Dao and Anor; Secretary, Department of Education, Employment and Workplace Relations and Anor and [2009] AATA 18 (12 January 2009)

Last Updated: 12 January 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 18

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/0203

) No 2008/2610

GENERAL ADMINISTRATIVE DIVISION		)
	Re		SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

CUONG NGOC DAO

Applicant

And

CUONG NGOC DAO

Respondent

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal

Ms Robin Hunt, Senior Member

Date 12 January 2009

Place Sydney

Decision

The decision under review is varied by affirming that Mr Dao has a debt to the Commonwealth for the period 3 February 2004 to 29 August 2005, and by setting aside that part of the decision as to the period 5 March 2002 to 16 January 2004. In substitution, the tribunal finds that Mr Dao does have a debt to the Commonwealth for the period 5 March 2002 to 16 January 2004.

....................[Sgd]...................
Ms Robin Hunt
Senior Member

CATCHWORDS

SOCIAL SECURITY – newstart allowance – overpayment – other income disentitled Mr Dao to payment of allowance – conflicting evidence about source of receipts – wrongful declaration to bank of income from employment – consideration of evidence about loans from family members – finding that income not loan from family members – debt to Commonwealth – no write off justified – finding that special circumstances do not exist for waiver – decision under review varied.

Social Security Act 1991 (Cth) ss 8, 593(1), 1223(1), 1236, 1237A(1), 1237AAD

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

12 January 2009

Ms Robin Hunt, Senior Member

SUMMARY

1. Cuong Ngoc Dao was receiving newstart allowance (‘NSA’) on the basis of his declaring to Centrelink that he was unemployed and without any sources of income. While he was receiving the allowance, however, Mr Dao and his wife were able to purchase a house and obtain bank finance secured by mortgage. Mr Dao made payments to the bank in reduction of his mortgage debt while receiving the allowance. He denies that he was in receipt of income from any source other than loans from family members.
2. The Secretary, Department of Education, Employment and Workplace Relations and Mr Dao are both seeking review of a decision of the Social Security Appeals Tribunal (‘the SSAT’) of 14 December 2007. The SSAT found that Mr Dao was entitled to the allowance for the first or earlier period at issue, 5 March 2002 to 16 January 2004, but not for the later period, 3 February 2004 to 29 August 2005. After considering all the evidence and submissions of both parties, I have found that Mr Dao owes a debt to the Commonwealth for both periods. This means Mr Dao’s application has not been successful.

ISSUES

3. The issue for determination is whether Mr Dao was entitled to NSA during two periods, from 5 March 2002 to 16 January 2004, and from 3 February 2004 to 29 August 2005. If he was not so entitled, I must decide whether he has been overpaid and whether there are resulting debts to the Commonwealth, which should be recovered.

