2014 when he then started living at his son’s place with his wife. [The Applicant] stated that for the first year he received rent $1100.00 per fortnight…’[5]
[5] T24/1077.
During the hearing the Applicant conceded that this was the first time he informed Centrelink he had been receiving rental income from the Fairfield property.
In light of this new information, Centrelink again wrote on 15 February 2019, informing him that his age pension would be paid on the basis of assets and income assessed at:
Total Combined Assets ......................................$870,792.00
Combined Annual Income ......................................$38,322.71
On 19 February 2019, the Applicant’s son, Laith Barnouti, was appointed as the Applicant’s correspondence nominee.
When NAB responded to the section 196 notice they informed Centrelink that the Applicant had, as of 29 October 2018, six NAB accounts, with all but one closed.[6]
[6] T17/440.
Asked about this during the hearing the Applicant explained that he had been using one of the closed accounts from 2005. Asked why he had closed the other NAB accounts the Applicant was unable to recall.
As mentioned, on 14 January 2019 the Applicant provided a partial breakdown of income received after 2 January 2018 into the NAB account.[7]
[7] T10/235.
The Applicant subsequently provided further information including a list of deposits made into his NAB account between 13 January 2006 and 15 October 2018, next to which the Applicant had handwritten the source of some of the deposits. During the hearing he conceded that he often received large sums of money which would remain in his bank account before being transferred to others. They were, he contends, from individuals including relatives and friends.
In the list the Applicant had identified a deposit of $325,000 as being from an individual with the note ‘transferred to him within days of his arrival’. The Applicant conceded during the hearing that this was, in fact, part of the proceeds from the sale of the Iraq property. He told the Tribunal he thought the funds belonged to a relative and now knew that not to be true.
Further explanation was provided by the Applicant’s correspondence nominee who wrote on 27 May 2019 to an officer from the integrity and fraud investigation branch of the then Department of Human Services stating that[8]:
I acknowledge receiving the email dated the 16th May 2019, in an attempt to justify some of the NAB Bank transections dated back to 2006.
I would like to state that we have visited the NAB requesting more details regarding the transactions. We have been advised by NAB that they do destroy all the records passed 7 years. Therefore we are relying on our memories in some of our reply.
…
When [the Applicant] settled in Australia, he received funds from family members and cousins ( Names and details attached) as they trusted him. The same EXACT funds that were deposited were transferred back few weeks/months/year later.
[the Applicant’s] Nab account is the one that he pays bills from and uses for daily living expenses…
[errors in original]
[8] T16/430.
Statements show the Applicant opened a NAB bank account on 12 January 2006 with a zero balance.[9] $4,000 was deposited on 13 January 2006. Asked to identify the source of the deposit, the Applicant indicated it was from relatives or friends who brought gifts to him. A further deposit of $2,000 was made on 7 February 2006, which he claimed may have also been a gift from his son, his daughter or cousins.
[9] T17/482.
In the Income and Assets declaration of 22 September 2006 in which he was asked to provide details of all his bank accounts, the Applicant provided details of a CBA account with a zero balance.[10] He also provided details of a St George bank account with a balance of $1200.77. He did not declare the NAB Account which was opened on 12 January 2006. Transaction records indicate he was using the account regularly at that time. When asked why he did not declare the account, the Applicant did not provide an explanation but indicated there were aspects of the reporting requirements he did not understand at the time.
[10] T5/142.
In the same Income and Assets declaration, the Applicant marked ‘No’ where asked if he or his partner own their own home or have an interest in any real estate in Australia and/or outside Australia.[11]
[11] T5/151.
The Applicant received a deposit of $8,000 into his NAB account on 4 February 2008, taking his balance to $8,464.59. When he was asked why he did not declare the balance in an Income and Assets form he signed on 5 February 2008, he told the Tribunal he was unable to answer the question.[12]
[12] T6/163.
NAB statements show that on 18 June 2012 the Applicant received two credits of interest - $572.61 and $857.35 – and two principal matured deposits - $25,000 and 30,000. When asked why he did not inform Centrelink of these deposits the Applicant told the Tribunal:
Applicant: I mean, what happened is once Centrelink dealt - well, I mean asked me anything, if - I usually - these letters, I usually never check. I just put them because to me it became something like routine. I never checked what's there. I didn't go into details. It comes, I put it sometimes in the drawer and sometimes I just forgot. That's what usually I do.
Secretary’s representative: So, it sounds to me like your answer is that you just didn't check the correspondence. Is that right?
Applicant: Yes, that's one of the problems we had. Because we are - I mean, since we can, we are under the stress of parents. Nobody came and told us, "Be precise on this because of these reason." It's written. It's written. How many people are going to read all the details? I haven't read - till today, I haven't read any detail when I get any letter from Centrelink - till today, nothing. It's become something like routine. The same problem with the tax. It didn't seem - - -
The Applicant was taken to his Income and Assets declaration of dated 9 August 2013 which lists his assets as being a Toyota Camry valued at $10,000 and $15,000 in household and personal effects.[13] In savings and investment details it records a CBA account and a St George bank account. Question eight states ‘Are the savings and investment details recorded for you (and/or your partner) complete and correct?’ The Applicant has answered ‘No’ and has added details of CBA pension accounts for both he and his wife with a value of $958 and $576 respectively.
[13] T8/195.
When asked by the Secretary’s representative if there was a reason he did not tell Centrelink about the NAB account, the Applicant explained most of the funds came from his CBA account and the NAB account was used for paying bills. However, he conceded that the information he provided in the Income and Assets declaration was wrong. He also conceded that he owned shares at that time and should have declared them on the Income and Assets form.

