Armstrong and Department of Family and Community Services
[2001] AATA 411
•15 May 2001
DECISION AND REASONS FOR DECISION [2001] AATA 411
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2000/348
GENERAL ADMINISTRATIVE APPEALS DIVISION )
Re JUDITH ARMSTRONG
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms S McKnight, Member
Date15 May 2001
PlacePerth
Decision In accordance with section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.
.........(- sgd Ms S McKnight)........
Member
CATCHWORDS
Social Security Act 1991 – overpayment of Parenting Allowance Single – notification of a specified event or change of circumstances – effect of income - waiver
Section 506D(1)
Section 1068A – E1
Section 1224(1)
Section 1237A(1)
Section 1237AAD
REASONS FOR DECISION
15 May 2001 Ms S McKnight, Member
This is an application by Mrs Judith Armstrong ("the applicant") for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on the 11th
September 2000. In that decision the SSAT affirmed the decision of a Centrelink delegate of the Secretary of the Department of Family and Community Services ("the respondent") of 14th October 1998, as affirmed by an Authorised Review Officer ("ARO") on 22nd March 2000, to recover an overpayment of parenting payment single ("PPS") of $1302, for the period 23rd July 1998 to 15th October 1998.
At the hearing, the applicant was represented by a friend, Mr A Smith, and the respondent was represented by Mr A Jones of the Advocacy and Administrative Law Team, Centrelink. The applicant gave evidence at the hearing. A witness for the respondent, Ms S Palmieri, also gave evidence. The Tribunal had before it the documents ("T documents") provided pursuant to s 37 of the Administrative Appeals Tribunal Act 1975. The following documents were also admitted as evidence:
A letter from Mr Smith to the Department of Family and Community Services dated 18th December 2000 (R 1);
A Customer Record Access Monitor Report (R 2);
A letter from Mr Jones to the applicant dated 13th November 2000 (A1).
Background
The background facts, as found by the Tribunal on the basis of the T documents and relevant exhibits were as follows:
During 1998 Mrs Armstrong was in receipt of PPS. At the time, she was employed as an enrolled nurse on a part-time basis. Mrs Armstrong's income varied from fortnight to fortnight depending on her hours and days of work.
In about April 1998 Mrs Armstrong was hospitalised and her employment income was nil for 4 consecutive fortnights (T 14). She informed Centrelink and her rate of PPS was increased (T 27). Following her hospitalisation Mrs Armstrong returned to work.
On 13th July 1998 she informed Centrelink of her employment earnings. Her rate of PPS payment was recalculated based on her earnings over the previous six fortnights. This calculation included three fortnights in which her employment earnings were nil. The following six fortnights were used, as shown at T14, p 50:
Date Amount
26/04/98 0.00
10/05/98 0.00
24/05/98 0.00
07/06/98 591.33
21/06/98 497.88
05/07/98 440.91
The total earnings over this twelve week period were $1530.12. Based on this sum, Centrelink calculated an average fortnightly employment income of $255.02 and an average yearly income of $6,630.52.
On 13th July 1998 Centrelink wrote to Mrs Armstrong informing her that her new rate of PPS would be $306.50 per fortnight (T4). The letter stated that:
"Your Parenting Payment has been reduced because your income has changed. Details are on the back of this letter.
Please read the back of this letter. It tells you about your social security rights and what you have to tell us."
On the back of the letter it stated:
"How we have assessed your yearly income.
Financial Investments $0.12
Earnings $6,630.52
Total Income $6,630.64"
It also stated that Mrs Armstrong must inform Centrelink within 14 days:
"…if your income, not including financial investments or maintenance
increases,
if your income as shown above is incorrect,…"
On 13th October 1998 Mrs Armstrong lodged a parenting payment review form and payslips (T7, T8). Based on Mrs Armstrong's earnings, Centrelink calculated an overpayment of $1,305.20 for the period 23rd July 1998 to 15th October 1998 (T10).
