Dauti and Secretary, Department of Social Services (Social services second review)
[2017] AATA 1241
•9 August 2017
Dauti and Secretary, Department of Social Services (Social services second review) [2017] AATA 1241 (9 August 2017)
Division:GENERAL DIVISION
File Number(s): 2016/2723
Re:Istref Dauti
APPLICANT
Secretary, Department of Social ServicesAnd
RESPONDENT
DECISION
Tribunal:Member K. Parker
Date:9 August 2017
Place:Melbourne
The Tribunal affirms the decision under review.
........................................................................
Member K. Parker
SOCIAL SECURITY – newstart allowance – debt raised to recover overpayments – application of the assets test – whether property should be counted as an asset – whether constructive trust in favour of claimant’s brother of a proprietary interest in the property – no common intention – words and conduct of family members - culture and tradition – detriment not sufficient to make it unconscionable for claimant’s brother to be denied proprietary ownership – assets exceeded allowable assets value limit – discretion to write off or waive debt not enlivened – debt not solely attributable to administrative error by the Commonwealth - no special circumstances – ill health of claimant and his wife – unencumbered property held by claimant was realisable to pay debt
Legislation
Social Security Act 1991 s 4(11), 23(1), s 611, s 612, s 1068, s 1223, s 1236(1A), s 1237A, s 1237AAD
Social Security (Administration) Act 1999 s 66A(2)Guide to the Social Security Law Chapter 4.12.3.51
Cases
Bannister v Bannister [1948] 2 All ER 133
Dineen v Secretary, Department of Social Security (1988) 17 ALD 91
Gissing v Gissing [1971] A.C. 886
Hohol v Hohol [1981] VR 221
Kidner v Department of Social Security [1993] FCA 587
Kintominas v Secretary, Department of Social Security (1991) 103 ALR 82
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583Ogilvie v Ryan [1976] 2 NSWLR 504
Re Beadle and Director-General of Social Security (1984) 6 ALD 1Ryde v Secretary, Department of Family and Community Services [2005] FCA 866
Slamkova and Secretary, Department of Social Security [2017] AATA 137Wachtel v Repatriation Commission (1986)11 ALN N213
REASONS FOR DECISION
Member K. Parker
9 August 2017
Mr Istref Dauti (Mr Dauti) seeks review of a decision by the Social Services & Child Support Division of the Administrative Appeals Tribunal (SSCSD) on 26 April 2016 to affirm a decision by an authorised review officer (ARO) of the Department of Human Services (Department) on 22 December 2015 that Mr Dauti had a recoverable newstart allowance debt of $63,790.49 for the period 18 March 2009 to 14 July 2015 (Debt Period).
The debt arose in circumstances where it became known to Centrelink that Mr Dauti had a one-third share in a residential property at 11 Cox Street, St Albans, Victoria, (11 Cox Street) which had not been declared. This meant that for a certain period Mr Dauti exceeded the allowable asset value limit and consequently, was not entitled to the newstart allowance which he had received, resulting in Centrelink raising a debt to Mr Dauti to recover those overpayments (Debt).
The effect of Mr Dauti’s contentions were that 11 Cox Street should not be regarded by Centrelink as his asset because his younger brother, Sevdi Dauti (Sevdi), was the sole beneficial owner of that property for the reasons set out in more detail below. Mr Dauti also contended that the Debt should be written off or waived because of his financial situation, his health and the health of his wife and because he was unaware until recently of his interest in 11 Cox Street (or at least that his name was on the title), which he explained was the reason he had not declared it to Centrelink.
For the reasons set out below, the Tribunal affirms the decision of the SSCSD as it considers that the Debt was properly raised and also, that the Tribunal does not have discretion in the circumstances of Mr Dauti’s application to write off or waive it in part or in full.
INTRODUCTION
Mr Dauti is a 65 year old man who lives with his wife, Mrs Maxhide Dauti (Mrs Dauti), at a residential property they jointly own at 17 Cox Street, St Albans, Victoria (17 Cox Street). Mrs Dauti was a disability support pensioner during the Debt Period.
From at least 18 March 2009 until 14 July 2015, Mr Dauti received the newstart allowance. Under this scheme, Mr Dauti fell into the category of a “partnered homeowner”.
Mr Dauti has two brothers; Sevdi, who lives in Australia, and Mr Muarem Dautofski (Muarem), who lives in Macedonia.
Mr Dauti’s principal place of residence at 17 Cox Street
On 23 March 2015, Mr Dauti and Mrs Dauti signed a “Mod R” Centrelink form for their property at 17 Cox Street, to which they (jointly) provided the following answers to certain questions as set out below, with a declaration that those answers were “complete and correct”:[1]
[1] Refer T-Documents T4.
Questions from the Mod R form
Answers provided Mr Dauti and Mrs Dauti
Q5. How many properties in Australia and/or outside Australia do you (and/or your partner) own or have an interest in?
2
Did you (and/or your partner) purchase this property? [i.e. 17 Cox Street]
Yes
Date of purchase
1998
Purchase price
$110,000
What is the estimate of the current market value of the property, including land, buildings and water allocations?
$300,000
Who owns the property?
You: 50%
Your partner: 50%
Mr Dauti’s investment property at 15 Cox Street
During the Debt Period, Mr Dauti also owned a further residential investment property at 15 Cox Street, St Albans, Victoria (15 Cox Street).
On 23 March 2015, Mr Dauti and Mrs Dauti (as Mr Dauti’s partner) signed a “Mod R” Centrelink form confirming details in relation to 15 Cox Street and providing an estimate of that property of $300,000.[2] A further “Mod R” form was completed on 28 July 2015 in relation to 15 Cox Street within which Mr Dauti and Mrs Dauti provided the following information:[3]
[2] Refer T-Documents T3.
[3] Refer T-Documents T5.
Questions from the Mod R form
Answers provided by Mr Dauti and Mrs Dauti
Q5. How many properties in Australia and/or outside Australia do you (and/or your partner) own or have an interest in?
2
Q7. Did you [Mr Dauti] (and/or your partner) purchase this property? [i.e. 15 Cox Street]
Yes
Q7. Date of purchase and purchase price
1975 for $35,000
Q12. What is the estimate of the current market value of the property, including land, buildings and water allocations?
$350,000
Q27. Who owns the property?
You [Mr Dauti]: 100%
Q32. Do you (and/or your partner) receive any rental income from the lease of the property?
Yes
Q33. Gross amount of rent received (before tax and other deductions)?
$320 per week
On 5 August 2015, WBP Property Group (WBP Valuer) undertook a “kerbside” property evaluation of 15 Cox Street and estimated its market value as at that time to be $410,000 and its market rental value to be $305 per week.[4]
[4] Refer T-Documents T8.
