Ruan and Anor; Secretary, Department of Employment and Workplace Relations and
[2007] AATA 1758
•13 September 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1758
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S 200600087
GENERAL ADMINISTRATIVE DIVISION ) & S 200600088 Re SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS Applicant
And
GAGE RUAN AND LI XIN CUI
Respondents
DECISION
Tribunal Senior Member R W Dunne Date13 September 2007
PlaceAdelaide
Decision 1. The Tribunal sets aside the decision under review and, in place of that decision, directs that the matter be remitted to the applicant for recalculation of the Debts that are recoverable in accordance with the Tribunal’s findings, having particular regard to the provisions of s 1073(1) of the Act.
2. The Tribunal reserves liberty to the parties, within 10 days of the date of this decision, to apply in relation to the final quantification of the Debts.
..............................................
R W DUNNE
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – gambling receipts as “income” under the Social Security Act 1991 – Parenting Payment Partnered – Newstart Allowance – overpayment and cancellation of benefits – recovery of debts – waiver or write-off of debts – whether special circumstances – decision set aside.
Social Security Act 1991 ss 8, 1072, 1073(1), 1075(1), 1236(1A), 1237A(1), 1237AAD
Social Security (Rewrite) Amendment Act 1991
Re Denhard and Secretary, Department of Families, Community Services and Indigenous Affairs and Anor [2007] AATA 1165
Secretary, Department of Social Security v Ekis (1998) 52 ALD 246
Haldane-Stevenson v Director-General of Social Security (1985) 7 ALD 467
Secretary, Department of Social Security v McLaughlin (1997) 48 ALD 536
Watson v Secretary, Department of Family and Community Services (2003) 74 ALD 77
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Riddell v Secretary, Department of Social Security (1993) 30 ALD 31Secretary, Department of Social Security v Hales (1998) 51 ALD 695
REASONS FOR DECISION
13 September 2007 Senior Member R W Dunne 1. The respondents in this case are Mr Gage Ruan and his wife Ms Li Xin Cui (the “respondents”). During the relevant periods, Mr Ruan was in receipt of Parenting Payment Partnered and Ms Cui was in receipt of Newstart Allowance. Following an investigation into the gambling activities of Mr Ruan, the applicant (“Centrelink”) cancelled the payments being made to Mr Ruan and Ms Cui. Centrelink then decided to recover a Parenting Payment Partnered debt of $22,168.94 (for the period from 8 May 2003 to 5 October 2005) from Mr Ruan and a Newstart Allowance debt of $22,189.92 (for the period from 8 May 2003 to 19 October 2005) from Ms Cui. The respondents sought a review of the decisions and on 11 November 2005 an Authorised Review Officer (“ARO”) reviewed and affirmed the decisions of the original decision-maker. However, in the course of the review, the ARO determined that, in the case of Mr Ruan, the debt should be increased to $23,145.46 for the period from 27 February 2003 to 5 October 2005. The ARO also determined that, in the case of Ms Cui, the debt should be reduced to $21,836.33
2. On 9 March 2006, the Social Security Appeals Tribunal (“SSAT”) set aside Centrelink’s decisions (effectively, the decisions of the original decision-maker) and substituted its decision:
·that there was no Parenting Payment Partnered debt owed by Mr Ruan and, subject to the relevant criteria being met, his payments of Parenting Payment Partnered should recommence with payment of appropriate arrears; and
·that there was no Newstart Allowance debt owed by Ms Cui and, subject to the relevant criteria being met, her payments of Newstart Allowance should recommence with payment of appropriate arrears.
