Re Alex Arnold and Secretary, Department of Education, Employment and Workplace Relations
[2011] AATA 828
•23 November 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 828
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/0001
GENERAL ADMINISTRATIVE DIVISION ) Re ALEX ARNOLD Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Ms J Toohey, Senior Member Date23 November 2011
PlaceSydney
Decision The Tribunal varies the decision under review by deciding that the deposits of $35.34 on 1 June 2006, $302.55 on 13 July 2006 and $15.00 on 19 December 2006 into the applicant’s bank account are not income for the purpose of assessing the applicant’s overpayment debt, but otherwise affirms the decision under review.
....................[sgd]......................
Ms J Toohey, Senior Member
CATCHWORDS
SOCIAL SECURITY – Newstart Allowance – overpayment – whether bank deposits income for the purposes of the Social Security Act 1991 – whether applicant overpaid – whether the Tribunal should hear evidence from the applicant’s witnesses – applicant’s evidence lacking credibility – whether special circumstances – decision under review varied.
Administrative Appeals Tribunal Act 1975 s 42A(2)(a)
Social Security Act 1991 ss 8, 1068, 1073(1), 1236, 1237A, 1237AAD
Read v Commonwealth (1988) 167 CLR 57; [1988] HCA 26
Secretary, Department of Social Security v McLaughlin and Anors [1997] FCA 1456
REASONS FOR DECISION
23 November 2011 Ms J Toohey, Senior Member BACKGROUND
1.This matter concerns a decision by Centrelink to raise and recover a debt for overpayment of Newstart Allowance to Alex Arnold.
2.From 1998 to 2004, Mr Arnold received Newstart Allowance intermittently. From 2004 until recently, when his payment was suspended for reasons unrelated to these proceedings, he has received the allowance continuously.
3.Between 22 February 2005 and 13 December 2007, cash deposits totalling $23,392.83 were made into Mr Arnold’s bank accounts which Centrelink says he has failed satisfactorily to explain. Centrelink contends the deposits are income for the purposes of the Social Security Act 1991 (SS Act) and resulted in an overpayment to Mr Arnold of $10,365.67 in Newstart Allowance.
4.On 4 December 2008, the Social Security Appeals Tribunal (SSAT) affirmed the decision that Mr Arnold had been overpaid $10,365.67. The SSAT further found there was no reason to write off or waive all or any of the debt.
5.Mr Arnold says the deposits came from various sources and none should be treated as income for the purpose of the SS Act.
THE ISSUES
6.I have to decide:
(a)whether Mr Arnold has been paid overpaid Newstart Allowance;
(b)if so, whether there is any reason why he should not have to repay some or all of the resulting debt.
PRELIMINARY MATTER
7.A preliminary matter arose at the hearing of Mr Arnold’s application on 16 November 2011, being whether the Tribunal should hear evidence from a number of witnesses nominated by Mr Arnold. For the following reasons, I declined to hear their oral evidence.
8.Mr Arnold lodged his application for review of the SSAT's decision on 2 January 2009. Since then, this Tribunal has conducted some 13 preliminary conferences and directions hearings. The application was originally listed for hearing on 3 August 2010. On 28 April 2010, a conference registrar directed Mr Arnold to file by 22 June 2010 his own witness statement and statements from any witnesses whom he proposed to call at the hearing. On 21 July 2010, the Tribunal, differently constituted, vacated the hearing because Mr Arnold was self-represented and had related proceedings in another jurisdiction which the Tribunal considered should be determined before it proceeded to determine this application.
9.The significance of the direction made on 28 April 2010 is that Mr Arnold has been on notice since then of the importance of providing evidence in support of his application and, in particular, written evidence from any witnesses on whom he intended to rely.
10.Mr Arnold’s application was subsequently listed for hearing on 2 June 2011. He did not appear at that hearing and, when contacted by the Tribunal, said he had changed address and had not received a listing notice advising him of the date and time of the hearing. I had some doubts about his explanation but I was prepared to accept what Mr Arnold said and relisted the matter for hearing on 5 September 2011.
11.Mr Arnold did not appear at the hearing on 5 September 2011 and I dismissed his application pursuant to s 42A(2)(a) of the Administrative Appeals Tribunal Act 1975 for failure to appear.
12.On 8 September 2011, Mr Arnold wrote to the Tribunal asking that his application be reinstated on the ground that he was in another court on 5 September 2011 and “accidentally confused” that matter with these proceedings. On 14 October 2011, I heard Mr Arnold’s application for reinstatement. Having heard his explanation for failure to appear on 5 September 2011, I again had some doubts about his evidence but I accepted he had a matter in another court on 5 September 2011 and made an order reinstating his application and listing the matter for hearing on 16 November 2011.