CONSIDERATION AND FINDINGS

4. The reviewable decision is the decision of the SSAT of 14 December 2007. The SSAT found that Mr Dao was overpaid NSA for the period 3 February 2004 to 29 August 2005, but that he had not been overpaid for an earlier period between 5 March 2002 and 16 January 2004.
5. Mr Dao claims that he is and was unemployed throughout both periods and had no income, although he purchased a house with his wife in 2001 and has met mortgage repayments to a bank lender. Mr Dao told the tribunal that he was not working when he claimed NSA and that any money that passed through his bank accounts was lent to him by family members. He claimed his mother helped him financially during the first period in question. He then took a short holiday in Vietnam when he did not receive the allowance. After his holiday, Mr Dao returned to Australia and re-applied for and received social security payments for the second period at issue. Mr Dao gave evidence to the tribunal that his sister helped him financially after his holiday.
6. As against Mr Dao’s evidence, the Secretary produced copies of bank statements showing several amounts of money deposited to Mr Dao’s ’Basic’ account. The account received deposits totalling $60,201.86 in the period 5 March 2002 to 16 January 2004. Further records show Mr Dao applied successfully for a bank loan which enabled him and his wife to purchase a house for $242,000 in 2001 and to make mortgage loan repayments regularly thereafter.
7. The Secretary’s copies of documents show that Mr Dao stated in a bank loan application form, dated 23 October 2001, that he had been working full-time as a pastry cook since 1 September 2000 and earning $2,380 per month. On record also is a copy of a letter furnished to the bank from the supposed employer of Mr Dao, dated 15 October 2001. This letter states that the business had employed Mr Dao since 1 September 2000 and paid him gross salary of $700 per week. Mr Dao told the tribunal his brother was the owner of the business and furnished the letter but did not in fact employ him. Mr Dao also made a statutory declaration, dated 26 February 2007, when seeking internal review of the Centrelink decision to raise a debt. In this declaration, Mr Dao wrote that he was unemployed but had asked his brother to provide him with a letter for the bank confirming he was employed.
8. Further records before me include a copy of Mr Dao’s income tax return for the 2000/2001 financial year in which he indicated he had worked as a self-employed panel beater. The return showed he made a loss of $351 for the year, after making gross business income of $5,600. The SSAT recorded Mr Dao’s oral evidence that he had previously worked and accumulated savings of $30,000 which, taken with a loan from his family of $56,000, meant he had $86,000 in the bank when he applied for the housing loan.
9. A copy of the front page of a contract for the sale of land, dated 14 October 2001, is among the Secretary’s documents. Mr Dao, when questioned, gave evidence that this contract is for the house he and his wife purchased and is at the address where he lives with his wife and children. According to further documents, the bank approved the loan application of Mr Dao and his wife and advanced them $165,000 on 26 November 2001. The bank wrote to Mr Dao on 30 November 2001 saying it had opened a new loan account in his name and that of his wife on 26 November 2001 and had made payments on their behalf totalling $172,000. The letter set out how this sum of money was disbursed. Mr Dao does not dispute that the bank paid out the moneys in connection with the purchase of the house and that the property is security for a mortgage to the bank.
10. Bank statements show Mr Dao’s ’First Option Home Loan’ account received a deposit of $10,000 on 28 November 2001 and another $7,000 on 19 April 2002. There are numerous other large deposits made in 2001 and 2002 to the home loan account and to Mr Dao’s basic account with the same bank. Mr Dao says any deposits that occurred were funded by his family. On 30 October 2001, an entry on Mr Dao’s basic account statement shows ‘principal paid on term deposit’ in the sum of $70,000. Direct debits of $970 per month from Mr Dao’s basic account occurred during 2001 and 2002 and later direct debits of $851 and $874 per month continued in 2003. Deposits of $900 and $5,500 to the account occurred in May 2003 and similarly in September 2003, with another $7,000 in November 2003. Mr Dao did not suggest that copies of bank documents and financial records held by Centrelink or other records referred to in the Secretary’s statement of facts and contentions were inaccurate.
11. In his statutory declaration made on 26 February 2007, which his then solicitor sent to Centrelink with a letter of the same date, Mr Dao states that he decided to purchase the property on or about March 2002. The copies of records obtained from the bank, however, show the purchase was concluded in the previous year, in November 2001. Mr Dao also claimed in the same statutory declaration that he had been unemployed since March 2002 and not from any earlier date.
12. In his oral evidence, Mr Dao said the deposits of $10,000 on 28 November 2001 and of $7,000 on 19 April 2002 and mortgage repayments during the periods in question came from loans advanced to him by family members. He said he made occasional deposits to his bank accounts in advance of mortgage requirements in order to ensure he had funds in readiness for mortgage repayments and to maintain a good record with the bank. Mr Dao agreed he had made regular repayments in reduction of the mortgage over the house since 30 November 2001.
13. Mr Dao gave further evidence he lied to the bank in order to obtain the loan but explained that he did not think he was being dishonest as he always intended to repay the loan and had in fact made the repayments due. He told the tribunal he had been able to make repayments only because his family helped him. His mother and other family members were concerned about his marriage which was under pressure. Mr Dao told the tribunal his wife had been threatening to leave him if he did not provide her with a decent place to live. His family were concerned and decided to help him provide a home for his wife and children.
