Burling and Secretary, Department of Social Services (Social services second review)
[2015] AATA 1020
•23 December 2015
Burling and Secretary, Department of Social Services (Social services second review) [2015] AATA 1020 (23 December 2015)
Division
GENERAL DIVISION
File Number
2015/3424
Re
Nathan Burling
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Senior Member A C Cotter
Date 23 December 2015 Place Brisbane The Tribunal affirms the decision under review.
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Senior Member A C Cotter
CATCHWORDS
SOCIAL SECURITY – disability support pension – debt raised - failure to disclose additional bank accounts by recipient – significant unexplained deposits in accounts – whether amounts properly classified as “ordinary income” – no reasonable explanation for transactions provided - debt properly raised – whether special circumstances warrant waiver – no special circumstances made out – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 1064, 8, 1072, 1223, 1237, 1237AAD
Social Security (Administration) Act 1999 (Cth) ss 68, 72
CASES
ReFrederick George Rose v Secretary, Department of Social Security [1990] FCA 52
Read v Commonwealth (1988) 167 CLR 57
Nassimi and Secretary, Department of Social Services [2015] AATA 423
Groth v Secretary, Department of Social Security (1995) 40 ALD 54
Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9
REASONS FOR DECISION
Senior Member A C Cotter
23 December 2015
INTRODUCTION
Since March 2007, Mr Nathan Burling has received the Disability Support Pension (“DSP”). At the time of lodging his claim, Mr Burling stated that he had one National Australia Bank (“NAB”) savings account and one NAB term deposit.[1]
[1] Exhibit 1, T Documents, T 2, page 3, Decision and Reasons for Decision of Social Security Appeals Tribunal dated 4 June 2015, paragraph [2].
When notifying Mr Burling of the grant of DSP, the Department also advised him of his obligations to notify it within 14 days if his income increased. He was also required to notify the Department within seven days if he opened a new account.[2] From time to time, the Department wrote to Mr Burling, reminding him of those obligations.[3]
[2] Ibid.
[3] Exhibit 1, T Documents, T 15, pages 295-316.
It subsequently came to the Department’s attention that Mr Burling had opened a number of other bank accounts without telling it. Its inquiries revealed that he in fact had three NAB accounts (one of which was closed) and three accounts with Westpac Banking Corporation (“Westpac”).
The Department initially requested an explanation from Mr Burling about the undeclared NAB and Westpac accounts and the activity in them. Although he provided some information (in respect of which he was given the benefit of the doubt), his response did not address all of the Department’s questions to its satisfaction; it identified 191 deposits, totalling $195,526.58, which it considered remained unexplained.[4]
[4] Exhibit 1, T Documents, T 14, page 292 and Exhibit 2.
In light of its inquiries and unanswered questions, the Department decided that Mr Burling had been overpaid DSP in the amount of $35,091.24 during the period 29 July 2008 to 5 November 2014. It demanded recovery of that debt from Mr Burling.[5]
[5] Exhibit 1, T Documents, T 7, pages 217-218.
Mr Burling unsuccessfully sought review of that decision, first by an Authorised Review Officer, and later by the then Social Security Appeals Tribunal (“SSAT”). Still dissatisfied with the outcome, he has sought a review of the SSAT’s decision by this Tribunal.
I should add that, after the initial inquiries were made of Mr Burling concerning the NAB and Westpac accounts, it was discovered that he also had a further three Commonwealth Bank of Australia (“CBA”) accounts. From what Mr Burling told me, they are the subject of a separate, ongoing inquiry by the Department; they are not directly the subject of this proceeding.
ISSUES FOR THE TRIBUNAL
The issues for me to determine are as follows:
(a)whether the bank deposits in question were “income”; and if so,
(b)whether DSP has been overpaid and is a debt due to the Commonwealth; and
(c)whether the debt should be recovered.
Before I deal with those questions, it is timely to note some of the key legislative provisions.
THE LEGISLATIVE FRAMEWORK
The amount of DSP payable to a person is worked out by reference to the rate calculators in s 1064 of the Social Security Act 1991 (Cth) (“Act”). One of the factors to be taken into account is the amount of the person’s “ordinary income”, which is a reference to their “gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.”[6]
[6] s 1072 of the Act.
“Income” is defined in s 8(1) of the Act as follows:
income, in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person’s own use or benefit; or
(b)a periodical payment by way of gift or allowance; or
(c)a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).
“Income amount” is defined to mean valuable consideration, personal earnings, moneys, or profits, whether of a capital nature or not.[7]
[7] s 8 (1) of the Act.
The expression “earned, derived or received” is defined in s 8(2) of the Act in the following way:
(2) A reference in this Act to an income amount earned, derived or received is a reference to:
(a)an income amount earned, derived or received by any means; and
(b)an income amount earned, derived or received from any source (whether within or outside Australia).
