Westbrook and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 37 (28 January 2011)

Last Updated: 31 January 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 37

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/5077

GENERAL ADMINISTRATIVE DIVISION		)
	Re		WARREN REGINALD WESTBROOK

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Senior Member K Bean

Date 28 January 2011

Place Adelaide

Decision

The decision under review is varied so as to provide that the debt amount owed by Mr Westbrook is $210.65 and that amount must be recovered.

..............................................
K BEAN
(Senior Member)

CATCHWORDS

SOCIAL SECURITY – Age pension – Overpayment – Whether debt amount correct – Whether grounds to waive or write-off debt – Decision under review varied.
Social Security Act 1991 ss 8(1A), 1073A, 1236, 1237A, 1237AAD

Social Security (Administration) Act 1999 s 57

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

REASONS FOR DECISION

28 January 2011

Senior Member K Bean

1. This application arises from a request by Mr Westbrook for review by this Tribunal of a decision of the Social Security Appeals Tribunal (the SSAT) dated 2 October 2009. In that decision, the SSAT affirmed an earlier decision of a Centrelink Authorised Review Officer (ARO) to raise and recover a debt in the amount of $470.89 in respect of Age Pension (AP) paid to Mr Westbrook for the period 27 March 2009 to 9 April 2009.

FACTUAL BACKGROUND

2. The facts which form the background to the application are not in dispute.
3. At the relevant time, in April 2009, Mr Westbrook was in receipt of AP and his wife, Mrs Westbrook, received a Partner Allowance. Mr Westbrook had intermittent casual earnings and Mrs Westbrook had regular casual earnings. Mrs Westbrook reported her earnings and any earnings of Mr Westbrook to Centrelink each fortnight.
4. Mr Westbrook and Mrs Westbrook were due to receive an instalment of their respective payments for the fortnight ending on 9 April 2009. However that day in 2009 was Good Friday and the respondent decided to pay Mr Westbrook’s instalment early in accordance with s 57 of the Social Security (Administration) Act 1999 (the Administration Act).
5. On 8 April 2009, Mrs Westbrook contacted Centrelink to report that she would earn $1,304.53 and Mr Westbrook would earn $1,271.25 for the fortnight ending 10 April 2009.
6. On 9 April 2009, an amount of $478.90 by way of AP was deposited into Mr Westbrook’s account.
7. On 28 July 2009, a Centrelink officer raised a debt of $470.89 on the basis that, after regard was had to the amount of his and Mrs Westbrook’s combined income for the fortnight under the pension income test, Mr Westbrook had only been entitled to $8.01 by way of AP for the fortnight ending 9 April 2009.
8. That decision was affirmed on review and by the SSAT as referred to above.

CONTENTIONS

9. Before the SSAT, Mr Westbrook put two main arguments, which he also reiterated to this Tribunal. Mr Westbrook argued that the debt ought to be waived pursuant to s 1237A of the Social Security Act 1991 (the SS Act) as the debt was caused solely by an administrative error on the part of Centrelink, and the amount was received by him in good faith. He also argued that, in any event, his income should have been averaged over a longer period and, if this had been done, he would not have had a debt.
10. In a Statement of Facts and Contentions filed with the Tribunal, the respondent initially contended that Mr Westbrook’s employment was intermittent and unpredictable and that his employment in the fortnight of 27 March 2009 to 9 April 2009 was therefore not part of a pattern of employment. The respondent contended that his income in that fortnight should therefore be treated as “separate employment” and should be considered as relating to that fortnight alone[1].
11. At the hearing however, Mr Westbrook directed the Tribunal’s attention to provisions which allowed for income to be averaged over a longer period. The Tribunal requested further submissions from the respondent in relation to this issue and in further written submissions filed on 3 May 2010, the respondent directed the Tribunal’s attention to s 1073A of the SS Act, which currently provides as follows:

“1073A Employment income attribution over a period for social security pensioners
(1) Employment income:
(a) that is a lump sum amount either:
(i) in respect of a period greater than a fortnight; or
(ii) resulting from remunerative work although not in respect of any particular period; and
(b) that is earned, derived or received, or is taken to have been earned, derived or received, by a person:
(i) who is receiving a social security pension; and
(ii) whose rate of payment of that pension is worked out with regard to the income test module of a rate calculator in this Chapter;
is to be taken to have been earned, derived or received over such period, not exceeding 52 weeks, as the Secretary determines.
(2) The person’s employment income for the period determined by the Secretary is to be reduced to a fortnightly rate rounded to the nearest cent (rounding 0.5 cents downwards).”

