Elskaf and Secretary, Department of Social Services (Social services second review)
[2020] AATA 4027
•13 October 2020
Elskaf and Secretary, Department of Social Services (Social services second review) [2020] AATA 4027 (13 October 2020)
Division:GENERAL DIVISION
File Number(s): 2019/1441
Re:Kalid Elskaf
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
Decision
Tribunal:Chris Puplick AM, Senior Member
Date:13 October 2020
Place:Sydney
The decision under review, noting the correction in paragraphs 25 and 26, is affirmed.
................................[sgd]................................
Chris Puplick AM, Senior Member
Catchwords
SOCIAL SECURITY – carer payment – whether deposits in bank account should be treated as Applicant’s ordinary income – overpayment – whether the Applicant owes a debt to the Commonwealth – whether there are any grounds to waive or write off the debt – decision under review affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) s 34J
Social Security Act 1991 (Cth) ss 8, 1072, 1073, 1207N, 1207Q, 1207X, 1207Y, 1208C, 1208D, 1223, 1236, 1237A, 1237AAD
Social Security (Administration) Act 1999 (Cth) ss 68, 72, 192
Cases
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25
Creamer and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 519
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114
Dranichnikov v Centrelink [2003] FCAFC 133
Elskaf and Secretary, Department of Social Services (Social services second review) [2020] AATA 3806
Jess v Scott (1986) 70 ALR 185
Read v The Commonwealth (1988) 167 CLR 57
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Greenham and Minister for Capital Territory (1979) 2 ALD 137
Secretary, Department of Social Security v Hales (1998) 82 FCR 154
Shi v Migration Agents Registration Authority [2008] HCA 31
Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569
Thompson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 585
Secondary Materials
Pearce, Dennis, Administrative Appeals Tribunal (LexisNexis Butterworths, 4th ed, 2015)
REASONS FOR DECISION
Chris Puplick AM, Senior Member
13 October 2020
A decision on the papers
Mr Kalid Elskaf (Applicant) is seeking a review of a decision by the Social Services and Child Support Division of the Tribunal (AAT1) which, on 12 February 2019, made a decision to set aside a decision of a delegate of the Secretary of the Department of Social Services (Respondent) relating to a debt which the Respondent claims is owed by the Applicant to the Commonwealth. The debt is claimed to arise as a result of the Applicant being paid the wrong entitlement of carer payment in relation to his father (Mr Jamal Elskaf).
Following the AAT1’s decision to set aside and substitute the decision of the Authorised Review Officer (ARO), the Applicant’s debt was recalculated in accordance with the AAT1’s findings regarding the income of the Applicant for the period 15 January 2009 to 3 September 2014 (debt period).[1]
[1] Section 37 documents (T documents) at 3-4.
On 18 March 2019 the Applicant applied to the General Division of the Tribunal (AAT2) for a review of the AAT1 decision.
These proceedings have been on foot for an extensive period of time and were first listed for hearing by the AAT2 on 31 October 2019.
At that time the Applicant was legally represented. However, his legal representative subsequently withdrew from the case immediately prior to the hearing scheduled for October 2019 and the Applicant continued in this matter on a self-represented basis.
In addition to his legal representative’s withdrawal, the Applicant also filed a medical certificate immediately prior to the October 2019 hearing indicating that he was unable to participate. The hearing was consequently adjourned and a telephone directions hearing (TDH) listed on 17 December 2019. At the December 2019 TDH it was decided that the hearing would be tentatively listed for 17 March 2020. In February 2020, the Applicant indicated that he would be unable to attend the hearing scheduled and a TDH was held instead on 16 March 2020.
At the March 2020 TDH the Applicant informed the Tribunal that he was seeking to obtain legal representation but that his various attempts were unsuccessful. He also indicated that it would be incredibly difficult for him to attend and participate in any future hearing that was to be listed due to his carer duties for his father.
As a result, the Tribunal sought the positions of both parties as to whether they would agree to the matter being determined on the basis of the written material before the Tribunal. This included any further material that was to be filed with the Tribunal by 8 May 2020 in the case of the Applicant and by 20 May 2020 in the case of the Respondent.
Such a course of action is open to the Tribunal under section 34J of the Administrative Appeals Tribunal Act 1975 (Cth):
Circumstances in which hearing may be dispensed with
If:
(a) it appears to the Tribunal that the issues for determination on the review of a decision can be adequately determined in the absence of the parties; and
(b) the parties consent to the review being determined without a hearing;
the Tribunal may review the decision by considering the documents or other material lodged with or provided to the Tribunal and without holding a hearing.
