SOCIAL SECURITY - pensions, benefits and allowances - Carer Pension - commencement of work - whether distinction in notification obligations between paid and unpaid work - increase in income notification obligations - whether income taken as at date of receipt or date earned - "earned" is at date work performed - waiver - departmental error

Social Security Act 1991 ss. 8, 198, 222, 1224

Social Security Legislation Amendment (Budget and Other Measures) Act 1996 (No 84 of 1996)

Re Shelmerdine and Secretary, Department of Family and Community Services [2000] AATA 91

1. This is an application by Mr George Hassoun (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 7 December 1998 (T2), affirming the decision of an authorised review officer (ARO) dated 31 July 1998 (T24) affirming the delegate of the respondent's decision of 28 May 1998 (T14) to raise and recover a debt of $1,118.90 representing Carer Pension for the period 29 May 1997 to 26 June 1997.

2. The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T29), together with five exhibits, two lodged by the applicant (Exhibits A1-A2) and three lodged by the respondent (Exhibits R1-R3). In addition, the Tribunal heard evidence from the applicant who represented himself. Ms Coral Hunt, a departmental advocate, represented the respondent.

3. The issues before the Tribunal are whether the applicant was overpaid Carer Pension; and if so, whether such overpayment constitutes a debt; and if so, whether grounds exist to waive part or all of the debt.

4. The applicant was in receipt of Carer Pension from 26 December 1996 onwards (T4). On 19 May 1997 he commenced voluntary work on a joint project involving both the University of New South Wales (UNSW) and Queensland University of Technology (QUT).

5. The applicant's supervisor at UNSW received a letter from QUT dated 2 July 1997 (T7) advising of the applicant's appointment to a position of Senior Research Assistant, which stated (inter alia):

" ... His appointment is for the period 19 May, 1997 until 18 November, 1997 at the rate of $1,495.50 per fortnight ($20.63 per hour) based on a 72.5 hour fortnight.

6. A Pay Advice notice received from QUT indicated that earnings paid to the applicant for the period 23 May 1997 to 20 June 1997 is in the gross amount of $3,738.75 (T6).

7. On either 3 or 4 July 1997 the applicant advised the respondent that he had commenced work and ceased caring for his mother (the former date is that contended by the applicant and not disputed by Ms Hunt, the latter appears at T17/74).

8. The delegate raised a debt in respect of the period 29 May 1997 to 26 June 1997 which has been affirmed on review, with the SSAT finding (at T2/11) that the applicant failed, as required by the Social Security Act 1991 (the Act), to notify the Department within 14 days of his commencement of work, and that he had worked more than 20 hours per week from 19 May 1997 onwards.

9. Section 198(2AA) of the Act sets out the relevant qualifying standard in respect of Carer Pension. The delegate, ARO, SSAT and Ms Hunt all made reference to a version of s.198(2AA) which came into operation on 1 July 1997, according to the commencement date noted in both the relevant schedule and the Social Security Legislation Amendment (Budget and Other Measures Act 1996 (No 84 of 1996) by which the amendment was introduced. This means that the delegate, ARO, SSAT have in fact applied an incorrect test, in that sub-s.198(2AA)(c) as at May/June 1997 refers to 10, not 20 hours per week. As at May/June 1997, s.198(2AA) provided as follows:

(a) a person is personally providing constant care for a severely handicapped person; and

(b) the person ceases to provide that care in order to undertake training, education, or employment; and

(c) the cessation does not exceed 10 hours per week;

the person does not cease to be qualified for a carer payment merely because of that cessation."

10. Section 222(1) of the Act sets out the notification obligations:

"222.(1) The Secretary may give a person to whom a carer payment is being paid a notice that requires the person to inform the Department if:

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

(b) the person becomes aware that a specified event or change of circumstances is likely to occur."

11. Section 1224(1) establishes when a debt comes into existence:

(a) an amount has been paid to a recipient by way of social security payment; and

(b) the amount was paid because the recipient or another person:

(i) made a false statement or a false representation; or

(ii) failed or omitted to comply with a provision of this Act or the 1947 Act;

the amount so paid is a debt due by the recipient to the Commonwealth."

12. The applicant provided detailed written submissions (Exhibit A1) to which the Tribunal has had regard and taken into account, but considers unnecessary to set out herein.

13. The applicant however, in his oral evidence, told the Tribunal that he had come to Australia because he considered it to be a family orientated and family friendly place. He stated that when he commenced with QUT and UNSW on 19 May 1997 his status as to whether he had paid employment or not was "up in the air" and accordingly, his supervisor, Dr Chris Rizos, told him that he did not need to work full days. He told the Tribunal that he only worked to put in an appearance three to four days per week from about noon to 4.00 pm on those days. He stated that he was informed that he was to be paid on 2 July 1997, and from that time onwards his attitude changed, and he worked from 9.00 am to 5.00 pm everyday thereafter.

14. He stated that his understanding of the notice dated 10 January 1997 (T4) was that since "start work or commence work" appears under the heading "Income", he was only required to notify in respect of paid work. He told the Tribunal that in any event he worked less than 20 hours per week up until 2 July 1997.

15. The applicant outlined to the Tribunal a number of concerns he had as to the manner in which this debt has been treated by the Department. In particular, he believes that he has been treated as a criminal, that the respondent has breached confidentiality and that the respondent's policies are anti-family.

