Taoube and Secretary, Department of Social Services (Social services second review)
[2015] AATA 591
•14 August 2015
Taoube and Secretary, Department of Social Services (Social services second review) [2015] AATA 591 (14 August 2015)
Division
GENERAL DIVISION
File Number(s)
2014/4549
Re
Hamid Taoube
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Deputy President S E Frost
Date 14 August 2015 Place Sydney The decision under review is affirmed.
..........................[sgd]..............................................
Deputy President S E Frost
CATCHWORDS
SOCIAL SECURITY - overpayment of disability support pension - whether bank account deposits were "income" for the purposes of the Act - whether receipt of money from family members considered "loans" - whether debt can be written off or waived - decision affirmed
LEGISLATION
Social Security Act 1991 ss 8(1), 8(8), 1064, 1236(1A), 1237AAD
CASES
Secretary, Department of Social Security v McLaughlin (1997) 48 ALD 536
REASONS FOR DECISION
Deputy President S E Frost
14 August 2015
INTRODUCTION
The applicant in this matter, Hamid Taoube, has been receiving the disability support pension (DSP) on and off since 1995.
In April 2012 the respondent formed the view that Mr Taoube had received a higher amount of DSP than he was entitled to. This was because the respondent found very large amounts of money had been deposited to Mr Taoube’s bank accounts. The respondent considered the amounts to be “income” for social security purposes and concluded that the DSP that Mr Taoube had been receiving should have been reduced because of these other receipts. The amount that the respondent says has been overpaid to Mr Taoube, during the period 17 May 2006 to 20 December 2011, is a very significant amount – over $42,000.
Mr Taoube has disputed the respondent’s claim but he has been unsuccessful at all levels of review up to and including the Social Security Appeals Tribunal (SSAT). He has now applied to this Tribunal for review of the respondent’s decision to raise and recover the debt.
I have decided to affirm the decision under review. My reasons follow.
THE ISSUES
The first issue is whether Mr Taoube has been overpaid. If he has not been overpaid, then there is nothing for him to repay. He would be successful on this appeal and the respondent’s decision would be set aside.
But if he has been overpaid, the amount of overpayment will be a debt due to the Commonwealth. In that circumstance I would have to consider whether the debt can or should be written off or waived.
CALCULATING THE PENSION AMOUNT
If a person is entitled to the DSP, the amount of their entitlement can be affected by the application of what is called the “ordinary income test” in the Pension Rate Calculator at the end of s 1064 of the Social Security Act 1991 (the SS Act). The important concepts in the ordinary income test are the concepts of “income”, “income amount” and “ordinary income”. Those expressions are defined in s 8(1) of the SS Act as follows:
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.
Section 1072 of the SS Act provides that ordinary income is generally a person’s gross ordinary income, without any reduction. Section 1073 contains rules for spreading non-periodic payments across a period, so as to smooth the impact of the income test on the calculation of a person’s entitlement to a pension or benefit.
Some types of amounts are specifically excluded from the concept of “income” (see the definition above), among them amounts specified in s 8(8). Relevantly, an amount of the following kind specified in paragraph (z) is not “income”:
a periodical payment by way of gift or allowance, or a periodical benefit by way of gift or allowance, from a parent, child, brother or sister of the person.
THE AMOUNTS RECEIVED BY MR TAOUBE
There is no doubt that very significant amounts of money were deposited to Mr Taoube’s bank accounts over a long period of time.
When his circumstances were being reviewed in early 2014 by an Authorised Review Officer (ARO), Mr Taoube explained that the deposits represented funds given to him by members of his family, gambling winnings, insurance payouts for motor vehicle accidents, insurance payouts for compensation claims and deposits of amounts withdrawn from his superannuation accounts. Some of his claims were accepted and adjustments were made to the overpayment amount that had been calculated. But there were still large unexplained deposits which, in the absence of any satisfactory explanation, were treated as income by the respondent. The SSAT upheld the ARO’s findings.
Mr Taoube’s application to this Tribunal for review nominates the following reasons for disputing the respondent’s position:
The decision was no fair because all the money they put on me as over paid its loan from x wife & family & I will pay that back or my life is in danger.
Mr Taoube has four sons and one daughter. His eldest son is 30 years old and his other children are in their twenties. The youngest son and the daughter live with their mother, Mr Taoube’s ex-wife. Mr Taoube and his ex-wife have been separated since about 2001.
The ex-wife and two of the sons have made written statements concerning amounts of money they say they have provided to Mr Taoube over the years.
