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

[2017] AATA 1180

Ma and Secretary, Department of Social Services (Social services second review) [2017] AATA 1180 (4 July 2017)

Division:GENERAL DIVISION

File Number:           2016/1626

Re:Wenhong Ma

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Professor M J McGrowdie, Senior Member

Date:4 July 2017

Date of written reasons:        1 August 2017

Place:Sydney

The Tribunal sets aside the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal made on 22 February 2016 and remits the matter to the Respondent for reconsideration with the directions set out in these written reasons.

...............................[sgd].........................................

Professor M J McGrowdie, Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayment of Newstart Allowance – whether the Applicant has a recoverable Newstart Allowance debt – whether payments into the Applicant’s bank accounts are to be treated as income – rental income – domestic payments – deposits from the Applicant’s family members – decision set aside and remitted for reconsideration

LEGISLATION

Social Security Act 1991 (Cth), ss 8, 1068(G6)

SECONDARY MATERIALS

Guide to Social Security Law, Version 1.233

REASONS FOR DECISION

Professor M J McGrowdie, Senior Member

1 August 2017

1. At the conclusion of the hearing of this matter on 4 July 2017, the terms of the decision intended to be made were given orally. The Tribunal served both parties with a copy of the order outlining the decision that was made shortly after. On 4 July 2017, pursuant to section 43(2A) of the Administrative Appeals Tribunal Act 1975 (Cth), the Applicant requested the Tribunal provide written reasons for its decision. The written reasons are set out below.

   INTRODUCTION

2. The Applicant seeks review of a decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal (“AAT1 decision”) made on 22 February 2016. The AAT1 decision affirmed a decision made by an Authorised Review Officer of the Department of Social Services (“the Respondent”), that the Applicant has a recoverable Newstart Allowance debt totalling $21,990.42 for the period of 25 February 2008 to 2 April 2010 ( the ‘relevant period’).

3. The Applicant disputes numerous payments made to him during the relevant period that were treated by the Respondent as income within the meaning of s 8(1) of the Social Security Act 1991 (“the Act”). The hearing occupied a considerable amount of time and many items were argued. At the conclusion of the hearing, the Tribunal determined how various items should be treated and issued a Decision to that effect.

4. The Applicant had a cleaning business until February 2008. He has a house, upon which he owed monies, and rented rooms in the house. The Applicant has, and is, pursuing university education. The Applicant managed his affairs in a very complicated way. The following paragraphs deal with the various receipts of money by the Applicant in the relevant period.

   ISSUE

5. Briefly, the issue is whether certain amounts deposited into the Applicant’s Commonwealth Bank of Australia account (“CBA account”) and Westpac bank accounts (“Westpac accounts”) were income within the meaning of section 8(1) of the Act.

   LEGISLATION

6. The legislation provides for an income tested benefit. Not all receipts are treated as income. Section 8(1) of the Act defines income as follows:

   "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).

7. The amounts excluded under subsections 8(4),(5) and (8) are limited.

   CONSIDERATION

8. The various payments deposited by the Applicant as being ‘income’ fall within a number of categories as follows.

   Rental income

9. At the Applicant’s house, he rented out rooms to boarders. Rental income received from boarders are treated as 70% (and not 100%) as income, less interest payments made in the relevant period by way of any registered mortgage on the Applicant’s residence, in accordance with clause 4.3.8.40 of the Respondent's Guide to Social Security Law (‘the Guidelines’). This section of the Guidelines sets out how to treat income from boarding and lodging situations. Generally. the receipts from boarders should be treated as falling within this category

10. Security bonds received from boarders are not to be treated as income as such payments do not constitute rental or other income.

    Domestic payments 

11. During the relevant period, the Applicant sold a variety of items which the Applicant argued were of a personal or domestic kind. As mentioned previously, the Applicant had a former cleaning business which traded under the name of “A1 Cleaning Service”. The Tribunal considers it appropriate that the Respondent is to exclude any domestic payments provided they do not appear on ‘A1 Cleaning Service’ tax invoices during the relevant period, except where the Tribunal has specifically allowed below.

