Young and Department of Family and Community Services

DECISION AND REASONS FOR DECISION [2001] AATA 420

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V99/1416

GENERAL ADMINISTRATIVE DIVISION       )
           Re      PAUL YOUNG
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mrs Joan Dwyer, Senior Member

Date18 May 2001
PlaceMelbourne

Decision      The Tribunal affirms the decisions under review.
  (Sgnd) Joan Dwyer
  Senior Member
SOCIAL SECURITY – rent assistance – whether a "homeowner" – applicant registered proprietor of land – whether he held it as trustee – whether trusts came into effect – lack of recognition of obligations of a trustee – failure to appoint a trustee as provided for in relevant declaration of trust – effect of a "lifetime lease" by applicant purporting to be trustee to applicant as tenant – whether applicant paid or was liable to pay rent - finding that applicant had "reasonable security of tenure" and was a "homeowner" at all relevant times and did not pay rent and was not entitled to payment of rent assistance
SOCIAL SECURITY – recovery of overpayment of rent assistance – s 1223(5) provides that incorrectly paid amount paid after 1 October 1997 is a debt due to the Commonwealth –does not address position as to incorrectly paid amounts prior to 1 October 1997 – application of s 1224 – whether rent assistance was paid because Mr Young made false statements –finding that rent assistance paid because of false statements and that it is a debt due to the Commonwealth – decisions affirmed
Social Security Act 1991 ss 1068-F1, 11(4) and (8), 13(2), 105(1), 1224(1),
Social Security Legislation Amendment (Budget and Other Measures) Act 1996 (No 84 of 1996) Schedule 18 Part 2

McAuliffe v Secretary Department of Social Security (1991) 23 ALD 284

Re King and Secretary, Department of Social Security (1994) 34 ALD 583

Secretary Department of Social Security v Salvona (1989) 18 ALD 289

REASONS FOR DECISION

18 May 2001 Mrs Joan Dwyer, Senior Member

This is an application for review of a reviewable decision of the Social Security Appeals Tribunal ("SSAT") (T2) which affirmed decisions (T31, T33) of a Centrelink employee, presumably as a delegate to the Secretary of the Department of Family and Community Services ("the Secretary"), that Mr Young's rent assistance be cancelled from 17 February 1999, and that a debt of $10,040.61, being rent assistance paid for the period 28 January 1993 to 17 February 1999, be raised and recovered. The SSAT decision was made on 24 November 1999, although it is wrongly dated 24 September 1999. So far as one can tell from the T documents which, as is regrettably usual nowadays, do not include identifiable decisions made within Centrelink, the SSAT affirmed decisions made 25 and 26 February 1999 which cancelled rent assistance from 18 February 1999 and raised a debt of $10,040.61, being all the rent assistance paid from 28 January 1993. That is the date rent assistance started to be paid to Mr Young, who was then using the name Luke Phillips, in respect of a property at Dunolly, formerly known as Lot 16 Government Road No 2, Dunolly. That property is now known as Lot 16 Pierce Hill Road, Dunolly ("the Dunolly property").
Mr Young appeared at the hearing. Mr Todd, an employee of Centrelink, appeared on behalf of the Secretary, Department of Family and Community Services ("the Secretary"). Mr Young gave evidence. The Tribunal had before it the documents ("the T documents") lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") and the exhibit tendered by Mr Young during the hearing.
The reason why Mr Young's rent assistance was cancelled was that the Centrelink decision-maker formed the view that Mr Young was "a homeowner", and therefore not qualified for payment of rent assistance. Mr Young does not deny that the title to the Dunolly property at all relevant times, was in his name. However he says that he has at all times been holding the property on trust, although not at all times on the same trust or for the same beneficiary, and that therefore he is not the beneficial owner of the property.
Mr Young's first submission at the hearing was that the fact that he had been paid rent assistance created some sort of entitlement or estoppel, so that he was entitled to keep the rent assistance which he had already been paid. He said that if he was not entitled to those payments the staff of the Department of Social Security ("DSS"), as it then was, should have investigated the matter further before making those payments. Mr Young put the position as follows (trans. p4):
MR YOUNG: On that basis I would need to get some assistance from somewhere else, because my position would be that if the Department is administering the process of their conduct has been negligent and incompetent and corrupt or deliberately withholding evidence, then the liability for any of the debt resulting from the rent issue, the liability is theirs. The legal argument that I am raising is that the issue is not whether or not I am an ineligible or eligible home owner. That is simply on the basis of the fact of the information that they have made the decision.
The real issue is they have raised the debt and I say that there is no debt in law as a result of their conduct, that they have administered their Departmental duty incorrectly, incompetently, negligently, and therefore no debt should have been raised in regard to the issue of the rent business at all. What I am saying, of course, simply is that if they had have done their job properly in the first place the benefit would have been correctly apportioned or not apportioned at the time and there would have been no need for any of these proceedings.

