DEAN COSENZA and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2009] AATA 176
•18 March 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 176
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/4262
GENERAL ADMINISTRATIVE DIVISION ) Re DEAN COSENZA Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Senior Member R W Dunne Date18 March 2009
PlaceAdelaide
Decision The Tribunal affirms the decision under review and directs that the decision to raise and recover debts comprising the total amount of all benefits paid to the applicant in the period from November 2000 to May 2008 be referred back to the respondent for re-consideration in light of the further information provided at the hearing.
..............................................
R W DUNNE
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Carer Payment – applicant receiving payments since October 2002 – in receipt of various benefits since November 2000 – respondent sent notices to applicant in 2008 requiring provision of information regarding income and assets from 1999 to 2007 – respondent cancelled Carer Payment and decided to raise and recover debts comprising total of all benefits paid from November 2000 to May 2008 – upon review, Carer Payment suspended and question of debts referred back to respondent for further consideration – applicant requested review of decision to suspend Carer Payment – decision under review affirmed
Social Security (Administration) Act 1991 ss 63, 80(1), 81(1), 192, 196
Re Secretary, Department of Employment and Workplace Relations and Mitchell [2006] AATA 804
Cosdean Investments Pty Ltd v The Football Federation of Australia Limited [2007] FCA 163Cosdean Investments Pty Ltd v Football Federation Australia Limited [2006] FCA 1134
REASONS FOR DECISION
18 March 2009 Senior Member R W Dunne introduction
1. Mr Dean Cosenza (“applicant”) had been receiving Carer Payment in respect of his parents since October 2002. He had also been in receipt of other Social Security benefits at various times. In his claim forms for the benefits, he denied that he had been involved in a private trust, a private company or any other type of business and had not declared details of any income or assets. The respondent (“Centrelink”) sent him various notices requiring that he provide information concerning his income and assets. Centrelink decided that he had failed to produce the information sought in the notices and cancelled his Carer Payment. Centrelink also decided to raise and recover debts comprising the total amount of all benefits paid to him in the period from November 2000 to May 2008. An Authorised Review Officer affirmed Centrelink’s decisions. Mr Cosenza appealed to the Social Security Appeals Tribunal (“SSAT”), which suspended the Carer Payment, rather than cancel it. The SSAT also referred back to Centrelink the question of whether the debts had been properly raised, with directions that, amongst other things, assessments be made of Mr Cosenza’s actual income and assets in the period 1999-2007. Mr Cosenza has applied to this Tribunal for review of the decision of the SSAT to suspend the Carer Payment.
2. At the hearing, Mr Cosenza represented himself and Mr Anthony Parker (from Centrelink Legal Services and Procurement Branch) appeared for the respondent. Apart from himself, no witnesses gave evidence for Mr Cosenza. Mr Bradley Kennedy and Mr Esmond McKeown, Centrelink officers, gave evidence for the respondent. The Tribunal received into evidence the T documents (Exhibit R1) and the supplementary T documents (Exhibit R2) pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. The following documents were tendered on behalf of the parties and were also received into evidence:
·letter dated 12 December 2008 from Mr Carlo De Pizzol, Lamberts Hall Chadwick, Chartered Accountants, to Mr Cosenza (Exhibit A1);
·affidavit of Mr Cosenza sworn on 4 September 2002 (Exhibit A2);
·caveat dated 8 March 2000 over land situated at Trimmer Parade, Seaton (Exhibit A3);
·letter from Dr G Vinci dated 13 April 2007 (Exhibit A4);
·financial statements for The Dean Cosenza Family Trust for the year ended 30 June 2001 (Exhibit A5);
·bank statements for International Sports Management Australasia for the period from 24 March 2006 to 23 November 2006 (Exhibit R3);
·Advertiser Newspaper tax invoices directed to the Sarjem Family Trust (Exhibit R4); and
·trust deed (undated) for the Sarjem Family Trust (Exhibit R5).
issue for the tribunal
3. Based on Mr Cosenza’s application for review, the only issue for the Tribunal is whether the Carer Payment should be suspended with effect from 7 May 2008.
legislation
4. The legislation that is presently relevant is contained in the Social Security (Administration) Act 1999 (“Act”). Section 63 of the Act sets out the various powers of Centrelink to require information from a benefits recipient. The section relevantly reads:
“63 Requirement to attend Department etc.