Mr Dauti’s one-third share on title of the investment property at 11 Cox Street
Mr Dauti’s father, Mr Mevlut Dauti formerly known as Mr Mevlut Dautofski (Mevlut), died on 1 May 2008. On 27 March 2009, 11 Cox Street was transferred from the name of Mevlut to Mr Dauti and Sevdi as the legal personal representatives of Mevlut.[5] On the same day it was then transferred to Mr Dauti, Sevdi and Muarem as tenants in common in equal shares.[6]
[5] Refer Application by Legal Personal Representative dated 27 March 2009 contained in Exhibit “R1”.
[6] Refer T-Documents T6.
On the front of the “Mod R” form referred to in paragraph [10], the following handwritten notation appears:
11 Cox Street St Albans 3021. This address belongs to Sevdi Dauti, I, Istref Dauti do not own the property or receive any money from the property.
On 12 August 2015, WBP Valuer undertook a “kerbside” property evaluation of 11 Cox Street and estimated its market value as at that date to be $410,000.[7] Retrospective valuations of that property were also provided by the WBP Valuer as follows:
(a)As at 1 July 2013 - $380,000;
(b)As at 1 July 2011 - $380,000;
(c)As at 27 March 2009 - $280,000.
[7] Refer T-Documents T7.
Mr Dauti accepted the property valuations referred to in paragraphs [11] and [14] above. The Tribunal notes they were based on recent sales of comparable properties as detailed in the valuation reports provided by the WBP Valuer.
Cancellation of Mr Dauti’s newstart allowance
The Department notified Mr Dauti that his newstart allowance would be cancelled as from 17 March 2010.[8] On 18 September 2015, Mr Dauti was notified that Centrelink sought to recover overpayments in the total sum of $63,790.49.[9]
[8] Refer T-Documents T10 (dated 16 September 2015) cancelling Mr Dauti’s newstart allowance as from 17 March 2010 and T9 (dated 11 August 2015) cancelling Mr Dauti’s newstart allowance as from 15 July 2015.
[9] Refer T-Documents T12.
Request for reconsideration
In a file note created on 10 December 2015, during the process of reconsideration of the decision to raise this debt, the ARO recorded his conversation with Mr Dauti’s son (and representative in this application), Mr Neki Dauti (Neki), as follows:[10]
* Neki says his father at no time ever considered he had any ownership of the property at 11 Cox St Albans.
* Neki advises that culturally the youngest boy in a family is responsible to care for their parents until they pass
* Customers youngest brother (cus has 2 brothers) cared for his mother and father as they got older and was living with and looking after their father when he passed away
* Traditionally ownership of the parents’ property passes to the youngest brother. So customer and his other brother who lives in Macedonia have never assumed any share of ownership in the property
* The property was rented out while their father was still alive and he was living at Taylor Lakes with the youngest brother. When their father passed away all income from the rental went to the youngest brother
* Neki went on to say that the customer would not have signed anything in relation to getting the title in his name and neither would the other older brother as he lives in Macedonia
* Neki said he would approach Vic Land Titles to get any signed copies of Transfer of title as he does not believe customers signature will be on it
[10] Refer T-Documents T13.
On 22 December 2015, the ARO notified Mr Dauti that he had reconsidered and affirmed the decision to raise the debt for $63,790.49 for the period 18 March 2009 to 14 July 2015.[11]
[11] Refer T-Documents T14.
LEGISLATION
At all times during the Debt Period:
(a)Section 66A(2) of the Social Security (Administration) Act 1999 (Administration Act) provided that a person receiving a social security payment must advise the Department of an event or change of circumstances that might affect the payment of that social security payment within 14 days of that event or change of circumstance taking place.
(b)Section 611(1) of the Social Security Act 1991 (Act) provided that a newstart allowance was not payable to a person if the value of the person’s assets was more than the person’s assets value limit.
(c)Section 611(2) of the Act prescribed the assets value limit (reviewed and usually increased each financial year) for a person depending on their family situation, namely, whether they were not a member of a couple; partnered (with a partner who did not get a pension or allowance); or partnered (with a partner who did get a pension or allowance). Section 4(11)(c)(i) of the Act defines a person (partner getting pension or benefit) as a person who is a member of a couple and the person’s partner is receiving a social security pension. In turn, section 23(1) of the Act defines a social security pension to include a disability support pension.
(d)Section 612 of the Act provided that if a person was a member of a couple and the person’s partner was in receipt of a social security pension, the value of the person’s assets is taken to be 50% of the sum of the value of the assets of the person and the value of the assets of the person’s partner.
(e)Section 1068 of the Act required that the calculation of the rate payable for newstart allowance was to be made in accordance with the Rate Calculator at the end of that section comprising Module A (which establishes the overall rate calculation process) and the remaining Modules (which provided for the calculation of the component amounts used in the overall rate calculation).
(f)Section 1223 of the Act provided that if a person received payments to which they were not entitled, the excess payment was a debt to the Commonwealth.
(g)Section 1236(1A) of the Act provided that a debt may be written off, if any of the following criteria were met:
(i)the debt was irrecoverable at law;
(ii)the debtor had no capacity to repay the debt;
(iii)the debtor's whereabouts were unknown after all reasonable efforts have been made to locate the debtor; or
(iv)it was not cost effective for the Commonwealth to take action to recover the debt.
(h)Section 1237A of the Act allowed for a debt to be waived if it was solely attributable to an administrative error by the Commonwealth, the person received the payment in good faith, and the debt was raised more than six weeks from the end of the notification period.
(i)Section 1237AAD of the Act also allowed for the debt to be waived where there were special circumstances and the person had not knowingly made a false statement or failed to comply with the provisions contained in the social security laws.
THE ISSUES
The main issue in this application was whether a one-third share of 11 Cox Street should be regarded as an asset of Mr Dauti and therefore, included in the calculation of the combined value of his assets during the Debt Period, to determine whether Mr Dauti had exceeded the newstart allowance allowable assets value limit. This required an assessment of whether Mr Dauti could establish that a constructive trust existed with respect to 11 Cox Street in favour of Sevdi in relation to Mr Dauti’s one-third share, during the Debt Period.
If the Tribunal finds that Mr Dauti’s one-third share of 11 Cox Street should be regarded as an asset of Mr Dauti (rather than finding it is held on constructive trust for Sevdi), a secondary issue will arise as to whether the Tribunal should write off or waive all or part of the corresponding Debt. This will necessitate an assessment of whether the requirements under s 1237A or s 1237AAD of the Act were met to enliven the Tribunal’s discretion to write off or waive the Debt.
EVIDENCE
Evidence of Mr Dauti
Mr Dauti gave the following evidence at the hearing, with the assistance of an Albanian interpreter:
(a)During the period March 2009 to July 2015, Mr Dauti owned 15 Cox Street “under my name” and 17 Cox Street “under my name and my wife’s name”.
