Bugeja; Secretary, Department of Employment and Workplace Relations

[2006] AATA 897

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 897

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2005/205

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And JOHNNY AARON BUGEJA

Respondent

DECISION

Tribunal Senior Member L Hastwell

Date20 October 2006

PlaceAdelaide

Decision The Tribunal sets aside the decision under review and substitutes the decision that the respondent owes a debt of $20,430.25 to the Department and there is no basis for waiver or write-off of some or all of this debt.

..............................................

L HASTWELL
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Newstart Allowance –overpayment raised – “unemployed” – was the respondent unemployed during the relevant period – adverse inference drawn from failure of respondent to call witnesses – false documents provided by respondent to SSAT – impossible to ascertain how much work respondent was doing during the relevant period – sufficient evidence to establish he was not unemployed –  decision set aside

Social Security Act 1991 ss 593(1), 1068(1) & (2), 1223(1), 1236(1A), 1237AAD

Jones and Dunkel (1959) 101 CLR 298
Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884
Re McKenna and Director-General of Social Services (1981) 3 ALD 219
McAuliffe v Secretary, Department of Social Security (1991) 23 ALD 219

REASONS FOR DECISION

20 October 2006   Senior Member L Hastwell

1.      Mr Johnny Bugeja (the respondent) was a recipient of Newstart Allowance during the period 26 February 2002 until 7 July 2004.  He was paid Newstart Allowance (incapacitated) until 30 June 2002.  He was exempt from the activity test during that period.  He was then deemed fit to work from 30 June 2002 onwards

2.      During all relevant periods he presented to Centrelink as being a single person with no assets. 

3.      As a result of information received by Centrelink that the respondent was a partner in the business Marcellinas Pizza Bar (Marcellinas), the respondent's entitlement to benefits was reviewed.  An investigation took place, and on 26 August 2004 a Centrelink officer made a decision to raise and recover an overpayment of Newstart Allowance in the sum of $20,430.25, being the benefit paid for the period 26 February 2002 to 7 July 2004.  This was on the basis of a finding that during the relevant period the respondent was in full-time employment at Marcellinas. 

4.      This decision was affirmed by an Authorised Review Officer on 7 March 2005.  The respondent appealed to the Social Security Appeals Tribunal (the SSAT).  The SSAT varied the decision under review on 15 June 2005 and substituted a decision that:

(a)there was no debt for the period 26 February 2002 to 31 March 2004; and

(b)the respondent’s entitlement to Newstart Allowance for the period 1 April 2004 to 7 July 2004 be re-assessed, taking into account the earnings of Olga Amanda Frangos (Ms Frangos), on the basis that she was his de facto spouse during that period.

5.      The applicant (the Department) has applied for a review of the SSAT decision.

legislation

6.      The relevant legislation is contained in the Social Security Act 1991 (the Act). Section 593(1) of the Act provides as follows:

“593(1)Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if:

(a)      the person satisfies the Secretary that:

(i)        throughout the period the person is unemployed; or

(ii)the person is a CDEP Scheme participant in respect of the period; and

Note:   For CDEP Scheme participant see section 1188B.

(b)in the case of a person to whom subparagraph (a)(i) applies—throughout the period, or for each period within the period, the person:

(i)        satisfies the activity test; or

(ii)       is not required to satisfy the activity test; and

…”

7. The rate of allowance payable is calculated in accordance with the rate calculator set out at the end of s 1068(1) of the Act.

8.      Section 1068(2) of the Act provides:

“1068(2)If:

(a)a person has a relationship with a person of the opposite sex (other person); and

(b)the relationship between them is a marriage-like relationship in the Secretary’s opinion (formed after the Secretary has had regard to all the circumstances of the relationship, including, in particular, the matters referred to in paragraphs 4(3)(a) to (e) and subsection 4(3A));

(c)the other person is under the age of consent applicable in the State or Territory in which the person is living;

the person’s benefit rate is not to exceed the rate at which it would be payable to the person if the other person were the person’s partner.

