Peter Kooyoufas and Secretary, Department of Social Services
[2014] AATA 924
•12 December 2014
[2014] AATA 924
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/0757
Re
Peter Kooyoufas
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Egon Fice, Senior Member
Date 12 December 2014 Place Melbourne The Tribunal affirms the decision made by the Social Security Appeals Tribunal on
29 January 2013.[sgd]........................................................................
Egon Fice, Senior Member
Catchwords – disability support pension – assets test – income test – excess of assets and income – debt due to the Commonwealth – repayment of debt – waiver – cancellation of DSP
Legislation
Social Security (Administration) Act 1999 (Cth), s94(1), s179.
Social Security Act 1991 (Cth), Ch 3, Part 3.1, s1064(4), s1064-A1, s1064-G2, s1064-G3, s1118(1), 11A(1), s11A(3), s1126AA, s1223(1), s1237A.
Instruments Act 1958 (Vic), s114, s125E.
REASONS FOR DECISION
Egon Fice, Senior Member
Mr Peter (also known as Pangioiti) Kooyoufas was granted the Disability Support Pension (DSP) on 21 March 1996. In April 2012 Centrelink, the government agency responsible for delivering a range of Commonwealth services for the Secretary, Department of Social Services, including the DSP, became aware of a property purchased by Mr Kooyoufas in Cranbourne South for $530,000. Centrelink considered that this purchase resulted in Mr Kooyoufas exceeding the asset limit for payment of the DSP. It cancelled his DSP on 20 April 2012.
In a letter dated 20 April 2012 Centrelink informed Mr Kooyoufas that the value of his assets was above the allowable limit and therefore it had decided to cancel his DSP. On 24 April 2012 Centrelink informed Mr Kooyoufas that due to the value of his assets, DSP payments made to him between 6 November 2008 and 10 April 2012, amounting to $61,188.72 were incorrect. It decided that the sum constituted a debt owed to the Commonwealth and should be recovered from Mr Kooyoufas.
Mr Kooyoufas sought a review of Centrelink’s decision by an Authorised Review Officer (ARO). On 24 August 2012 the ARO decided to vary the Centrelink decision and found that Mr Kooyoufas had a recoverable debt in the amount of $73,813.71 for the period between 30 May 2007 and 22 November 2011.
On 30 August 2012 Mr Kooyoufas lodged an application with the Social Security Appeals Tribunal (SSAT) seeking review of the ARO’s decision. The SSAT handed down its decision on 29 January 2013 affirming the decision to raise and recover a debt in the amount of $73,813.71 for the period stated above. In addition, the SSAT set aside the ARO’s decision to suspend DSP payments to Mr Kooyoufas from 23 November 2011 and in substitution determined that his DSP be cancelled with effect from 30 May 2007 pursuant to s. 94 (1) of the Social Security (Administration) Act 1999 (the Administration Act).
On 19 February 2013 Mr Kooyoufas lodged an application with the Tribunal under
s. 179 of the Administration Act seeking a review of the SSAT decision.
In essence, the issues which I am required to determine are whether, in the period stated, Mr Kooyoufas’ assets and/or income exceeded the amount permissible for the DSP to be paid to him.
More particularly, I must determine whether Mr Kooyoufas held assets in excess of the following amounts in the periods stated:
(a)$185,000 between 30 May 2007 and 30 June 2008;
(b)$212,500 between 1 July 2008 and 20 November 2008;
(c)$240,779 between 21 November 2008 and 19 January 2009;
(d)$271,300 between 20 January 2009 and 31 December 2009;
(e)$288,800 between 1 January 2010 and 31 December 2010;
(f)$301,300 between 1 January 2011 and 24 October 2011; and
(g)$328,244 between 25 October 2011 and 22 November 2011.
I must also determine whether Mr Kooyoufas derived income in excess of the following amounts in the period stated:
(a)$1,455.25 per fortnight between 30 May 2007 and 30 June 2007;
(b)$1,459.25 per fortnight between 1 July 2007 and 19 September 2007;
(c)$1,490.75 per fortnight between 20 September 2007 and 19 March 2008;
(d)$1,513.50 per fortnight between 20 March 2008 and 30 June 2008;
(e)$1,519.50 per fortnight between 1 July 2008 and 19 September 2008;
(f)$1,557.75 per fortnight between 20 September 2008 and 31 December 2008;
(g)$1,558.25 per fortnight between 1 January 2009 and 19 March 2009;
(h)$1,577.50 per fortnight in the period 20 March 2009 and 30 June 2009;
(i)$1,581.50 per fortnight between 1 July 2009 and 19 September 2009;
(j)$1,485.80 per fortnight between 20 September 2009 and 19 March 2010;
(k)$1,544.20 per fortnight between 20 March 2010 and 30 June 2010;
(l)$1,548.20 per fortnight between 1 July 2010 and 19 September 2010;
(m)$1,578.20 per fortnight between 20 September 2010 and 19 March 2011;
(n)$1,604.60 per fortnight between 20 March 2011 and 30 June 2011;
(o)$1,608.60 per fortnight between 1 July 2011 and 19 September 2011; and
(p)$1,647.60 per fortnight between 20 September 2011 and 22 November 2011.
Should I determine that during the periods stated above Mr Kooyoufas exceeded the asset/and or income limits to which I have referred, whether:
(a)the excess payment he received is a legally recoverable debt;
(b)all or part of the debt should be waived or written off for any period; and
(c)the decision to cancel the DSP from 30 May 2007 was the correct decision.
ASSETS LIMIT
Chapter 3 Part 3.1 of the Social Security Act 1991 (the Social Security Act) sets out the Rate Calculators which described the methodology for calculating the rate payable to a person claiming the Age Pension, the Disability Support Pension, Wife Pension, Carer Payments and Mature Age allowances/Mature Age Partner allowances. The rates payable are dependent upon whether the person in question has a partner (s. 1064 (4)). The overall method of rate calculation is described in Calculator A which is set out in s. 1064-A1 of the Social Security Act. In calculating that rate, one must take into account the assets test which is set out in Module G.
Where the calculation involves the value of assets of members of a couple, the value of the assets is taken to be 50% of the sum of the value of the person’s assets and the value of the person’s partner’s assets (s. 1064-G2). The Assets Value Limit is set out in table
G-1 and s. 1064-G3. A person’s asset value limit varies depending on whether the person is a member of a couple and whether the person is a homeowner. The assets value limits are indexed or adjusted annually in line with CPI increases. This is why the asset value limits in paragraph [7] above vary in the periods set out.Like much of the evidence given by Mr Kooyoufas in the course of this hearing, the date of his divorce is difficult to establish with any degree of certainty. In his witness statement, which was taken into evidence, he stated the divorce occurred in 2005. That accords with Centrelink records which identify the date of his divorce as 26 November 2005. At least that is the day he gave that information to Centrelink. There appears to have been a temporary separation prior to that time. In his oral evidence-in-chief he said his divorce occurred in 2001. In his statement of facts and contentions, Mr Kooyoufas said that in 2001 he separated from and then subsequently divorced his wife. That does not appear to be correct given that his youngest child was born on 25 August 2003. For the purposes of calculating any pension to which Mr Kooyoufas may have been entitled, it seems to me that he should be regarded as having had a partner up until November 2005. I note from the Centrelink documents in evidence that Mr Kooyoufas notified Centrelink and commenced receiving his disability support pension at the single rate in December 2005.
There are a number of assets which the Secretary, Department of Social Services
(the Secretary) claimed are assets Mr Kooyoufas ought to have disclosed while he was receiving DSP payments. They include a half share in the property known as 1 Lewis Grove, Mount Waverley (Lewis Grove); a property known as 1120 Dandenong-Hastings Road (also called 1120 Western Port Highway), Cranbourne South (Dandenong-Hastings Road); and a number of other assets of lesser value.The Lewis Grove Property
When Mr Kooyoufas first applied for the DSP in August 1995, he stated that his home address was the Lewis Grove premises. He provided the same information for his 1996 application. In both applications, he answered No to the question regarding whether he owned his own home. However, this was plainly incorrect. In fact Mr Kooyoufas together with his father, Mr Dimitrius Kooyoufas, are the transferees on a Transfer of Land document executed on 30 August 1990. That document was signed by Mr Kooyoufas and his father and they are said to be tenants in common in equal shares. A more recent register search obtained in 2012 confirms Mr Kooyoufas and his father remain the registered proprietors as tenants-in-common.
Furthermore, in both applications for the DSP Mr Kooyoufas stated that he rented the property, paying $115 per week, and $125 per week in the second application, to an entity called Zatona which, in the first application, he referred to as a proprietary company. In fact, Zatona is a registered business name held by Mr Dimitrius Kooyoufas.
In his witness statement Mr Kooyoufas said that Lewis Grove was purchased in 1994 for $135,000. He said that his father purchased that property as an investment with his own funds. Mr Kooyoufas annexed to his witness statement a copy of his father’s bank book indicating a withdrawal of $126,608.47 on 16 August 1990 which he said was payment for the Lewis Grove property. Mr Kooyoufas testified that he did not make any payment towards the purchase price of that property. He also said that he did not want to have a half share interest in the property and that prior to registration of the Transfer of Land, his father told him his name would be removed from that document. He claimed he was unaware that this did not happen. As a result, Mr Kooyoufas maintained that until he was required to deal with a property settlement as result of his divorce, he did not believe he was half owner of that property.