13.Mr Arnold’s application has been before the Tribunal for close on three years and he has something of a history of claiming not to receive correspondence, whether sent by registered post or direct to his home address, and failing to appear at hearings. For this reason, on 14 October 2011, I directed him to give to the Tribunal and the respondent by 28 October 2011:
(a)a list of all witnesses on whose evidence he intended to rely with their full contact details;
(b)a statement from each witness of the evidence they would give in support of his application; and
(c)any further documents on which he intended to rely.
14.Nothing was received from Mr Arnold by 28 October 2011. Instead, on 15 November 2011, the Tribunal received from him a fax listing five names and telephone numbers of people he described as witnesses from whom “I have borrowed money over my entire life and the period questioned by Centrelink”.
15.At the start of the hearing on 16 November 2011, Mr Arnold was asked who each of his nominated witnesses were. He said they were his mother, father, two sisters and a friend, and that each would give evidence they had lent him money which accounted for a number of the deposits into his account. He claimed he had been unable to contact the witnesses until the last few days to obtain witness statements. He confirmed he had no further documents on which he intended to rely.
16.I am prepared to accept that each of the persons nominated by Mr Arnold is who he says they are. However, I was not satisfied it would assist me to hear from any of them; at most, each would say they lent him money which they required him to repay. As Mr Arnold had already confirmed he had no further documents on which he intended to rely, I was not persuaded their oral evidence alone would be of any probative value. However, I noted that the written reasons of the SSAT indicated he had given that tribunal a similar account of loans by family members and I maintained an open mind about whether, having heard Mr Arnold's evidence, it might assist to hear from any of them.
17.As it turned out, Mr Arnold's evidence changed during the course of the hearing. Whereas at the start of the hearing, as well as before the SSAT, he claimed that others lent him money, in oral evidence he claimed the deposits about which his witnesses would give evidence represented their repayments to him of amounts he lent them on different occasions. As should become clear, I am not satisfied of the truth of Mr Arnold's evidence generally and I am satisfied that he has not been prejudiced by the failure to hear evidence from any of his witnesses, particularly as their evidence would have been contradicted by his own.
WAS MR ARNOLD OVERPAID NEWSTART ALLOWANCE?
18.I should note at this point that Centrelink has raised other debts against Mr Arnold in connection with income from employment which Centrelink says he has not declared. Some of those debts have been repaid and some are outstanding. None has any bearing on these proceedings.
19.The income in question in these proceedings comprises cash deposits of $23,392.83 into Mr Arnold's St George bank account between March 2005 and February 2007. Broadly, the deposits comprise the following:
(a)eight deposits of between $1000 and $6000; and
(b)ten deposits of less than $1000.
20.Mr Arnold accounts for these deposits as follows.
21.In late 2002, Mr Arnold sold a property from which he received approximately $53,000. He says he contacted Centrelink at the time to find out what effect that amount would have on his Newstart Allowance. He says he was advised that any interest earned would count as income, and could affect his payment, but that cash itself would not affect his payment. He says he therefore decided to keep the money in cash, rather than in his bank account, and draw on it from time to time as needed. He gave evidence that he still has approximately $10,000 in cash today.
22.In evidence before the Tribunal, Mr Arnold said the deposits of $1000 or more into his bank account were from the cash he kept at home; he made the deposits from time to time for various purposes, as the need arose. He said the deposits of $1000 or less “could possibly” be money he borrowed from his family to pay for medical expenses in connection with an injury for which he received compensation in about 2005.
23.However, on questioning about each deposit, Mr Arnold gave varying and inconsistent responses.
Deposits of $1,000 or more
24.Mr Arnold said that he made deposits of $6000 and $1300 into his account in March 2005 to pay for doctors’ reports in connection with his compensation claim. When asked whether he had kept receipts for the reports, he said he had them at one time but does not know what has happened to them, and he thought he had in fact produced them to Centrelink. Centrelink does not appear to have received them.
25.It is not clear why Mr Arnold would pay cash into his account only to withdraw it to pay for doctors’ accounts, and he could not satisfactorily explain why he would do so. In any event, nothing in his bank statements appears to align with payments to doctors in the amounts he claims. When this was put to him, Mr Arnold said he might have made a withdrawal and added cash he already had on him to pay the doctor. He also said he might have paid the doctors by cheque, but there are no withdrawals consistent with a bank cheque, and he does not have a personal cheque account.
