Daniels and Secretary, Department of Social Services (Social services second review)

[2017] AATA 327

Daniels and Secretary, Department of Social Services (Social services second review) [2017] AATA 327 (30 January 2017)

Division:GENERAL DIVISION

File Number:           2016/2265

Re:Samantha Daniels

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member N A Manetta

Date:30 January 2017

Date of written reasons:        16 March 2017

Place:Adelaide

For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal affirms the decision under review.

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

Senior Member N A Manetta

CATCHWORDS

SOCIAL SECURITY - overpayment of parenting benefit - recipient assisting in father's improper scheme to avoid income tax - father's earnings credited to recipient's account - presumption of advancement - resulting trust - role of Tribunal in adjudicating and recognising resulting trusts - held - not appropriate for Tribunal to recognise unconditional resulting trust - decision under review affirmed.

LEGISLATION

Social Security Act 1991 (Cth)

CASES

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

Nelson v Nelson (1995) 184 CLR 538

REASONS FOR DECISION

Senior Member N A Manetta

16 March 2017

1. After delivery of my decision and oral reasons, I received a request for written reasons, which I now publish.

2. This is an application by Ms Samantha Daniels for a review of a Level 1 decision of this Tribunal dated 22 March 2016.  In its decision, the Tribunal affirmed decisions taken in the respondent’s Department that Ms Daniels should repay to Centrelink an alleged overpayment to her of parenting benefit.  Ms Daniels represented herself before me; Mr Visser appeared for the respondent.

   STATEMENT OF CONCLUSION

3. Hearing the matter afresh on the evidence adduced by the parties,[1] I have decided to affirm the decision under review.    Ms Daniels gave evidence before me as did her father, whom she called to give evidence on her behalf.  I did not find the testimony of either of them entirely reliable, but even accepting most of Ms Daniels’ evidence, I do not believe she was entitled to parenting benefit during the relevant period, and, in my opinion, a debt was properly raised against her.  I now set out the background facts and the reasons for this decision.

   [1] Drake v. Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68.

   BACKGROUND

4. The salient facts are as follows.  Ms Daniels, who was 29 years of age at the time of the hearing before me, has not worked regularly for some time as she is the mother of three children, born in 2005, 2006, and 2008 respectively.  She gave evidence that she has worked on and off at Clipsal 500 races in the past, but has never had a full-time job and no regular ongoing part-time work.  She has been in receipt of a parenting payment.  She lives alone with her three children and does not have a partner.

5. Ms Daniels undertook a small-business course with TAFE in 2011.  She became familiar with the concept of an ABN whilst undertaking the course and applied for one, she said, in 2011 because her father had two old classic cars and wanted her to start up a business using them in some way.  She applied for her ABN online and gave evidence that it was a very straightforward matter to obtain one.

6. Her father lives relatively close by.  He and Ms Daniels’ mother separated when Ms Daniels was eight years of age.  She gave evidence that he had had serious personal problems in the past and that he had failed to pay appropriate child support whilst she was a child.  The relationship between them was, therefore, a difficult one.

7. On 19 March 2014, a large sum of money ($16,425) was deposited to Ms Daniels’ bank account by a company called Lodge Constructions.  Other sums, including other large ones, were deposited to Ms Daniels’ account by various companies, but principally by Lodge Constructions.  There is a schedule of payments which appears at pp 198-199 of the “T” documents.[2]  I shall not set it out.  The schedule runs from 19 March 2014 to 20 November 2014 (i.e., eight months).  In that time, approximately $360,000 in total was credited to Ms Daniels’ account on account of construction work.  She did not notify Centrelink of any of the sums she received.

   [2] Received into evidence as Exhibit R1.

8. Ms Daniels gave evidence that her father was a self-employed building contractor, although, as I have said, most of the payments were received from a single company called Lodge Constructions.  Mr Daniels would perform building work, and then Ms Daniels would prepare the invoice in relation to that work at her father’s direction.  The invoices she prepared would quote either her brother’s ABN or her own.  In either case, this information was false as neither Ms Daniels nor her brother performed work for the invoiced companies.  I note that Ms Daniels and her father were not in partnership together.  The companies were instructed on the invoice to pay monies to Ms Daniels’ bank account.  Once received, the monies would be withdrawn by Ms Daniels from her account in cash and she would then hand over the cash to her father although sometimes she would pay suppliers on his behalf from her bank account by direct transfer.  

