Toksoz and Secretary, Department of Social Services (Social services second review)

[2015] AATA 985

Toksoz and Secretary, Department of Social Services (Social services second review) [2015] AATA 985 (18 December 2015)

Division	General Division
File Number	2014/4141
Re	Ersever Toksoz
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Ms N Isenberg, Senior Member
Date	18 December 2015
Place	Sydney

The decision under review is affirmed.

..........................[sgd]..............................................

Ms N Isenberg, Senior Member

CATCHWORDS

SOCIAL SECURITY – overpayments and debt recovery – whether Applicant earned income during the relevant period – whether Applicant overpaid various pensions in the relevant periods – whether debt recoverable – whether special circumstances – decision affirmed

LEGISLATION

Social Security Act 1991 (Cth) ss 8, 1072, 1236, 1237A, 1237ADD

Social Security (Administration) Act 1999 (Cth) s 68

CASES

Re Nassimi and Secretary, Department of Social Services [2015] AATA 423

Secretary, Department of Social Security v Brian McLaughlin and Anor [1997] FCA 1456

REASONS FOR DECISION

Ms N Isenberg, Senior Member

18 December 2015

BACKGROUND

1. Mr Toksoz (‘the Applicant’) was paid Newstart Allowance, Austudy and Carer’s Payment (‘pensions’) for varying periods between March 2009 and December 2013.  Centrelink decided that overpayments, totalling about $40,000 had been made, which he should repay.  That decision was essentially, affirmed on internal review and by the Social Security Appeals Tribunal (‘SSAT’).  The Applicant now seeks review by this Tribunal. 

2. Centrelink’s decision was reached on the basis that deposits paid into the Applicant’s bank accounts (totalling approximately $130,000) were income under s 8 of the Social Security Act 1991 (Cth) (the Act).

   ISSUES

   ·Was there was an overpayment of the applicant’s Newstart Allowance, Austudy and Carer Payment – each of which apply an income test to work out the rate of pension payable?  This depends on whether money received by the Applicant was income under s 8 of the Act.

   ·If so, are there any reasons the whole or part of the debts should not be recovered?

   LEGAL PRINCIPLES

3. The amount of a person’s pension is worked out by taking into account a person’s “ordinary income”.

4.       Section 8(1) of the Act defines income to mean an income amount “earned, derived or received by a person for the person’s own use or benefit”. “Income amount” is defined to mean the valuable consideration of all moneys whether of a capital nature or not.  The definitions are very wide.

1. Under s 8(2) “an income amount earned, derived or received” is a reference to an income amount derived or received from any source whether within or outside Australia.  

6.        Section 8(8)(z) provides that a “periodical payment or benefit by way of gift or allowance from a parent, child, brother or sister” of a person is not income for the purposes of the Act.

7.       Section 1072 provides that:

a reference 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...

1. Under s 68 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) a recipient is required to notify Centrelink of any matters that might affect their social security payments. During the relevant period letters were sent to the Applicant which required him to notify Centrelink of any income he received as well as other changes to his circumstances.

   The Applicant’s responsibilities to inform Centrelink about his ‘income’

2. On at least four occasions (25 March 2009, 6 April 2009, 21 April 2009 and 5 May 2009) Centrelink informed the Applicant that he had an obligation to advise Centrelink if he received any money from any source. 

3. On 7 May 2009, when the Applicant lodged an online Claim for Austudy, amongst other matters, he wrote that he received no income from any source.  On 19 May 2009 and 2 June 2009 Centrelink further informed the Applicant of his obligation to report any income. 

4. On 24 June 2009, Centrelink wrote to the Applicant informing him that he would be paid Austudy from 2 June 2009 and specifying the limit on his income to avoid affecting his payment.  The letter also included instructions to contact Centrelink if his circumstances changed, including if he started to receive or stop receiving income, or had any changes in his income.  Income was noted to include personal earnings, gifts or allowances of a regular nature and loans or bonds.

5. On multiple occasions between 22 September 2009 and 22 February 2011, Centrelink reminded the Applicant of his obligations to declare any income.  On at least three other occasions – 6 April 2011, 17 May 2011 and 27 June 2011 – Centrelink informed the Applicant of, amongst other things, his social security obligations including if he received any income or gifts. 

