Soames v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2012] AATA 107
•23 February 2012
[2012] AATA 107
Division GENERAL ADMINISTRATIVE DIVISION File Number
2011/3409
Re
ANDY SOAMES
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
DECISION
Tribunal Ms N Isenberg, Senior Member
Date 23 February 2012 Place Sydney The Tribunal affirms the decision under review.
...........[sgd].............................................................
Ms N Isenberg, Senior Member
CATCHWORDS
SOCIAL SECURITY - disability support pension - assets test – whether value of assets was such that disability support pension should be cancelled
LEGISLATION
Social Security Act 1991, ss 11, 98, 117, 1064, 1123, 1126AA
Social Security (Administration) Act 1999, s 80
Social Security Act 1947Administrative Appeals Tribunal Act 1975, s 35
CASES
Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130
Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 33
Re Georgina Frendo v Secretary to the Department of Social Security [1987] FCA 438 (2 December 1987)
REASONS FOR DECISION
Ms N Isenberg, Senior Member
BACKGROUND
Mr Soames was granted a disability support pension (“DSP”) in about 1995 and remained on that pension until it was cancelled on 22 March 2011 with effect from 29 July 2010. That cancellation is the subject of the present application for review.
From 2003 Mr Soames and his wife had a small business which was sold in about May 2009. According to Mr Soames $600,000 from the proceeds of sale was placed into superannuation funds and $40,000 was spent on miscellaneous items.
In July 2010 Mr Soames sold a commercial property he had owned since 2001 for $460,000.
On 2 August 2010 Mr Soames advised Centrelink of his intention to leave Australia that day. He was sent a letter which advised the effect on his DSP of his absence from Australia and outlining his notification obligations. These included notification if there were any changes to his or his partner's assets and required him to advise if he bought or sold a property or gave away property.
On 2 November 2010 Mr Soames' DSP was suspended because of his prolonged absence from Australia.
On 21 December 2010 Mr Soames informed Centrelink of his return to Australia and his Centrelink payments recommenced. On 23 December 2010 he advised Centrelink of his intention to leave Australia indefinitely.
On 22 March 2011 Mr Soames contacted Centrelink and advised that he had sold a property but as he no longer had the money, he wanted his DSP adjusted. When he was requested to provide a bank statement, it showed that he had withdrawn over $1,000,000 from his bank prior to departing Australia in August 2010. On the same day, Mr Soames' DSP was cancelled with effect from 29 July 2010 as his assets, assessed at $997,250, were above the allowable limit.
That decision was affirmed on internal review and by the Social Security Appeals Tribunal (“SSAT”).
LEGISLATIVE FRAMEWORK
Essentially, DSP is means tested and the rate at which it is payable is worked out in accordance with a formula under sections 117 and 1064 of the Social Security Act 1991 ("the Act"). The fortnightly DSP is reduced by $1.50 for every $1,000 over the person's asset value limit until the rate payable is nil. The relevant amount for non-homeowners is as follows:
Assets Value Limit Assets Cut-Off Limit
Single Couple Single Couple
01/07/2010 $313,250 $389,500 $790,750 $1,094,500
21/09/2010 $313,250 $389,500 $790,750 $1,109,500
20/03/2011 $313,250 $389,500 $799,500 $1,122,500
Under s 11 of the Act "asset" includes property or money outside Australia.
A person has disposed of assets if he or she directly or indirectly engages in a course of conduct which destroys, disposes of or diminishes the value of the person's asset and the person has received no or inadequate consideration for the destruction, diminution or disposal or engaged in the conduct in order to gain a social security advantage: s 1123 of the Act.
Section 1124 provides that if the person received no consideration for the disposal, the value of the disposal is equal to the value of assets which are disposed of.
As Mr Soames was not a member of a couple after 3 August 2010 s 1126AA of the Act applies from that time. Its effect is that if a person disposes of an asset there must be included in the value of his assets the amount of the disposed assets less $10,000 (if no other disposals were made in the same income year).
Section 98 of the Act provides that DSP is not payable if the rate would be nil.