Both parties consented to this course of action and it is on this basis that the Tribunal has proceeded.
In response to applications by the Applicant, the Tribunal granted extensions of time, on two occasions, for him to file further submissions or evidence until 19 June 2020. The Applicant then requested a further extension of time for filing material. However, this application was refused because, based on the reasons therein given, it would have had the effect of extending indefinitely the time for the Applicant to file further material and to delay indefinitely a decision being made in this matter.
The material before the Tribunal consists of:
(a)section 37 documents (T documents) and supplementary section 37 documents (supplementary T documents) running to 1337 pages;
(b)a statement of facts, issues and contentions prepared by the Applicant’s then-legal representative and filed with the Tribunal on 9 October 2019 (Applicant’s SFIC);
(c)the Respondent’s statement of facts, issues and contentions dated 23 October 2019 (Respondent’s SFIC) and Annexure A: ASIC historical search;
(d)the Respondent’s supplementary statement of facts, issues and contentions dated 28 October 2019 (Respondent’s supplementary SFIC) and attached MultiCal calculations dated 11 March 2019;
(e)the Respondent’s email dated 16 March 2020 advising the Tribunal, at its request, of the Applicant’s alleged outstanding level of debt as at that date.
Respondent’s position
The Respondent has set out its position in its SFIC as follows:[2]
Mr Elskaf has been in receipt of CP [carer payment] since 28 August 2008, on the basis he provided care to his father, Jamal Elskaf.
On the Income and Assets form, provided with the application for CP, Mr Elskaf did not disclose that he was involved in a private company, as he was required to.
ASIC records reveal Mr Elskaf is the sole shareholder and director for the company JFK Developers Pty Ltd ACN 123 958 976 from its registration on 15 February 2007 to 8 July 2014 [sic; scil. 2012] when the company was deregistered.
On 8 February 2017, the Department sent a letter to Mr Elskaf requesting further information. The applicant did not respond to this letter.
On 5 April 2017, the Department raised and recovered debts of $169,206.88 for Mr Elskaf for the period 27 August 2008 to 15 February 2017. On 14 June 2017, an ARO varied the decision, deciding that Mr Elskaf had debts of $105,876.89 in the period 15 January 2009 to 3 September 2014. Mr Elskaf applied to the AAT1 for further review.
On 17 April 2018, the matter was heard in the AAT1. On 12 February 2019, the AAT1 set aside the decision under review and in substitution required the debt to be recalculated on the basis that certain deposits were not ordinary income and with amendments to the derivation and attribution period.
…
The Secretary seeks an order that the matter be remitted for reconsideration.
[2] Respondent’s statement of facts, issues and contentions dated 23 October 2019 (Respondent’s SFIC) at [3]-[8], [65].
Applicant’s position
The Applicant denies that JFK Developers Pty Ltd (Company) had ordinary income in the debt period or that he received any ordinary income in the relevant bank accounts during that period.
In his SFIC, the Applicant asserts:
Contentions
1. The Applicant contends that the Company did not have any ordinary income and should not have been attributed with 100% of the Company's income and assets.
2. The Applicant contends that the deposits into bank account ending #5514, listed on Folios 27 and 28 of the AAT documents and made from 15 January 2009 to 8 July 2012, are not ordinary income of the Company and should not be attributed to him.
3. The Applicant contends that the deposits into bank account ending #5514, listed on Folios 28 to 29 of the AAT documents, which occurred after 8 July 2012, are not ordinary income received by or attributable to him.
4. The Applicant contends that the deposits into bank account ending #1597, listed on Folios 30 of the AAT documents, are not ordinary income received by him.
Status of the AAT1 decision and reasons for decision
The approach to second-tier reviews is outlined in Professor Dennis Pearce’s authoritative text on the Administrative Appeals Tribunal:
The decision under review, as distinct from the reasons for it, must be given no weight by the AAT. The decision is to be reviewed and the correct and preferable decision reached: the original decision itself cannot influence the AAT in reaching its conclusion.[3]
[3] Dennis Pearce, Administrative Appeals Tribunal (LexisNexis Butterworths, 4th ed, 2015) 301, citing Collins v Minister for Immigration and Ethnic Affairs (1981) 4 ALD 198, Commonwealth v Twyman (1985) 8 ALD 554 and Re KLGL and QCYY and Australian Prudential Regulation Authority [2008] AATA 452.
