DOS SANTOS and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2010] AATA 128
•18 February 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 128
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/2084
GENERAL ADMINISTRATIVE DIVISION ) Re FILOMENA DOS SANTOS Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr Egon Fice, Member Date18 February 2010
PlaceMelbourne
Decision The Tribunal affirms the decision under review.
[sgd] Egon Fice
Member
social security – carer payment recipient – failure to notify Centrelink of change in circumstances – definition of income – ordinary income test – monies received for a person’s own use or benefit – exempt lump sum - assessed rate of carer payment – debt owed and paid to Commonwealth – decision under review affirmed.
Administrative Appeals Tribunal Act 1975 s 37
Social Security Act 1991 ss 8, 198, 199, 210, 1064, 1223, 1236, 1237A, 1237AAD
Social Security (Administration) Act 1999 ss 36, 37, 68REASONS FOR DECISION
18 February 2010 Mr Egon Fice, Member 1. Ms Dos Santos applied for and was granted the carer payment in August 2002 in respect of her mother and, subsequently, her uncle Mr Natalino Jorge. Her mother died on 2 March 2007. She continued to care for her uncle.
2. Between 2002 and December 2007 Ms Dos Santos was regularly informed of her obligations to notify Centrelink of changes to her income and assets. Centrelink administers the delivery of social security payments on behalf of the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (the Secretary). Centrelink asked her to provide financial information on a number of occasions and, because she failed to respond within the time requested by Centrelink, her payments were stopped. Subsequently, her carer payments were restored. However, in January 2008 Ms Dos Santos’ carer payment was cancelled because she had failed to provide financial information requested by Centrelink. She was also asked to complete an income and assets review form she had previously returned incomplete.
3. Upon reconsideration of that decision, a Centrelink review officer determined that the decision to cease Ms Dos Santos’ carer payment was correct and should not be changed. This was because the officer was unable to obtain full details about Ms Dos Santos’ income and the value of her assets. The review officer noted that there were a number of large deposits credited to Ms Dos Santos’ Australia and New Zealand Bank (ANZ Bank) accounts and she had failed to provide information about those deposits. Apparently, her bank accounts also indicated she had received income from BT Investments and ING Life and information about those investments had not been provided to Centrelink. Ms Dos Santos requested a review of that decision by an authorised review officer (ARO).
4. On 2 October 2008 an ARO notified Ms Dos Santos that having reviewed the decision made in January 2008 to cancel her carer payment and the decision made on 20 May 2008 to raise and recover a carer payment debt of $43,726.36, the decision to cancel Ms Dos Santos’ carer payment was correct but that the amount of the debt should be recalculated.
5. In October 2008 Ms Dos Santos lodged a further claim for carer payment in respect of the care of Mr Jorge.
6. Following the ARO’s decision, Centrelink recalculated Ms Dos Santos’ debt and advised her that Centrelink was seeking to recover $43,652.60. Centrelink continued to be concerned about the information it had regarding Ms Dos Santos’ assets and income.
7. In November 2008 Centrelink rejected Ms Dos Santos’ application for carer payment in respect of Mr Jorge because it had not received the requested financial information. Ms Dos Santos sought reconsideration of that decision. Upon reconsideration, a Centrelink delegate affirmed the original decision. Ms Dos Santos then requested further review of that decision by an ARO. On 10 December 2008 the ARO affirmed the decision to refuse Ms Dos Santos’ application for carer payment in respect of Mr Jorge.
8. On 23 December 2008 Ms Dos Santos applied to the Social Security Appeals Tribunal (SSAT) for a review of the decision to raise and recover a carer payment debt and also the decision to refuse her claim for carer payment in respect of Mr Jorge which was lodged on 7 October 2008. On 2 April 2009 the SSAT affirmed both decisions under review. Ms Dos Santos now seeks review of the SSAT decisions by this Tribunal.
ISSUES
9. The principal issue I must address is whether Ms Dos Santos received carer payments in excess of her entitlement between 25 February 2004 and 8 January 2008 (the relevant period). To determine this, I need to establish:
(a)the value of Ms Dos Santos’ assets during this period; and/or
(b)the income she received during this period.