(1) This section applies to a person if:
(a)the person is receiving, or has made a claim for, a social security payment; or
…
(2)If the Secretary is of the opinion that a person to whom this section applies should:
…
(d) give information to the Secretary;
the Secretary may notify the person that he or she is required, within a specified time, to:
…
(h) give that information;
as the case may be.
(4) If:
(a)a person is receiving, or has made a claim for, a social security payment; and
(b) the Secretary notifies the person under subsection (2); and
(c) the requirement of the notice is reasonable; and
(d) the person does not comply with the requirement;
the payment that the person is receiving or has claimed is not payable.
…
(7)The Secretary may notify a person under subsection (2) by sending the notice by prepaid post addressed to the person at the postal address of the person last known to the Secretary. This subsection does not prevent the Secretary from giving the person notice in any other way.
(9)The Secretary may determine that a social security payment that was not payable because of subsection (4) is payable to a person if the Secretary is satisfied that the person had a reasonable excuse for not complying with the requirement under subsection (2).
…
(11) A notification under subsection (2) or (3) must inform the person to whom it is given of the effect of this section.”
5. Section 80(1) of the Act provides for the cancellation or suspension of Social Security payments. The section reads:
“80 Cancellation or suspension determination
(1)If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:
(a) who is not, or was not, qualified for the payment; or
(b) to whom the payment is not, or was not, payable;
the Secretary is to determine that the payment is to be cancelled or suspended.”
6. Section 81(1) of the Act applies when a person receiving a Social Security payment does not comply with a notice under s 192. Section 81(1) relevantly reads:
“81 Cancellation or suspension for non‑compliance with certain notices
(1) If:
(a)a person who is receiving a social security payment (other than a newstart allowance) has been given:
…
(ii)a notice embodying a requirement under Division 1 of Part 5 [which includes s 192]; and
(b) the person does not comply with the requirement of the notice;
the Secretary may determine that the payment is to be cancelled or suspended.”
7. Section 192 contains Centrelink’s general power to require a person to supply information. Again, this section relevantly reads:
“192 General power to obtain information
The Secretary may require a person to give information, or produce a document that is in the person’s custody or under the person’s control, to the Department if the Secretary considers that the information or document may be relevant to one or more of the following:
(a)the question whether a person who has made a claim for a social security payment is or was qualified for the payment;
(b)the question whether a social security payment is payable to a person who is receiving the payment;
(c)the question whether a social security payment was payable to a person who has received the payment;
(d)the rate of social security payment that is or was applicable to a person;
…”
8. To be effective, a notice under s 192 requiring a person to give information or produce a document must satisfy a number of conditions. These are contained in s 196 and relevantly read:
“196 Written notice of requirement
(1)A requirement under this Division must be made by written notice given to the person of whom the requirement is made.
(2) The notice:
(a)may be given personally or by post or in any other manner approved by the Secretary; and
(b) must specify:
(i)how the person is to give the information or produce the document to which the requirement relates; and
(ii)the period within which the person is to give the information or produce the document to the Department; and
(iii)the officer (if any) to whom the information is to be given or the document is to be produced; and
(iv) that the notice is given under this section.
(3)The period specified under subparagraph (2)(b)(ii) must not end earlier than 14 days after the notice is given.
…”
background and evidence of applicant
9. The material background facts, which were not challenged by Mr Cosenza before the Tribunal, are set out in the decision of the SSAT and may relevantly be repeated. Mr Cosenza had been receiving Newstart Allowance, Austudy and Carer Payment, at various times, since November 2000. He lodged six different claims for these benefits between November 2000 and January 2005. In January 2008 and April 2008, Centrelink sent him various notices requiring that he provide documents and information regarding his income and assets from 1999 to 2007. The information sought included tax returns and other financial statements, for the period 1999/2000 to 2006/2007, relating to eight companies and five trusts and another entity with which Mr Cosenza was alleged to be associated. He had not declared to Centrelink, in any of his claims, any income from, or any assets he owned through, those entities. As at May 2008, he was in receipt of Carer Payment for the care of his mother. This was cancelled and then subsequently suspended.
