Provan and Secretary, Department of Families, Community Services and Indigenous Affairs
[2006] AATA 831
•29 September 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 831
ADMINISTRATIVE APPEALS TRIBUNAL )
) No A2006/106
GENERAL ADMINISTRATIVE DIVISION ) Re ALROY PROVAN Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr S. Webb, Member Date29 September 2006
PlaceParkes
Decision The Tribunal affirms that Mr Provan has a debt due to the Commonwealth in the amount of $1826.31 but varies the decision under review to the extent that:
(a) recovery of the part of the debt that accrued prior to 1 October 2003 is waived pursuant to subs 1237A(1) of the Social Security Act 1991;
(b) there are special circumstances that make it appropriate to waive recovery of 50 percent of the remaining debt pursuant to subs 1237AAD of that Act.
The matter is remitted to the Respondent to calculate the amount of the debt to be recovered from Mr Provan.
..............................................
Mr S. Webb, Member
CATCHWORDS
SOCIAL SECURITY - age pension - calculation of ordinary income on a yearly basis - recurrent income during a period - Centrelink informed of temporary reduction of income - administrative error - annual rate of income calculated on reduced income level - overpayment - debt - part of debt solely attributable to administrative error - good faith - special circumstances - decision varied
Social Security Act 1991 ss 55, 1064, 1223, 1237A, 1237AAD
Harris v Director-General of Social Security (1985) 57 ALR 729
Secretary, Department of Family and Community Services v Rolley (2000) 175 ALR 4
Sekhon v Secretary, Department of Family and Community Services [2003] FCAFC 190
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
REASONS FOR DECISION
29 September 2006 Mr S. Webb, Member 2. Alroy Provan is an age pensioner. He was employed by Init Proprietary Limited on a casual basis as a security guard working at the Forbes abattoir. He declared his earnings to Centrelink and the rate of his age pension was calculated accordingly. In September 2003 Mr Provan informed Centrelink of a reduction in his weekly earnings. Centrelink calculated the rate of Mr Provan's age pension on the reduced level of his earnings and no further adjustment was made when his earnings returned to their previous level. Subsequently Centrelink determined that Mr Provan had been overpaid age pension, as the amount of his actual earnings was higher than the amount used for the purpose of calculating the rate of his age pension. A debt was raised against him in the amount of $2190.81. Mr Provan challenged that decision and the amount of the debt was recalculated to be $831.20. Later the matter was reviewed by the Social Security Appeals Tribunal and the debt was recalculated in the amount of $1826.31 for the period 10 September 2003 to 10 February 2004.
3. Mr Provan is unhappy with the decision to raise a debt against him and he is not satisfied that the amount of the debt has been correctly calculated. Mr Provan asserts that, if anything, he has been underpaid age pension during the period in question.
4. The issues for the Tribunal to decide are:
(a)whether Mr Provan has been overpaid an amount of age pension to which he was not entitled and the amount of any resulting debt to the Commonwealth, and if so
(b)whether there are grounds to write off or waive any resulting debt in whole or in part.
has mr provan been overpaid an amount of age pension to which he was not entitled?
5. Mr Provan asserts that he has not been overpaid an amount of age pension. In his view, if anything, he has been underpaid. Mr Provan says his taxable income in the 2003-2004 financial year was at $11,035, that is, an average of $424 per fortnight. On that basis Mr Provan calculates that the average fortnightly pension to which he was entitled was an amount of $431, or an annual amount of $11,206. As he received only $10,120 in age pension payments, he asserts that he was underpaid by an amount of $1086. As will appear, I do not agree.