Under s 68 of the Social Security (Administration) Act 1999 (Cth)(“Administration Act”), a social security recipient is required to notify the Department of any matters or changes of circumstances that might affect their social security payments. Section 72 of the Administration Act requires a person to advise the Department of any changes of circumstances within 14 days.
The courts and this Tribunal have said that the definition of “income” employed in the Act is very broad, “to ensure that it brought within its net as wide a range of categories and sources of income as possible”.[8] As Brennan J noted in Read v Commonwealth, the definition is “couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide”.[9]
CONSIDERATION
Were the bank deposits “income”?
[8] ReFrederick George Rose v Secretary, Department of Social Security [1990] FCA 52, [12].
[9] (1988) 167 CLR 57, 69. See also Nassimi and Secretary, Department of Social Services [2015] AATA 423, [6] and [9].
Mr Burling’s explanations to the Department
As mentioned earlier, significant amounts of money were deposited into Mr Burling’s bank accounts on various occasions during the relevant period. That is not disputed by Mr Burling. Rather, he offered a number of explanations for the deposits, which I set out below.
When he was first contacted about the deposits, Mr Burling said that they represented:
(a)the collection of household rent from housemates which he then forwarded to the landlord;
(b)the repayment of money lent to friends from years previous;
(c)“recycled” monies, being amounts which he had withdrawn for a particular purpose, and then changed his mind; and
(d)the deposit of funds from previously closed accounts.[10]
[10] Exhibit 1, T Documents, T 14, Departmental files note dated 10 November 2014.
As to the loans, he told the Department that he never expected to be repaid, let alone have a formal repayment plan in place, which is why he did not inform Centrelink of the deposited repayments.[11]
[11] Ibid.
Taking into consideration Mr Burling’s explanations, the Department conducted a further detailed consideration of his NAB and Westpac accounts. Affording him the benefit of the doubt with respect to his collection of household rent, his “recycling” of monies and the transfer of funds from closed accounts, it reduced the unexplained deposits to 191, totalling $195,526.58.[12] In the absence of an explanation, the Department determined those deposits to be income for the purpose of calculating the correct rate of DSP for Mr Burling. That resulted in its decision that he had been overpaid DSP in the amount of $35,091.24 during the relevant period and that the amount overpaid was a debt owed to the Commonwealth.[13]
[12] Exhibit 1, T Documents, T 14, page 292.
[13] Exhibit 1, T Documents, T 7, pages 217-218, Account Payable dated 1 December 2014.
Shortly after receiving its decision, Mr Burling sent an email to the Department titled “claim mistake”, in which he reiterated the explanations concerning his friends’ loan repayments and the rent collection. Further, some deposits related to the “buying and selling of cars motorbikes etc.”[14] He followed that with an email the next day, saying that he also recalled that he had made a lot of purchases for other people using PayPal and cards, for which he was later paid cash. He eventually deposited those monies back into his bank accounts.[15]
[14] Exhibit 1, T Documents, T 8, page 219 Email Mr Burling to Seonmi Kim dated 15 December 2014.
[15] Exhibit 1, T Documents, T 9, page 220 Email Mr Burling to Seonmi Kim dated 16 December 2014.
As to the loan repayments, Mr Burling stated that the reason his savings might have risen very slightly was due to two old friends that had been paying him back loans over 10 years. He also said that he lived within his Centrelink income, and that it felt like not a day went by when he had not helped a friend out with money “in amounts small and sometimes larger”. A few friends had agreed to give statements, but there were others that were busy with jobs and families and did not want to get involved. Many others had “come and gone”, but he expected to be able to obtain the most important two that had paid him back “in the tens of thousands” from previous years.[16] A few days later, on 18 December 2014, Mr Burling wrote another email, asking if he could have until March to organise his evidence. He said that he was having trouble tracking down the most important statutory declaration from the person he had loaned the most money to.[17]
[16] Exhibit 1, T Documents, T 8, page 219 Email Mr Burling to Seonmi Kim dated 15 December 2014.
[17] Exhibit 1, T Documents, T 10, page 221, Email Mr Burling to Seonmi Kim dated 18 December 2014.
By the time of the SSAT hearing almost six months later, Mr Burling had still to obtain the required evidence from his friends.[18]
[18] Exhibit 1, T Documents, T 2, page 5, SSAT’s Decision and Reasons for Decision dated 4 June 2014, paragraph [8].
Mr Burling’s evidence
Mr Burling gave evidence at the hearing. He also tendered a number of letters and statutory declarations from family and friends, which I summarise below.