10. It was Mr Cosenza’s evidence that, during the period from 1999 to 2007, he derived no income from any of the companies or trusts mentioned in the notices issued by Centrelink. He had been a director of Cosdean Investments Pty Ltd and Denco Holdings Pty Ltd during 1999 and post-1999, prior to commencing to receive Social Security benefits. He was imprisoned for attempted assault between July 2001 and July 2002, and then on home detention until February 2003. He was declared bankrupt on 11 December 2003 and was discharged on 18 September 2007. He had loaned $150,000 to Denco Holdings Pty Ltd, a company in which he had been a director and shareholder. The funds were taken by the managing director, who absconded with them. The loan was written off and he ceased to be a director of the company in about November or December 2003. Denco Holdings Pty Ltd was the trustee of the Denco Trust and did not trade or derive income in its own right.
11. Under the terms of a property settlement with his ex-wife in October 1999, Mr Cosenza was required to pay her $325,000 by 1 March 2000. The money was to come from the sale of their North Adelaide unit and a restaurant business. In default, which in fact occurred, he was required under the Family Court order (Exhibit R1, T7) to transfer to his ex-wife all of his shares in Pescana Pty Ltd and Cosdean Investments Pty Ltd and all his rights or entitlements in the Emjamdean Trust, the Dean Cosenza Family Trust, the Pescana Unit Trust, the Cosdean Investments Unit Trust and the Cosdean Family Trust. Mr Cosenza tendered and referred to the letter from his accountant, Mr De Pizzol, Lamberts Hall Chadwick, dated 12 December 2008 (Exhibit A1) which provided details of the status of the companies and trusts with which he had been associated during the period 2000-2003 and were the subject of the Family Court order. The letter also referred to the Cosdean Investments Unit Trust and the Sarjem Family Trust, which were trusts with which he said he had not been associated. The details in the letter read:
“…
Pescana Pty Ltd
This is purely a trustee company for Pescana Unit Trust and therefore there are no financial statements available and no tax returns were required to be lodged. This structure was put into liquidation in 2001. The company was deregistered on 6 May 2007.
Pescana Unit Trust
No tax returns have been lodged for this entity since 30 June 1998. This structure has not traded since 2001 when the trustee company was put into liquidation. You do not have any loans associated with this entity. For further information regarding either Pescana Unit Trust or the trustee company you will need to contact the liquidator Sims Partners.
Denco Holding[s] Pty Ltd
This is purely a trustee company for The Denco Trust and therefore there are no financial statements available and no tax returns were required to be lodged.
The Denco Trust
The project that The Denco Trust was to manage never commenced and therefore no financials were ever completed. When the project was in the development stage, The Denco Trust invested $150,000 in Annatom Pty Ltd. I am aware that you lent Denco Holdings Pty Ltd as trustee for the Decon [sic] Trust $150,000. I also understand that Annatom Pty Ltd is in liquidation and consequently it was necessary for you to forgive the loan to Denco Holdings Pty Ltd in 1999.
Emjamdean Trust
Emjamdean Trust has not traded since 1998 and no financials statements were compiled or tax returns lodged since that date.
The Dean Cosenza Family Trust
Attached are copies of the 2000 and 2001 financial statements for The Dean Cosenza Family Trust. No tax returns have been lodged for the trust since 30 June 1998 and no financials have been completed since 2001. The trust has not traded since 2001 due to the marriage break up between yourself and Mary Cosenza.
Cosdean Investments Pty Ltd
This is purely a trustee company for Cosdean Investments Unit Trust and therefore there are no financial statements available and no tax returns were required to be lodged.