The Tribunal rejects that submission. It was explained to Mr Young that once the matter comes before the Tribunal, the Tribunal makes a new decision on the material before the Tribunal.

The starting point for consideration of this issue must be the relevant legislation. Module F in s 1068B-F1 of the Social Security Act 1991 ("the Act") deals with rent assistance. As at 25 May 1999 it stated as follows:
MODULE F—RENT ASSISTANCE
Rent assistance
1068B-F1. An amount to help cover the cost of rent is to be included in a person's provisional payment rate in the Method statement in point 1068B-A3 for a period if:
(a)       . . .
(b)       the person is not an ineligible homeowner; and
(c)       . . .
(d)the person pays, or is liable to pay, rent (other than Government rent) in respect of the period; and
(e)       the rent is payable at a rate of more than the rent threshold rate; and
. . .

Table F-1 sets out rent threshold rates. At all times the rents Mr Young claimed to be paying were above the rent threshold which was relevant to him.

The crux of the dispute between the parties concerns the meaning of the term "ineligible homeowner" which is defined in s 13 of the Act. So far as relevant an "ineligible homeowner" means a "homeowner". The term "homeowner" is defined in s 11(4) and (8) of the Act as follows:
Homeowner
11 (4)   For the purposes of this Act:
(a)       a person who is not a member of a couple is a homeowner if:
(i)the person has a right or interest in the person's principal home; and
(ii)     the person's right or interest in the home gives the person reasonable security of tenure in the home; and
. . .
11 (8)   If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.
As set out above, 1068B-F1(d) contains a requirement that to be entitled to rent assistance a person must pay or be liable to pay rent. The concept of "rent" is defined in s 13(2) as follows :
13 (2) Amounts are rent in relation to the person if:
(a) the amounts are payable by the person:
(i)as a condition of occupancy of premises, or of a part of premises, occupied by the person as the person's principal home;
. . .
Mr Todd, as had the SSAT, addressed the issues relevant to whether Mr Young was an "ineligible homeowner". The issues arising are:
(i)Whether the Dunolly property is Mr Young's principal home.
(ii)If so, whether Mr Young has a right or interest in the Dunolly property.
(iii)If so, whether Mr Young's right or interest in the home gives him reasonable security of tenure in the home;

There is of course a further underlying issue namely:

(iv)Whether Mr Young paid or was liable to pay rent during the relevant period.

Is the Dunolly property Mr Young's principal home?

The definition of "rent" in s 13(2) of the Act provides that "amounts are rent . . . if the amounts are payable as a condition of occupancy of premises, . . . occupied by the person as the person's principal home". Mr Young in his evidence seemed to deny that the property had ever been his principal home. The issue was explored by Mr Todd in cross-examination (trans. page 69):
MR TODD: Did you consider yourself already living at the Dunolly address by April '92?
MR YOUNG: No but I mean I don't consider that I've ever, considered that I've never been a resident there in fact. I've always taken the view that I've simply only been working there.
If Mr Young were not living at the Dunolly property as his principal home, then he was not entitled to rent assistance in respect of any money which he may have been paying for rent of the Dunolly property.
Prior to the hearing Mr Young had claimed on a number of occasions that he was living at the Dunolly property. In a statement dated 24 February 1999 (T30 p98), Mr Young wrote:
I have lived at the property since September 1991. I currently have a 3 year lease on the above property.

He advised that he had moved to the Dunolly property in a change of address notice (T18 p62) and a Newstart Claim form (T16 p54), both of which he completed on 23 December 1992. He advised that he paid $75.00 per week rent to Stephanie Kerrwin of the same address. From 23 December 1992 Mr Young used the Dunolly property address in all his communications with the Department of Social Security ("DSS") and Centrelink. On 3 February 1998 he told Centrelink that he commenced to live at the Dunolly property on 30 March 1997 (T22 p73).

The Tribunal considers that the Change of Address notice (T18) is the most reliable evidence on this issue. It finds that Mr Young has at all relevant times lived at the Dunolly property as his principal home.

Does Mr Young have a right or interest in the Dunolly property?