6. On 24 October 2011, Centrelink sent the Applicant a letter informing him of his rate of carer payment, and also informed him of his obligations to report any income including receiving regular payments or regular gifts.

7. In early March 2012, Centrelink commenced a review of the Applicant’s circumstances and entitlements.

8. On 12 April 2012, Centrelink sent the Applicant an income reporting statement, which referred to his social security obligations.  This stated, in part:

   … If you are paid too much because you don’t tell Centrelink about any of these changes when you have to, Centrelink may make you pay it back… get any money from any other source.

   Funds from Ms Keles

   On 3 October 2012, Centrelink received information about the Applicant’s financial circumstances, and commenced an investigation. 

9. On 5 December 2013, the Applicant wrote to Centrelink that:

   During these periods I have received substantial amounts of funds from a family relative by the name of Songul Keles. … All of the funds given to me by Ms Keles was in the means of direct cash, direct deposit to my ANZ savings account, and bank cheques payable to lawyers.  

10. On 6 December 2013, Ms Keles wrote to Centrelink stating, in part:

    The means [sic] of money given to Mr Toksoz was bank cheques drawn up to his solicitors/barristers, direct deposit into his ANZ account as well as direct cash. The amount given by me to Mr Toksoz equates to $170,000.

    18.The Applicant had never declared that he had received significant sums from Ms Keles.  He denied that these funds were income, but were a loan to assist in the payment of legal fees.

    19.As a result of its investigation, on 20 December 2013, Centrelink informed the Applicant that multiple deposits made into his ANZ account and ING Direct accounts during the period 24 March 2009 to 8 August 2013, totalling about $130,000 were considered as ordinary income under s 8 of the Act. Centrelink informed the Applicant that this had given rise to the overpayments the subject of the present application for review, and a decision was made to raise a debt in respect of each of the three pensions.

    20.The Applicant had told Centrelink that the money paid into his account should not be treated as income, because it was used to pay his solicitors’ accounts.  On review, he told the Authorised Review Officer (ARO) that the funds deposited into his account were only a small part of the funds received from a family member to assist him with his legal fees.  The ARO decided that an amount of $15,232 paid to the Applicant from an overseas relative was a one-off gift and therefore should not be included in the Applicant’s assessment of income.  The three debt decisions were otherwise affirmed, as they were by the SSAT. 

    CONSIDERATION

    21.The Applicant contended that the money given to him by Ms Keles was a loan.  Further, the Applicant contended that, in any event, it was not ‘income’ because he had received no benefit from it because it had all gone to the lawyers.  This second argument can be dealt with shortly.  The Applicant acknowledged his responsibility to pay the lawyers’ fees, notwithstanding that his criticism of the service that had been provided.  If, as he claimed, the money from Ms Keles went directly or virtually directly to the lawyers, it did so in satisfaction of the Applicant’s debt to the lawyers.  It cannot in those circumstances be said that he derived no benefit from the payment.  

    Was the money received from Ms Keles a loan?

    
    
    

    22.It was common ground that if the money provided to the Applicant was a loan it did not fall within the definition of “income”, and could be disregarded in calculation of the Applicant’s pensions: per Secretary, Department of Social Security v Brian McLaughlin and Anor [1997] FCA 1456.

    23.In their correspondence with Centrelink of 5 and 6 December 2013, neither the Applicant nor Ms Keles mentioned whether the money was a gift or a loan.

    24.On 9 July 2014, the Applicant, in a Statement of Financial Circumstances (Centrelink reviews) wrote, under the heading “Other debts (e.g. personal debts, legal costs, debts to …” that his only debt was one to the “State Dept (sic) Recovery” for court and parking fines of $7,500.  No mention was made of the loan to Ms Keles.

    25.The Applicant provided a letter from his lawyer, Mr Sam Abbas, dated 15 July 2014, which stated the Applicant had “received financial assistance from a relative, Songul Keles”, but the letter makes no reference to a loan.

    26.At the SSAT hearing, the Applicant reportedly said: “Of course I will repay her when I’m back on my feet”. 