Therefore, whilst reference is made to the AAT1 decision in the course of this Tribunal’s decision-making, weight is given only to the AAT1’s reasons for its decision and the evidence upon which they were based in the process of this Tribunal reaching its own independent determination of the correct or preferable decision.
It is apparent from the AAT1’s reasons for its decision that that Tribunal had the benefit of hearing direct evidence, given under oath or affirmation, from the Applicant. In his application for review to this Tribunal, the Applicant has challenged the AAT1’s findings simply by stating that none of the deposits in question should be attributed to him or assessed as income received by him. His formal position is as recorded in paragraph 15 above.
However, in advancing these propositions, the Applicant has not submitted any further corroborative or probative evidence to support such contentions, other than that which was before the AAT1 at the time of its hearing in 2018.
Under these circumstances the Tribunal is prepared to accept that the AAT1’s record of the evidence presented by the Applicant to it are correct and accurate and should be accepted, and that that Tribunal’s record of the Applicant’s submissions should be treated likewise. The veracity of the evidence presented and recorded by the AAT1 (and included in the T documents) has not been challenged by the Applicant or Respondent, although both parties dispute the conclusions drawn by the AAT1.
Nevertheless, the AAT1’s conclusions or findings arising from such evidence are in no way binding on this Tribunal which must come to its own independent conclusions arising therefrom, albeit informed on some matters by the record in the AAT1’s reasons for its decision.
Before the AAT1
The AAT1 had before it extensive records of the bank accounts controlled or operated by the Applicant, either in his sole name or in association with his father. The AAT1 requested (following a request to do so by the Applicant) the Respondent to obtain further information from the ANZ Bank which was put before that Tribunal as part of its proceedings. The AAT1 also had the benefit of hearing direct sworn evidence from the Applicant.
The AAT1 examined the bank records and in particular paid attention to a number of deposits into various bank accounts which the Applicant claimed were for specific purposes and should not be regarded as ordinary income.
The AAT1 made its decision as follows:
The Tribunal sets aside the decision under review and, in substitution, decides that:
1. Mr Elskaf’s entitlement to carer payment in the period from 15 January 2009 to 3 September 2014 to (sic) is to be recalculated on the basis that:
a. Mr Elskaf was the sole attributable stakeholder of JFK Developers Pty Ltd (the company) until 8 July 2012 and is to be attributed with 100% of the company’s income and assets pursuant to Part 3.18 of the Social Security Act 1991,
b. Bank deposits into the company’s ANZ bank account ending in #5514, listed at Folios 27 and 28 of the Tribunal documents, and made from 15 January 2009 to 8 July 2012, are to be assessed as ordinary income of the company and attributed to Mr Elskaf, with the exception of the deposit of $448,000 made on 16 March 2009 which is not ordinary income
c. Pursuant to sections 1208, 1208C and 1208D of the Act, the company’s derivation periods and their corresponding attribution periods in the relevant periods are to be assessed as follows:
Derivation period Attribution period 15 Jan 2009 – 30 June 2010 15 Jan 2009 – 30 June 2010 1 Jul 2010 – 30 June 2011 1 Jul 2010 – 30 June 2011 1 Jul 2011 – 30 June 2012 1 Jul 2011 – 8 July 2012 d. Any deposit into the ANZ bank account ending in #5514 listed on Folios 28 to 29 which occurred after 8 July 2012 is taken to be a sum of ordinary income received by Mr Elskaf and assessed pursuant to section 1073 of the Act from the date of each receipt.
e. The amounts deposited into Mr Elskaf’s Commonwealth Bank account ending in #1597 and listed on Folio 30 of the Tribunal documents are ordinary income, except for the following:
19 November 2009 $38,2580.00 (sic) 8 February 2010 $1,843.20 29 March 2012 $1,496.00 4 March 2016 $1,614.80 f. The debt, as recalculated, is to be recovered from Mr Elskaf.
It is noted that in relation to the 19 November 2009 deposit into the Commonwealth Bank account ***1597, it appears the AAT1 has made a typographical error in its decision by referring to a withdrawal made on 24 November 2009 from that account, being $38,250, instead of the deposited amount, being $38,258.79.
The parties in their SFICs have proceeded on the basis that the correct figure for the amount deposited into ***1597 on 19 November 2009 was $38,258.79.[4] The Tribunal will also proceed on this basis, that “$38,2580.00” reads “$38,258.79”.
[4] Applicant’s statement of facts, issues and contentions (Applicant’s SFIC) at [18]; Respondent’s SFIC at [47].