(b)Mr Dauti accepted the following valuations of the property at 15 Cox Street:
(v)$209,000 as at 2 September 2008 (estimate previously provided by Mr Dauti);[12]
[12] Refer Supplementary T-Documents ST4/page 2 of 2.
(vi)$350,000 as at 23 March 2015;[13] and
[13] The Tribunal notes, however, that there appears to be in an error in paragraph [9] of the Respoondent’s Statements of Facts, Issues and Contentions dated 23 January 2017 as it states that the “Mod R” form completed by Mr Dauti on 23 March 2015 provided an estimate of the value of 15 Cox Street property of $350,000 when in fact the property was estimated by Mr Dauti in this form to be $300,000 - refer T-Documents T3/12.
(vii)$410,000 as at 5 August 2015.[14]
[14] Refer T-Documents T8/55.
(c)Mr Dauti’s father died in May 2008. He said that he did not know when his father made a will and that “Centrelink had all the documents”. He said his father had not told him about the will, nor did he have any discussion with his father or mother before his father died as to what was in the will.
(d)Mr Dauti was shown the Transfer of Land certificate dated 27 March 2009 for the transfer of the property at 11 Cox Street to Mr Dauti and his two brothers, as tenants in common as equal shares.[15] Mr Dauti was asked whether he recognised his signature on this document. Mr Dauti said that he did not remember signing this certificate but he gave evidence that it was his signature. Mr Dauti said he could not remember whether he signed it at the same time as Sevdi. He said that it was possible. He said “maybe we signed it together”. Mr Dauti said that if he signed it, he would have signed it at his home. He said he did not remember going to a lawyer. He said he could not recognise the signature on the form at the place where a witness had signed to the left of Mr Dauti’s signature.
[15] Refer Exhibit “R1”.
(e)Mr Dauti was asked whether the Transfer of Land certificate was explained when it was presented to him, as to what it meant. He said that maybe it was but he could not remember. In answer to a question by the Tribunal, Mr Dauti gave evidence that he did not ever sign off on documents without knowing what they were about. He also said that he understood what the English words “transfer” and “land” meant.
(f)When asked whether Nuri & Kiratzis, who prepared the Transfer of Land certificate, were the Dauti family’s lawyers, Mr Dauti said “my father had used them”. Mr Dauti said he did not have a lawyer. He said he had only been there once about two years ago, “for my brother, for some documents”. He said it had “something to do with Centrelink”.
(g)Mr Dauti said that when his father died, Sevdi was living at 8 Commodore Court, Taylors Lake, Victoria (8 Commodore Court) with Mevlut. He said Sevdi had always lived with their parents since they came to Australia in 1971. He said that 11 Cox Street had been rented out for about two years prior to his father passing away, i.e. from about 2006. He said that it had been a rental property since that time but it had not been rented out consistently – for instance, “it might be occupied for six months and then unoccupied for two or three months”.
(h)Mr Dauti said that Sevdi owned the property at 8 Commodore Court which he bought with his wife. He said his father did not own this property. He said that Sevdi continued to own 8 Commodore Court and lives there.
(i)Mr Dauti confirmed that he agreed with the first four paragraphs of the statement set out in paragraph [17] above and that 11 Cox Street “belonged to” Sevdi because he looked after his parents and due to “culture and tradition”.
(j)Mr Dauti was asked whether he had ever discussed transferring 100% of the property to Sevdi at any time after March 2009 (at which time it was transferred into the name of the three brothers in equal shares). Mr Dauti said his brother in Macedonia “did not want for 11 Cox Street to be sold”. He also said “I don’t want to sell it. My family doesn’t want to sell my father’s house.” When questioned about why he would get a say in that or why it mattered, if he had no interest in that property, he said “My brother, it’s his business, I’ve got nothing to do with it. If he wants to sell it, it’s not my business.”
(k)Mr Dauti was asked why 11 Cox Street had not been transferred into Sevdi’s name at any time following the death of their father. He said that “we haven’t had that discussion” and he later gave evidence that the reason was “You have to get the lawyer. That’s why.” Mr Dauti was asked why it was not transferred to Sevdi in 2009, when the lawyers, Nuri & Kiratzis, at that time, were involved in transferring the property into Mr Dauti’s name and his two brothers’ names. Mr Dauti said that, “I wasn’t there at the lawyers. I went there when I had some Centrelink paperwork.” He said his father went to the lawyers and he did not go with him. He said he did not know what his father had done. He said that his father put the property into the three [brothers’] names and “he made a mistake there”. Mr Dauti said it had not subsequently been transferred into Sevdi’s name since 2009 because “We haven’t been to the lawyers.” Mr Dauti said that, “I have been to Centrelink – I have had appointments. I have told them. I don’t get any money from that house. It belongs to my brother because he looked after my parents.” He also said “If we knew we would have had these problems, we would have done it [transferred it into Sevdi’s name] back then.” Neki submitted that they were currently trying to transfer it, but it had been hard with Muarem being in Macedonia. He said they had been “going back and forth sending documents”.
(l)Mr Dauti gave evidence that there had not been any written agreement between him and his brothers to transfer the property to Sevdi alone. Neki contended on Mr Dauti’s behalf, that “the agreement was just verbal”.
(m)Mr Dauti gave evidence that since March 2009, the rent from 11 Cox Street had gone to Sevdi, except for five weeks of it, which Sevdi had given to Mr Dauti to pay for his insurance and bills. Neki contended on behalf of Mr Dauti that Sevdi had given Mr Dauti money because his Centrelink payments had been cut off and that “it was not the rental income”. Mr Dauti said this took place about four months ago. He said he told Sevdi he needed money for his car registration and Sevdi gave it to him. He said he did not know whether Sevdi expected him to pay it back.
(n)Mr Dauti said that since March 2009, he had not asked Sevdi to pay Mr Dauti one-third of the rent from 11 Cox Street. Mr Dauti said that Sevdi had paid all of the bills for 11 Cox Street and that he had never been asked to contribute to the payment of them.
(o)Mr Dauti accepted that during the period March 2009 to July 2015, Centrelink had sent to him a series of letters asking him to advise of any changes to his assets. Mr Dauti said he had the letters with him. Mr Dauti said he was not aware that he had a one-third share in 11 Cox Street and this was the reason he did not tell Centrelink about it.
(p)In relation to 15 Cox Street, Mr Dauti gave evidence that he received monthly rental at the rate of $320 per week. He said there was no tenancy agreement and when asked why, he said that if the tenant had asked him for a receipt he would give it to them. He said he declared the rental income to the tax office while he was working because when he was working he used to fill in a taxation form. He said that when he was not working, Neki had filled in the forms that Centrelink had sent to him. Neki, on behalf of Mr Dauti, said that for the last few years it had been declared with the accountant and the rental income from 15 Cox Street had been declared to the tax office.[16]
(q)Mr Dauti said that he owned 15 Cox Street outright - there was no mortgage against this property. When questioned as to whether Mr Dauti was paying land tax on the property at 15 Cox Street, he said he did not know what it was and he said, “Not aware of paying land tax – I don’t think so”.
