Cole and Secretary, Department of Family and Community Services - [2002] AATA 727

DECISION AND REASONS FOR DECISION [2002] AATA 727

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2001/1140

GENERAL ADMINISTRATIVE DIVISION       )
           Re      ANTHONY COLE
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Dr J Campbell, Member

Date26 August 2002
PlaceSydney

Decision The decision under review is affirmed.

[sgd] Dr J Campbell Member
CATCHWORDS
SOCIAL SECURITY - failure to notify correct earnings when receiving Newstart Allowance - knowingly or recklessly under declaring earnings - breach imposed - severity of penalty.

Social Security Act 1991, sections 8, 68, 630, 644, 1072

REASONS FOR DECISION

Dr J Campbell, Member

In this matter, Mr Cole ("the Applicant") seeks a review of the decision of the Social Security Appeals Tribunal ("SSAT") dated 2 July 2001 which affirmed the decision of an authorised Centrelink officer of the Secretary, Department Family and Community Services ("the Respondent") dated 28 March 2001 to impose an activity test breach with 18 per cent reduction on payment of Newstart Allowance to the Applicant for the period 28 March 2001 to 25 September 2001. This latter decision had been subject to review and affirmation by an authorised review officer on 7 May 2001.
A hearing was held in Orange on 2 July 2002 at which the self represented Applicant presented oral evidence. The Respondent was represented by Ms Garcia, an advocate from Advocacy and Administrative Law, Centrelink.
The following material was placed into evidence before the Tribunal:

Exhibit No.     Description    Date
T1-T37 Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
A1      Applicant's Statement of Facts and Contentions          25 June 2002
A2      Applicant's additional Statement of Facts and Contentions     1 July 2002
A3      Respondent's Statement of Facts and Contentions     28 June 2002

issues

The relevant issues in this matter are:
(a) whether the Applicant knowingly or recklessly under declared his earnings from employment; and
(b) whether a breach rate reduction penalty of 18 per cent be imposed on the Applicant because of his failure to declare his earnings recently.

legislation

The relevant legislation is the Social Security Act 1991, and in particular sections 8, 68, 630, 644 and 1072:
Sections 8 and 1072 nominate that gross wages are assessed as income for Newstart Allowance.
Section 68 nominates the requirement to provide particular information relevant to a Newstart Allowance.
Failure to provide information etc.
630AA.(1) If a person:
(a) refuses or fails, without reasonable excuse, to provide information in relation to a person's income from remunerative work (the failure); or
(b) knowingly or recklessly provides false or misleading information in relation to the person's income from remunerative work (the provision of information);
when required to do so under a provision of this Act, a newstart allowance is not payable to the person.
630AA.(2) If a newstart allowance becomes payable to the person after the time it ceases to be payable under subsection (1), then:
(a) if the failure or the provision of information is the person's first or second activity test breach in the 2 years immediately before the day after the failure or the provision of information - an activity test breach rate reduction period applies to the person; or
(b) if the failure or the provision of information is the person's third or subsequent activity test breach in the 2 years immediately before the day after the failure or the provision of information - an activity test non-payment period applies to the person.
Activity test breach rate reduction periods
644AA. If an activity test breach rate reduction period applies to a person under this Part, the period applicable to the person is 26 weeks.
Commencement of activity test breach rate reduction periods
644AB.(1) Subject to section 644AC, if an activity test breach rate reduction period applies to a person under this Part, the Secretary must give to the person a written notice informing the person of the commencement of the activity test breach rate reduction period applicable to the person.
644AB.(2) Subject to section 644AC, the activity test breach rate reduction period commences on the day on which the notice is given to the person.
644AB.(3) If, at the time of the commencement of an activity test breach rate reduction period under this Part, the person is already subject to an activity test breach rate reduction period (the pre-existing reduction period), the pre-existing reduction period is taken to end immediately before the commencement of the activity test breach rate reduction period under this Part.
644AB.(4) Subject to section 644AC, if, on or before the day on which the period referred to in subsection (1) would (apart from this subsection) have commenced, newstart allowance ceases to be payable to the person.
Note: For activity test breach rate reduction period see subsection 23(1).
Rate of newstart allowance where activity test breach rate reduction period applies
644AE.(1) If:
(a) an activity test breach rate reduction period applies to a person under this Part; and
(b) the person qualifies for a newstart allowance; and
(c) a newstart allowance is payable to the person;
the person's rate of newstart allowance for the activity test breach rate reduction period is worked out as follows:
Newstart allowance rate calculator for activity test breach rate reduction period
This is how to work out a person's rate of newstart allowance for an activity test breach rate reduction period that applies to the person.
Method statement
Step 1. Work out the person's maximum basic rate of newstart allowance specified
          in:
          (a) Table B of Module B of Part 3.5 (Benefit Rate Calculator A); or
          (b) Table B of module B of Part 3.6 (Benefit Rate Calculator B):
          the result is called the maximum payment rate.
Step 2. Work out the rate reduction amount in accordance with subsection (2).
Step 3. Take the rate reduction amount away from the rate of benefit worked out in accordance with Benefit Rate Calculator A in section 1067 or Benefit Rate Calculator B in section 1068, as the case requires:
          The result is called the activity test breach reduced rate.
Note: an activity test breach reduced rate may be a nil rate.
644AE.(2) A person's rate reduction amount is worked out as follows:
(a) if the activity test breach is the person's first breach in the 2 year period:
          Maximum payment rate x 0.18
(b) if the activity test breach is the person's second breach in the 2 year period:
          Maximum payment rate x 0.24
644AE.(3) In this section:
2 year period means the 2 years immediately before the day after the activity test breach.