14. In his claim for NSA, lodged on 7 March 2002, Mr Dao stated he was not working, had previously been self-employed, was separated from his wife, did not own a home, and paid $155 per week in rent. He did not disclose his ownership of the house he purchased in 2001. Mr Dao also made a written statement in support of his application for the allowance stating that he ceased work as a self-employed panel beater on 20 December 2001 because no work was available. An accountant wrote a letter on 14 March 2002 saying Mr Dao was a client and had ceased business operations on 20 December 2001. Mr Dao in his completed form of application gave an address which was not that of the house he owned.
15. Centrelink granted Mr Dao NSA from 5 March 2002, based on nil income. His NSA payments were credited to an account held with a different bank from the bank funding his mortgage. Mr Dao furnished the bank account details for the purpose of receiving the allowance. When asked why he had opened accounts with two banks, Mr Dao said he wanted to keep his transactions concerning the mortgagee bank separate from his other transactions.
16. After granting NSA, Centrelink sent Mr Dao the usual notices from time to time informing him of his fortnightly allowance payments and informing him that he must advise Centrelink of any change in his circumstances. One such notice was issued on 16 March 2002. Mr Dao later completed a statement of details form on 27 May 2002. In that statement he indicated he had no earnings during the previous three months.
17. The Centrelink file contains a first reference to Mr Dao’s new address at the house he owns in a completed application for payment form dated 5 January 2004. Centrelink sent Mr Dao another application for payment form with a due date of 19 January 2004 to the new address. The completed form contains the information “going overseas on 17/1/04 coming back 31/1/04”. On 17 January 2004, Mr Dao travelled to Vietnam, returning on 31 January 2004.
18. Mr Dao, on his return, wrote to Centrelink, on 9 February 2004, saying he had visited family in Vietnam, had paid for his trip out of savings and had not worked while he was away from Australia. He also completed a customer declaration form for NSA on the same day, as well as a ‘Claim for Job Network Assistance while looking for work’ form. In this application, he gave his new address and ticked the box which indicated he had moved 0-3 times in the past year. He also stated that he lived alone. Centrelink wrote to Mr Dao at his new address informing him that he would be paid Newstart allowance from 3 February 2004.
19. Mr Dao lodged an application for payment form on 1 March 2004. Around the same time, Dr S. K. Law wrote to another medical practitioner, on 2 March 2004, setting out that he saw Mr Dao on 1 March 2004 and prescribed medication for his headaches. Dr Law noted in the letter that Mr Dao was living with his wife and two children at the new address supplied to Centrelink. Several further application forms completed by Mr Dao followed, covering the period from 17 February 2004 to 29 August 2005. Mr Dao did not declare any income in any of these applications. In one of his completed review forms, dated 25 October 2004, Mr Dao wrote that he had previously worked as a pastry cook and as a panel beater.
20. In 2006, Centrelink became concerned that Mr Dao may have been untruthful about his situation and not declared relevant information. Centrelink made enquiries about Mr Dao. The bank lender involved in Mr Dao’s house purchase wrote to Centrelink on 4 May 2006 in response to a Centrelink enquiry and supplied details of Mr Dao’s loan account and other accounts.
21. A few weeks later, on 9 May 2006, Centrelink wrote to Mr Dao requesting information about his circumstances and attaching a form for his completion. On 22 May 2006, he replied that neither he nor his partner had any money on deposit with any bank, building society, credit union or other financial institution. He also provided to Centrelink copies of bills from service providers to his address as well as a rate notice addressed to him and his wife and a tax invoice from a grocer for purchases made.
22. Centrelink then decided that Mr Dao had not been entitled to past payments he received. Centrelink calculated, on 20 October 2006, that overpayments gave rise to a debt of $15,521.56 for the period covering 5 March 2002 to 16 January 2004. Centrelink informed Mr Dao of this debt by letter dated 23 October 2006. Similarly, Centrelink calculated a debt of $15,331.28 for the further period 3 February 2004 to 29 August 2005 and informed Mr Dao of the further debt by letter dated 24 October 2006.
23. Mr Dao furnished written statements which he said were made by his mother and his sister. These are dated 16 April 2007 and English translations have been supplied for this review. Mr Dao’s mother and sister each wrote that they had lent him money. The mother stated she lent him $12,000 and the sister stated she lent him $9,000. Mr Dao’s oral evidence was that they had sat down together and worked out the total advances. He said neither loan was made in one lump sum. He said he made repayments to his mother and sister from time to time when they asked for money and kept a running account in his head.
24. According to the reasons for decision of the SSAT, Mr Dao’s mother receives the age pension and his sister does not work but receives help from her children. It was put to Mr Dao that as his mother received social security assistance and his sister did not work it must be difficult for them to help him financially. Mr Dao responded that he did not know. It was also put to Mr Dao that it must be difficult to keep track of the amounts he owed his mother and sister if they had helped him from time to time and he repaid them only when asked but Mr Dao did not agree.

