Tuck and Secretary, Department of Education, Employment and Workplace Relations

[2008] AATA 680

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 680

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/2691

GENERAL ADMINISTRATIVE DIVISION		)
Re		KAREN TUCK

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms N Isenberg, Senior Member

Date5 August 2008 

PlaceSydney

Decision The decision under review is set aside and is remitted to the Respondent for the re-calculation of Ms Tuck’s parenting payment at the single rate with effect from 7 December 2006 in accordance with this decision .

..................[Sgd]............................

Ms N Isenberg
  Senior Member

CATCHWORDS

SOCIAL SECURITY – parenting payment single – whether start date of payment is correct – date of actual lodgement of claim form – earlier date on which application is deemed to be lodged – criteria not met – no discretion – decision under review is set aside.

Social Security (Administration) Act 1999 – sections 68, 78, 85, 85A, 108, 109 and 110

Secretary, Department of Families, Community Services and Indigenous Affairs and Walshe [2007] AATA 1861

REASONS FOR DECISION

5 August 2008  Ms N Isenberg, Senior Member   

DECISION UNDER REVIEW

1.On 13 February 2007, Centrelink ceased assessing Ms Tuck’s self-employment income.  As a result, it decided to increase Ms Tuck’s rate of parenting payment single (“PPS”) with effect from 3 February 2007.

2.This decision was affirmed on internal review by an authorised review officer on 24 April 2007 and by the Social Security Appeals Tribunal (“SSAT”) on 7 June 2007.

3.Ms Tuck now seeks review of that decision.

ISSUE BEFORE THE TRIBUNAL

4.The issue before the Tribunal is whether Ms Tuck can be paid arrears of PPS from a date earlier than 13 February 2007.

BACKGROUND

5.There was no dispute in relation to the following facts:

·In early 2003, Ms Tuck received parenting payment at the partnered rate.  In April 2003, she separated from her husband and she notified Centrelink to that effect on 7 April 2003.  The following day she lodged a claim for PPS and was granted payment from that date.  She completed a Mod F form – Business Details, noting that she was a sole trader operating under the business name “Karen Tuck Bookkeeping”.  The declared business earnings for the period 4 March 2003 to 4 April 2003 were $1,192.  This amount was annualised by Centrelink to give her an income amount of $15,498.52 per annum ($596.10 per fortnight).

·Ms Tuck’s PPS was calculated on variable casual earnings declared to Centrelink from March 2003.  Self-employment income of $15,498.10 per annum continued to be assessed as well.

·Ms Tuck was sent a number of letters by Centrelink, which referred to fortnightly income (other than earnings) of $596.10.  She was asked to provide verification of her earnings as well as update her employment details. 

·Other letters to Ms Tuck informed her of her payment and the decision to calculate it on an annual income of $15,499.03. 

·On 13 August 2004, Ms Tuck attended an interview with a personal advisor at Wyong Centrelink office.

·On 13 February 2007, Ms Tuck contacted Centrelink about her PPS and on 26 February 2007, she informed Centrelink that she had not been self-employed since 2004.  From that date, her PPS was paid on the basis that her income did not include the amount that was previously noted as attributable to her business income.

·Ms Tuck sought payment of arrears as she understood she had notified Centrelink in August 2004 that she was no longer running a business.  Her application was refused.  That decision was affirmed on internal review, and by the SSAT, albeit on a slightly different basis.

LEGISLATIVE FRAMEWORK

6.Section 68(2) of the Social Security (Administration) Act 1999 (“the Act”) provides that, with respect to a person receiving social security payment other than utilities allowance or seniors concession allowance:

The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:

(a)inform the Department if:

(i)a specified event or change of circumstances occurs; or

(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;

(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;

(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.

7.Section 109 of the Act refers to the date of effect of the favourable determination resulting from review and states that:

(1)If:

(a)   a decision (the original decision) is made in relation to a person's social security payment; and

(b)   a notice is given to the person informing the person of the original decision; and

(c)   within 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and

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

the favourable determination takes effect on the day on which the determination embodying the original decision took effect.