Before this Tribunal
This Tribunal is required to approach its deliberations on a de novo basis and, further, it is required to take into account any material presented to it, including any material which may not have been before the original decision-maker.
In reaching its decision, the Tribunal is not restricted to the material that was before the decision-maker any more than the decision-maker himself is so restricted. The decision-maker may adduce evidence that was not available to him when he made his decision and he may, in the light of that evidence, or upon re-consideration of the decision, even abandon or modify the reasons upon which he originally relied. The absence of a hearing before the decision-maker and the Tribunal's powers to gather evidence make it unthinkable that the Tribunal should be limited to the material before the decision-maker.[5]
Davies J acknowledged that regard might be had to the decision of the primary decision-maker as part of the "material before the Tribunal", particularly where it involved special expertise or knowledge. But ultimately, it was for the Tribunal to reach its own decision upon the relevant material including any new, fresh, additional or different material that had been received by the Tribunal as relevant to its decision. In effect, this was no more than a consequence of the Tribunal's obligation to conduct a true merits review.[6]
[5] ReGreenham and Minister for Capital Territory (1979) 2 ALD 137, 141. Citations omitted.
[6] Shi v Migration Agents Registration Authority [2008] HCA 31, [37].
The difficulty faced by this Tribunal, however, is that there is no new material before it which was not before the AAT1 other than advices from the Respondent as to the accrued level of current debt for which it is seeking recovery.
The Applicant has not submitted any additional material although he was provided with an opportunity (and extensions) to do so subsequent to his hearing originally scheduled for October 2019 and before a decision was to be made on the papers. To that extent, this Tribunal must rely upon the AAT1’s unchallenged reporting of the evidence which he gave, under oath or affirmation, at that hearing.
Nevertheless, this Tribunal must decide for itself whether:
(a)monies deposited in two bank accounts – one being that of the Company and the other a personal account in the name of the Applicant – should be regarded as ordinary income in the hands of the Applicant,
(b)the Applicant had ordinary income which exceeded the amount he declared to the Department for the debt period,
(c)an overpayment of carer payment to the Applicant was made giving rise to a debt owing to the Commonwealth, and
(d)the debt is to be recovered from the Applicant.
The bank accounts
There are two bank accounts relevant to this application.
Bank account ***5514 is an account with the ANZ Bank held in the name of JFK Developers Pty Ltd. Its signatories are Kalid Elskaf and Jamal Elskaf. It was opened on 22 February 2007 and closed on 9 January 2014.[7]
[7] T documents at 224. Information produced by ANZ Bank pursuant to a notice from the Respondent under section 192 of the Social Security (Administration) Act 1999 (Cth).
Bank account ***1597 is an account with the Commonwealth Bank held in the name of Kalid Elskaf who is the sole signatory. It was opened on 29 August 2008 and was still operational at the time of the Tribunal’s determination.[8]
[8] Ibid 80 and 88.
the Company – Attribution – The Applicant
The Company was registered on 15 February 2007 with the Applicant as the sole shareholder and director, and it was deregistered on 8 July 2012. The ABN for this Company was cancelled on 24 June 2014.[9]
[9] Ibid 305 and 320.
Part 3.18 of the Act deals with the “means test treatment of private companies and private trusts”.
Division 7 of Part 3.18 (sections 1207Y – 1208D) deals with the “attribution of income of controlled private companies and controlled private trusts”.
The question arises as to whether JFK Developers Pty Ltd was a designated private company controlled by the Applicant. The answer to that is clearly in the affirmative.
Section 1207N of the Social Security Act 1991 (Cth) (Act) sets out the criteria to establish whether or not a company is a “designated private company”. It will be held to be such if it satisfies at least two of the conditions specified in that section. Subparagraphs 1207N(1)(a)(i) and (iii) relate to the consolidated revenue and maximum number of employees of the organisation in the relevant financial year, and the Company in question satisfies those conditions.
As the Applicant was the sole director, secretary and shareholder of the Company,[10] he therefore passes the “control test” in section 1207Q(2).
[10] Annexure A: ASIC historical research to the Respondent’s SFIC.
Thus, as the Company was a designated private company and as the Applicant passes the control test, JFK Developers Pty Ltd was therefore a controlled private company in relation to the Applicant.[11]
[11] Social Security Act 1991 (Cth) (Act) s 1207Q(1).