6. A person's rate of age pension is to be calculated using the rate calculator set out at s.1064 of the Social Security Act 1991.[1] An income test applies pursuant to Module E of that section. Effectively, the annual rate of a person's age pension is affected by his or her ordinary income on a yearly basis. The term "ordinary income on a yearly basis" may be taken to mean the annual rate of a person's ordinary income. The conceptual framework underlying this construction is essentially the same as that applying under the Social Services Act 1947 that was considered by the High Court in Harris v Director-General of Social Security (1985) 57 ALR 729. Thus, it is necessary to identify each source of income that was obtained during the year in question. The character of payments received from each source must be evaluated and a decision made whether such payments should be treated as one-off payments or as recurring income from which an annual rate may be extrapolated for the ensuing year.[2] In the case of a person earning variable amounts from week to week in employment during a period, an averaging principle may be applied. Alternatively the annual rate of income is to be calculated from the time of the variation of income and on the basis of the new level of income from that source. In such cases the annual rate of income will continue until the assumptions on which it is based change.[3]
[1] s.55
[2] Secretary, Department of Family and Community Services v Rolley (2000) 175 ALR 4 at 14
[3] Harris v Director-General of Social Security (supra) at 735
7. For primary decision maker's determining the annual rate of a person's ordinary income is a prospective exercise based on present information. When considering such matters the Tribunal may consider the matters in issue with the benefit of hindsight and the knowledge of what actually occurred. Nonetheless it is still necessary to distinguish between actual income earned and the annual rate of income. If the annual rate of income is to be worked out on the basis of actual income then it would be necessary to specify the commencing date of the income year and to conduct a retrospective examination of earnings to quantify the actual income received in that year in order to calculate the correct annual rate of pension payable during that period. While the Act does not specify the particular methodology to be applied, that approach is not consistent with the authorities. It is well understood that the annual rate of income may vary from time to time within any year. It is an expression of present earnings in annual terms.
8. In Mr Provan's case he earned approximately $324 per week in employment on a recurrent basis for a number of months prior to September 2003. He correctly reported his earnings to Centrelink. However on or about 7 September 2003 Mr Provan's hours reduced and his earnings declined from $324 per week to $162 per week. Mr Provan reported his reduced earnings to Centrelink. On Mr Provan's evidence he earned $162 per week for two weeks and then his income increased again to its previous level of $324 per week. Centrelink records reveal that Mr Provan provided a letter on 11 September 2003, which is recorded as stating that his earnings for the period from 12 September 2003 to 28 September 2003 would be $324 gross.[4] That letter is not in evidence. It was noted, however, that Mr Provan would need to notify of his earnings again from 29 September 2003. On 12 September 2003 Centrelink recorded his earnings as $162 per week. Mr Provan’s pension rate was increased from 10 September 2003.[5] A Centrelink computer record dated 30 September 2003 suggests that a further letter was received from Mr Provan[6] on 18 September 2003.[7] That further letter is not in evidence. The letter is recorded as stating that Mr Provan’s “Total earnings from 7/9/2003 to 20/9/2003 were $162”. On 20 September 2003 Centrelink recorded his earnings as $162 per fortnight.[8] The rate of Mr Provan's pension was increased on that basis from 22 September 2003.[9]
[4] T6 folio 27
[5] Exhibit R1
[6] T8
[7] T30 folio 96
[8] T6 folio 28
[9] T8 and Exhibit R1
9. There is no evidence to explain this record of a further reduction in Mr Provan's income. It is not consistent with his evidence concerning his earnings and pay slips at that time. Mr Provan's evidence, which I accept, was that he recalled only two weeks of reduced income in that period and the lowest weekly income recorded on his pay slips was $162 a week. Nevertheless $162 per fortnight was the level of income that was used for the purpose of calculating Mr Provan’s annual rate of income and the rate of his age pension until 1 February 2004, when on 3 February 2004 Mr Provan again informed Centrelink of a change in his earnings at that time.[10]
[10] T10
10. Mr Provan was paid weekly by his employer, whereas his age pension was calculated and paid fortnightly. It is perhaps not surprising that Mr Provan has difficulty now recalling with precision specific events concerning his level of earnings in September 2003. He could have assisted the Tribunal on this point by filing any payslips he has retained, but he declined to do so. Thus, doing the best with the available evidence I am satisfied that it is more likely than not that the level of Mr Provan’s earning in employment reduced from $324 per week to $162 per week for two pay weeks in the period from 7 September 2003 to 28 September 2003. It is not possible to be more precise. I am satisfied that Mr Provan informed Centrelink of variations in his earnings in employment from time to time as they occurred, as he was required to do. I accept his evidence in that regard. Furthermore I am satisfied that the record of Mr Provan's income on 20 September 2003 is in error. I accept Mr Provan’s evidence that at no point during the relevant period from September 2003 to February 2004 did he earn $162 per fortnight. Even though the evidence is not sufficient to determine with certainty the precise cause of the error, I am satisfied that in all likelihood Mr Provan’s weekly earnings were recorded as fortnightly. Furthermore, the temporary reduction in his earnings was not adjusted when Mr Provan’s earnings returned to the previous level.
