Wainwright and Secretary, Department of Education, Employment and Workplace Relations
[2009] AATA 858
•8 October 2009
Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/2218
GENERAL ADMINISTRATIVE DIVISION ) Re PATRICK WAINWRIGHT Applicant
And
SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION [2009] AATA 858
Tribunal Dr R. McRae, Member Date8 October 2009
PlaceMelbourne
Decision For reasons given orally at the hearing the Tribunal affirms the decision under review.
(sgd) Dr R. McRae
Member
SOCIAL SECURITY – income maintenance period – termination payment – member of a couple - payment used to pay outstanding debt – whether severe financial hardship exists – whether unavoidable or reasonable expenditure was present
Social Security Act 1991 ss 14A(1) - (2), 19C(3) - (4), 1068-G7AH – 1068-G7AR, 1223(1), 1236(1), (1A), (1B), (1C), 1236(2), (3), 1237A(1), (1A), (3),1237AAD
Angelakos v Secretary, Department of Employment & Workplace Relations (2007) 100 ALD 9
Arena v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 494
Beadle v Director-General of Social Security (1985) 60 ALR 225
Dranichnikov v Centrelink (2003) 75 ALD 134
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Re Beadle and Director-General of Social Security (1984) 6 ALD 1
Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693
Re Green and Secretary, Department of Social Security (1990) 21 ALD 772
Sekhon v Secretary, Department of Family and Community Services (2003) 132 FCR 126
REASONS FOR DECISION
9 November 2009 Dr R. McRae, Member 1. On 7 November 2008 Mr Patrick Wainwright (the Applicant) ceased employment and received a termination payment. His partner was employed up to 10 October 2008 and received a redundancy payment. The Applicant lodged a claim for Newstart Allowance (NSA) with Centrelink on 19 January 2009 under the Social Security Act 1991 (the Act). Centrelink acts as the service delivery agency for the Secretary to the Department of Education, Employment and Workplace Relations (the Respondent).
2. This claim was rejected on 20 January 2009 due to insufficient documentation. The Applicant lodged a new claim on 21 January 2009.
3. On 22 January 2009 a Centrelink officer decided to approve the claim, subject to an Income Maintenance Period (IMP) calculated to end on 7 July 2009.
4. An internal review by a Centrelink officer amended the IMP to end on 20 March 2009.
5. On 20 February 2009 a Centrelink authorised review officer (ARO) further varied that decision to end the IMP on 15 March 2009. The ARO calculated his further variation by reference to an amount of $23,812.45, representing available payments less allowable deductions. The Applicant then sought review of the ARO’s decision by the Social Security Appeals Tribunal (SSAT). On 21 April 2009 the SSAT set aside the ARO’s decision and remitted the matter to Centrelink for reconsideration of the IMP in accordance with directions which altered the amount of assessable expenses. The Applicant now seeks a review of the SSAT decision by the Tribunal.
6. The issues for the Tribunal were whether an IMP applies to the Applicant, and if so, for what duration; and whether there are grounds for the IMP to be reduced. The Tribunal’s decision is that the IMP applies to the Applicant from 7 November 2008 and that there are no grounds for it to be reduced.
7. The Applicant was self-represented. The Respondent was represented by Mr P. Carson, a Centrelink advocate. The Tribunal had before it documents lodged by the Respondent pursuant to s 37 of the Administrative Appeals Tribunal Act1975 (the T Documents).
Background
8. The Applicant is a 38 year old man, who lives as a member of a couple with his partner and two children (recorded with Centrelink as dependents of his partner) in rented accommodation. The Applicant was educated to a year 9 level. He subsequently completed the equivalent of year 10 and worked as a dye-setter. He worked for Seeley International Pty Ltd in Adelaide until a personal decision to re-locate to Melbourne. There was no dispute that the Applicant is a member of a couple.
9. There was no dispute that on 7 November 2008 he ceased employment and received termination payments totalling $2,327.88. There was no dispute that his partner ceased her employment on 10 October 2008, receiving a redundancy payment of $30,584.15. The couple received a total of $32,912.03. At the time he lodged the claim, their savings totalled $866.91. There was no dispute as to the relationship of this amount to the maximum payment rate of NSA on 19 January 2009.
10. The Applicant used $6,463.03 of the $32,912.03 to pay out a GE CreditLine Card (a credit card on which there was 27 per cent interest charges) for personal reasons. Other expenditure included travel, relocation costs and computer costs.
11. As a consequence of the several Centrelink decisions summarised above, the IMP was shortened to 15 March 2009 (as per T- p82) and Centrelink commenced NSA payments prior to the SSAT hearing.
