Difford; Department of Family and Community Services [2000] AATA 1089 (12 December 2000)

Last Updated: 18 December 2000

DECISION AND REASONS FOR DECISION [2000] AATA 1089

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/722

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And MICHAEL DIFFORD

Respondent

DECISION

Tribunal Senior Member M D Allen

Date 12 December 2000

Place Sydney

Decision The decision under review is affirmed.

(Sgd) M D ALLEN

..............................................

Senior Member

CATCHWORDS

SOCIAL SECURITY - Imposition of penalty for failure to declare earnings. Whether Tribunal satisfied Applicant had a reasonable excuse for failure to provide information. Recklessly providing false information requires a degree of knowledge.

Social Security Act 1991 - ss630AA, 644AA and 644AE

Iannella v French 119 CLR 84

Crabbe v R 56 ALR 733

R v Crabbe 58 ALR 417

Boon v Maher and Others 7 NSWLR 232

Briginshaw and Briginshaw 60 CLR 336

REASONS FOR DECISION

12 December 2000 Senior Member M D Allen

1. In this matter the Applicant sought review of a decision by a Social Security Appeals Tribunal made 29 March 2000 which set aside the decision by a delegate of the Applicant to impose upon the Respondent an activity rate reduction penalty of 18% from 26 October 1999 to 24 April 2000.

2. The penalty was imposed upon the Respondent as he failed to declare to Centrelink the fact that he had obtained two days' employment and thus was overpaid Newstart Allowance in the sum of $139.49. The monetary penalty imposed upon the Applicant by the reduction penalty was the sum of $700.00. The overpayment of $139.49 has been recovered from the Respondent.

3. Section 630AA of the Social Security Act 1991 (as amended) states:

"(1) [Allowance not payable] If a person:

(a) refuses or fails, without reasonable excuse, to provide information in relation to a person's income from remunerative work (the failure); or

(b) knowingly or recklessly provides false or misleading information in relation to the person's income from remunerative work (the provision of information);

when required to do so under a provision of this Act, a newstart allowance is not payable to the person.

(2) [Penalties] If a newstart allowance becomes payable to the person after the time it ceases to be payable under subsection (1), then:

(a) if the failure or the provision of information is the person's first or second activity test breach in the 2 years immediately before the day after the failure or the provision of information - an activity test breach rate reduction period applies to the person; or

(b) ..."

The period and amount the rate reduction is mandated by s644AA and subs644AE(2). Section 644AA reads:

"If an activity test breach rate reduction period applies to a person under this Part, the period applicable to the person is 26 weeks."

Whereas subs644AE(2) reads:

[Rate reduction amount] A person's rate reduction amount is worked out as follows:

(a) if the activity test breach is the person's first breach in the 2 year period:

Maximum payment rate X 0.18

(b) ..."

4. It will be seen from the above provisions that the penalty imposed by the legislation is a mandatory one and neither the Secretary nor his delegate (and hence this Tribunal) has any discretion to ameliorate the penalty imposed consistent with the circumstances of the individual case.

5. The circumstances which led to the breach in this matter are in a relatively small compass. At all relevant times the Respondent was in receipt of Newstart Allowance. At other times he had been able to obtain casual work and earnings were declared in the form which related to the fortnight in which he worked.

6. On 19 and 20 May 1999 the Respondent obtained work through a labour hire company, Network Staffing, as a truck driver. Previously the Respondent had been able to estimate the amounts he would have been paid for casual work and declared it directly. However, for the two days, namely 19 and 20 May 1999, he did not know under what award he had been paid so decided to wait until he received his pay-slip to declare his earnings.

7. In passing it may be pointed out that this in itself is a breach of the requirements of subs630AA(1), as notified in the Application for payment of Newstart Allowance Form for the period ended 26 May 1999 as the question asked is in the said form -"Did you do any part-time, casual or temporary work in the period?". I accept the Respondent's statement that on other occasions he has indicated casual work and income in a later fortnight when the amount of wages actually received had been verified. In my opinion, this is a sensible attitude by Centrelink as to indicate that work had been undertaken but the amount of payment was as yet unknown would simply lead to more work, in the form of further enquiries, having to be undertaken by Centrelink officers.

8. Unfortunately, as to the payments for 19 and 20 May 1999, the Respondent never received a pay-slip or, if he did, it was lost or mislaid and in the subsequent weeks, he forgot to declare the two days' income.

9. The fact that the Respondent had undertaken two days' work and was paid for it was discovered by Centrelink as the result of a data matching program. The result was that an overpayment was raised against the Respondent and the mandatory penalty amounting to $700.00 imposed.

10. Mr Rhys Jones is an employee of Centrelink. In his evidence before me he stated that he had had a conversation with the Respondent on 28 May 1999. He had no recall of the specific conversation with the Respondent but referred to a file memorandum generated by him. That memorandum is at Document T5 of the documents prepared for the Tribunal, pursuant to s37 of the Administrative Appeals Tribunal Act 1975, and reads inter alia:

"Phoned a/n re: employment with Network Staffing on 170599. explained correctly declaring casual earnings, income test, gross declaration, declaring when earned, notification responsibilities, breaches, DMP and use of Casual Income Record. Followed up with letter enclosing CIR's and pamphlets. Income details requested from Network Staffing."

