Sullivan; Secretary, Department of Family and Community Services
[2002] AATA 415
•31 May 2002
DECISION AND REASONS FOR DECISION [2002] AATA 415
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q 2001/842
GENERAL ADMINISTRATIVE DIVISION )
Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Applicant
And SCOTT SULLIVAN
Respondent
DECISION
Tribunal Mr B J McCabe, Member
Date31 May 2002
PlaceBrisbane
Decision The Tribunal sets aside the decision under review.
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B J McCabe
Member
CATCHWORDS
SOCIAL SECURITY – overpayment – rate calculator - whether income test properly applied – whether monies paid to applicant were lump sum payments
Social Security Act 1991 ss 1067G, 1067G-H23, 1067G-H23A, 1067G-H24
REASONS FOR DECISION
31 May 2002 Mr B J McCabe, Member
Introduction
Scott Sullivan received Youth Allowance from 15 January 2000 to 22 February 2001, and Newstart allowance from 23 March 2001 to 19 October 2001. While in receipt of benefits, he was paid for work he did as a crew-member of a fishing trawler. He reported the earnings to Centrelink as required. The Secretary applied an income test and concluded Mr Sullivan had been overpaid and raised a debt. The respondent disagreed and appealed to the Social Security Appeals Tribunal (the SSAT). The SSAT concluded that the income test had been wrongly applied. The Secretary now appeals that decision to the Tribunal. In particular, the Secretary says the monies paid to Mr Sullivan by the fishing companies were lump sum payments that were properly assessed under s 1067G-H23A of the Social Security Act 1991, which would result in a debt being raised against the respondent.
The Tribunal did not hold a hearing in this matter. The evidence referred to on the file is straightforward enough. The dispute between the parties revolves around the correct interpretation of the law.
The factsScott Sullivan lives in Bundaberg with his parents. Between January 2000 and November 2001, he was in receipt of benefits paid by Centrelink. He worked on several occasions throughout the period as a deckhand on fishing trawlers. It was not regular work, and he worked for different employers. He advised Centrelink about his earnings after he was paid at the end of each trip.
The respondent's first two trips were for ASP Holdings Ltd. He went to sea for the first time on 30 October 2000. The trip apparently lasted several weeks. He received a 6% share of the proceeds of the catch; fuel and other costs were taken into account. He was paid a total $2989.24. Seven hundred dollars of that amount had been paid by way of an advance and the balance was credited to his account on 13 December 2000. Mr Sullivan was paid for the second trip on 23 January 2001. He was paid a net amount of $1936.82.
Mr Sullivan also crewed on a boat operated by Capricorn Seafoods. He went on two trips: the first from 30 January 2000 - 6 February 2001, and the second from 12 February 2001 - 16 February 2001. He received a 6% share of the total catch from the two trips less costs and he was paid $2359.78 in four tranches:
$799.20 deposited on 22 February 2001;
$997.01 deposited on 27 February 2001;
$440.57 deposited on 23 March 2001;
$123.00 deposited on 26 March 2001.
The respondent was required to meet certain costs himself. He was required to pay insurance on each trip. He also reimbursed the skipper in cash for food costs on his trips for Capricorn Seafoods.
On 4 June 2001 a Centrelink officer determined that the monies received by the respondent from ASP Holdings after the first trip should be assessed using the rate calculator in s 1067G-H23A. Accordingly one fifty-second of $2989.24 was taken to be income in each week following the 14 December. On 4 June 2001, Centrelink applied the test to the other payments and one fifty-second of each amount was treated as income for the purpose of assessing the respondent's entitlement to receive benefits. As a result of the application of the tests, Mr Sullivan was shown to have received more money in benefits than he was entitled to receive, and a debt was raised against him in respect of the overpayment.
The relevant lawThe applicant pointed out in its written submissions that the respondent was in receipt of Youth Allowance at the time when the payments were received. Section 556 says that it is necessary to work out the rate of allowance using the rate calculator in s 1067G. The applicant says the SSAT mistakenly used the rate calculator in s 1068G which deals with the assessment of income by a recipient of Newstart. The applicant concedes there is no practical difference in the result as the sections operate in parallel.
Module H of s 1067G lays out the process for assessing how an individual's ordinary income will affect his or her entitlement to benefits. The expression "ordinary income" is defined in s 8(1) to mean "income that is not maintenance income or an exempt lump sum". There is no suggestion that the monies received in this case are either maintenance income or an exempt lump sum. The expression "income" is defined in s 8(1) relevantly as "…(a) an income amount earned, derived or received by the person for the person's own use or benefit…".
