Leslie and Department of Family and Community Services

[2000] AATA 857

DECISIONS AND REASONS FOR DECISIONS [2000] AATA 857

ADMINISTRATIVE APPEALS TRIBUNAL)

Nº V99/1429

GENERAL  ADMINISTRATIVE  DIVISION)                 Nº V99/1430
           Re:     ROBERT AND ADELE LESLIE   
  Applicants
           And:    SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES            
  Respondent

DECISIONS

Tribunal:       Mrs H.E. Hallowes, Senior Member        

Date:27 September 2000

Place:Melbourne

Decisions:     The decisions under review are set aside.   The matter is remitted to the Secretary with directions that the applicants' rate of age pension payable between 11 February 1999 and 23 May 1999 be recalculated in accordance with these reasons.      

(sgd) H.E. Hallowes
  Senior Member
SOCIAL SECURITY — age pension — rate — variable earnings — averaged over a suitable period — income maintained beyond period — whether statutory obligation on applicants to advise that no income earned — whether reasonable reflection of current rate — whether application for review more than 3 months after notice given
Social Security Act 1991 ss.55, 68, 80, 1064
Harris v Director-General of Social Security (1985) 57 ALR 729, (1985) 7 ALD 277
Secretary, Department of Family & Community Services v Rolley [2000] FCA 806
Re Blanusa and Another and Secretary, Department of Social Security (1985) 8 ALD 351

REASONS FOR DECISIONS

27 September 2000    Mrs H.E. Hallowes, Senior Member         

1. On the face of the documents it appears that the decisions under review in these matters are straightforward and that the Tribunal should affirm the decisions made by the Social Security Appeals Tribunal ("the SSAT") on 7 October 1999 with respect to the rate of age pension payable to Mr and Mrs Leslie between 11 February 1999 and 23 May 1999. They were informed by letter dated 12 February 1999 of the rate of age pension payable to them. They did not seek review of the decision with respect to the rate of pension payable to them until 15 July 1999. Subsection 80(3) of the Social Security Act 1991 ("the Act") provides:

   80.(3)      If:

   (a)a decision (in this subsection called the "previous decision") is made in relation to a person's age pension; and

   (b)a notice is given to the person to whom the age pension is payable advising the person of the making of the previous decision; and

   (c)the person applies to the Secretary under section 1240, more than 3 months after the notice is given, for review of the previous decision; and

   (d)the favourable determination is made as a result of the application for review;

   the determination takes effect on the day on which the person sought the review.  

The SSAT found that Mr and Mrs Leslie "would need to have appealed this decision within 13 weeks of the decision being made" if they wanted to be paid arrears of age pension.

1. Although there was no document amongst the documents lodged with the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the documents") setting out a decision in respect of the rate of age pension payable to Mr and Mrs Leslie for the period 11 February to 23 May 1999 which has ultimately led to this application for review, a decision must have been made, for Mr Leslie advised Centrelink by letter dated 15 July 1999:

   . . . I have been advised by Suzanne at your office that because we have not advised you that we have not earned any income for a 16 week period from 11th February to 23rd May this year my wife's and my pension have been reduced by about $900.

Mr Leslie, in succinctly setting out the issue for him and his wife, went on to say:

In all the literature that we have received from DSS and Centrelink I cannot find any indication to say that a person must advise if they are not earning income.   In fact every time that we have earned income since we have been receiving a pension we have given your office a letter from our employer stating the amount we have been paid and the period for which we were employed.   I would have thought that this would comply with "What you must tell us" instructions in your guidelines.   These letters clearly state the period for which we have received remuneration, and I cannot understand why your office does not accept the letters as proof of the period for which we have been earning income.
. . .  

1. An issue with respect to the calculation of rates of income affecting rates of pension payable is raised in this application as well as an issue with respect to notification notices provided to recipients as to what they must tell Centrelink (section 68 of the Act), particularly in light of the advice by Mr Leslie that letters he now receives from Centrelink provide less information with respect to the rate of income taken into account in calculating a rate of age pension payable than was provided in letters to him during the relevant period. There is also an issue about when a favourable decision takes effect as referred to in the reasons for the decision by the SSAT.