(r)In relation to the property at 17 Cox Street, Mr Dauti said there was no mortgage against this property.
(s)Mr Dauti gave evidence that he suffered from arthritis everywhere, including in his spine, neck and shoulders. He said he also had problems with his stomach and abdominal area. He said that he had not been to see a specialist and that his doctor had not sent him.
(t)Neki, on behalf of Mr Dauti, tendered two medical reports by Dr Oludare dated 9 January 2015 and 21 April 2016 explaining Mr Dauti’s health conditions and the medications he was receiving.[17]
(u)The medical report dated 9 January 2015 stated that Mr Dauti was suffering from hypertension; type 2 diabetes; left subacromial bursitis; cervical spondylosis; irritable bowel syndrome; gastrointestinal reflux disease; and lumbar spondylosis. The medical report dated 21 April 2016 stated that Mr Dauti was suffering from cervical spondylosis and stenosis at C3/4, C4/5 and C5/6; severe bilateral facet joints arthritis at L3/4, L4/5 and L5/S1 with degenerative arthritis of the sacroiliac joints; chronic abdominal pain; left subacromial bursitis; depression; type 2 diabetes and hypertension.
(v)In addition to the medical conditions covered in those reports, Mr Dauti gave evidence that two weeks ago, he had seen a heart specialist due to pain in his chest. He said he underwent some exercise testing. He said he was due to see “some sort of specialist for his heart” in a few days after the hearing. He said they had given him a pump spray to use if he experienced pain in the chest.
[16] The declaration of rental income for the financial years 2015 and 20116 was confirmed in Mr Dauti’s tax returns tendered as Exhibit “A1” at the hearing.
[17] Refer Exhibit “A2”.
Evidence of Sevdi
Sevdi did not require the assistance of an interpreter. He gave the following evidence at the hearing:
(a)Sevdi said he was born on 20 March 1959 (58 years old), and has two brothers Istref and Muarem;
(b)He said he resided at 8 Commodore Court and had done so for about 20 years. He said he bought this property and it was not previously owned by his father. He said the property at 11 Cox Street was previously owned by his father.
(c)Sevdi said his father was living with him at 8 Commodore Court when he died in 2008. He said his father had lived with him at this property for about 12 years. He said that before that, he (Sevdi) lived at 11 Cox Street with his parents from 1971 until 1997 “or something like that”. He said that his wife lived at 11 Cox Street with them and that all of his children were born at 11 Cox Street.
(d)Sevdi was asked whether he recognised the signature on the Transfer of Land certificate dated 27 March 2009. His evidence was, “Doesn’t even look like it to be honest – it’s similar. No, it’s not my signature.” He said he did not recall signing it and denied doing so. He said he did not recognise Mr Dauti or Muarem’s signature on that document as he did not know what either of their signatures looked like. He also said he did not recognise the signature of the witness on the left of Sevdi’s signature on the document. When asked if he knew who “Etem Demiri” was, who appeared as the witness of Muarem on the document, he said it was his “sister in law’s father” and that he was based in St Albans.
(e)Sevdi said that neither his mother nor father said anything to him about transferring 11 Cox Street to him and his brothers in equal shares.
(f)When Sevdi was asked what actions he had taken or that he was involved in following the death of his father to sort out his father’s affairs and to deal with his assets, he said, “Nothing, I think dad organised that, before he passed away, with the solicitor.”
(g)Sevdi said that Nuri & Kiratzis were his father’s solicitors and “not mine”. Sevdi said he took Mr Dauti there a couple of years ago, but the solicitor, Nuri, who has since died, had organised for this to happen. When Sevdi was asked what he went to see Nuri about a couple of years ago, Sevdi said he was told the property had been transferred into his and his brothers’ names.
(h)Sevdi gave evidence that he had organised for the water service at 11 Cox Street and to have the bills sent to 8 Commodore Court. When questioned about why the named account holders included all three brothers “S & I Dauti & M Dautofski”, Sevdi changed his evidence and said that the solicitors had set up the accounts for the water and the rates and arranged for the bills to be sent to Sevdi’s address for payment. Sevdi says he has continued to pay these bills and had done so “since 1997, since we moved”. He said “We paid it all, insurance and rates”.
(i)When questioned, Sevdi initially gave evidence that he had paid the land tax in relation to 11 Cox Street. When asked if he could provide the land tax invoices to the Tribunal, Sevdi asked whether this was a reference to rates and when finding out that it was not, he said, “No, I am not. No, I don’t. I don’t pay state land tax”. He said he did not know that land tax was required to be paid for a property which was not the owner’s principal place of residence.
(j)Sevdi was asked at the hearing whether, after the death of his father, he had ever inquired as to what had happened to 11 Cox Street and who had received it. He said, “No, we had a verbal agreement. I looked after mum and dad and the property would be mine. Waiting for paperwork from Macedonia – power of attorney, so I could transfer it over into my name.” When asked if this was what he went to see the lawyers about a few years ago, he answered, “No”. He said he was overseas and when he returned, Mr Dauti had told him he was having problems with Centrelink as he had not told Centrelink about 11 Cox Street.
(k)When questioned, Sevdi gave evidence that he engaged the services of the lawyers two years ago at Sevdi’s request so they could “give them advice” and he said this was the first time he became aware that 11 Cox Street had been “transferred into three names”. Sevdi gave evidence that from the time his father died, until two years ago, he thought the property was in his father’s name.
(l)At the meeting with the lawyers two years ago, Sevdi gave evidence there was a discussion about transferring 11 Cox Street into his name alone and he said “When we get the proper documents, everything going to be transferred”. Sevdi said the lawyers were not chasing up his brother in Macedonia but that Sevdi had told his brother “to do the documents and send them to me and I will go and see the solicitors”.
(m)When questioned whether it was Sevdi’s intention to transfer 11 Cox Street over into his name alone, he said “Yeah. Agree with my brother and other brother.” Attempts were made at the hearing to ascertain whether there were any documents that existed or to be signed to put into effect a transfer of 11 Cox Street into Sevdi’s name alone. The evidence given by Sevdi at this point was evasive and unclear, however, at the end of his evidence on this subject, Sevdi was asked whether he had any documents to substantiate that he was in the middle of a process to try to transfer the property into his name, to which he answered, “No”.
(n)Sevdi gave evidence that the matters described by Neki as set out in paragraph [17] above were correct. He said he made no inquiry after his father died in May 2008 about whether the property at 11 Cox Street would pass to him and stated as his reason for this, “No, because once mum and dad passed away, the property would be mine”.