26.Mr Arnold gave evidence that a deposit of $1000 on 4 April 2005 was “probably for medical expenses”. He was unable to produce receipts because, he said, he had sent them to the Legal Services Commission in relation to a dispute concerning his compensation claim. He gave evidence that a deposit of $1800 on 28 July 2005 “could have been” for doctors’ reports and various scans related to his compensation claim. He has not produced receipts.
27.Mr Arnold gave evidence that deposits of $2000, $2300, $3740 and $1000 in November 2005, January and December 2006, and February 2007 were for gambling. He frankly admitted to gambling a lot, and said he preferred not to carry large amounts of cash when gambling. While that makes some sense, it is not clear why he would not simply take smaller amounts of cash with him from what he kept at home.
Deposits of less than $1,000
28.Mr Arnold claimed that deposits of $980 on 8 March 2005, and $550 on 10 March 2005, were for doctors’ bills. As noted above, no withdrawals in his bank statements appear consistent with these amounts. He has not produced receipts.
29.When asked for details of the smaller deposits, Mr Arnold was vague at first and said they were “possibly” from his mother, his sister and his friend, Yusuf. When pressed, he recalled most of them in detail. He claimed that deposits of $600 on 19 April 2005 and 6 September 2005 were repayments by his mother of money he had lent her. He said a deposit of $260 on 9 May 2005 was a repayment by his father for a power bill Mr Arnold paid for him. He said a deposit of $500 was repayment by his friend, Yusuf, for money he had lent him, and a deposit of $450 on 11 January 2007 was from his sister for money he had lent to her.
30.Mr Arnold's claim that most of the smaller deposits were repayments to him by family members and a friend appears to have been made for the first time at the hearing on 16 November 2011. It is in direct contrast to his evidence to the SSAT that the deposits were money he borrowed from his sister and his mother for legal and medical bills, and for his wedding. It is inconsistent with what he said at the start of the hearing: that his witnesses would give evidence of money they had lent to him, and that claim itself makes little sense if he had a considerable sum of cash from the sale of his house at home.
31.When it was put to Mr Arnold that he had previously said the deposits were loans to him by others rather than the other way around, he claimed that, each time he lent money to family members or his friend, they signed a document as proof of the loan. He claimed that he had kept copies of these documents but he had moved house several times and no longer had any of the paperwork. However, he said, his family and his friend would probably have copies but he had not thought it necessary to produce those to the Tribunal. It is difficult to reconcile this claim with Mr Arnold's statement at the start of the hearing that there were no further documents on which he intended to rely.
SHOULD THE DEPOSITS BE TREATED AS INCOME?
32.Newstart Allowance is payable at a rate calculated according to a formula in section 1068 of the SS Act and is subject to an income test based a person’s ordinary income on a fortnightly basis.
33.By section 8 of the SS Act, the terms “ordinary income”, “income amount” and “income” have the following meanings:
ordinary income means income that is not maintenance income or an exempt lump sum.
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).
income amount means:
(a) valuable consideration; or
(b) personal earnings; or
(c) moneys; or
(d) profits;
(whether of a capital nature or not).
34.The combined effect of these definitions is to give “income” a broad meaning for the purposes of the SS Act. The policy underlying the relevant provisions is to ensure a basic level of income for those in need of support. The High Court in Read v Commonwealth (1988) 167 CLR 57 at 69; [1988] HCA 26, referring to the SS Act said:
The definition is exhaustive: the term “income” means what it is defined to mean; it does not mean what “income” would be understood to mean if the definition were not in the Act. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide. The definition is wide enough to embrace receipts of a capital nature as well as receipts of income, for “income” is defined to mean, inter alia, any monies, valuable consideration or profits irrespective of the means by which or the source from which those monies, etc. are received…
35.Referring to Read, in Secretary, Department of Social Security v McLaughlin and Anor [1997] FCA 1456, French J (as he then was) said:
The concept of “income” defined in the Social Security Act is entirely different from that embodied in the comparable provisions of the Income Tax Assessment Act … The general approach to construction was considered in Rose v Department of Social Security (1990) 21 FCR 241 at 244:
The Act is a remedial provision in that it gives benefits to persons and thereby remedies Parliament's perceptions of injustice. It calls for no narrow or pedantic construction; but, as mentioned earlier, it contains both enabling and excepting provisions which do not therefore necessarily require beneficial interpretation. It depends on the particular statutory provision and an analysis of its language and purpose. Aids to construction, including the principle of liberal interpretation of remedial provisions, are generally invoked when there is some ambiguity on the fact (sic) of the particular statutory provision. That is not the case here with the definition of “income” in its introductory general words with which this case is concerned.