Mr A Shelley, who appeared on behalf of the Secretary, submitted that I should not accept Mr Kooyoufas’ explanation given in his witness statement and in his oral evidence. He pointed out that the Transfer of Land instrument was registered on
12 September 1990, less than two weeks after Mr Kooyoufas had signed that document. In order to prevent being registered as an owner of the property, it would have been necessary for him to have signed an amendment to the contract of purchase and to have had the previous owners of the property execute a new Transfer of Land document with his father as the sole transferee. On Mr Kooyoufas’ own evidence, he took no steps to avoid becoming a co-owner of the property and being registered on the title.Logically, what Mr Shelley submitted must be correct. Having signed the Transfer of Land document, it is inconceivable that Mr Kooyoufas did not consider that it would result in him being registered on title as a proprietor of that property together with his father. Furthermore, despite having annexed to his witness statement a copy of his father’s bank passbook account showing a withdrawal $126,608.47 on 16 August 1990, that is not evidence that the withdrawn money was used for the purchase of the property. Mr Kooyoufas said the purchase price was $135,000. Ordinarily, on the signing of a contract for the sale of land, the purchaser would provide a deposit, often ten percent of the purchase price. The balance, subject to any adjustments, is paid at settlement. Despite Mr Kooyoufas’ evidence that the passbook withdrawal from his father’s account was evidence of purchase of the Lewis Grove property, there was no evidence before me of a deposit having been paid. The amount of the withdrawal recorded in the passbook is $8,391.53 short of the full purchase price. It also raises questions about why the monies were withdrawn some two weeks prior to the execution of the Transfer of Land document, which is usually a document handed over at settlement.
Mr Kooyoufas’ claim that he paid rent to Zatona, which he incorrectly identified as a company, is highly questionable. There was no direct evidence of such payments having been made. In a letter dated 19 December 2012 from his then lawyers, LAC Lawyers, to the Social Security Appeals Tribunal (SSAT), the lawyers stated that while residing in the Lewis Grove property, Mr Kooyoufas felt obligated to pay his father rent for using his property. With respect to Mr Kooyoufas, that appears to have been said because Mr Kooyoufas was being paid rental assistance in conjunction with the DSP. In a handwritten letter dated 23 February 1996, Mr Kooyoufas informed Centrelink that his rent had increased and, despite notifying Centrelink of that increase, he complained that his rental assistance had not altered. Not only was there no evidence of such payment having been made, logically, there is no reason why he would have paid rent to his parents given that he was, and knew that he was, part owner of the property.
In his evidence-in-chief Mr Kooyoufas accepted that he had seen rate notices in respect of the Lewis Grove property. However, he said he did not pay particular attention to them. A rate and valuation notice in respect of that property issued on 15 July 2010 is addressed to D Kooyoufas and P Kooyoufas. In cross-examination, Mr Kooyoufas said that the rates were paid by his parents. However, given that Mr Kooyoufas also said in evidence that he held an enduring power of attorney for his father, and that rental income which his parents received from a number of rental properties owned by them was paid into his account which he used to pay bills on their behalf, that explanation is unconvincing.
I have no hesitation on the evidence before me in finding that Mr Kooyoufas deliberately failed to disclose the ownership of Lewis Grove to Centrelink at the time of his applications in 1995 and 1996 for the DSP. In fact, as Mr Shelley submitted, even after Mr Kooyoufas said he became aware that he was a co-owner of the Lewis Grove property, he did not notify Centrelink of that fact.
It is of some importance to establish just when Mr Kooyoufas ceased to reside at the Lewis Grove property. That is because certain assets are disregarded when calculating the value of a person’s assets. Relevantly, s. 1118 (1) of the Social Security Act provides:
In calculating the value of a person’s assets for the purposes of this Act (other than sections 198F to 198MA (inclusive), Division 1B of Part 3.10, Division 2 and sections 1133 and 1135A), disregard the following:
(a)if the person is not a member of a couple – the value of any right or interest of the person in the person’s principal home that is a right or interest that gives the person reasonable security of tenure in the home;
(b)if the person is a member of a couple – the value of any right or interest of the person in one residence that is the principal home of the person, of the person’s partner or of both of them that is right or interest that gives the person or the person’s partner reasonable security of tenure in the home;…
The expression principal home for the purposes of the assets test is defined in s. 11A of the Social Security Act. Essentially, the principal home of a person is taken to be where that person resides unless absence is temporary and does not exceed 12 months
(s. 11A (9)).
In cross-examination Mr Kooyoufas said that between 2005 and 2008, he resided at Lewis Grove and then Ian Grove before moving to Hastings. I had in evidence a Centrelink notice dated 2 September 2005 which is addressed to Mr Kooyoufas at
1 Lewis Grove. The next Centrelink notice sent to Mr Kooyoufas, which is dated 11 January 2006, was sent to 7 Ian Grove. In addition, Centrelink asked VicRoads in a letter dated 14 September 2010 to provide it with details regarding Mr Kooyoufas’ residential addresses. VicRoads responded that from 1 February 2007 Mr Kooyoufas notified it that he had moved to 146 Warrigal Road, Oakleigh. That strongly suggests that between
2 September 2005 and 11 January 2006, Mr Kooyoufas ceased to reside at the Lewis Grove property. That is when the Lewis Grove property ceased to be his principal home. It also means that for the purposes of the Social Security Act, it was an asset which had to be taken into account in calculating the value of his assets.
Centrelink obtained valuations of the Lewis Grove property between 2005 and 2009. The Australian Valuation Office (AVO) provided the following valuations:
01/01/2005 – $300,000
01/01/2006 – $315,000
01/01/2007 – $370,000
01/01/2008 – $425,000
01/01/2009 – $465,000
01/01/2010 – $500,000
01/01/2011 – $525,000
01/01/2012 – $540,000
There being no evidence to the contrary, I accept the accuracy of the above valuations.
Nevertheless, in his witness statement Mr Kooyoufas referred to property division proceedings initiated by his ex-wife, Susan, in 2012 in which she claimed an interest in two properties, one of them being Lewis Grove. As a consequence, Mr Kooyoufas contended that any interest he held in the Lewis Grove property should be reduced to one quarter of its total value. In response, Mr Shelley submitted that the property division application did not proceed and the court did not consider that matter but rather, the parties settled on the basis that Mr Kooyoufas paid to Susan the sum of $50,000.
With respect to Mr Shelley, it is not entirely clear whether that is correct. The orders made by consent included the sale of two properties, the Dandenong-Hastings Road property and the Lewis Grove property. As Mr Shelley submitted, the document is incomplete and, other than a statement that there be a just and equitable division of property between the parties, it is not clear whether all matters were settled by the payment of $50,000 to Susan. The only thing which is clear is that on 18 December 2013 Mr Kooyoufas’ solicitors wrote to him explaining that they had forwarded a cheque in the amount of $50,000 to Susan’s lawyers on her behalf and that those monies would be held in their trust account pending the lodgement of withdrawals of caveats in relation to all properties owned by him and/or his parents. Mr Kooyoufas’ solicitors then stated: Once this has occurred, financial matters will be finalised. It is not clear to me what is meant by that statement.
Given the state of the evidence, I find that the AVO valuations should be applied to the Lewis Grove property and that half of those values should be attributed to Mr Kooyoufas in the relevant periods stated.
The Dandenong-Hastings Road Property
I had in evidence a Transfer of Land document executed by Mr Panagioti (Peter) Kooyoufas on 30 October 2008 as the transferee of the property known as
1120 Dandenong-Hastings Road, Cranbourne South. Consideration for the purchase is stated to be $530,000. A title search at Vic Lands obtained on 17 January 2012 records Mr Kooyoufas as the sole proprietor of that property. The document discloses that the date of registration was 6 November 2008.In his witness statement Mr Kooyoufas said that the money for the purchase of that property came from an account in his parents’ name. Annexed to his witness statement was a Term Deposit Periodic Statement in the name of Kooyoufas M/D. That statement discloses the sum of $519,673.71 having been withdrawn on 16 October 2008. Despite Mr Kooyoufas stating that the bank statement clearly disclosed the source of the money used to purchase the Dandenong-Hastings Road property, it does not go that far. I did not have any evidence of a contract for the sale of that property nor any breakdown dealing with settlement proceeds. The proceeds from the term deposit are some $10,327 short of the purchase price. In addition to that, the stamp duty on the transfer was in excess of $26,000.
Although in his witness statement Mr Kooyoufas said that his parents paid one hundred percent of the purchase price, stamp duty and other expenses associated with the purchase of the Dandenong-Hastings Road Road property, that appears to be at odds with what was stated by his lawyers, LAC Lawyers, in a letter to the SSAT dated 14 January 2013. They said, at paragraph 12:
We are instructed that Peter Kooyoufas paid the $20,000 deposit which resulted in an outstanding balance of the Cranbourne South property being (approx.) $510,000.