9. Ms Daniels gave evidence that her father requested her to cite her ABN, or her brother’s, because his had been suspended.  She did not ask any questions about the suspension, she said.  So far as the use of the bank account was concerned, Ms Daniels accepts that her father did have his own bank account, or could have set a new one up for himself.  She did not question, she says, why he did not use his own bank account or proceed to set a new one up.

10. Mr Daniels gave candid evidence that his purpose in using his daughter’s bank account was to avoid income tax.  He had not filed a tax return for some years, he said, and I find that his purpose was to hide the monies he was earning from the Australian Taxation Office (ATO).  My understanding of his evidence is that his own ABN had either been suspended or cancelled altogether because of a failure to lodge taxation returns.  Mr Daniels gave evidence – but I do not find this evidence credible – that he has recently engaged an accountant to sort out his taxation liabilities with the ATO including the payment of back taxes.  In any case, I note that his evidence fell short of a positive assertion that all outstanding income tax had been paid by him.

11. So far as Ms Daniels’ knowledge is concerned, I do not accept her evidence that she did not understand that her father’s use of her bank account to conduct his business was connected with tax avoidance.  I do not think the arrangement by which Ms Daniels falsely cited her brother’s and her own ABNs on invoices and allowed her bank account to be used could have come about without her having discussed with her father the reason for such a complicated and misleading business arrangement.

12. In my opinion, there must have been a discussion between Mr Daniels and Ms Daniels in which he explained why he preferred to use her ABN and bank account and not his own.  Even if I am wrong in this conclusion, however, Ms Daniels’ evidence was clearly to the effect that she chose to ask no questions.  Having regard to the self-evidently misleading nature of the banking arrangements, I find that Ms Daniels must have decided at the very least to turn a blind eye to any wrongdoing.  Had I not found that she knew of her father’s purpose, I would have found in the circumstances that she chose not to ask questions because she already strongly suspected the truth.  In this connection, I refer to Ms Daniels’ further evidence that after she received monies into her account and paid them in cash to her father, her father would prepare and hand her an “invoice” drawn in his own name.  When asked why this was done, Ms Daniels replied in her evidence that he had told her that they would both be “covered” that way.  Again, this was, I must say, a wholly artificial exercise, and her evidence shows, in my opinion, that she must have known, or strongly suspected at the very least, a dishonest intention.

13. Ms Daniels gave evidence that she was paid only $50 a week for her secretarial services in preparing the invoices.  I do not accept this evidence.  I find that she asked for and received a greater amount for the improper use of her ABN and bank account.[3]  I bear in mind that some $360,000 was paid into her account over eight months.  In any event, she certainly chose to assist her father and I have found that she knew her father’s purpose.

    [3] The exact amount, however, is not revealed in the documentary evidence before the Tribunal.

14. Finally, I refer to Ms Daniels’ evidence that her father was an aggressive and forceful man with whom she felt reluctant to argue.  I do not accept, however, that she was forced to co-operate in his scheme.  On her own evidence, she ceased involvement in the scheme when Centrelink raised questions with her about it.  She was strong enough at that point to withstand whatever pressure he exerted upon her.  I believe she could have chosen not to participate, but she decided that participation was the preferable course for her to follow.

    CONSIDERATION

15. I now turn to consider the law.  Given Ms Daniels was self-represented and I am delivering my reasons orally, I shall state the law without quoting from sections.  If the amounts totalling some $360,000 were received by Ms Daniels for her own use and benefit, they count as her income.[4]  If they were received by her for her father’s use or benefit, they should be ignored in the calculation of her income.  Ms Daniels says they were received for her father’s use or benefit.

    [4] See s 8(1) of the Social Security Act, 1991.  The monies were either income amounts received by her for her own use or benefit or a periodical payment by way of gift or allowance.

16. It is here that Ms Daniels’ submission runs into legal difficulties.  The monies were earned by Mr Daniels but were paid at his direction into his daughter’s account.  A presumption in law that he intended to make a gift to his daughter arises in the circumstances.  This so‑called “presumption of advancement” can be rebutted and, if it is rebutted, Ms Daniels would be taken to hold the monies on trust for her father (a so-called “resulting” trust).  They would be taken to be held for his use or benefit.[5]

    [5]See Nelson v Nelson (1995) 184 CLR 538.

