Drewry and Department of Family and Community Services - [2000] AATA 913

DECISION AND REASONS FOR DECISION [2000] AATA 913

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/39 & N2000/172

GENERAL ADMINISTRATIVE DIVISION          )
           Re      MICHAEL DREWRY
  First Applicant
  SUSAN DREWRY
  Second Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION

Tribunal Dr J D Campbell

Date19 October 2000
PlaceSydney

Decision The Tribunal varies the decision under review to reflect the waiver of $85 for each debt by the Respondent prior to the hearing, and accordingly finds that the first Applicant has a debt of $156.70, and the second Applicant a debt of $508.14 owing to the Commonwealth, in relation to overpayment of newstart and parenting allowance respectively.

Dr J D Campbell
Member
CATCHWORDS
SOCIAL SECURITY - newstart allowance - parenting payment - commencement of casual work - estimate of earnings - delay in receipt of earnings - overpayment - debt - waiver - administrative error - special circumstances - write off

Social Security Act 1991, sections 8, 657, 1068, 1224, 1236, 1237

Inguanti v Secretary, Department of Social Security (1988) 15 ALD 348
Re Beadle and Director General of Social Services (1984) 6 ALD 1

REASONS FOR DECISION

Dr J D Campbell, Member

Mr Michael Drewry ("the first Applicant") and Mrs Susan Drewry ("the second Applicant") in this matter seek a review of the decision of the Social Security Appeals Tribunal ("the SSAT") dated 24 November 1999, which had reviewed a decision dated 25 September 1999 made by a Centrelink delegate of the Secretary, Department of Social Security ("the Respondent") which in turn had been reviewed and affirmed by an authorised review officer dated 14 May 1999. The SSAT affirmed the earlier decision in relation to the second Applicant, namely to recover a debt of $593.14 arising from overpayment of parenting allowance, and varied the decision in relation to the first Applicant by nominating the debt to be recovered as $241.70, this debt having arisen from an overpayment of newstart allowance.
A hearing was held before the Tribunal on 26 July 2000 at which the first Applicant represented both himself and the second Applicant. The Respondent was represented by Ms Mantaring, an advocate from the Advocacy and Administrative Law section of Centrelink.
The following material was placed in evidence before the Tribunal:

Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 T1-33 pp 1-90
Respondent's statement of facts and contentions dated 18 July 2000         Exhibit R1
Attachment "A" – notice of termination of employment dated 12 September 1997 (two pages)           Exhibit R2
Attachment "B" – application for payment of newstart allowance by the first Applicant dated 10 December 1997       Exhibit R3
Attachment "C" – memo relating to overpayment to both Applicants dated 17 July 2000 Exhibit R4

issues

The relevant issues in this matter are:
(a)whether the first Applicant owes a debt arising from newstart allowance in the amount of $241.70 during the period 18 February 1998 to 1 April 1998;
(b)whether the second Applicant owes a debt arising from overpayment of parenting allowance in the amount of $593.14 during the period 5 February 1998 to 1 April 1998; and
(c)whether $156.70 of the first Applicant's debt and $508.14 of the second Applicant's debt can be written off or waived, pursuant to the Act.