Note:   this provision has the effect of taking into account the ordinary income and assets of the partner in applying the ordinary income test and assets test respectively.”

9.      Section 1223(1) of the Act provides:

“1223(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.”

10.     Section 1236(1A) of the Act provides for the write-off of a debt in certain circumstances:

“1236(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.”

11.     Section 1237AAD of the Act provides:

“1237AAD 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 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.

Note 1:  Section 1236 allows the Secretary to write off a debt on behalf of the Commonwealth.

Note 2: This section has effect subject to section 1237AAE in relation to an assurance of support debt.”

issues

12.     The issues to be determined in this case are:

·was the respondent unemployed during the period 26 February 2002 to 7 July 2004 or during some of that period;

·has the respondent been overpaid Newstart allowance for some or all of that period; and if so

·has the overpayment been correctly calculated; and if so

·are there any special circumstances in this case that would justify waiving or writing-off some or all of the  debt?

the hearing

13.     Mr Goldsworthy represented the Department.  The respondent represented himself.  His brother, Mr Lee Bugeja, was present at the hearing, but did not give evidence.  Mr Anthony Harry and Mr Carl Iwanyshyn were called by summons issued by the Department and gave brief evidence.  The T documents were received into evidence.

14.     Mr Goldsworthy tendered various exhibits and in presenting his case relied on the summary of events as set out in Exhibit A3, being the applicant’s statement of facts and contentions.  Other exhibits will be referred to where relevant.

15.     The respondent had little dispute with the facts set out in Exhibit A3, but he asked the Tribunal to accept that despite some of the facts, he was unemployed during the relevant period.

16.     The Department's case was that the respondent had been receiving Newstart Allowance during a period that he was not unemployed as he was working on a full-time basis at Marcellinas. 

17.     The following matters are not disputed, and for the purposes of this hearing the Tribunal makes the following findings of fact: 

·The respondent was a recipient of Newstart Allowance between 26 February 2002 and 7 July 2004.

·On 31 March 2003 Marcellinas returned a questionnaire to the Department indicating that the respondent was working 15 hours per fortnight and had commenced employment on 3 February 2003.  This resulted in a debt for $23 being raised  as the  respondent had failed to advise Centrelink of his earnings.

·An anonymous tip-off was received by the Department from a member of the public in late June 2004.  The advice was that the respondent was a partner in the business Marcellinas.  The Department initiated an investigation. 

·A search of the Australian Business Register showed that the business name Marcellinas was owned by Lee Andrew Bugeja, the respondent's brother.

·A Credit Reference check indicated that the respondent was the joint mortgagee with respect to a property at 114 Hillier Street, Reynella.  It was established that he had purchased this property jointly with Ms Frangos in late 2003.

·Further inquiries established that the finance for the purchase of the Reynella property was arranged through the NAP Finance Group (NAP).  The loan application (T10) was accompanied by a 2003 financial year PAYG  Payment Summary for the respondent showing that he had received income from Marcellinas of $27,839 in the year ended the 30 June 2003 (T10/55).

·The loan application also included a letter dated 25 October 2003 from Marcellinas stating that the respondent had worked there on a full-time basis for 40 hours per week since 29 April 2001 (T10/56).  This letter was purportedly signed by the owner/manager, Mr Lee Bugeja.  It stated that the respondent was currently earning a weekly wage of $674.  Sample payslips were included for pay periods in October 2003 (T10/57-59).  At no stage did the respondent report to Centrelink that he was earning these sums.   

·In the loan application, which was dated 5 November 2003 and signed by the respondent and Ms Frangos, the respondent stated that he was a pizza maker by occupation and that his income was $35,000 per annum (T10/53).

·The respondent and Ms Frangos initially borrowed a sum of $187,850 to assist in financing the purchase of the Reynella property.  The first loan drawdown was on 15 December 2003 as evidenced by the statement of mortgage account produced by the respondent (Exhibit A9).