Cosdean Investments Unit Trust and Sarjem Family Trust
Any request for the provision of financial statements and income tax returns for Cosdean Investments Unit Trust and Sarjem Family Trust must come from the directors of Cosdean Investments Pty Ltd and the trustee of the Sarjem Family Trust. With respect to these entities you have no involvement or loans associated with them.
…”
12. Mr Cosenza’s further evidence was that International Sports Management Australasia (“ISMA”) had been a registered business name owned by Cosdean Investments Pty Ltd in its capacity as trustee of the Cosdean Investments Unit Trust. The unit holders had been either Ms Suzanne Watson or Mr George Snell and he had had no interest in the Unit Trust at that stage. ISMA had been established subsequent to his imprisonment and bankruptcy to sell World Cup soccer merchandise. A football agent’s licence was granted to ISMA but, as a result of representations made to the governing body by his ex-wife, the licence was subsequently withdrawn. He had not undertaken any work whilst the licence operated. ISMA had run a 6 day soccer school in June/July 2004, which he had organised. However, there was no profit and no income that needed to be declared to Centrelink. He had travelled to Dubai in November 2004 with Ms Watson, who was also a director of Cosdean Investments Pty Ltd. Although attempts were made to bring Word Cup soccer merchandise to Australia, the sale of the products was not endorsed and ISMA was unable to enter the market. Mr De Pizzol had undertaken to provide Centrelink with whatever information was required in response to the notices that had been issued, for no fee. He had spoken to Mr De Pizzol before 30 April 2008, but his accountant had been busy. He subsequently found out that Mr Pizzol had spoken to Centrelink on 15 May 2008.
13. Mr Cosenza then tendered a caveat dated 8 March 2000 which had been entered by his ex-wife, pursuant to the Family Court order, over properties situated at Trimmer Parade, Seaton (Exhibit A3). The caveatee was the applicant, but in his capacity as trustee of the Emjamdean Trust. The properties had been sold in order to meet the Family Court property settlement with his ex-wife. Mr Cosenza said that the responses he had provided to Centrelink had been to the best of his ability. He had not been well at the time and had been suffering from depression. He referred to the letter from his general practitioner, Dr G Vinci (Exhibit A4). Finally, he referred to the report from his trustee in bankruptcy (Exhibit R2, T26). Although not stated in the report, the trustee had sold his shareholding in Cosdean Investments Pty Ltd for $1,000.00.
14. In cross-examination by Mr Parker, Mr Cosenza acknowledged that the loan of $150,000 he had made to Denco Holdings Pty Ltd had been transferred by the managing director into an account with his own company, Annatom Pty Ltd. Denco Holdings Pty Ltd had taken legal action to recover the loan and had obtained judgement. His trustee in bankruptcy was aware of the judgement, but had determined not to pursue the matter. Mr Cosenza had not received any of the loan back. He had been a director of Cosdean Investments Pty Ltd from 17 March 1998 until 11 December 2003 and from 12 May 2004 until 9 August 2006. His trustee in bankruptcy had been aware of his directorship during the second period because he needed access to the company bank account to receive the Carer Payment. He could not recall whether financial statements had been prepared for Cosdean Investments Pty Ltd. As the owner of the ISMA business name, the company had bought and sold World Cup soccer products for a period of 4 months, but had not made any money from its activities. ISMA had been involved in some business activities, with Mr Cosenza’s help, but there were no employees involved. Ms Suzanne Watson, as a director of Cosdean Investments Pty Ltd, had become involved in the business of the company in early 2006. Mr Parker referred the applicant to the bank statements of ISMA (Exhibit R3) between 24 March 2006 and 23 November 2006, which disclosed various deposits on 24 and 27 March 2006 totalling $182,000. Mr Cosenza said that the deposit monies had come from the Sarjem Family Trust for the purchase of merchandise and had been loaned to ISMA by the Trust. Monies had been paid for the merchandise on 28 March, but were re-deposited on 12 May 2006. A further amount of $145,550 was paid for merchandise on 15 May 2006. He was unable to recall a payment of $11,145 made to the Australian Taxation Office on 4 September 2006 or what it was for.