Section 80 of the Social Security (Administration) Act 1999 ("the Administration Act") allows the Secretary to cancel a social security payment if the payment is not payable.
ISSUE
Was the value of Mr Soames' assets on 29 July 2010 such that his DSP should be cancelled?
CONSIDERATION OF THE EVIDENCE AND FINDINGS
I had before me documents lodged pursuant to s 37 of the Administrative Appeals Tribunals Act 1975 (“the AAT Act”) (“the T-documents”), which I took into evidence. Mr Soames provided a significant amount of documentary evidence associated with the health of himself, his wife and his son. He also provided some receipts for medical and other expenses. After the hearing both parties provided written submissions.
Mr Soames did not dispute that he was the owner of a Commonwealth Bank account which had a balance of $559,649 as at 23 July 2010. From 29 July 2010 the account had a balance of $1,097,407.80. Mr Soames agreed that he had deposited the proceeds of sale of both the business and the property into that account. He also agreed that he withdrew $1,095,397.30 on 3 August 2010.
At the hearing Mr Soames said he withdrew that amount in three bank drafts (in Australian dollars) which he took to Syria. There he spent most of his funds between August and December 2010. He said that he cashed in the bank drafts with two different brokers, and received the entire amount in Syrian lira in a case which he stored in a safe at his sister’s home. He returned to Australia with $40,000, having spent in excess of $915,000.
Mr Soames said that he spent the (bulk of the) money buying a property in Syria where he planned to live there for six months of the year, and in Australia for the balance. He contended that he spent the money without advice and did not give it away. He asserted that he should have been informed of the impact upon his pension and that Centrelink owed him a duty of care to inform him.
According to his statement he spent money on the following items:
Property purchased in Syria for the use $360,000.00
of him and his wife
Living expenses over 12 months $220,000.00
Moving expenses for his wife $30,000.00
and sonExtended overseas holiday for himself $120,000.00
and his wife
Repayment of a loan from a $160,000.00
overseas relative
Total $890,000.00
On 25 March 2011 Mr Soames made a statement in which he said at that time he had $2,000 remaining in his Australian bank account and $120,000 in an overseas bank account. He stated that in addition he held $64,000 preserved in a superannuation fund. He has since drawn down on his superannuation.
Repayment of loan to relative in Syria
At the SSAT Mr Soames said he had also repaid a loan from a relative in Syria of $160,000, which, with interest, came to a total of $169,000. He provided a document (in Arabic) which purported to be a receipt for the loan in that amount. The translation of the document was to the effect that a loan had been made in 2004 pursuant to a trust instrument. That instrument provided for a loan of ‘$160,000’, but did not specify whether that referred to Australian dollars. At the hearing he said both the loan and the repayment were in US dollars. It is unlikely, in my view, that a loan would have been arranged in an unspecified foreign currency. The trust instrument made no reference to the duration of the loan, nor calculation of any interest, yet an additional $9,000 was paid by Mr Soames, which he claimed was ‘10%’. Mr Soames gave evidence that the loan was made on a cash basis, and that his wife arranged through a cousin to have someone ‘from Emirates [airlines]’ carry the amount in cash to Australia. In my view that conduct would be highly irregular, especially as there was no independent evidence about the movement of large amounts of cash by Mr Soames and his associates.
$120,000 left in Syria
Mr Soames contended that he left $120,000 in Syria when he returned to Australia in December 2010. On 25 March 2011 he provided a statement to Centrelink that this amount was left ‘in an overseas bank account’. At the SSAT he gave evidence of having placed the amount ‘into his sister’s account’ for ‘the costs of his mother’s funeral and for completing the purchase and furnishing of the house’. At the hearing, however, he said that the money was not in fact kept in a bank account but rather kept ‘in the community’ by his sister. It was unclear in what form the funds were kept and he appeared to leave decisions about the manner in which the funds were kept or their use to his sister.