A review of this decision was conducted by a delegate of the respondent on the 22nd March 2000 (T26), which affirmed the original decision. On the11th
September 2000 the decision was affirmed by the SSAT (T2).
Applicable Legislation
The following legislation is relevant:
Social Security Act 1991
Section 506D Secretary may require notice of the happening of an event or a change in circumstances
506D.(1)The Secretary may give a person to whom parenting payment is being paid a notice that requires the person to inform the Department if:
(a)a specified event or change of circumstances occurs; or
(b)the person becomes aware that a specified event or change of circumstances is likely to occur.
Module E – Ordinary Income Test
Section 1068A-E1 Effect of income on maximum payment rate1068A-E1.This is how to work out the effect of a person's ordinary income on the person's maximum income rate:
Method statement
Step 1.Work out the amount of the person's ordinary income on a yearly basis.
Step 2.Work out the person's ordinary income free area (see points 1068A-E14 to 1068A-E18 below).
Note: A person's ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person's maximum payment rate.
Step 3.Work out whether the person's ordinary income exceeds the person's ordinary income free area.
Step 4. If the person's ordinary income does not exceed the person's ordinary income free area, the person's ordinary income excess is nil.
Step 5.If the person's ordinary income exceeds the person's ordinary income free area, the person's ordinary income excess is the person's ordinary income less the person's ordinary income free area.
Step 6. Use the person's ordinary income excess to work out the person's reduction for ordinary income using points 1068A-E19 and 1068A- E20 below.
Section 1224.(1) Debt arising from recipient's contravention of Act
1224.(1)If:
(a)an amount has been paid to a recipient by way of a 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.
Section 1237A.(1) Waiver of debt arising from error
1237A.(1) Subject to subsection (1A), the Secretary must waive the right to recover the portion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that portion of the debt.Note:Subsection 1 does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as an error by the debtor).
Section 1237AAD Waiver in special circumstances
1237AAD.The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i)making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
The Issues
The main issues in contention between the parties are whether Mrs Armstrong informed Centrelink of her earnings during the period in question, and whether a debt has been incurred.
In her evidence Mrs Armstrong said that she had notified Centrelink of her income each of the six fortnights following the 13th July 1998. She was unable to recall exactly how she had notified Centrelink or any details of the notifications. She said that in the past she had informed Centrelink in varying ways about her earnings. This included lining up at the counter, sending the information in, or telephoning Centrelink. In regard to the period in question she said that the notifications were probably by phone. She was unable to recollect whether this had been by the toll free number or direct to the Albany office of Centrelink. She said that she had sought details of her calls from Telstra but was told that these were unavailable.
After Mrs Armstrong received the initial notification of the overpayment she wrote to Centrelink (T12). In that letter she wrote:
"I advised via phone before 13/10/98, but didn't send in wage slips until SPP form due, it was an honest oversight of me, not to ring in every fortnight, as I usually do."
An annotation to the letter with an arrow at this point noted:
"Been pretty stressed out of late."
The letter then stated:
"I don't believe my last 12 weeks work, would have been a great deal more than the last 12 weeks."
When questioned by her representative Mr Smith about the statement "…it was an honest oversight of me not to ring…", Mrs Armstrong said:
"It may have meant 'bring'. Because I think I was confused as to whether I was meant to still bring them in every now and then: or do I ring them every fortnight." (Transcript, p 9, line 17).
Mrs Armstrong said that this period may have been when she changed over the way in which she notified Centrelink of her income. She said that in the past she had often had to wait in a line for a long time to notify in person at the counter, and was told that she could do so by telephone. She said that she was stressed when she wrote the letter and that it contained mistakes.
In another letter to Centrelink from Mrs Armstrong, dated 25th March 2000, concerning her notification for the period in question, it stated:
"There is no way of me recording a "over the counter" notification." (T 28)
When questioned by Mr Jones about this, Mrs Armstrong said that the letter had been written by Mr Smith and she had signed it.