12. The respondent further submitted that the words in s 1073A(1)(b) “is to be taken to have been earned, derived or received over such period, not exceeding 52 weeks, as the Secretary determines” afforded a discretion to determine the length of a period over which the income has been earned which does not exceed 52 weeks.
13. The respondent also submitted that it was appropriate for this discretion to be exercised by reference to the Guide to the Social Security Law (the Guide). The respondent relied upon part of the Guide stating that prior to 20 September 2009 there were two methods of assessing income for pensioners, as follows:

“Annual Rate of Income Assessment
If earnings are at a regular constant rate, the current rate whether weekly, fortnightly or monthly, is converted to an annual figure.
Variable Income
If income is not earned at a constant or clearly recognisable rate; average earnings over a suitable period may be used to obtain a rate. If there is difficulty in deciding what period to average earnings over, the guiding principle is that the calculation should provide a reasonable reflection of the current rate of income. Generally, an average of the previous 13 weeks earnings provides an acceptable figure if the pattern of earnings is likely to continue. However, less than 13 weeks average MAY be appropriate if the shorter period better reflects the pattern of earnings.” [2]

14. In light of the contents of the Guide, the respondent submitted that it was open to the Tribunal to find that Mr Westbrook’s earnings from his employment for the period 27 March 2009 to 9 April 2009 could be averaged over a 13 week period.
15. In written submissions in reply, Mr Westbrook indicated that he would agree to this, providing his wife’s earnings were also included in the relevant calculations. He submitted that once these calculations were done, he would have no debt.
16. In further submissions for the respondent received by the Tribunal on 6 August 2010, the respondent clarified its position by indicating that, as the period in question was 27 March 2009 to 9 April 2009, the relevant 13 week period should commence from 27 March 2009. The respondent further contended that, based on the earnings reported to Centrelink, Mr Westbrook earned a total of $1,271.25 in the 13 week period commencing from 27 March 2009. This resulted in an average income for Mr Westbrook of $97.79 per week or $195.58 per fortnight. Having carried out the applicable calculations on the basis of these figures, the respondent contended that the revised debt amount for Mr Westbrook for the fortnight ending 9 April 2009 was $269.49.
17. In a further submission received by the Tribunal on 25 August 2010, Mr Westbrook contended that his income should be calculated annually, though he also indicated he would accept a calculation over a 13 week period. However, he further contended that the correct figure for a 13 week period should be derived by reference to his annual income, divided into 13 week periods. If his entitlement to pension was to be calculated by reference to the 13 week period from 27 March 2009 to 25 June 2009, he contended that he and his wife’s total income for that period was $6,127.11.
18. Banking details supplied by Mr Westbrook after the hearing also recorded income from Mrs Westbrook’s employer, Riverland Respite and Recreation Service, of $1,112.80 on 9 April 2009, and in his written submissions he contended that that amount represented his wife’s income for the relevant fortnight. Mr Westbrook also provided his tax return for the financial year ending June 2009 which recorded his total income as a fruit and nut picker as $1,173.00. As that was the activity he was engaged in during the relevant fortnight, he contended that that figure should be used in calculating his income over the relevant 13 week period, rather than the $1,271.25 figure used by Centrelink which he said was based on an estimate.