In his submission he wrote that that he had left $120,000 with his sister for funeral expenses so that when he died he could be treated with integrity. He said the money was also for his mother and sister and to ‘finalise the purchase of the property’, notwithstanding the purchase had, on his evidence, been finalised in August 2010 other than as to registration (see below). He said that he had subsequently withdrawn $40,000 of the money to live on as he has had ‘no income’ since March 2011 (although he has in fact been receiving carer payment). This contrasted with his evidence that he had given the money to his sister and that it was not in a bank account. He said the remaining $80,000 had been used by his family in Syria as living expenses and claimed his family were refugees and were moving around.
I find his account in relation to the $120,000 to be inconsistent and vague and I doubt the veracity of his contentions.
Property in Syria
In relation to the property in Syria, Mr Soames said he bought the property with a view to possibly living in it one day, and noted that there is a nursing home nearby. He had intended to split his time between Syria and Australia but now, given the civil unrest, does not want to live in Syria. He said he is the legal owner of the property but it needs to be registered with the government.
He said that the negotiations for the purchase took place over a month and were finalised in August 2010, although I observe that he did not arrive in Syria until early August 2010 and the purported settlement was less than three weeks later.
Two sets of documents purporting to be the contract for sale were provided by Mr Soames in Arabic: one apparently faxed to Centrelink in about August 2011 and the other was provided to Centrelink on 18 October 2011. Translations of both sets of documents were obtained by Centrelink. The documents, while very similar, are not identical. At the hearing Mr Soames explained that the first document was a copy of the original contract, whereas the second had been emailed to him by his real estate agents in Damascus following his request in March 2011. The document had been ‘caught in the cross-fire’ while being faxed during the recent civil unrest, and a different member of the agent’s company had attempted to re-construct the document. Mr Soames submitted that the second document should be disregarded. The original contract for sale is locked ‘at home in Syria’ and is unable to be accessed by anyone other than him.
The Respondent submitted that the Tribunal should have some concerns about the authenticity of the documents. At first glance the documents appear to be identical. However, on closer inspection of the last page of the contract for sale there are a number of differences that do not appear to be related to the quality of the reproduction of the documents. For example line four; the name and signatures at the bottom of the page; and the placement of official stamps. It is noted that the date of contract on the first version was translated as "20/08/2004" but was translated in the second version as 20 August 2010. These discrepancies lead me to the view that I cannot be satisfied that Mr Soames in fact purchased a property in August 2010.
It is of serious concern that Mr Soames was prepared to provide two inconsistent documents and now asks the Tribunal to disregard one because it may be inaccurate. His evidence about the creation of the second document suggests he and his associates acted in a manner which was designed to assist him with his case before the Tribunal. His evidence about how the two different versions of the contract came about is not credible, and I find his explanation as to his inability to provide the original document to be implausible.
If the property was purchased in 2004, it would not be relevant to the disposal of funds taken to Syria in 2010, but would form an additional asset to be added to his assets for the purpose of determining his eligibility for DSP. Even if I had not come to this view, and I had found that Mr Soames used some of his funds to purchase a property in Syria, then the value of that property – said to be around $350,000 – would be included in the value of his assets. As the property has never been occupied by Mr Soames it would not be exempt from the assets test.
Travel expenses
After the SSAT decision, Mr Soames provided some undated documents in Arabic about his expenses in Syria, which Centrelink had translated.
Documents were provided of rental of a Mercedes for 135 days from 8 August 2010 to 18 December 2010 at a cost of 594,000 Syrian lira (which is about $14,250 AUD). The entering into of a contract of that duration on 8 August 2010 was inconsistent with Mr Soames’ evidence that he had planned to stay in Syria only for about six weeks.
Similarly, other documents were in respect of holiday accommodation costing 11,000 Syrian lira per day, that is, 1,485,000 Syrian lira (a total of about $35,625 AUD). The lease was entered into on 8 August 2010 and was to expire on 18 December 2010. This too was inconsistent with his stated intention of remaining in Syria for only six weeks.