Furthermore, LAC Lawyers said that Mr Kooyoufas exercised the power given to him under the power of attorney granted by his father to purchase that property. I had in evidence an Enduring Power of Attorney made on 15 December 1990 pursuant to s. 114 of the Instruments Act 1958 (Instruments Act). The power of attorney grants to the donee power to execute instruments on behalf of the donor. The power must be exercised in accordance with s. 125E of the Instruments Act. It provides:
(1) The attorney under an enduring power of attorney may, if the attorney thinks fit –
(a)execute any instrument with the attorney’s own signature, and, where sealing is required or employed, with the attorney’s own seal; and
(b)do any other thing in the attorney’s own name.
(2) An instrument executed by the attorney under an enduring Power of attorney must be executed in such a way as to show that the attorney does so as attorney for the donor of the power.
(3) An instrument executed or thing done in the way specified in this section is as effective as if executed or done by the donor –
(a)with the donor’s signature; or
(b)with the donor’s signature and seal; or
(c)with the donor’s name.
The Transfer of Land document was clearly executed by Mr Kooyoufas. There is nothing on that document which shows that he did so as attorney for his father.
Mr Kooyoufas has executed that document as if he were the transferee in his own right. In those circumstances, it does not fall to him to now say that he executed the Transfer of Land document on behalf of his father.
Mr Kooyoufas’ mother, Maria Kooyoufas, said in a witness statement which she made on 27 April 2014 and which was taken into evidence that the Lewis Grove and the Dandenong-Hastings Road properties were purchased with monies provided by her and her husband. She also testified that those properties were not gifted to Mr Kooyoufas. In answer to a question as to why the property was in Mr Kooyoufas’ name, she said that they had an agreement whereby, as long as she and her husband remained alive, it was theirs and if sold, the money went to them. However, if she and her husband died before the property was disposed of, it would then belong to Mr Kooyoufas.
For the purposes of s. 1118 (1), it is difficult not to conclude that Mr Kooyoufas had reasonable security of tenure in the Dandenong-Hastings Road property. Not only is he the sole registered proprietor of that property, but, even if the purchase moneys were provided by his parents, as stated in his mother’s evidence, it is clear that he was intended to have security of tenure. The question therefore becomes whether that property was Mr Kooyoufas’ principal home for the purposes of the Social Security Act.
There was conflicting evidence about whether Mr Kooyoufas resided at the Dandenong-Hastings Road property. In his witness statement Mr Kooyoufas said he lived at that property, being his principal place of residence, since it was purchased in November 2008. He said he currently resided at the property. In support of that evidence, Mr Kooyoufas annexed to his witness statement two copies of the gas account addressed to him at the property, the first in August 2009 and the second in August 2011; and three accounts from South East Water for September 2009, June 2010 and March 2011. In addition, City of Casey Council, in response to a request from the Department of Human Services for information regarding planning permits, responded on 10 August 2012 stating that its records indicated the property was owned and occupied by P Kooyoufas since purchase.
On the other hand, Mr Shelley submitted that during the relevant period Mr Kooyoufas lived at the Lewis Grove property, 146 Warrigal Road Oakleigh and 19 Eterton Street Blairgowrie. He based this statement on information obtained from VicRoads regarding the residential address provided to it in respect of Mr Kooyoufas’ drivers licence. VicRoads informed Centrelink that according to its information, Mr Kooyoufas resided at 1 Lewis Grove between 14 April 1995 and 1 February 2007; at 146 Warrigal Road Oakleigh between 1 February 2007 and 2 April 2007; and at 19 Eterton Street Blairgowrie between 2 April 2007 and the date on which the information was provided, being 14 September 2010. The 19 Eterton Street Blairgowrie address is consistent with the records from Roads Corporation regarding the registration of three motor vehicles in the name of Peter Kooyoufas as his residential address.
The Centrelink records, particularly copies of letters sent by Centrelink to Mr Kooyoufas, were addressed to 7 Ian Grove Mount Waverley between January 2006 and 13 May 2012. Despite Mr Kooyoufas claiming he had notified Centrelink that his place of residence was the Dandenong-Hastings Road property, that is not what Centrelink’s records disclose nor is it consistent with a file note made by an authorised review officer (ARO) following the telephone conversation with Mr Kooyoufas on 20 July 2012. In fact, in the course of the telephone conversation, the ARO recorded Mr Kooyoufas telling him that Centrelink had got it all wrong and that the only property he owned was the Dandenong-Hastings Road property which had been his principal home since 1998. He told the ARO that the Ian Grove property was owned by his parents and that he had no financial interest in the Lewis Grove property. Furthermore, Mr Kooyoufas apparently said that his father owned the Lewis Grove property because in 1989, his father had purchased his share of the property for $450,000. He then said the property was only worth $250,000 but his father had also given him the extra $200,000 as a loan so that he could purchase the Dandenong-Hastings Road property.
Following that conversation with Mr Kooyoufas, the ARO made some further investigations and recorded that the Department (Centrelink) had never been advised of Mr Kooyoufas’ share in the Lewis Grove property; his ownership of the Dandenong-Hastings Road property; the use of his other name, Panagioti; the motor vehicles which were registered in his name; or that he had changed his address. The ARO also recorded it was only after Centrelink discovered that Mr Kooyoufas was the registered proprietor of the Dandenong-Hastings Road property and had decided to cancel his DSP payment that Mr Kooyoufas informed Centrelink it was his principal home.
Another file note made on 25 July 2012 by the ARO repeated what Mr Kooyoufas had said to him in the previous telephone conversation, including the fact that he had asked Mr Kooyoufas why the Lewis Grove property had not been transferred into his father’s name in 1989 when he said that he had sold his interest to his father. Mr Kooyoufas responded that he needed to speak to his father about that. According to the ARO, he then put to Mr Kooyoufas that what he had said about the Lewis Grove property was not true because the Dandenong-Hastings Road property was purchased in 2008 and if his father had in fact purchased the property, he would be aware of it and would have had to approve the loan. Furthermore, it was up to him to transfer the property as he held a power of attorney for his father. According to the ARO, Mr Kooyoufas said that he always had to consult with his father. He is also recorded as having said that he could not afford the stamp duty and regardless, he remained under the asset test limit because he lived at the Dandenong-Hastings Road property. When the ARO explained to
Mr Kooyoufas that he had never informed Centrelink that he had purchased the Dandenong-Hastings Road property, Mr Kooyoufas said that he had. The ARO told him there was no evidence to support this and again asked him why he had not advised Centrelink that he had an interest in the Lewis Grove property when he claimed payments and rent assistance to which he was not entitled. Apparently, Mr Kooyoufas’ response was simply that he was paying rent to his father who owned half of the property.
There is one other piece of evidence which points to Mr Kooyoufas not having resided at the Dandenong-Hastings Road property following its purchase. I had in evidence the reasons for decision provided by the Victorian Civil and Administrative Tribunal (VCAT) on 10 May 2012. The application to VCAT was brought by Mr Kooyoufas against his solicitor who acted in the conveyance transaction of the Dandenong-Hastings Road property. While the main claim Mr Kooyoufas brought was on account of his solicitor failing to notify him that the property was connected to sewerage, he also claimed that his solicitor failed to tell him that he could claim stamp duty exemption because it was to be his principal place of residence. The VCAT member referred to the evidence of the solicitor who said he was not told until after settlement that the property would be Mr Kooyoufas’ principal place of residence. The member then referred to a letter dated 5 December 2008 from Mr Kooyoufas to the solicitor in which
Mr Kooyoufas said: I had told you that I will live reside [sic] at the property once renovated. The significance of that statement seems to have been overlooked. What it strongly points to is the fact that Mr Kooyoufas did not intend to immediately take up residence in the Dandenong-Hastings Road property as he claimed in this proceeding. Furthermore, there was no evidence before me which indicated the property has been renovated since its purchase.
Mr Kooyoufas also relied on the fact that on enquiry by Centrelink in December 2011, Casey City Council advised that the owner of the Dandenong-Hastings Road property was Panagioti Kooyoufas and that the property was Owner Occupied. While I have no doubt that is what the Council’s records disclose, in my respectful opinion, it does not take the matter any further. Although I have taken that into consideration, it does not outweigh the evidence which points to Mr Kooyoufas not residing at that property at least until Centrelink became aware that he was its registered proprietor.
The significant inconsistencies in Mr Kooyoufas’ evidence which was before me and to which I have referred above make it clear that I cannot rely on his evidence but rather, I must be guided by the objective evidence in the form of documents before me.
That evidence, on the balance of probabilities, does not permit me to make a finding that Mr Kooyoufas has lived at the Dandenong-Hastings Road property since it was purchased in November 2008. In fact the evidence points to Mr Kooyoufas deliberately avoiding disclosing his interest in the Dandenong-Hastings Road property until he realised that Centrelink had become aware that he was its registered proprietor.
I agree with Mr Shelley’s submission that the strongest documentary evidence of
Mr Kooyoufas’ residence was the changes of address which he provided to VicRoads for the purposes of his driver’s licence. That document is commonly used for identification purposes and therefore, logically, one is more likely to keep that up to date than other documents. In addition, Mr Kooyoufas, in his discussions with the ARO, denied part ownership of the Lewis Grove property and claimed the Dandenong-Hastings Road property acquisition was made possible by being paid out for his share of the Lewis Grove property together with a loan from his father. Since he made that statement, his explanation regarding the source of the funds for the acquisition of the Dandenong-Hastings Road property has changed completely. At the hearing of this matter and in his witness statement, Mr Kooyoufas said that the monies for the purchase of the Dandenong-Hastings Road property came out of an account held by his parents.