12. It is the Tribunal’s view that the following deposits totalling $5,600 into the Applicant’s CBA account are sales of domestic items and should not be treated by income:

    ·one carpet cleaner at $1600, deposited into the Applicant’s account on 26 March 2009;

    ·one scaffolding platform at $400, deposited into the Applicants account on 25 March 2009;

    ·one further scaffolding platform, $300 , deposited into the Applicant’s account on 26 March 2009; and

    ·one floor sander at $3300, deposited into the Applicant’s account on 26 March 2009.

    Payments from the Applicant’s sister

13. In respect of the payments from the Applicant’s sister to the Applicant during the relevant period into the Westpac bank account as set out on pages 8, 9, 10 of the Respondent’s amended Statement of Facts, Issues and Contentions (‘SFIC’) dated 4 November 2016, the Tribunal cannot be satisfied on the evidence available that, on balance, the payments fall within an exception (to income). The Applicant had agreed that the payments from his sister should not be treated as income. However, the evidence with regards to the receipts provided by the Applicant was both complicated and unclear, and did not satisfy any requirement that these payments should be excluded from the wide notion of income as exists under the legislation.

    Deposits into the Applicant’s bank accounts

14. This issue relates to payments into the Applicant’s Westpac accounts and are detailed in the Respondent’s SFIC dated 4 November 2016.

    Payments from the Applicant’s parents

15. The payments from the Applicant’s father to one of the Applicant’s Westpac accounts were four deposits of $4,982 between 11 March 2008 and 8 May 2009. During the hearing, the Applicant gave evidence that he had an accommodation agreement with his parents, who were coming for a particular term, but that term was reduced by 75 per cent, because of difficulties that the Applicant’s mother had with the stairs at the front of the Applicant’s house.  The Applicant’s parents then moved to the Applicant’s sister’s place and the Applicant regarded the payments, to the extent that they exceeded payment for the period of their stay, as loans.  The Tribunal accepts that the first payment of $4,982, provided it falls within the relevant period, should be treated as rental. 

16. The payment of $4,982 from the Applicant’s father to the Applicant on 11 March 2008 is to not be treated as income pursuant to section 1068(G6) of the Act and 4.3.8.40 of the Guidelines.

17. In respect to the two payments of $4,982 made on 6 May 2008 and 26 May 2008 the Tribunal is satisfied, on the Applicant’s evidence, that the money was initially paid by way of rent or monies for accommodation and that, as accommodation was only required for a period of the time, the balance would be repayable to avoid the Applicant being unjustly enriched by the transaction. The Tribunal is satisfied that the intention was to pay the Applicant those moneys by way of rent and the requirement for accommodation reduced from 100 per cent, which was the initial period proposed, down to 25 per cent. Accordingly, there is some entitlement to a refund of the overpayment.

18. The final payment of $4,982 received on 8 May 2009 does not fall into this category and was long after any rental/accommodation agreement had been terminated. Accordingly, the Tribunal cannot be satisfied that it was for rental/accommodation. All of the other payments referred to were in 2008.  The supposed supplementary agreement at page 51 of exhibit A1 is dated 13 January 2009. The Tribunal cannot be satisfied that it was for rental/accommodation even though of the same amount and does not regard it as an exception to income.

19. There remains a collection of other items which are to be dealt with. These are referred to in the Respondent’s further submissions dated 26 May 2017. The $250 deposited on 20 April 2009, and later withdrawn by the Applicant, should be treated as income as it does not appear, as initially argued by the Applicant, that the withdrawal shows that it was his money deposited and withdrawn again by him. In the absence of evidence to the contrary, this amount could be treated as income.   

20. The deposit of $3,210 on 8 June 2009 should not be treated as income as $2,180 of this sum is to be treated as the payment of a bond for the Applicant’s property and $1050 is to be treated as the sale of assets to a tenant, being a fish tank, fish and wardrobe.

21. The deposit of $1,600 on 28 September 2008 should not be included as income in total and should be treated as bond to the sum of $800 and the remaining sum of $800 as rent (that is, 70% less the registered mortgage interest offset (the mortgagees registered on title)).

22. As to the deposit of $100 on 16 December 2009, this should be regarded as income and is not pressed by the Applicant to be otherwise

    The Applicant’s submissions

23. In the course of the proceedings, the Applicant raised a number of legal arguments. Firstly, the Applicant argued that the Respondent should have written off the debt upon the basis that it would be cost-effective. This is a matter for the Respondent.