In my view the documents purporting to show a contract for car hire and holiday rental are problematic. Each document is undated and appears to be constructed as a contract ordinarily entered into at the start of a rental period. At the same time though, the documents reflect receipt of payment after the contract concluded. Also, given Mr Soames’ evidence that in August 2010 he had no intention to remain in Syria for more than six weeks, there was no explanation why both contracts of that duration were made at the outset of the actual period which Mr Soames then spent in Syria. Furthermore, the amounts for both car and house rental seem excessive.
The Respondent submitted that it was open to the Tribunal to come to the view that Mr Soames may have had the documents created after his departure from Syria, with a view to persuading Centrelink of his expenditure. Given the irregularities in the documents I do not accept that they are genuine.
In addition, Mr Soames claimed that he spent $400-$500 per day in Syria and that all transactions were in cash. He said both his mother and sister were ill and he paid for extensive treatment for them. He also had the expense of telephoning his son for about one and a half hours a day to provide him with emotional support. There is no independent record of how much was in fact paid for these expenses. I observe too that Mr Soames had previously been living on about $500 per week on his DSP.
I observe that the Authorised Review Officer (“ARO”) was prepared to accept that his living expenses between August 2010 and March 2011 amounted to $90,000.
Living expenses generally
In his statement of 25 March 2011 Mr Soames claimed to have spent over $220,000 in the preceding 12 months. He had spent $25,000 on vehicles for family members and $30,000 to move his ex-wife and son into different homes. He claimed to have spent $120,000 on his and his ex-wife’s trip to Syria (see above).
However, at the SSAT he made greater claims about living and travel expense. Mr Soames told the SSAT that he had spent $153,000 made up as follows:
maintaining 3 cars $20,500
gift to his wife $20,000
for his wife to take overseas $5,000
lounge $3,150
clothing $3,500
furniture $1,380
household (not specified) $35,000
car for son, Sammy $15,000
eyes (not specified) $25,000
moving expenses and furniture for 2 houses $30,000
Mr Soames supplied a number of invoices and receipts in relation to expenses between August 2010 and March 2011, for amounts totalling in excess of $12,000. Some expenses related to payments to his wife (over $1,000) and motor vehicle expenses (over $3,800) and other household expenses.
His evidence before me about how much was spent on various items was vague and he gave new evidence, such as sending his ex-wife $20,000, in addition to the $20,000 he had given her in Syria.
Only some $35,000 of the receipts relate to expenditure from 3 August 2010 (the date on which he cashed in his funds) and 12 May 2011 (the day on which the ARO’s decision was made). This amount also included the payment of $20,000 to his wife. These are the only receipts which appear relevant to the issue in dispute. Insofar as those receipts related to other people’s bills, the amounts should be considered to have been disposed.
Expenditure after 12 May 2011 appears to be largely from a drawdown of superannuation funds and is not relevant to the disposal of the larger sum taken to Syria.
I have come to the view that Mr Soames’ evidence about the manner in which he spent over $1,080,000 in funds is vague, lacks particulars and lacks credibility.
Even allowing for reasonable travel expenses and daily costs of living, the receipts provided by Mr Soames fall far short of explaining where over $1,000,000 of the funds was spent. It is also far from clear whether Mr Soames in fact retained considerable funds in Australia. It further appears that the $64,000 remaining superannuation funds were a separate investment, which was not part of the $1,095,397.30 withdrawn by Mr Soames.
To the extent that Mr Soames purchased cars, furniture or other assets for adult family members in 2010, such amounts are properly regarded as a disposal of assets. Mr Soames received no consideration for such expenditure. Similarly, amounts spent on his mother's medical needs amount to a disposal for no consideration.
CONCLUSION
I do not accept that Mr Soames spent over $1,040,000 overseas in less than five months as he has claimed. I did not find his assertions that he was not good at maintaining paperwork to be credible in circumstances where he apparently managed to run a successful business (notwithstanding his claimed incapacity for which he was paid DSP). There was a lack of reliable contemporaneous information about his expenditure from when he was in Syria. This contrasted with extensive documents about expenses in Australia for a number of years, both before and after his trip in 2010 which, again, is consistent with someone who had sufficient business acumen to conduct a successful small business. I accept that it may now be more difficult for him to obtain supporting evidence from Syria, but his evidence was of continued reasonable contact by phone and internet with family and associates in Syria. I have come to the view that Mr Soames has been less than candid in his provision of information about his expenditure.
