Sarre and Secretary, Department of Social Services (Social services second review) - [2018] AATA 3270

Sarre and Secretary, Department of Social Services (Social services second review) [2018] AATA 3270 (6 September 2018)
Division:GENERAL DIVISION
File Number(s): 2017/3358
Re:Luke Sarre
APPLICANT

Secretary, Department of Social ServicesAnd
RESPONDENT

DECISION
Tribunal:Dr Damien Cremean, Senior Member
Date:6 September 2018
Place:Melbourne

The Tribunal sets aside the decision under review and in substitution decides that compensation payments made to Ms Fraser during the relevant periodic payments period are not compensation affected payments under s 1174(1) of the Social Security Act 1991 (Cth).
[sgd]........................................................................
Dr Damien Cremean, Senior Member
Catchwords
SOCIAL SECURITY—carer payments—debt raised for overpayment—compensation payments—whether compensation affected payments –whether such payments should be treated as ordinary income-whether payee principal carer—decision set aside.
Legislation
Social Security Act 1991(Cth) ss 5(15), 5(17), 17, 500(1), 500D (1),1174(1)
Cases
Nicholls and Secretary, Department of Family and Community Services (2003) 74 ALD 299
Re Petrie and Secretary, Department of Social [2018] AATA 1641
REASONS FOR DECISION
Dr Damien Cremean, Senior Member
6 September 2018
Background