2. Mr Leslie represented himself and his wife at the hearing.  The Secretary was represented by Ms C. McInnes, an advocate with Centrelink.   As well as the documents the Tribunal had before it, information, figures and calculations provided by Mr Leslie with respect to his and Mrs Leslie's casual earnings and the rate of age pension which he considers should have been payable during the period in dispute.   Ms McInnes provided the Tribunal and Mr and Mrs Leslie with part of the departmental Guide to Commonwealth Government Payment Rates which sets out the maximum rate of age pension payable and income test figure.   Part of the Social Security Policy and Legislation Guide ("the Guide") with respect to the determination of rates of income for pensions was also included amongst the documents, which provides, so far as relevant:

   . . .
   Assessment of income for pensions
   There are 2 methods of assessing income for pensions:

• fortnightly versus annual income assessment, and

• variable income.

  . . .
  Variable income
  If income is not earned at a constant or clearly recognisable rate, average earnings over a suitable period may be used to obtain a rate.
  . . .
  If there is difficulty in deciding what period to average earnings over, the guiding principle is that the calculation should provide a reasonable reflection of the current rate of income.
  Generally an average of the previous 13 weeks earnings provides an acceptable figure if the pattern of earnings is likely to continue.   However, less than 13 weeks average MAY be more appropriate if the shorter period better reflects the pattern of earnings.  

Ms McInnis also provided a statement of the Secretary's case which had been prepared by another officer of Centrelink.

1. On 12 February 1999 Mr Leslie, and presumably Mrs Leslie, although no copy of notifications to her was amongst the documents, were advised by letter:

   . . . Your payment will be $244.20 per fortnight starting from 18 February 1999.
   Your pension has increased because of a change in your circumstances. 
   . . .   

Information on the back of the letter indicated that, in assessing Mr Leslie's "combined yearly income", earnings of $9534.80 were taken into account.   Mr Leslie was also advised of his combined yearly income taken into account in order to determine the rate of age pension payable.   He was further advised that he must tell Centrelink if his combined income "increases" or if his combined income as shown in the letter was "incorrect".   The total income figure set out in the letter was $10,459.94.   The letter also advises:

. . . Remember, if you do not ask for the decision to be reviewed within 3 months of being told about it, you can only get back payment from the date you ask.

The letter refers to "earnings" and "total income" rather than the rate of earnings and income.   Mr Leslie told the Tribunal he was satisfied that figures provided to him in letters from Centrelink at that time "seemed to work out fairly accurately" as he calculated his then rate of earnings as $9534.80 or close thereto.   Mr Leslie has developed his own computer program to trace the rate of his earnings and hence the rate of pension he can anticipate being paid.   He has always averaged his earnings across a 12-week period as that is what an officer of Centrelink advised him Centrelink was doing.   As far as Mr and Mrs Leslie were concerned, there was no "increase" in their combined income until they advised Centrelink on 1 July 1999 of earnings of $2100.00 which they had been paid by the Yass Highway Motor Inn for work they had undertaken.   In fact, if Centrelink had been consistent with past practice, earlier income averaged across 12-week periods should have dropped out of their rate of earnings and led to an increase in their pension.   Mr and Mrs Leslie did not know that this was not occurring.   They were surprised that Centrelink was not sending them further advice.    Centrelink was already aware of regular income they received from superannuation and investments.   The Tribunal is satisfied that Mr and Mrs Leslie did not fail to comply with any notification notices because their income did not increase during the period the Tribunal is considering and the advice with respect to their earnings as at 12 February 1999 was correct.  

1. Mr and Mrs Leslie disclosed on nine occasions during 1998 that they had been paid for undertaking casual employment managing motels as they had done during 1997.   Computer records with respect to the rate of Mr and Mrs Leslie's income disclose that Mr and Mrs Leslie's casual earnings on 20 April 1998 had been averaged across a two-week period.   Earnings of $200.00 disclosed on 29 July 1999 were averaged across a four-week period, all other casual earnings disclosed between those dates were averaged across a 12-week period.   The impact of Mr and Mrs Leslie's earnings on their rate of earnings, and hence their rate of age pension payable, was in the main taken by Centrelink to last for 12 weeks rather than being spread across a 52-week period.   If it had been spread across a longer period it would mean that they would have had a lower rate of income and therefore would be paid a higher pension.  If, however, a decision had been made that their disclosed earnings were taken to only affect them in the fortnight in which they received those earnings, they may have found themselves entitled to no pension for those fortnights but they would then have been entitled to a maximum rate of age pension during the following period.