background

The Applicant was receiving Newstart Allowance. Letters to the Applicant from the Respondent on 8, 12, 15 and 17 January 2001 notified the Applicant of his obligations to advise the Respondent within 14 days if he went to commence work, and/or his income changes from the rate last notified or the income shown in the letters is incorrect (T34, 35, 36, 37).
On 8 March 2001, the Applicant completed an Employment Application Form in relation to employment with Routleys Pty Ltd, in which he detailed his previous employment history, namely full time carer for his mother in Bathurst between February 1998 and December 2000, at which time his mother was placed in a nursing home. Prior to this the Applicant had worked as a manager in a menswear retail outlet in Balmain between August 1995 and February 1998. Finally the Applicant requested that his wages be directed to a nominated St George bank account (T30).
The Applicant commenced working with Routleys on 7 March 2001 in Hobart and worked six days up to and including 14 March 2001 for which he was paid $743.45. Between 15 March 2001 and 28 March 2001 the Applicant worked one day (22 March 2001), for which he received $91.60 (T32).
For the fortnight ending 13 March 2001, the Applicant declared earnings of $200, and for the fortnight ending 27 March 2001 the Applicant declared earnings of $50.
A decision was made by a Centrelink officer on 28 March 2001 to impose an activity test breach and reduce the Applicant's Newstart Allowance by 18 per cent for a 26 week period, as he had not correctly declared his wages. The decision was reviewed and affirmed by an Authorised Review Officer on 7 May 2001 and by SSAT on 2 July 2001.