It is not in dispute that since 7 February 1991 the Dunolly property has been registered in the name of Paul Charles Kerr (T37 pp162-163). Mr Young did not deny that he is the same person as Paul Charles Kerr, the registered proprietor of the Dunolly property. Thus he is the registered proprietor and does have a right or interest in the property.
Mr Young claimed that he had no right or interest in the Dunolly property because it was subject to two different trusts from the time of settlement of the purchase of the Dunolly property. The two trusts may be referred to as:
(a) The trust for Stephanie (see T50 p195); and
(b) The trust for K.F. & F. Foundation (see trust deed T27 pp89-94).

(a) The trust for Stephanie

Mr Young explained that from the time he purchased the property he was intending to buy it for Stephanie, who he believed to be his daughter. He produced a "receipt" for $200.00 deposit on the property (T50 p195). The "receipt" reads as follows:
TO WHOM IT MAY CONCERN 31/1/90
THIS DOCUMENT IS A RECEIPT FOR $200.00 (TWO HUNDRED DOLLARS) RECEIVED BY MR JAMIE REID BEING AN AMOUNT PAID AS A DEPOSIT FOR A LAND TRANSACTION ON THE PROPERTY KNOWN AS SECTION 42 ALLOTMENT 16 AND PART OF LOT 9 (6 ACRES COVERAGE) SUCH PRELIMINARY DEPOSIT PROVIDES FOR SALE AT A NEGOTIATED PRICE SUBJECT TO SITE INSPECTION BY A BUILDING INSPECTOR PROVIDED BY MR KERR. THE PROPERTY IS LOCATED ON THE ? PERIMETER OF THE RURAL TOWNSHIP KNOWN AS DUNOLLY IN THE STATE OF VICTORIA. THIS LAND HAS BEEN PURCHASED TO BE HELD IN TRUST FOR MY DAUGHTER STEPHANIE.
Signed Mr Paul Kerr Purchaser
Signed Mr Jamie Reid Seller
Mr Young said that there were documents drawn up to show that he was purchasing the property in trust for his daughter, Stephanie, but when his relationship with her mother deteriorated he destroyed those documents. He explained (trans. p47):
[T]he circumstance was such that when the personal involvement became unpleasant they were simply destroyed in order that the woman involved who I believe was the mother had no access to any of these documents that could be used in a way to influence me or draw some sort of pressure on me.
When Mr Young explained the position in that way, the Tribunal suggested to him that the trust never really came into effect. He said (trans. p47):
[W]ell I say it did.
. . .
Well, it stopped, I would say it stopped being in effect when the relationship was dissolved, when the documents were destroyed and when the Foundation Trust was formed. That has taken precedence over any other previous documentation..
The Tribunal asked Mr Young how, if he was holding the property on trust for Stephanie, he, as trustee, could simply "stop" the trust when he chose to do so. He responded (trans. p48):
Well there's no entitlement of the child or the mother to any of that property or any of those issues when I've been deceived.

When the Tribunal attempted to explore this further, Mr Young replied that the trust was certainly not in existence now because there are no documents to show that it is in existence.

Mr Young explained that although he thought the documents which were in existence did establish a trust in favour of the child, Stephanie, the documents had been destroyed. He said (trans. p49):
[S]imply destroyed on the basis of the fact that the woman involved would have no legal situation where she could come back and use some sort of pressure.

That seems to show that Mr Young does not understand the obligations of a trustee or the effect of setting up a trust.

On that evidence I am satisfied that there never was a trust for Stephanie. It may be that Mr Young at one time intended to hold the property for the benefit of Stephanie, but he did not intend to interfere with his own entitlement to deal with the Dunolly property for his own benefit. There is nothing to show that he ever constituted a trust. The fact that he simply destroyed the documentation and regarded that as putting an end to the trust, indicates that he had never effected any intention to give the full beneficial ownership of the Dunolly property to a trustee, to hold for the benefit of Stephanie. Thus I find that Mr Young was the registered and beneficial owner of the Dunolly property from the time it was transferred to him, using the name Paul Charles Kerr, on 7 February 1991 (T37 pp162-163).
(b) the K.F. & F. Foundation
The next question is whether Mr Young ceased to have a right or interest in the Dunolly property after he made a declaration of trust in favour of the K.F. & F Foundation on 24 December 1996. That Declaration of Trust (T27), according to Mr Young's evidence, was drawn up by a solicitor, but he added typewritten variations on the day he purported to execute the Declaration of Trust. He signed the Declaration of Trust using the name Paul Charles Kerr. The Declaration of Trust contains a Constitution of the K.F. & F Foundation, which provides that the Foundation is to use the property of the Foundation to further (T27 p89):
a.        the conservation of native Australian flora and fauna, in particular –
(1)       endangered species; and
(2)       the wildlife of box/ironbark forests, and
b.        the promotion of Australian ecological purity.