His brother, Adam, wrote a letter confirming that during the 2000-2006 period, Mr Burling lent him money on numerous occasions. In accordance with their agreement, Adam was to keep track of what was owed (which he put at a total of $40,650.00) and he would repay it when he was able. He was unable to commence repayments until 2009, when he obtained a more remunerative job. He repaid Mr Burling in varying amounts when he could manage, and did so in cash on different occasions when they caught up. He fully repaid the loan earlier in 2015.[19] Adam also wrote a second letter providing some historical information as to Mr Burling’s disabilities, and confirming that Mr Burling “covered people for their rent and lent people money to get them out of trouble on numerous occasions”. He also made a general statement that Mr Burling “left an open time frame for these people to pay him back as their own circumstances allow, as he has done for me also”.[20]
[19] Exhibit 5, Letter from Adam Cecil Burling dated 12 November 2015.
[20] Exhibit 4, Letter from Adam Cecil Burling dated 12 November 2015.
Mr Burling’s mother, Margaret, also wrote a letter, stating that she had needed to borrow money from him in the past during a time of hardship.[21]
[21] Exhibit 8, Letter from Margaret Gai Burling, undated.
A statutory declaration was tendered from a housemate of Mr Burling, Mr Bradley Tabulo. He stated that he had known Mr Burling for 14 years and they had lived together in four different houses. Over the years, he said that he would have “easily borrowed in the [sic] excess of $16,000.00” in different amounts over a couple of years. He had been able to repay the monies from payouts he had received from WorkCover and from personal injury claims.[22]
[22] Exhibit 6, Statutory declaration of Bradley Scott Tabulo declared 19 November 2015.
Ms Kellie Passey stated in a statutory declaration that Mr Burling had lent her “large” sums of money “now and in the past over 12 yrs.” She said that she had known Mr Burling to also do that “a lot” for others, especially a mutual friend of theirs, Charlie Brown (Parker), who had since passed away. She also stated that Mr Burling had paid her registration quite a few times and had made purchases online or on cards for her, which she paid back in instalments; she had known him to do that for others as well. [23]
[23] Exhibit 7, Statutory declaration of Kellie Louise Passey declared 13 November 2015.
In his oral evidence, Mr Burling confirmed the contents of the letters and statutory declarations referred to earlier. During cross-examination, he was asked about another friend, Adam Clarke, to whom he had previously referred in conversations with Departmental officers.[24] He said that over the years, Mr Clarke had probably borrowed more than $100,000.00 from him. He would often borrow money from Mr Burling, but pay it back straight away after he had received his salary. They had since had a falling out and Mr Clarke had declined to assist him.
[24] See Exhibit 1, T Documents, T 14, page 289.
Mr Burling reiterated that he helped people financially when they were in difficulties. He said that he did not record in writing the details of monies he lent, but kept a running figure in his head. He denied the comment attributed to him during a conversation with a Departmental officer, that he never expected to be repaid and that was the reason why he had never notified Centrelink.[25] He confirmed, however, that all loans had now been repaid.
[25] See Exhibit 1, T Documents, T 14, page 293.
Mr Burling explained that he was a good saver and had accumulated savings before he was granted DSP. He said that even on DSP, he was able to save money, describing his DSP payment as a “quite generous amount”. He denied that he had received any other income during the relevant period, apart from some money he received towards the end of that period from share trading, which he had commenced earlier in 2014. Asked during cross-examination about his current funds, he said he had approximately $40,000.00, of which about $38,000.00 was invested in shares (although he estimated he would only net about $32,000.00, or possibly $33,000.00 if they were sold now).
When asked to respond to the schedule of unexplained deposits, Mr Burling said that it was “unfair” and irrelevant. He could not remember the details of what he lent and what he received, and when, saying that he suffered from poor memory as a result of past operations.
Evaluation of the evidence
Notwithstanding the evidence led by Mr Burling, no attempt was made to address even some of the unexplained deposits identified by the Department.
The statutory declarations lacked particularity. Ms Passey failed to identify any amounts lent or repaid, or specific timeframes. While Mr Tabulo nominated a figure of in excess of $16,000.00 in loans having been made to him, his declaration likewise lacked specifics of when those loans were made, and repaid. I attempted to pinpoint at least some repayment dates by reference to when Mr Burling purchased a motorcycle with some of the funds repaid by Mr Tabulo. Unfortunately, Mr Burling could not provide any assistance, even though it was relatively recent and towards the end of the relevant period (Mr Burling thinking that the motorcycle may not have been registered 12 months).