10. If I find that Ms Dos Santos received carer payments in excess of her entitlements, I must determine whether there are any reasons why the excess payment is not a debt due to the Commonwealth which can be recovered.
11. I must also determine whether Ms Dos Santos’ application for a carer payment lodged on 7 October 2008 in respect of Mr Jorge should have been rejected.
ASSETS AND INCOME LIMITS
12. Section 198(1) of the Social Security Act 1991 (the Act) provides that a person qualifies for the carer payment if the requirements of s 198 are met. There was no dispute before me about the fact that Ms Dos Santos had constant care of both her mother, and subsequently, Mr Jorge.
13. Section 210 of the Act provides that a person’s carer payment rate is worked out using the Pension Rate Calculator A (PRC A) which is found at the end of s 1064.
14. The PRC A contains a method statement setting out 12 steps which must be followed in arriving at a claimant’s rate of carer payment. Step five requires the ordinary income test to be applied using Module E to work out a reduction in the rate of carer payment due to ordinary income. This results in what is called the income reduced rate. Then, the assets test must be applied using Module G to work out the reduction for assets. The resultant is called the assets reduced rate. The income reduced rate is then compared with the assets reduced rate and the lower of those two rates becomes the provisional annual payment rate.
Income Reduced Rate
15. The first step in Module E, which is the ordinary income test calculator, requires the Secretary to work out the amount of the person’s ordinary income on a yearly basis.
16. Section 8 of the Act sets out the income test definitions. Section 8(1) provides the following definition:
income, in relation to a person, means:
(a)an income amount earned, derived or received by the person for the person’s own use or benefit; or
(b)a periodical payment by way of gift or allowance; or
(c)a periodical benefit by way of gift or allowance;
but does not include an amount that is excluded under subsection (4), (5) or (8).
…
17. The definition of the expression income is wide. Therefore, if an applicant for the carer payment receives money for that person’s own use or benefit, or receives a periodical benefit by way of gift or allowance, unless that amount is excluded, it must be treated as income for the purposes of the Act. The exclusions set out in s 8(4), s 8(5) and s 8(8) of the Act do not apply to Ms Dos Santos. However, s 8(11) describes what is meant by the expression exempt lump sum. If an amount received by a person is not a periodic amount; a leave payment, or income from remunerative work undertaken by the person; then the Secretary may determine the amount to be an exempt lump sum.
18. The expression ordinary income is defined in s 8(1) as income that is not maintenance income or an exempt lump sum.
19. It appears that the Secretary has excluded a payment received by Ms Dos Santos from an account jointly held by her mother and Mr Jorge. The ARO, in reasons given for his decision of 2 October 2008, said:
In relation to the amounts transferred from accounts held jointly by your mother and uncle, as your mother is an immediate family [sic] it is appropriate to consider her portion of each deposit, i.e. half, as an exempt lump sum under subsection 8(11).
The ARO said that $289,573.37 was transferred from accounts held jointly by Ms Dos Santos’ late mother and uncle to her account. Therefore, it seems to me that $144,786.68 has been determined by the Secretary to be an exempt lump sum.
20. Any other monies Ms Dos Santos received between 25 February 2004 and 8 January 2008 for her own use must be treated as ordinary income for the purposes of the PRC A.
21. Ms Dos Santos operated a number of bank accounts and held investments in her own name and jointly with her daughter, Noella Dossantos-Lee. These were identified as:
(a)interest saver - account number 4992-45874 – joint;
(b)access account – account number 5541-49464 – Ms Dos Santos;
(c)V2 Plus – account number 2518-67282 – joint account; and
(d)Home Loan - account number 3572-46994 – joint account.
Ms Dos Santos also had monies invested in ING Life Ltd and BT Investment Funds.
22. The total deposits credited to Ms Dos Santos’ access account, interest saver account and V2 Plus account during the relevant period amounted to $736,271.88. The source of those deposits remains unclear although a deposit in the sum of $43,764.46 into the interest saver account is recorded as having been transferred from an account numbered 9806-80012 which was an account held jointly by Ms Dos Santos’ late mother and Mr Jorge.