The ex-wife’s statement (T20-142), dated October 2013, says that she provided Mr Taoube with “financial assistance during 17 May 2006 to 3rd January 2012”. It continues:
During this time period, 17 May 2006 to 3rd January 2012, I paid my ex-husband a total of $98,000 in small increments. … He original[ly] promised to pay back the money however he has been unable to pay back the full sum. During Christmas period of 2012, my ex-husband was able to pay me a total payment of $15,000 following receiving financial incentives from his work at the time. He has been paying me a total of $200.00 a fortnight since Christmas 2012.
I worked extremely hard for my money and am waiting for Hamid to pay it back. …
In oral evidence before me, Mr Taoube said his ex-wife had given him more than the $98,000 she referred to in her statement. Indeed, the reasons for decision of the SSAT record that he said she had given him “about $170,000 over a number of years, usually $8,000 to $10,000 at a time, and he deposited it into his Westpac account” (T2-5 [10]).
The eldest son’s statement (T20-143), also dated October 2013, says:
… I provided my father with financial assistance during 17 May 2006 to 3rd January 2012. During this time, I paid my father a total of $19,000 in small increments. My father has only returned a total of $2000 since 2012 Christmas after he received financial incentives from his work during this time. He has also paid me back a total of $100.00 a fortnight during this period until current. He still however owes me a significant amount of money and is finding it difficult to pay me back. …
The second son’s statement (T20-144), also dated October 2013, says:
… from the period of 17 May 2006 to 3rd January 2012 I was providing financial assistance to my father. During this time period I gave my father a total of $47,000 in small increments to support his difficult financial circumstances. During the 2012 Christmas Period, my father received some financial incentives from his work and was able to pay me a total of $3000 in one payment. He has also been paying me a total of $150.00 a fortnight since last Christmas until now. My father still owes me a significant amount of money and is having difficulty paying back my money as he has other debts with family members. …
Over the years Mr Taoube has had a gambling problem. He did a lot of gambling at the Cabra-Vale Diggers Club, where he had a membership card. Sometimes, but not always, he would use his card when he was gambling. So there is some record of how much he gambled. But there are two shortcomings in those records – one, not all of his activity is recorded because he did not always log on with his card; and two, he is not the only person who has logged on with his card. This is where his statement that his “life is in danger” if he fails to repay his loans comes in.
The danger does not come from Mr Taoube’s family. He says it comes from a group of “Asians” who have also lent him money. The “Asians” he refers to are people who have approached him at the club and offered to lend him money. I gather from Mr Taoube’s evidence that these people observe the gamblers and then target those who appear to be having a hard time of it on the poker machines or at the gaming tables. They approach those they consider to be financially stressed, and offer to help them out with additional money. Alternatively, if a gambler has had some success and been paid their winnings by cheque, the “Asians” will offer to cash the cheque (at a discount from its face value) and thus allow the player to keep gambling immediately, without having to wait a few days for the cheque to clear through the bank. If all that money is lost, then the “Asians” will again be there to “help out” – by lending more money which will likely be lost just as quickly.
Mr Taoube said one “Asian” had given him $7,000 and another $11,000. He said he had got $23,000 in total from them. He said he had paid some of it back, but they still want the rest of it. He said he is currently paying $400 per fortnight, sometimes more, to the “Asians”.
Mr Taoube also said that he sometimes allows the “Asians” to log on with his membership card, and the club’s record of his gambling activity will therefore be unreliable. That record suggests that during the period January 2009 to December 2011, more than $1.2 million was gambled on Mr Taoube’s account, with a net loss of about $140,000 (T2-5 [14])[1].
[1] Those figures are based on a forensic accountant’s report undertaken in the context of a workers compensation dispute. The Workers Compensation Commission did not doubt the accuracy of the figures.
FINDINGS OF FACT
The information that Mr Taoube has provided in support of his application is at best patchy.
I accept what he says about the predatory conduct of the “Asians”. I accept that they have given him money at different times. I also find that they will have done so in the expectation that they would be repaid. I accept that he is currently paying them $400 per fortnight. On the information available to me, I am unable to make a finding as to precisely how much they have given him, or when. But since Mr Taoube did not raise the “Asians”, or his interaction with them, during his SSAT hearing in August 2014, or during his dealings with the ARO earlier in 2014, it is unlikely that they were giving him money during the period relevant to this review, namely between 17 May 2006 and 20 December 2011. I find that none of the deposits made to Mr Taoube’s bank accounts during the relevant period came from the “Asians”.
I accept that Mr Taoube has been assisted financially by his ex-wife and two of his sons. The respondent has not challenged the statements made by the family members; the real dispute concerns the character of the payments in Mr Taoube’s hands. I will deal with that issue below. But even then, there remains uncertainty about the precise dates on which Mr Taoube’s family members provided the assistance to him (which each of them said was in “small increments”), and the amount of each of those increments.