    27.The Applicant gave evidence before me that from about 2008 to 2010 he was the defendant in serious criminal and civil litigation, which concerned allegations of fraud by him and his former wife.  He claimed the litigation included an appeal to the Court of Appeal.  He said Ms Keles agreed to fund the appeal.  His barrister was confident, he said, that not only would the appeal be successful but that costs would be awarded.  Therefore Ms Keles would get all her money back.  The published appeal decision, Toksoz v Westpac Banking Corporation [2012] NSWCA 199 from the decision from the Supreme Court proceedings Westpac Banking Corporation v Toksoz and Anor [2010] NSWSC 1509 did not include the Applicant as a party. Notwithstanding this apparent anomaly I am prepared to accept that the Applicant was engaged in some litigation and that it was likely to have been expensive.

    28.He had a jaundiced view of his lawyers.  He gave evidence of what may have been some sharp practices by his lawyers, but this is not a matter for me.  Whether or not his view was justified, he had incurred significant legal costs.  Although there were some fee negotiations, he paid, he said, $70,000 to one barrister, and $60,000 to a solicitor.  There were other, smaller payments, such as for $2000, $5000 and $10,000.  One of his solicitors has retired so he was unable to obtain complete invoices. 

    29.He said the whole family knew he and his ex-wife were in difficulty because of the allegations against them.  He received some financial support from Turkey, but the only person in the extended family in Australia who could assist was Ms Keles, who is the daughter of his ex-wife’s brother.  The family told him she had access to more than $100,000.  He said that in about April 2008 Ms Keles, who was then aged about 22, started helping him financially.  He said he asked her for a loan.  He did not know how much he needed, but thought it would only be a small amount.  He did not know it would be about $140,000.  There were  no discussions about interest payments, nor the term of the loan, and Ms Keles did not ask. 

    30.As to how Ms Keles was, at such a young age, able to provide such a substantial sum, he said she was a hard worker and a good saver.  For example, he knew she had previously made a loan of about $80,000 to a company owned by a friend of her father’s and had “got back” $100,000, so that she could lend to him.

    31.He said that she made payments to the solicitors or barristers, sometimes by bank cheque, and sometimes cash.  He would tell her how much he needed and she would go and deposit the amount into his account, so he could draw down on it to give to the lawyers.  In addition she gave him money for his own expenses when he asked for assistance.

    32.He said he would pay her back as much as he could – a minimum of $250- $500 cash per month.  He estimated he had repaid her about $36,000.  He gave the $15,000 he got from his grandmother overseas to Ms Keles as part re-payment.  Otherwise he had given her $1000 or $5000 “here and there”.  As to his ability to repay her, given his income is from his pensions, he said that he is a gambler and “has won a few times”, up to $9000.  As to the current loan balance he said Ms Keles makes a note of his payments, but he does not.  In cross-examination though he said she does not write down exact amounts. 

    33.In her statement of 6 December 2013 Ms Keles wrote that, in providing the Applicant with financial support, she had given him $170,000.   

    34.In an email dated 14 November 2014 Ms Keles provided a statement to the Tribunal that the money paid to the Applicant was a loan.  The statement provides:

    Through these years Ersever and I have sat down and made an informal agreement with a payback total amount of $120,000.  This agreement involved, making a minimum payment of $250 per month to be paid regularly until the owed amount was paid off.  No exact time frame was placed on this binding agreement amoungst [sic] ourselves.

    Since January 2012, Ersever has commenced paying me the $250.00 a month and at times given me more than the agreed amount.  …

    Till [sic] date Ersever has paid me back an approximate amount of $36,000. He now has an owing balance of $84,000. Again, I have not given him a certain time limit to pay off this debt. As long as the monthly agreed amount of $250 is paid.

    35.On 2 February 2015 she purported to withdraw the statement, but two days later adopted it again. 

    36.Ms Keles gave evidence that she had worked since she was 19, collecting blood for pathologists.  From August/September 2005 she worked a 7 day roster, working multiple long shifts, and was paid penalty rates.  She estimated she earned between $60,000 -$100,000 per annum.  She said that by 2006 – when she was about 20 – she had accumulated $80,000 which she was able to lend to a friend of her father’s, but could not remember when that was.  She received back $100,000.  She had savings by the time she was 22, in 2008.  By the end of 2008 she had accumulated $100,000, although after that time she did not save at the same rate. 