The evidence of Mr Burling’s mother and brother was unsworn. Mrs Burling’s letter contained no detail whatsoever of the loans made to her. Nor did it make any reference to repayments. Adam Burling’s letter did nominate a figure, $40,650.00, which he said was repaid to his brother in various cash payments between 2009 and earlier in 2015. However, it failed to provide dates on which repayments were made or the amounts of any instalments, even though Adam Burling was to have kept track of what was owed. One would have thought that Adam could have provided more detail as to repayments, especially given that he was able to nominate the specific amount loaned to him between 2000 and 2006, and the fact that the loan was repaid relatively recently and that he was able to confirm that to be the case. Adam Burling’s second letter stated Mr Burling had made numerous loans to people. No specifics, however, were provided as to amounts loaned and when, to whom such loans were advanced, or details of when any repayments were made.
Nor did Mr Burling make any attempt to respond to even some of the list of unexplained deposits, simply saying that his memory was poor. That explanation, however, does not sit comfortably with other aspects of Mr Burling’s version. He not having kept written records of his various loans to people, he told me that he kept the figures in his head. Given the number and frequency of loans over such an extended period of time, and the various irregular repayments he received, it is implausible that someone with such a poor memory could keep abreast of the detail of the various transactions. It is also improbable that someone with such poor memory for detail could conduct what Mr Burling described to a Departmental officer as “high volume share trading” every second day.[26] The Profit and Loss Statement prepared for Centrelink in respect of the first nine months of trading show an eye for precision, with variable expenses being reported to the cent and with percentage apportionments on the use of utilities such as electricity, telephone and internet, as well as motor vehicle usage.[27] Nor do those dealings sit comfortably with Mr Burling’s seemingly casual, almost carefree, attitude to lending money and its repayment.
[26] See Exhibit 1, T Documents, T 14, page 284.
[27] See Exhibit 1, T Documents, T 12, page 271-273.
For those reasons, I am not satisfied that Mr Burling has offered any plausible or reasonable explanation for the deposits identified by the Department.
Conclusion
Given the wide definition of “income” and the available evidence, I believe that, absent a satisfactory explanation to the contrary, it is reasonable to conclude that the unexplained deposits, totalling $195,526.58, were for Mr Burling’s own use and benefit. He having failed to offer any reasonable explanation to the contrary, I conclude that the deposits were his “income” for the purpose of the Act.
Was DSP overpaid and is there a debt due to the Commonwealth?
Based on the unexplained deposits being considered income, the Department calculated that Mr Burling was overpaid DSP in the amount of $35,091.24.[28] That calculation not having been questioned or challenged by Mr Burling, I am prepared to accept the Department’s calculations as accurate.
[28] Exhibit 1, T Documents, T 5, pages 73-96.
Mr Burling having received a payment of DSP to which he was not entitled, the amount of that overpayment is a debt due to the Commonwealth, by reason of s 1223 of the Act.
Should the debt be recovered?
Under the Act, the Secretary may waive the Commonwealth’s right to recover the whole or part of a debt from a debtor in certain circumstances.[29]
[29] See s 1237 of the Act.
There being no suggestion that the debt in this instance is solely attributable to the Commonwealth’s administrative error, the only possible basis for waiver is if “special circumstances” make it desirable to do so.[30]
[30] s 1237AAD of the Act.
The term “special circumstances” is not defined in the Act, but has been the subject of much consideration by the courts and this Tribunal in the context of both this and other social services legislation. For present purposes, it is suffice to say that the term is often said to refer to circumstances which distinguish the particular case from others; there must be something that takes it out of the usual or ordinary case.[31]
[31] See, for example, Groth v Secretary, Department of Social Security (1995) 40 ALD 54 and Angelakos v Secretary, Department of Employment and Workplace Relations (2007) 100 ALD 9, [33].
Apart from contending that the Department’s claim was unfair, and that he had previously worked hard and saved diligently, Mr Burling did not lead any evidence to justify the exercise of the discretion to waive recovery. There is nothing about his circumstances which are unusual or out of the ordinary to warrant waiver. On the contrary, he has the capacity to repay the debt. He gave evidence of currently having the equivalent of at least $35,000.00 in cash and shares. He also continues to receive DSP (which he acknowledged was “quite generous”), from which the debt can also be recovered through periodic deductions.
CONCLUSION
For the reasons outlined above, I consider that the deposits into Mr Burling’s bank accounts, totalling $195,526.58, were income for the purposes of the Act. As a consequence, Mr Burling has been overpaid DSP in the sum of $35,091.24, which amount is a debt owed to the Commonwealth. I do not believe there are any special circumstances in this case which would justify a waiver of the right to recover that debt in whole or in part.
Accordingly, the decision under review is affirmed.
I certify that the preceding 45 (forty -five) paragraphs are a true copy of the reasons for the decision herein of Senior Member A C Cotter ...............................[Sgd].........................................
Associate
Dated 23 December 2015
Date of hearing 19 November 2015 Applicant In person Solicitors for the Respondent Department of Human Services
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