Clause 3.a. of the Declaration of Trust states that the Dunolly property becomes the property of the Foundation.

The main problem with that document is that, so far as the evidence reveals, there has never been a trustee appointed to carry out the objects of the Foundation. The Declaration of Trust sets out in paragraph 2 the duties of the Trustee. The Trustee in clause 2.c. has power to appoint and supervise and remove or replace a Guardian. There is nothing in the Declaration or in the evidence to show that anybody (other than Mr Young) agreed to accept the responsibility of being Trustee of the Foundation.
Mr Young gave evidence that he thought he had been the Trustee as well as the Founder and Guardian of the Trust. He said he had seen no need to involve anyone else as a Trustee of the Trust. The Declaration of Trust provides in clause 4.a. (T27 p90):
4.a. During the life of the Founder the Trustee is appointed by him and may be removed or replaced by him.
The duties and powers of the Trustee are set out in clause 2 (T27 p89):
2.a. It is the duty of the Trustee to ensure that the purposes are carried out and in particular to plan the strategies, policies and general framework within which the purposes are to be achieved.
b.The Trustee may appoint and supervise, and may remove or replace, a Guardian.
c.Subject to Clause 2a. the Guardian is responsible for the implementation of the purposes in particular the care and daily management of the property of the Foundation.
d.For so long as a Trustee or Guardian makes over to the Fund all of his or her income from all sources or is employed full-time without remuneration in the office of Trustee or Guardian, the upkeep of that Trustee or Guardian is a first charge on the property of the Foundation and that Trustee or Guardian is permitted to reside on the land of the Foundation.

Mr Young's evidence was that no Trustee was ever appointed by him under clause 4.a. of the Declaration of Trust. He said he simply acted as Trustee. To the extent that any legal effect can be given to the Declaration of Trust, it clearly contemplates that the Trustee and the Guardian are two distinct people. Although the Declaration of Trust (T27) in regulation 2.b. of the Schedule, states that the inaugural Guardian is Paul Charles Kerr, it does not appoint him Trustee.

The T documents include a handwritten document dated 15 January 1997, at T51 p196 by which Mr Young, as Paul Charles Kerr, purports to appoint six named people as Trustees of the K.F. & F. Foundation. Mr Young acknowledged that only one of those people had ever been made aware of his possible or proposed role as Trustee, and that he had declined to act as Trustee when called on to do so (trans. p15).
In those circumstances I find that the K.F. & F. Foundation did not ever come into existence as an entity separate from Mr Young. No person ever accepted the responsibility of being a Trustee of the Foundation. Clause 4.a. of the Declaration of Trust anticipates that the Founder, Mr Young, would appoint a Trustee. Instead what he purported to do was to act as if he were the Trustee, ignoring the appointment provisions for a Trustee set out in the Constitution of the Foundation. Mr Young purported to assume all the positions specified in Constitution, namely, Founder, Trustee and Guardian. Further, he did not comply with the obligations of a Trustee such as keeping trust accounts, or keeping his funds separate from the trust funds.

Did Mr Young have reasonable security of tenure at the relevant period?

Even if the K.F. & F. Foundation had existed as a separate entity to Mr Young, there is no way it could challenge his security of tenure. He is the registered proprietor of the land, he occupies the land and he decides the terms on which he so occupies it. There is no one representing the K.F. & F. Foundation who could challenge Mr Young's security of tenure.

Further clause 2.d. of the Declaration of Trust (T27 p89), specifically granted Mr Young reasonable security of tenure. It reads as follows:
For so long as a Trustee or Guardian makes over to the Fund all of his or her income from all sources or is employed full-time without remuneration in the office of Trustee or Guardian, the upkeep of that Trustee or Guardian is a first charge on the property of the Foundation and that Trustee or Guardian is permitted to reside on the land of the Foundation.

That provision gave Mr Young, as the Guardian, a right or interest in the property which gave him reasonable security of tenure in the home. However, he said that he had varied that clause on the same day as the Declaration of Trust came into effect, under variation 1 which reads as follows:

Variation No 1: Implementation
·Superceeding [sic] clause 2D [sic] page 1
·Under no circumstances, without exception can a trustee or guardian receive any benefit, financial or otherwise, explicit or implied. Clause 2D may apply only to the founder in the event of exceptional circumstances, long term illness (medically untreatable) being the only such circumstance.