Mr Jones contended that Mrs Armstrong had not notified Centrelink of her income over the period in question. He said that three separate Centrelink recording systems showed no contact by Mrs Armstrong concerning her earnings after the 13th of July 1998 and prior to the 13th October 1998. Information about the recording systems was provided by a witness, Ms Palmieri, Accredited Learning Co-ordinator for Centrelink with past experience in Centrelink offices dealing with sole parent and family payments.
Mr Jones referred Ms Palmieri to a computer printout of telephone calls made to the Centrelink call centre by Mrs Armstrong (T 29, p 95). Ms Palmieri said that when a person telephones Centrelink to advise of earnings they are asked to provide proof of identity, which automatically brings up a receipt number, which is recorded. Any computer screens used by the operator, for example to enter earnings, are also automatically recorded. The call centre computer record shows telephone calls by Mrs Armstrong on 9th July 1998 and 13th July 1998, and then no telephone contact until 17th May 1999.
Ms Palmieri was also referred to a computer printout (T 27, p 85). She said that this was a Document List and recorded all dealings with Centrelink by Mrs Armstrong, whether by telephone, letter, a form, or over the counter. While the Document List shows relatively frequent contact in the several months before and after the period in question, there is no recorded contact of any kind by Mrs Armstrong between 13th July 1998 and 13th October 1998.
The final recording system referred to by Mr Jones was a Customer Record Access Monitor (CRAM) Report (R 2). Ms Palmieri explained that this showed all access to Mrs Armstrong's record by Centrelink officers for the period 13th July 1998 to the 12th October 1998. This system is automatic and used as a security monitoring system. There are two records of activity over three month period. The first related to the telephone call on 13th July 1998 by Mrs Armstrong advising of her earnings. The second was an internal maintenance review on the 22nd of July 1998 by the Albany office of Centrelink. The CRAM report shows no reference to Mrs Armstrong's earnings as part of the internal maintenance review.
Mr Jones referred to the finding of the Social Security Appeals Tribunal that the chances of a person phoning in details of their income six times and not going through this process, ie having the information recorded on one of the systems, are so remote that they can be ignored. He questioned Ms Palmieri about the likelihood of this occurring. She responded that she couldn't say it would ever happen (Transcript p 27, line 6).
In his submission Mr Smith raised the possibility that on six separate occasions the same fault in the system could have caused the mistake. He contended that there were some errors made by Centrelink in letters and documents. For example, he referred to a Centrelink letter to Mrs Armstrong dated 12th January 2000, in which a date and earnings amount were missing from a list (T 23, p 68). This missing item did not affect the accuracy of subsequent calculations. He also referred to incorrect earnings amounts listed in several places in a letter to Mrs Armstrong dated 13th November 2000 (A1). In the Debt Determination and Submission document he noted that there was no reference to the notification on 13th July 1998 (T 9, p 34). Mr Smith acknowledged that there were references to this notification in other places. He considered that such errors showed the possibility that there could be faults in the system.
Mr Smith also questioned Ms Palmieri about whether the computer system should have alerted Centrelink at the time if there was no record of Mrs Armstrong notifying her income. Ms Palmieri said that Centrelink would not necessarily know if a customer's income had increased, decreased or remained the same. She said that it was the customer's obligation to notify Centrelink of income changes and that it relied on this advice in calculating the rate of payment.
Mr Smith submitted that Mrs Armstrong was an honest person who had never had any problems with Centrelink in nine and a half years. He stated that she had always informed Centrelink of her income, and had even declared the $40 she had received in board from her son, and a $1 per hour pay rise. He contended that it was not logical that she would suddenly stop reporting or would deliberately try to procure money she was not entitled to receive.
In his submission, Mr Jones noted that following advice of her earnings on 13th July 1998, Mrs Armstrong's income increased substantially the following fortnight. The payslip for the period ending 19th July 1998 was $645.41 in contrast to the previous fortnight figure of $440.91 (T14, p 50, 51). It was also higher than any other fortnightly earnings figure reported since Mrs Armstrong returned to work following the period of hospitalisation.