Section 1207X then provides:
Attributable stakeholder, asset attribution percentage and income attribution percentage
Company
(1) For the purposes of this Part, if a company is a controlled private company in relation to an individual:
(a) the individual is an attributable stakeholder of the company unless the Secretary otherwise determines; and
(b) if the individual is an attributable stakeholder of the company – the individual's asset attribution percentage in relation to the company is:
(i) 100%; or
(ii) if the Secretary determines a lower percentage in relation to the individual and the company – that lower percentage; and
(c) if the individual is an attributable stakeholder of the company – the individual's income attribution percentage in relation to the company is:
(i) 100%; or
(ii) if the Secretary determines a lower percentage in relation to the individual and the company – that lower percentage.
It follows, and without compelling evidence from the Applicant indicating otherwise, that the Applicant is the sole attributable stakeholder of the Company and as a result should be attributed with 100% of the assets and income of the Company.
Applying the formula then set out in section 1207Y, the Applicant as the sole attributable stakeholder must be attributed with, or be taken to have received, during the attribution periods, 100% of the ordinary income of the Company derived during the derivation periods.
The Act refers to two relevant periods of time – the “derivation period” which generally equates with the tax year (or part thereof) where a company has been in existence throughout (or during a part of) a tax year,[12] and an “attribution period” which is defined in section 1208D as:
[12] Act s 1208C.
Attribution periods
(1) The Secretary may, by writing, determine that, in the event that a specified individual is an attributable stakeholder of a specified company or trust at a specified time (the start time):
(a) a period beginning at the start time and ending at whichever is the earlier of the following times:
(i) the later time specified in the determination;
(ii) the time when the individual ceases to be an attributable stakeholder of the company or trust;
is an attribution period for the purposes of the application of this Part to the individual and the company or trust; and
(b) that attribution period relates to a specified derivation period of the company or trust.
Attribution periods may, but are not required to, overlap (in whole or in part), or be of the same length as, the derivation periods.[13]
[13] Ibid 1208D(4) and (5).
Given the fact that an assessment in relation to this Applicant is being made retrospectively, the Respondent accepts the AAT1’s determination that the income in question should be considered as derived over a financial year with the exception of the start date of the first derivation period, and that the attribution and derivation periods should align with the exception of the end date of the last attribution period.[14] This Tribunal sees no reason not to follow that course of action.
[14] T documents at 12 [54]-[57]; Respondent’s SFIC at [33]-[34].
What is ordinary income?
Pursuant to section 1072 of the, Act the general meaning of ordinary income is as follows:
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.
It is also defined in subsection 8(1) of the Act as “income that is not maintenance income or an exempt lump sum”.
Subsection 8(11) provides the definition of exempt lump sum as follows:
(11) An amount received by a person is an exempt lump sum if:
(a) the amount is not a periodic amount (within the meaning of subsection (11A)); and
(b) the amount is not a leave payment within the meaning of points 1067G‑H20, 1067L‑D16 and 1068‑G7AR; and
(c) the amount is not income from remunerative work undertaken by the person; and
(d) the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.
Note: Some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift—if it is a one‑off gift.
Income is also defined in subsection 8(1) of the Act:
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).
Subsection 8(2) of the Act also states that:
A reference in this Act to an income amount earned, derived or received is a reference to:
(a) an income amount earned, derived or received by any means; and
(b) an income amount earned, derived or received from any source (whether within or outside Australia).
Section 4.3 of the Social Security Guide is entitled “Ordinary Income” and sets out in detail what income is to be included and what is to be excluded according to the overarching definition given in section 8 of the Act.
The definition of what constitutes income for the specific purposes of the Act, as distinct from any other purposes (for example, tax legislation), was explained by the High Court as follows:
The definition is exhaustive: the term ‘income’ means what it is defined to mean; it does not mean what ‘income’ would be understood to mean if the definition were not in the Act. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide.[15]
[15] Read v The Commonwealth (1988) 167 CLR 57, [69] per Brennan J, specifically in reference to the Social Security Act 1947 (Cth).
The Court’s decision is not only definitional, but it also evokes the underlying purpose of the social security legislation, namely, to provide taxpayer funded support to those in genuine need and not those who are able to manage from their own resources.
Deposits in account ***5514 (ANZ – JFK Developers Pty Ltd)
Consideration of the deposits falls into two periods, the first while the company was operational (15 January 2009[16] to 8 July 2012), and the second while the account remained open but after the company had been deregistered (9 July 2012 to 9 January 2014).
[16] This date being the start of the debt period. However, the Tribunal notes again that the Company was registered since 15 February 2007.