3. On 18 April 2006, the applicant applied to this Tribunal for a review of the decision of the SSAT.
4. At the hearing, the respondents appeared on their own behalf and Ms Katherine Bean (of counsel) appeared on behalf of the applicant. The Tribunal received into evidence the T documents (Volumes 1 and 2) lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Exhibits A1 and A2).
issues for the tribunal
5. The issues for the Tribunal are:
(a)whether Mr Ruan’s receipts from gambling are “income” for the purposes of s 8 of the Social Security Act 1991 (“the Act”);
(b)whether Mr Ruan has been overpaid Parenting Payment Partnered and whether Ms Cui has been overpaid Newstart Allowance;
(c)if there have been overpayments, whether the debts involved (“Debts”) are recoverable by the applicant; and
(d)if the Debts are recoverable by the applicant, are there grounds to waive or write-off all or part of them.
legislation
6. The provisions of the Act that relevantly apply to the issues before the Tribunal are as follows:
“8(1) In this Act, unless the contrary intention appears:
…
‘earned, derived or received’ has the meaning given by subsection (2).
…
‘exempt lump sum’ has the meaning given by subsection (11).
…
‘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).
…
‘ordinary income’ means income that is not maintenance income or an exempt lump sum.
…
Earned, derived or received
8(2) A reference in this Act to an income amount earned, derived or received is a reference to:
(a) an income amount earned, derived or received by any means; and
(b)an income amount earned, derived or received from any source (whether within or outside Australia).
…
Excluded amounts—general
8(8)The following amounts are not income for the purposes of this Act:
…
(z)a periodical payment by way of gift or allowance, or a periodical benefit by way of gift or allowance, from the person’s father, mother, son, daughter, brother or sister;
…
8(11) An amount received by a person is an exempt lump sum if:
(a)the amount is not a periodic amount (within the meaning of subsection (11A)); and
(b)the amount is not a leave payment within the meaning of points 1067G-H20, 1067L-D16 and 1068-G7AR; and
(c)the amount is not income from remunerative work undertaken by the person; and
(d)the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.
Note:Some examples of the kinds of lump sums that the secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift – if it is a one-off gift.
…
1072General meaning of ordinary income
A reference in this Act to a person’s ordinary income for a period is a reference to the person’s gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.
1073 Certain amounts taken to be received over 12 months
1073(1 )Subject to points 1067G-H5 to 1067G-H20 (inclusive), 1067L-D4 to 1067L-D16 (inclusive), 1068-G7AA to 1068-G7AR (inclusive), 1068A-E2 to 1068A-E12 (inclusive) and 1068B-D7 to 1068B-D18 (inclusive), if a person receives, whether before or after the commencement of this section, an amount that:
(a) is not income within the meaning of Division 1B or 1C of this Part; and
(b) is not:
(i) income in the form of periodic payments; or
(ii) ordinary income from remunerative work undertaken by the person; or
(iii) an exempt lump sum.
the person is, for the purposes of this Act, taken to receive one fifty-second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.
…
1075 Permissible reductions of business income [see Note 9]
1075(1)Subject to subsection (2), if a person carries on a business, the person’s ordinary income from the business is to be reduced by:
(a)losses and outgoings that relate to the business and are allowable deductions for the purposes of section 8-1 of the Income Tax Assessment Act 1997; and
(b)amounts that relate to the business and can be deducted in respect of plant (within the meaning of the Income Tax Assessment Act 1997) under Division 40 of that Act; and
(c)amounts that relate to the business and are allowable deductions under section 290-60 of the Income Tax Assessment Act 1997.”
background and evidence of mr ruan
7. Mr Ruan was born in China on 1 December 1960. He married Ms Cui on 30 September 1986 and first arrived in Australia in 1989. Since his arrival, he has engaged in gambling activities and has a long history of gambling. He started winning more than he lost and, with the encouragement of friends in Melbourne and New Zealand, he began saving up his winnings. In addition to his winnings, his friends lent him money and told him that the best way to save the money was to buy a house. He used his winnings as a deposit and, together with the money he said he borrowed from his friends, he bought a house. This occurred in around October 2004. During the period from May 2003 until May 2004 he had brought money into Australia from gambling in New Zealand. He was referred to a table of payments that the SSAT had questioned him on and he acknowledged that the payments were all gambling receipts. The following sets out the table of payments and the comments that were made by the SSAT:
“…
o10 May 2003 - $13,712 ex New Zealand. He believes that this was gambling winnings from his first trip to New Zealand.
