Jacobson and Secretary, Employment and Workplace Relations - [2006] AATA 141

Administrative

Appeals

Tribunal

DECISION AND REASONS FOR DECISION [2006] AATA 141

ADMINISTRATIVE APPEALS TRIBUNAL Nº V2005/558

GENERAL ADMINISTRATIVE DIVISION

Re: STEPHEN BRIAN JACOBSON
Applicant

And: SECRETARY,
EMPLOYMENT AND WORKPLACE RELATIONS
Respondent

DECISION

Tribunal: Regina Perton, Member

Date: 21 February 2006

Place: Melbourne

Decision: The Tribunal affirms the decision under review.

(sgd) Regina Perton
Member

SOCIAL SECURITY ‑ parenting payment (partnered) ‑ overpayment – variable income – notification of exact amount of income ‑ debt to Commonwealth ‑ waiver of debt ‑ write‑off of debt ‑ special circumstances ‑ decision affirmed

Social Security Act 1991 s 1068, 1237A, 1237AAD

Re Beadle and Director-General of Social Security (1985) 7 ALD 670

REASONS FOR DECISION

21 February 2006 Regina Perton, Member

Stephen Brian Jacobson has applied for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 9 June 2005 concerning overpayment of parenting payment (partnered) (PPP). Centrelink administers PPP for the Department of Family and Community Services. On 15 November 2004, a Centrelink delegate determined that Mr Jacobson had been overpaid PPP between 20 March 2002 and 30 September 2003 and had therefore incurred a debt of $5248.42 to the Commonwealth. An authorised review officer of Centrelink (ARO) affirmed the original decision. The SSAT found that there was an overpayment of PPP between 20 March 2002 and 30 September 2003. However, the SSAT waived recovery of that part of the debt incurred between 20 March 2002 and 6 May 2002, finding it was due solely to administrative error by Centrelink.
Mr Jacobson does not dispute that he was overpaid PPP between 20 March 2002 and 30 September 2003. However, he believes that the sole responsibility for the overpayment rests with Centrelink. He stated that he had informed Centrelink that his wages and those of his wife, Robyn Jacobson, fluctuated and provided Centrelink with payslips and other information which showed their income was variable. He submitted that it was Centrelink’s inadequate reporting mechanisms that caused the overpayment. Before this Tribunal Centrelink accepted that it was appropriate to waive that part of the debt incurred between 20 March 2002 and 6 May 2002, namely $268.25. However, Centrelink maintained that the balance of the debt should remain.
The issue before the Tribunal is whether Mr Jacobson’s debt to the Commonwealth should be waived; either on the ground that Centrelink’s administrative error was the sole cause of the debt or because of Mr Jacobson’s special circumstances.