The above evidence is not the only evidence which has changed significantly as time has passed. In his witness statement Mr Kooyoufas said this about living at the Dandenong-Hastings Road property: I have lived at this address as my principal place of residence since it was purchased in November 2008 and I currently live in the property. As I have said above, the evidence before VCAT stated he intended to reside at the property once it had been renovated. Quite plainly, the two statements cannot be reconciled. Simply referring to the fact that the gas account and water bill were addressed to him at the Dandenong-Hastings Road property cannot, by itself, be evidence of him residing in the premises. Such accounts are generally sent to the registered proprietor which was
Mr Kooyoufas.
In the event that I am wrong in finding that Mr Kooyoufas did not reside at the Dandenong-Hastings Road property between the time it was purchased in 2008 and
22 November 2011, I should examine whether that property passes the private use test set out in s. 11A (3) the Social Security Act. Section 11A (1) describes the principal home in the following way:
11A (1) Principal home. A reference in this Act to the principal home of a person includes a reference to:
(a)if the principal home is of dwelling-house – the land adjacent to the dwelling-house to the extent that:
(i) the land is held under the same title document as a land on which the dwelling-house is located; and
(ii) the private land use test in subsection (3) is satisfied in relation to the land or, if the person is one to whom the extended land use test applies in relation to the land, the extended land use test in subsection (6) is satisfied in relation to the land; or
(b)if the principal home is a flat or home unit – a garage or store room that is used primarily for private or domestic purposes in association with the flat or home unit.
Section 11A (3) provides:
11A (3) Private land use test. The private land use test is satisfied in relation to land if:
(a)the area of land, together with the area of the ground floor of the dwelling-house, is not more than 2 hectares; and
(b)the land is used primarily for private or domestic purposes in association with dwelling-house.
At the time Mr Kooyoufas purchased the Dandenong-Hastings Road property, the advertisement placed by the real estate agent gave the following description:
Invest in a wonderful lifestyle farming poultry. Perched on a corner block on 3.8 acres, you’ll find your country living home, a granny flat and 4 sheds as well as an ex-poultry farm.
When converted, 3.8 acres equals 1.54 hectares. The property therefore satisfies the
s. 11A (3) (a) part of the private land use test. However, the description given above, and in particular the reference to four sheds and an ex-poultry farm, suggests strongly that the land is not used primarily for private or domestic purposes in association with the dwelling-house. Although Mr Kooyoufas strenuously denied that the property, after his purchase, was used as a poultry farm, there is objective evidence to the contrary.
I had in evidence an extract from the ASIC register for an Australian Business Number (ABN) 66737189907 which was in the name of Soterri Kooyoufas, who is
Mr Kooyoufas’ son. The registered trading name under that ABN is POULTRY & DUCKS. I also had in evidence downloads from a number of Internet sites clearly indicating that chickens, ducks and turkeys were available from the property at Cranbourne South. A mobile telephone number is provided and the contact at that property is said to be Peter. On a Google search, the Cranbourne South property is cited as the address for a poultry, ducks and turkey business as well as an entry in the Poultry Club and Breeder Directory with the same mobile number and the contact again being described as Peter. Various breeds of chickens and ducks are also advertised for sale on a site called ChookNet. The location is described as Cranbourne South and the contact telephone number is the same mobile number to which I have referred above.
Despite the above evidence, Mr Kooyoufas said in his witness statement that the property was not used for commercial purposes at all. He admitted to having some chickens, a few goats and pigs for their personal use but not as a business enterprise. He said that his son Soterrios wanted to set up a poultry farm in 2011 and attempted to do so but it never flourished and closed in December 2011. This was despite the fact that the Internet downloads were made in July 2012. I had no evidence before me from Soterrios.
In addition to the above, Mr Kooyoufas lodged an application (which was ultimately unsuccessful) with VCAT objecting to a decision made by Casey City Council to refuse a permit to allow the land to be used as an animal boarding facility. That application includes the following land description:
It has an area of approximately 1.68 hectares and contains a dwelling and a number of sheds. One of the sheds houses a range of poultry and is the shed proposed to be converted to house dogs. Two sheds, including that proposed to house dogs, are within an enclosure of Colorbond fencing.
The VCAT member had inspected the premises and described one of the sheds this way:
This shed is some 35m x 15m and is currently used to house a range of poultry including chickens used as egg layers, some rare breed chickens, ducks, guineafowl and turkeys all of which were housed in various wire pens.
Once again, the objective evidence does not accord with the evidence given by
Mr Kooyoufas. The fact that his son went to the trouble to obtain an ABN for the registered business name indicates, at least, an intention to use the premises for business purposes. Despite Mr Kooyoufas’ oral evidence that he bred chickens as a hobby and only sold a small number, that explanation does not fit comfortably with the degree of advertising which was undertaken. Even if he did not sell many chickens or other birds, it is simply not possible, on the evidence for me, to say that the land was used solely for private purposes. It clearly was not. Therefore, if, contrary to my finding that the Dandenong-Hastings Road property was Mr Kooyoufas’ principal place of residence during the relevant period, this issue would need to be remitted in order to value the commercially used parts of the land in question.
The AVO valuations of this property throughout the relevant period are as follows:
01/01/ 2008 – $580,000
01/01/2009 – $525,000
01/01/2010 – $525,000
01/01/2011 – $600,000
In my opinion, the Dandenong-Hastings Road property during the relevant period was the property of Mr Kooyoufas. Furthermore, I find that Mr Kooyoufas did not reside at that property during the relevant period and it therefore cannot be regarded as his principal home between the date of purchase in 2008 and 22 November 2011.
Other significant assets
There are a number of motor vehicles registered in Mr Kooyoufas’ name. They include a 1971 Rolls-Royce sedan; a 1996 Mercedes-Benz sedan; and a 1988 Pontiac coupe. At the time that information was obtained from VicRoads, the registrations were current to around the middle of 2011. Further information obtained on 7 December 2011 also recorded Mr Kooyoufas as being the person to whom the above three vehicles were registered as well as recording his residential address at that time as 19 Eterton Street, Blairgowrie. Also registered to Mr Kooyoufas was a 1972 Dodge tray.
Insurance information obtained by Centrelink disclosed that in 2009, vehicles were insured with RACV. The replacement value for the Mercedes-Benz was $9,500; the Rolls-Royce $20,900; and the Pontiac $5,400. Although there are a number of other motor vehicle insurance policies taken out in Mr Kooyoufas’ name and he is named as the nominated driver, he was not the registration holder at the relevant time.
Mr Kooyoufas denied purchasing the vehicles. He maintained that they were owned by his children. In fact, Mr Kooyoufas’ eldest son, Demetrios, whose witness statement was taken into evidence, said that he purchased and paid for the Mercedes-Benz and the Pontiac coupe. In his witness statement he repeated that the Mercedes was paid for and used only by him and then said: My father, Peter Kooyoufas bought and registered the vehicle on my behalf which I paid for. Quite clearly, that statement does not stand together with the first sentence in his witness statement where he said that he purchased and paid for the Mercedes-Benz. He also said in his witness statement that he subsequently sold the Mercedes-Benz to his brother, Soferri (sic – Soterrios) in 2008.
In his oral evidence, Demetrios explained that the Pontiac was registered in his father’s name because, at that time, he held P plates and could not drive the vehicle. Nevertheless, he said he personally purchased the Mercedes-Benz at auction as he did the Pontiac. When asked about the registration on the Pontiac, he said that it should have been in his name and it was changed in about 2012. Demetrios did not provide any documentary evidence supporting any of those statements.
The problem for Mr Kooyoufas is manifest. As at 7 December 2011, those vehicles were registered in his name with the registration expiring either in May or July 2012. There was no evidence before me of the change in registration of the Pontiac in 2012, as claimed by Demetrios. As for the Mercedes-Benz, which Demetrios said he sold to his brother in 2008, that vehicle continued to be registered to Mr Kooyoufas. There was no documentary evidence before me which would support that claim.
Again, the evidence, both by way of witness statement and oral evidence, is at odds with the documents in evidence regarding these assets. I have no confidence whatsoever that what was said by either Mr Kooyoufas or Demetrios about these vehicles is correct. In my opinion, these assets are properly regarded as being those of Mr Kooyoufas during the relevant period.
There was also significant controversy about bank accounts Mr Kooyoufas held in his own name throughout the relevant period. The ARO, when investigating this matter, said that Mr Kooyoufas was responsible for 28 different bank accounts between 1996 and 2012. During that period, Centrelink only recorded Mr Kooyoufas as having two bank accounts, a NAB savings account and an ANZ Access Choice account. As the ARO said in his reasons for decision, monies held in bank accounts are referred to as financial assets.
In his witness statement Mr Kooyoufas said that he held the power of attorney to manage his father’s financial affairs from about 1996 onwards. As I have already said, I had in evidence an enduring power of attorney which was granted on 15 December 1992 to Mr Kooyoufas. When it was put to Mr Kooyoufas in examination-in-chief that he had 28 bank accounts in operation, he responded by saying: no, not at one time. He explained that he told Centrelink of those accounts which he described as his accounts only. As to other accounts, he suggested they were not his because he held the power of attorney. In response to a question as to why he required the power of attorney, Mr Kooyoufas said that his parents went to Greece from time to time for long holidays and it would allow him to pay bills and receive money. With respect to Mr Kooyoufas, a power of attorney is not required for the purpose of paying bills or receiving money.