o14 August 2003 - $4,467 transferred ex New Zealand. He believes that this was gambling winnings from his second trip to New Zealand.
o15 October 2003 - $12,368 ex New Zealand. He believes that these again were gambling winnings of his second gambling trip to New Zealand.
o10 November 2003 - $16,000. He is not quite sure where this payment is supposed to have come from and could not comment upon it.
o2 April 2003 - $10,000 Crown Casino cash out. This represented a withdrawal made by friends using his Crown Casino VIP card. His friends were not able to get a VIP card. The money that they withdrew was their money, just using his card. It is much more difficult for a local Melbourne person like his friends to get a card from the Crown Casino than it is for someone interstate.
o31 October 2004 - $14,000 Crown Casino cash in / out. Again, this payment related to a friend withdrawing his own funds from the Crown Casino using Mr Gage Ruan’s Crown Casino VIP card.
o1 October 2004 - $37,240. This amount was loaned to Mr Gage Ruan by a friend in New Zealand so he and his wife could buy a house.
o4 October 2004 $60,000. This was also a loan to Mr Gage Ruan from a friend in Melbourne so that he and his wife could buy a house.
o10 May 2004 - $13,365 ex New Zealand. This was the proceeds of his third gambling trip to New Zealand.
oThe amounts of $13,712, $4,467, $12,368 and $13,365 do not represent his “net” winnings from these trips. They do not take into account the money he took with him to gamble with (which he said was up to $5,000 to $6,000), his airfares or his accommodation and living expenses in New Zealand.
…”
8. When questioned about certain of the payments, Mr Ruan’s evidence to the Tribunal was as follows:
·2 April 2003 - $10,000.00. This was money deposited into his account by a friend using his Crown Casino VIP membership card. The friend did not have a card and he lent him the card to use the account. The money was not his, but belonged to his friend.
·1 October 2004 - $37,240.00. This amount came to him from a friend in Auckland, Mr Ju Ming Chen. It was a loan of NZ$50,000.00 to buy a house. The money he had saved from casino winnings was not enough, so he borrowed money from his friend.
·4 October 2004 - $60,000.00. Again, this was money borrowed from a friend in Melbourne to enable him to buy the house.
·31 October 2004 - $14,000.00. Again, this was money that related to his friend in Melbourne using his Crown Casino VIP card. The money belonged to his friend and was not his.
9. Mr Ruan was also questioned about other amounts that he said did not represent winnings from gambling, these being:
·19 April 2005 - $7,197.09. This was the refund of a benefit that had been received by him, on account of his son, from the Australian Scholarships Group.
·24 May 2005 - $10,000.00. This was a rearrangement of credit card debt through Coles Myer.
10. Mr Ruan said he started gambling shortly after his arrival in Australia. He said sometimes he would win and sometimes he would lose. When he did win he would socialise with friends and then go back to gambling again. If he won enough he would sometimes cash out his winnings. Other times, if he felt luck was with him, he would continue gambling. But, often he would then lose all his winnings. If he felt unlucky, he would take his winnings and leave and use the money to pay bills and to buy things. If he spent all his money, he would wait until he received a payment from Centrelink and, with the money, would start gambling again. He said he dreamt of one day winning a major jackpot, which was $75,000.00, and with this he would pay back the money he had borrowed from his friends. This had not happened and he had sold his house, paid off the mortgage, repaid the debts he owed to his friends and kept on gambling.