applicant's evidence

The Applicant told the Tribunal that he was born on 18 April 1956 and that he was currently employed (as of the previous week) for two hours per day as a teacher's aide in a school for disabled children.
Prior to moving to Hobart in February 2001, the Applicant stated that he had been receiving a carer's pension while caring for his mother in the family home in Bathurst. This was ceased when she moved into a nursing home where she still resides. The Applicant stated that issues had arisen with the Guardianship Board and the Protective Commissioner, with the latter asking the Applicant to vacate the home in February 2001, as he could not meet the rent of $100 per week. The Applicant also indicated that he did some part time work with Simplot during April/May 2000.
The Applicant decided to travel to Hobart to seek employment in retail menswear, mainly on the grounds of memories of a previous work experience. The Applicant stated that he obtained a lump sum advance of his Newstart Allowance from Centrelink and with release of superannuation payments from previous employment at Balmain, he had sufficient funds to travel to Hobart, with his mother's cat and to hire a car for a week.
In Hobart the Applicant stated that he was unable to find suitable accommodation, and as a consequence he lived in the hired car for several weeks, together with the cat. He stated that he visited Centrelink and an issue concerning his continuing to stay in Hobart was resolved after his questioning of a decision not to accommodate his desire. He became registered with several agencies, and he eventually secured an interview with the manager of Routleys Menswear.
Following his interview for a salesperson's position with the manager, he travelled with him on the following day to Launceston, for there was a particular vacancy in their business at Launceston. The Applicant indicated that they returned to Hobart the same day, he, having indicated that he would prefer to work in Hobart. The manager, according to the Applicant, asked him to ring the next morning to see if there was work available in the Hobart store, which he did, and on being advised that there was work available, went in and worked for the day (7 March 2001). A similar procedure was followed on subsequent days and the Applicant worked on 8, 9, 10, 11, 13, 14 and 22 March 2001.
The Applicant stated that on 13 March 2001, he dropped in at Centrelink on the way to work, and while not knowing his rate of pay, he had a feeling that he was going to be paid, but he remained uncertain as how much he would be paid and for how long he would be working. He stated that he submitted the fortnightly form to Centrelink, that in so doing, he was in a hurry to get to work, and knowing he had to put something down he considered the days and the hours he had worked and put a figure down, which was $200.
In the following fortnight the Applicant stated he worked on two days, namely on 14 and 22 March 2001. Again, when he completed the form, he stated that he knew he had to put something down, as he had said that he was working. On this occasion the Applicant indicated that his earnings were $50.
The Applicant indicated that his rate of pay was not discussed during the interview process, nor was he told of it by management at Routleys. Further the Applicant expressed the view, that he considered it inappropriate to raise the issue of pay rate prior to, upon or during his employment with management at Routleys as this may have jeopardised his continuing employment. Further the Applicant denies that he plucked "a figure out of the air", and that during the one hour initial interview for the position, the discussion focused more on the power dynamics and the person he was. The Applicant stated that his last day of work was 22 March 2001, and that he visited Routleys once about a week after he left work. The Applicant also stated that he never received pay slips from Routleys.
The Applicant initially stated that he was unable to remember the time sequence between the approval to stay in Hobart and getting the job, and similarly between moving into the house and getting the job. However, in other evidence the Applicant indicated that he moved into his home accommodation at or about the time the decision to allow him to stay in Hobart was made.
The Applicant indicated that twice during his employment with Routleys he received a call from the head office pay officer in Launceston, but he did not think to ask about his rate of pay. The Applicant stated that a female staff member told him the rate of pay while he was still at work, but only shortly before he left. The Applicant further indicated that his earnings were paid into his St George bank account, which did not have a branch in Hobart. However the Applicant indicated that he was able to access his account through an appropriate automatic teller, and that he did so access his account. The Applicant indicated accessing his account in this manner "was just money" and he did not consider the access process for any other purpose. The Applicant also stated that he did complete an Employment Form with Routleys, but is unable to remember whether the rate of pay was nominated.
The Applicant did indicate that "his stress levels" were high during the entire process of leaving Bathurst, his early weeks living in a car in Hobart, his difficulties with Centrelink in relation to be allowed to stay in Hobart, his search for accommodation, his search for work and his concerns concerning the continuity of work at Routleys. The Applicant stated that he left Hobart in June 2001.