There are significant evidentiary problems in respect of monies held in bank accounts on which Mr Kooyoufas’ name appears. Mr Kooyoufas effectively claimed that he derived no benefit from monies which were placed into accounts where his name appeared from time to time because he was responsible for the financial affairs of his mother and father and, in exercising that responsibility, monies received from the rental of a number of properties owned by his mother and father went through those accounts. In fact, frequently Mr Kooyoufas described the monies as belonging to Zatona as if it was a discrete entity in its own right. It plainly is not. It is simply a business name under which his mother and father traded. Mr Kooyoufas claimed he kept good records of those accounts, however, as I will demonstrate shortly, that is not the case. In fact the source of monies which were placed into those accounts and, when subsequently withdrawn, to which accounts they went, was not clear even to Mr Kooyoufas. While his mother, Mrs Maria Kooyoufas, said in cross-examination that her son kept good records, when asked which records she had seen, referred simply to the accountant’s records. Quite plainly, the accounts prepared by the accountants were done so on the material and information Mr Kooyoufas gave to them. It disclosed nothing about his record keeping.
In cross-examination Mr Kooyoufas confirmed that his sole source of income between May 2007 and November 2011 was his DSP. In 2010, regular fortnightly payments of $687.45 were paid into his ANZ Access Deeming Cheque account. In round figures, that amounts to some $17,874 per year. When it was put to Mr Kooyoufas that this amounted to some $16-$18,000 per year, he said he was not sure but he said it sounded right. One should also bear in mind that at this time he had six children, most of them being dependent on his income.
Included amongst the accounts bearing his name, were accounts with NAB where he and his ex-wife, Susan, appeared to be trustees for one or other of their children. These accounts were described as National Smart Junior Saver accounts. In one of these accounts for one of his daughters, there is an entry on 3 July 2006 which is simply described as cash and/or cheques deposit in the amount of $8,837.51. When asked where that money came from, Mr Kooyoufas said he could not recall. In that same account there was a withdrawal in the amount of $11,000 on 29 June 2007. When asked if he could recall where that money went to, Mr Kooyoufas answered no.
Mr Kooyoufas in cross-examination was referred to a NAB account solely in his name described as a FlexiDirect account. On 1 August 2007 there was a deposit in that account of $30,000. On 27 August 2007 four cheques were drawn on that account amounting in total to $31,000. Then, on 28 August 2007, there was a deposit of $266,402.78 said to be a transfer from a T/D (term deposit) closure. On the following day, a cheque was drawn in the amount of $266,000. When Mr Kooyoufas was asked to explain that transaction, he said it went to a term deposit account. He also said that the money did not belong to him but rather to his parents. However, at that time Mr Kooyoufas had a term deposit in his own name which was opened on 22 November 2005. Funds were added and the term deposit rolled over in 2006 and 2007. In fact on 30 July 2007, the amount of $227,000 was added to that term deposit account. The term deposit account was closed on
28 August 2007 when the principal plus interest, amounting to $266,402.78, was withdrawn. Logically, it appears that the monies from the closure of that account, which was solely in Mr Kooyoufas’ name, went into his NAB FlexiDirect account. The subsequent withdrawal of $266,000 appears to have been transferred into another term deposit which was an account held jointly with his parents. Mr Kooyoufas explained that by saying it was his parents’ money.
Mr Kooyoufas’ attention was also drawn to another National Smart Junior Saver account which he and his ex-wife held apparently on trust for another daughter. At that time the daughter was ten years of age. On 3 July 2006 there is recorded a cash and/or cheque deposit in the amount of $8000. When Mr Kooyoufas was asked whether he could recall where the money came from, he responded that he did not have any recollection of that deposit. Similarly, when Mr Kooyoufas was asked about the transfer of $10,000 from that account on 27 June 2007, he was unable to recall where that money went to but simply said it went to the account shown which gives an account number but no indication as to whom that account belongs. I did not have before me any documents from that account. Likewise, Mr Kooyoufas was unable to recall a withdrawal of $8,000 on 30 June 2006 from another joint account with one of his children nor a withdrawal of $9,000 on 26 June 2007. Nor was Mr Kooyoufas able to shed light on a number of other substantial transactions in a joint account with another child in 2005.
I also had in evidence a number of ANZ Bank accounts for which the sole signatory was Mr Kooyoufas. They are described as an Access Advantage Cheque account and Access Deeming Cheque account. The Access Deeming Cheque account discloses regular deposits of rent from a real estate agent. I accept that those deposits were monies from rental paid by tenants of Mr Kooyoufas’ parents rental properties. However, there are some substantial withdrawals from that account which are not explained.
Mrs Kooyoufas’ evidence was that rental payments were made into: our bank account. When asked if those accounts were in her name, she said in her husband’s and her name and that her son, Mr Kooyoufas, helped with the accounts, taking out some $2,000 on a regular basis for shopping and incidental expenses. However, a cursory glance at those accounts shows withdrawals well in excess of $2,000. A withdrawal on 25 October 2007 was for $10,000; on 21 December 2007 $4400; on 23 January 2008 $24,000; on
21 February 2008 $8000; on 28 March 2008 $5461; on 28 April 2008 $5000; on
28 May 2008 $8000; on 17 June 2008 $45,000; on 24 June 2008 $9680; on 23 July 2008 $11,000 and so on. On average, the balance in that account is around $20,000 over the relevant period.
Regarding the financial assets I have referred to above, Mr Shelley submitted that while the evidence was that all the money in those accounts belonged to Mr Kooyoufas’ parents, he believed he had the right, by reason of holding a power of attorney for his father, to invest the money in his own name. Furthermore, Mr Shelley submitted that there were no documents in evidence before me which established the purpose for which the money was held or why it was held in Mr Kooyoufas’ name. Those submissions are plainly correct.
The evidence discloses that Mr Kooyoufas dealt with that money as if it was his and that he did not hold the money on trust for either his parents or for any of his children. In those circumstances I find that the balance of the accounts to which I have referred above, from time to time, were financial assets of Mr Kooyoufas. That applies equally to amounts which he subsequently disposed of in the five-year period following disposition. That is because section 1126AA of the Social Security Act provides:
1126AA (1) Disposals to which this section applies. This section applies to a disposal (the relevant disposal) on or after 1 July 2002 of an asset by a person who is not a member of a couple the time of the relevant disposal.
126AA (2) Increase in value of assets. If the amount of the relevant disposal, or the sum that the amount and amounts (if any) of other disposals of assets previously made by the person during the income year in which the relevant disposal took place, exceeds $10,000, then, for the purposes of this Act, the lesser of the following amounts is to be included in the value of the person’s assets for the period five years starting on the day on which the relevant disposal took place:
(a)the amount of the relevant disposal;
(b)the amount by which the sum of the amount of the relevant disposal and the amounts (if any) of other disposals of assets previously made by the person during the income year which the relevant disposal took place, exceeds $10,000.
INCOME THROUGHOUT THE RELEVANT PERIOD
There is also a serious question to be answered regarding Mr Kooyoufas’ income between 30 May 2007 and 22 November 2011. During that period, Mr Kooyoufas’ parents owned three rental properties: 4 Hume Street Huntingdale; 146 Warrigal Road Oakleigh; and 25 Colin Road Oakleigh South. In addition to his Centrelink DSP payments which were made into a NAB FlexiDirect account and an ANZ Access Deeming cheque account, Mr Kooyoufas placed into those accounts rental payments from properties owned either jointly by his mother and father or solely by his father. The NAB and ANZ accounts are solely in the name of Peter Kooyoufas.
The real estate agents whose names appear on those accounts are Crabtrees Real Estate, ARC Real Estate and Ray White Real Estate. I have attached to these reasons an appendix detailing those payments. In summary, the amounts received throughout the relevant period are:
·NAB account –
August 2007 – $7,495.23
·ANZ account –
September 2007-June 2008 – $80,700.93
July 2008-June 2009 – $106,583.29
July 2009-June 2010 – $127,588.14
July 2010-June 2011 – $114,571.41
July 2011-November 2011 – $44,963.79
Total (both accounts) – $481,902.79
Mr Kooyoufas attached to his witness statement a number of tax returns for the relevant period which included rental property statements for the properties concerned. For the three properties I have identified above, the gross income from rental was declared as follows:
2009 income year – $59,529
2010 income year – $66,525
2011 income year – $53,623
Those figures disclose large discrepancies between the rental income declared for income tax purposes and the actual gross income received by Mr Kooyoufas from the real estate agents who manage these properties. The amount of each discrepancy is as follows:
2009 income year – $47,054.29
2010 income year – $61,063.14
2011 income year – $60,948.41
The differences are clearly significant. When these figures were put to Mr Kooyoufas in the course of his cross-examination, his response was that he provided the books to his accountant who did the income tax returns. He said he could not explain the discrepancy. Mr Kooyoufas did not call his accountant to give evidence in this matter.