EVIDENCE

The Tribunal had before it the documents lodged by the respondent pursuant to s 37 of the Administrative Appeals Act 1975 (the T documents), as well as a submission and copies of correspondence provided by Mr Jacobson. Mr Jacobson gave oral evidence at a hearing on 7 December 2005.
Between mid-March 2002 and May 2002, there was written and telephone contact between Mr Jacobson and Centrelink in relation to the amount of PPP he was receiving. Mr Jacobson informed Centrelink, by telephone and fax, during that period that his earnings and those of his wife fluctuated, depending on the shifts and number of days worked. Mr Jacobson sent faxes to Centrelink to advise of changes to his work and earnings on 15 March 2002 and 22 March 2002. Centrelink file notes on those days indicate that an officer telephoned Mr Jacobson, as he requested, on receipt of the fax and left messages on his answering machine. On 22 March 2002, Centrelink wrote to Mr Jacobson to advise him of a decrease in PPP because of an increase in his and his wife’s combined income. On 19 April 2002, Centrelink sent Mr Jacobson a questionnaire concerning his and his wife’s income, asking that he provide a response by 9 May 2002(T40 p134). Mr Jacobson provided payslips to Centrelink for the previous three fortnights by the due date.
On 6 May 2002, Centrelink wrote to Mr Jacobson informing him of a decrease in PPP because of an increase in income. In the letter he was advised of the requirement to inform Centrelink within 14 days if his income exceeded $231.76 per fortnight or his wife’s income was over $658.09 per fortnight. The amount of income recorded for Mr Jacobson was the lowest of the three fortnightly payslips he had provided to Centrelink. He gave evidence that he presumed the calculations were correct and that Centrelink was aware of his earnings being higher than those shown as two of the three payslips they had in its possession on that day were for a higher amount of income.
On 15 October 2002, Mr and Mrs Jacobson faxed a letter to Centrelink (SJ13) advising that Mr Jacobson was now only working one day a week and hence his income had decreased. They also advised that Mrs Jacobson’s income from her work at a medical centre was variable as she sometimes had to extend her hours due to emergencies. They asked Centrelink for advice as to what their new rate of PPP would be. Centrelink, by letter dated 17 October 2002, asked Mr Jacobson to provide proof of gross income for both himself and his wife so that they calculate the correct amount. Mr Jacobson sent a response by facsimile on 22 October 2002(SJ14), providing copies of his and his wife’s recent payslips. He reiterated that his work had been cut back to one day a week. Centrelink has no record of receipt of the fax. Mr Jacobson faxed the response and payslips to Centrelink again on 12 November 2002. In mid-November 2002, Mr Jacobson’s PPP was adjusted again, the amount being based on the lowest of the payslips he provided.
On 22 March 2003, Mr Jacobson notified Centrelink that he had ceased employment. Centrelink records show that on 2 May 2003, Mr Jacobson informed Centrelink that he had resumed work on 1 May 2003. Mr Jacobson’s records (SJ11) show that he notified Centrelink on 15 April 2003 that he would work 3 days per week on a project during May and June 2003 and that his hours would return to approximately one day per week thereafter. His wife’s earnings were said to remain unchanged. On 8 May 2003, Centrelink wrote to Mr Jacobson advising him of a further decrease in PPP. He was advised of the requirement to notify Centrelink if his income was over $215.99 per fortnight or if his wife’s income exceeded $581.79 per fortnight.
On 8 September 2003, Mr and Mrs Jacobson informed Centrelink that Mrs Jacobson was no longer working at the medical centre and that Mr Jacobson was still casually employed for 2 or 3 days per week. On that day, Centrelink wrote to Mr Jacobson seeking additional information, including his wife’s employment separation certificate and payslips from both employers for the preceding 12 weeks.
On 19 September 2003, Mr Jacobson informed Centrelink that he would not continue to claim PPP. He stated that his wife would seek PPP as she was no longer employed.
On 20 September 2004, Mr and Mrs Jacobson provided payslips for work then being undertaken by Mr Jacobson. They gave authority to Centrelink to obtain information about their pay directly from the employers. Centrelink obtained confirmation about the variable nature of Mr Jacobson’s casual work and received printouts of his income since commencing with the company. Centrelink obtained a record of Mrs Jacobson’s earnings, from January 2002 until she ceased working for them, from her previous employer. Mrs Jacobson’s employer confirmed that her hours had varied.
On 15 November 2004, Centrelink wrote to Mr Jacobson informing him that he had been overpaid $5248.42 in PPP between 20 March 2002 and 30 September 2003. Centrelink also raised a recoverable debt in that amount.
In his oral evidence Mr Jacobson amplified the points that had been made in his submissions to Centrelink, to the SSAT and to the Tribunal. He said that he and his wife had telephoned Centrelink and advised of income changes during the relevant period. They had provided payslips and informed Centrelink on several occasions of the variability in their incomes. He had provided three payslips in May 2002, yet Centrelink had recorded the lowest of the three as his income level. He did not inform Centrelink of changes to his income upon receipt of the letter of 6 May 2002 as he had provided payslips that very day, two of which were higher than the amount specified in the letter. He stated that he did not know why Centrelink had chosen the lowest one. He presumed that Centrelink had calculated the amount of PPP correctly based on the payslips he had provided. He was not in a position to check those calculations. He stressed that he and his wife had been proactive and honest in their dealings with Centrelink and believed that Centrelink had the correct information about their income.
Ms Paul brought the contents of several of the T documents to Mr Jacobson’s and the Tribunal’s attention. Ms Paul referred to a computer entry dated 15 March 2002 which indicates that the Centrelink officer had left a message on Mr Jacobson’s telephone that day, as requested by Mr Jacobson in his fax. The entry read:
…
Recvd fax stating that clt has not had any income from…since 311201. Also advised that ptr’s earnings are usually $258.40/w, from…Medical Centre. Payslip provided for ptr for p/e 200202 showing gross inc of $657.20 fro that fnt. Have coded this income & called clt to advise what future rate would be. Not home, but left msg on answering machine as requested in fax. Also advised them to let us know on a ftntly basis if income changes & we can rea PPP as often as needed. If further pslips supplied, will rea PPP accordingly.
Mr Jacobson said that he could not recall hearing that particular telephone message. He said that usually his wife or the children would hear the messages on the answering machine rather than he. Mr Jacobson could also not recall hearing a message left on the answering machine by Centrelink on 22 March 2002 concerning his earnings, in which the Centrelink officer requested contact if the details given in the message were not correct. Mr Jacobson cited the letters he had sent and said that his wife spoke to Centrelink regularly and would usually return their calls. On being questioned by Ms Paul as to whether he or his wife had read the instructions in letters from Centrelink, of the requirement to advise Centrelink if their income was above a certain stated level, Mr Jacobson said that he looked at the rate he was being paid and did not think that the rate was incorrect as he had just provided Centrelink with correct information about his income. He could not recall reading the notice himself as his wife usually did the banking and managed household expenditure. He said that he did not communicate with Centrelink about each subsequent payslip as his income went up and down and he thought Centrelink would average out his pay. He was not told that the calculations were on a fortnightly basis; nor was he informed in any correspondence that it would be wise if he provided information to Centrelink fortnightly. Had he been asked to or had he known the ramifications, he would have done so.
Mr Jacobson said that he believed that he and his wife had kept Centrelink informed of their income. He said that the letters he received were not clear and he believed that Centrelink should have asked him to provide fortnightly payslips when Centrelink knew that his income was variable. He also said that he believed that Centrelink’s decision to record the lowest of the three payslips he provided had caused the overpayment. He stated that Centrelink’s actions in recording the lowest of his three payslips and its failure to record his wife’s income in certain calculations was a breach of s 1068B of the Social Security Act 1991 (the Act). He also submitted that Centrelink’s notices do not comply with legislative requirements. He was adamant that sole responsibility for the overpayment rests with Centrelink.
Mr Jacobson stated that he is currently unemployed. He described various medical conditions from which he has suffered in the last year and which still affect him. His wife is also regularly caring for a, recently widowed, sick mother and is not working. Mr Jacobson pointed out that neither he nor his wife has claimed sickness or unemployment benefits, even though they may be eligible and have sold a number of assets to maintain themselves. He stated that they do not wish to be a burden to the taxpayer.