The Tribunal asked Mrs Armstrong whether she had expected her parenting payment to go down after a period of time, to a level similar to what she was receiving before the hospitalisation. Mrs Armstrong said that she was shocked as she did for a time receive full pension after she went back to work following her hospitalisation. She said that she telephoned Centrelink and was told:
"Well the first thousand is your own, and then it sort of cut out."
(Transcript p 16, line 4)
Computer records of Mrs Armstrong's parenting payments show that for a period of time after returning to work, she received the full payment rate she received while hospitalised. For example, on the 25th June 1998 and 9th July 1998 she received the full payment of $360, which was the same amount she had received in parenting payments during April 1998 (T22, A1). This was even though she had been working from about the end of May 1998 (T16, p 58). Any query to Centrelink during this particular time would have been prior to the period in question. During the period in question her parenting payments were $306.50 per fortnight, not the full rate of $360 (T 22).
Based on the evidence presented, the Tribunal finds that Mrs Armstrong did not inform Centrelink of the increase in her earnings for the six fortnights following the 13th July 1998. Three separate computer record systems show no contact of any kind by Mrs Armstrong between the 13th July 1998 and 13th October 1998. By contrast, contact in the several months before and after this period is relatively frequent. Mrs Armstrong is unable to recall any details of the contact, other than that it was probably by telephone. The letter she wrote after receiving notification of the overpayment stated that "...it was an honest oversight of me not to ring in every fortnight as I usually do." While Mrs Armstrong's claimed that "ring" may have meant "bring, this interpretation is somewhat inconsistent with other aspects of the evidence such as the later letter to Centrelink stating there was no way of her recording an "over the counter" notification. Some of the other aspects of the evidence were unconvincing such as Mrs Armstrong's inability to remember any details about contacting Centrelink yet her certainty that she had done so. This assertion is not supported by the documentary evidence of computer records of Centrelink telephone calls, client transactions, or records access.
The Tribunal did not accept the argument that Centrelink should have contacted Mrs Armstrong at the time if there were no records of her notifying her earnings. Mrs Armstrong had received a notice pursuant to Section 506D of the Social Security Act 1991. It was incumbent on her to notify of changes in earnings.
The Tribunal has also considered the references to mistakes and typographical errors in letters and documents referred to by Mr Smith. There is no evidence of an error by Centrelink being responsible for the overpayment.
In regard to the possibility that an administrative error resulted in none of the six notifications being recorded, the Tribunal finds this argument unconvincing. Even in the event that an error resulted in one or several notifications not being recorded, (and there is no evidence of this), earnings information would have been obtained at the following notification and the PPS rate recalculated.
The Tribunal does not believe that Mrs Armstrong set out to deliberately withhold information, or to obtain money she was not entitled to receive. By her own account it was a period during which she was under considerable stress. Based on the evidence the Tribunal finds that during the period in question Mrs Armstrong omitted to inform Centrelink of an increase in her income.
In his submission Mr Smith raised a number of matters about the overpayment determination. He claimed that no debt had been incurred. He contended that it was not necessary for Mrs Armstrong to notify Centrelink of her income. He referred to the letter of 13th July 1998 informing Mrs Armstrong of the need to inform Centrelink within 14 days if her income increased or if the amounts shown were incorrect (T 4). He stated that the yearly income figure of $6,632 shown in the letter was agreed to as being a correct figure by the parties. Therefore, he contended, it was unnecessary for Mrs Armstrong to notify it as being incorrect. He maintained that Mrs Armstrong had no way of knowing what her income would be and whether the figure was right or wrong. He further claimed that the figure was based on averaging and Mrs Armstrong did not know the basis on which it was calculated.
Mrs Armstrong's earnings varied on a fortnightly basis. In the period in question her earnings were different each fortnight (T8). Her earnings for the 19th July1998, for example, were significantly higher than for the previous fortnight. This was clearly an increase in income which should have been notified. It was not necessary for Mrs Armstrong to understand the basis on which the yearly figure of $6,632 was calculated in order for her to notify that her income had increased. Her payslips showed her earnings figures.