legislation

The relevant legislation in this matter is the Social Security Act 1991 ("the Act"), in particular sections 8, 1068, 1224, 1236 and 1237.
background evidence
On 12 September 1997, the first Applicant was served with a notice of termination of employment effective as of that date by his employer, with two months salary being paid in lieu of notice (Exhibit R2). On 27 November 1997 he applied for newstart allowance (T4). No decision was taken to impose an income maintenance period and newstart allowance was granted on 4 December 1997 and commenced to be paid on 10 December 1997 (Exhibit R3). The second Applicant lodged an application with the Respondent on 8 December 1997 for parenting allowance (T5).
On 11 February 1998 the first Applicant commenced part time employment with the Technical and Further Education department (TAFE) (T6). On 18 February, for the fortnight ending on that date, he lodged an application for payment of newstart allowance and estimated gross amount earned at $160 (T6). On 4 March 1998 the first Applicant lodged an application for payment of newstart allowance and estimated the amount earned for the fortnight ending as of that date at $320 (T7). On 18 March 1998, for the fortnight ending on that date, he lodged an application for payment of newstart allowance and estimated income earned at $550 (T8). On 1 April 1998 he lodged a claim for payment of newstart allowance and stated that the amount earned for the fortnight ending 1 April 1998 was $839.80 (T9).
A Centrelink and employment declaration form (Australian Tax Office) matching activity was undertaken for the second Applicant on 4 May 1998 (T10) and for the first Applicant on 22 May 1998 (T11). Payroll extracts from St John of God Hospital were received by the Respondent which indicated that the second Applicant had commenced work on 13 March 1998 (T12). A similar payroll report was received from TAFE in relation to the first Applicant on 16 June 1998, detailing his earnings on a fortnightly basis from 16 February 1998 to 10 May 1998 (T13). A further report was received from Granville TAFE on 23 June 1998 in relation to the first Applicant's earnings (T14) and similarly a report from Bankstown TAFE relating to him was received on 25 June 1998 (T15).
On 25 September 1998, Centrelink determined that there had been an overpayment of newstart allowance to the first Applicant in the amount of $266.72 and an overpayment of parenting allowance in the amount of $593.14 and that pursuant to section 1224(1) of the Act these were debts owing to the Commonwealth (T16). These decisions were affirmed by an authorised review officer in the decision of 14 May 1999 (T30, T31). The amount of overpayment and debt owed by the first Applicant was varied in the decision of the SSAT dated 24 November 1999 to an amount of $241.70 following a further review of the first Applicant's earnings (T2).
On 17 July 2000 Centrelink waived $85 from each of the Applicants' debts, resulting in the debts outstanding at $156.70 for the first Applicant and at $508.14 for the second Applicant. The waiver was granted in recognition of a computer systems error which produced incorrect group certificates, which in turn caused both Applicants to both incur an extra accounting fee of $85 (Exhibit R4).
evidence – the applicants
The first Applicant informed the Tribunal that he left his previous place of employment on 12 September 1997 and that the first payment of newstart allowance did not come into effect until 10 December 1997. He stated that he was essentially without any income for this period.
The first Applicant further stated that he commenced casual work with TAFE on 15 February 1998, and that he was not paid for his endeavours until a period of five weeks had elapsed, with newstart allowance being paid up to 1 April 1998.
The first Applicant stated that the issue that he wished to pursue related to the practical concern of an individual and a family having to wait five weeks for receipt of payment for work done and the fact that Centrelink used income earned, but not received, in calculating the rate of newstart and parenting allowance payments.
Further discussion centred around the issue of an income maintenance period, with the first Applicant highlighting the time period in which it was expected an individual and a family could survive without any form of income support, being, in essence, expected to live on accrued savings.
The first Applicant confirmed that he was satisfied that the two debts did exist, and that the calculation leading to the debts was appropriate, but again stressed that his main concern was to highlight the incongruency and unfairness that is created by the concept of treating income earned as income received, when indeed the gap between earning and receipt could be some many weeks. Thus he submitted that it would be a fairer and more just system if the support payment allowances were calculated on a cash as opposed to an accrued basis.
In response to questions asked in cross examination the first Applicant confirmed the details relating to his commencement of casual work with Granville TAFE and income details provided by that same institution (T6, p27 and T14, p49).
In discussing the particular circumstances of himself and his wife and family, the first Applicant stated that:
(a)following his termination at ADC Telecommunications, he sought casual work, and undertook such activity, once obtained, for a period of ten months;
(b)he is currently a permanent employee on a salary of $60,000, with no car allowance;
(c)his wife suffered a back injury which required surgery, and because of a delay in the public system the operation was performed in the private sector, accumulating $6,000 - $7,000 of health expenses; and
(d)the Applicants own their own home, with a mortgage of $140,000, an overdraft of $10,000 and the first Applicant has a hobby relating to particular cars (value of $8,000), as well as the two family cars (value of $8,000).