In paragraphs 1 and 2 of the Applicant’s statement of contentions to the Tribunal (see paragraph 15 above), the Applicant makes a simple claim that deposits into this account were not ordinary income. The Applicant has not advanced, before this Tribunal, any new and probative evidence to support this claim.
The Applicant provided to the AAT1 certain evidence which, in effect, claimed that payments into this account while the Company was operational were derived largely from deposits made by family members for the purposes of undertaking the development of a block of units on adjacent land owned separately by his brother (Mr Ahmed Elskaf) and his mother (Mrs Ferdous Elskaf).[17]
[17] Details of this development are discussed in detail in Elskaf and Secretary, Department of Social Services (Social services second review) [2020] AATA 3806.
The Applicant’s evidence was put to, and examined by, the AAT1. That Tribunal came to the conclusion that the deposits into this account during the first period were ordinary income received by the Company for its use and should be treated as such without any deductions due to the limited evidence presented by the Applicant to indicate otherwise.
As the Applicant has advanced no evidence before this Tribunal over and above what was presented to the AAT1, this Tribunal can only proceed by reference to the material before it in the T documents.
The Tribunal has before it extensive records from ANZ in relation to the account in question and it has examined these in detail.[18] With the exception of one credit and debit transaction discussed below, none of the evidence shows that the deposits received into this bank account were for a use or benefit other than that of the Company or that the deposits were not for the use or benefit of the Company.
[18] T documents at 224-294.
There is only one obvious and correlated credit/debit transaction in the sum of $448,000 which was credited to the account on 16 March 2009 and withdrawn on 30 March 2009.[19]
[19] Ibid 233-234.
In relation to the $448,000 transaction, the AAT1 accepted that this was not ordinary income but rather represented an ANZ business equity loan taken out in the name of the Applicant’s ex-wife which, following her objections, was reversed.[20] Therefore, it was not treated as ordinary income of the Company. This Tribunal also accepts that it should not be treated as ordinary income because it was not received by the Company for its own use or benefit.
[20] Ibid 10 [44]-45].
On 14 December 2009 and 10 February 2010 credits are shown for $14,248.08 and thereafter, on a monthly basis, from March 2010 to April 2012 there are credits of $7,124.04 (March 2012 excepted).
The Applicant claims that the regular payments of $7,124.04 were payments by way of rent from a commercial property owned by his brother Mr Mohammed Elskaf. His claim made before the AAT1 was that this money was paid into the Company’s account in order to shield it from being accessed by Mohammed who had a gambling problem which the family attempted to control through this arrangement. No evidence on this point was presented to this Tribunal, however the claim was considered and assessed in detail by the AAT1 which found that it lacked credibility.[21] The evidence does not demonstrate that deposits of such monies were not received by the Company for its own use or benefit and thus these amounts should be treated as ordinary income of the Company and attributable to the Applicant.
[21] T documents at 10 [47] –11.
On 8 May 2012 (before the deregistration of the Company on 8 July 2012) there are three transactions involving the deposit (by card) of $100,000, followed by reversal of this amount on the same day, and then withdrawal of the same amount again on the same day.[22]
[22] Ibid 271.
While there is evidence which was accepted by the AAT1 in relation to the $448,000 transaction there does not appear to have been any evidence before it in relation to either of the three substantial transactions identified above or, if there was, it did not persuade the AAT1 to exclude them from being taken as ordinary income. No evidence at all was put before this Tribunal in relation to those (or indeed, any other) transactions and hence there is no reason for this Tribunal to disturb the findings of the AAT1 in relation to them. They are taken to be ordinary income.
There is no evidence before this Tribunal (other than in relation to the $448,000 transactions) which explains any of the transactions in this ANZ account before the deregistration of the Company which would led it to conclude that the monies in the account were anything other than ordinary income of the Company and attributable to the Applicant, or that there was any reason why they should be reduced for the purpose of assessing the Company’s level of income.
In relation to the ANZ transactions in the second period (after deregistration of the Company), again there is no evidence from the Applicant that the monies were anything other than income, and in this period it would not have been possible for any discounts on that income to be contemplated as related to any business activities.
The Applicant made a claim before the AAT1 that this account was also used to assist with monies related to a car dealership operated by his brother Mr Ali Elskaf. It was asserted that this account was used in part because Ali had “gambling and drug problems” and monies from the car dealership were placed into the Applicant’s bank account “to prevent Ali from spending the money unwisely”.[23] As noted above, exactly the same was said about the use of this account to shield his brother Mohammed who also allegedly had ”issues with gambling”.[24]
[23] T documents at 11 [48].