In his evidence-in-chief Mr Kooyoufas said that while the rental income from his parents’ properties went into his own account, those monies were not applied to his use. In fact, Mr Kooyoufas attached to his witness statement a number of bank statements from his NAB and ANZ accounts and copies of cheque butts which he claimed evidenced money returned to his parents from those accounts. According to
Mr Kooyoufas, over the four year period, the rental income received between
27 June 2008 and 27 August 2012 was $511,700.40. Against that figure, Mr Kooyoufas said that the cheque butts disclosed a return to his parents in the sum of $510,206.80. Therefore, according to Mr Kooyoufas, save for $1,493.61, he did not receive a personal benefit from the rental income from his parents’ properties.
If in fact the evidence supported what Mr Kooyoufas said about the rental income, I would have little hesitation in agreeing with him. Unfortunately, closer examination of the accounts shows numerous discrepancies in his evidence.
The first problem identified by Mr Shelley was that Mr Kooyoufas, by reason of holding an enduring power of attorney for his father, plainly controlled his parents’ finances. He did not produce all of the bank account statements in the name of either his parents as a partnership or his father as an individual. It should be remembered that despite
Mr Kooyoufas referring to Zatona as if it were a legal entity and holding accounts in its name, that is incorrect. Zatona is simply a registered business name. From about May 2000 it was registered to Mr Dimitrios Kooyoufas and, from about November 2009, to
D Kooyoufas & M Kooyoufas. The bank statements to which Mr Kooyoufas referred as being Zatona’s account is in fact an ANZ Business Classic account in the name of Dimitri Kooyoufas trading as Zatona. It is in fact his father’s account which can be controlled by Mr Kooyoufas pursuant to the enduring power of attorney. To add to the confusion, the cheque butts which Mr Kooyoufas put into evidence do not identify the account on which those cheques were drawn. This is a problem because the cheque numbers identified on the cheque butts (not all of which are visible) appear, at least in some instances, to coincide with cheques drawn on the Dimitri Kooyoufas account. However, the dates and amounts are different. An example is cheque butt number 001037 which is dated 23 July 2008 and appears to be a cash payment to Mr Kooyoufas’ mother of $1,000. Mr Kooyoufas has indicated that it was an $11,000 withdrawal although I believe that it is incorrect. That is because the difference between the forward amount and closing balance amount suggest it was $1,000. The real problem however is that the same cheque number also appears as an entry on 30 June 2008 in the Dimitri Kooyoufas account as a withdrawal of $260. It is simply not possible to make sense of the cheque butts unless one is aware of the account on which they were drawn. That has not been identified. Nevertheless, Mr Kooyoufas, fixing on the date on the cheque butt, has identified a deposit of $11,000 on that date in the Dimitri Kooyoufas account. The cheque butt has a forward amount of $12,269.59 and closing balance of $11,212.59 on it. That certainly does not suggest an $11,000 amount drawn on that account.
To further compound the problem, as Mr Shelley correctly submitted, the bank statements produced by Mr Kooyoufas are not complete but simply selected extracts from 20 December 2007 to 20 March 2009; 19 June 2009 to 18 September 2009;
20 September 2010 to 20 December 2010; 18 March 2011 to 20 June 2011; and
20 December 2011 to 20 June 2012. Even statements from his accounts are incomplete. For example, he has put together the first page of a three page statement which commences with entries on 27 May 2009 while the second page commences with an entry dated 16 April although the year is not identified. That is simply hopeless.
In his evidence-in-chief Mr Kooyoufas said that he used his NAB Visa Classic credit card account for the purpose of paying all bills, his and those of his parents. He said he paid the credit card account by cheques drawn on his ANZ account. However, there are a number of problems with this evidence. The first is that there is no way of identifying credit card purchases made on behalf of his parents and those which were made for goods and services he obtained. The second problem is that while the NAB credit card was paid out by cheque, it is not possible to identify those monies coming from any particular account. For example, there was a cheque payment against the NAB credit card balance on 21 March 2011 in the amount of $4,405.45. An examination of the ANZ Access Deeming Cheque account on or around that date does not disclose a payment or the drawing of a cheque in the said amount. In fact, the complete intermingling of his money and his expenses with those of his parents makes it impossible to identify the monies received into his account during the relevant period which he claims belonged to his parents and the payment of their expenditure from those monies.
In my opinion, it is fair to say that while Mr Kooyoufas undoubtedly met expenditures incurred by his parents and those associated with the rental properties from his accounts, because his accounts involved intermingled sums of DSP payment and rental income, it is simply not possible to objectively determine, with any degree of accuracy, the amounts which Mr Kooyoufas used for his own benefit and which were in fact monies received from rental income. A good indicator of the total expenditure during the relevant financial years may be obtained from the summary of all credit card expenditures between May 2007 and November 2011 which was conveniently tabulated by Mr Shelley and attached to the respondent’s submissions. In summary, the expenditures were as follows:
2008 income year – $35,482.92
2009 income year – $65,698.47
2010 income year – $65,995.57
2011 income year – $59,718.36
Having been through those accounts in some detail, on the balance of probabilities, I find that the expenditure Mr Kooyoufas incurred on his own account well and truly exceeded his income from DSP payments. In other words, he derived substantial benefit from income received on account of the rental properties owned by his parents.
Mr Shelley submitted that the method used by the SSAT in determining the amount of rental income which was for Mr Kooyoufas’ benefit probably overstated what he in fact received. Instead, he submitted that the preferable approach was to apportion to
Mr Kooyoufas the difference between the rental income received and the amount declared in the relevant rental returns.
In my opinion, that is a fairer approach in circumstances where it is simply not possible to arrive at a figure other than by estimating the extent to which Mr Kooyoufas had the benefit of the rental income. Even so, in the final analysis, it does not alter the conclusion which is inevitable. Between May 2007 and November 2011, as I have pointed out at paragraphs [75] – [77], the discrepancy between the declared rental income and the monies in fact received exceeded $50,000 in each financial year. That of course amounts to an excess of $1,000 per week or $2,000 per fortnight; a fortnight being the basis for determining a person’s ordinary income free area. It should therefore be immediately apparent that Mr Kooyoufas had income in excess of the maximum allowable per fortnight in each fortnight during the relevant period between May 2007 and November 2011. That alone would preclude any DSP payments being lawfully made to Mr Kooyoufas during that period.
SUMMARY OF ASSETS AND INCOME
In calculating the rate of pension to which a person is entitled, one starts with the Pension Rate Calculator A which is found in Module A at s. 1064-A1 of the Social Security Act. After working out the maximum payment rate, one has to apply the ordinary income test using Module E to work out the income reduction. This results in what is described as the income reduced rate. One is then required to apply the assets test using Module G to work out the reduction assets. That results in what is described as the assets reduced rate. The income reduced rate and the assets reduced rate are compared and the lower of the two rates becomes the provisional annual payment rate.
I have set out above at [7] the total assets limit and the income cut-off limits for the relevant periods. As far as assets are concerned, I have found that Mr Kooyoufas at all relevant times had an equal share with his father in the Lewis Grove property and from 6 November 2008 was the sole owner of the Dandenong-Hastings Road property. Neither property was his principal home during the relevant period. Therefore, in the first period between 30 May 2007 and 30 June 2008, the value of Mr Kooyoufas’ property assets was approximately $205,000. In the second period, between 1 July 2008 and 20 November 2008, without taking into account the Dandenong-Hastings Road property, the total value was approximately $250,000. Subsequently, with the acquisition of the Dandenong-Hastings Road property, the value of his property assets was well in excess of the total assets limit. On that basis alone, Mr Kooyoufas’ pension rate should have been $0. In any event, if one were to also examine Mr Kooyoufas’ ordinary income over the relevant periods, given that the amount which I have found should be attributed to him from the rental income of his parents’ properties, he has exceeded the income cut-off limit for every period. This test would also reduce his pension rate to $0.
DEBT WAIVER
While the issue of debt waiver was not raised by Mr Kooyoufas in the course of the hearing, for the sake of completeness, I should examine whether grounds for waiver exist.
Section 1223 of the Social Security Act deals with debts arising from overpayment. It provides:
1223 (1) [Payments made to a person] Subject to this section, if:
(c)a social security payments made; and
(d)a person who obtains a benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains a benefit of the payment.
Given the findings I have made in relation to Mr Kooyoufas’ assets and income, there can be no doubt that he is a person who obtained the benefit of payments to which he was not entitled. There was no dispute about the calculated amount of overpayment being $73,813.71 for the period 30 May 2007 to 22 November 2011.
Where a debt has arisen which is attributable solely to an administrative error made by the Commonwealth, if the debtor received the payment or payments in good faith, the Secretary must waive the right to recover that proportion of debt (s. 1237A (1)). Subsection (1) only applies if the debt is not raised within a period of six weeks from the first payment that caused the debt (s. 1237A (1A)).
The reason for the debt arising in Mr Kooyoufas’ circumstances was that he failed to notify Centrelink of his interest in the Lewis Grove property and the acquisition of the Dandenong-Hastings Road property. In addition, Mr Kooyoufas failed to notify Centrelink that he was receiving into his accounts rental income from properties owned by his parents.
In those circumstances, the waiver provisions set out in s. 1237A cannot apply to
Mr Kooyoufas. It cannot be said that Mr Kooyoufas received the DSP payments during the period in question in good faith or that the payments came about solely as the result of an administrative error.