2. Section 55 of the Act provides that a person's age pension rate is worked out using Pension Rate Calculator A at the end of section 1064 of the Act. Steps are provided in module A for the calculation of a maximum payment rate, an income reduced rate, the asset reduced rate and a provisional annual payment rate. We are involved here with the ordinary income test under Step 5 of Module A. Module E of section 1064 provides the steps to work out income reduction. Ordinary income is to be worked out on a yearly basis.

3. The Full Federal Court has recently considered a matter in which income was earned from casual employment.   In Secretary, Department of Family & Community Services v Rolley [2000] FCA 806 (decided 20 June 2000) the Court referred to module E, section 1064 and the decision of the High Court in Harris v Director-General of Social Security (1985) 57 ALR 729, (1985) 7 ALD 277 in which the Court construed and applied predecessor provisions under the Social Security Act 1947 relating to the income test applicable to age pension. The majority of the Court (Gibbs CJ, Brennan, Deane and Dawson JJ) observed:

   . . . the annual rate of income may change at any time:   it is not an annual amount, but an annual rate.   When there is a change in either the s 28(1) rate or in the excess of the annual rate of income over the relevant specified sum per annum in s 28(2), it is necessary to exercise the powers conferred by s 46(1) in order that the pension which is being paid conforms with the s 28(2) rate.   The powers conferred by s 46(1) may be exercised at any time.   An occasion for exercising those powers is when the S 28(2) rate so changes that the rate of pension which is being paid is greater or less than it should be.  

And further, at page 733:

It is a current rate of income, expressed as so much per annum.   An annual rate of income may not subsist for a year:   an annual rate of income that obtains in one week may change in the week following.   Annual income is the sum of the products of each annual rate of income that obtained during any part of the year multiplied by the fraction of the year during which it obtained.

The Federal Court in Rolley went on to say, at page 8:

. . . The Court did require however that regard be had to the character of the income in determining how the annual rate should be calculated.   So an annual payment of a dividend on an investment was to be treated as yielding an annual rate of income of $1,000, not an annual rate of $52,000 in the week in which the dividend was received and a nil annual rate of income for the other fifty one weeks of the year.   A pensioner in receipt of weekly wages from employment would find the annual rate of income from that source calculated on the assumption that earnings at the current rate would continue for the year.   If the pensioner were to retire from work that source of income would be gone and the annual rate of income attributable to that source would be nil.

before again referring to Harris, at page 733:

In cases where pensioners or claimants are employed intermittently, it may be appropriate in some cases to treat the intermittent work as a continuing source of income and to take an average of earnings over a period as the yield from that source, and in other cases to treat each employment as a separate source of income yielding its particular amount of earnings.   The former method would establish a comparatively constant annual rate of income; under the latter method, the annual rate of income would change as the pensioner or claimant went into and out of employment.   The circumstances of the particular case would show which method is more appropriate.

and further, at page 734:

An annual rate of income, at whatever time it is ascertained for the purposes of s 28(2), is the aggregate of those income payments which would be received by the pensioner during the ensuing year on the assumption that he retains all his current sources of income for the year and that they continue to yield income at the current level.   The annual rate thus ascertained enures until something occurs which falsifies the assumption on which the particular annual rate was ascertained — that is, until a source of income is gained or lost, or the level of income yielded by a source of income changes.   Then a new annual rate of income must be ascertained on a new set of assumptions that accord with the then current sources of income and the then current levels of income yielded by those sources. If the s 28(2) rate changes, the pension that is being paid should be changed pursuant to s 46(1).

And, at page 735:

But an annual rate of income that is calculated and expressed on the assumption that current sources of income and levels of income — whether annual or not — will continue, being a rate that subsists only until the assumption is changed, removes the anomalies which the Full Court and the Administrative Appeals Tribunal referred.

In Rolley the Full Federal Court said, at page 9:

It is important to bear in mind that the focus of the reasoning of the High Court in Harris related to intermittent payments and the ways in which such payments could be annualised on either an averaged or varying basis.   The judgment makes clear by reference to the example of a one off dividend payment that there are some payments which can, as a matter of fact, be treated as isolated without the need to go through the fiction of annualising them.    . . .

and further, at page 12:

. . . While point 1064-A1 states in parenthesis that "fortnightly amounts are provided for information only", instalments of age pension are payable on alternate Thursdays (s 23(1)) in instalments "worked out by dividing the amount of the annual rate of the pension by 26" (s 59(1)).   So payment of the pension is done in fortnightly instalments calculated according to an annual rate.   The fortnightly instalments so paid may vary as the annual rate varies according to fluctuations in the amount of a person's ordinary income calculated under Module E.  
. . . The characterisation of some income by reference to its sources may require evaluative judgments as to whether or not it is to be treated as recurring income from which an annual rate may be extrapolated.   The range of cases requiring such judgments is illustrated by reference to income derived from employment.   . . .   On the other hand a one off payment for work unlikely to be repeated could be dealt with on the basis that it reflected the total income from employment likely to be derived in any period of twelve months.   . . .