(o)Sevdi was asked whether it rang any bells for him when he received the rates and water bills addressed to Sevdi and his two brothers to which he said, “No it didn’t. Kept on paying the bills”.
(p)Sevdi said that since his father had died, neither of his brothers had requested a share of the rental income received from 11 Cox Street. He said that he had not requested either of his brothers to make a contribution to pay for the bills and that the bills were paid for out of the rent from this property. Neki, on behalf of Mr Dauti, later submitted that when Sevdi said he paid bills from the rent received from 11 Cox Street, if there was money left over, it was Sevdi’s money.
(q)He said the property was leased to tenants on a weekly tenancy at the rate of $330 per week. He said they had leased the property for the last two years. Sevdi said no lease agreement existed between the parties and no agents were involved. He said sometimes the rent was transferred to Sevdi’s wife’s bank account and sometimes they “drop it off at his home in cash”.
(r)Sevdi said that repairs to the property at 11 Cox Street were carried out by him and his wife and sometimes, by tradespeople. Sevdi was asked whether he could provide invoices for the repairs but he said there were “No invoices”.
CONTENTIONS
The Secretary’s contentions
At the hearing, the Secretary’s representative, Mr Tim Noonan, said that he had proceeded on the assumption that Mr Dauti was alleging a constructive trust in relation to his one-third share of the property at 11 Cox Street. Mr Noonan contended that if a constructive trust was not able to be established by Mr Dauti, the combined value of his assets, which included 11 Cox Street, exceeded the allowable asset value limit for the newstart allowance, applicable to Mr Dauti during the Debt Period. He said this had a corresponding effect on the amount of debt owed by Mr Dauti to Centrelink.
The Secretary lodged detailed contentions with the Tribunal dated 23 January 2017. Mr Noonan’s primary contention at the hearing was that there was insufficient evidence to find a constructive trust in relation to 11 Cox Street. He contended that the obstacles to the Tribunal making such a finding included:
(a)There were irreconcilable differences in relation to the Transfer of Land certificate executed in March 2009. He contended that Mr Dauti had given evidence that the handwriting of his name was his signature. There were indications that the document was executed by Mr Dauti and Sevdi at the same time. However, Sevdi, at the hearing, denied it was his signature. Instead, Sevdi maintained that he only become aware of 11 Cox Street being held in equal shares with his two brothers two years ago. Sevdi maintained that since then, or at least in the last year, efforts were made to transfer property into his name outright but Sevdi gave evidence that he had no documents to substantiate those efforts.
(b)The present authorities supported the proposition that it was insufficient to ground a constructive trust based on a general notion of cultural or traditional values. There was an absence of any other documentation showing what the understanding or agreement was between the brothers as asserted by Mr Dauti and Sevdi. The Transfer of Land certificate executed in March 2009 was signed by Mr Dauti, Sevdi and Muarem for the property to be held in equal shares between them. No subsequent documentation was identified or tendered by Mr Dauti to establish any intention by any person to transfer the property outright to Sevdi since 2009.
Mr Noonan contended that if the Tribunal did not find a constructive trust existed in relation to Mr Dauti’s proprietary interest in 11 Cox Street, then it was an asset of Mr Dauti and his share in it was assessable for newstart allowance purposes. Mr Noonan contended that the Tribunal was obliged to accept the valuation of the WBP Valuer, which Mr Dauti did not contest. The inclusion of 11 Cox Street resulted in Mr Dauti exceeding his allowable asset limit, meaning that the newstart allowance overpayments had been made to Mr Dauti during the Debt Period and this was a legally recoverable debt.
Mr Noonan contended that if the Tribunal found there was a debt, it had the power to waive all or part of the debt. He contended that despite the ill health of Mr Dauti and his wife, they were in a far better position (financially) than the usual potential recipients of income support payments, as they had substantial assets which were potentially realisable. Accordingly, it was contended that the Tribunal had no basis to waive the debt.
Mr Dauti’s contentions
Mr Dauti’s primary contention at the hearing as to why the debt was not owed was:
My brother looked after my parents. Initially, it was my dad’s home. My brother lived with our parents and looked after them in that house, so because my brother looked after my parents, the house belongs to him.
Neki contended that the Tribunal should also consider the health of Mr Dauti and his wife. He said they would not be able to pay back the debt. Neki was given an opportunity to make specific submissions as to why Mr Dauti and his wife would not be able to sell 15 Cox Street in order to raise funds in the order of well above $500,000 (noting that a neighbouring property at 16 Cox Street had sold recently for $660,000), to use to pay the debt. Neki contended that Mr Dauti and his wife, “should keep it, as this is their only source of income”. He said Mr Dauti’s wife received Centrelink payments but they had been reduced as well. Neki contended that Mr Dauti and his wife could not work. He said Mr Dauti’s wife has had heart issues and had been in hospital as well. Neki said that he and his brothers had given them money to get by. Neki accepted that “if worse came to worse”, his parents would have to use their assets to support themselves but “they would prefer if they had that property [15 Cox Street]. They could keep tenants in there and they could live off that.”
Mr Dauti made a final contention to the Tribunal that it should take into account that Centrelink had claimed overpayments back from his wife as well.
CONSIDERATION
Definition of “assets” in the Rate Calculator
In the decision of Kidner v Department of Social Security [1993] FCA 587, Cowdroy J of the Federal Court of Australia at [5] stated (emphasis added):
…But the term of “assets” in the Rate Calculator in s 1064 of the Act is defined in s 11(1) to mean “property (including property outside Australia)”. In the context of s 1064, the term “assets” so defined, bears its ordinary English meaning. In ordinary parlance, a person’s assets would not be regarded as including property of which that person was the bare legal owner when the beneficial interest was vested in another. The respondent was therefore required, on the proper construction of Module G in the Rate Calculator in s 1064 of the Act (and subject always to provisions of the Act such as 1064-G2 of Module G in the Rate Calculator in s 1064 which otherwise provide) to bring into account in applying the assets test only the value of the beneficial interest which a person has in property of which he or she is the legal owner. The was the approach taken by Einfeld J in Kintominas v Secretary, Department of Social Security [1991] FCA 342; (1991) 103 ALR 82.
Also, in Kidner at [34] (emphasis added):
…Even if there was no such concluded oral agreement but only a much looser arrangement, whereby the applicant gave the sons the use of the properties, a constructive trust of the applicant’s interest in the properties in favour of the sons could still arise if it would be unconscionable, in all the circumstances for the applicant to deny the son’s claim to an interest in them. In the latter case, and depending on all the circumstances, including the precise nature of the arrangement, it may be that the applicant would hold the properties on a constructive trust for the sons less extensive than a trust of the full beneficial interest in them, i.e., on a trust that would be limited to reflecting the extent to which the sons had enhanced the value of those properties. But even so, it would be necessary for the respondent to assess the extent of the sons’ beneficial interest in the properties and to bring into account in applying the asset test to the applicant’s pension claim only an amount that represented the applicant’s remaining interest in them.