the applicants' submissions

The Applicants submitted that the essential issue in this matter is that calculation of income support payments should be made on income earned and received as opposed to income earned and not received. In essence, the Applicant submits that such calculations should be undertaken on a cash as opposed to an accrual basis.
The Applicants also contended that there were issues of concern relating to the calculation of the income maintenance period, in that individual Applicants were expected to exhaust their savings prior to being entitled to receipt of income support payments.
In making the above submissions the Applicants, while expressing concern with the difficulties that had been experienced in their various dealings with the Respondent, were satisfied that the overpayments and resulting debts had finally been correctly calculated.
respondent's submissions
The Respondent contends that the Applicants have had their overpayments and debts correctly calculated and that the correct interpretation for the purposes of the calculation of such income support payments has been implemented.
Further the Respondent notes that there has been no income maintenance period imposed in this matter and that the Applicants were paid their income support payments once they had lodged the appropriate applications.
In relation to waiver, the Respondent contends that there had been no sole administrative error and that the first Applicant was a party to any error by virtue of the inaccuracies given in the amount of income earned in the fortnightly periods after he commenced casual work as well as his failure to notify the Respondent when his wife resumed casual work on 13 March 1998. Further the Respondent contended that the Applicants' circumstances could not be considered special as they were not uncommon, unusual or exceptional.
consideration and findings
In preliminary comment the Tribunal notes the waiver of $85 to each of the debts by the Respondent in the correspondence of 17 July 2000 (Exhibit R4) and confirms the level of debt nominated in this matter as standing at $156.70 for the first Applicant and $508.14 for the second Applicant.
In further preliminary analysis the Tribunal notes that there were no decisions made in relation to an income maintenance period in this matter and thus any enquiry into the issue is of no relevance, although the Tribunal does note that payments in lieu of notice are excluded when calculating the income maintenance period.
In further analysis the Tribunal notes sections 8(1) and (2) of the Act which provide:
"8 (1) Income test definitions
…
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 payment by way of gift or allowance
but does not include an amount that is excluded under subsection (4), (5), (7A) 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);
income from personal exertion means an income amount that is earned, derived or received by a person by way of payment for personal exertion by the person but does not include an income amount received as compensation for the person's inability to earn, derive or receive income through personal exertion.
ordinary income means income that is not maintenance income or an exempt lump sum.

"8(2) A reference in this Act to an income amount earned, derived or received is a reference to :
(a) an income amount earned, derived or received by any means; and
(b)an income amount earned, derived or received from any source (whether

within or outside Australia)."

In understanding the terms "earned", "derived" or "received", the Tribunal is of the view that each word has a different connotation or meaning. The word "received" means that the income has been received by the individual; "earned" means activities have been undertaken, but money for these activities may or may not have been received; and "derived" means that income has been accrued, and may or may not have been received from such activities as periodic payments, investments etc. In forming such a view the Tribunal notes the comments of Sheppard J in Inguanti v Secretary, Department of Social Security (1988) 15 ALD 348 at pages 350-351 in relation to these words:
"The use of the verbs "earned", "derived" and "received' in juxtaposition in the definition of "income" in the Act strongly suggests that each was intended to have a different meaning. Notwithstanding that the word "derived" can mean "received", I reject the submission made on behalf of the applicant that "derived" is used in that sense here. Sometimes moneys will be earned, derived and received simultaneously. At others they will be earned or derived but not received until a later time. If one invests moneys and is entitled to interest at six monthly or yearly rests, one's income, if it needs to be related to a weekly or a monthly period, is not properly stated unless one takes into account one's expectation of payment of interest on the future day upon which it will be received. Countless pensioners were accustomed to invest in Australian Savings Bonds. Their entitlement to a pension is properly calculated upon the basis of the expectation they have that interest on their investment will be paid on the day promised. That is because they are "deriving" income from their investment. They do not receive it daily, weekly or monthly. But the moneys to which they are periodically entitled are moneys derived by them, and thus income for the purposes of the Act."