17. There are two interrelated difficulties for Ms Daniels that immediately arise.  First, I do not sit as a court with power to declare the terms upon which money is held on trust.  Secondly, unless Ms Daniels can persuade me that the monies would be judged by a court to be held by her unconditionally on trust for her father, her claim should fail in my opinion.

18. This Tribunal does recognise, of course, express trusts that exist in documentary form, but in the realm of trusts that are inferred from circumstances and where discretionary considerations are involved, there is a difficulty in the Tribunal finding so-called resulting or constructive trusts have arisen.  In particular, where a court would, or might, impose a condition before finding a trust arises, it would be wrong, in my opinion, for the Tribunal to decide, as if it were a court, whether a condition would be imposed, and, if so, what the condition should be.  

19. I note that in Nelson v Nelson, for example, a mother who provided funds for a property registered in the name of her daughter and who improperly received a benefit under the Defence Services Homes Act, 1918, was held to be entitled to a declaration that her daughter held the proceeds of sale of the property on a resulting trust in her favour but subject to a condition that she pay to the Commonwealth an amount equal to the benefit she had improperly obtained.[6]  The condition imposed by the court shows that the court did not simply rule unconditionally one way or another whether a resulting trust had arisen but chose to condition the declaratory relief sought by Ms Nelson by requiring her to account for her improperly obtained benefit. 

    [6] See Order 2(iii) at p 618.

20. In this case, on the findings of fact I have made, Ms Daniels has willingly engaged in the father’s deliberate scheme of hiding his income from the ATO and has benefited from the scheme.  The issue boils down to whether Ms Daniels would inevitably be judged by a court to hold the $360,000 in question on a resulting trust for her father unconditionally.  It seems to me, however, that other court rulings might also be given.  First, a court might simply rule that her involvement in her father’s dishonest practices was so close that she should not have the benefit of any declaration of trust in her favour at all.  Alternatively, a condition might be imposed that before she has the benefit of a declaration of trust in her favour, she should secure the payment to the Commonwealth of outstanding taxes owed to it by her father in respect of the $360,000 or some portion thereof.  Some other condition might be imposed.

21. Sitting as a Tribunal only, I do not have the power to adjudicate this question.  It is sufficient for me to note that a very serious question would have arisen, were the issue to have been litigated in court, as to whether Ms Daniels is entitled to a simple and unconditional declaration of trust in respect of the monies in question.  The dishonesty of her father’s conduct, her own complicity in that behaviour, and her benefitting from the scheme are factors that militate against an unconditional declaration of trust in her favour.  Sitting as a Tribunal, I am not prepared to accept Ms Daniels’ submission that the monies were, in effect, trust monies held unconditionally by her for her father’s use or benefit.

22. In these circumstances it follows, in my opinion, that Ms Daniels’ submission fails and the monies should not be treated as moneys held for the use or benefit of her father.

23. Taking a step back, and whilst it is not strictly necessary to do so, I ask myself whether this is a reasonable result.  In my opinion, Ms Daniels’ submission that it is unfair that she should be deemed to have received the $360,000 for her own use or benefit does ignore the harm her behaviour has caused to the taxation revenue of the Commonwealth, which, of course, funds the benefit she was receiving at the relevant time.  Looked at in one way, it is not unfair that Ms Daniels be made to repay part of a social security benefit she has received at a time she was receiving large sums of money in her account to further her father’s tax avoidance purposes.  That result does not strike me as inherently unfair.

24. Finally, I do not believe a proper ground for waiving the debt arises on the evidence before me.  Ms Daniels did not reveal any of the monies to Centrelink nor did she seek to clarify the position.  I understand Ms Daniels is repaying the debt at a modest rate, although it may cause her some hardship given her difficult financial circumstances.  I do not think in all the circumstances, however, that there is a case for waiving the debt, and I refer again here to the fact that Ms Daniels was on my findings paid by her father $50 per week for her services together with other indeterminate sums that are not revealed by the evidence but which I find were received by her.  

    FORMAL DECISION

25. The formal decision of the Tribunal will be to affirm the decision under review.

I certify that the preceding 25 (twenty -five) paragraphs are a true copy of the reasons for the decision herein of Senior Member N A Manetta

....................[Sgd]...................................

Administrative Assistant

Dated: 16 March 2017

Date(s) of hearing:	23 & 30 January 2017
Applicant:	In person
Advocate for the Respondent:	Mr C Visser
Solicitors for the Respondent:	Department of Human Services