11. In cross-examination by Ms Bean, Mr Ruan admitted that, as early as November 2002, he brought gambling receipts into Australia from New Zealand. When asked about an amount of $10,220.00 that he had brought into Australia, he said that some of this would have been his friend’s money. He said he kept no records of amounts he won or amounts he lost. He saw no purpose in doing this, as he would often lose the winnings he had made previously. Ms Bean referred him to the SSAT table of payments, detailed in paragraph 7 of these reasons. Mr Ruan acknowledged that the amounts in the table and the SSAT’s comments about them were correct. When asked about the two loans from his friends, he said that he had received a letter from his friend in New Zealand, which he had sent to his lawyer. He could not remember when he got the letter, but he could remember handing it over to his lawyer. He did not receive a letter from his friend in Melbourne in relation to the loan of $60,000.00. When asked why he had not obtained some acknowledgement of the loans, he said:
“We don’t do that. We never use that. … We are very good friends, okay. He knows that the money I would use into my house deposit. He knows the money would be there. It is safe. … Even my friend ask me to lend him money – if I have, I will – and I won’t ask him to write some evidence that shows he owes me money, we never do that.” (Transcript at pages 26 and 27)
12. In further cross-examination, Mr Ruan admitted that, when applying for the bank loan for his house, he had lied to the bank about his occupation and his income. He said the loan officer had told him that he needed to provide this information, otherwise he could not obtain the loan. He admitted that he had also lied to the Australian Customs Service when he said he was self-employed. He did this to make it easier to get money into and out of Australia. Mr Ruan was also asked about a statement he had made to Centrelink in September 2005 (Exhibit A1, T30, at page 261) concerning his Parenting Payment Partnered. This statement contained particulars of a gambling ban that had been imposed upon him and his wife. He said he had been forced to sign the statement because the Centrelink officer had told him that, if he did not sign, his Parenting Payment would be stopped. After first suggesting that he could not read the Centrelink officer’s writing anyway, he admitted that the circumstances of the gambling ban described in this statement, which had been read over to him by the officer, had been incorrectly described. The ban had been imposed on his wife, not him.
consideration and application of the law
13. Ms Bean urged the Tribunal to treat Mr Ruan’s evidence with caution. He had misrepresented his position in his home loan application, to the Australian Customs Service and in making the September 2005 statement to Centrelink. On these bases, she submitted that, where Mr Ruan’s evidence was not otherwise corroborated, it should not be accepted in support of any factual findings. The Tribunal takes note of this submission but is satisfied that, in the relevant instances where his evidence is in question, he has been a witness of truth.
14. It is clear that the critical issue for determination in the respondents’ case is whether Mr Ruan’s gambling receipts are “income”, and that means “income” for the purposes of the Act, and not for other purposes, such as the Income Tax Assessment Act 1997. The SSAT found that the receipts were not “ordinary income” of Mr Ruan in the relevant period (which, for him, the SSAT identified as 8 May 2003 to 5 October 2005) as defined in s 8(1) of the Act. If Mr Ruan’s gambling activity was regarded as “an ordinary business activity” and if his gambling winnings were to be treated as potentially amounting to income, then the costs of producing that income and any losses should both be taken into account, as they would with any other business activities. If his gambling activity was not regarded as an ordinary business activity, then the winnings would not be taxable, as being isolated receipts of a capital nature.