Mr Luke Sarre (the Applicant) applies to review a decision of the Social Services and Child Support Division of this Tribunal, which affirmed a decision made by a Department of Human Services authorised review officer to raise and recover an overpayment of carer payment (CP) of $18,761.31 under the Social Security Act 1991(Cth) (the Act) in respect of the period from 4 January 2013 to 6 July 2016.
The basis of the overpayment of CP, is the failure of Mr Sarre to notify the Department of the increases in his partner Ms Lisa Fraser’s incapacity payments from the Military Rehabilitation and Compensation Scheme
Issues
The central issue is therefore whether the Applicant has incurred that CP debt, which was subsequently recalculated as $18,389.00. As Mr Sarre points out in his Statement of Issues, Facts and Contentions this involves the question, amongst others, of whether each of the paragraphs of s 1174(1) of the Act has been satisfied.
If it arises, a further issue is whether the CP debt as recalculated or any part of it should be waived under the Act.
Hearing
At the hearing the Applicant was self-represented but appeared together with his partner, Ms Fraser. The Applicant filed carefully prepared written submissions. Both the Applicant and Ms Fraser gave affirmed evidence. The Respondent was represented by Mr T de Uray, from the Department of Human Services, who did not call any witnesses.
Consideration
It is important to first set out s 1174(1) of the Act:
(1) If:
(a) a person receives periodic compensation payments; and
(b) the person is a member of a couple; and
(c) the person was not, at the time of the event that gave rise to the entitlement of the person to the compensation, qualified for, and receiving, a compensation affected payment; and
(d) the person is qualified for a compensation affected payment in relation to a day or days in the periodic payments period but, solely because of the operation of this Part, does not, or would not, receive the payment; and
(e) the person's partner receives or claims a compensation affected payment in relation to a day or days in the periodic payments period;
the amount (if any) by which the daily rate of periodic compensation payable to the person exceeds the daily rate of the compensation affected payment for which the person is qualified in relation to a day or days in the periodic payments period (the excess amount) is to be treated as ordinary income of the person's partner for the purpose of the calculation of the amount of the compensation affected payment referred to in paragraph (e).
Mr Sarre contends there has been no overpayment of CP to him. Overpayment, if any, only arises if compensation payments being made to Ms Fraser are treated as ordinary income under and by virtue of s 1174(1) of the Act.
Those payments to Ms Fraser were made following her injury during Army Reserve training on 21 April 1998, following which she was later diagnosed with severe depression and as suffering from complex regional pain syndrome. Gradually, Ms Fraser’s compensation payments increased in each fortnightly amount.
Ms Fraser went to Centrelink on 2 February 2010 to update her compensation amount and to request cancellation of parenting payment at the partnered rate.
On 17 April 2015 the Applicant reported to Centrelink that he believed the amount of his CP was incorrect but he was told it was correct and that Ms Fraser’s compensation payments were being taken into account
On 19 July 2016 Centrelink noted that compensation is treated as direct deduction for customer and any excess that transfers to partner is assessed as his own ordinary income.
The question then is whether this is correct. In my view, s 1174(1) of the Act does not apply to the Applicant’s situation such that Ms Fraser’s compensation payments should be regarded as ordinary income. On s 1174 generally see Nicholls and Secretary Department of Family and Community Services (2003) 74 ALD 299.
I am satisfied that paragraphs (a), (b), (c) and (e) of s 1174(1) of the Act are made out in this case. I am not satisfied, however, that s 1174(1)(d) is satisfied in this case.
The periodic payments period referred to in s 1174(1) of the Act in this matter is the period from 4 January 2013 to 6 July 2016. That is, from the date of notification to the Department. In respect of that period I am not satisfied that Ms Fraser is qualified for a compensation affected payment and solely because of the operation of the Part 3.14 of the Act does not or would not receive the payment.
I do not consider that Ms Fraser was qualified for a compensation affected payment. under s 17 of the Act In my view, this is because Ms Fraser does not fall within s 500(1) of the Act in that under s 500 (1)(a) she did not have at least one PP child as defined in s 500D(1)(d) of the Act in that she was not the principal carer of a child.
Section 500(1) of the Act states:
Qualification for parenting payment
(1) A person is qualified for parenting payment if:
(a) the person has at least one PP child (see section 500D); and
…
Section 500D(1) of the Act provides:
PP child
(1) A child is a PP child of a person if:
(a) the child is a child of the person; and
(b) the person is a member of a couple; and
(c) the child has not turned 6; and
(d) the person is the principal carer of the child.
Sections 5(15)-(24) of the Act set out the definition for principal carer. Relevantly, section 5(15) states:
A person is the principal carer of a child if:
(a) the child is a dependent child of the person; and
(b) the child has not turned 16.
Note:          The definition of dependent child in subsection (2) requires:
(a)    the adult to be legally responsible (whether alone or jointly with another person) for the day-to-day care, welfare and development of the child…; and
(b)    a child to be in an adult's care
Furthermore, s 5(18) of the Act provides:
Only one person at a time can be the principal carer of a particular child.
An issue which arises is with respect to the words whether alone or jointly with another person. In other words s 5(15) of the Act seems to contemplate that more than one person may be a principal carer of children (taking into account Note (a)) if each is legally responsible for the welfare of the children. I cannot see though that Parliament in s 5(15) intended this to be so considering it then provided in s 5(18) of the Act that only one person at a time can be a principal carer.