24. Secondly, the Applicant raised the question of a limitation period. The Respondent has consistently pursued the debt. The fact that it hasn’t affected any recovery is due, to a major degree, on the Applicant’s opposition to the Respondent’s claim.

25. Thirdly, the Applicant raised the issue of estoppel in regards to the Respondent’s claims in respect to monies received from his parents and from his sister. In the Tribunal’s view, there has been nothing done by the Respondent which would lead to the Respondent being estopped from arguing the monies received by the Applicant from his parents and his sister were income. In the Tribunal’s determination, however, The Tribunal has decided that some monies received by the Applicant from his parents to be deemed as rental payments rather than income.

26. In summary, the Applicant’s argument that, in these proceedings, the Respondent is estopped from arguing the monies received from his sister, is not made out. The amount of debt owing by the Applicant is to be calculated in accordance with the Tribunal’s directions. 

    DECISION

27. The Tribunal sets aside the decision of the Social Services and Child Support Division of the Administrative Appeals Tribunal made on 22 February 2016 and remits the matter to the Respondent for reconsideration with the following directions:

    (a)Rental income received from boarders are to be treated as 70% (and not 100%) as income, less interest payments made in the relevant period by way of any registered mortgage on the Applicant’s residence, in accordance with clause 4.3.8.40 of the Guidelines.

    (b)Security bonds received from boarders are not to be treated as income.

    (c)The Respondent is to exclude any domestic payments provided they do not appear on ‘A1 Cleaning Service’ tax invoices during the relevant period, except where the Tribunal has specifically allowed.

    (d)The following deposits totaling $5,600 into the Applicant’s bank account are sales of domestic items and should not be treated as income:

Item	Date	Amount
Scaffolding	25 March 2009	$400
Scaffolding	26 March 2009	$300
Carpet Cleaner	26 March 2009	$1,600
Floor sander	26 March 2009	$3,300

(e)In respect of the payments from the Applicant’s sister to the Applicant during the relevant period, into the Westpac account ‘0456’ as set out on pages 8, 9, 10 of the Respondent’s amended SFIC dated 4 November 2016, the Tribunal cannot be satisfied on the evidence available that, on balance, the payments should be excluded from income.

(f)In respect to payments into the Applicant’s Westpac account ‘2659’ and detailed in the Respondent’s SFIC dated 4 November 2016:

(i)the payment of $4,982 from the Applicant’s father to the Applicant on 11 March 2008 is to not be treated as income pursuant to s 1068(G6) of the Act and 4.3.8.40 of the Guidelines;

(ii)in respect to the two payments of $4,982 made on 6 May 2008 and 26 May 2008, the Tribunal is satisfied, on the Applicant’s evidence, that the money was initially paid by way of rent or monies for accommodation and that, as accommodation was only required for a period of the time, the balance would be repayable to avoid the Applicant being unjustly enriched by the transaction;

(iii)the final payment of $4982 not made until 8 May 2009 does not fall into this category and was long after any rental/accommodation agreement had been terminated. Accordingly, the Tribunal cannot be satisfied that it was for rental/accommodation.

(iv)$250 deposited on 20 April 2009 should be treated as income.

(v)The deposit of $3,210 on 8 June 2009 should not be treated as income as $2,180 of this sum is to be treated as the payment of a bond for the Applicant’s property and $1050 is to be treated as the sale of assets to a tenant, being a fish tank, fish and wardrobe.

(vi)the deposit of $1,600 on 28 September 2008 should not be included as income in total and should be treated as bond to the sum of $800 and the remaining sum of $800 as rent (that is, 70% less the registered mortgage interest offset (the mortgagees registered on title)).

(vii)As to the deposit of $100 on 16 December 2009, this should be regarded as income and not pressed by the Applicant.

I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Professor M J McGrowdie, Senior Member

............................[sgd]............................................

Associate

Dated: 1 August 2017

Dates of hearing:	3 and 6 March 2017, 16 and 17 May 2017, 4 July 2017
Applicant:	Self-represented
Solicitors for the Respondent:	Dr S Thompson, Department of Human Services