15. On the evidence before it, the following are the amounts which the applicant has submitted (and which, where shown in the affirmative, Mr Ruan has admitted) are Mr Ruan’s gambling receipts, and the Tribunal so finds:
Date Amount Admitted as
gambling receipts?24/11/2002 $10,220.00 No
02/04/2003 $10,000.00 No
10/05/2003 $13,712.00 Yes
14/08/2003 $4,467.00 Yes
15/10/2003 $12,368.00 Yes
10/11/2003 $16,000.00 Yes
07/01/2004 $5,000.00 Yes
08/01/2004 $7,000.00 Yes
13/01/2004 $8,000.00 Yes
16/01/2004 $3,000.00 Yes
10/05/2004 $13,365.00 Yes
24/09/2004 $12,000.00 Yes
28/09/2004 $5,000.00 Yes
01/10/2004 $37,240.00 No
04/10/2004 $60,000.00 No
08/10/2004 $4,000.00 Yes
19/10/2004 $15,000.00 Yes
31/10/2004 $14,000.00 No
14/02/2005 $5,000.00 Yes
03/05/2005 $3,000.00 Yes
04/07/2005 $1,000.00 Yes
01/08/2005 $2,000.00 Yes
04/10/2005 $2,500.00 Yes
16. In relation to the above where Mr Ruan has not admitted the amounts to be his gambling receipts, the Tribunal makes the following findings:
(a)24/11/2002 - $10,220.00. Mr Ruan conceded that this amount comprised gambling receipts, but he was uncertain whether the whole of the amount was attributable to his gambling. As the amount falls outside the relevant period (8 May 2003 to 5 October 2005), the Tribunal’s view is that it should be ignored for present purposes.
(b)02/04/2003 - $10,000.00. The Tribunal is satisfied that this amount did not comprise gambling receipts of Mr Ruan, but belonged to a friend in Melbourne.
(c)01/10/2004 - $37,240.00. The Tribunal is satisfied that this amount did not comprise gambling receipts of Mr Ruan, but was a loan from a friend (Ju Ming Chen) in New Zealand.
(d)04/10/2004 - $60,000.00. Again, the Tribunal is satisfied that this amount did not comprise gambling receipts of Mr Ruan, but was a loan from a friend in Melbourne.
(e)31/10/04 - $14,000.00. The Tribunal is satisfied that this amount did not comprise gambling receipts of Mr Ruan, but belonged to a friend in Melbourne.
The Tribunal notes that, in the case of paragraphs (b) to (e) above, Mr Ruan’s evidence was consistent with the evidence he gave before the SSAT.
17. It follows from the Tribunal’s findings in paragraphs 15 and 16 above that Mr Ruan’s gambling receipts during the period from 10 May 2003 to 4 October 2005 amounted to $132,412.
Are Mr Ruan’s gambling receipts “ordinary income”?
18. In relation to a person, the definition of “income” (and hence “ordinary income”) in s 8(1) of the Act is expressed in extremely wide terms. It includes “an income amount earned, derived or received by the person for the person’s own use or benefit”. The expression “income amount” in the definition of “income” means valuable consideration or personal earnings or moneys or profits, whether of a capital nature or not. The expression “earned, derived or received” in the definition of “income” in s 8(1) is also very broadly defined and includes any “income amount” which is “earned, derived or received”. The latter expression is amplified in s 8(2) to refer to amounts earned, derived or received “ … by any means and … from any source (whether within or outside Australia)”. As was said by Senior Member Dr K S Levy RFD in Re Denhard and Secretary, Department of Families, Community Services and Indigenous Affairs and Anor [2007] AATA 1165 (at paragraphs 38 and 39):
“38. The statutory definition of income clearly encompasses ‘…as wide a range of categories and sources of income as possible, thus giving full scope to the exclusionary provisions of the Act…’ (see Rose v Secretary, Department of Social Security (1990) 21 FCR 241 at 243). The definition also extends to gifts. There is also no necessity that the amount received also involves a net gain for the recipient (see Secretary, Department of Social Security v McLaughlin (1997) 81 FCR 35 at page 44).
39. The test to be applied in determining whether amounts received are ‘income’ within the meaning of the definition in the Act, is to be an objective test (Dellis v Secretary, Department of Social Security (1990) 21 ALD 252 at page 253. …”
19. The expression “ordinary income” excludes certain amounts (which are not presently relevant) and “an exempt lump sum” (see s 8(11)). The Tribunal notes that gambling receipts do not comprise “an exempt lump sum” as defined. Moreover, although examples of lump sums are given in the Note to s 8(11) in the Act, such as a lottery win or other windfall, a legacy or bequest, or a gift (if it is a one-off gift), gambling receipts are not included. Given the nature of gambling activities (particularly as they were in Mr Ruan’s case), it would in the Tribunal’s view be difficult to describe gambling receipts as “one-off” receipts or gifts. The Tribunal is also satisfied that the Secretary has not determined that gambling receipts constitute exempt lump sums under s 8(11)(d) of the Act.