·In April 2004 the respondent and Ms Frangos applied to borrow further funds through the same mortgage broker.  Payslips were once more provided in support of that application for an increase in borrowings.  These payslips showed that the respondent was still employed and earning a wage.

·A further drawdown took place on the joint mortgage account on 31 May 2004, bringing the mortgage balance to $209,717.79.

18.     As a result of all of the above information, Centrelink raised a debt against the respondent for the full amount of Newstart Allowance received by him between 26 February 2002 and 7 July 2004. 

19.     The respondent contacted the Department on 11 August 2004 and requested a review of the decision.  He advised that the documents upon which he had relied to obtain finance were false.  A letter dated 15 August 2004 (T19) was then sent by the respondent confirming that the documents in support of the loan application were false and claiming that the group certificate was filled in and lodged by the loan consultant.  His letter made it clear that the respondent was complicit in providing this false information to the broker.

20.     The Department then made a direct approach to the proprietor of the company through whom the finance application was made, a Mr Rudd.  Mr Rudd swore a statutory declaration (T21) in which he claimed that it was the respondent who provided the documents as evidence to support his loan application.  He denied any knowledge of an employee falsifying any documents for a loan application.

21.     The respondent’s initial application for review was heard by the SSAT on 17 May 2005 and a decision was handed down on 15 June 2005.  At that hearing the respondent provided to the Tribunal as part of his case copies of his personal tax returns for the years ended 30 June 2002, 2003 and 2004 (the first set of tax returns).  He also told the SSAT that the information provided to NAP was false.  Ms Frangos was with him at this first hearing and she supported his story with respect to why documents were falsified to obtain a loan, namely that they could not obtain a loan without showing a higher income and he wanted to please his father by purchasing a home prior to his father’s death.

22.     The first set of tax returns (T28) show Centrelink income, and also show some income receipts from Marcellinas for the years 2003 and 2004 under the heading “Allowances, earnings, tips, director’s fee, etc”.  There were also substantial work related expenses claimed in those years that exceeded the sum purportedly received in “Allowances, earnings, tips, director’s fee, etc”.  The SSAT’s decision indicates that the respondent’s evidence was that he had lodged these tax returns with the Australian Taxation Office (ATO) (T2/10).  The tax agent lodging these returns was Anthony Harry.

23.     Shortly after the SSAT hearing, and as a result of an inquiry by the applicant, the ATO provided the applicant with copies of the tax returns lodged by the respondent for the same 3 financial years.  These tax returns were provided under cover of a letter from the ATO dated 14 July 2005 (the second set of tax returns) (T27).  The second set of tax returns differed from the tax returns that the respondent had handed to the SSAT and were lodged by a different accountant.

24.     The first set of tax returns that the SSAT were shown by the respondent, and upon which they placed reliance, had never been lodged.  The second set of tax returns lodged with the ATO did not declare any income received from Marcellinas.

25.     It would appear that the SSAT were not privy to the genuine and second set of tax returns that only came to light after the SSAT hearing.  The respondent did not provide copies of these tax returns to the SSAT.

the respondent’s evidence

26.     The respondent gave a history of having worked for Mitsubishi for 5 years and he then went on to work for a period of time as a service station console operator.  He was diagnosed with type 1 diabetes in February 2002 and he left that job.  After leaving that job he said that he worked from time to time at Marcellinas, a business run by his father and his brother.  There were no uncles or cousins involved in the business and he pointed out that the tip-off to the Department (T8) which had claimed that the business was run by his uncle and cousins was incorrect. 

27.     The respondent’s father became seriously ill in 2003.  It was his father’s wish that the respondent purchase a property.  His father gave him $10,000 towards the deposit on a house.  His father eventually had to give up work altogether because of his illness.  The respondent assisted in the care of his father during the period of his illness.  His father died some months later in 2004.