CONSIDERATION

Calculation of Mr Westbrook’s debt

19. Having reviewed the relevant legislation and considered the form in which it was at the relevant time, I am not satisfied that s 1073A applies to Mr Westbrook’s circumstances. That is because, at the relevant time, the provision did not apply to a person who had reached pension age[3].
20. However, I note that the portion of the Guide referred to by the respondent nevertheless reflects the approach taken to assessment of employment income for age pensioners prior to 20 September 2009, albeit that the relevant provision of the SS Act at that time was s 8(1A).
21. Adopting that approach, I am satisfied that at the relevant time Mr Westbrook’s income was not earned at a constant or clearly recognisable rate, and that it is therefore appropriate to average his earnings at that time over a longer period than the fortnight in question. I am further satisfied that it is appropriate to calculate Mr Westbrook’s income over a 13 week period, being the longest period applicable pursuant to the approach set out in the Guide.
22. Having regard to the evidence outlined above, I am also satisfied that in that period, Mr Westbrook’s income was $1,173.00, which averaged over a 13 week period gives an amount of $90.23 per week or $180.46 per fortnight. Accordingly, for the relevant fortnight ending on 9 April 2009, his earnings were $180.46.
23. In relation to Mrs Westbrook, as she was receiving regular earnings I do not consider that I should average her income over a longer period. Rather I consider that I should have regard to her income for the fortnight in question, which I am satisfied was $1,112.80 as recorded in her banking records. This gives a combined income for the relevant fortnight of $1,293.26.
24. As I understand the position, in order to determine Mr Westbrook’s entitlement to pension for the relevant fortnight, his maximum pension entitlement of $478.90 must be reduced by 20 cents in the dollar for the earnings above the threshold amount applicable to a couple at that time, which was $240.00[4]. When those calculations are carried out, I am satisfied that he was entitled to a pension amount for that fortnight of $268.25. As he received an amount of $478.90, he owes a debt to Centrelink in the amount of $210.65.

Waiver or write-off

25. As noted above, Mr Westbrook has contended that his debt should be waived and there are a number of provisions of the SS Act pursuant to which the debt could potentially be waived or written-off. The relevant provisions are as follows:

“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
Administrative 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.
Underestimating value of property
(2) If:
(a) a debt arose because the debtor or the debtor’s partner underestimated the value of particular property of the debtor or partner; and
(b) the estimate was made in good faith; and
(c) the value of the property was not able to be easily determined when the estimate was made;
the Secretary must waive the right to recover the proportion of the debt attributable to the underestimate.
Proportion of a debt
(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:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.”

Administrative error

26. Mr Westbrook contended that his debt should be waived as it arose solely due to an administrative error by Centrelink. On analysis however, the debt arose at least partly because Mrs Westbrook did not report her and Mr Westbrook’s earnings until 8 April 2009. This was despite the fact that a notice had been sent to the Westbrooks dated 26 March 2009 which advised them that the reporting date for the relevant fortnight was 7 April 2009[5].
27. Accordingly, the debt cannot be waived pursuant to s 1237A.

Special circumstances

28. Mr Westbrook has expressed a number of grievances about the circumstances leading to creation of his debt, including the fact he says his income should have been calculated over a longer period. I am not satisfied however that any of the circumstances which have been established on the evidence before me amount to “special” circumstances in the relevant sense[6] such as to justify waiver of the debt. It follows that, although I consider that the debt did not arise from any false statement or false representation, the debt cannot be waived pursuant to s 1237AAD.

Recoverability

29. Given the small amount of the debt and the fact that Mr Westbrook continues to be in receipt of AP, I am also not satisfied that any of the circumstances outlined in s 1236 are applicable with the result that the debt cannot be waived under that provision.

CONCLUSION

30. I have concluded that the debt amount owed by Mr Westbrook is $210.65, rather than $470.89. I have also concluded that that debt should not be waived or written-off and must be recovered.

DECISION

31. The decision under review is varied so as to provide that the debt amount owed by Mr Westbrook is $210.65 and that amount must be recovered.
    

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member K Bean

Signed: ...........J Coulthard...........................................

Associate

Date of Hearing 22 April 2010

Date of Decision 28 January 2011

Advocate for the Applicant Self-represented

Advocate for the Respondent Mr A Parker

Centrelink Advocacy Branch

---

[1] At [16]
[2] At 4.3.3.30
[3] See s 1073A(1)(b)(iii) as in force in April 2009.
[4] Respondent’s submissions dated 5 August 2010, Attachment B.
[5] Exhibit 13
[6] See Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545