11. The Respondent, in his sworn evidence, stated that Mr Jones had never asked him if he had in fact obtained any employment through Network Staffing and, as Mr Jones has no specific recollection of his conversation with the Respondent and his file memorandum makes no reference to actual work obtained, I accept the Respondent's evidence that he was never asked if he had done any work.

12. A factual error in Mr Jones' memorandum is his reference to "employment" with Network Staffing. My understanding of the evidence is that Network Staffing was a job provider with whom applicants seeking employment registered. Network Staffing did not itself employ the Respondent but directed him to an employer - see, for example, Document T10.

13. Both before this Tribunal and the Social Security Appeals Tribunal, the Respondent maintained that he had intended to inform Centrelink of his employment once he had obtained his pay-slip but that it had then slipped his mind.

14. A reason as to why the obligation to notify Centrelink was forgotten, in addition to the lost pay-slip, was that the Respondent was, at that time, subjected to stress in his family life as his dog had bitten his nephew. The dog had to be put down and the attack by the dog, which had just had pups, had caused problems with the Applicant's brother, the boy's father.

15. The Respondent does remember the conversation with Mr Jones. In the light of that conversation I find that the Applicant would either have to be very brazen or extremely stupid to deliberately refrain from declaring his income to Centrelink. I find he is neither. In evidence before me he impressed me as genuine and I accept that his failure to declare earnings was an honest mistake on his part. The very fact of Mr Jones' conversation with him points, in my opinion, to genuine forgetfulness on the Respondent's part.

16. Paragraph 630AA(1)(b) refers to a person "knowingly or recklessly providing false information". The term "knowingly" was discussed by Barwick CJ in Iannella v French 119 CLR 84 at 96 as follows:

"The word 'knowingly' which I think is part of the connotation of 'wilfully' in connexion with an offence was treated as satisfied by a reckless indifference as to whether or not the act to be done was lawful."

17. The term "reckless" was discussed by the Full Court of the Federal Court in Crabbe v R 56 ALR 733. The majority there held that recklessness involves a foresight of consequences. The opinion of the majority was upheld on appeal - see R v Crabbe 58 ALR 417.

18. As I have found that the Respondent's failure was due to an honest mistake on his part, paragraph 630AA(1)(b) cannot apply.

19. Paragraph 630AA(1)(a) refers to a refusal or failure "without reasonable excuse" to provide information. If a person honestly and genuinely forgets, he cannot be said to refuse to supply information. As was pointed out by Campbell J in Boon v Maher and Others 7 NSWLR 232 at 237, the word "refuse" conveys more than a mere failure or inability to do something but involves the idea of some exercise of discretion or exercise of will.

20. As to "failure", it is clear that the Respondent did fail to provide information but in this case I accept that he had a reasonable excuse, namely that he genuinely forgot in circumstances where he had no pay-slip to remind him and other family difficulties were playing on his mind.

21. During the course of his submissions Mr Slattery, solicitor for the Applicant, pointed to a passage in the decision of the Social Security Appeals Tribunal (the SSAT) (T2) which he submitted was wrong in law. The passage reads:

"The tribunal then considered if Mr Difford had a reasonable excuse for failing to provide this information. Mr Difford's explanation for the failure is that he forgot, because he did not see the pay slip to remind him and because there were particular stresses on him at the time that exacerbated his generally poor memory. The tribunal considered whether this excuse is reasonable in the context of this particular failure, which potentially attracts a penalty of in excess of $700. Mr Difford had declared his income in the past. On this occasion he worked for only two days and the resultant over-payment ($139.49) is relatively small. The tribunal recognised that Mr Difford's excuse is one that might not be sufficient if there was a pattern of failure to declare income, or if the amounts involved were greater. However, the tribunal was satisfied that, in the circumstances of his case, it is a reasonable excuse. ..."

22. If, as submitted by Mr Slattery, the SSAT took the mandatory penalty into account in deciding whether or not the Respondent had a genuine excuse then that would clearly be a misconceived view of the applicable law. Similarly, the actual amounts involved cannot be used to judge whether an excuse is reasonable or not. However, I consider that the SSAT were pointing out that the smallness of the amount gained by non disclosure mitigated against a deliberate act and had regard to penalty in assessing the standard of proof required. In other words, they applied the words of Dixon J (as he then was) in Briginshaw and Briginshaw 60 CLR 336 at 362-363, namely:

"But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. ... It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained."

In this matter the standard of proof required to satisfy a Tribunal of fact so as to uphold a penalty of $700 upon a welfare recipient must be greater than if it were, for example, a mere action under a Municipal Dog Ordinance.

23. For the reasons outlined above the determination under review is affirmed.

I certify that the 23 preceding paragraphs are a true copy of the reasons for the decision herein of:

Senior Member M D Allen

Signed: Kwai-Ling Wong .....................................................................................

Associate

Date of Hearing 22 November 2000

Date of Decision 12 December 2000

Solicitor for the Applicant Mr B Slattery,

Department of Family and Community Services

Solicitor for the Respondent Applicant was self-represented