Asked during the hearing if he still held any shares he confirmed that he did. The Applicant also acknowledged that he gave false and misleading information in the Income and Assets declaration of 9 August 2013.
He was taken to further transactions which appear in the NAB statements.[14] On 26 August 2013 a deposit of $14,923.39 was made into his account. Eight days later he received $14,420. He told the Tribunal that his memory is so bad he could not remember what he spent yesterday meaning he could not remember what he spent in August 2013.
[14] T17/551.
Other Evidence
The Applicant gave evidence that he was responsible for the financial decisions he and his wife made and managed all interactions and declarations with Centrelink. He told the Tribunal that he currently lives in the Fairfield property separately from his wife who resides with their son. Apart from his evidence, there is little probative evidence to support his claim to be separated from his wife, particularly in relation to the debt period.
ISSUES TO BE DETERMINED
The issues to be determined are:
(a)whether the Applicant owes a debt to the Commonwealth due to overpayment of age pension during the debt period;
(b)if so, the amount of the liability; and
(c)whether the whole or part of the debt should be written off or waived.
LEGISLATION AND POLICY
The legislation relevant to this application is contained in the Social Security Act 1991 (Cth) (the Act) and the Social Security (Administration) Act 1999 (Cth) (the Administration Act). The Social Security Guide (the Guide) contains relevant policy.
Section 55 of the Act provides that a person’s rate of age pension is calculated using the pension rate calculator in section 1064 of the Act.
Section 1064-A1 of the Act provides that the rate of pension is calculated using a Method Statement for calculating a person’s maximum payment rate. The Method Statement contains 12 steps, with Step 5 providing an ordinary income test and Step 9 an assets test. Step 11 provides that if an income and assets reduction is applicable, the greater of them applies.
A debt in relation to a social security payment arises by operation of subsection 1223(1) of the Act, which relevantly provides:
1223 Debts arising from lack of qualification, overpayment etc.
(1)       Subject to this section, if:
(a)       a social security payment is made; and
(b)       a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
A debt that is due to the Commonwealth is normally recoverable from the debtor, but the Act contains provisions that allow for non-recovery of debts in prescribed circumstances.
Section 1236 of the Act provides that a debt may be written off in specific circumstances including where the debt is irrecoverable at law, the debtor has no capacity to repay the debt or it is not cost effective for the Commonwealth to take action to recover the debt.
Section 1237A provides that a debt, or part of a debt, must be waived in circumstances where the debt arose solely due to administrative error by the Commonwealth.
Section 1237AAD of the Act provides for the waiver of a debt, or part of a debt, in special circumstances.
CONSIDERATION
Credibility and Reporting Obligations
The Secretary contends that the Applicant can be taken to have known of his reporting obligations in subsection 68(2) of the Administration Act since 23 December 2005.
For his part, the Applicant told the Tribunal his reputation is more important to him than money. Whilst he has made administrative mistakes, he has provided evidence of his community service and says he is ‘very good in serving the community’. He does not dispute his failure to comply with the reporting obligations, which he attributes in part to his having a poor memory. In a written submission the Applicant states that he is responsible for the ‘mis-information, reports, actions, starting from 4 February 2010’.
The Applicant has provided evidence relating to he and his wife’s physical health. He writes that he has severe back ache, osteoarthritis in his right shoulder and other physical conditions which prompted his son to suggest he and his wife move in with him, as his home is single level.
He also claimed to be suffering from memory problems. At the commencement of the hearing he was asked if he wished to proceed in light of this and he confirmed that he did. It is noted by the Secretary that on 3 January 2006 the Applicant nominated his wife as his correspondence nominee. The Applicant was asked if his wife would be available to give evidence and he said she was not. Asked if he wished to proceed he confirmed he did and was competent to do so.
The Applicant claims that after a time he ignored the subsection 68(2) notifications setting out his reporting obligations and indicated he was unaware of the requirement to inform Centrelink of changes to his financial circumstances. I do not accept this explanation. Not only were the reporting obligations set out from the time he first applied for age pension, they were in clear and unequivocal language.
The medical evidence that the Applicant has provided neither explains or mitigates his failure to meet his reporting requirements from 2005.
The sum of the evidence leads me to conclude that the Applicant’s failure to report the true nature of his income and assets was a purposeful and calculated practice entrenched over many years. During the debt period, he successfully managed the sale of his property in Iraq, the transfer of the funds to Australia, held bank accounts with at least three different financial institutions, received deposits of over $1.9 million in one of those accounts, purchased real estate, became a landlord and built a share portfolio. I do not consider these activities are consistent with being forgetful or debilitated by poor memory.
Further, whilst there was a failure on the part of the Applicant to meet his reporting obligations, when questioned about some of the oversights, he continued to maintain that he had, for various reasons, not been required to declare the information in question. He also has provided conflicting and confusing accounts and evidence at various times. In his application for review he writes that that the Fairfield property was purchased with his sister’s money and intended for his sister when she relocated to Australia, yet at the hearing he conceded this was not true.
The Applicant’s claim to have been forgetful or careless does not stand up to scrutiny given his failure to declare his assets on multiple Income and Assets forms submitted throughout the debt period. Notably, the Applicant has not provided a credible explanation as to why he volunteered details of his modest CBA and St George bank account balances in September 2008, but not that of his NAB account into which thousands of dollars had been deposited.
When confronted with the details of his NAB account, the documentary evidence is that the Applicant initially denied knowledge and ownership of the account. Whilst he now accepts that the account is his, his initial denial leads me to find that the Applicant sought to obscure the full extent of his assets and income from Centrelink.
The Applicant is a medical doctor and presents as an intelligent man. His claim to have been uncertain as to the source or purpose of, for example, $325,000 deposited in 2009 strains credibility. Taken as a whole, I agree with the observations of the AAT1 at [82]:
The Tribunal finds, however, that Mr Barnouti's false statements on forms were made knowingly. The question about property and shares on Centrelink forms are not ambiguous. The Tribunal notes that Mr Barnouti appeared to be highly educated, had good English skills and appeared astute. The Tribunal finds when Mr Barnouti told Centrelink he did not have any property in Australia or overseas, he knew this was incorrect. Furthermore, the Tribunal finds that in 2008 he falsely claimed that money for the [Fairfield] property was not his money but that of his sister. In the light of the evidence later discovered, that cannot be regarded as anything but a deliberate falsehood.
I acknowledge that Applicant’s community service but do not accept his contribution to the community is relevant as to whether he has received benefits to which he is not entitled.
For these reasons, I am not satisfied that the Applicant was a reliable witness and have generally preferred the documentary evidence where it is at odds with his testimony or submissions. This conclusion does not necessarily mean the position of the Secretary is taken to be established. However, based on the totality of the evidence outlined above I am satisfied of the following facts:
·the Applicant received $602,265 and 325,449.92 from the sale of the Iraq property in 2008 and 2009 respectively;
·$395,000 of the funds from the sale of the Iraq property was used to purchase the Fairfield property outright in in March 2009;
·the Applicant’s NAB accounts and the deposits made into those accounts were not reported to Centrelink during the debt period;
·the Applicant received deposits totalling $1,900,154.09 into his NAB accounts during the debt period;
·some of the deposits made into the NAB accounts were onforwarded to other parties.
Income and Assets Test
Age pension is means tested. The rates at which people are paid age pension is determined using the pension Rate Calculator A at the end of section 1064 of the Act. The calculator provides that the rate at which age pension is paid is affected by the person’s income and assets. Step 11 in section 1064-A1 provides that where an income and assets reduction is applicable, the greater of them will be applied. In other words, the rate of age pension payment is calculated under both the income and assets tests and the test that results in the lower rate will apply.
Section 4.2.3 of the Guide explains how the ‘pensions assets test’ applies:
The pensions assets test applies to all pensions. The assets test is only applied where a person's assets exceed the assets free areas for full pension. If assets exceed the assets free areas, pension entitlement is assessed by:
·calculating the rate payable under the assets test, and
·comparing that with the rate payable under the income test.
The assets test only applies if it produces a lower rate of payment than the income test.
Table 5 in Section 4.10.3 of the Guide sets out historical assets value limits for full pensions for homeowners and non-homeowners from 1 July 1997 to the present day.
Paragraph 4.2.1 of the Guide says that the ‘pensions income test’ is based on a person’s annual rate of ordinary income. Paragraph 4.2.1.10 sets out the five steps in applying the ordinary income test for age pension.
The reference to ‘ordinary income’ in section 1064-E1 (Module E) means gross income in accordance with section 1072 of the Act which provides that the general meaning of ordinary income for a period is income from all sources for the period calculated without any reduction not related to specific deductions for business income.
Where two people are members of a couple, they are treated as pooling their resources (income and assets) and sharing them 50/50. They are also treated as sharing expenses on a 50/50 basis.
The Secretary has applied the income test to the Applicant between 16 December 2005 and 13 September 2015. From 14 September 2015 through to 7 February 2019 the assets test has been applied.
Section 1064-G1 of the Act sets out how to work out the effect of a person’s assets on the person’s payment rate. Generally, a person’s principal home is to be disregarded when calculating the value of a person assets:
1118 Certain assets to be disregarded in calculating the value of a person’s assets
(1) In calculating the value of a person’s assets for the purposes of this Act … disregard the following:
…
(b) if the person is a member of a couple—the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that is a right or interest that gives the person or the person’s partner reasonable security of tenure in the home;
Relevantly, the proceeds of sale of a principal home are exempt for 12 months and up to 24 months of temporary absence from the residence by operation of subsections 11A(9) and 11A(9A) . Based on the evidence I accept that the Applicant sold the Iraq property on or about 11 December 2008 and purchased the Fairfield home on 27 March 2009. As the Iraq property was not the Applicant’s principal home on 16 December 2005, the exemption provided by subsections 11A(9) and 11A(9A) do not apply.
It is not in dispute that the Fairfield property was the Applicant’s principal place of residence between April 2009 and when the Applicant and his wife moved in with their son and began receiving rental income from the property in April 2014.
On this basis, I am satisfied that the Fairfield property is appropriately considered an assessable asset for the purposes of the age pension asset test from 17 April 2014 onwards.
The Secretary has assessed the deemed income arising from unexplained deposits in the Applicant’s bank accounts and share portfolio in order to determine whether the income or assets test applied. In calculating the debt the Secretary has taken into account both unexplained deposits into the Applicant’s bank accounts and international money transfers into those accounts and deemed interest calculated on balances held in his accounts.
The Applicant contends that many of these transfers were from friends and relatives who were immigrating to Australia, having offered his accounts to facilitate the process and reduce fees. Some of the transfers were identified as being between the Applicant’s accounts and from family members. In relation to the transfers, the Authorised Review Officer (ARO) observed in the decision dated 4 September 2019 that:
In cases where this was supported by the evidence, these funds were not included in the debt calculations. The summary provided by [the Applicant] and your nominee identified these transactions, and sometimes they were self-evident in terms of the deposited amount directly matching the withdrawn amount and in the description on the individual fund transfer.
While this methodology significantly reduced the amount of funds being assessed, it did not account for all of the multiple transactions that occurred and these were assessed accordingly as unexplained deposits. The department produced debt calculation summary reports which identified excluded funds and funds that were used to calculate the debt.
The debt calculation also includes a component for deemed income from the Applicant’s share portfolio.
The Secretary contends that there was a rigorous process underlying the debt calculation documents to ensure that only unexplained deposits in the Applicant and his wife’s accounts were included in the debt calculations.
During the hearing the Applicant was asked if he had any issues with the calculation of the debt and he indicated that he did not know if he agreed or disagreed with them as calculated.
However, based on the evidence I am satisfied that the Applicant has been overpaid in the amount calculated by the Secretary and he owes a debt to the Commonwealth of $137,469.63 for overpayment of age pension between 16 December 2005 and 7 February 2019.
Can the debt be written off?
Section 1236 of the Act provides that a debt may be written off in certain circumstances:
…