Was Mr Dauti’s one-third share of 11 Cox Street subject to a constructive trust in favour of Sevdi?
When does a constructive trust arise?
A constructive trust is imposed by operation of law (being the application of established equitable principles to a particular set of facts), where it would be unconscientious for the holder of the title to a property to deny the claimant a beneficial interest in that property.[18] The authorities are clear that it would not be sufficient for the claimant to show that it was unfair; they must show that it is unconscionable for the person with the legal interest to retain it.[19]
[18] Refer [22.020], Principles of the Law of Trusts, H A J Ford & W A Lee, 2017 Thomson Reuters.
[19] Refer [13], Brennan J in the High Court of Australia decision of Muschinski v Dodds [1985] HCA 78: (1985) 160 CLR 583.
The equitable principles relating to constructive trusts were established by the House of Lords in England in Gissing v Gissing [1971] A.C. 886 involving a dispute over matrimonial property. These principles were subsequently adopted in Australia by the Supreme Court of New South Wales in another case involving matrimonial property of Ogilvie v Ryan [1976] 2 NSWLR 504. A clear articulation of the elements required to establish a constructive trust is set out in the Supreme Court of Victoria decision of Hohol v Hohol [1981] VR 211, 225:[20]
…it can be said that the essential elements of the trust are, first, that the parties formed a common intention as to the ownership of the beneficial interest. This will usually be formed at the time of the transaction and may be inferred as a matter of fact from the words or conduct of the parties. Secondly, that the party claiming a beneficial interest must show that he, or she, has acted to his or her, detriment. Thirdly, that it would be a fraud on the claimant for the other party to assert that the claimant had no beneficial interest in the property.
[20] These elements are reflected in the Guide to the Social Security Law – see Chapter 4.12.3.51.
First element: common intention
In relation to the first of these elements, the enforceability of a constructive trust does not depend on express common intention or expectation. As mentioned above, it may be inferred as a matter of fact from the words or conduct of the parties.
In this application, Mr Dauti and Sevdi both gave evidence that due to “culture and tradition”, the youngest child in the family was to “look after the parents” and in return, the parents’ home would “belong to” the youngest child. The Tribunal heard evidence, which was uncontested, that Sevdi, initially alone and then with his wife and children once born, lived with his parents in his father’s former home at 11 Cox Street from 1971 until 1997 and then, at Sevdi’s home at 8 Commodore Court from 1997 until their father died in 2008. The home at 11 Cox Street was purchased by his father in 1971. At the time, Sevdi was about 12 years old. The Tribunal acknowledges the living arrangements that existed during Sevdi’s entire adult life, while his parents were still alive, and that they were consistent with Mr Dauti’s and Sevdi’s evidence describing the “culture and tradition” that applied.
In addition, certain conduct took place which could be considered as supporting Mr Dauti’s contention that the brothers understood 11 Cox Street to “belong to” Sevdi following the death of their father. The Tribunal accepts the evidence of Mr Dauti and Sevdi that since the death of their father, Sevdi had received all of the rental income from 11 Cox Street (except for a period of five weeks earlier in 2017 when it was given to Mr Dauti) and that Sevdi had not requested of Mr Dauti or Muarem to make any contributions towards the outgoings on this property. Instead, the outgoings were paid by Sevdi alone. This is supported by the evidence tendered which demonstrated that the council rates and water bills for 11 Cox Street were sent to Sevdi’s home address and there was evidence of some withdrawals made from Sevdi’s wife’s bank account to make payment of some of those bills. The bank account statements of Sevdi’s wife for the period 1 April 2015 to 26 October 2015 also showed multiple cash deposits received into the account from unspecified transferors of amounts of $330 or a multiple of $330 ($660). Sevdi gave evidence at the hearing that the rent on 11 Cox Street was $330 per week.
However, there were a number of factual matters which the Tribunal considered were inconsistent with the “culture and tradition” as described by Mr Dauti.
Regarding words or conduct which might indicate the intention of Mevlut before he died, in relation to 11 Cox Street, it was apparent from the Transfer of Land certificate dated 27 March 2009 that Mevlut’s will included in it a devise that provisioned for the proprietary interest in 11 Cox Street to be shared equally between all of his three sons, Mr Dauti, Sevdi and Muarem, after his death. Under the heading “Consideration” in this certificate, the following entry was made in relation to the transfer of 11 Cox Street on 27 March 2009, “Pursuant to a devise in the Will of Mevlut Dauti formerly known as Mevlut Dautofski, deceased”. At the hearing, a copy of Mevlut’s will was requested of Mr Dauti. He said that he gave it to Centrelink. Following the hearing, a search by Centrelink revealed that Mevlut’s will had not been provided to Centrelink. A further request was made by the Tribunal of Neki and Mr Dauti to obtain Mevlut’s will but it was not forthcoming. In the absence of Mevlut’s will, the Tribunal accepts the indication as appearing in the Transfer of Land certificate that Mevlut intended for his three sons to share in the ownership of 11 Cox Street following his death.
The Tribunal also notes that following Mevlut’s death, the executors, being Mr Dauti and Sevdi themselves did not transfer 11 Cox Street into the name of Sevdi alone when they were at liberty (and had the opportunity) to do so. Instead, 11 Cox Street was transferred into the names of all three brothers as tenants in common in equal shares on 27 March 2009. Nor did a transfer into Sevdi’s name alone take place subsequently in the eight years to follow. There was no satisfactory explanation given in the evidence of Mr Dauti or Sevdi for this. Mr Dauti suggested that his father “made a mistake there”. Although it was contended by Neki and evidence was given by Mr Dauti and Sevdi that attempts were made in the last year or so to transfer 11 Cox Street to Sevdi alone, Sevdi admitted at the hearing that he did not have any documents to substantiate those attempts. Based on this evidence, the Tribunal finds that no such attempts were, in fact, made. It was also contended by Mr Dauti that he was unaware that he had any legal interest in 11 Cox Street until it was raised with him by Centrelink. Similarly, Sevdi’s evidence was that he first became aware of this only two years ago when he visited the solicitors, Nuri & Kiratzis.