Mr Soames repeatedly referred to his need to support his adult children and ex-wife. However, they were not the main beneficiaries of the funds he withdrew before departing for Syria where, according to his evidence, most of the dissipation of the funds occurred. His expenditure on his family in Australia, it seems, was otherwise financed. I do not accept that an amount of $1,040,000 taken to Syria in August 2010 is properly accounted for.
There is also some doubt about Mr Soames’ remaining resources. While he receives carer allowance of $110 per fortnight he has not been paid DSP since March 2011. His bank records indicate he has drawn on superannuation funds. His evidence was to the effect that his family in Australia is in straitened circumstances. In that context, his decision to transfer $16,000 to Syria in November 2011 is inexplicable, especially in circumstances where he has said he left his sister with at least $80,000.
In summary, I find that Mr Soames travelled to Syria with $1,080,000 in August 2010 and returned in December 2010 with $40,000. I accept that his travel expenses in Syria may have been as high as $90,000. I accept that he also had some domestic expenses in Australia but it was far from clear how much this was.
Pursuant to s 1123 of the Act relevantly to this case, a person has disposed of assets if they have engaged in a course of conduct that disposes of assets or diminishes their value and they either received no consideration for the disposal or diminution, or they received inadequate consideration, or their purpose was to obtain a social security advantage.
I find that the manner in which Mr Soames appears to have spent his funds indicates he did not receive any, or inadequate, consideration.
The Federal Court in the case of Re Georgina Frendo v Secretary To the Department of Social Security [1987] FCA 438 (2 December 1987) considered the meaning of “consideration” in the equivalent to s 1123 appearing in the Social Security Act 1947. Woodward J found that the word “consideration” used in the Act did not bear its ordinary meaning but had a legal meaning. He stated:
21. Accordingly I take the view that, if a pensioner disposes of property, then to escape the effect of sub-sec.(10) of s.6AC of the Act, he or she must receive consideration, in the sense recognized by the law of contract of an act, forbearance or promise sufficient to establish the existence of a binding contract. In the present case it was conceded that there was, at most, a family understanding for the future provision of accommodation, which did not result in any immediate benefit or enforceable future right for the applicant.
None of the people Mr Soames claims to be supporting are minor children or legally dependent on him. Mr Soames’ wife and son both receive income support payments in their own right. There was no evidence he received any consideration in return for having spent money on them or other members of his family. His sense of familial duty does not constitute consideration in the legal sense. Amounts spent by Mr Soames on the needs of other adult family members are properly considered a gift and constitute a disposal within s 1123 of the Act.
The Act envisages a person wishing to benefit family member, and allowance is made for gifts up to $10,000 per year ($30,000 over five years) to be made to others. Any gifts in excess of these limits, even when made to close family members, are ‘disposals’ within the meaning of the Act.
Mr Soames’ disposal amount alone is sufficient to preclude Mr Soames' DSP rate being payable both in August 2010 and as at March 2011.
Pursuant to s 1126AA of the Act the amount of $940,000 would be included in Mr Soames’ assets for a period of five years from the date of disposal. In addition to this, any assets in Australia would be added to his total assets for the purpose of the assets test. The amount disposed of by March 2011 would be about $1,000,000, less the disposal limit of $10,000, leaving a disposal amount of $990,000. This amount is required to be added to the value of Mr Soames' other assets pursuant to s 1126AA of the Act.
Further, having found the property in Syria was not acquired during his visit commencing in August 2010, his real estate assets would be increased by $350,000, as that property was previously undisclosed to Centrelink. The property would not be exempt from the assets test, as it is not Mr Soames’ principal home and he has never lived in it.
The total amount of assets exceeded the assets value limit for a non-homeowner couple as at 29 July 2010, and was sufficient reason to cancel Mr Soames' DSP from that date pursuant to s 98 of the Act and s 80 of the Administration Act. His assets at 29 July 2010 and at 22 March 2011 were in excess of the assets limit for a single pensioner, which he claims to have been at that time.