20. It follows from what has been said in the previous paragraph that Mr Ruan’s gambling receipts are “moneys” earned, derived or received by him from his gambling activities. On his evidence, he has used those receipts for various purposes, including socialising, the payment of bills, the purchase of a house and further gambling. In relation to the expression “own use or benefit”, it is not defined in the Act. In these circumstances, the expression has the meaning it bears in ordinary speech and is a question of fact (see Secretary, Department of Social Security v Ekis (1998) 52 ALD 246 at 251 per Drummond J). Given the use to which he put the receipts, the Tribunal is satisfied (and so finds) that the receipts have been earned, derived or received by Mr Ruan for his “own use or benefit”. The receipts do not represent a one-off windfall, nor are they amounts which could not be foreseen or predicted or expected or which are unlikely to occur again. There has been a course of conduct by Mr Ruan which takes his gambling receipts outside the ambit of the exempt lump sum provisions in s 8(11).
21. The Tribunal notes from the statement of facts, issues and contentions of the respondents the references to Haldane-Stevenson v Director-General of Social Security (1985) 7 ALD 467 and Secretary, Department of Social Security v McLaughlin (1997) 48 ALD 536 and to whether the reference to “income” in s 8(1) is to “gross” or “net” income. The issue of whether “gross” or “net” income applied for s 8(1) purposes was addressed in amendments to the income definitions in the Act in 1991. The Social Security (Rewrite) Amendment Act 1991 introduced the precursor to the current s 1072, which defines “ordinary income”. The Explanatory Memorandum that accompanied the enactment of the Bill states as follows:
“A new Division 1AA is to be inserted before Division 1 of Part 3.10 of the Principal Act. This will deal with the concept of ordinary income for income assessment purposes. It will make it clear that ordinary income for social security purposes generally means gross income but that certain expenses incurred in deriving income from a business, including adjustments for decreases in the value of stock on hand, can be allowed as ordinary income deductions but only from ordinary income derived from the business concerned and not from any other source.” [emphasis added]
22. The amendments addressing the distinction between “gross” and “net” income were considered in Ekis (supra) where, at page 249, Drummond J observed:
“… At one stage, the Social Security Act did not contain any provision corresponding to ss 1072 and 1075 and the wide-reaching definition of ‘income’ in the Act was interpreted as meaning net realised income: see Haldane-Stevenson v Director-General of Social Security (1985) 9 FCR 73 at 75 and Secretary, Department of Social Security v Garvey (1989) 91 ALR 245 at 249. In 1991, however, new provisions, including ss 1072M and 1072P, which correspond to ss 1072 and 1075, were inserted in the Social Security Act by Sch 1 to the Social Security (Rewrite) Amendment Act 1991 (Cth). These amendments changed, in a radical way, the entitlement of a person to an age pension where that person was in receipt of income from other sources. Save only for a few specific classes of outgoing, of which outgoings incurred by the pensioner in carrying on his or her business were one, a person's pension entitlement thereafter had to be reduced by reference to the gross amount, without any reduction, of the pensioner's ordinary income from all sources. The purpose of an income-related pension such as the age pension is to ensure that pensioners in the lower income brackets receive a measure of social security: Read v Commonwealth (1988)167 CLR 57, per Brennan J at 68. It would appear that the assumption underlying this changed approach was that where a pensioner had another source of income, the outgoings incurred in earning that income were, in general, likely to be relatively small in total amount and, for that reason, should be ignored in determining the person's pension entitlement. An exception was made, however, in relation to expenses incurred in earning income from the carrying on of a business; the assumption would appear to be that, in contrast to the position generally obtaining in respect of deriving income from other sources, eg, work as an employee, a person would only derive a gross amount of income from carrying on a business at the cost of having to incur what might be substantial expenses, so that it would be unfair to ignore those expenses in determining such a person's pension entitlement.” [emphasis added]