…
The definition of “income” extends to income amounts “received” by a person. There is no requirement in the Act that such amounts are received in exchange anything. They may therefore extend to gifts. This is reinforced by the extension of the definition of “income” to a periodical payment by way of gift or allowance.
There is no requirement in the definition to the payment received to constitute a net gain. Absent such a requirement a payment of money received by a person for that person's own use or benefit is the payment of an income amount. No doubt examples may be generated and multiplied of apparently startling or unfair results of this construction. The receipt of the proceeds of the sale of a house or a lottery win may constitute “income” for the purposes of the Act. Such debates, however, are best reserved for the legislature...
36.Once it is determined that an amount is “income” for the purposes of the SS Act, it is taken to have been received equally over the weekly periods in the 12 months following its receipt: section 1073(1).
37.Mr Arnold's bank statements for the relevant period show a number of deposits which he has been unable satisfactorily to explain. None of his explanations for three larger deposits makes sense or is plausible. He has given inconsistent evidence generally, and his evidence about the smaller deposits in particular is quite different from what he has previously told Centrelink and the SSAT. It is not possible to determine what the source of the various deposits was but I do not accept the explanations given by Mr Arnold.
38.With the exception of three amounts referred to below, I am satisfied that each of the deposits in question were moneys, and therefore an “income amount”, for the purposes of the SS Act. I am satisfied that they were received by Mr Arnold for his own use or benefit. I am satisfied that they are not amounts excluded by subsections (4), (5) or (8) from the definition of “income” in section 8.
39.Mr Arnold's bank statements show three deposits which I am prepared to accept should not count as income. They are: $35.34 on 1 June 200, $302.55 on 13 July 2006, and $15.00 on 19 December 2006. While he could not recall these amounts in any detail, Mr Arnold gave evidence that he thought the first was to do with an overdraft; the second was some form of refund, possibly to do with insurance; and the third he could not recall. They are small amounts and appear broadly consistent with a refund or reimbursement of some sort. I am prepared to accept that is what they were.
IS THERE ANY REASON MR ARNOLD SHOULD NOT HAVE TO REPAY ALL OR ANY OF THE OVERPAYMENT?
40.By section 1236, of the SS Act, a debt may be written off only if:
a) the debt is irrecoverable at law; or
b) the debtor has no capacity to repay the debt; or
c) the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
d) it is not cost-effective for the Commonwealth to take action to recover the debt.
41.I am satisfied that none of these provisions apply in this case.
42.A debt must be waived if it is attributed solely to administrative error and was received in good faith: section 1237A(1). There is nothing to suggest an administrative error in this case, and I am satisfied this provision does not apply here.
43.By s 1237 AAD, a debt may be waived if there are special circumstances. For this provision to operate:
(a)the overpayment must not result from a person knowingly making a false statement or false representation, or knowingly failing or omitting to comply with social security law; and
(b)there must be special circumstances other than financial hardship alone, that mean the debt should be waived.
44.Leaving aside whether Mr Arnold knowingly made a false statement or false representation to Centrelink, I am not satisfied that there are special circumstances which warrant waiving any or all of the debt.
45.Mr Arnold gave evidence that he has a number of ongoing medical expenses related to the injury for which he was paid compensation. Approximately every six months, he pays $500 to $800 for x-rays, MRIs or other scans. He has to spend $30.00 to $40.00 each week on painkillers and other medication. He has three children who live with their mother but who spend weekends with him. He lives with his mother and does not pay rent. He owns a house which has been rented since last week; he receives $350 in rent each week and has a mortgage of $650 a month. According to his evidence before the Tribunal, he still has approximately $10,000 in cash from the sale of his property in 2002.
46.Mr Arnold does not claim any special circumstances other than financial hardship. I am not satisfied there is ground to waive any or all of the debt arising from the overpayment.
DECISION
47.The Tribunal varies the decision under review by deciding that the deposits of $35.34 on 1 June 2006, $302.55 on 13 July 2006, and $15.00 on 19 December 2006 into the applicant’s bank account are not income for the purpose of assessing the applicant’s overpayment debt, but otherwise affirms the decision under review.
I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Ms J Toohey, Senior Member
Signed: ...............[sgd].................................................................
C. Taylor, AssociateDate/s of Hearing 16 November 2011
Date of Decision 23 November 2011
Appearance for the Applicant Self-Represented
Appearance for the Respondent Ms H Schuster, DHS Legal Services
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