15. Mr Cosenza was questioned further about the Sarjem Family Trust and its trust deed (Exhibit R5). His sister had established the Trust and his niece was the trustee. He had no interest in the Trust, but he acknowledged that he was within the class of eligible beneficiaries. He had been trustee of the Emjamdean Trust in 1999-2000, but was no longer trustee. It had held properties at Trimmer Parade, Seaton, but they had been sold to the Sarjem Family Trust pursuant to the Family Court order. He was unaware of the condition of the properties at the time of sale.
evidence of mr bradley kennedy
16. Mr Kennedy was a fraud investigator with Centrelink. He had issued a request to the applicant’s bank for details of accounts in his name. The details provided were only of accounts in the name of ISMA, with the applicant as a signatory. The address for the ISMA accounts was the applicant’s post office box address. In a telephone conversation with the applicant, he was advised that the properties at 190 and 192 Trimmer Parade, Seaton had been sold by the Emjamdean Trust to the Sarjem Family Trust and the proceeds of sale paid to his ex-wife as part of the family settlement. During the course of Mr Kennedy’s investigations, he established that 10 townhouses had been built on the properties with funding of between $2.5 and $3 million. Guarantees for the funding had been provided by Ms Suzanne Watson as trustee of the Sarjem Family Trust and Mr Cosenza had been involved in consultations regarding the progress of construction of the townhouses. When driving by, he had also noted on a “For Sale” sign on the properties that the contact phone number was Mr Cosenza’s mobile number. From Lands Titles Office searches, he established that Mr Cosenza had been a previous owner of the Trimmer Parade properties. He also established that tax invoices from the “Advertiser Newspaper” relating to advertisements for the sale of the townhouses (Exhibit R4) had been sent to the Sarjem Family Trust at Mr Cosenza’s post office box address.
evidence of mr esmond mckeown
17. Mr McKeown was a complex assessment officer with Centrelink. Since about 2005, he had been involved in investigations of clients who were thought to have interests in companies and trusts. His investigations of company annual returns showed that Mr Cosenza had been the sole director, secretary and shareholder of Cosdean Investments Pty Ltd between 2000-2002. On 11 December 2003, he resigned as director and secretary and Mr George Snell was appointed a director in his place. On 12 May 2004, Mr Snell resigned as a director and Mr Cosenza was reappointed. On 6 October 2004, Mr Snell was also reappointed as a director. In March 2006, Ms Suzanne Watson was appointed as a director and on 9 August 2006 Mr Cosenza resigned. Ultimately, on 2 August 2007, Ms Watson became the sole shareholder and director of the company. Cosdean Investments Pty Ltd was operating the business of ISMA up to 30 June 2006. Financial statements for the company had been sought from Mr Cosenza, but none had been provided. However, in proceedings in the Federal Court involving the company (Cosdean Investments Pty Ltd and The Football Federation of Australia Limited) financial statements had been tendered. The company’s 2006 balance sheet showed net assets of $2,851 and non-current liabilities to persons or entities associated with its directors or Mr Cosenza of $375,000. A trading loss of $35,321 had been made by the company in 2005 and a trading profit of $38,162 in 2006.
18. In relation to the Emjamdean Trust, the properties at 190 and 192 Trimmer Parade were owned by Mr Cosenza as trustee of that Trust. The property at 190 Trimmer Parade had been purchased by Mr Cosenza (as trustee) on 14 July 1997 for $162,000, with a mortgage to St George Bank stamped to a value of $129,000. The property at 192 Trimmer Parade had been purchased by Mr Cosenza (again, as trustee) from his parents for $45,000. On 7 November 1997, the transfer instrument was stamped to reflect a value of $112,000. The Australian Valuation Office independently valued the property at $165,000. The St George Bank mortgage for 190 Trimmer Parade was upstamped to $224,600. Under the terms of the family Court order, 190 and 192 Trimmer Parade were to be sold for not less than $410,000 and the net proceeds, after paying out existing liabilities and costs, were to be paid to Mr Cosenza’s ex-wife. The properties were sold and were transferred into the name of Sara Verdicchio for $410,000, with a registered first mortgage to Tower Trust (SA) Ltd for $490,000. In the trust deed for the Sarjem Family Trust, Ms Verdicchio was appointed the trustee. Ms Verdicchio had resigned as trustee and Ms Suzanne Watson had been appointed in her place. After Ms Watson became trustee of the Sarjem Family Trust, the amount of the first mortgage was upstamped to $2,050,000. The properties at Trimmer Parade were developed into ten units and eventually sold for $3.2 million. In cross-examination, Mr McKeown admitted that Centrelink had no evidence that Mr Cosenza had received any income or benefit from the sale of the townhouses at Trimmer Parade.
