Rigas and Secretary, Department of Education, Employment and Workplace Relations and Anor

[2008] AATA 1036

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 1036

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/3209 &

GENERAL ADMINISTRATIVE DIVISION		)               2007/3213
Re		JOHN RIGAS AND ELPIS RIGAS

Applicant

And

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT & WORKPLACE RELATIONS

and

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr P McDermott, RFD, Senior Member

Date18 November 2008

PlaceBrisbane

Decision The decision under review is affirmed.

.............[Sgd]...........................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Pensions, Benefits and Allowances – mature age allowance debt, partner allowance debt and age pension debt – debts arising from lack of qualification – no special circumstances – debts neither written off nor waivered – decision under review affirmed.

Social Security (Administration) Act 1999 (Cth) ss 63, 68(2)

Social Security Act 1991 (Cth) ss 1223(1), 1236, 1236(1A)(a), 1236(1A)(b), 1236(1C), 1237AAD

REASONS FOR DECISION

18 November 2008 Dr P McDermott, RFD, Senior Member  

INTRODUCTION

1.      Mr John Rigas has a mature age allowance debt and an age pension debt. His wife, Mrs Elpis Rigas, has a partner allowance debt and an age pension debt.  I have to determine whether these debts exist and, if so, whether the Commonwealth should recover the debts.

BACKGROUND

2.      From 28 June 2000 to 15 May 2006, Mr Rigas was in receipt of mature age allowance or age pension.  From 28 June 2000 to 15 May 2006, Mrs Rigas was in receipt of partner allowance or age pension.

3.      During the period from 28 June 2000 to 15 May 2006, Mr and Mrs Rigas loaned monies in various sums to their two adult children and a company known as Shooters Saloon Bar (Gold Coast) Pty Ltd (‘Shooters’), the details of these loans appear in the Schedule of my reasons.  The particulars of the loans are in evidence before me and were provided by the accountant of Mr and Mrs Rigas.[1]

[1] T65, fols 434-435.

4.      The amount due on the loans that Mr and Mrs Rigas made to A and G Rigas is $245,687.  The amount due on the loans that Mr and Mrs Rigas made to Shooters is $310,005.  The total amount due on the loans is $555,692.

5.      The loans that Mr and Mrs Rigas made to Shooters and A and G Rigas were obtained by Mr and Mrs Rigas from banks and were secured to those lending institutions by mortgages over rental  properties that Mr and Mrs Rigas owned.  They also provided security over their own home.

CENTRELINK NOTICES

6. I will refer to various notices that Centrelink has given to Mr and Mrs Rigas; all of these notices were given under s 68(2) of the Social Security (Administration) Act 1999.

7.      On 13 March 2000, Centrelink issued a notice to Mr Rigas to require him to notify Centrelink within 14 days if “you or your partner’s” combined financial investments exceeded $95,142.

8.      On 28 June 2000, Centrelink issued a notice to Mr Rigas requiring him to notify Centrelink within 14 days if “you or your partner’s combined financial investments exceeded $84,910.

9.      On 28 June 2000, Centrelink issued a notice to Mrs Rigas requiring her to notify Centrelink within 14 days if her or her partner’s combined financial assets were more than $285,000.  That letter contained an explanation of the meaning of the expression “assets”.  It was mentioned that “a debt owing to you or your partner” was an asset.

10.     On 29 December 2000, Centrelink issued a notice to Mrs Rigas requiring her to notify Centrelink within 14 days if her or her partner’s combined financial assets were more than $285,000.  That letter also contained an explanation of the meaning of the expression “assets”.  It was mentioned that “a debt owing to you or your partner” was an asset.

11.     On 17 June 2001, Centrelink issued a notice to Mrs Rigas requiring her to notify Centrelink within 14 days if her or her partner’s combined financial assets goes over $301,500.  That letter also contained an explanation of the meaning of the expression “assets”.  It was mentioned that “a debt owing to you or your partner” was an asset.

12.     On 21 September 2005, Centrelink issued a notice to Mrs Rigas requiring her to notify Centrelink within 14 days if her and her partner’s combined financial investments were more than $426,494.

13.     On 5 October 2005, Centrelink issued a notice to Mrs Rigas requiring her to notify Centrelink within 14 days if her and her partner’s combined financial investments were more than $427,757.

INCOME AND ASSETS REVIEW

14. On 12 January 2005, Mrs Rigas completed an Income and Assets Review form. That form, which was issued under s 63 of the Social Security (Administration) Act 1999, contained a question: ‘Do you (and/or your partner) have money on loan to another person or organisation?’  By way of explanation, directly below the question is explanatory material that states: ‘All loans should be included, whether they are made to family members, other people or organisations or trusts.’  Mrs Rigas answered ‘no’ to the question.

RELEVANT DECISIONS

15.     On 26 May 2006, Centrelink raised an age pension debt against Mrs Rigas in the sum of $3 863.72 for the period 7 March 2005 to 15 May 2006.

16.     On 26 May 2006, Centrelink raised a partner allowance debt against Mrs Rigas in the sum of $30,452.75 for the period 28 June 2000 to 24 May 2005.