The variation document further states in variation no. 2 clauses 3A and 3B:

Variation No 2: Property – Superceeding Clauses 3A & 3B
·Clause 3A – the founder has no real or personal assets. The land in certificate of title volume 9231 folio 420 (The Dunolly Land) becomes foundation property, by the power of attorney vested in the founder on behalf of the owner (Including house and chattels)
.Clause 3B – The trustee cannot sell/dispose of the Dunolly property but may acquire other property on behalf of the foundation.

The Tribunal does not accept the submission that these documents had any effect on Mr Young's security of tenure.

In spite of the variations, Mr Young has occupied the trust property as his home at all relevant times. Since 30 March 1997 he claims that his occupation has been pursuant to a "lifetime lease" to himself (T52 p197-198). By that lease, dated 30 March 1997, the K.F. & F. Foundation, as landlord, agreed to lease the property to Mr Young, as tenant, for $200.00 a week from 30 March 1997. Mr Young signed the lease as Trustee of the Foundation and as the tenant. The terms included the following (T52 p198):
(A)THAT THE TENANT (MR YOUNG) HAS A LIFETIME LEASE WITH THE OPTION TO CANCEL THE LEASE ON 6 MONTHS NOTICE PRIOR TO VACATING
(B)THAT THE LEASE INCLUDES ALL GOODS AND CHATTELS FOR PERSONAL USE OF TENANT
(C) THAT THE TENANT MANAGE AND MAINTAIN SAID PROPERTY IN ACCORDANCE WITH THE DOCUMENT THAT CONSTITUTES THE CHARTER OF THE FOUNDATION
(D)THAT THIS LEASE CAN BE ALTERED WITH THE CONSENT OF BOTH PARTIES.
I doubt if that "lease" has any legal standing. If it does, it gives Mr Young security of tenure with a lifetime lease which can only be altered either with the consent of both parties, or by him cancelling the lease. As Mr Young is both parties to the "lease", he has had security of tenure of the Dunolly property which he occupies as his principal home, since the date of the lease. I find that Mr Young had security of tenure prior to the date of the lease because he was the registered proprietor of the property and there was no Trustee of the K.F. and F Foundation to challenge his security of tenure of the Dunolly property. Whether or not the lease has legal standing, that position continued after 30 March 1997.
I find that Mr Young has been a homeowner as defined in s 11(4) of the Act since he started living at the Dunolly property. He has never been entitled to payment of rent assistance in respect of his occupation of the Dunolly property.
Mr Young relied on exhibit A, an excerpt from a Social Security Manual discussing the assessment for assets test purposes of a home owned by a trust. That excerpt discusses the definition of "a homeowner" where the home is owned by a trust. It considers the concept of "reasonable security of tenure". That is not relevant as I have found that the Dunolly property was not owned by a trust during the relevant period, as neither purported trust ever came into effect.
In his written submission received on 23 March 2001 Mr Young stated :
CLEARLY THE LAW APPLICABLE IN REGARD TO RESIDENTIAL TENACY [SIC] MATTERS, IN THIS SPECIFIC CASE PRECLUDES ANY LAWFULL OCCUPANCY OF THE PROPERTY IN QUESTION. IN LAW THERE CAN BE NO OCCUPANCY AND THEREFORE NO TENURE [REASONABLE OR OTHERWISE] IN AN UNCOMPLETED DWELLING WHERE THERE IS NO CERTIFICATE OF OCCUPANCY, NO SEWERAGE AS REQUIRED IN LAW BY HEALTH REGULATIONS, NO BASIC INFRASTRUCTURE SUCH AS ELECTRICITY AND GAS AND INSUFFICIENT WATER.
. . .
THERE IS A CONTINUING AND ONGOING REAL THREAT TO THE PRESENCE OF THE APPLICANT FROM VARIOUS AUTHORITIES AS RELATE TO ANY ALLEGED OCCUPANCY OF THE PROPERTY. CLEARLY ANY AND ALL THE LEASE DOCUMENTS ARE INVALID AND HAVE NO BASIS OR STANDING IN LAW. ANY SUGGESTED OCCUPANCY IS ILLEGAL.

The Tribunal is not satisfied on the material before it that Mr Young's occupancy is unlawful nor that he does not have reasonable security of tenure.

Did Mr Young pay, or was he liable to pay rent?