The Tribunal finds that both Mr Dauti and Sevdi were both aware of whose names were on the title of 11 Cox Street as from the time it was transferred to the three brothers on 27 March 2009. This finding is based on the following:
(a)Mr Dauti gave evidence at the hearing that although he could not recall signing the Transfer of Land certificate, it was his signature on the certificate;
(b)Mr Dauti gave evidence that he did not sign documents [in general] unless he understood what they were about. He also gave evidence that he understood what the English words “transfer” and “land” meant;
(c)The Tribunal does not accept the evidence given by Sevdi that he did not sign the certificate and that it was not his handwriting, noting that it appeared from the certificate that a common witness had witnessed both Mr Dauti and Sevdi signing it at the same time, coupled with Mr Dauti’s acceptance at the hearing that it was his signature on the certificate;
(d)The certificate was prepared by a firm of solicitors, Nuri & Kiratzis, which the evidence revealed various members of the Dauti family had engaged to provide legal services from at least 2009 up until two years ago (seven years after the brothers’ father had died) when a visit was made to them about problems with Centrelink;
(e)Mr Dauti did not call, as witness, any past or present solicitor from Nuri & Kiratzis to give evidence as to what had taken place on 27 March 2009 in relation to the signing of the certificate this firm had prepared for execution;
(f)Regular bills for the council rates and water service to 11 Cox Street were sent to Sevdi, upon which all three brothers were named as the account holder in relation to this property.
The Tribunal was unable to conclude, based on the words and conduct of the parties as set out in paragraphs [36] to [41] above, that there was a common intention between Mr Dauti, his father and brothers, that Sevdi would become the sole beneficial owner of 11 Cox Street following the death of his father because Sevdi looked after his parents during his adult life.
Second and third elements – Did Sevdi act to his detriment which made it unconscionable for Mr Dauti or Muarem to deny that Sevdi was the sole beneficial owner of 11 Cox Street?
For the Tribunal to be satisfied that the second and third elements were present, an examination was required as to whether Sevdi acted to his detriment and in the circumstances, it would have been unconscionable for Mr Dauti or Muarem to have denied that Sevdi was the sole beneficial owner of 11 Cox Street, were they minded to do so.
No direct financial contribution was made by Sevdi at the time of purchase of the property, as it was purchased when Sevdi was about 12 years old. Nor was there any evidence before the Tribunal that Sevdi had made a contribution, financial or otherwise, to any improvements to the property, since its purchase in 1971 until 2008.
The Tribunal notes that in Ogilvie, the acts performed by the person claiming that there was a constructive trust in that case, were unrelated to the acquisition of the property and the improvement of its value. In this decision, Holland J made the following observation:
If the condition had been that she would contribute financially towards the purchase price or would provide finance or labour to improve the property itself, there would, I think, have been no doubt that the case fell into the second category, and a constructive trust would have arisen. Why should it not arise if, by their arrangement and common intention, the benefits to be taken by the deceased were of a different character? The fraud on the defendant of using the legal title to defeat her interest, after the benefits have been taken and she had earned her interest in the property in accordance with the arrangement, is just as great as it is in the case where the benefits were directed towards the acquisition or enhancement of the value of the property.[21]
[21] [1976] 2 N.S.W.L.R. 504, 517.
The key consideration for the Tribunal is whether Sevdi’s conduct of “looking after his parents”, while he and his family lived with them initially at 11 Cox Street and later at 8 Commodore Court, amounted to a sufficient detriment such that it would be unconscientious for Mr Dauti and/or Muarem, were they minded to do so, to deny that Sevdi was the sole beneficial owner of 11 Cox Street after Mevlut died.
While recognising that each case ultimately turns on its own facts, this Tribunal notes the previous decision of the Administrative Appeals Tribunal (AAT) in Wachtel v Repatriation Commission (1986)11 ALN N213 rejecting a proposition that a father held a farming property subject to a constructive trust in favour of his son for a proprietary interest in a family farm, in circumstances where his son had been involved in the family’s farming enterprise since 1973 until he took over from his father in 1980. The father did not proceed with the transfer because of the high costs involved and instead, the father sub-leased the farm to the son and the father’s wife, who both continued on the farming business without the involvement of the father after 1980. In that case, it was acknowledged that the son had, no doubt, received payment for his efforts from 1973 onwards from the farming profits. There was no suggestion that the son had conferred any benefits on his father in relation to the property, for which he was not recompensed by the income he received, so in that case the Tribunal found that it could not be said that it would have been unconscionable for the father to assert his legal title against the son.
In a further case of Dineen v Secretary, Department of Social Security (1988) 17 ALD 91 the AAT refused to find that a father held a farming property subject to an express, implied or constructive trust, in circumstances where all that existed was a family understanding that the father would leave a farming property to his sons, combined, with a generous willingness on his part to forego any income from the properties in the meantime, in favour of the sons.
More recently, in Slamkova and Secretary, Department of Social Security [2017] AATA 137 the AAT refused to make a finding that a mother held a particular property on trust for her son, even though it was said this was the arrangement between them (and the son’s father), at the time the property was purchased. The facts in this case differed significantly from those in the present application, however, Senior Member J Toohey observed at [61] that:
…there must be something of real substance to support a claim that a property of which a person is the registered owner of 100 per cent, is in fact held on trust for another.
Returning to the facts of this application, there was a notable absence of detailed evidence about the degree of independence of Sevdi’s parents and how that changed over time while Sevdi was living with them during his adult life; or the specific tasks that were required of Sevdi personally by looking after them. Sevdi did not give evidence about this, nor was Sevdi’s wife called to give evidence to do so. Despite the absence of that evidence, the Tribunal is satisfied that there must have been some personal impost on Sevdi in carrying out this role of living with and looking after his parents while they were elderly, although no finding can be made about the extent of this impost, as it is not able to be identified with any precision on the evidence presently before the Tribunal.
Even if the Tribunal were to find that the extent of this personal impost on Sevdi was substantial, the Tribunal is not satisfied that Sevdi acted to his detriment sufficiently so as to make it unconscionable for his two brothers to deny Sevdi sole beneficial ownership of 11 Cox Street, were they minded to do so. Sevdi has been well rewarded for any efforts made by him to care for his parents financially by having received rental income from 11 Cox Street for the entire period for which it was rented out. For this reason and noting the absence of any express or inferred common intention (see paragraphs [35] to [42]), the Tribunal concludes that Mr Dauti’s one-third share of 11 Cox Street was not subject to a constructive trust in favour of Sevdi.
The $63,790.49 Centrelink Debt against Mr Dauti was appropriately raised
Flowing from the finding set out in paragraph [51], it was correct that Mr Dauti’s one-third share of 11 Cox Street be counted as an asset for the purpose of calculating the combined value of his assets. For this reason, the Tribunal concludes that Mr Dauti was not entitled to receive the newstart allowance that was paid to him during the Debt Period.
The amount of the debt was not in contest as between the parties. The methodology for its calculation was articulated in detail in the Secretary’s Statement of Facts, Issues and Contentions dated 23 January 2017 and the calculation itself is contained in a document entitled “MultiCal - Centrelink Debt Calculator” prepared by Centrelink on 16 September 2015.[22] The Tribunal examined the Debt calculations and is satisfied that they are an accurate representation of the amounts paid to Mr Dauti. Further, those calculations were not contested by Neki or Mr Dauti. Consequently, the Tribunal finds that the Debt amount is correct and that $63,790.49 was appropriately raised by Centrelink under s 1223 of the Act for the recovery of those overpayments from Mr Dauti.[23]
[22] Refer T-Documents T11.