THE Applicant’s Case
12. The Applicant’s case is that he is in difficult financial circumstances. He considers he and his wife are being penalised. His written application to the Tribunal included the following: I feel the decision was a personal attack on me and my family.
THE Respondent’s Case
13. The Respondent’s case is that the IMP was correctly imposed by the first Centrelink decision, as mandated by legislation and is appropriate in the circumstances. Centrelink incorrectly applied a test for liquid assets waiting period rather than an IMP. The Respondent conceded that the payments received by the Applicant (to which he was not entitled) were due solely to Centrelink’s error. Consequently, the Commonwealth would not attempt to recover any such overpayment.
14. Whilst an IMP may be altered, for this to occur the decision-maker has to be satisfied the Applicant is in severe financial hardship. Additionally, the severe financial hardship must have been caused by unavoidable and reasonable expenditure. The Respondent did not challenge the amount identified by the SSAT as being unavoidable or reasonable. However, the Respondent submitted that there remained a substantial difference between these expenses and the combined termination payments available to the Applicant. The Respondent further submitted that Centrelink should not have applied the waiver provision, and that it incorrectly reduced the IMP.
Legislation
15. The relevant legislation:
Section 14A of the Act defines liquid assets:
(1)…
liquid assets, in relation to a person, means the person’s cash and readily realisable assets, and includes:
…
(b)amounts deposited with, …, a bank … by the person (whether or not the amount can be withdrawn or repaid immediately);….
…
(2)… a person’s liquid assets are to be taken to include:
(a)the liquid assets of the person’s partner; and
(b)the liquid assets of the person and the person’s partner.
Section 19C of the Act defines severe financial hardship for a person who is a member of a couple:
(3)A member of a couple who makes a claim for … :
(a)newstart allowance;
…
is in severe financial hardship if the value of the couple’s liquid assets … is less than twice the fortnightly amount at the maximum payment rate of the … allowance that would be payable to the person:
(f)if the person’s claim were granted; and
(g)in the case of a person to whom an income maintenance period applies, if that period did not apply.
…
(4)Unavoidable or reasonable expenditure, in relation to ... a person to whom an income maintenance period applies, …, includes, but is not limited to, the following expenditure:
(a)the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:
…
(iii) if an income maintenance period applies to the person—that part of the period that has already applied to the person;
(b)the costs of repairs to, or replacement of, essential whitegoods situated in the person’s home;
…
(f)expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;
(g)the costs of essential repairs to the person’s car or home;
(h)premiums in respect of vehicle or home insurance;
(i)expenses in respect of vehicle registration;
(j)essential medical expenses;
(k)any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).
(6)For the purposes of paragraph (4)(a), the amount of reasonable costs of living that a person who is not a member of a couple is taken to have incurred, may not exceed:
…
(c)in the case of a person to whom an income maintenance period applies—the amount of allowance or parenting payment (as the case may be) that would have been payable to the person during that part of the income maintenance period that has already applied to the person, if the period did not apply to the person.
16. Sections 1068‑G7AH to1068‑G7AR of the Act set out the provisions relating to the IMP. In summary, they detail how various types of received employee payments are considered as ordinary income and contribute to an IMP. Sections relevant here are:
Certain termination payments taken to be ordinary income
1068‑G7AH
If:
(a)a person’s employment has been terminated; and
(b)the person receives a termination payment (whether as a lump sum payment…);
the person is taken to have received ordinary income for a period (the income maintenance period) equal to the period to which the payment relates.
…
Start of income maintenance period—employment terminated
1068‑G7AKA … the income maintenance period starts, …, on the day the person is paid the termination payment.
…
Leave payments or termination payments in respect of periods longer than a fortnight
1068‑G7AL Subject to points 1068‑G7AA to 1068‑G7AE (inclusive), if:
(a)a person receives a leave payment or termination payment; and
(b)the payment is in respect of a period greater than a fortnight;
the person is taken to receive in a payment fortnight or part of a payment fortnight an amount calculated by:
(c)dividing the amount received by the number of days in the period to which the payment relates (the daily rate); and
(d)multiplying the daily rate by the number of days in the payment fortnight that are also in the period.
…
1068‑G7AM If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.
…
Single payment in respect of different kinds of termination payments
1068‑G7AP If a person who is covered by point 1068‑G7AH receives a single payment in respect of different kinds of termination payments, then, for the purposes of the application of points 1068‑G7AG to 1068‑G7AN (inclusive), each part of the payment that is in respect of a different kind of termination payment is taken to be a separate payment and the income maintenance period in respect of the single payment is worked out by adding the periods to which the separate payments relate.