On 23 December 1992 Mr Young using the name Luke Phillips, completed a Newstart Allowance claim in which he stated that he paid $75.00 rent a week to Stephanie Kerrwin (T16 pp54-60). He also lodged a copy of a receipt for $75.00 rent which appeared to be signed by Miss Stephanie Kerrwin (T17 p61).
I find that Mr Young never paid rent to Stephanie Kerrwin. He was asked at the hearing who signed that receipt for Stephanie Kerrwin, who he referred to as a child (trans. p54). Mr Young was also asked whether the receipt referred to "notional payments", or whether some money actually passed. He replied (trans. p54):
Well, at the initial stages I still had some contact with the mother of the child and there was initially some transfer of money to her on behalf of the child but as things progressed that sort of arrangement was disposed of I suppose is the only other way to say that.
Mr Young said the handwriting on the receipt was "the writing of the woman" (trans. p55), meaning the mother of the child Stephanie. I do not accept that evidence as indicating any payment of rent. If Stephanie's mother was giving receipts for rent, she would have been aware that Stephanie had some claim to an interest in the land and the burning of the trust documents would not have left her without any documents "that could be used . . . to influence or [put] pressure on" Mr Young (trans. p47). Mr Young's evidence does not satisfy me that rent was paid to Stephanie, or to someone on her behalf, in respect of his occupancy of the land. I find it was not.
As to the claim that rent was paid after the property was beneficially transferred to the K.F. & F. Foundation, the T documents do include a purported tenancy agreement (T52 p197) whereby Mr Young agreed to pay the K.F. & F Foundation the sum of $200.00 per week from 30 March 1997, payable in advance on the first day of every month. Mr Young said that the rent was reduced to $100 per week by agreement. He told the SSAT he signed a second lease (T2 p5), but it is not included in the T documents. In a review form, T22 dated 3 February 1998, Mr Young said that he rented the property from the K.F. & F Foundation at a rent of $100 per week, being a variation from 24 December 1997, of the rent payable under the original lease of 30 March 1997. He did not state that the variation was in writing, nor did he produce a copy. In evidence he was extraordinarily vague as to the rent he claimed to have been paying, not knowing whether it was $200.00 a week, a fortnight or a month (trans. p39).
That vagueness is explained by the lack of evidence that Mr Young has ever in fact paid any rent for his occupancy of the Dunolly property. From his evidence I find that he has just spent what money he needed to spend on himself and the property, and regarded the money that he spent on the property as his rent. When the Tribunal asked whether the rent was ever paid. He replied (trans. p39):
The rent was paid. The money was disbursed in things like management of the foundation, payment of rates, various wildlife purposes. In the recent several years – well, not the last couple of years, that's ongoing – the purchase of a further property.
The Tribunal asked "Where are the accounts that show all of this?" Mr Young replied, "Aren't they in the T documents?" Later, it transpired that there were no trust accounts and no trust bank account. The way Mr Young regards himself as paying rent is as follows (trans. p40):
I think I could explain it simply by saying there was a tenancy agreement, there was a rental agreement. The rent was paid and expenditure of the foundation was kept a record of.
MRS DWYER: Where is the record?
MR YOUNG: I suppose I should have brought that, but it is a file full of receipts for everything from mail, photocopying, donations to other organisations, money spent on a series of awards for – annual awards for various organisations, schools or whatever. There would be everything from petrol receipts, phone calls, mail. There would be records of expenditure for everything from vet bills to food purchased for wildlife. I think I've said rate payments, maintenance of any of the property, if the water tank sprung a leak, any and all of those extraneous issues where expenditure has been on the property for whatever reason.
MRS DWYER; But you have not been keeping a running account that says the rent in, $100, or whatever, expenditure. There is no balanced account like that. Is that correct? I mean, if there was you would be able to show it to me.
MR YOUNG: Well, that's right. The accounts in effect are the receipts showing the expenditure on the purpose of the Foundation. When there is expenditure the receipts which are asked for are made out in the name of the Foundation. So there is copious quantities of material of receipts marked in the name of the Foundation where the expenditure has been for the Foundation. Clearly, it must have come from somewhere, and if there's a residential tenancy agreement where the rent is paid, and that's the only income of the Foundation, it must by logic be coming from the rent.
I do not accept that evidence as indicating any payment of rent at all. I find that Mr Young resides on the Dunolly property, which is his property. He has chosen to use the name K.F. & F. Foundation for certain purposes, including for payment of some of the property expenses, but there is no evidence that he has ever paid rent to the Foundation.
conclusion
I find that Mr Young has never been entitled to rent assistance in respect of his occupation of the Dunolly property. He has at all times had an interest in that property as the registered proprietor and has at all times had reasonable security of tenure. Thus he has at all relevant times been "a homeowner" and not entitled to payment of rent assistance. Further, I find he has not paid or been liable to pay rent. The decision cancelling rent assistance will be affirmed.
Had I had any doubt about the significance of the purported trusts, the same result would have followed under s 11(8) of the Act. As Mr Young has at all relevant times been the registered proprietor of the Dunolly property, he has always had "a right or interest" in the property. Under s 11(8) of the Act, he is to be taken to have a right or interest that gives him "reasonable security of tenure" unless the Secretary, or the Tribunal standing in the shoes of the Secretary, is satisfied that the "right or interest" does not give him "reasonable security of tenure". I am not so satisfied.
the decision to raise and recover a debt of $10,040.61 being the rent assistance paid for the period 28 January 1993 to 17 February 1999
I have found that Mr Young has never been entitled to payment of rent assistance in respect of the Dunolly property. However the Act does not simply provide that any amounts paid to a recipient, which should not have been paid, are a recoverable debt. The position is more complex than that.
Mr Todd, in his Statement of Facts and Contentions, did not deal with the mechanism for raising and recovering the debt. When the Tribunal asked him to refer it to the relevant section, he relied on s 1223(5) of the Act (trans. p84). That provision reads as follows:
Incorrectly paid amount
1223 (5) If:
(a)an amount (the received amount) has been paid to a person by way of social security payment on or after 1 October 1997 . . . ; and
(b)because the received amount had not been correctly calculated using the relevant rate calculator or other provision for calculating the amount, or for any other reason, the received amount is greater than the amount (the correct amount) of social security payment or fares allowance that should have been paid to the person;
the difference between the received amount and the correct amount is a debt due to the Commonwealth.