other file evidence

In a letter dated 4 April 2001 the Applicant indicated that his initial acceptance for work was on a trial basis with Routleys, during which time he would be assessed. Further the Applicant indicated that he had declared earnings for the two periods in question on an assumption of hours and days worked, and that he felt embarrassed to ask questions concerning rate of pay when he was unsure as to the basis of his employment (T8).
In a Routleys Pty Ltd Employment Application Form signed by the Applicant on 8 March 2001, his address in Hobart is detailed, as is his previous employment details, as well as a direction as to where his wages should be paid (T30).
In response to a request from Centrelink, Ms Kidd, an employee of Routleys, indicated that the Applicant was advised of his hourly rate of pay at the start of the employment, either verbally and on a pay slip and that this rate of pay was $13.57 per hour (T29).
In a further response to an Advocacy and Administrative Law Services, Centrelink request, Ms Quarrell forwarded copies of pay slips issued for pay periods ending 14 and 28 March 2001 (T31, 32).
Further documentation contained within the T-documents indicates that Centrelink made enquires of an earlier employer of the Applicant, namely Simplot on 23 February 2001 and 28 March 2001 (T3, 4). At T10 it is noted that no breach has been applied re earnings with Simplot.

submissions

A submission on behalf of the Applicant contends that the uncertain nature of the Applicant's employment status is relevant to a consideration of whether his failure to provide accurate income details to Centrelink was due to "recklessness" on his part, or was a consequence of a range of other factors, which included stress experienced by the Applicant associated with trying to impress a potential employer, while homeless.
It was further contended that the Applicant felt pressured by the SSAT when he stated that the "picked a figure out of the air." The real circumstances, contended in the submission, was that the Applicant did not know the precise details of his earnings, as he was unsure of the basis of his employment, and his earnings; that he does not recall receiving any pay slips prior to completing the Centrelink forms dated 13 and 27 March 2001; that the answers provided by Ms Quarrell do not reveal the date on which the pay slips were issued; that the written responses by Ms Kidd are not reliable where it states that the Applicant was advised of this hourly rate of pay and that his hourly rate of pay for the period 7 March 2001 - 14 March 2001 was $13.57; that the Employment Application Form completed by the Applicant on 8 March 2001 did not nominate the Applicant's hourly rate of pay; that the information relating to Simplot is not relevant.
Further it was argued, that as recklessness involves foresight of consequences (Crabbe v R 56 ALR 733, a Full Federal Court decision involving a majority decision which was upheld by the High Court R v Crabbe 58 ALR 417), the Applicant's state of mind is relevant as to whether his failure to provide accurate information to Centrelink was due to recklessness on his part. In support of such a contention that the Applicant was under a great deal of stress, the following factors were listed:

the need to find housing and work in a city in which he had no contacts and with which he was unfamiliar;
that issues of dispute concerning his Newstart Allowance payments and their possible cancellation on account of reducing his employment prospects by moving to Hobart;
the method, mode and continuance of his employment;
a genuine desire not to antagonise his employer and that any enquiry by him as to conditions of employment would reflect poorly on him.

It was also contended on behalf of the Applicant that the penalty imposed was too severe in all the circumstances of this matter.

respondent

The Respondent argues that the word "reckless" means "utterly careless of the consequences of action: without caution; characterised by or proceeding from such carelessness" (Macquarie Dictionary 1981).
The Respondent contends that the uncertain nature of the Applicant's employment, the Applicant's condition of stress, for which there is no medical evidence, the Applicant's desire to impress a potential employer, while homeless were not relevant to the issue of the Applicant's failure to appropriately declare his income.
The Respondent also contends that the degree of stress experienced by the Applicant was not an unusual experience and that the stress experienced by the Applicant in the absence of any medical evidence, would not have influenced his ability to notify Centrelink of his appropriate earnings.
The Respondent contends that the issues surrounding Simplot are relevant in this matter, in that they indicate a propensity by the Applicant to underdeclare earnings from work, while in receipt of Newstart Allowance.
The Respondent also contends that there is evidence to suggest that the Applicant was advised of his hourly rate of pay and that if he was unsure it would have been reasonable for him to clarify the situation with his employer.
The Respondent, in noting that the Applicant is recorded as stating "that it would all work out at tax time" (T5-p35), submits that the Applicant's rationale when under declaring his income because he did not know what he was going to receive, is indicative of recklessness, in that there was no real necessity to provide accurate details of earnings. Such behaviour, it is contended, is reinforced by the Applicant's failure to notify Centrelink of his inability to obtain accurate information from his employer.
In relation to the severity of the penalty, the Respondent contends that the Act does not provide the Secretary with a discretion as to quantum of penalty.