In his submission, Mr Smith also raised matters concerning the way in which Mrs Armstrong's income and the overpayment were calculated. He contended that when Mrs Armstrong's income fluctuated, her entitlements had remained the same. He claimed that there was no debt because the unrecorded income would have made no difference to her entitlement. He referred to a period from the 27th November 1997 until the 5th February 1998 when Mrs Armstrong received $127.30 per fortnight while earning varying amounts of income each fortnight (A 1). He claimed that during this time Mrs Armstrong was reporting her income to Centrelink on a fortnightly basis. He claimed that if the system was working then her entitlements would have changed, or an overpayment calculated.
The Tribunal questioned Ms Palmieri about Centrelink policy and practice in calculating the rate of parenting payment for someone on a varying income. Ms Palmieri explained that a yearly rate and fortnightly rate are normally determined based on income for the previous twelve weeks. She stated that Centrelink would look into other methods if the client requested, or was not happy with this process. She said that each time a client advised of a change in income, the rate would be recalculated based on the previous twelve weeks of income. The reason for this she explained was so that people would not be cut off and need to re-apply if they received a one-off high income payment. She said it also allowed for people to budget more easily and to receive more parenting payment in times when they worked less, for example in school holidays or in times of illness. She said that Mrs Armstrong's income and entitlements had been calculated in this way.
Mr Jones disputed that reported changes to income made no difference to parenting payments. In regard to the period from 27th November 1997 to 5th February 1998 raised by Mr Smith, Mr Jones referred Ms Palmieri to the Document List (T 27). Ms Palmieri stated that the Document List showed no record of contact by Mrs Armstrong with Centrelink between 17th November 1997 and 3rd February 1998 (T 27, p 86). Mr Jones disputed that Mrs Armstrong had been meticulously reporting her income to Centrelink each fortnight over the full term of her parenting payments. He maintained that her parenting payments were consistent with records of her Centrelink contact, and that income fluctuations do influence the rate of payment when they are advised.
The period from November 1997 to February 1998 is outside the period relating to the decision under review by the Tribunal. There is, however, no evidence before the Tribunal which shows that Mrs Armstrong reported her income to Centrelink each fortnight in the time period between the 17th November 1997 and 5th February 1998. The T documents show that Mrs Armstrong's parenting payments were recalculated on the 5th February 1998. The payment rate was changed from $127.30 per fortnight to a new higher rate of $129.30 (T27, A1). This clearly indicates that Mrs Armstrong's income assessment for the period 17th November 1997 to the 5th of February 1998 was not higher than for the previous assessment period. No overpayment was calculated. There is no evidence of a fault in the system.
Mr Smith also contended that Centrelink was not using an averaging system to work out Mrs Armstrong's entitlements. He stated that the average annual figure of $6,630.52 as assessed on 13th July 1998 (T4) suddenly increased to $16,206.40 (T10) in calculating the overpayment. Mr Jones contended that if there had been fortnightly notifications to Centrelink, then the parenting payments would have gradually decreased each fortnight. Further it would not have been necessary to calculate an overpayment if notification had been within 14 days of income increasing.
Mr Smith also raised concerns about dates in the documents. He expressed concern that while Mrs Armstrong informed Centrelink of her earnings on the 13th October 1998, Centrelink did not process the changes in time for a new rate of parenting payment to be paid to her on the 15th October 1998. This matter is not material to the decision as to whether Mrs Armstrong had been overpaid parenting payment due to an increase in her earnings.
Mr Smith also claimed that there was a discrepancy between the dates of Mrs Armstrong's earnings as listed on her parenting payment review form (T7, p 24) and those in the Centrelink letter to Mrs Armstrong dated 13th November 2000 (A1). Examination of the documents shows the dates on Mrs Armstrong's review form correspond to the dates on her pay slips (T8). The dates in the Centrelink letter of 13th November 2000 correspond to Centrelink payment delivery dates for Mrs Armstrong (T22). The difference in these dates has no bearing on the overpayment determination.