CONCLUSION
I have found that during the relevant period between 30 May 2007 and 22 November 2011, Mr Kooyoufas had assets and income both of which were in excess of the maximum permissible for the payment of the DSP. In those circumstances, all social security payments received by Mr Kooyoufas during that period were payments made for his benefit to which he was not entitled. Accordingly, the sum of those payments constitutes a debt due to the Commonwealth by reason of s. 1223 of the Social Security Act. Having examined the entitlement calculations and the debt report prepared by Centrelink, I am of the opinion that Mr Kooyoufas has a debt owing to the Commonwealth in the amount of $73,813.71.
I find that the decision made by the SSAT on 29 January 2013 to raise and recover a debt in the amount of $73,813.71 and to cancel his entitlement to the DSP effective from
30 May 2007 was correct. I affirm that decision.
I certify that the preceding 97 (ninety seven) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member [sgd]........................................................................
Associate
Dated 12 December 2014
Dates of hearing 8 & 9 September 2014 Date final submissions received 30 September 2014 Counsel for the Applicant Nicola Pachinger Solicitors for the Applicant Zenith Lawyers Solicitors for the Respondent Andrew Shelley, Sparke Helmore ANNEXURE
14-Aug-07 $2,635.08 Crabtrees Real Estate
17-Aug-07 $4,860.15 Ray White Real Estate
SUBTOTAL $7,495.23
Acc ending
Appendix 1
Rental income
NAB acc ending #897
#90313-Sep-07 $2,442.01 ARC Real Estate
13-Sep-07 $2,652.00 Crabtrees Real Estate25-Sep-07 $1,760.00 Ray White Real Estate
27-Sep-07 $909.09 ARC Real Estate
1-Oct-07 $2,442.82 ARC Real Estate
15-Oct-07 $2,635.08 Crabtrees Real Estate
25-Oct-07 $909.09 ARC Real Estate
26-Oct-07 $1,707.20 Ray White Real Estate
1-Nov-07 $2,442.82 ARC Real Estate
15-Nov-07 $2,645.68 Crabtrees Real Estate
23-Nov-07 $1,707.20 Ray White Real Estate
29-Nov-07 $2,165.94 ARC Real Estate
3-Dec-07 $637.87 ARC Real Estate
6-Dec-07 $529.20 ARC Real Estate
14-Dec-07 $3,123.11 Crabtrees Real Estate
18-Dec-07 $1,707.20 Ray White Real Estate
31-Dec-07 $1,271.03 ARC Real Estate
31-Dec-07 $909.09 ARC Real Estate
3-Jan-08 $529.20 ARC Real Estate
14-Jan-08 $2,876.77 Crabtrees Real Estate
18-Jan-08 $1,707.20 Ray White Real Estate
31-Jan-08 $909.09 ARC Real Estate
4-Feb-08 $1,167.07 ARC Real Estate
7-Feb-08 $1,323.00 ARC Real Estate
14-Feb-08 $2,876.77 Crabtrees Real Estate
19-Feb-08 $1,711.49 Ray White Real Estate
19-Feb-08 $689.96 Crabtrees Real Estate
22-Feb-08 $313.30 Ray White Real Estate
27-Feb-08 $884.09 ARC Real Estate
3-Mar-08 $1,167.07 ARC Real Estate
4-Mar-08 $1,323.00 ARC Real Estate
13-Mar-08 $2,876.77 Crabtrees Real Estate
25-Mar-08 $1,701.92 Ray White Real Estate
31-Mar-08 $2,182.00 ARC Real Estate
7-Apr-08 $1,323.00 ARC Real Estate
14-Apr-08 $2,876.77 Crabtrees Real Estate
22-Apr-08 $1,637.84 Ray White Real Estate
30-Apr-08 $1,090.91 ARC Real Estate
6-May-08 $2,334.15 ARC Real Estate
19-May-08 $2,887.37 Crabtrees Real Estate
23-May-08 $1,792.56 Ray White Real Estate
27-May-08 $677.01 ARC Real Estate
30-May-08 $1,239.84 ARC Real Estate
6-Jun-08 $1,707.14 ARC Real Estate
13-Jun-08 $2,876.77 Crabtrees Real Estate
24-Jun-08 $992.01 ARC Real Estate
24-Jun-08 $1,792.56 Ray White Real Estate
1-Jul-08 $545.00 Agent Deposit
$88,196.16
to June 2008
7-Jul-08 $1,320.25 ARC Real Estate
15-Jul-08 $5,050.30 Crabtrees Real Estate
18-Jul-08 $1,369.39 ARC Real Estate
18-Jul-08 $3,300.45 ARC Real Estate
28-Jul-08 $2,269.03 ARC Real Estate
12-Aug-08 $2,876.77 Crabtrees Real Estate
15-Aug-08 $1,430.64 ARC Real Estate
15-Aug-08 $1,792.56 Ray White Real Estate
27-Aug-08 $1,112.54 ARC Real Estate
2-Sep-08 $1,294.65 ARC Real Estate
9-Sep-08 $1,372.14 ARC Real Estate
15-Sep-08 $2,897.03 Crabtrees Real Estate
17-Sep-08 $1,792.56 Ray White Real Estate
23-Sep-08 $803.25 ARC Real Estate
6-Oct-08 $1,343.55 ARC Real Estate
13-Oct-08 $1,372.14 ARC Real Estate
14-Oct-08 $2,876.22 Crabtrees Real Estate
17-Oct-08 $1,792.56 Ray White Real Estate
29-Oct-08 $1,034.77 ARC Real Estate
29-Oct-08 $1,308.93 ARC Real Estate
7-Nov-08 $1,372.14 ARC Real Estate
13-Nov-08 $2,876.22 Crabtrees Real Estate
19-Nov-08 $100.57 Ray White Real Estate
26-Nov-08 $1,051.55 ARC Real Estate
3-Dec-08 $1,323.00 ARC Real Estate
10-Dec-08 $1,372.14 ARC Real Estate
12-Dec-08 $3,118.83 Crabtrees Real Estate
22-Dec-08 $3,114.60 Ray White Real Estate
29-Dec-08 $1,134.00 ARC Real Estate
30-Dec-08 $1,304.10 ARC Real Estate
09-Jan-09 $957.33 Ray White Real Estate
15-Jan-09 $2,991.38 Crabtrees Real Estate
21-Jan-09 $1,939.94 Ray White Real Estate
23-Jan-09 $1,372.14 ARC Real Estate
29-Jan-09 $980.30 ARC Real Estate
04-Feb-09 $1,323.00 ARC Real Estate
05-Feb-09 $943.93 Ray White Real Estate
06-Feb-09 $1,372.14 ARC Real Estate
12-Feb-09 $2,991.38 Crabtrees Real Estate
20-Feb-09 $944.76 Ray White Real Estate
25-Feb-09 $1,023.43 ARC Real Estate
03-Mar-09 $977.76 Ray White Real Estate
04-Mar-09 $1,289.93 ARC Real Estate
04-Mar-09 $1,372.14 ARC Real Estate
16-Mar-09 $3,003.67 Crabtrees Real Estate
20-Mar-09 $678.10 Crabtrees Real Estate
25-Mar-09 $1,023.43 ARC Real Estate
25-Mar-09 $483.50 Ray White Real Estate
01-Apr-09 $1,323.00 ARC Real Estate
03-Apr-09 $1,432.55 Ray White Real Estate
08-Apr-09 $1,436.40 ARC Real Estate
16-Apr-09 $2,991.38 Crabtrees Real Estate
27-Apr-09 $1,053.43 ARC Real Estate
04-May-09 $1,417.50 ARC Real Estate
05-May-09 $1,939.94 Ray White Real Estate
14-May-09 $2,991.38 Crabtrees Real Estate
27-May-09 $1,023.43 ARC Real Estate
29-May-09 $1,370.25 ARC Real Estate
05-Jun-09 $1,925.15 Ray White Real Estate
10-Jun-09 $1,044.51 ARC Real Estate
15-Jun-09 $3,003.67 Crabtrees Real Estate
26-Jun-09 $781.85 ARC Real Estate
30-Jun-09 $88.83 ARC Real Estate
30-Jun-09 $1,370.25 ARC Real Estate
$106,583.29
(2008/2009)
03-Jul-09 $1,372.14 ARC Real Estate
03-Jul-09 $1,896.71 Ray White Real Estate
06-Jul-09 $1,432.62 ARC Real Estate
10-Jul-09 $884.16 Ray White Real Estate
16-Jul-09 $5,211.92 Crabtrees Real Estate
23-Jul-09 $1,067.85 ARC Real Estate
28-Jul-09 $1,208.66 Ray White Real Estate
31-Jul-09 $1,370.25 ARC Real Estate
05-Aug-09 $1,433.57 ARC Real Estate
07-Aug-09 $1,868.97 Ray White Real Estate
13-Aug-09 $2,991.38 Crabtrees Real Estate
14-Aug-09 $1,919.52 Ray White Real Estate
28-Aug-09 $1,208.66 Ray White Real Estate
31-Aug-09 $1,210.85 ARC Real Estate