consideration
Should the Carer Payment paid to Mr Cosenza be suspended with effect from 7 May 2008?
19. Letters requesting further information relating to Mr Cosenza’s entitlement to Carer Payment were sent to him on 7 January 2008 and 30 April 2008. The letters required that he provide, amongst other things, the following:
(a) lists of private companies, private trusts or unit trusts in which he holds or has held, since 1 January 1996, a directorship, shares, units, a position of appointor or trustee or a member of a class of beneficiaries;
(b) a list of all business names under which he (whether in his own right or through proxies) had operated any enterprise and the period during which the names were held;
(c) copies of taxation returns, profit and loss statements and balance sheets for the 1999/2000 to 2006/2007 financial years for any trust in which he was or had been involved. Possible trusts suggested were the Pescana Unit Trust, the Dean Cosenza Family Trust, the Emjamdean Trust, the Sarjem Family Trust and the Cosdean Investments Unit Trust;
(d) for the 1999/2000 to 2006/2007 financial years, copies of company taxation returns, profit and loss statements and balance sheets for any company in which he was involved. Possible companies included Denco Holdings Pty Ltd, Cosdean Investments Pty Ltd and Pescana Pty Ltd; and
(e) for the 1999/2000 to 2006/2007 financial years, personal taxation returns or taxation returns for partnerships in which he was or had been involved.
The letters stated that they were each an information notice under the Social Security law and that his Carer Payment might be stopped or cancelled if he did not provide the information within 14 days. The Tribunal is satisfied that each of the letters was a valid notice under s 63 of the Act.
20. Mr Cosenza’s evidence was that the responses to Centrelink’s notices had been given to the best of his ability. This would appear to be the case with his response to the notices sent on 7 January 2008. However, the Tribunal notes that he did not respond to the notices issued on 30 April 2008 and it was only when further notices on related matters were issued on 7 July 2008 that he responded by letter dated 14 July 2008. Before the Tribunal, Mr Cosenza was able to provide further information concerning his involvement in Cosdean Investments Pty Ltd and Denco Holdings Pty Ltd. He also tendered the letter from his accountant, Mr De Pizzol, dated 12 December 2008. This letter detailed the status of the companies and trusts with which he had been associated during the period 2000-2003. Clearly, the evidence given by Mr Cosenza and the information contained in Mr De Pizzol’s letter could have been provided to Centrelink in response to the notices issued on 30 April 2008. The Tribunal is of the view and finds, pursuant to s 63(4)(d) of the Act, that Mr Cosenza did not give all the information required in the notices within the time specified in them. He tendered a letter from his general practitioner, Dr Vinci, dated 13 April 2007 which spoke of his major depression and anxiety and that he would have benefitted psychologically and financially if he were able to obtain employment. Although it was Mr Cosenza’s evidence that his depression prevented him from providing the information in the notices within the time specified, based upon the information that has since been provided, the Tribunal is not satisfied that his medical conditions, between January and April 2008, prevented him from providing the further information to Centrelink. In the Tribunal’s view, he did not have a reasonable excuse, within the meaning of s 63(9) of the Act, for not complying with the notices issued on 30 April 2008.