(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
I am satisfied that the Applicant’s debts cannot be written off under section 1236 as none of the preconditioning criteria set out in subsection 1236(1A) are satisfied. The debts are recoverable at law. His whereabouts are known, and it is cost effective for the Commonwealth to recover the debt.
Was the debt due to sole administrative error?
Section 1237A provides that a debt may be waived if the debt is solely attributable to administrative error:
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
This subsection has two limbs – firstly that the debt was solely attributable to an administrative error by the Commonwealth, and second, that the payment was received in good faith.
The Secretary contends that there was no administrative error on the part of the Commonwealth before, during or after the debt period. There is no evidence before the Tribunal which casts doubt on this assertion.
The Secretary also argues that the Applicant did not receive his age pension payments in ‘good faith’ within the meaning of subsection 1237A(1) of the Act. I accept the Secretary’s submission that the Applicant can be taken to have known of his reporting obligations in subsection 68(2) for the reasons I have detailed in paragraphs 73 to 79 above, and his failure to comply eliminates the possibility of sole administrative error on the part of the Secretary.
Can the debt be waived due to special circumstances?
Section 1237AAD provides the right to recover all or part of a debt may be waived in certain 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.
Each of the three limbs must be satisfied in order for the debt to be waived under section 1237AAD.
The term ‘special circumstances’ is not defined in the Act but has been extensively considered in case law.
In the decision of Re Rosemarie Beadle and Director-General of Social Security [1984] AATA 176 the Tribunal determined:
An expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. 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.
Subsection 1237AAD(b) of the Act makes it clear that there must be more than financial hardship alone for special circumstances to exist.
The Tribunal observed in Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569 that the integrity of the social security system should be taken into account when considering exercising the discretion in section 1237AAD:
It is important to recognise the need to ensure the integrity of the social security system and the public interest. This means that those recipients who have received monies to which they are not entitled, are generally expected to repay those monies unless the repayment is in the specific circumstances unjust, unreasonable or inappropriate.