CONSIDERATION OF THE ISSUES

Section 1068B of the Social Security Act 1991 (the Act) sets out the rate calculator for PPP, and provides that a person’s income, and that of their partner, will affect the rate of payment. The income test is set out in Module D of s 1068B and requires Centrelink to take account of the applicant and his wife’s ordinary income. Module D of section 1068B of the Act provides:

Effect of income on maximum payment rate
1068B-D1. This is how to work out the effect of a person’s ordinary income, and the ordinary income of the person’s partner, on the person’s maximum payment rate:

Method statement

Step 1.Work out the amount of the person’s ordinary income on a fortnightly basis.
Note: The amount of the person’s ordinary income is affected by points 1068B-D2 to 1068B-D21.

Step 2.Work out the partner income free area using point 1068B-D22.
Note: The partner income free area is the maximum amount of ordinary income the person’s partner can have without affecting the person’s rate.

Step 3.Use point 1068B-D23 to work out the person’s partner income excess.
Step 4.Use the person’s partner income excess to work out the person’s partner income reduction using point 1068B-D24.
Step 5.Work out whether the person’s ordinary income exceeds the person’s ordinary income free area (see point 1068B-D27).
Note: A person’s ordinary income free area is the maximum amount of ordinary income the person can have without affecting the person’s rate.

Step 6.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 7.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 8.Use the person’s ordinary income excess to work out the person’s ordinary income reduction using points 1068B-D29 to 1068B-D31.
Step 9.Add the person’s ordinary income reduction and partner income reduction: the result is the person’s income reduction referred to in step 5 of the method statement in point 1068B-A2.

Note 1:For ordinary income see section 8.
Note 2:See point 1068B-A2 (step 6) for the significance of the person’s income reduction.
Note 3:The application of the ordinary income test is affected by provisions concerning the following:
(a)      the general concept of ordinary income (sections 1072 and 1073);
(b)      business income (sections 1074 and 1075);
(c)      deemed income from financial assets (sections 1076 to 1084);
(d)      income from income streams (sections 1095 to 1099D);
(e)      disposal of income (sections 1106 to 1112).