28.     The respondent and his girlfriend, Ms Frangos, applied for a loan in late 2003 as he wanted to fulfil his father’s wish that he purchase a home.

29.     He told the Tribunal that he told the loan officer “everything”, namely that at the time he was receiving “gifts of money from the shop” (Marcellinas), he was also in receipt of Centrelink benefits.  The loan officer said initially that obtaining a loan would be no problem, but then said that he and Ms Frangos would need more documents to obtain the loan.  

30.     The respondent claimed that the particular loan officer was sacked 2-3 weeks after his involvement with the respondent’s loan application and that he has no idea where that person is.

31.     The respondent denied creating the falsified group certificate which was given to NAP.  He said that he assumed the loan officer had done that himself.  He then said that he believed that the loan officer had bought the blank group certificate from a Post Office and had forged the signature.  He admitted that the detailed payslips (T10) presented with the loan application had been created on the home computer by his girlfriend, Ms Frangos.  They were successful in their loan application and they purchased the Reynella house in late 2003.  His father died in April 2004.

32.     He said that Ms Frangos, who is a dental assistant, pays the entire loan from her wage.  The statements later produced by him showed that approximately $33,000 in loan repayments were made between 15 December 2003 and 1 December 2005 (Exhibit A9).

33.     The respondent then gave some fairly confusing evidence about the first and second sets of tax returns.  He claimed to know nothing about the second set of tax returns (T27) and he appeared to genuinely have no memory of ever lodging them.  As to the first set of tax returns presented to the SSAT, he again appeared to have little knowledge of them.  He said that he had never met anyone called Anthony Harry (the lodging accountant) and he deferred to his brother in the back of the hearing room for an answer.  Mr Lee Bugeja (without any prompting from the Tribunal) advised that a Peter Balnaves had prepared them.  The respondent also denied any knowledge of a Mr Harry, whose name appeared on the face of the documents.

34.     When the respondent was questioned about the refinancing in April 2004, he said that it was a personal loan which was to be used to reduce the mortgage balance on the home.

35.     He and Ms Frangos had never lived together before they purchased the home and he said that he still lives between the jointly owned Reynella property and  his brother’s house.  He now works full-time for Marcellinas and he described himself as being in training to be a boss.  He is planning to become a partner in the business so that his brother can go away for a year or so. 

36.     When cross-examined about the preparation of false documents, he said that he really did not care about falsifying documents as the only thing important to him was his father’s wishes.  He denied that he received income from Marcellinas and referred to it as “gifts”.  He claimed that he declared these gifts on the Centrelink forms. 

37.     When questioned about the first set of tax returns produced to the SSAT, he denied any knowledge of them and said that his brother went to the tax agent.  He said “We’re brothers – we’re in this together”. 

38.     His recall was that he had last lodged tax returns when he was working for Mitsubishi.  The leading hand would come around and arrange for everyone to do their returns.  He admitted preparing the letter from Marcellinas saying that he had a full-time job and stating details of his wage.  He asked the Tribunal to accept that the contents of these documents were untrue.

39.     When questioned about his relationship with Ms Frangos, he said that he had not really moved in with her in their property and he still spent time living with his brothers.  They do not have a joint bank account (other than the mortgage account) and he claimed the mortgage payments are made by her.  He indicated that he made little contribution, if any, to the joint household with Ms Frangos.

40.     The Tribunal then adjourned the matter so that further evidence could be called with respect to the two different sets of tax returns.  The applicant issued a summons to Mr Anthony Harry and Mr Iwanyshyn to give evidence. 

41.     At the resumed hearing, Mr Harry appeared and gave evidence.  He claimed to have no knowledge whatsoever of the first set of tax returns that had been lodged using his name as the lodging agent.  He had not prepared them.  His evidence was that he has not authorised anyone else to lodge returns under his name.  He knew of no one with the respondent’s name and denied ever meeting the respondent.