11. The consequence of the error was that Mr Provan was paid age pension in the period from 22 September 2003 to 1 February 2004 on the basis of an annual rate of income that was not consistent with the rate of his earnings during that period. It follows that Mr Provan was paid fortnightly amounts of age pension to which he would not have been entitled if the rate of his income for pension calculation purposes had been correctly recorded. On that basis I am satisfied that Mr Provan's entitlement to age pension payments was incorrectly calculated. The amount of age pension he was overpaid is a debt due to the Commonwealth pursuant to s.1223 of the Act.
12. It is a matter of some concern that Mr Provan's debt has been calculated in three different amounts. It is certainly a cause of concern and stress to Mr Provan, who is unsure about the correct method of calculation and the amount of his debt. Perhaps understandably, Mr Provan stated that he did not want the matter sent back to Centrelink to calculate the debt for a fourth time. However, as will appear, that is not necessary.
13. The Social Security Appeals Tribunal used an average of Mr Provan's earnings during the period from 10 September 2003 to 10 February 2004, being an amount of $6,533 for the 22 weeks. That amount was stated by Mr Provan to be the total amount he earned from Init Pty Ltd during that period of 11 fortnights, being an average of $593.90 per fortnight. I understand that the Secretary does not dispute the amount of earnings in that period, and I will proceed on the basis that the amount is correct. In the circumstances and in the absence of weekly pay slips, I accept that it is appropriate to average Mr Provan's earnings over the period from 10 September 2003 to 10 February 2004 for the purpose of calculating his annual rate of income and so find. Thus the level of income for the purpose of calculating the annual rate of Mr Provan’s income at that time was $593.90 per fortnight.
14. At the time Mr Provan’s income was recurrent and could reasonably have been expected to continue for the ensuing year, at least for the purpose of calculating the annual rate of his income. With the benefit of hindsight, it is clear that Mr Provan’s employment and earnings did not continue at the same level for the ensuing year. The Forbes abattoir was shut down, Init Pty Ltd lost the security contract for the abattoir and ceased trading, and Mr Provan lost his job on or about 1 February 2004. He subsequently obtained different employment with AAA Security on or about 10 February 2004 in which he earned $70 per week. Thus, in order to calculate the annual rate of Mr Provan’s income it is appropriate to consider his weekly income as recurrent and not one-off, applying the average level of weekly earnings during the period from 10 September 2003 to 10 February 2004, and applying the subsequent level of his earnings ($70 per week) from that date forward. I so find.
15. Applying that methodology, I am reasonably satisfied that the correct amount of the debt is $1,826.31, as calculated in accordance with the SSAT decision.
are there grounds to write off or waive any resulting debt in whole or in part?
16. The Secretary submitted that there are no grounds to write off or waive the debt. I accept that there are no grounds to write off the debt. It is necessary to determine whether there are grounds to waive the debt, in whole or in part, on the basis of administrative error of the Commonwealth or if it is appropriate to do so in the special circumstances of the case.
administrative error
17. In the Secretary’s submission even if the debt was attributable to administrative error by Centrelink, it was not solely attributable to that cause because Mr Provan did not contact Centrelink to correct the erroneous information concerning his earnings that were set out in the letter dated 30 September 2003. The Secretary made no submissions concerning the issue of ‘good faith’.