Section 1067G-H23 provides that "ordinary income is to be taken into account in the fortnight in which it is first earned, derived or received". But the general rule is subject to a number of exceptions, including that provided for in s 1067G-H23A. That section provides:
"If a person whose claim for youth allowance has been granted receives, after the claim was made, a lump sum amount that:
(a) is paid to him or her in relation to remunerative work; and
(b) is not a payment to which point 1067G-H24 applies; and
(c) is not an exempt lump sum;
the person is, for the purposes of this Module, taken to receive one fifty-second of that amount as ordinary income during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount."
The expression "lump sum" is undefined. The applicant referred to the definition in The Australian Concise Oxford Dictionary (2 ed, 1992) that says a lump sum is "1. a sum covering a number of items; 2. money paid down at once (opposite of 'instalment')".
The object of s 1067G-H23A seems clear enough. It is designed to ensure that a recipient of benefits is not entitled to receive more than he or she would otherwise receive simply because his or her income is 'lumpy'. By spreading the income over 12 months, the legislation aims to ensure the assessment of entitlement is made on the basis of a more accurate picture of the individual's income.
One of the exceptions to s 1067G-H23A is contained in s 1067G-H24. That section provides:
1067G-H24 Subject to points 1067G-H10 to 1067G-H20 (inclusive), if:
(a) a person receives a number of ordinary income payments; and
(b) each payment is in respect of a period (work period) that is greater than a fortnight; and
(c) there is reasonable predicability or regularity as to the timing of the payments; and
(d) there is reasonable predicability as to the quantum of the payments;
the person is taken to receive in a fortnight falling within; or overlapping with, a work period an amount calculated by:
(e) dividing the amount received by the number of days in the work period (daily rate); and
(f) multiplying the daily rate by the number of days in the fortnight that are also within the work period.
The section is apparently intended to accommodate more flexible remuneration arrangements for work. In particular, the provision governs the treatment of payments received in respect of periods of work that are longer than 14 days, the usual reporting period for recipients of Youth Allowance and Newstart. The section assumes that there is a level of predicability to the timing of payments – in other words, they have that element of regularity that one might expect of wages, albeit that they are not paid fortnightly. The section also assumes there will be some predicability as to the quantum of the payments. The reference to 'quantum' in the section suggests it is necessary for the actual amount of payment to be predictable. It is not enough that the parties agree on a formula for calculating the amount of the payment, such as a rate per hour worked or a fixed rate of commission on sales.
Characterising the payments to Mr SullivanIt is necessary to characterise the payments to Mr Sullivan in order to determine whether a debt has been properly raised against him. The applicant says the payments should be characterised as a lump sum to be assessed under s 1067G-H23A.
There was no dispute that the payments in question were made in respect of work. I am also satisfied that s 1067G-H24 does not apply. While the payments were clearly income, I am not satisfied there was "reasonable predicability or regularity as to the timing of the payments". The evidence suggests the respondent took part in four stand-alone or one-off engagements. He was paid at the conclusion of each engagement. There was no regularity to the payments, and the payments were only predictable in so far as there was presumably an obligation to remunerate the worker according to the terms of his agreement at the conclusion of the trip. In the respondent's case, that meant he would receive a share of the value of the catch after the deduction of certain costs. If there was no catch, then there would be no remuneration. It follows that the quantum of the payment was also unpredictable.
There is little doubt that the payments by ASL and the first payment received from Capricorn Seafoods constitute lump sums. But the remuneration from Capricorn Seafoods in respect of the second trip was paid in four tranches. The applicant's submissions referred to a dictionary definition of 'lump sum' that suggested a 'lump sum' was the opposite of a payment by instalments. The applicant noted that the same dictionary defined 'instalment' as "a sum of money due as one of several usually equal payments for something spread over an agreed period of time". The four payments in respect of the second trip with Capricorn Seafoods were not equal. But I think to define payments as lump sums by reference to the fact that they are not instalments is inappropriate in this case in any event. The legislation uses the expression lump sum in contradistinction to regular wage-like payments. Since a wage paid fortnightly would not ordinarily be defined as an instalment, the distinction adopted in the dictionary is unlikely to be of assistance.
I am satisfied that remitting the lump sum in four payments does not prevent the characterisation of the remuneration in respect of the second voyage for Capricorn Seafoods as a lump sum for the purposes of the section.
ConclusionI agree that the payments to the respondent were correctly characterised as a lump sum subject to s 1067G-H23A. It follows that the debt was properly raised against him.
I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Mr B J McCabe, Member
Signed: .....................................................................................
AssociateMatter Heard on the Papers
Date of Decision 31 May 2002
Solicitor for the Applicant Mr T Ffrench, Advocacy and Admin Law Team
Solicitor for the Respondent Mr D Muller, Charlton Muller & Madders
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