42.     Mr Iwanyshyn appeared and gave evidence.  He acknowledged that he had lodged the second set of tax returns and that they were lodged under his name.  He was confident that he had received instructions to lodge them directly from the respondent and that he last saw the respondent on 20 July 2004 when he came into sign his tax returns.  He was familiar with the respondent and had done his tax over a number of years.

43.     The respondent produced his mortgage statement (Exhibit A9) at the resumed hearing.  This showed that approximately $33,000 in mortgage payments had been made over a 2 year period.

44.     When questioned about why he had not advised Centrelink of his ownership of an asset (the Reynella property) and his relationship with Ms Frangos, the respondent’s response was that if he received letters from Centrelink he did not pay any attention to them.

45.     The respondent’s own personal bank account records were contained at T17 and covered the period from February 2002 until July 2004.  They showed discretionary expenditure on items such as comprehensive motor vehicle insurance, Foxtel and BASS tickets.

submissions

46.     Mr Goldsworthy’s submission for the applicant was that the Tribunal was entitled to draw an adverse inference from the failure of the respondent to call his employer to give evidence and also from his failure to call Ms Frangos, who supposedly falsified documents for the respondent.  A detailed summons to produce documents had been issued to Mr Lee Bugeja requesting that business and wages records relating to the respondent’s employment be produced.  Mr Bugeja’s response was to produce no documents and assert that he had “a book” but it had been lost.  This summons was returnable on the first day of the hearing and that statement was made to the Tribunal by Mr Lee Bugeja.

47.     The applicant asserted that all the evidence pointed to the respondent not being trustworthy and the Tribunal should accept that he was not unemployed during the relevant period and was working at Marcellinas.

48.     The respondent’s submission was that despite the various deceptions to the loan broker and the SSAT, the Tribunal should now accept that he had “never received whatever I supposedly received” namely wages per week and Centrelink benefits as well.

discussion of the evidence

49.     At the commencement of the hearing Mr Lee Bugeja was present with the respondent.  The Tribunal asked the respondent if he wished to call his brother, Lee, to give evidence.  The Tribunal invited the respondent to carefully consider taking this course and to discuss the matter with his brother outside the hearing room.  The Tribunal pointed out to him that his brother, as his alleged employer, was an important witness and that adverse inferences may be drawn if he were not called.  The respondent elected not to call his brother to give evidence.  His brother then sat in the back of the hearing room throughout the first hearing day, occasionally answering questions (without prompting) that the respondent was unable to answer, particularly when it came to the issue of who had prepared the tax returns that were never lodged. 

50.     Ms Frangos was not called to give evidence, although by the respondent’s account he continues to have a relationship with her.

51.     The respondent’s brother appears to have had a key role in events.  The respondent commented to the Tribunal, they were “in it together”.  His brother is his alleged employer for the relevant period.  If indeed the respondent was not working for his brother at Marcellinas during the relevant period then why did he not call his brother to give that evidence? His brother could have also collaborated his evidence that the pay slips and letter from Marcellinas were forged.  He could have confirmed what the respondent’s real role (if any) was at Marcellinas during the relevant period.  Judging on his impromptu remarks from the rear of the hearing room, he could also have cast some light on the first set of tax returns.

52.     The rule in Jones and Dunkel (1959) 101 CLR 298 provides that the unexplained failure of a party to call a witness to give evidence may in appropriate circumstances lead to an inference that the uncalled evidence would not be of assistance in his case.

53.     No satisfactory explanation has been given by the respondent for Mr Lee Bugeja’s failure to give evidence.  In fact, no explanation was given at all.  Lee Bugeja sat in the back of the hearing room throughout and made occasional loud comments, when it suited him, in response to questions put to his brother. 

54.     Ms Frangos could also have assisted the Tribunal.  She is the alleged author of the pay slips.  Her evidence may have corroborated the respondent’s evidence about his motivations in falsifying documents.  The Tribunal would like to have had the opportunity to discuss with her how she manages to pay all outgoings on the Reynella property without assistance from the respondent.  If the loan documents accurately present her income, she earns a modest income.