Definitions
1068‑G7AQ In points 1068‑G7AG to 1068‑G7AP (inclusive):
payment fortnight means a fortnight in respect of which … a newstart allowance, … is paid, or would be paid, apart from the application of an income maintenance period, to a person.
period to which the payment relates means:
(a)if the payment is a leave payment—the leave period to which the payment relates; or
(b)if the payment is a redundancy payment and is calculated as an amount equivalent to an amount of ordinary income that the person would (but for the redundancy) have received from the employment that was terminated—the period for which the person would have received that amount of ordinary income; or
(c)if the payment is a redundancy payment and paragraph (b) does not apply—the period of weeks (rounded down to the nearest whole number) in respect of which the person would have received ordinary income, from the employment that was terminated, of an amount equal to the amount of the redundancy payment if:
(i)the person’s employment had continued; and
(ii)the person received ordinary income from the employment at the rate per week at which the person usually received ordinary income from the employment prior to the termination.
…
termination payment means:
(a)a leave payment relating to a person’s employment that has been terminated; or
(b)a redundancy payment.
1068‑G7AR In points 1068‑G7AA to 1068‑G7AQ (inclusive):
leave payment includes a payment in respect of sick leave, annual leave, maternity leave and long service leave.
…
1223 Debts arising from lack of qualification, overpayment etc.
(1) Subject to this section, if:
(a)a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
…
1236 Secretary may write off debt
(1) Subject to subsection (1A), the Secretary may, on behalf of the Commonwealth, decide to write off a debt, for a stated period or otherwise.
(1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a)the debt is irrecoverable at law; or
(b)the debtor has no capacity to repay the debt; or
(c)the debtor’s whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d)it is not cost effective for the Commonwealth to take action to recover the debt.
(1B) For the purposes of paragraph (1A)(a), a debt is taken to be irrecoverable at law if, and only if:
(a)the debt cannot be recovered by means of deductions, or legal proceedings, or garnishee notice, because the relevant 6 year period mentioned in section 1231, 1232 or 1233 has elapsed; or
(aa)the debt cannot be recovered by means of deductions or setting off because the relevant 6 year period mentioned in section 86 of the A New Tax System (Family Assistance) (Administration) Act 1999 has elapsed; or
(b)there is no proof of the debt capable of sustaining legal proceedings for its recovery; or
(c)the debtor is discharged from bankruptcy and the debt was incurred before the debtor became bankrupt and was not incurred by fraud; or
(d)the debtor has died leaving no estate or insufficient funds in the debtor’s estate to repay the debt.
(1C) For the purposes of paragraph (1A)(b), if a debt is recoverable by means of:
(a)deductions from the debtor’s social security payment; or
(b)deductions under section 84 of the A New Tax System (Family Assistance) (Administration) Act 1999; or
(c)setting off under section 84A of that Act;
the debtor is taken to have a capacity to repay the debt unless recovery by those means would result in the debtor being in severe financial hardship.
(2) A decision made under subsection (1) takes effect:
(a)if no day is specified in the decision—on the day on which the decision is made; or
(b)if a day is specified in the decision—on the day so specified (whether that day is before, after or on the day on which the decision is made).
(3) Nothing in this section prevents anything being done at any time to recover a debt that has been written off under this section.
…
1237A Waiver of debt arising from error
(1) Subject to subsection (1A), the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.
Note: Subsection (1) does not allow waiver of a part of a debt that was caused partly by administrative error and partly by one or more other factors (such as error by the debtor).
(1A) Subsection (1) only applies if:
(a)the debt is not raised within a period of 6 weeks from the first payment that caused the debt; or
(b)if the debt arose because a person has complied with a notification obligation, the debt is not raised within a period of 6 weeks from the end of the notification period;
whichever is the later.
…
(3) For the purposes of this section, a proportion of a debt may be 100% of the debt.
…
1237AAD Waiver in special circumstances
The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
…
(b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
….
Considerations
17. The IMP provisions are set out in s 1068-G7AH to s 1068-G7AR of the Act. Social security claimants who have received particular types of payment are taken to have received income in assessing their claim entitlements according to the Act. Such claimants are expected to use such payments to support themselves before being paid the full rate of NSA. Since 20 September 1997, lump sum leave payments received on termination of employment are considered income. Redundancy payments received after 20 September 2006 are included in the IMP. There is no maximum length of an IMP.
18. The IMP is determined from the date a person is paid the leave entitlement. Payments for members of a couple are combined. For leave payments, the calculation is made by dividing the amount received by the number of days in the leave period for that payment. This is the determined daily rate. The determined daily rate is then multiplied by the number of days in the payment fortnight that are also in the period of leave. For redundancy payments, the number of weeks is determined by dividing the redundancy payment by the relevant weekly wage and then rounding down this figure to a whole number using a five day working week.