WAS MR DAO IN RECEIPT OF INCOME?

25. Income for social security purposes can include money from various sources. An indicator of income may be that it is periodical but receipt need not be periodical for it to be income. Mr Dao gave evidence that he received money from his mother and sister from time to time and repaid it in the same fashion. Mr Dao further claimed his receipts were irregular and some deposits in his bank accounts do occur at irregular intervals. As against this evidence, I note that the mortgage repayments, whether funded by his family or some other means, occurred throughout the NSA periods and Mr Dao has not adequately explained how he managed to make these repayments.
26. The Social Security Act 1991 (‘the Act’) contains definitions of income and concepts related to income, as well as income tests. Section 8 provides, in part:

“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).

27. Counsel for Mr Dao argued that the amounts received by Mr Dao were not periodical and therefore not income but this is not an essential element of the definition of ‘income’ in section 8. The term ‘income’ includes an ‘income amount’ and ‘income amount’ is defined to include some very general expressions, in particular, ‘moneys’, with no other qualification. The exclusions under subsections 8(4), (5) and (8), have no application apart from the $70,000 received on 30 October 2001, which appears to come within the exclusion in subparagraph (8)(b)(ii) as a return on a person's investment in an approved deposit fund.
28. Bank records before me show that Mr Dao has continuously received income during the two periods he received NSA. The amounts maintained in his home loan account was more than sufficient during the periods he received NSA to cover mortgage repayments for the house in which he lives with his wife and children. The only material before me about Mr Dao’s source of income comprises Mr Dao’s written and oral statements and two unsworn written statements about family assistance. Mr Dao’s claims were not substantiated by any member of his family giving oral evidence or making sworn statements to confirm they had advanced him money to pay his mortgage or for any other reason. The written statements supplied are signed but not sworn unlike Mr Dao’s statutory declaration. Further, Mr Dao’s statutory declaration contains inaccuracies. In his declaration, he states that he decided to buy a house in March 2002 although he had already bought the house in 2001.
29. Mr Dao before me gave oral evidence of loans from family and admitted he lied to the bank by saying he worked in order to get a mortgage. He argued his dishonesty in dealing with the bank did not indicate he was prepared to lie when dealing with Centrelink because he had not meant to defraud the bank and had in fact made repayments.
30. I have taken into account the sworn evidence of Mr Dao and compared it to the documentary evidence before me. I am satisfied by a standard above that of reasonable satisfaction, that Mr Dao was in receipt of income undisclosed to Centrelink at the same time he was receiving NSA for both periods at issue.

WAS MR DAO’S INCOME BY WAY OF FAMILY LOANS?

31. I am not convinced by the evidence before me, on balance, that Mr Dao’s receipts shown in his bank statements are loans from his family. The bank statements show considerable sums of money passed through his accounts with his mortgagee bank. His only explanation is that his family lent him this money but no person has come forward to give sworn evidence to confirm this is so. It may be that his mother and sister lent him the amounts of $12,000 and $9,000 respectively, as indicated in written statements, but these statements were not tested at the tribunal hearing as Mr Dao did not call his mother and sister as witnesses. Mr Dao was accompanied by a person said to be his wife when he attended the hearing but she also gave no evidence. In addition, the amounts of $12,000 and $9,000 are well below the total amounts that have been credited to Mr Dao’s bank accounts during the periods he was receiving NSA.
32. The source of Mr Dao’s income remains mysterious. I am unable to find whether Mr Dao was or was not employed but it is undeniable that Mr Dao received regular funds. There is no independent confirmation that the money to pay the mortgage came from family. Apart from the untested statements of the mother and sister and the claims of Mr Dao, there is no evidence they lent him money rather than gave it to him outright. I am not satisfied, on balance, therefore, that Mr Dao is required to return these amounts to family members or that the money used to reduce his mortgage came to Mr Dao by way of loan. This is of little consequence, in any event, as unsecured loans without further evidence that repayment is required and payment is enforceable do not amount to a legal obligation.
33. The Secretary’s statement of facts and contentions set out a great deal more evidence which has not been attacked by Mr Dao but I have not found it necessary to deal with all the matters that cast his claims in doubt. For instance, Mr Dao gave evidence that withdrawals from his bank account were repayments to his mother when she requested assistance. Withdrawals are frequent and of considerable amounts, but are inconsistent with a loan of a few thousand dollars.
34. Similarly, withdrawals during the second period of receipt of NSA, which Mr Dao said were made to repay his sister or bolster his account with the mortgagee bank, follow shortly after deposits. I do not accept that his sister needed the return of money advanced in close sequence such as on 31 May 2004 when he deposited $7,000 and withdrew $200 on the same day. Likewise, he deposited $1,000 on 30 May 2005 and withdrew the same amount the following day.
35. Taking all the material before me into account, I am satisfied on the balance of probabilities, despite making no finding about the source of Mr Dao’s funds during his receipt of NSA, that Mr Dao did receive income during the two periods in question and was disqualified from any entitlement to receive NSA.