18. A debt that is solely attributable to administrative error of the Commonwealth must be waived if it was received in good faith (s.1237A). However if the debt is not solely attributable to Commonwealth error, and is the result of other factors as well, waiver under this section is not available.[11]
[11] Sekhonv Secretary, Department of Family and Community Services [2003] FCAFC 190 at paragraph 35
19. The precise cause of Mr Provan's debt is not clear on the evidence that is available. However it is more probable than not that the error was an error of the Commonwealth insofar as the temporary reduction of Mr Provan's weekly earnings in September 2003 was incorrectly recorded as fortnightly and ongoing. It was that error that caused Mr Provan to be paid incorrect amounts of age pension.
20. In the Secretary's submission Mr Provan contributed his measure of fault to cause the debt. Strictly, I am compelled to agree. Mr Provan did not seek to correct the erroneous information in the letter sent to him by Centrelink on 30 September 2003 concerning the rate of his age pension.[12] That letter records Mr Provan's regular fortnightly earnings as $162. Mr Provan did not recall receiving this letter. His evidence was that he received many letters from Centrelink and he would read the front but not the back of each letter. He asserted that if he had received the letter dated 30 September 2003 he would have read it and responded to it because it was incorrect. That did not occur. I accept that the 30 September 2003 letter was sent in the usual way by Centrelink and, that being so, Mr Provan is deemed to have been given it. Mr Provan accepted that he may have received the letter, and I am satisfied that in all likelihood he did. It is possible that Mr Provan may not have been as diligent reading Centrelink letters as he claims, or he may have read the letter and chosen not to act upon it. In either case the fact is that Mr Provan did not seek to correct the erroneous information about his earnings that were set out in that letter as he should have done.
[12] T9
21. It follows that I am satisfied that the part of Mr Provan’s debt that accrued to 1 October 2003 (the day on which Mr Provan is deemed to have been given the letter dated 30 September 2003) is solely attributable to Centrelink's administrative error recording his earned income. I am also satisfied that he received this portion of the debt in good faith. That portion of the debt must, therefore, be waived pursuant to subs 1237A(1) of the Act. The part of Mr Provan's debt that accrued after 2 October 2003 cannot be attributed solely to Centrelink's error, but is in some measure at least partly attributable to Mr Provan's failure to correct information that he knew to be in error in the letter dated 30 September 2003. That portion of Mr Provan's debt cannot, therefore, be waived pursuant to s.1237A of the Act.
special circumstances
22. The Secretary asserted that there are no special circumstances in Mr Provan's case that would warrant waiver of the debt pursuant to s.1237AAD. I do not agree.
23. There is discretion in the Secretary to waive the Commonwealth's right to recover a debt under the Act if there are special circumstances that make it appropriate to do so.[13] The term special circumstances is not defined. It refers to circumstances that are truly uncommon, unusual or exceptional,[14] or to circumstances that are out of the ordinary in which something unfair, unintended or unjust will result from a strict application of the Act.[15] When determining whether special circumstances exist it is necessary to consider all of the circumstances in the particular case, including circumstances concerning error of the Commonwealth that are outside the scope of subs 1237A(1).[16] If special circumstances are found to exist it must then be determined whether it is appropriate to exercise the discretion to waive the debt in whole or in part.
[13] s.1237AAD
[14] Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at 4
[15] Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545
[16] Sekhonv Secretary, Department of Family and Community Services (supra) at paragraphs 45-46
24. Mr Provan submitted that there were special circumstances in his case. He agreed that his health was very good for a man in his 70s and he was able to cope financially, even though he couldn't afford many luxuries. Nevertheless Mr Provan asserted that he was required to work a greater number of hours as a security guard as a result of the debt. This work required him to perform the duties of a night watchman, including static guard duty and night car patrols. This, he said, placed him under stress. He asserted that his dealings with Centrelink over this matter were a cause of significant aggravation and expense. Mr Provan submitted that proceedings concerning the debt must have cost significantly more than the quantum of the debt itself, and that this was not a proper use of public money. He said that the overall cost to the taxpayer was both unnecessary and unjustified in the circumstances.