[23] Refer T-Documents T12.
Should the Debt be written off?
The Tribunal may exercise its discretion to write off a debt if any of the criteria set out in s 1236(1A) of the Act apply (as outlined in paragraph [19(g)] above).
The first criterion is whether the debt is irrecoverable at law. Subsection 1236(2) of the Act provides that this criterion is met if, and only if, there is no proof of the debt capable of sustaining legal proceedings for its recovery; or the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or the debtor has died leaving no estate or insufficient funds in the debtor's estate to repay the debt. These last two requirements do not apply in Mr Dauti’s case – he is neither bankrupt nor has he died. Neither could it be said that there is no proof of the debt capable of sustaining legal proceedings. The Centrelink invoice for the Debt constitutes such proof.[24]
[24] Refer T-Documents T12.
The second criterion is whether the debtor has no capacity to repay the debt. This is deemed to be the case if the debtor continues to be in receipt of social security payments but this does not apply in Mr Dauti’s case.[25] Otherwise, the Tribunal concludes that Mr Dauti does not satisfy this criterion as he has the capacity to repay the Debt within a relatively short period of time by selling the unencumbered property he owns outright at 15 Cox Street, presently leased on a short-term (monthly) tenancy. Mr Dauti’s representative accepted at the end of the hearing that if “worse came worse” Mr Dauti could sell that property, acknowledging that it was his parents’ preference not to do so.
[25] Refer s 1236(1C) of the Act.
The third criterion is whether the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor. This does not apply in Mr Dauti’s case.
The fourth criterion is whether it is not cost-effective for the Commonwealth to take action to recover the debt. The size of the Debt is significant. The Tribunal considers that it would be cost-effective to recover the Debt so this criterion is not met.
The Tribunal concludes that none of the criteria in s 1236(1A) apply which means its discretion to write off the Debt is not enlivened under this provision of the Act.
Should the Debt be waived in part or in full?
The Tribunal has discretion to waive a debt in whole or part but only in the particular circumstances set out in Part 5.4 of Chapter 5 of the Act.[26]
[26] Refer s 1237 of the Act.
Of relevance to Mr Dauti’s situation, the Tribunal has considered whether the circumstances in either s 1237A or s 1237AAD of the Act apply.
Was the Debt solely attributable to an administrative error by the Commonwealth?
Section 1237A of the Act allows for a debt to be waived if it was solely attributable to an administrative error by the Commonwealth, the person received the payment in good faith, and the debt was raised more than six weeks from the end of the notification period.
As set out in paragraph [41], the Tribunal has found that Mr Dauti was aware that he held a one-third share of 11 Cox Street as at the time he signed the Transfer of Land certificate on 27 March 2009.
The Tribunal is also satisfied that at all relevant times, including as at 27 March 2009, Mr Dauti was aware of his obligation to inform Centrelink of the occurrence of any event of change in his circumstances which may affect his entitlements. For one thing, Mr Dauti was required to provide detailed information about his existing assets when he first applied for the newstart allowance. This provided Mr Dauti with a clear indication of the importance of this information in the assessment of his entitlement to be paid the newstart allowance. Further, Mr Dauti also received repeated notices from Centrelink to remind him of his continuing obligation to update Centrelink about any changes to his circumstances. In this regard, the Tribunal was provided with samples of information notices sent from Centrelink to Mr Dauti from February 2009 until February 2014. [27] Mr Dauti gave evidence at the hearing that he had received those notices.[28]
[27] Refer T-Documents T19 comprising samples of information notices sent from Centrelink to Mr Dauti.
[28] Refer paragraph [23(o)] of this decision.
The Tribunal is further satisfied that the overpayments were made and the corresponding Debt was incurred, due to Mr Dauti’s failure to comply with the obligations, which he knew he had, to notify Centrelink of his acquisition in March 2009 of a one-third share in 11 Cox Street.
Accordingly, the Tribunal finds that the Debt was not attributable to any administrative error by the Commonwealth and s 1237A of the Act does not apply. This means the circumstances of Mr Dauti’s application provides the Tribunal with no discretion to waive the debt under this provision.
Do special circumstances apply?
The Tribunal may also waive the right to recover all or part of a debt under s 1237AAD of the Act, if satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly making a false statement or a false representation; or failing or omitting to comply with a provision of this Act, the Administration Act or the Social Security Act 1947; 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.
In this application, for the reasons set out in paragraphs [63] to [65], the Tribunal finds that the first requirement set out in paragraph [67(a)] is not met in Mr Dauti’s case. Even if the Tribunal is wrong about that, the Tribunal does not consider that any special circumstances arise in Mr Dauti’s case and that it would be inappropriate for any proportion of the Debt to be waived. For circumstances to be considered special circumstances for the purpose of s 1237AAD of the Act they must be unusual, uncommon or exceptional[29] and the hardship or unfairness should be sufficient to justify departure from the general rule of the particular case.[30]
[29] Refer Re Beadle and Director-General of Social Security (1984) 6 ALD 1.
[30] Per Branson J in Ryde v Secretary, Department of Family and Community Services [2005] FCA 866.
The Tribunal has considered and accepts that Mr Dauti and his wife do not enjoy good health. The medical reports concerning Mr Dauti describe a number of present health conditions and medications.[31] However, Mr Dauti and his wife have a capable son who represented Mr Dauti in this application; a younger brother based in Australia (Sevdi); and a firm of solicitors who have assisted the Dauti’s family in the past; to call upon to assist Mr Dauti to arrange for funds to be identified to repay the Debt and if need be, in order to raise those funds, to arrange for the sale of Mr Dauti’s unencumbered property at 15 Cox Street.
[31] Refer Exhibit “A2”.
CONCLUSION
For the reasons set out above, the Tribunal concludes that the Debt against Mr Dauti was correctly raised in consideration of the combined value of Mr Dauti’s assets which included the value of his one-third share of 11 Cox Street. The Tribunal finds that no constructive trust existed in favour of Sevdi in relation to Mr Dauti’s one-third share of that property. This means that during the Debt Period, Mr Dauti exceeded his allowable assets value limit and the decision of Centrelink to cancel his newstart allowance was correct. It was appropriate for Centrelink to have raised the Debt against Mr Dauti for the corresponding overpayments made to him during the Debt Period.
The Tribunal also concludes that the Debt should not be written off or waived either in whole or in part, as the discretion of the Tribunal to do so was not enlivened under the Act for the reasons set out in this decision.
72. I certify that the preceding 71 (seventy-one) paragraphs are a true copy of the reasons for the decision herein of Member K. Parker
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Associate
Dated: 9 August 2017
Date of hearing: 8, 22 May 2017 Applicant: In person Advocate for the Respondent: Mr Tim Noonan
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