(2)If:

(a)   a decision (the original decision) is made in relation to a person's social security payment; and

(b)   a notice is given to the person informing the person of the original decision; and

(c)   more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and

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

the favourable determination takes effect on the day on which the application for review was made.

8.Section 110 of the Act deals with the dates of effect of the favourable determination and provides that:

(1)Subject to subsections (1A) to (11) (inclusive), if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect:

(a)   on the day on which the person so informed the Department; or

(b)   on the day on which the event or change occurred;

whichever is the later.

(1A)  If a favourable determination is made in relation to a person who has not reached pension age:

(a)    following the person's having informed the Department of the occurrence of an event or change of circumstances; and

(b)    because, in an instalment period of the person:

(i)there is a decrease in the amount of employment income that is earned, derived or received, or that is taken to have been earned, derived or received, by the person; or

(ii)the person has ceased to earn, derive or receive, or to be taken to earn, derive or receive, employment income;

the determination takes effect on the first day of the instalment period, or on the first day of the instalment period in which the person so informs the Department, whichever is the later.

DISCUSSION OF THE EVIDENCE

9.I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which I took into evidence.  Ms Tuck supplied a copy of the original correspondence she had received from Centrelink and also gave evidence.  At my request, Centrelink provided additional material in order to provide assistance in respect of issues raised by Ms Tuck in her evidence.

10.Ms Tuck told me that she had started contract book-keeping work for a company (“Styles”) for 2½ days per week in March 2003.  In December 2003, she started doing contract work 1-2 days per week for another company (“Seascape”) as well.  However, at the end of June 2004 she ceased contracting to Seascape.  She also ceased contracting to Styles and instead worked for that company as an employee, first on a casual basis, and then as a permanent part-time employee for 3½-4½ days per week.  She was paid at the same rate as before and continues to be paid at the same rate. 

11.She said that at least once a year she would be reviewed by Centrelink.  On 5 July 2004, she received notice of an appointment for 13 August 2004.  She said on that occasion she was asked a number of questions about her circumstances.  The Centrelink clerk (“the Personal Advisor”) completed a “yellow and brown” form, which she was asked to read and sign.  Ms Tuck said that on that occasion she told the Centrelink clerk that she was not a contractor but a wage-earner.  She said her income estimate was the same as it was as when she was a contractor.  She took in her pay slips (as distinct from a contractor’s tax invoices) to verify the change in status.

12.Although the “yellow and brown” form could not be located by Centrelink, it was conceded in the course of the hearing that Ms Tuck had informed Centrelink that she had ceased to be a contractor to Styles, but was an employee, as she had contended.  A statement by Mr Bullock, a Centrelink Legal Services and Procurement Officer, was provided. It noted that it is the responsibility of the Personal Advisor to transfer information onto the customer’s file.  The Centrelink file note in respect of the 13 August 2004 meeting does not appear to address financial issues, but, instead, is of a more general nature.

13.Ms Tuck had 2 further reviews, one in 2005 and another in 2006. On each occasion, she told the Centrelink clerk that she was still an employee of Styles and that she was “still earning about the same”.  She was not asked in terms of the actual amount she was receiving.

14.Ms Tuck said that every fortnight she was obliged to contact Centrelink and advise of her fortnightly income.  Usually this occurred by a computer interface, whereby, on entering her Centrelink ID and password, she would provide information about her earnings.  She would only “speak to a person” if the “system was down”. 

15.Information provided by Centrelink confirmed these 2 means of automated access and noted that eligible customers are able to report their income for the fortnight and have this recorded on their Centrelink computer file and have a payment issued without the need to speak with a customer service officer.  Importantly, the Centrelink information was to the effect that the system is not available if the customer is self employed as the system is only for reporting wages. 

16.On 13 February 2007, Ms Tuck spoke to a Centrelink customer service officer. Ms Tuck was asked about a property she owned.  She told the customer service officer that she had not owned that property since her divorce in 2003. The customer service officer acknowledged this had not been noted on Ms Tuck’s file, and went on to enquire about Ms Tuck’s business.  It was at that point that Ms Tuck realised that there was another error:  Centrelink believed that she was still operating her business as well as being employed.  She was advised to attend Centrelink in person to sort it out, which she did.  Centrelink records confirm this contact.