21. Section 80 of the Act allows for cancellation or suspension of a Social Security payment being paid to a person where the payment is not, or was not, payable. Centrelink decided that Mr Cosenza’s Carer Payment should be cancelled because he did not comply with the notices issued on 30 April 2008. Noting the reasoning of Deputy President Jarvis in Re Secretary, Department of Employment and Workplace Relations and Mitchell [2006] AATA 804, the SSAT found that there was sufficient evidence before it to raise doubts about Mr Cosenza’s current and past Social Security entitlements. As to the Carer Payment being paid to him, the SSAT decided that suspension, rather than cancellation, was appropriate while reasonable attempts were made by Centrelink to resolve the doubts. It was Mr Cosenza’s evidence that, from 1999 to 2007, he derived no income from any of the companies or trusts mentioned in the notices issued to him. This evidence is supported by the untested letter from his accountant, Mr De Pizzol. However, the Tribunal notes that Mr De Pizzol’s letter did not provide information in relation to the Cosdean Investment Unit Trust and the Sarjem Family Trust. Mr De Pizzol suggested that such information must come from the directors of Cosdean Investments Pty Ltd and the trustee of the Sarjem Family Trust, but he was nevertheless able to say that the applicant had no involvement or loans associated with either of those entities.
22. Mr Cosenza’s involvement as a director of Cosdean Investments Pty Ltd is interesting. The company was incorporated on 17 March 1998 and the directorships were as follows:
Mr Dean Cosenza
Mr George Snell
Ms Suzanne Watson
Appointed
17 March 1998, resigned
11 December 2003
Re-appointed
12 May 2004, resigned
9 August 2006
Appointed
11 December 2003, resigned
12 May 2004
Re-appointed
6 October 2004
Appointed
1 March 2006
According to his evidence, ISMA was registered as a business name in 2003 and Cosdean Investments Pty Ltd was the proprietor of the name. It appears the application for registration took place when Mr Cosenza was the sole director of the company. Significant funds ($182,000) were loaned to ISMA (or, more particularly, Cosdean Investments Pty Ltd) by the Sarjem Family Trust, the Trust established by Mr Cosenza’s sister, for the purchase of soccer merchandise. The applicant was unable to explain why the Sarjem Family Trust had provided the significant funds, apparently unsecured, to assist ISMA in the conduct of its new business. When asked whether he had any involvement or interest in the Sarjem Family Trust, his response was that he simply had no interest in the Trust. He acknowledged that he was within the class of potential beneficiaries, as were all his brothers, his sisters and his cousins, but he received no benefit from the Trust. The Tribunal notes that, at the time the funds were loaned to ISMA, Ms Watson was the trustee of the Sarjem Family Trust and also a director of Cosdean Investments Pty Ltd. She did not appear to be within the class of income or capital beneficiaries of the Trust. In the absence of any evidence from Mr Cosenza, the reasons for the loan and the apparent relationship between Cosenza Investments Pty Ltd and the Sarjem Family Trust remain unclear.
23. As a director of Cosdean Investments Pty Ltd at the time, Mr Cosenza was unable to provide Centrelink or the Tribunal with financial statements of the company for the year ended 30 June 2006. Mr McKeown referred to the Federal Court proceedings involving Cosdean Investments Pty Ltd v The Football Federation of Australia Limited, which the Tribunal notes was reported as [2007] FCA 163. In those proceedings, the 2006 balance sheet of Cosdean Investments Pty Ltd showed non-current liabilities of $375,000, which one assumes includes the loan of $182,000 made to ISMA in March 2006, and a trading profit of $38,162. The Tribunal notes the earlier (and related) proceedings in the Federal Court reported as Cosdean Investments Pty Ltd v Football Federation Australia Limited [2006] FCA 1134. In his decision in those proceedings, referring to the financial statements of Cosdean Investments Pty Ltd at 30 June 2006, Mansfield J said:
“3. … Its draft profit and loss statement and trading statement show that it has a gross trading profit of $153,900 and an operating profit, before tax, of $38,400.