consideration and findings

In this matter the Tribunal notes that there is no dispute as to the basic facts and accordingly makes the following finding of facts:

the Applicant was in receipt of Newstart Allowance when he obtained casual work with Routleys Menswear;
the Applicant had been notified on four occasions in January 2001 that he was required to inform Centrelink if he were to start paid work, or if his income changed from the rate last notified;
the Applicant was employed by Routleys and worked on 7, 8, 9, 10, 11 March 2001, 13 & 14 March 2001 and 22 March 2001;
the Applicant received gross earnings of $743 for the pay period ending 14 March 2001 and $91.60 for the pay period ending 28 March 2001;
the Applicant declared earnings to Centrelink of $200 for the period ending 13 March 2001 and $50 for the period ending 27 March 2001.

In addressing the issues raised by the Applicant as to why there was a significant difference between earnings received and earnings declared for the two fortnightly pay periods in question, the Tribunal notes that the Applicant states that he completed the earnings declaration at Centrelink on his way to work on 13 March 2001, that he was in a hurry and having considered the hours and days worked, he felt obliged to put a figure down. The Tribunal also notes that on the second occasion, namely the 27th March 2001, the Applicant again stated that he "put a figure down".
The Tribunal, while noting the Applicant's story of his travels from Bathurst to Hobart, his living in a rented car with his mother's cat for some weeks, his interactions with Centrelink, his searching for a job and appropriate accommodation, and the difficulties thereof, observes that by the time he commenced work with Routleys, agreement had been reached for his continuing stay in Hobart with Centrelink and that he had secured suitable accommodation for himself and the cat.
Further the Tribunal, in noting that the Applicant stated that he had concerns about the nature and terms and conditions of his employment with Routleys, his absence of knowledge as to his hourly rate of pay, his failure to enquire as to his hourly rate because of his tentativeness about making such an enquiry in the face of the tenuous nature of his employment, and his unsureness as to whether the job would be ongoing, observes that the Applicant has had significant prior experience in menswear and indeed has been a manager; that he had completed the Routleys Employment Applicant Form on 8 March 2001, in which he directed earnings from his employment be credited to his St George bank account; that he had two telephone communications with the pay officer at Routleys Launceston and he had made no enquiry as to his hourly rate of pay and that an employee did advise him of the hourly rate of pay prior to his last day of work with Routleys.
In addressing the Applicant's evidence, the Tribunal notes that while the Applicant cannot recall as to whether he received any pay advice notices, the Applicant admits to the use of an automatic teller to obtain funds, stating in turn that their use was for money only.
In noting the language containing within s 630AA(1)(b) of the Social Security Act 1991, namely "knowingly or recklessly providing false or misleading information", the Tribunal in turn notes the definition of "reckless" as contained in the Oxford Concise English Dictionary, namely "devoid of caution, regardless of consequences, heedless of danger".
In analysing the provision of information by the Applicant on both occasions, the Tribunal concludes that the information on both occasions was both false and misleading. In addressing the provision of this information on both occasions, it is evident to the Tribunal that by 13 March 2001, all the many issues and difficulties upon which the Applicant has sought to rely as to causing him personal tension and anxiety have run their course in the weeks and days proceeding 13 March 2001. The only significant issue in operation was the Applicant's performance at his work and the effect of this and other factors at the workplace in relation to him continuing in employment at Routleys.
The Tribunal, while noting that the Applicant claims uncertainty as to the nature of his employment, it is clear to the Tribunal, that despite any uncertainty that the Applicant may later express, that an application for employment was completed by the Applicant on 8 March 2001, and that he expected to receive remuneration from such activity, otherwise he would not have detailed his bank account to which earnings were to be credited.
Further the Tribunal observes by 13 March 2001, the Applicant had worked some five days, had received a phone call from the employer's pay office and yet continues to state that he was unaware of his hourly rate of pay, and further had made no attempt to secure such information prior to completing his information advice to Centrelink.