23. In Watson v Secretary, Department of Family and Community Services (2003) 74 ALD 77, Finn J also observed at [18]:
“18 My own view can be put shortly. It is unnecessary for me to outline at any length the effect of ss 1072 and 1075(1) of the SS Act. I would merely note the following. It is well accepted that, as a result of the amendment that introduced the precursors of ss 1072 and 1075 into the SS Act in 1991, ordinary income for social security purposes means gross income save in certain specified cases. One such case is where income is derived from a business in which case certain expenses incurred relating to that business can be deducted from the ordinary income of the business. Those expenses, though, cannot be deducted from income from any other source: see generally, Secretary, Department of Social Security v Ekis (1998) 85 FCR 382; see also Social Security (Rewrite) Amendment Bill 1991, Explanatory Memorandum, p181; Secretary, Department of Family and Community Services v Cantlay (2000) FCA 345.”
24. Following the 1991 amendments, and the Tribunal accepting the submission for the applicant, s 1072 now has the effect that “ordinary income” means gross income from all sources without deduction, other than allowable deductions against business income as provided for by s 1075. Thus, the whole of Mr Ruan’s gambling receipts are part of his “ordinary income” for the purposes of the Act, unless his gambling activities can properly be characterised as “carrying on a business”. If this is the case, he will be able to offset allowable deductions against the business income pursuant to s 1075 of the Act, which includes deductions which are only allowable under the Income Tax Assessment Act 1997. The expression “carries on a business” in s 1075(1) is not defined in the Act. Again, as was said by Drummond J in Ekis, the expression has the meaning it bears in ordinary speech and is a question of fact. Although Mr Ruan gave no evidence in support of the proposition that he “carried on a business” the Tribunal is unable to accept that this was the case. He kept no records of his gambling activities, there appeared to be no system or regularity in approach and, as the SSAT concluded, he did not conduct his activities in a measured and professional way. In the circumstances, the Tribunal finds that Mr Ruan’s gambling activities do not meet the requirements of s 1075(1) of the Act.
Debts due to the Commonwealth
25. Having regard to the evidence before it, the Tribunal is satisfied that the respondents were not entitled to receive the benefits (or the extent of the benefits) paid to them during the relevant periods. As has been adverted to in paragraph 1 of these reasons, these periods were from 27 February 2003 to 5 October 2005 (in the case of Mr Ruan) and from 8 May 2003 to 19 October 2005 (in the case of Ms Cui). Moreover, as has also been adverted to in paragraph 1 of these reasons, they are indebted to the Commonwealth and the amounts involved are $23,146.46 (in the case of Mr Ruan) and $21,836.33 (in the case of Ms Cui).
Recovery of the debts due to the Commonwealth
26. Under s 1236(1A) of the Act, the applicant may write-off a debt, for a stated period or otherwise, only in the following situations:
(a) The debt is irrecoverable at law. The Tribunal is satisfied that the applicant is able to recovery the Debts, in the present case, at law.
(b) The debtor has no capacity to repay the debt. The Tribunal does not have before it particulars of the respondents’ assets or current financial position. Nevertheless, there is no evidence before the Tribunal that the respondents do not have the capacity, albeit over a period of time, to repay the Debts.
(c)The debtor’s whereabouts are unknown. This exception is not presently applicable.
(d) It is not cost effective for the Commonwealth to take action to recover the debt. Although no submissions were put to the Tribunal by Ms Bean in relation to this aspect, the Tribunal accepts that it is cost effective for the Commonwealth to take action (or to continue to take action) to recover the Debts.