17.Ms Tuck acknowledged that she had received a large number of letters from Centrelink and that she did not query those letters notwithstanding that there was a phone number provided in the event she had questions.  My attention was invited to the format of the letters, such as that of 15 March 2004 which records:

INFORMATION USED FOR CALCULATING YOUR REGULAR PAYMENT

Variable Earnings……………………………………………………………….$423.00

Annual Income………………………………………………………….……$15,499.03

18.Ms Tuck said she understood “variable earnings” to refer to what she had actually earned and that “annual income” was the estimate of what she thought she was going to earn and the amount above which she could not earn without incurring a Centrelink debt.

19.Similarly she understood that the references to amounts in the letters, such as $596.10 (T10/34), related to the fortnightly amount she could earn without incurring a debt.

20.She was asked in cross-examination why she had not queried the letters.  She responded that she had no cause to query Centrelink because she had provided the information and thought Centrelink was just behind in updating its records.  She noted that as late as 26 September 2006, Centrelink was referring to a bank account (ANZ) that she had advised was closed in 2003.  Other letters refer to an Advance Bank account which had also been closed.  She said she was unperturbed by these inclusions because she did not think that information, although incorrect, had any bearing on her pension.  When specifically referred to a letter dated 20 July 2006, which indicated that she was still a sole trader, she noted she had told Centrelink in 2004 that this was no longer the case and, in any event, had had 2 further reviews since that time.  She was diligently providing her information fortnightly about her income, so felt there was nothing to be concerned about.  If she felt her pension was affected she would have been “straight onto it”.

21.She thought her PPS was generally consistent throughout the period she received it.  It may have slightly reduced in December 2003 when child support was taken into account.  The records, however, do not show a clear pattern.

CONTENTIONS

Applicant

22.Ms Tuck contends that she informed Centrelink in 2004 that she had ceased to be a sole trader and that Centrelink failed to record this information. As a result, she had been underpaid PPS and is owed over $12,000 in arrears.

Respondent

23.The Respondent’s case is that there is no legislative basis for the payment of arrears of PPS to Ms Tuck.  She was notified of her obligations and appeal rights and failed to seek a review of the decisions made regarding her rate of payment until 26 February 2007. 

CONSIDERATION OF THE EVIDENCE

24.I accept that Ms Tuck changed her status from a contractor to an employee in mid 2004 and that she advised Centrelink of this on or about 13 August 2004.  Indeed, Centrelink conceded that this had occurred, but failed to make a note in its records. Nonetheless, Centrelink contended that it had acted in good faith in calculating her rate of PPS, when clearly it was proceeding on an erroneous basis.

25.Various letters were sent to Ms Tuck requiring her to notify Centrelink if the income being used to calculate her parenting payment was incorrect or had “changed”. 

26.The following summarises these letters:

• On 9 March 2004, Ms Tuck was informed her payment was calculated on an annual income of $15,498.52 (T8/27).

• On 15 March 2004 and 27 May 2004, Ms Tuck was advised that it was calculated using an annual income of $15,499.03 (T9/30; T11/36).

• On 10 November 2004 and 26 July 2005, after having notified Centrelink of her change of status from contractor to employee, she was informed that her PPS was calculated using an annual income of $15,499.03 (T14/45; T17/54).

• On 26 April 2005, 2 August 2005, 25 October 2005, 17 January 2006 and 11 April 2006, she was advised it was calculated on a fortnightly amount (other than earnings) of $596.00 (rounded)  (T15/49; T18/59; T20/65; T21/68; T22/71)

• On 20 July 2006, 26 September 2006 and 19 December 2006, Ms Tuck was informed her rate of payment was assessed on her earnings and assets including income recorded as $15,496 per annum (sole trader) (T24/76; T27/83; T28/87)

27.Ms Tuck agreed that she had received these letters.  The evidence she gave before the SSAT, when referred to some of the letters sent to her acknowledging the amount of $15,496 per annum being assessed, was that “she did not notice this information at the time”. 

28.She told me she had no cause to query Centrelink because she had provided the information and thought Centrelink was just behind in updating its records.  Even as late as 20 July 2006, almost 2 years later, when she was specifically referred to as being a sole trader, she was, it appears, unconcerned with this failure by Centrelink to update its records. 