    37.She said she was not using the money at the time so had offered to help with the Applicant’s legal expenses.  She had assumed other family members had helped but the money had run out.

    38.She said there was no formal agreement.  There was no discussion about interest.  The payments she made, mostly by bank cheque but also by direct payment, or deposits into the Applicant’s account were solely for the purpose of paying his legal bills.  Two or three times she went with the Applicant to the lawyers to pay cash.  The Applicant was very confident about the outcome of the litigation.  She therefore was also confident that when he got his costs paid, she would get her money back.  She was very let down when he lost and thought she would not get her money back, other than in “dribs and drabs”, which he started in 2012.

    39.She does not know how much she loaned him or how much he has repaid.  From “time to time” she “jots down” what he pays.  At present, she said, he owes her $80,000 -$90,000, or maybe more.  In cross-examination she said she thought he still owed her about $84,000 and that he had repaid about $36,000.  She said she will be happy when he has paid it all back, but conceded she will not know when that has occurred, because she does not know what he owes her.  She said he gives her $250 per month and more if he has gambling success.  She said she does not have a realistic expectation of getting her money back.  She said she writes in a diary when he pays her.  The most he has given her at a time is $15,000 which was from his grandmother overseas.  He gave her $8000 in cash once but she did not know when that was. She used it for expenses and did not deposit it in to any of her accounts.   

    40.She had trained as an Enrolled Nurse in 2008 - 2009, and during which time she worked casually.  On completion of her course, she again worked in a hospital and then worked for Medibank where her annual salary was about $60,000.  She currently is on a carer’s pension.  She has a current credit card debt of about $50,000, which she is unable to pay.  She has other credit card debts for which she is being pursued.  She had started accumulating the debt in 2008 when she was working part time during her training.  

    41.In a Centrelink Income and Assets form dated 17 March 2015 she was asked: “Do you have money on loan to another person or organisation?” to which she answered “No”.  She said that Centrelink knew about the loan to the Applicant so she did not include it.

    42.In cross-examination she was referred to her bank records and statements for her many credit cards.  In particular she was referred to a deposit of $100,000 into one of her accounts in November 2009.  She said that it represented savings but could not point to a transfer from another of her accounts.  She said that earlier bank records would have shown the accumulation of savings.  She could not remember how she had spent the money.  She was also taken to other large deposits (e.g. of $50,000 and $23,000 in July 2009), but could not remember the source of the money.   

    43.She was shown records of several credit cards which were in arrears and appear to have been closed.  It was put to her that her bank records did not show a pattern of saving.  There were multiple expenditure items of a discretionary nature.  She agreed that she spent money, but claimed she also saved money. 

    44.I did not find the Applicant or Ms Keles to be credible witnesses.  There was some evidence that culturally, loans are made without terms and are repaid when possible.  Even if this were the case and there was no arrangement as to the period of the loan or interest rates, it is implausible, in my view, that the amount of the loan is unknown to either of them and the amount repaid to date is unknown.  Further, Ms Keles explanation as to the source of the money, namely savings she had accumulated in a very few years and while working in low-paid jobs or while as student or on benefits, also was implausible.  This influenced my assessment of her credit.

    45.I find that the money the Applicant received from Ms Keles was not a bona fide loan such as would exclude it from the definition of income. 

    46.I must conclude that, as the payments from Ms Keles were not a loan, they are gifts they are captured in the definition of income for the purpose of calculating the rate of Newstart allowance, Austudy and Carer Payment. Gifts from some family members, namely those “from a parent, child, brother or sister of the person” as per s 8(8)(z) of the Act, may be exempt for pension purposes, but this does not apply to Ms Keles. There is no general exclusion of gifts from the definition of income.

    47.I was referred to the Tribunal’s recent decision in ReNassimi and Secretary, Department of Social Services [2015] AATA 423 (‘Nassimi’) where DP Tamberlin said at [9]

    In Read v Commonwealth [1988] HCA 26 at [3] the High Court noted that the definition of “income” in the Act is in the widest terms “to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide”. The purpose of the definition is to ensure that it brings within its net as wide a range of categories and sources of income as possible: see Frederick George Rose v Secretary, Department of Social Security [1990] FCA 52 at [12].