17.     On 15 June 2006, Centrelink raised a mature age allowance and age pension debt against Mr Rigas in the sum of $28,288.98 for the period 28 June 2000 to 15 May 2006.

18.     On 26 July 2006, Centrelink recalculated the debts of Mr and Mrs Rigas after having received further evidence from their former accountant.  Centrelink recalculated Mr Rigas’ mature age allowance and age pension debt to $24,345.02.  Centrelink recalculated Mrs Rigas’ partner allowance debt to $23,557.38.

19.     On 22 January 2007, Mr and Mrs Rigas sought review by an authorised review officer of Centrelink.  On 23 February 2007, the authorised review officer affirmed the decisions of Centrelink.

20.     On 23 April 2007, Mr and Mrs Rigas appealed to the Social Security Appeals Tribunal.  On 6 June 2007, the Social Security Appeals Tribunal affirmed the decisions of Centrelink.

21.     On 12 July 2007, Mr and Mrs Rigas sought review of the decision of the Social Security Appeals Tribunal by this Tribunal.

DEBTS

22.     It may be convenient if I set out the debts as affirmed by the Social Security Appeals.

23.     Mr Rigas has a mature age allowance and age pension debt in the sum of $24,345.02 for the period 28 June 2000 to 15 May 2006.

24.     Mrs Rigas has a partner allowance debt in the sum of $23,557.38 for the period 28 June 2000 to 24 May 2005 and an age pension debt in the sum of $3,863.72 for the period 7 March 2005 to 15 May 2006.

25.     In my reasons I shall refer to these various debts as “the debts”.

ISSUES

26.     The applications of Mr and Mrs Rigas raise an issue of the existence of the various debts.  However, the existence of these debts was conceded by Mr Rigas who also appeared on behalf of Mrs Rigas.  Although the debts were conceded by Mr Rigas, it is fair to say that he had misgivings about whether the loans to his sons could be properly regarded as being “assets”.  However, it is appropriate that I mention that the Social Security Act 1991 (“the Act”) provides in s 1222, which applies to loans, that the value of an asset includes so much of that amount that remains unpaid.  This concession by Mr Rigas really left me to consider whether the Commonwealth should be able to recover the debts.

CONSIDERATION

27.     I should mention at the outset of my consideration of these applications that Mr Rigas elected to not give evidence before me.  Mrs Rigas did not attend the hearing.  Mr Rigas informed me of some circumstances of his family situation.  Mr and Mrs Rigas care for one son who has had psychiatric care and has to periodically have chemotherapy treatment.  The fact that the son has special needs was quite properly conceded by the advocate who appeared for the Secretary.

28. I am satisfied that the debts are recoverable by the Commonwealth. This is because s 1223 (1) of the Act provides that where a person obtains the benefit of a social security payment to which that person was not entitled, then the amount of the payment is a debt due to the Commonwealth on and from the date that the person obtains the benefit of the payment.

29. I have given consideration to whether the debts should be written off under s 1236 of the Act.

30. I can only write off a debt if the circumstances are covered by s 1236(1A) of the Act. Having regard to the circumstances of this matter, I can write off the debt only if the debt is irrecoverable at law or the debtor has no capacity to repay the debt: see 1236(1A)(a) and (b). I am satisfied that the remaining paragraphs in s 1236 (1A) have no application.

31. Having regard to s 1236(1C) of the Act, I find that Mr and Mrs Rigas are taken to have a capacity to repay the debt. This is because the debt is recoverable from the debtors’ social security payments. In this context, I should mention that I am unable to find on the evidence before me that the recovery of the moneys by this means would result in the debtor being in severe financial hardship. I have no evidence before me of the extent or value of the assets of Mr and Mrs Rigas. I have accordingly concluded that it is not appropriate to write off the debts under s 1236 of the Act.

32. I have also given consideration as to whether it is appropriate under s 1237AAD of the Act to waive the debts either in whole or in part. I am not prepared to take the step of waiving the debts where I do not have any evidence of the extent or value of the assets of Mr and Mrs Rigas.

33.     I might add that Centrelink should be commended for providing for the debt to be repaid by small instalments. 

DECISION

34.     I affirm the decision under review.

I certify that the 34 preceding paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member

Signed: ....................[Sgd].........................................................
  Elizabeth Young, Research Associate

Date/s of Hearing  3 November 2008           
Date of Decision  18 November 2008
The Applicants were represented by their son, Mr Anthony Rigas.        
For the Respondent                  Mr B Hamilton, departmental advocate.           

SCHEDULE 1

Loans to A and G Rigas

DateAmount

1 July 2000 (balance brought         15 150

forward)

3 August 2000  100 000

29 September 2000   50 000

2 May 2001   20 000
8 July 2002   10 000
18 December 2002   5 000
26 June 2003   50 000
12 August 2003    50 000

Subtotal  300 150  300 150

Less Repayments

30 June 2003   4 463
2 March 2005   50 000

Subtotal   54 463    54 463

Balance  245 687

Loans to Shooters

DateAmount

2 May 2003  250 000
26 June 2003   50 000
8 July 2003   10 000
9 August 2003  125 005

Subtotal  435 005  435 005

Less Repayments

29 October 2003  125 000  125 000

Balance  310 005