23. There is of course a risk that some monies shown as deposits in the accounts I have referred to above are simply transferred from other accounts. In other words, they are not additional income which Ms Dos Santos has had access to but, in the calculation of total deposits, have been duplicated because all deposits of significance have been recorded. I have identified five such transfers and they are:
·25 October 2004: $10,000 from the access account deposited into the interest saver account;
·4 June 2004: $500 from the access account deposited into the V2 Plus account;
·14 February 2006: $1,500 from the V2 Plus account deposited into the access account;
·29 March 2006: $10,000 from the V2 Plus account deposited into the access account; and
·6 July 2007: $5,600 from the V2 Plus account deposited into the access account.
24. The result is that $27,600 must be subtracted from the figure $736,271.88 resulting in monies received into accounts for the benefit of Ms Dos Santos in the sum of $708,671.88.
25. I have been provided with tables setting out the rate of payments which can be made to social security recipients based on the level of either income or assets. The income tables disclose that at 1 January 2004 a claimant receiving an income of $32,929 per annum would exceed the maximum income permissible for a social security payment to be made and therefore the rate of payment is nil. The table valid for March 2009 up to June 2009 discloses a maximum allowable income of $41,015. Quite clearly, the monies received by Ms Dos Santos between 25 February 2004 and 8 January 2008 exceed, by a substantial amount, the maximum permissible income before the carer payment rate drops to nil. Based on the sum I have calculated above, Ms Dos Santos received, on average, $177,167.75 per annum during the relevant period. However, that income was not received uniformly throughout the years in question and an allowance must also be made for the excluded lump sum she received.
26. I have also been provided with tables which set out the maximum allowable value of assets before the payment rate falls to nil. However, given that the rate payable is calculated on the lowest figure under either the income or the assets test, there seems to be no purpose at all in setting out the assets limits for the relevant period. The evidence clearly indicates that the limiting factor in this case will be the level of Ms Dos Santos’ income.
27. Ms Dos Santos made a number of submissions about the inflow of monies into her accounts and although I found her submissions very difficult to follow and quite confused, I have done my best to articulate them and to make findings of fact regarding all of the disputed payments.
MONIES RECEIVED BY MS DOS SANTOS FOR HER OWN USE OR BENEFIT
28. The $708,671.88 received by Ms Dos Santos over the four years in question can only be income if it satisfies the definition in s 8(1) of the Act. It must have been received by her for her own use or benefit. As I understood Ms Dos Santos’ submissions, she was adamant that a number of very substantial sums which were deposited in those accounts were monies provided to her by Mr Jorge for the purpose of purchasing the Colorado Court property at Werribee. In fact, Ms Dos Santos insisted that it was Mr Jorge who was the owner of the property at Werribee. I cannot accept that submission.
29. Among the documents provided by the Secretary under s 37 of the Administrative Appeals Tribunal Act 1975 (AAT Act) was a Transfer of Land document dated 1 July 2004. It was lodged with the Office of Titles on 21 July 2004 and it relates to the property identified as Volume 10024 Folio 054. A curb side evaluation prepared by the Australian Valuation Office identified that title as being the property located at number 20 Colorado Court, Werribee (the Werribee property). The Transfer of Land document states the transferor to be Jayne Michelle Ayre and the transferees as Filomena Marie Jorge Dos Santos as to 90 equal undivided 100th parts or shares and Noella Dossantos-Lee (her daughter) as to 10 equal undivided 100th parts or shares as tenants in common. The consideration for the transfer was $207,000. In my opinion, that document is conclusive of the fact that Ms Dos Santos and her daughter became part owners of the Werribee property. There was no evidence that the property was held on trust. There was evidence that a mortgage was obtained from the ANZ Bank in the amount of $172,600. The home loan account, in the joint names of Ms Dos Santos and her daughter, indicates that the mortgage sum was drawn on 1 July 2004 which corresponds with the date on the Transfer of Land document.
30. There was another transfer of land document dated 8 September 2008, indicating a transfer of the Werribee property from Ms Dos Santos and her daughter to Mr Jorge and her daughter, in the same proportions as Ms Dos Santos and her daughter held the property when they acquired it in July 2004. Although that transfer took place after Centrelink began to make enquiries about Ms Dos Santos’ asset and income position, it does not affect the outcome of my decision in this matter which is based solely on Ms Dos Santos’ income.