29.Ms Tuck said she did not think that information, although incorrect, had any bearing on her pension.  On that assumption, however, she was wrong.  Her failure to notify Centrelink that it was proceeding in error resulted in the PPS being paid at a lower rate.  She did not seek to have the position clarified until 26 February 2007 despite receiving all the letters which invited her to contact Centrelink if she had any questions.

What is the earliest date from which Ms Tuck’s PPS can be re-calculated?

30.I was referred to Secretary, Department of Families, Community Services and Indigenous Affairs and Walshe [2007] AATA 1861, and am satisfied that there was a “notice” in accordance with section 68(2) of the Act sent to Ms Tuck on 19 December 2006 in respect of a decision made about her PPS on 7 December 2006. The notice informed her of her current rate of pay and previous payments and changes to the rate of pay in addition to referring to her income sources. Ms Tuck sought review of that decision, by querying the rate at which was paid because of Centrelink’s reliance on incorrect information about her sources of income. That application for review was made on 26 February 2007, which was a date less than 13 weeks after the decision. In accordance with section 109 of the Act, the earliest date of effect is therefore 7 December 2006.

31.It should be noted that this is a more favourable outcome than if section 109(2) was applied to an earlier notice. This is due to the fact that her application for review was more than 13 weeks after each notice and the change can only take effect from the date of the application for review, namely 26 February 2007.

32.I note that the SSAT decided that the appropriate section for calculating the date of effect was section 110. I do not think the letter of 19 December 2006 is properly characterised as a “favourable determination” under sections 78, 85 or 85A (as required by section 108) of the Act. In Ms Tuck’s case, a favourable determination was not made until, pursuant to section 109, the decision of 26 February 2007 to apply PPS at a higher rate.

33.I wish to take the opportunity to indicate that this matter has drawn my attention to some accountability issues with respect to Centrelink.  It had been Centrelink’s position that it had no record of Ms Tuck’s information in August 2004.  Only later, in a telephone directions hearing, when the matter was part heard, was it conceded that Centrelink had been so informed, as Ms Tuck had contended from the outset.  It is true that since advising Centrelink of her change in employment status, Ms Tuck was invited in the many letters to question their content, but did not do so.  Perhaps this was naïve on her part, but I find her explanation entirely plausible: she believed she had informed Centrelink as she was obliged; and Centrelink acknowledges that she did so. 

34.The effect of Centrelink’s omission to adjust its records was that Ms Tuck’s PPS was calculated on the basis that she received fortnightly earnings and other income (as a contractor) as well. In fact, from August 2004 Ms Tuck only had fortnightly earnings.  It was unclear to me why Centrelink did not notice that the income being declared by Ms Tuck fortnightly, when annualised, was significantly less than the basis on which it was paying PPS, and itself enquire why this might be the case. 

35.Further, the Centrelink information provided to me was that the computer and telephone reporting systems were only available to wage earners, and yet Ms Tuck was able to use the systems, even though Centrelink regarded her as a contractor as well as a wage earner.  Still, Centrelink did not notice any disparity and make enquiries.

36.I appreciate that Centrelink has to manage the payments of many thousands of beneficiaries and that it is probably inevitable that some errors will be made.  However, those beneficiaries, like Ms Tuck, who diligently keep Centrelink informed of their circumstances, should be able to be confident, having fulfilled their notification obligations, that Centrelink will act accordingly. 

37.Having said that, it is regrettable that Ms Tuck did not take a more critical approach to reviewing the notices that Centrelink sent her.  Had she done so, then she may have recognised Centrelink’s error at an earlier point in time, and would not now find herself financially disadvantaged.

DECISION

38.     The decision under review is set aside and is remitted to the Respondent for the re-calculation of Ms Tuck’s PPS with effect from 7 December 2006.

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member

Signed:         …………[Sgd]……………………….
   Ms R Prasad, Associate

Date of Decision  5 August 2008
Date of Hearing  8 April 2008
Representative for Applicant     Self-represented
Advocate of Respondent:        Ms G Heggen, Centrelink Legal Services