The calculations undertaken by Centrelink after receipt of Mr and Mrs Jacobson’s employers’ printouts has revealed that the level of income on which PPP was calculated was incorrect. The Tribunal is satisfied that there was an overpayment of PPP of $5,248.42 between 20 March 2002 and 30 September 2003; and that this sum is a debt due to the Commonwealth. The Tribunal also notes that the SSAT waived that portion of the debt between 20 March 2002 and 6 May 2002 and that Centrelink is prepared to accept waiver of the debt for that period. The amount waived is $268.25.
Mr Jacobson submitted that the debt should be waived under s 1237A(1) of the Act as his failure to regularly advise Centrelink of changes of income was not his fault, but rather it arose solely due to administrative error by Centrelink. He also pointed to Centrelink recording only one, namely the lowest of his fortnightly payslips, when he provided multiple payslips.
Centrelink submitted that Mr Jacobson was informed by letter and telephone that he was required to notify of income changes on a fortnightly basis. Ms Paul cited the answering machine message of 15 March 2002 and Centrelink’s letters dated 22 March 2002, 6 May 2002 and 8 May 2003 as evidence that Mr Jacobson was informed of the need to let Centrelink know of increases in his or his wife’s income above the amount specified in the letters. Ms Paul submitted that the debt cannot be waived under s 1237A(1) of the Act as it did not arise solely through administrative error on the part of Centrelink.
Section 1237A of the Act provides for waiver of a debt arising from administrative error:
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.
1237A.(1A) Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
On examination of the T documents, and taking into account Mr Jacobson’s written and oral evidence, the Tribunal is of the view that it is understandable that Mr Jacobson believed that he was being paid the correct amount of PPP. The Tribunal accepts that Mr Jacobson genuinely believed that Centrelink averaged out his pay to come up with the rate of PPP. This is particularly so given that the lowest figure was used when he provided three payslips; and advised Centrelink in his letters that his income and his wife’s income was variable. The Tribunal finds that there were various factors contributing to the underestimation of income, including the variable income of Mr and Mrs Jacobson and their lack of awareness of the fortnightly basis for calculation of PPP. Had Centrelink been more proactive in asking Mr Jacobson and his wife to provide fortnightly payslips, the Tribunal has no doubt that they would have done so. The Tribunal accepts that Mr and Mrs Jacobson did not deliberately underestimate their income. Notwithstanding less than stellar administration by Centrelink in this case, the Tribunal cannot be satisfied that the fault lies entirely with Centrelink. The documentary evidence indicates that Centrelink officers advised Mr Jacobson in a telephone message (which he had requested) and in writing of the requirement to advise it of any rise in income levels above those specified. Therefore, the Tribunal finds that the debt cannot be waived under s 1237A(1) of the Act as it did not arise through sole administrative error on the part of Centrelink.
Section 1237AAD of the Act provides for waiver of the debt in certain other 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 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.
As indicated earlier, the Tribunal is satisfied that Mr Jacobson was not fully aware of the technicalities of the income provisions relating to PPP. It is also satisfied that the under-reporting of income and the subsequent debt did not arise due to Mr or Mrs Jacobson knowingly making false statements or failing to comply with a provision of the Act. There is no evidence to suggest that they deliberately withheld information from Centrelink. Rather, it appears that they were proactive and prompt in letting Centrelink know when there were significant changes to Mr or Mrs Jacobson’s employment. The Tribunal finds that Mr Jacobson did not knowingly make false statements or representations to Centrelink; nor did he deliberately fail to comply with a provision of the Act. He therefore meets the criteria in s 1237AAD(a) of the Act.

Ms Paul submitted that there were no special circumstances that would justify waiving the debt. She cited Beadle v Director-General of Social Security (1985) 7 ALD 670 in which it was held that the special circumstances, as referred to in s 1237AAD(b) of the Act, must be unjust, unreasonable or exceptional as to distinguish the case from the usual case. The Tribunal accepts that Mr Jacobson has health and financial problems and that he and his wife have experienced difficulties not of their making in recent years. However, the Tribunal is not satisfied that the situation that Mr and Mrs Jacobson find themselves in is vastly different from other social security recipients who have received overpayments. The Tribunal is not satisfied that the circumstances in this case constitute special circumstances (other than financial hardship alone). Hence, the waiver provisions of s 1237AAD of the Act do not apply.
Therefore, Mr Jacobson owes a debt of $4980.17 to the Commonwealth.

DECISION

The Tribunal affirms the decision under review.

I certify that the twenty-eight [28] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton Member

(sgd) Elite Aloni
Clerk

Date of hearing:  7 December 2005
Date of decision:  21 February 2006
Advocate for applicant:                Self-represented
Advocate for respondent:            Ms K. Paul, Centrelink