19. Section 1068-G7AM of the Act allows for the whole or a part of an IMP not to apply to a claimant. This discretion can only be exercised if the claimant is in severe financial hardship (as defined in s 19C(3)(a) of the Act) through unavoidable or reasonable expenditure (as defined in s 19C(4) of the Act) during the IMP. In Arena and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 494 the Tribunal held that voluntary re-payments of a loan facility did not constitute unavoidable or reasonable expenditure in the context of the Act, the object of which is to provide social security. To be considered to be in severe financial hardship a person living as a member of a couple must have liquid assets less than twice the customer’s fortnightly maximum payment rate. Section 14A(1)(b) defines liquid assets as including amounts deposited with a bank. Section 14A(2)(b) provides that the liquid assets include those held jointly with a partner.
20. Section 1237AAD of the Act provides for waiver of a debt to the Commonwealth if there are special circumstances. In Re Green and Secretary, Department of Social Security (1990) 21 ALD 772 the Tribunal stated that hardship is a relevant consideration but regard must be given to the manner in which the hardship arose. The Tribunal stated that there must be factors which justify the making of an exception to the principle of liability established in the Act. The decision maker must also have regard to whether exercise of the discretion achieves or frustrates objects which are within the scope and purpose of the Act.
21. The Tribunal stated in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 at page 3:
…an expression such as “special circumstances” is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.
The Tribunal highlighted the context in which [the circumstances] occur. The Full Federal Court considered the Tribunal’s decision in Beadle in Beadle v Director-General of Social Security (1985) 60 ALR 225 and did not subsequently endorse the words unusual, uncommon or exceptional.
22. Kiefel J in Groth v Secretary, Department of Social Security (1995) 40 ALD 541 considered that:
…”special circumstances”, … would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case. … It would … follow that if … something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
Besanko J in Angelakos v Secretary, Department of Employment & Workplace Relations (2007) 100 ALD 9 stated at [33] that:
… the test will be overstated if the word “exceptional” is emphasised… less risk of overstatement if the words “unusual” or “uncommon” are emphasised…there must be something that distinguishes the case from the ordinary or usual case…close attention must be given to the…context.
Hill J in Dranichnikovv Centrelink (2003) 75 ALD 134 at [66] stated that …To some extent the question whether there were special circumstances must depend on how it came about that the error occurred. In Re Davy and Secretary, Department of Employment and Workplace Relations (2007) 94 ALD 693 the Tribunal stated that it is not appropriate for a person to exhaust a compensation lump sum payment in a short time in the expectation the taxpayer will then provide extra support.
Findings
23. The Applicant is a member of a couple living in rented accommodation. He received $2,327.88 in termination payments from Seeley International Pty Ltd for work which ceased on 7 November 2008. His partner received redundancy payments of $30,584.15. Both payments come within s 1068 G7AH of the Act.
24. The Applicant’s IMP commences on 7 November 2008, the date of his unemployment.
25. The Applicant lodged a claim for NSA on 19 January 2009.
26. The Applicant’s liquid assets at the date of the claim were $866.91. The Tribunal notes that some allowances for deductions are generous.
27. The Applicant’s voluntary payment of credit card debt is not unavoidable or reasonable expenditure.
28. Therefore, the Applicant is not in severe financial hardship (as defined in s 19C(3) of the Act) through unavoidable or reasonable expenditure (as defined in s 19C(4) of the Act).
Conclusion
29. The determined IMP is from 7 November 2008.
30. The Applicant was not in severe financial hardship at the date of lodgement of the claim for NSA, so the discretion in s 1068-G7AM cannot be exercised to reduce the IMP.
31. The Tribunal concludes that the Applicant did not satisfy the requirements necessary to allow for reduction of the IMP.
32. Payments received by the Applicant to which he was not entitled occurred through decisions of Centrelink officers. The Applicant would have a strong case to seek waiver of any attempt at debt recovery by the Commonwealth due to sole error by the Commonwealth, and should not be required to make such a case. The Tribunal notes the intention of the Respondent not to pursue any such debt recovery. The Tribunal considers this to be prudent and correct in the circumstances.
33. In the circumstances, it is best that the SSAT decision remains undisturbed, as the SSAT decision sent the matter back to the Chief Executive Officer of Centrelink to recalculate the IMP.
Decision
34. Accordingly, the Tribunal affirms the decision under review.
I certify that the thirty-four [34] preceding paragraphs are a true copy of the reasons for the decision of:
Dr R. McRae, Member
(sgd): Leah Berardi
Clerk
Date of Hearing: 8 October 2009
Date of Decision: 8 October 2009
Advocate for the Applicant: Self‑represented
Advocate for the Respondent: Mr P. Carson, Centrelink Legal Services & Procurement Branch
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