And I must say that some of the content of the statements is implausible. Each family member said that Mr Taoube was making regular fortnightly payments to them, and if all those claims are correct, then for the ten months referred to in the statements (from Christmas 2012 to October 2013) Mr Taoube was paying a total of $450 per fortnight by way of loan repayments. That seems unlikely. I accept that Mr Taoube made some repayments to his family members but I cannot quantify how much he paid nor how regularly he paid it.
I find that Mr Taoube received gambling “winnings” from his visits to the Cabra-Vale Diggers Club. Some of those “winnings” were received by way of cheque from the club, and others in the form of cash. Some of the cheques, and some of the cash, will have found their way to Mr Taoube’s bank accounts. I do not find, however, that Mr Taoube’s net financial position was improved by his gambling activities. The strong likelihood is that his financial holdings were considerably depleted by his gambling, and I find accordingly. I cannot put a precise figure on his net losses because there is simply not enough reliable information to go on.
WERE MR TAOUBE’S RECEIPTS “INCOME”?
The respondent’s fundamental submission is that the amounts deposited into Mr Taoube’s bank accounts (with the exception of those whose source has been adequately explained, such as compensation or insurance receipts or superannuation payments) are properly characterised as “income” for social security purposes.
The concept of “income” for social security purposes is very broad. There is no doubt that it captures, at least, any amounts that are properly described as “moneys”, which have been “received” for a person’s own use or benefit.
But no matter how broad the concept, it does not cover bona fide loans: Secretary, Department of Social Security v McLaughlin (1997) 48 ALD 536 at 542, per French J (as the Chief Justice then was).
Mr Taoube says the amounts he got from his family members are loans. Although he has not repaid much of what they gave him, he considers himself obliged to repay the sums in full. He said “When I have it, I have to pay them.” Mr Thompson, the respondent’s representative, put it to Mr Taoube that it was unlikely his family members would ever be repaid. Mr Taoube said “I will. I’d like to.”
The respondent notes that transactions between family members are often not characterised by the courts as loans because of the informal nature of the arrangement and the propensity of family members to forgive the liabilities of other family members to whom money is given.
In my view, the true position is that Mr Taoube’s ex-wife and sons would prefer that Mr Taoube pays them back the money they have given him and, at least in theory, Mr Taoube would prefer to pay them back than not. But there have been times when Mr Taoube has had the capacity to pay them back and has not done so. One example was in September 2009 when Mr Taoube received an insurance settlement of over $17,000 but did not make any payments – not even small ones – to his family members. This is despite the fact that, on his version, all the money his ex-wife and sons had given him was by way of loan, and that he was obliged to give it all back to them. Circumstances like that make it impossible for me to accept that there was a genuine agreement between Mr Taoube and his family members that the amounts provided to him were provided by way of loan.
There is a further problem that stands in the way of a finding that the deposits to Mr Taoube’s bank accounts, or any of them, were not “income”. He has not been able to demonstrate, even within a reasonable tolerance, the source of all the money. Some of it clearly came from his family members, but Mr Taoube told me that he only “sometimes” banked the money they gave him. He could not tell me how much of what they gave him had gone into the bank and how much he had kept as cash, to use for his own purposes. On that basis, even if I were to accept that the amounts of money the relatives gave him were “loans”, I do not have enough information to make even a reliable estimate of the extent to which that would impact on the overpayment he has received.
Nor, on the scant material before me, could I conclude that the amounts received from Mr Taoube’s family members are excluded from the concept of “income” by s 8(8)(z) of the SS Act.
In summary, Mr Taoube’s explanations are quite unsatisfactory. They have never risen beyond a level of unhelpful generality. They are not at all convincing. I must uphold the respondent’s conclusion that Mr Taoube has been overpaid DSP to the extent of $42,217.24.
CAN THE DEBT BE WRITTEN OFF OR WAIVED?
No, the debt cannot be written off or waived.
Section 1236 of the SS Act governs write-offs. A debt can only be written off (subsection (1A)) 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; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
Mr Taoube has been repaying the debt by regular instalments from his fortnightly compensation receipts. The debt cannot be written off.
Section 1237AAD of the SS Act governs waiver. For a debt to be waived, there must be, among other things, “special circumstances (other than financial hardship alone) that make it desirable to waive” the debt. Mr Taoube has not asserted that there are special circumstances such as would make it desirable to waive the debt, and I find that there are none.
CONCLUSION
The decision under review is affirmed.
I certify that the preceding 41 (forty-one) paragraphs are a true copy of the reasons for the decision herein of Deputy President S E Frost ...........................[sgd].............................................
Associate
Dated 14 August 2015
Date(s) of hearing 6 May 2015 Applicant In person Solicitors for the Respondent Sparke Helmore
Key Legal Topics
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