I also find the assets hardship rules cannot be applied in this case as Mr Soames, on his own evidence, had at his disposal $120,000 in cash in Syria and some $64,000 in a superannuation account.
I find that the decision made on 22 March 2011 to cancel Mr Soames’s DSP from 29 July 2010 on the basis that his assets exceeded the assets value limit was correct.
CONFIDENTIALITY
Mr Soames sought an order pursuant to s 35 of the AAT Act restricting the publication of the decision.
He contended that publication of the decision had the potential to cause distress if details regarding his son’s medical and legal issues were to be raised.
Mr Soames also expressed a general concern about his dealings with individuals in Syria and a non-specific fear of issues arising out the current civil conflict in that country. As I have observed above, his evidence about matters concerning his stay in Syria was vague; he did not mention about whom he was concerned or why. He did not claim to be directly involved in the civil unrest, nor was any issue of a political nature raised. No evidence was provided of any real threat to the safety of Mr Soames or his family.
Under s 35 of the AAT Act, the Tribunal may, where it is satisfied that it is desirable to do so by reason of the confidential nature of any evidence before it, give directions prohibiting or restricting the publication of the names of witnesses appearing before the Tribunal. In reaching a decision s 35 sets out that:
the Tribunal shall take as the basis of its consideration the principle that it is desirable that hearings of proceedings before the Tribunal should be held in public and that evidence given before the Tribunal and the contents of documents lodged with the Tribunal or received in evidence by the Tribunal should be made available to the public and to all the parties, but shall pay due regard to any reasons given to the Tribunal why the hearing should be held in private or why publication or disclosure of the evidence or the matter contained in the document should be prohibited or restricted.
It is clear from this provision that the Tribunal must generally conduct its proceedings on the basis of openness, in the interests of maintaining public confidence in the fairness and integrity of those proceedings, and that the Tribunal should only depart from this approach if it is satisfied that there are proper and cogent reasons for doing so: Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 33.
In Australian Securities and Investments Commission v Administrative Appeals Tribunal (2009) 181 FCR 130, the Full Federal Court, in the joint judgment of Downes and Jagot JJ, the following was said with respect to an application under s 35:
Suppression orders are rarely made in courts, even though publicity undoubtedly disadvantages the parties. Criminal proceedings are a good example. In the AAT itself facts which parties would not wish to be published and which may disadvantage them are frequently published. Social security applications are a good example. The reason these matters are not kept secret is the overriding importance of justice being administered openly and in public. It is not readily apparent why persons in businesses should be treated differently even when, for example, employees may be disadvantaged.
I am of the view that the details in relation to Mr Soames’ son are not relevant to the issue before me, namely, the expenditure of Mr Soames’ funds in Syria between August and December 2010. Indeed, I have not recorded any details of Mr Soames’s son’s legal and medical history in this decision.
Mr Soames appears to be known under a different name in Syria, which is likely to limit the potential of anyone linking him to the decision. I note that I have not referred to that name in this decision. Mr Soames claims that ‘the Syrian authority’ knows him to have changed his name but there was no evidence before me to that effect.
The reasons advanced by Mr Soames for the making of a confidentiality order under s 35(2) of the AAT Act were very brief and general, and amount to no more than assertions. They are, in my view, concerned more with avoiding possible personal embarrassment than with preventing injustice or other serious disadvantage to him. I do not consider publication of this decision would have any impact on Mr Soames’ safety, nor the safety of others who are neither central to the decision nor named.
I therefore find there is no compelling reason why the decision should not be published.
DECISION
The decision under review is affirmed and the Tribunal decides that there is no compelling reason why the decision should not be published.
I certify that the preceding 74 (seventy-four) paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member.
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Associate
Dated 23 February 2012
Date of hearing 6 December 2011 Date final submissions received 18 January 2012 Applicant In person Solicitors for the Respondent Ms H Schuster
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