31. The provenance of the balance of monies required to purchase the Werribee property ($34,400) is unclear. There was a deposit in Ms Dos Santos’ access account in the sum of $42,189.98 on 28 June 2004 and a payment of $33,853.15 on 1 July 2004 with the annotation of BANK/GOVT FEE REFER LOAN APPROVAL LETTER, but no indication of the origin of that sum. Regardless of the provenance of the $42,189.98, it cannot be said that those monies were not provided for Ms Dos Santos’ use or benefit. In my opinion, they were used for the purpose of purchasing the Werribee property of which Ms Dos Santos became a nine‑tenths owner.
32. The mortgage on the Werribee property was discharged on 22 June 2007. The discharge of mortgage was also registered with the Office of Titles on that day. However, the home loan obtained by Ms Dos Santos and her daughter from the ANZ bank for the purchase of the property was fully repaid on 31 August 2005, almost two years prior to the discharge of mortgage. A closer examination of the discharge of mortgage discloses the mortgagee is listed as Perpetual Trustees Victoria Limited (Perpetual Trustees). That strongly suggests that the property was refinanced in August 2005 with Perpetual Trustees. In fact, in further documents provided to the Tribunal on 10 December 2009, Ms Dos Santos enclosed a bank cheque to Perpetual Trustees in the sum of $175,607.67 dated 21 June 2007. That of course coincides with the discharge of mortgage dated 22 June 2007. Ms Dos Santos also enclosed the covering letter sent to Perpetual Lender’s Mortgage Services seeking a discharge of that mortgage on 18 June 2007.
33. Ms Dos Santos’ explanation of this transaction was quite remarkable, to say the least. Ms Dos Santos claimed that the ANZ bank mortgage was discharged from monies paid by Mr Jorge. She said that a deposit in her access account on 11 July 2006 in the sum of $165,318.93 was used for that purpose. That cannot be correct. The ANZ bank loan was repaid on 31 August 2005. Furthermore, Perpetual Trustees took a mortgage over the property following the discharge of the ANZ mortgage, clearly indicating that Perpetual Trustees advanced the $164,028.69 for the purpose of discharging the ANZ loan. This is despite the fact that Ms Dos Santos attempted to explain the transaction by stating that she and her uncle were cheated out of the $165,000 and had to pay twice for the same property. On the documentary evidence, that is plainly incorrect. If the monies to discharge the loan were provided by Mr Jorge, there would have been no reason to obtain a further mortgage loan from Perpetual Trustees.
34. There are also a number of other substantial deposits for which Ms Dos Santos could not give an explanation. Sixty-five thousand dollars was deposited in her access account on 19 January 2007 and $190,000 on 24 May 2007. There was also a further payment of $20,000 on 12 November 2007. The joint ANZ V2 Plus account received deposits of $10,836.52 on 28 March 2006; $10,000 on 24 May 2007 and $30,000 on 12 July 2007. The source of these monies remained unexplained. At that time, Ms Dos Santos was not working and she had ceased to operate the small business which she had previously operated.
35. Ms Dos Santos also had an ANZ MasterCard account. The records of payments on the MasterCard in the relevant period indicate substantial sums of money being spent on personal items, clearly for the benefit of Ms Dos Santos and/or her daughter. The payment of her credit card accounts was conducted almost exclusively from monies held in her access account. Therefore, in my opinion, it is not open to Ms Dos Santos to claim that the monies in her access account were not available for her personal use or benefit. They clearly were. Therefore, I find that the monies received by Ms Dos Santos between 25 February 2004 and 8 January 2008 in all of the accounts I have referred to above in the amount of $708,671.88 were monies received by Ms Dos Santos for her own use or benefit. Subject to any excluded lump sum payment, they constitute ordinary income for the purposes of calculating the rate payable to Ms Dos Santos in respect of the carer payment for that period. Centrelink recalculated the overpayments received by Ms Dos Santos after taking into account the fact that half of the lump sum payments could be attributed to monies received from her late mother and concluded that she had been overpaid by $43,652.60. I find that to be correct.
does ms dos santos owe a debt to the commonwealth?
36. Under s 1223 of the Act, if a person receives a Social Security payment to which he or she was not entitled, the amount of the payment is a debt due to the Commonwealth and is taken to arise when the person obtains the benefit of the payment.