    In view of the wide definition of ‘income’, as discussed in Nassimi, I find the deposits in the Applicant’s bank account, and the payments to the lawyers justify a conclusion that they were for the applicant’s own use and benefit because they were under his control: per Nassimi at [12].

    Are there circumstances why the Applicant should not have to repay the debts?

    
    
    

    48.Section 1236 of the Act provides that the debt may be written-off a debt if it is irrecoverable or the debt or has no capacity to repay the debt or the debtor is not receiving a social security payment under the Act, and it is not cost effective for the Commonwealth to take action to recover the debt.  This cannot be applied because the Applicant receives social security pension, from which repayment of the debt is being made.

    49.Section 1237A of the Act provides that all or part of a debt may be waived in specified circumstances, namely that the debt has arisen solely because of an administrative error.  Here there is no evidence that the debt arose solely because of an administrative error and therefore the debt cannot be waived on this basis. 

    50.Section 1237AAD of the Act also provides that a debt may be waived where there are special circumstances other than financial hardship alone that makes it desirable to waive the debt. 

    51.As to his financial position, the Applicant noted that he receives carer payment.  For the purposes of review by the SSAT, he completed a Statement of Financial Circumstances which stated that his only income was that from Centrelink; he had court fines of $7,500; $1.82 in the ANZ Bank; and that he had a judgment against him from the Supreme Court in the amount of $1.1 million.  I accept, as did the SSAT, that he has limited discretionary spending.  Having said that, I note his evidence that he is “a gambler”. 

    52.The Applicant claimed he is depressed.  There was a report from Dr Keith Dawes, psychologist, dated 26 July 2012, prepared in anticipation of sentencing in relation to the Applicant’s conviction on several charges related to obtaining money by deception.  It made no contention of any psychological disorder.  There was a ‘character reference’ from Dr Altan Capa, GP, dated 1 October 2014, which referred to the Applicant’s depression, anxiety and post-traumatic stress disorder.    While the Applicant may have been referred for counselling, I do not regard a GP’s diagnosis as determinative of a psychiatric condition.  Further there was no evidence that the applicant was debilitated by any claimed condition.  In any event, in my view it is not unusual or uncommon for a social security recipient to have some psychological problems. 

1. He claimed that at the time he received the money, his life was “consumed” with criminal and civil court cases.  In my view it is not unusual or uncommon for a social security recipient to have competing demands on their time and the fact that he was involved in litigation did not prevent him from fulfilling his social security obligations. 

   54.He claimed to have been affected by the breakdown of his marriage and the subsequent divorce, and that his personal life was in disarray.  Family breakdowns and divorce not uncommon or unusual and consequently are not special circumstances.   

   55.There was no evidence that would persuade me that the Applicant’s circumstances are special.  I am not satisfied that =the Applicant’s circumstances overall are sufficient to be classified as “special” for the purposes of waiver. 

   56.Further, the waiver provisions are only enlivened when a person has not knowingly made a false statement to Centrelink.  Unlike the SSAT, I do not accept that the Applicant did not knowingly mislead Centrelink by his failure to comply with his obligations.  I do not accept his explanation that he did not receive ‘income’ because only his lawyers, he said, received the benefit of the money and not him personally.

   CONCLUSION

2. I find that the Applicant had received “income” which was not taken into account when calculating his rate of Newstart Allowance, Austudy and Carer’s Payment and accordingly that he has been overpaid.  

3. I therefore find that as a result of being overpaid pension to which he was not entitled, the Applicant:

   (a)has a debt of $352.25 due to the Commonwealth for Newstart Allowance

   (b)has a debt of $13,372.31 due to the Commonwealth for Austudy

   (c)has a debt of $26,977.50 due to the Commonwealth for Carer Payment.

   59.I further conclude that the debts must be repaid in full.

   DECISION

   
   
   

   60.The decision under review is affirmed.

I certify that the preceding 60 (sixty) paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member.

...........................[sgd].............................................

Associate

Dated 18 December 2015

Dates of hearing	5 August, 30 September & 17 November 2015
Applicant	In person
Solicitors for the Respondent	Department of Human Services