[24] Ibid 10 [470.
The AAT1 found these claims to be lacking in credibility and unsubstantiated by any evidence. They were described as being “convenient explanations” and “completely opaque”.[25] In light of the fact that nothing has been presented to this Tribunal to contest those specific findings, that position is adopted by this Tribunal.
[25] Ibid 11 [48]-[50].
These deposits cannot be linked to the operation of the Company which had been deregistered by this time. However, the bank account continued to be controlled and operated by the Applicant. Therefore, the deposits are to be assessed as ordinary income received by the Applicant.
As the deposits from 9 July 2012 are non-remunerative, not periodic payments and not exempt lump sums, the AAT1 and the Respondent have assessed them in accordance with subsection 1073(1) of the Act.[26]
[26] Ibid [58]; Respondent’s SFIC at [43]-[44].
It is not actually clear on the simple reading of that subsection that the carer payment is caught by the provision. Subsection 1073(2)(a) to (f) gives a specific list of six types of designated social security payments and allowances to which subsection (1) is said to apply, none of which is the carer payment. However, reliance on the section has been advanced by the Department on the basis that it “simply modifies or reinforces its application in respect of the entitlements at subsections (a) to (f)”[27] and that, in dealing with a similar issue related to age pension, “[t]here is nothing in s1073 which indicates that the list of allowances set out in the subsection is intended to be exhaustive or exclusive. The fact that the aged pension is not specifically mentioned in s1073 does not mean that s1073 does not apply”.[28] Following these previous Tribunal decisions, this Tribunal accepts that section 1073 also operates in relation to the carer payment despite its not being specifically designated within that section.
[27] Thompson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 585, [27].
[28] Ibid, [44]. See also Creamer and Secretary, Department of Families, Community Services and Indigenous Affairs [2006] AATA 519.
Deposits in account ***1597 (CBA – Kalid Elskaf)
This account was held solely in the name of the Applicant and he is the sole signatory. It was used as a general personal account and all the Applicant’s social security payments were made directly into it.[29]
[29] T documents at 107-223.
There are two transactions in this account which the Applicant claims relate to payments he received by way of insurance payments following damage to a motor vehicle which he told the AAT1 belonged to his brother Ali but that he was driving and for damage during another motor vehicle accident. He claims that deposits of $38,258.79 (19 November 2009) and $1,843.20 (8 February 2010) refer to those payments.[30] What appears to be a corresponding withdrawal of $38,250.00 took place on 24 November 2009.[31]
[30] Ibid 103 and 107, respectively. However, in his statement to the AAT1, the Applicant dates the car insurer payment cheque for $38,258.79 to be 19 September 2009 and refers to the vehicle in question as “my motor vehicle”: T documents at 333.
[31] Ibid 103.
There are two further transactions which allegedly relate to a loan from his brother (Mr Ahmed Elskaf) and a refund of a rental bond paid by the Applicant’s ex-fiancé. The first of these was in the sum of $1,496.00 (29 March 2012) and the second for $1,614.80 (4 March 2016).[32]
[32] Ibid 128 and 214, respectively.
The AAT1 accepted these deposits should not form part of the assessment of the Applicant’s ordinary income[33] and, based on the AAT1’s finding that the evidence received directly from the Applicant regarding these deposits were specific and credible, this Tribunal sees no reason to depart from that assessment, despite the Respondent’s challenge on this point.[34] The Tribunal does not consider that these deposits were amounts received by the Applicant for his own use and therefore they are not to be treated as ordinary income.
[33] T documents at 13 [60].
[34] Respondent’s SFIC at [48].
Conclusions
It is clear that the accounts held by the Applicant disclose monies which fall within the definition of “ordinary income” and that they are attributable to him for the purposes of the Act. The only sums which do not meet these criteria are those specifically outlined above, viz:
·$448,000 from account ***5514 (ANZ – JFK Developers Pty Ltd): being a reversed loan deposit,
·$38,258.79 and $1,843.20 from account ***1597 (Kalid Elskaf): being two insurance payouts, and
·$1,496.00 and $1,614.80 from account ***1597 (Kalid Elskaf): being a loan and a rental bond refund.
All other monies in both accounts are ordinary income attributable to, or received by, the Applicant during the debt period.
Do these findings give rise to a debt?
As the Applicant had not declared any income or assets to the Department,[35] and as he had undisclosed income as discussed above, he therefore had ordinary income which exceeded the amount he declared to the Department for the debt period.
[35] Ibid [51]-[52].