Similarly, in Secretary, Department of Social Security v Coralie Hales [1998] FCA 219, French J acknowledged the need to balance the circumstances of an individual who owes a debt with the expectation that payments made to which an individual is not entitled will be recovered:
From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. However, the confining of a recovery regime by rigid rules, particularly in this area of the law, is likely to be productive of unfair or harsh outcomes in some of the great variety of fact situations that can arise. There are provisions in the Act which recognise that reality. They relate to the writing off and the waiver of debts otherwise due to the Commonwealth. This case primarily concerns the proper construction of a section of the Social Security Act 1991 (Cth) which provides for the waiver of debts where special circumstances are found to exist. There is a tension in the construction of such provisions between the needs for certainty of application and flexibility of response to the situations that may arise from time to time.
The Applicant has set out his income and household expenditure in a statement of financial circumstances stating that he has shares valued at $96,000 and the Fairfield property valued at $650,000. He and his wife receive rental income from the Fairfield property and interest on their investments. They are both in receipt of age pension, with a modest amount withheld to repay the debt to the Commonwealth. Based on the evidence, I am not satisfied that the Applicant is experiencing straightened financial circumstances which would warrant exercising the discretion to waive all or part of the debt.
I also accept the Secretary’s submission that the Applicant, and his correspondence nominee on his behalf, knowingly did not comply with his reporting obligation under subsection 68(2) of the Administration Act. I have outlined the reasons for this conclusion in paragraphs [62] to [74] above. As such, subsection 1237AAD(a) is not able to be satisfied and the special circumstances waiver cannot be exercised.
CONCLUSION
The Tribunal is satisfied that the Applicant owes a debt to the Commonwealth of $137,469.63 for overpayment of age pension between 16 December 2005 and 7 February 2019. This amount is required to be paid in full.
DECISION
For the reasons stated above, the decision under review is affirmed.

I certify that the preceding 108 (one hundred and eight) paragraphs are a true copy of the reasons for the decision herein of Mr S Evans, Member

...............................[SGD].........................................
Associate
Dated: 9 May 2022

Date(s) of hearing: 13 September 2021 and 9 December 2021

Applicant: Self-Represented

Solicitor for the Respondent: Dr S Thompson, Sparke Helmore Lawyers

Date(s) of hearing:	13 September 2021 and 9 December 2021
Applicant:	Self-Represented
Solicitor for the Respondent:	Dr S Thompson, Sparke Helmore Lawyers