4. Other information before the Court indicates that during the financial year to 30 June 2006, Cosdean received a substantial injection of funds in the order of $288,000 from what is called Sarjem Family Trust. There is no evidence to indicate that Sarjem Family Trust is a trust of one or other of the directors, although that might be suspected. In any event, that sum advanced during the course of the last financial year now represents a significant liability of Cosdean. …
5. I note also that the trading statement producing a gross profit of $153,900 includes purchases of roughly $212,000, sales of $144,000 and closing stock of some $222,000 which is noted to be closing stock at market value. …”
When questioned specifically, Mr Cosenza said that he simply had no interest in the Sarjem Family Trust. However, in the Tribunal’s opinion, there was clearly some association or relationship between Cosdean Investments Pty Ltd and the Sarjem Family Trust.
24. In 1999/2000, Mr Cosenza was the trustee of the Emjamdean Trust. In that capacity, he was the registered proprietor of the properties situated at 190-192 Trimmer Parade, Seaton. Mr McKeown’s unchallenged evidence was that 190 Trimmer Parade had been purchased by Mr Cosenza (as trustee of the Emjamdean Trust) on 14 July 1997 for $162,000. There was a mortgage over the property to St George Bank stamped to a value of $129,000, which was subsequently upstamped to a value of $224,600. The property at 192 Trimmer Parade was purchased by Mr Cosenza (again, as trustee of the Emjamdean Trust) from his parents for $45,000. The transfer instrument was stamped to reflect a value of $112,000, whereas the Australian Valuation Office valued the property at $165,000. Apparently, under a Family Court order, the properties were to be sold for not less than $410,000. Subsequently, the sale occurred to Sara Verdicchio (in her capacity as trustee of the Sarjem Family Trust) for $410,000. When Ms Suzanne Watson was subsequently appointed as trustee in Ms Verdicchio’s place, the amount of the first mortgage over both properties was upstamped from $490,000 to $2,050,000, and they were developed into units and sold for $3.2 million.
25. Mr Cosenza was able to provide little evidence to the Tribunal relating to the activities of ISMA and the Sarjem Family Trust. This was surprising, given that he had been a director of Cosdean Investments Pty Ltd, on and off, until 9 August 2006. As trustee of the Emjamdean Trust, he would also have been instrumental in the sale of the properties at Trimmer Parade to the Sarjem Family Trust and, on the evidence of Mr Kennedy, which was not seriously challenged by Mr Cosenza, he was actively involved in the ultimate sale of the Trimmer Parade townhouses. He was also hesitant to comment about the dispute between Cosdean Investments Pty Ltd and The Football Federation of Australia. As a director of the company for the year ended 30 June 2006, he certainly made no mention of the gross trading profit of Cosdean Investments Pty Ltd of $153,900, of purchases of $212,000, of sales of $144,000 and of closing stock of some $222,000. In the Tribunal’s opinion, these matters all raised questions that necessitated the provision of further information to Centrelink in response to the notices that had been issued on 30 April 2008.
26. For the reasons and on the basis of the findings above, there must be doubts as to Mr Cosenza’s current and past Social Security entitlements. Mr Cosenza submitted that suspension of his Carer Payment was a breach of natural justice and his legal entitlement to have some benefit paid to him. The Tribunal has sympathy for his position, but the doubt about current entitlement remains and while it does it is appropriate that the Carer Payment be suspended. In his closing, Mr Parker said that the respondent wished to pay Mr Cosenza a Carer Payment but, in the absence of more information concerning his involvement in ISMA and Cosdean Investments Pty Ltd, had been unable to calculate the correct amount of his entitlement. He suggested that the additional information provided at the hearing, including that contained in the letter from Mr De Pizzol, should go a long way towards enabling the respondent to make an assessment of what benefit could be paid to Mr Cosenza.
decision
27. The Tribunal affirms the decision under review and directs that the decision to raise and recover debts comprising the total amount of all benefits paid to the applicant in the period from November 2000 to May 2008 be referred back to the respondent for re-consideration in light of the further information provided at the hearing.
I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne
Signed: .....................................................................................
AssociateDate of Hearing 17 December 2008
Date of Decision 18 March 2009
Advocate for the Applicant Self representedAdvocate for the Respondent Anthony Parker
Centrelink Legal Services & Procurement Branch
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