This would have affected the calculation of his entitlement to carer payment during the period 15 January 2009 to 3 September 2014. The Applicant failed to disclose this income on either his relevant Claim for Carer Payment; his Centrelink Asset and Income Form or his Carer Allowance Questionnaire.[36] He also failed to provide the Department with updated information once his circumstances had changed.
[36] Supplementary section 37 documents at 1267-1284; 1285-1310; and 1311-1315, respectively.
As the Applicant was paid carer payment greater than his level of entitlement, the amount to which he was not entitled represents an overpayment made to him and is a debt due to the Commonwealth.[37] The Applicant’s current outstanding debt, as indicated by the Respondent in its supplementary SFIC, is $105,078.36.
[37] Act s 1223(1).
Is there any reason why the debt should not be recovered?
The Act establishes that overpayments are debts to the Commonwealth and are legally recoverable unless it can be shown that the debt should be waived because it has arisen as a result of a sole administrative error on the part of the Department (section 1237A), the debt should be written off because it is effectively irrecoverable at law, the debtor has no capacity to repay the debt, the debtor’s whereabouts are unknown or it is not cost effective to recover the debt (section 1236), or there are “special circumstances” why it should be waived (section 1237AAD).
There is no suggestion that there has been any sole administrative error on the part of the Department.[38]
[38] Ibid 1237A.
In terms of whether the debt should be written off, the conditions in subsection 1236(1A) are not met. The Applicant has not provided evidence that he has no capacity to repay the debt. Suffice to say that the Applicant has assets and that matters such as this can be subject to arrangements made between an individual debtor and the Respondent.
In terms of whether the Applicant’s debt can be waived pursuant to section 1237AAD, as with so many key concepts in the Act, the term “special circumstances” is not given any precise definition. Without going into extensive detail, it can be said that the courts have identified a number of factors which go to establishing whether or not “special circumstances” exist. They must be:
(a)something more than ordinary or usual[39]
(b)markedly different from the usual run of cases – not necessarily unique but having a particular quality of unusualness[40]
(c)attuned to the individual circumstances of each case[41]
(d)not so rigidly applied as to risk harsh or unreasonable outcomes[42]
(e)supportive of the overall integrity of the social security system and recognising the public interest in ensuring that public monies are recovered where they can and should be.[43]
[39] Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25; Jess v Scott (1986) 70 ALR 185, 193; Dranichnikov v Centrelink [2003] FCAFC 133, [66].
[40] Re Beadle and Director-General of Social Security (1984) 6 ALD 1, 3.
[41] Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, [80].
[42] Secretary, Department of Social Security v Hales (1998) 82 FCR 154, 162.
[43] Skinner and Secretary, Department of Social Services (Social services second review) [2015] AATA 569, [48]; Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114, [80].
The Tribunal does not find there are “special circumstances” in this instance that make it desirable for the debt to be waived.
Furthermore, for a debt to be waived where there are special circumstances it must also be clear that the debt did not result wholly or partly from an applicant “knowingly” failing or omitting to comply with provisions of the Act or the Social Security (Administration) Act 1999 (Cth) (Administration Act) (section 1237AAD(a)(ii) of the Act). The Respondent asserts that the Applicant, by not responding to various letters sent to him pursuant to subsection 68(2) of the Administration Act requiring him to keep the Department updated with any changes in his personal circumstances[44] and by not responding in the required timeframe,[45] “knowingly” failed or omitted to comply with provisions of the Administration Act.
[44] T documents at 995-1260.
[45] Social Security (Administration) Act 1999 (Cth) s 72(3)(b).
The Tribunal is of the view that given the number of notices sent to the Applicant, he was informed, and given multiple opportunities to gain knowledge, about his obligations to provide the required information to the Department. As such, in addition to special circumstances not being made out, the Applicant’s debt resulted wholly from him knowingly failing or knowingly omitting to comply with the requirements of the notices.
Given that no circumstances apply for the Applicant’s debt to be written off or waived, the debt should therefore be recovered by the Commonwealth.
DECISION
The decision under review, noting the correction in paragraphs 25 and 26, is affirmed.
I certify that the preceding 91 (ninety-one) paragraphs are a true copy of the reasons for the decision herein of Chris Puplick AM, Senior Member
................................[sgd]................................
Associate
Dated: 13 October 2020
Date(s) of hearing: 29 July 2020 Date final submissions received: 7 July 2020 Applicant: In person Solicitors for the Respondent: Dr S Thompson, Sparke Helmore Lawyers
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