55.     The Tribunal notes that the second set of tax returns that were lodged with the ATO, and which are contained at T27, show no income whatsoever from Marcellinas.  The first set of tax returns that were provided to the SSAT, subsequent to the hearing and before their decision, show income from Marcellinas and were corroboration of the story the respondent told the SSAT, namely that he was receiving some small amounts of income from Marcellinas over a period of time.  These returns were prepared allegedly by an Anthony Harry who denies any knowledge of them.  The Tribunal has no reason to disbelieve the evidence given by either accountant. 

56.     The Tribunal finds as a fact that the first set of tax returns were prepared for the sole purpose of misleading the SSAT at the hearing and were a deliberate attempt to raise the credibility of the respondent in the eyes of the SSAT.  The second set of tax returns (T27) had been lodged at some other time and were the genuine tax returns lodged.  The Tribunal has been unable to ascertain when the second set of tax returns were lodged.

57.     The Tribunal finds that the respondent is not a credible witness at all.  He has woven a tangled web in his attempts to deceive the loan provider, Centrelink, the SSAT and this Tribunal.  It is impossible for the Tribunal to ascertain where the truth lies and how much work the respondent was doing at Marcellinas during the relevant period.  The respondent was clearly flustered and confused at times when giving evidence, and the Tribunal had the impression that his brother, who sat in the hearing room throughout, was to some degree complicit in some of his brother’s actions in falsifying documents in an attempt to produce an outcome that suited him. 

58.     The respondent had no compunction in saying that he falsified documents to obtain a loan.  He has also falsified documents for the purposes of the SSAT hearing.  He has told the Tribunal that he did some small amounts of work for Marcellinas that he declared on tax returns.  His genuine tax returns did not declare this income.

59.     His personal accounts for the relevant period were also interesting in that they show discretionary expenditure that one would not expect would be within his capacity if he was largely reliant on income support from Centrelink during the relevant period.

consideration

60. A person is entitled to Newstart Allowance if they are unemployed during the relevant period. The issue in this case is not so much who the respondent was working for and whether he was working full-time during the relevant period, but rather whether he was “unemployed” within the meaning of that term as used in s 593(1)(a)(i) of the Act.

61.     The Full Federal Court in the case of Secretary, Department of Employment and Workplace Relations v Joss [2006] FCA 884 recently considered the concept of “unemployed” as set out in the Act. They adopted with approval the statement of the Administrative Appeals Tribunal in the matter of Re McKenna and Director-General of Social Services (1981) 3 ALD 219 which commented in the following terms:

“11. The apparent legislative intent of the provisions of the Act concerned with eligibility for and payment of unemployment benefit is to provide those people who are not engaged in work of a remunerative nature with the means of subsistence in circumstances where, despite capacity, willingness and effort on their part, they have been unable to find paid work to maintain themselves. … When regarded in the context of the apparent legislative intent and the other terms and expressions used in the sub-section, it seems to us that the word "unemployed" bears its colloquial or popular meaning of not being engaged in work of a remunerative nature. This meaning must … be modified to allow for those special cases where a person is not engaged in work of a remunerative nature but whose commitment to some activity …  demonstrates a preference for that activity rather than employment. …”

62.     The Federal Court in that case went on to adopt the definition of “unemployed” as appearing in the Macquarie Dictionary in the following terms:

“1.       out of work, especially temporarily and involuntarily; without work or         employment.

2.        not employed; not in use; not kept busy or at work.

3.        not in productive or profitable use.”

63.     The Court also noted with approval the comments of Von Doussa J in the matter of McAuliffe v Secretary, Department of Social Security (1991) 23 ALD 219 where he said:

“The question whether the appellant was ‘unemployed’ during the whole or part of the period when benefit was paid was essentially a question of fact and degree to be decided having regard to the above principles.”