That provision deals adequately with amounts of rent assistance paid to Mr Young after 1 October 1997, but it says nothing as to raising a debt in respect of payments made from 28 January 1993 to 1 October 1997.

At the conclusion of the hearing the Tribunal gave leave to Mr Todd to lodge a written submission as to the means of raising and recovering the debt, if the Tribunal should find that there was an overpayment in respect of amounts paid to Mr Young by way of Social Security payment before 1 October 1997. It gave leave to Mr Young to lodge a written submission in reply.
Mr Todd lodged a written submission on 27 February 2001. Mr Young applied for a further hearing date to deal with that written submission. The Tribunal refused to vary its direction that Mr Young make a written response to that submission. Mr Young's written response was received by the Tribunal on 23 March 2001.
Mr Todd in his further submission set out s 1223(6), the predecessor to s 1223(5), as it appeared in the Act as at 15 January 1993. However no decision was made that the rent assistance paid to Mr Young was not payable to him, until February 1999. It is the powers of the Secretary, as at that date, to raise a debt in respect of a period prior to 1 October 1997 that are relevant.
Mr Todd also set out the history of s 1223(5) and its predecessor, s 1223(6), which had applied to amounts incorrectly paid, whenever they were paid. Section 1223(6) was repealed and replaced by s 1223(5) in its present form by the Social Security Legislation Amendment (Budget and Other Measures) Act 1996 (No 84 of 1996), with effect from 1 October 1997 (see Part 2 of Schedule 18) of that Act. A savings clause, clause 105(1) was inserted in Schedule 1A of the Social Security Act. It provides so far as relevant:
105Application and saving provisions: debts due to the Commonwealth and their recovery
(1)For the avoidance of doubt, and without affecting the operation of section 8 of the Acts Interpretation Act 1901, Part 2 of Schedule 18 of the amending Act does not:
(a)affect the operation of Part 5.2 or 5.3 of this Act before 1 October 1997; or
(b)extinguish the amount of any debt due to the Commonwealth arising before 1 October 1997 that was outstanding at the start of that day; or
(c)prevent the recovery, on or after 1 October 1997, of any such outstanding amount.
I do not consider that the savings clause helps the Secretary in this matter. Each of paragraphs 1(a), (b) and (c) requires that prior to 1 October 1997, there have been either a debt or an overpayment. No decision to that effect was made prior to 1 October 1997. Part 5.2 of the Act deals with "Amounts Recoverable under this Act". Immediately prior to 1 October 1997 it provided in s 1223(1):
Recipient not qualified for payment and amount not payable
1223.9 (1) Subject to subsection (2), if:
(a)an amount has been paid to a person by way of social security payment; and
(b)the recipient was not qualified for the social security payment and the amount was not payable to the recipient;
the amount so paid is a debt due to the Commonwealth.