37. As I have found that Ms Dos Santos received $43,652.60 over the relevant period by way of carer payments to which she was not entitled, that sum is a debt Ms Dos Santos owes to the Commonwealth.
38. Under s 1236(1A) of the Act, the Secretary may write off a debt if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
39. As the Secretary has already recovered the debt in full, the write‑off provisions in s 1236 of the Act do not apply to Ms Dos Santos.
40. Section 1237A provides:
Administrative error
(1)Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note:Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor). …
41. There was no evidence before me that the debt or any proportion of it was attributable solely to an administrative error made by the Commonwealth. Therefore, the waiver provisions under s 1237A do not apply to Ms Dos Santos.
42. There are further discretionary waiver provisions in s 1237AAD of the Act. It provides:
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c)it is more appropriate to waive than to write off the debt or part of the debt.
43. Essentially, the debt arose because Ms Dos Santos failed to notify Centrelink about the additional income she received during the relevant period from other sources, including Mr Jorge. During that period, Centrelink sent Ms Dos Santos a letter on no fewer than 10 occasions stating that she was required to notify Centrelink of any changes to her income within 14 days. She failed to comply with those letters. She therefore cannot rely on s 1237AAD because she failed to comply with the provision of the Social Security (Administration) Act 1999 (Administration Act). In particular, s 68 of the Administration Act applies to a person to whom a social security payment is being paid. Section 68(2) of the Administration Act provides that the Secretary may give a person who is receiving a social security payment a notice to notify Centrelink where the person experiences a change of circumstances which might affect the payments that the person is receiving.
ms dos santos’ claim for carer payment made on 7 october 2008
44. After making a further claim for carer payment in respect of Mr Jorge on 16 October 2008 and again on 20 October 2008, Centrelink sent Ms Dos Santos letters requesting that she provide information to enable Centrelink to assess her claim. Ms Dos Santos did not comply with those requests and on 19 November 2008 Centrelink rejected her application. This was because Centrelink did not receive sufficient information for it to be able to determine whether Ms Dos Santos was entitled to the carer payment.
45. The Secretary has an obligation under s 36(1) of the Administration Act to determine a claim for a social security payment, either by granting that claim or rejecting it. Section 37(1) of the Administration Act provides:
(1)Subject to section 40, the Secretary must determine that a claim for a social security payment is to be granted if the Secretary is satisfied that:
(a)the claimant is qualified for the social security payment; and
(b)the social security payment is payable.
Quite plainly, unless the Secretary is able to determine whether a claimant is qualified for the social security payment claimed, the claim must be rejected. In order to determine whether a person is qualified for a carer payment, the Secretary must consider the matters set in s 198 and s 199 of the Act. The Secretary cannot do so where the applicant has not provided full details of his or her financial circumstances. Therefore, I find that Ms Dos Santos’ claim for carer payment lodged with Centrelink on 7 October 2008 was correctly rejected.
CONCLUSION
46. In the relevant period Ms Dos Santos received some $708,671.88 for her benefit or use. Except for an exempt lump sum of $144,786.68, those monies must be regarded as ordinary income for the purposes of the Act. Because Ms Dos Santos exceeded the maximum permissible income for an eligible recipient of the carer payment, she received social security payments to which she was not entitled. Therefore, Ms Dos Santos owed a debt to the Commonwealth which could not be written off nor should it be waived. It follows that the decision made by the SSAT on 2 April 2009 regarding the debt was correct and I affirm that decision.
47. As for the decision to reject Ms Dos Santos’ claim for the carer payment in respect of Mr Jorge, because Ms Dos Santos failed to provide Centrelink with financial information to enable it to determine her eligibility for the carer payment, her claim was, in my opinion, properly rejected. Therefore, this aspect of the SSAT decision was also correct and I affirm that decision.
I certify that the preceding forty-seven [47] paragraphs are a true copy of the reasons for the decision herein of
Mr Egon Fice, MemberSigned: Dianne Eva
Clerk
Date of Hearing 4 December 2009
Date of Decision 18 February 2010
Self-represented Applicant Ms F Dos Santos
Solicitor for the Respondent Mr B Wee, DLA Phillips Fox
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