In Re Blanusa and Another and Secretary, Department of Social Security (1985) 8 ALD 351 the Tribunal, at page 362, provided figures to demonstrate how a person's pension, payable each fortnight, could be varied depending on the period over which earnings were spread.

1. The documents disclose that, on 11 February 1999, Centrelink was advised that Mr and Mrs Leslie had earned a total of $400.00 from Morwell Southside Motel and Services Apartments for the two-week period ending January 28, 1999.   It appears that a decision was taken to average that income over 12 weeks.   From the Centrelink computer printout, included amongst the documents (T16), it appears that a further decision was made on 23 May 1999 with respect to the rate of income and rate of pension payable to Mr and Mrs Leslie, although it was Mr Leslie's evidence that they had no further earnings until June 1999 when they disclosed earnings of $700.00.   Although the computer printout records some change in age pension paid to Mr and Mrs Leslie, there is no record amongst the documents of a further letter being sent to Mr and Mrs Leslie with respect to their age pension after 12 February 1999.   Letters may have been sent after the period with which the Tribunal is concerned.

2. A person may have high spots and low spots with respect to income received.   In this application the Tribunal is satisfied that it was known to Centrelink that Mr and Mrs Leslie undertook work on a casual basis managing motels.   They had quite lengthy periods without any income over and above their superannuation and interest payments.   During other short periods, they earnt considerable sums of money.   It is a matter of determining the appropriate period over which that income should be spread in order to reasonably reflect their current rate of income and in turn determine the rate of age pension payable.  

3. The Tribunal is satisfied in these applications that the appropriate period over which to spread their casual earnings is the 12-week period chosen on most occasions by Centrelink.   The Tribunal has considered the character of their income, that is, its source, that it was intermittent, and that the amount varied.   In choosing a 12-week period the characterisation of the income, taking into account its source, is such that the Tribunal is satisfied that it should not be treated as recurring income.   The payments are more in the nature of one off payments for work, unlikely to be repeated on a regular basis.   Having chosen a period in order to determine a rate in this matter, no assumption should be made that Mr and Mrs Leslie would continue to earn at that rate.   They clearly disclosed the periods of their earnings and once the period was spent the income attributable to that source of income, for example earnings from the Morwell Southside Motel, would be nil.

1. There was no reason for Mr and Mrs Leslie to seek review of the decision advised to Mr Leslie in the letter dated 12 February 1999.   The decision was in accord with his calculations.   However, during the period further decisions should have been made with respect to the rate of age pension payable to both Mr and Mrs Leslie to provide a "reasonable reflection of the current rate of income" (the Guide).   The computer printout amongst the documents (T16) does not disclose action between 11 February 1999 and 23 May 1999, although decisions were regularly taken during the year before.   The Tribunal will therefore direct that the rate of pensions payable to Mr and Mrs Leslie between 11 February and 23 May 1999 be recalculated as no assumptions should have been made that Mr and Mrs Leslie retained an ongoing income from the motels they disclosed they had worked at (Harris, page 734). The amounts of income disclosed by Mr and Mrs Leslie in the 12-week period leading up to 11 February 1999 should only affect the rate of their pensions for the 12-week period following each advice of income to Centrelink. As Mr and Mrs Leslie were not given "notice" of any decisions during the period 11 February 1999 to 23 May 1999, they were not in a position to apply for review. They gave evidence that, although they were not at home during the period, they were in regular contact with their daughter who advised them that no letters had been received from Centrelink. The Tribunal therefore finds that the decisions now to be made should take effect and that subsection 80(3) does not preclude the correct rate of age pension being paid to Mr and Mrs Leslie in accordance with these reasons.

   I certify that the twelve [12] preceding paragraphs are a true copy of the reasons for the decision herein of 
   Mrs H.E. Hallowes, Senior Member
   (sgd)   Catherine Thomas
             Personal Assistant

   Date of Hearing:  08.08.00
   Date of Decision:  27.09.00
   Solicitor for the Applicants:         Mr R. Leslie
   Solicitor for the Respondent:       Ms C. McInnis