64.     In Joss the Court concluded:

“In addressing the question of whether or not a person is ‘unemployed’ for the purpose of s 593 of the Act it is not sufficient to confine one’s consideration to the question of whether or not a contract of employment existed between the person claiming to be unemployed and a third party.  Other situations which must be considered are those of the self-employed whether they be engaged in endeavours on their own account or as members of a partnership or of a joint venture.  One might say that if a person is carrying on business or engaged in work with a view of profit, that person could not be considered to be unemployed.”

65.     The Tribunal has considered all the evidence available to it and finds, on the balance of probabilities, that the respondent was not “unemployed” during the relevant period.  He may have been a wage earner, he may have been a silent partner in Marcellinas, or he may have worked only part-time.  Based on the above decision, the Tribunal does not have to make a precise finding as to the exact role he had during that time.  The question is whether he was unemployed.

66.     There was clearly no contract of employment with Marcellinas as such.  However, the Tribunal is satisfied that throughout the relevant period the respondent was doing some work for Marcellinas and was receiving some income which he did not declare to either the ATO or to Centrelink and which was not put through bank accounts.  A perusal of his personal banking records at T17 would suggest that he was receiving cash payments from a source other than Centrelink and his pension benefit was being used for items such as Foxtel, monthly comprehensive vehicle insurance, BASS tickets and Visa payments.  His Visa statements were not produced. 

67.     The failure of Mr Lee Bugeja to give evidence or to produce wage records further confirms the Tribunal’s view that it is likely that the respondent was working in some capacity at Marcellinas during the relevant period and falsely presenting his position to Centrelink as being unemployed.  Ms Frangos could also have assisted greatly in supporting aspects of the respondent’s story and the Tribunal would like to have had the opportunity to ascertain how, on her fairly modest salary, she was servicing the entire Reynella mortgage.

68.     The Tribunal is satisfied that the respondent may not have been working on a full-time basis.  He has health issues to deal with and his father was very ill at times.  Nevertheless, the Tribunal finds as a matter of fact that he was working during the relevant period for some hours per week at Marcellinas and was not otherwise making any effort to seek employment.  He was not unemployed during the relevant period.

69.     Based on that finding, the Tribunal does not need to go on to consider the issue of whether the respondent had a marriage-like relationship with Ms Frangos during some of the period under consideration.

70.     The Tribunal must go on to consider whether write-off or waiver is appropriate in this case.

71.     Section 1223(1) of the Act provides that the amount paid in Social Security benefits to the respondent during the relevant period becomes a debt payable to the Commonwealth.  The respondent does not challenge the calculation of the debt.

72.     Under s 1236(1A) of the Act, the Secretary may decide to write-off a debt in certain circumstances.  The only applicable circumstance here would be if the Tribunal found that the debt is irrecoverable at law or the debtor has no capacity to repay the debt.  The Tribunal is satisfied that the debt is recoverable and that the respondent has the capacity to repay that debt over time, either from earnings or in the event that he is in receipt of benefits, by deductions from his benefit.

73.     Section 1237AAD of the Act provides for waiver of some or all of a debt in “special circumstances”. 

74.     The Tribunal is satisfied that the debt arose from the respondent making a false representation to the Department that he was essentially unemployed or receiving very minimal amounts by way of remuneration.  It is the Tribunal’s view that the respondent has knowingly failed or omitted to comply with a provision of the Act, namely notification of wage earnings to the Department.  There is therefore no basis on which the respondent is entitled to a waiver of the debt. 

75.     In the circumstances the Tribunal sets aside the decision under review and substitutes the decision that the respondent owes a debt of $20,430.25 to the Department and there is no basis for waiver or write-off of some or all of this debt.

I certify that the 75 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member L Hastwell

Signed:         ............J Coulthard .........................................
  Associate

Dates of Hearing  3 July 2006 & 22 August 2006
Date of Decision  20 October 2006

Advocate for the Applicant       Mr C Goldsworthy

Centrelink Legal Services Branch

Representative for the

Respondent  In person