27. It follows that the Debts are not capable of being written-off, for a stated period or otherwise, pursuant to s 1236(1A) of the Act.
Waiver under s 1237A(1) of the Act
28. The Tribunal is satisfied that the Debts are not attributable to an administrative error by the applicant. In these circumstances, the Debts (or the remainder of the Debts) should not be waived under s 1237A(1).
Special circumstances under s 1237AAD of the Act
29. Apart from his argument that his gambling receipts were not income (or taxable income), Mr Ruan’s main contention was that the Debts (or the remainder of the Debts) should be waived under s 1237AAD of the Act, on the grounds that there were “special circumstances” that made it desirable to waive. In this regard, the Tribunal notes that the special circumstances must be other than financial hardship alone. Nevertheless, Mr Ruan put to the Tribunal that he and his wife had a considerable amount of debt, largely credit card debt, which the Tribunal understood had arisen as a result of Mr Ruan’s gambling activities and the need to pay for his legal fees relating to the present dispute. He said he had rent and other bills to pay and, with his parents in China who were elderly and very sick, he needed to be with them to look after them. This meant travel to China to stay there for some months.
30. The expression “special circumstances” has been considered on numerous occasions by Courts and Tribunals. In Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Tribunal said (at page 3):
“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.” [emphasis added]
31. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J, after referring to the Federal Court’s decision in Re Beadle, observed that special circumstances:
"… would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. … It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary. …”
32. Finally, in Riddell v Secretary, Department of Social Security (1993) 30 ALD 31, the Full Court of the Federal Court said (at page 38):
"Each particular case must be considered on its merits. It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other."
33. The Tribunal has noted the circumstances mentioned by Mr Ruan and referred to in paragraph 29 above. However, as Ms Bean put to the Tribunal, Mr Ruan is substantively relying upon financial hardship and there are no other circumstances which could amount to “special”. The Tribunal is satisfied that the financial circumstances of Mr Ruan and Ms Cui, whilst they may be straightened and stressful at times, are not such that they can be categorised as special circumstances. In saying this, the Tribunal gains assistance from the comments of French J in Secretary, Department of Social Security v Hales (1998) 51 ALD 695, where (at page 695-696) he said:
“From time to time in the administration of social security benefits overpayments occur. Sometimes these are the result of innocent non-compliance with the requirements of the law which can be affected by the stress associated with the circumstances that led to the receipt of benefits in the first place. The taxpayer is entitled to expect that in the ordinary course money paid to people which they are not entitled to receive will be recovered, albeit in a way appropriate to the circumstances which led to the overpayment and the circumstances of the persons concerned. …”
34. After consideration of all the respondents’ circumstances, the Tribunal is not satisfied that there are special circumstances that would warrant the waiving of the debts and the Tribunal so finds.
conclusion
35. Given the findings the Tribunal has made above, Mr Ruan’s gambling receipts are “income” (and hence “ordinary income”) pursuant to s 8(1) of the Act. Mr Ruan has been overpaid Parenting Payment Partnered and Ms Cui has been overpaid Newstart Allowance. As there are no grounds to waive or write-off the Debts arising from the overpayments, they are recoverable by the applicant.
decision
36. For the above reasons, the Tribunal sets aside the decision under review and, in place of that decision, directs that the matter be remitted to the applicant for recalculation of the Debts that are recoverable in accordance with the Tribunal’s findings, having particular regard to the provisions of s 1073(1) of the Act. The Tribunal reserves liberty to the parties, within 10 days of the date of this decision, to apply in relation to the final quantification of the Debts.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne
Signed: ............J Coulthard……......................................
AssociateDate of Hearing 4 June 2007
Date of Decision 13 September 2007
Counsel for the Applicant Mr R Prince
Solicitor for the Applicant AGS
Advocate for the Respondents In person
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