In providing the advice as he so did on 13 March 2001, it is evident from the Applicant's own evidence that the figure nominated was a figure which "he just put down", or alternatively constructed from an absence of factual information concerning an hourly rate of pay, this information being such information that he had had opportunity to obtain, in the event that he had not been told, by way of simple enquiry or during his telephone call with the pay office, leaving aside any knowledge he would have had by virtue of his experience in the industry. In whichever way the Tribunal looks at the issue, the Tribunal concludes that the figure of $200 nominated was nominated by the Applicant in a manner which was both devoid of caution and regardless of any consequences that may arise from such action. The Tribunal is further reinforced in its view, when in later file notation the Applicant is recorded as stating "that it would all work out at tax time".
In concluding, the Tribunal finds that the advice rendered to Centrelink on 13 March 2001 was both false and misleading information, and the Applicant recklessly provided such advice, having created such information without an apparent basis in fact, or made enquiry to provide such fact, that is, such information provision was both devoid of caution in its compilation and was provided regardless of any consideration of foreseeable consequences, other than "it would all work out at tax time". In relation to the Applicant's claim as to tension and anxiety at this time, the Tribunal, while noting the chronology of the Applicant's difficulties, concludes that on his own evidence such was in the past on 13 March 2001, with his efforts being more concerned with maintaining the job at this stage. In the absence of any medical evidence, the Tribunal finds that no substantive evidence has been presented which would allow the Tribunal to conclude that the Applicant's ability to foresee the consequences of any of his actions was in any way substantially affected by his personal circumstances.
In addressing the information provided on 27 March 2001, the Tribunal observes that even in the event that the Applicant was not given a pay advice slip, he had opportunity to note the amount in his St George bank account had increased as a result of the payment by Routleys on 14 March 2001 on the first occasion he made a withdrawal after such a payment, if he took the opportunity to observe. Further, the Tribunal observes that the Applicant had opportunity to ask the pay office during his second communication with that office. More importantly the Tribunal observes that the Applicant by his own evidence admits being told the hourly pay rate by a fellow staff member some short time before his final day of work on 22 March 2001.
The Tribunal in considering such material, as well as material presented earlier on behalf of the Applicant concludes that the Applicant had knowledge of the hourly rate of pay prior to the provision of information to Centrelink on 27 March 2001. In such circumstances, that is, becoming aware of the hourly rate of pay, the Tribunal would conclude that a reasonable person would also become aware that the advice rendered on 13 March 2001 was false and that the advice rendered on 27 March 2001 would certainly present a correct appreciation of earnings as well as nominating the earlier error.
In that the advice rendered on 27 March did not reflect either of these two outcomes indicates that the Applicant either knowingly presented false or misleading advice or alternatively presented such advice which involved a personal activity by the Applicant which was both devoid of caution, and was provided regardless of any consequences. The Tribunal concludes that the information provided by the Applicant on 27 March 2001 was both false and misleading and that such information was provided knowingly and recklessly by the Applicant.
In addressing the issue of the penalty, the Tribunal notes the statutory construction that arises as a consequence of a breach under s630AA(1)(b), then pursuant to s630AA(2)(a) an activity breach rate reduction period applies, with the rate reduction period being for 26 weeks pursuant to s644AA and the rate redirection amount being 18 per cent of the maximum payment rate of Newstart Allowance pursuant to s644AE(2) of the Act.
The Tribunal notes that there is no statutory provision to permit the decision maker a discretion, once there has been a finding relating to knowingly or recklessly providing false or misleading information and an activity test breach reduction period applies. Accordingly the Tribunal finds that in the absence of any discretion in the matter the penalty has been correctly imposed.

determination

The Tribunal determines that the decision under review be affirmed.
I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: A Stephens .....................................................................................
  Associate
Date/s of Hearing  2 July 2002
Date of Decision  26 August 2002
Applicant  self-represented
Solicitor for the Respondent    Ms A Garcia