02-Sep-09 $1,370.25 ARC Real Estate
04-Sep-09 $1,920.76 Ray White Real Estate
09-Sep-09 $1,433.57 ARC Real Estate
15-Sep-09 $3,012.97 Crabtrees Real Estate
25-Sep-09 $1,097.85 ARC Real Estate
02-Oct-09 $1,370.25 ARC Real Estate
02-Oct-09 $1,208.66 Ray White Real Estate
02-Oct-09 $1,920.60 Ray White Real Estate
05-Oct-09 $1,436.40 ARC Real Estate
13-Oct-09 $2,991.38 Crabtrees Real Estate
23-Oct-09 $1,920.60 Ray White Real Estate
26-Oct-09 $1,067.85 ARC Real Estate
30-Oct-09 $985.36 Ray White Real Estate
06-Nov-09 $1,370.25 ARC Real Estate
06-Nov-09 $1,430.73 ARC Real Estate
16-Nov-09 $3,111.15 Crabtrees Real Estate
27-Nov-09 $1,097.85 ARC Real Estate
01-Dec-09 $1,208.66 Ray White Real Estate
04-Dec-09 $1,370.25 ARC Real Estate
07-Dec-09 $1,433.57 ARC Real Estate
08-Dec-09 $1,755.60 Ray White Real Estate
17-Dec-09 $3,125.38 Crabtrees Real Estate
30-Dec-09 $1,067.85 ARC Real Estate
04-Jan-10 $1,208.66 Ray White Real Estate
05-Jan-10 $1,886.72 Ray White Real Estate
06-Jan-10 $1,370.25 ARC Real Estate
08-Jan-10 $1,436.40 ARC Real Estate
13-Jan-10 $3,111.15 Crabtrees Real Estate
19-Jan-10 $184.29 Ray White Real Estate
27-Jan-10 $1,097.85 ARC Real Estate
29-Jan-10 $1,208.66 Ray White Real Estate
03-Feb-10 $1,370.25 ARC Real Estate
05-Feb-10 $2,023.28 Ray White Real Estate
08-Feb-10 $1,431.67 ARC Real Estate
16-Feb-10 $3,111.15 Crabtrees Real Estate
26-Feb-10 $1,067.85 ARC Real Estate
02-Mar-10 $1,208.66 Ray White Real Estate
02-Mar-10 $2,015.50 Ray White Real Estate
03-Mar-10 $1,370.25 ARC Real Estate
10-Mar-10 $1,433.57 ARC Real Estate
15-Mar-10 $3,846.04 Crabtrees Real Estate
30-Mar-10 $1,161.41 Ray White Real Estate
31-Mar-10 $1,370.25 ARC Real Estate
07-Apr-10 $1,433.57 ARC Real Estate
09-Apr-10 $1,043.35 ARC Real Estate
13-Apr-10 $114.35 Ray White Real Estate
15-Apr-10 $3,111.15 Crabtrees Real Estate
1e-Apr-10 $2,015.79 Ray White Real Estate
30-Apr-10 $1,162.35 ARC Real Estate
30-Apr-10 $1,285.19 Ray White Real Estate
06-May-10 $1,370.25 ARC Real Estate
06-May-10 $1,436.40 ARC Real Estate
13-May-10 $3,111.15 Crabtrees Real Estate
14-May-10 $2,017.47 Ray White Real Estate
28-May-10 $1,162.35 ARC Real Estate
28-May-10 $1,280.47 Ray White Real Estate
04-Jun-10 $1,370.25 ARC Real Estate
07-Jun-10 $1,436.40 ARC Real Estate
15-Jun-10 $1,740.60 Ray White Real Estate
15-Jun-10 $3,125.38 Crabtrees Real Estate
25-Jun-10 $276.19 Ray White Real Estate
29-Jun-10 $1,233.22 Ray White Real Estate
30-Jun-10 $1,162.35 ARC Real Estate
05-Jul-10 $1,425.85 ARC Real Estate
$127,588.14
(2009/2010)
06-Jul-10 $2,347.62 Crabtrees Real Estate
08-Jul-10 $1,369.16 ARC Real Estate
09-Jul-10 $2,017.60 Ray White Real Estate
13-Jul-10 $3,111.15 Crabtrees Real Estate
23-Jul-10 $2,080.65 Ray White Real Estate
29-Jul-10 $1,161.25 ARC Real Estate
30-Jul-10 $1,280.47 Ray White Real Estate
05-Aug-10 $1,370.26 ARC Real Estate
06-Aug-10 $1,433.57 ARC Real Estate
06-Aug-10 $2,015.51 Ray White Real Estate
17-Aug-10 $3,135.09 Crabtrees Real Estate
27-Aug-10 $1,162.35 ARC Real Estate
31-Aug-10 $1,280.46 Ray White Real Estate
03-Sep-10 $1,370.26 ARC Real Estate
08-Sep-10 $1,474.20 ARC Real Estate
10-Sep-10 $2,017.70 Ray White Real Estate
15-Sep-10 $3,111.15 Crabtrees Real Estate
28-Sep-10 $1,280.47 Ray White Real Estate
29-Sep-10 $1,162.35 ARC Real Estate
01-Oct-10 $2,017.59 Ray White Real Estate
04-Oct-10 $1,370.26 ARC Real Estate
06-Oct-10 $1,474.20 ARC Real Estate
14-Oct-10 $3,111.15 Crabtrees Real Estate
26-Oct-10 $1,162.35 ARC Real Estate
29-Oct-10 $1,417.40 ARC Real Estate
29-Oct-10 $1,280.47 Ray White Real Estate
05-Nov-10 $1,465.69 ARC Real Estate
11-Nov-10 $2,726.15 Crabtrees Real Estate
26-Nov-10 $1,162.35 ARC Real Estate
30-Nov-10 $1,280.48 Ray White Real Estate
01-Dec-10 $1,384.43 ARC Real Estate
07-Dec-10 $1,471.37 ARC Real Estate
14-Dec-10 $212.62 Ray White Real Estate
16-Dec-10 $3,127.58 Crabtrees Real Estate
30-Dec-10 $1,351.35 Ray White Real Estate
04-Jan-11 $1,162.35 ARC Real Estate
07-Jan-11 $1,474.20 ARC Real Estate
13-Jan-11 $1,417.66 ARC Real Estate
17-Jan-11 $3,618.57 Crabtrees Real Estate
28-Jan-11 $1,351.35 Ray White Real Estate
31-Jan-11 $1,162.35 ARC Real Estate
01-Feb-11 $1,417.66 ARC Real Estate
14-Feb-11 $2,891.70 ARC Real Estate
14-Feb-11 $3,280.29 Crabtrees Real Estate
01-Mar-11 $1,162.35 ARC Real Estate
01-Mar-11 $1,445.85 Ray White Real Estate
04-Mar-11 $1,417.66 ARC Real Estate
16-Mar-11 $4,297.28 Crabtrees Real Estate
29-Mar-11 $1,162.35 ARC Real Estate
29-Mar-11 $1,445.85 Ray White Real Estate
06-Apr-11 $1,502.55 ARC Real Estate
13-Apr-11 $1,417.66 ARC Real Estate
19-Apr-11 $3,280.29 Crabtrees Real Estate
28-Apr-11 $1,357.85 Ray White Real Estate
02-May-11 $1,162.35 ARC Real Estate
02-May-11 $1,417.66 ARC Real Estate
09-May-11 $1,474.20 ARC Real Estate
17-May-11 $3,280.29 Crabtrees Real Estate
27-May-11 $1,162.35 ARC Real Estate
31-May-11 $766,51 Ray White Real Estate
03-Jun-11 $1,486.30 ARC Real Estate
07-Jun-11 $1,474.20 ARC Real Estate
16-Jun-11 $3,296.72 Crabtrees Real Estate
29-Jun-11 $1,162.35 ARC Real Estate
$114,571.41
(2010/2011)
01-Jul-11 $1,460.33 ARC Real Estate
08-Jul-11 $1,473.10 ARC Real Estate
14-Jul-11 $3,280.29 Crabtrees Real Estate
29-Jul-11 $1,161.25 ARC Real Estate
29-Jul-11 $1,463.65 ARC Real Estate
05-Aug-11 $1,474.20 ARC Real Estate
15-Aug-11 $3,280.29 Crabtrees Real Estate
30-Aug-11 $1,162.35 ARC Real Estate
30-Aug-11 $1,460.03 ARC Real Estate
05-Sep-11 $1,500.66 ARC Real Estate
13-Sep-11 $5,943.60 Crabtrees Real Estate
29-Sep-11 $1,162.35 ARC Real Estate
29-Sep-11 $1,460.03 ARC Real Estate
05-Oct-11 $1,502.55 ARC Real Estate
13-Oct-11 $3,280.29 Crabtrees Real Estate
14-Oct-11 $3,695.50 ARC Real Estate
26-Oct-11 $1,162.35 ARC Real Estate
03-Nov-11 $1,460.03 ARC Real Estate
08-Nov-11 $1,494.99 ARC Real Estate
14-Nov-11 $3,411.60 Crabtrees Real Estate
30-Nov-11 $1,200.15 ARC Real Estate
30-Nov-11 $1,474.20 ARC Real Estate
Total $474,407.56
Key Legal Topics
Areas of Law
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Social Security Law
Legal Concepts
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Debt Recovery
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Entitlement to Benefits
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Administrative Decision
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Waiver
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Cancellation of DSP
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