In my view, s 5(18) of the Act applies as it was enacted later in the Act than s 5(15) Note (a) and expresses a later intention. It would seem odd also that s 5(15) could operate to deny a principal carer the status of a principal carer by allowing, by Note (a), more than one principal carer.
In the alternative, Mr de Uray submitted that during the relevant period, Ms Fraser was legally responsible for her children. He contended that as the definition of primary carer refers to legal responsibility and not to physical ability, the fact that Ms Fraser had been seriously unwell during the relevant period did not negate her legal responsibility to her children. Although I agree with the contention that Ms Fraser remained legally responsible for her children during the relevant, I reject the argument that legal responsibility comprises the entire definition of principal carer, as per s 5 of the Act. In arriving at this conclusion, I draw attention to the structure of s 5(15) of the Act and note that the aspect of legal responsibility relates to satisfying a subpart of s 5(15), that being the element of whether a child is a dependent child within the definition of principal carer in s 5(15). Therefore, legal responsibility does not directly satisfy the definition of whether a person is the principal carer for a child and is merely a component of it, This view is further reinforced when read together with s 5(18), which states that only one person at a time can be the principal carer of a particular child. It is useful to note also the use of the definite article the principal carer in s 5, rather than a principal carer.
In Re Petrie and Secretary, Department of Social [2018] AATA 1641, the Tribunal stated at [16]:
The Act is silent as to how to determine who the principal carer of a child is in situations where, as in the present application, two parties share equally in the care of a child.
During the hearing, evidence was given by Mr Sarre and Ms Fraser that during the relevant period Ms Fraser was unable to take her children to medical/dental appointments, read school reports, attend parent/teacher interviews, make school lunches or buy clothing for her children.
Further as of 6 June 2016, s 500D(1)(c) was no longer satisfied either because the youngest child of the Applicant and Ms Fraser turned 6 years.
Therefore, I accept the evidence of the Applicant and Ms Fraser that during the relevant periodic payments period Ms Fraser was not in a position to be a principal carer of a child and that during that period the principal carer of the children of the couple was Mr Sarre.
During the whole of the relevant periodic payments period the evidence is clear to me that Ms Fraser was not and was incapable of being the principal carer of the children. She was capable of doing very little during that period. Ms Fraser said, and I accept, that effectively for that period I was confined to bed unless I had a good day. She said I was in bed and couldn’t get out of bed. This was due to her accepted conditions, including depression. In such circumstances Mr Sarre looked after the children with vague input from Ms Fraser. She may have attended to occasional matters, such as some computer tasks, but that was all and I accept that evidence. She was cross examined about these matters but in my view maintained her position.
These matters being so, I regard Mr Sarre as the principal carer during the relevant periodic payments period.
That being my finding on the evidence, Ms Fraser could not be the principal carer during that period in any event by reason of s 5(18) of the Act.
This provision means that during the relevant period, with Mr Sarre as principal carer of the children, Ms Fraser was not able to be their principal carer also. I regard the terms of s 5(18) of the Act as clear and unqualified.
My overall position is therefore that s 1174(1)(d) of the Act is not satisfied in this case and that being so (the other paragraphs of s 1174(1) being cumulative), s 1174(1) itself is not satisfied. During the relevant periodic payments period Ms Fraser was not qualified for a compensation affected payment. This is not solely by the operation of Part 3.14 of the Act. It is because she does not fall within s 500(1) of the Act in not having at least one PP child because under s 500D(1)(d) of the Act she was not the principal carer of a child. In reality, during the period in question, Mr Sarre was the principal care of the children and by virtue of s 5(18) of the Act he alone, as was the fact, could be the principal carer.
I do not consider s 5(15) Note (a) as having been intended by Parliament to alter this position. I cannot think that I ought to hold that Parliament intended to contradict itself and moreover the Act as a whole, considering its import, should be treated beneficially in favour of s 5(18) applying. It would be absurd to find that s 5(18) is supplanted by a Note to the earlier provision in s 5(15). A Note to a section, although strictly part of an Act, is not of the same order as a substantive section.
It follows that the payments made to Ms Fraser during the relevant period are not regarded as income under s 1174(1) of the Act and should not have been regarded as such by the Respondent.
In my view therefore no overpayment situation arises and the Applicant has been wrongly regarded as owing the amount sought to be recovered from him as a CP debt.
If it arose for decision, and strictly it does not now do so, I would have no hesitation in finding there has been an error on the part of the Respondent in wrongly applying s 1174(1) and consideration should be given to waiving or writing off the CP debt.
Consequently, I set aside the decision under review for the Reasons I have given and in substitute a decision that the compensation payments made to Ms Fraser during the relevant periodic payments period are not compensation affected payments under s 1174(1) of the Act.

37. I certify that the preceding 36 (thirty-six) paragraphs are a true copy of the reasons for the written reasons herein of Dr Damien Cremean, Senior Member

[sgd]......................................................
Associate
Dated 6 September 2018

Dates of hearing

Applicant

31 January 2018 & 7 August 2018

By telephone

Solicitors for the Respondent Mr Tim de Uray, Department of Human Services