In turning to the facts of this matter it is clear that income was earned within each of the fortnightly periods appropriate to each of the first Applicant's work activities and this is the Tribunal's finding. It matters not that the income was not received or for that matter derived, but that it had been earned.
The Tribunal in turn notes section 1068-G7A of the Act which provides:
"Ordinary income generally taken into account when first earned, derived or received
1068-G7A. Subject to points 1068-G7B, 1068-G8 and 1068-G8A and section 1073, ordinary income is to be taken into account in the fortnight in which it is first earned, derived or received."

Sections 1068-G7B and 1068-G7C refer to lump sum payments; section 1068-G8 refers to a receipt of a number of payments over a period longer than an fortnight; section 1068G8A refers to arrears payment of compensation and section 1073 refers to lump sum payments not resulting from remunerative work, and as a result are not further relevant to the Tribunal's consideration.
As a consequence of the Tribunal's consideration, the Tribunal finds that the first Applicant's ordinary income must be taken into consideration when first earned, not when earned and received.
Accordingly the Tribunal finds that the Applicants did receive overpayments of newstart and parenting allowance respectively and these resulted as a consequence of the first Applicant providing an inaccurate nomination of amounts earned over these successive fortnightly periods, and further a failure by the Applicants to notify that the second Applicant had returned to work on 13 March 1998. There is no suggestion in this matter that the activities undertaken in relation to documents completed (T7, T8, T9) were other than innocent in intent, but nevertheless false statements were made and there was a failure or omission to comply with a provision of the Act, namely the section 657 notice to inform of various happenings. The Tribunal finds that in relation to these overpayments they constitute debts pursuant to section 1224(1) of the Act which states:
"1224.(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 this Act or the 1947 Act;
the amount so paid is a debt due by the recipient to the Commonwealth.

The Tribunal in considering issues of waiver, notes the following legislation:
"1237A(1) Subject to subsection (1A) , the Secretary must waive the right to recover the proportion 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 proportion of the debt.
…
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 false representation; or
(ii) failing or omitting to comply with a provision of the 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 Tribunal has already concluded that this matter does not involve sole administrative error by the Commonwealth; that there have been false statements made and that there has been a failure or omission to comply with a provision of the Act. Further in considering the circumstances nominated by the Applicants, the Tribunal finds that they do not constitute special circumstances, as there is nothing in the health circumstances of the Applicants which are exceptional and the financial circumstances, while constrained, are certainly not those of financial hardship. In so finding the Tribunal has found the circumstances nominated not to be uncommon, unusual or exceptional, as defined by Toohey J in Re Beadle and Director General of Social Services (1984) 6 ALD 1.
With the findings as nominated, the Tribunal concludes that there is no case for waiver pursuant to section 1237A(1) of the Act for sole administrative error or to section 1237AAD of the Act for special circumstances.
Similarly after consideration of section 1236 of the Act the Tribunal finds that there are no circumstances existing which would allow the Tribunal to write off the debt for a stated period or otherwise, in that it is clear that the Applicants' whereabouts are known and that they have a capacity to pay and the debt is not irrecoverable at law.

As a consequence of the Tribunal's findings the Applicants continue to owe a debt of $156.70 for the first Applicant and $508.14 for the second Applicant arising from overpayments of newstart allowance and parent allowance respectively. This debt level has been varied as a result of a waiver of $85 for each debt by the Respondent prior to the hearing.
determination
The Tribunal varies the decision under review to reflect the waiver of $85 for each debt by the Respondent prior to the hearing, and accordingly finds that the first Applicant has a debt of $156.70, and the second Applicant a debt of $508.14 owing to the Commonwealth, in relation to overpayment of newstart and parenting allowance respectively.
I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell (Member)
Signed:         .....................................................................................
  Associate
Date/s of Hearing  26 July 2000
Date of Decision  19 October 2000
Representative for the Applicants            Applicants were self represented
Representative for the Respondent        Ms S Mantaring