ARE THERE DEBTS FOR THE 2 PERIODS CONTESTED?

36. Mr Dao’s receipt of NSA during the two periods when he also received income from other sources means that Mr Dao has two debts to the Commonwealth for the overpayments made during these periods pursuant to subsection 1223(1) of the Act. Mr Dao did not contest the correctness of the calculations of amounts he received. I find, therefore, that Mr Dao owes debts for the amounts Centrelink has calculated for the two periods at issue.

SHOULD THE DEBTS BE WRITTEN OFF OR WAIVED?

37. Debt waiver may occur where it is solely attributable to administrative error pursuant to subsection 1237A(1) of the Act, but there is no evidence of error occurring here.
38. Under section 1236 of the Act, the Secretary may waive debts in circumstances where the debt is irrecoverable at law or the debtor has no capacity to repay the debt. Mr Dao has not persuaded me that either of these situations apply in his case or that there is any other reason why his debts to the Commonwealth should be waived. He has not demonstrated that he is unable to repay these debts when I consider his evidence and compare it to the reality that he has maintained his mortgage repayments since late 2001.
39. Section 1237AAD enables a flexible response to a wide range of situations which could give rise to hardship or unfairness due to rigid application of a requirement for recovery of debt. Under section 1237AAD, the Secretary may waive the right to recover all or part of a debt if there are special circumstances that make it desirable or more appropriate to waive.
40. The phrase, “special circumstances”, is not defined in the Act. The Macquarie dictionary gives several meanings of “special”, beginning with “of a distinct or particular character” and a range of other meanings including “different from what is usual or ordinary”. It also gives as meanings, “extraordinary” and ”exceptional”. All of these meanings suggest some unusual situation is required in order to dispense with the debt involved. As explained in the case Re Beadle and Director-General of Social Security (1984) 6 ALD 1, concerning a similar legislative provision, circumstances must be "unusual, uncommon or exceptional" in order to qualify as "special".
41. Mr Dao in my view has not demonstrated financial hardship or any other form of hardship which might generate compassionate considerations for waiving his debts to the Commonwealth. Mr Dao misrepresented his circumstances throughout the periods he took advantage of the social security system and applied for benefits to which he was not entitled.
42. Mr Dao furnished two medical certificates from Dr Law dated 25 November 2005 and 30 May 2006. Both certificates record Mr Dao as suffering from anxiety disorder and migraines, but are listed as temporary conditions. The later certificate also cites post traumatic stress disorder, as a result of Mr Dao being hit by someone in 2005, but again Dr Law regards this as a temporary condition that is likely to show considerable improvement. In my opinion, Mr Dao’s health issues do not amount to sufficiently special circumstances to justify waiver of the debts to the Commonwealth. Mr Dao also did not call on Dr Law to give evidence at the hearing.
43. In addition, pursuant to section 1237AAD, paragraph (a), the decision-maker has to be satisfied that there are no knowingly made false statements or failure to comply with provisions of the Act which led to the debt. In view of the undeclared income Mr Dao received during the periods at issue, I am not satisfied that Mr Dao made no false statements to Centrelink or that he complied with provisions of the Act. The debts arose because of Mr Dao’s failure to declare his income or to declare the amounts he received which enabled him to make his mortgage repayments.

CONCLUSION

44. Mr Dao owes a debt to the Commonwealth in the amount of $15,521.56 for the period 5 March 2002 to 16 January 2004. The decision in his favour made by the SSAT for this period should be set aside in accordance with my findings above.
45. In addition, Mr Dao owes a debt of $15,331.28 for the period 3 February 2004 to 29 August 2005. The finding of the SSAT in this respect should be affirmed.

DECISION

46. The decision under review is varied by affirming that Mr Dao has a debt to the Commonwealth for the period 3 February 2004 to 29 August 2005, and by setting aside that part of the decision as to the period 5 March 2002 to 16 January 2004. In substitution, the tribunal finds that Mr Dao does have a debt to the Commonwealth for the period 5 March 2002 to 16 January 2004.
    

I certify that the 46 preceding paragraphs are a true copy of the reasons for the decision herein of Ms Robin Hunt, Senior Member

Signed: ..........................[Sgd]...........................

Jennifer Wong, Associate

Date/s of Hearing 30 October 2008

Date of Decision 12 January 2009

Counsel for Mr Dao Mr W Carney

Solicitor for the Secretary Ms R Harlock, Centrelink Legal Services and Procurement Branch