25. Mr Provan's sense of frustration and unfairness concerning this matter are understandable. However those circumstances, of themselves, are not out of the ordinary. I am satisfied that Mr Provan is a man who has attempted to comply with his obligations in relation to age pension and whose dealings with Centrelink may be characterised as open and honest. I have found that the debt has arisen substantially as a result of the administrative error of Centrelink. Even though Mr Provan does not recall precisely what occurred in or about September 2003 in relation to his earnings and his efforts to inform Centrelink as he was required to do, his evidence was that he had fulfilled all of his obligations and had properly informed Centrelink about his earnings in September 2003. He did so, he said, because he had experienced difficulties in the past with Centrelink and was scrupulous in his efforts to ensure he fully complied with his obligations. His expectation was that Centrelink would properly and accurately calculate the rate of his age pension. He asserted that a person in his position should be able to rely on Centrelink to that extent at least in the circumstances. I note that Mr Provan’s debt does not arise from any error in the calculation of his pension rate, but arises from error in recording the amount of his earnings at the relevant time.
26. Considering all of the circumstances it appears to me that strictly asserting the Commonwealth's right to recover the full extent of Mr Provan's debt would be unjust and will result in unfairness to him. His failure to correct erroneous information in Centrelink’s letter dated 30 September 2003 must be considered in relation to Centrelink's failure to accurately record the earnings information he provided and to calculate the proper rate of age pension to which he was entitled on that basis. Mr Provan, as any pensioner, should be entitled to rely upon Centrelink to correctly calculate his age pension entitlement on the basis of accurate information provided by him. While Mr Provan must bear some responsibility for the ensuing debt as a result of his failure to recognise and correct erroneous information that was sent to him by Centrelink, the greater weight of responsibility for the debt lies with the Commonwealth.
27. Mr Provan is a 71 year old man of limited means. He is experiencing stress and increased financial pressure to earn in employment as a result of the debt that has been raised against him. He is undertaking work as a night watchman in order to make ends meet and repay his debt. His integrity and credit as a witness was not challenged. He is a straight-forward and honest witness whose evidence I accept, subject only to minor deficiencies in his memory. I am satisfied that recovering the full amount of the debt from him by strict application of the debt recovery provisions of the Act will result in unfairness and will be unjust. Those, I am satisfied, are special circumstances that make it appropriate to waive the Commonwealth's right to recover 50 percent of Mr Provan's debt. I so find.
Conclusion
28. Mr Provan has been overpaid age pension in the amount of $1826.31. That amount is a debt due to the Commonwealth. The portion of the debt that accrued prior to 1 October 2003 was solely attributable to Commonwealth administrative error and was received by Mr Provan in good faith. Recovery of that portion of the debt must be waived. Recovery of the remaining portion of the debt that accrued after to October 2003 is likely to result in unfairness to Mr Provan to the extent that it is appropriate, in the special circumstances, to waive the Commonwealth's right to recover 50 percent of that amount. The matter will be remitted to the respondent secretary to calculate the recoverable amount of Mr Provan's debt consistent with these reasons.
29. The Tribunal affirms that Mr Provan has a debt due to the Commonwealth in the amount of $1826.31 but varies the decision under review to the extent that:
(a)recovery of the portion of that debt that accrued prior to 1 October 2003 is waived pursuant to subs 1237A(1) of the Social Security Act 1991;
(b)there are special circumstances that make it appropriate to waive recovery of 50 percent of the remaining debt pursuant to subs1237AAD of that Act.
30. The matter is remitted to the Respondent to calculate the amount of the debt to be recovered from Mr Provan.
I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member
Signed: Peter Edwards .....................................................................................
AssociateDate of Hearing 26 September 2006
Date of Decision 29 September 2006
Representative for the Applicant Self-Represented
Advocate for the Respondent Susan Mantaring
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