That provision would have rendered the rent assistance a debt due to the Commonwealth, if anybody had determined that Mr Young was not qualified for the payment of rent assistance and that it was not payable to Mr Young. But there was no determination to that effect before 1 October 1997. Thus the savings clause which, in clause 105(1)(a), saves the operation of Part 5.2 or 5.3 before 1 October 1997, does not assist the Secretary. As to paragraphs 1(b) and (c) of clause 105, there was no determination that there was a debt due to the Commonwealth and thus there was no debt or amount outstanding at the start of 1 October 1997.

In the alternative Mr Todd relied on s 1224 of the Act which, as at 25 February 1999, provided as follows:
1224 Debts arising from recipient's contravention of law
(1)       If:
(a)an amount has been paid to a recipient by way of social security payment; and
(b)      the amount was paid because the recipient or another person:
(i)        made a false statement or a false representation; or
(ii)failed or omitted to comply with a provision of this Act or the 1947 Act;
the amount so paid is a debt due by the recipient to the Commonwealth.

The section has now been slightly amended. It now reads as follows:

1224 Debts arising from recipient's contravention of law
(1) If:
(a)an amount has been paid to a recipient by way of social security payment or fares allowance; and

(b) the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii)failed or omitted to comply with a provision of the social security law or this Act as in force immediately before 20 March 2000, the 1947 Act or the Social Security (Fares Allowance) Rules 1998;

the amount so paid is a debt due by the recipient to the Commonwealth.

The Tribunal and the Federal Court have considered the meaning to be attributed to the term "a false statement" in s 1224 of the Act. In McAuliffe v Secretary Department of Social Security (1991) 23 ALD 284 at p296 Von Doussa J, in considering s 246(1) of the Social Security Act 1947, the predecessor to s 1224, said:
As a matter of fact, statements and representations made by the appellant on 12 and 13 August 1986 which contributed to the making of the overpayments were untrue. For the purpose of s 246(1), in my opinion a statement or representation which is untrue in fact, is "false". Liability to the Commonwealth for overpayment of benefit is not dependent on proof that the statement or representation was deliberately or intentionally untrue.

That approach has been adopted in many subsequent decisions. (see Re King and Secretary, Department of Social Security (1994) 34 ALD 583 and Secretary Department of Social Security v Salvona (1989) 18 ALD 289). It is sufficient for the purposes of s 1224 if there is a finding that Mr Young made statements which were not true in fact.

The review forms completed and statements made by Mr Young generally have an element of fiction or fantasy. This extends from the use of different names to contradictory accounts of his relationship to Stephanie Kerrwin, to the name of his employer and to his reason for being at the Dunolly property. But the false statements which are significant and which attract the operation of s 1224 are those in which Mr Young claimed to be paying rent in respect of the Dunolly property. It is "because" of those statements that he was paid rent assistance.
I find that the whole claim for rent assistance was based on false statements that Mr Young paid or was liable to pay rent, and that he was not the owner of the Dunolly property. I find that rent assistance was paid to him because he made those false statements. Accordingly the whole amount of rent assistance paid to Mr Young in respect of the Dunolly property is a debt due by Mr Young to the Commonwealth under s 1224 of the Act. Such a debt is recoverable under s 1230C of the Act.

In his written submission Mr Young repeated a claim he made frequently during the hearing, that the Department had been negligent and incompetent in failing to establish whether his rent assistance claim was appropriate. He seems to have overlooked the fact that he never made a full disclosure of the facts to the Department so as to enable it to make a proper decision on that matter. He did not ever disclose that he was the registered proprietor of the property. He claimed that rent was being paid to Stephanie Kerrwin, when it was not, and he claimed that he was paying rent to K.F. and F Foundation. I find he was not.
The decisions under review will be affirmed.
I certify that the 55 preceding paragraphs are a true copy of the reasons for the decision herein of Mrs Joan Dwyer, Senior Member
Signed:         Chan Wai Heng
  Associate
Date/s of Hearing  14 February 2001
Date of Decision  18 May 2001
Counsel for the Applicant        Nil
Solicitor for the Applicant         Self Represented
Counsel for the Respondent    Nil
Solicitor for the Respondent    Nil
Departmental Advocate           Mr M Todd

[2001] AATA 420

18 May 2001

Key Legal Topics

Areas of Law

Social Security Law

Legal Concepts

Overpayment Recovery

Statutory Interpretation

Rights and Interests