Mr Smith disputed the determination of an overpayment. He contended that Mrs Armstrong was paid the correct amount and that any excess was part of a normal annual fluctuation. Mr Smith stated that Mrs Armstrong's gross earnings as stated on her tax return for 1998/99 were $17,795. He referred to the Centrelink letter of 13th November 2000, which showed in a table that on the 29th of October 1998 Mrs Armstrong was paid a benefit of $123.20 (A1). The table showed under a column headed "Averaged amount expressed as PA figure" the amount of $18,321.00 for the fortnight 29th October 1998. He contended that Mrs Armstrong's annual entitlement from Centrelink for earnings of approximately $18,000 was $123.20 multiplied by 26 fortnights, or $3,203. He claimed that her group certificate from Centrelink showed she was paid $3,049 in parenting payment and therefore there was no overpayment.
In a letter to Mrs Armstrong dated 13th October 1998, it states:
"Your payment will be $123.20 per fortnight starting from 29th October 1998." (T 5)
On the back of the letter it shows that this rate of payment is based on a yearly income of $16,302.16.
Mr Smith questioned Ms Palmieri about benefit entitlements for people on fluctuating incomes. Ms Palmieri explained that Centrelink calculates a person's average annual and fortnightly income based on their current averaged earnings. She stated that this allowed people who had lost a job part way through a year or received a single high income payment to not be excluded from receiving benefits for the remainder of the year because their annual gross income was too high. For people on fluctuating incomes, she did not expect there would necessarily be an exact match at the end of the year between their income and Centrelink benefits.
The Tribunal considered the way in which the overpayment was calculated and whether this was in accordance with the requirements of the Social Security Act 1991.
Section 1068A – E1 of the Social Security Act 1991 sets out the method which is to be employed in working out the effect of a person's income on their payments. In determining a rate of payment it requires that a person's income be worked out first on a yearly basis. Through the steps set out in Section 1068A – E1, the effect of a person's income on their fortnightly rate of payment is determined.
Centrelink has used Mrs Armstrong's earnings from the 23rd July 1998 to 15th October 1998 to work out a yearly average income of $16,206.40 (T10). Based on this amount a fortnightly entitlement for the period has been calculated and a total overpayment for the period of $1,305.20. This method is consistent with the requirements of Section 1068A-E1 of the Social Security Act 1991. It is also consistent with they way in which Mrs Armstrong's entitlements have been calculated in the past. This process is reasonable and is in keeping with the requirements of the Act.
If Centrelink had used Mrs Armstrong's actual 1998/99 income from her employment of $17,795 to calculate the debt for the period in question, rather than the figure of $16,206.40, then the overpayment would be larger.
The Tribunal finds that Mrs Armstrong omitted to inform Centrelink of an increase in her income, resulting in an overpayment of $1,305.20 for the for the period 23rd July 1998 to 15th October 1998. In accordance with Section 1224.(1) of the Social Security Act 1991, this amount is a debt due to the Commonwealth. There are no grounds to waive the debt under Section 1237A (1) of the Act, as the debt was not attributable to administrative error by the Commonwealth. There are no grounds to waive the debt under Section 1237AAD of the Act, as the are no special circumstances which apply and the debt resulted from Mrs Armstrong omitting to comply with a requirement to notify Centrelink of an increase in her income.
For the reasons expressed above and in accordance with Section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.
I certify that the 51 preceding paragraphs are a true copy of the reasons for the decision herein of Ms S McKnight, Member
Signed: .............(- sgd W Treasure -)...........
AssociateDate/s of Hearing 26 February 2001
Date of Decision 15 May 2001
Counsel for the Applicant Mr Alan Smith
Solicitor for the Applicant
Counsel for the Respondent Mr Alan Jones
Solicitor for the Respondent
Key Legal Topics
Areas of Law
-
Social Security Law
Legal Concepts
-
Overpayment of Benefits
-
Notification of Changes
-
Waiver
0
0
0