16. Ms Hunt submitted that the notice dated 10 January 1997 (T4) was a proper notification notice pursuant to s.222 of the Act. She relied on the pay details from QUT (T6/42) and the implication of the phrase "based on a 72.5 hour fortnight" contained in a letter dated 2 July 1997 from QUT to Dr Rizos (T7) to support her contention that the applicant worked more than allowed under the Act during the period under review, in breach of the requirements of s.198 of the Act, and rendering him ineligible for Carer Pension. She submitted that this created an overpayment of Carer Pension.

17. She further submitted that the applicant's failure to notify of his commencement of work on 19 May 1997 gives rise to a debt pursuant to s.1224 of the Act and that there are no grounds for waiver of the debt. In response to questions from the Tribunal she submitted that it was the commencement of work and the number of hours worked that are relevant, not the level of income received by the applicant during the relevant period under review.

18. She told the Tribunal that the respondent did not challenge the applicant's credit in any way.

19. The Tribunal notes that an incorrect test has in fact been applied throughout the review process, in that 10 hours per week is the relevant standard, not 20 hours per week. As the Tribunal heard evidence on oath as to the number of hours worked by the applicant, it proceeds to review this matter utilising the correct 10 hour per week test.

20. There is a further contradiction in the reasoning of the SSAT. It reached a conclusion that the applicant worked more than 20 hours per week from 19 May 1997, and hence was not entitled to Carer Pension, but found a debt only in respect of the period from 29 May 1997 onwards. It is apparent to this Tribunal that the 29 May 1997 date was calculated at first instance by the departmental officer on the basis that from that date onwards, his "income was too high to be entitled to carers pension" (T12/55). It appears that both the SSAT and Ms Hunt have missed the import of this conclusion in concentrating only on the commencement of employment and hours worked.

21. There are in fact two separate factors to be considered. The first, is that the applicant commenced work on 19 May 1997. This was initially unpaid work. The second is that the applicant subsequently received an increase in income from this work. He initially receiving nothing, and then received some remuneration for his work. This is reflected in the arrears payment received on or about 20 June 1997, which was brought to the applicant's attention around 2 July 1997. Both these events give rise to quite separate and distinct notification obligations pursuant to the notice received by the applicant (T4). The Tribunal is satisfied and so finds that the notice satisfies s.222 of the Act.

22. The commencement of employment was a notifiable event pursuant to the terms of the notice sent to the applicant (T4). Despite the applicant's assertion that the notation "you start work or recommence work" appears under the heading "Income" and therefore relates only to paid work, the Tribunal is satisfied that the notification obligation extends to unpaid work also.

23. The reasoning behind this, is that Carer Pension is dependent upon a person's capacity to provide full-time care. If a person commences voluntary work, this can affect their ability to provide full-time care just as much as paid employment might. It is therefore something the Department rightly wants to know about. It would be advantageous were the Department to be more explicit in the terms of the Carer Pension notices and provide an indication that commencement of both voluntary and paid work are things which constitute notifiable events.

24. It is clear that the applicant failed to notify of his commencement of this employment within 14 days of 19 May 1997 and the Tribunal so finds. Whether or not this gives rise to a debt depends upon whether the hours of such employment rendered him ineligible for benefit. Ms Hunt submitted that preference should be given to the pay advice which demonstrates that the applicant was paid for 36.25 hours per week work from 19 May 1997 onwards. Contrary to this pay advice, the Tribunal has the evidence of the applicant that he worked 3-4 hours per day, 3-4 days per week prior to 2 July 1997. The Tribunal also has the statement given by Dr Chris Rizos, the applicant's then supervisor, dated 3 August 1999 (Exhibit R3) indicating that the applicant worked less than 20 hours (paid) work per week during the relevant period. It also has Dr Rizos' response to Ms Hunt's email dated 15 September 1999 in which the following question and answer appear (Exhibit R2):

1. You have stated that Mr Hassoun worked 20 hours or less each week between the weeks 23 May 1997 to 3 July 1997. The pay records show that Mr Hassoun was employed on a "temporary full-time" basis.

Yes, until he received formal notification from QUT, his employment status was unclear, and as far as I am concerned he was doing voluntary work. It did amount to 30-40 hours per week, as was obvious from the back payment records.

25. Dr Rizos goes on to say in that document that he was in fact not the applicant's employer at that time, as QUT was paying the applicant's wage, whereas Dr Rizos works for UNSW. Dr Rizos' email responses (Exhibit R2) contradict his former advice (Exhibit R3) as to how many hours the applicant worked. The email responses also appear to be predicated upon the pay advice and the Tribunal has no information as to the basis upon which the applicant was paid. Due to the contradictions in his statements, the Tribunal cannot be satisfied that Dr Rizos has given reliable information about hours worked by the applicant and does not attach any weight to either statement of Dr Rizos.

26. Ms Hunt unequivocally told the Tribunal that the applicant's credit was not in question. The Tribunal found him to be a credible witness. Given that the Department is not contesting credit, and the Tribunal had a favourable impression of the applicant, it accepts his evidence as truthful and so finds that the applicant worked some 3-4 hours per day, 3-4 days per week up until 2 July 1997. He may have been paid in consideration of more hours, but it is not this Tribunal's task to enquire into why employers might pay certain remunerative amounts. As the applicant told the Tribunal, he believes he was over paid. There is nothing before the Tribunal to indicate that that explanation is not valid.

27. On the applicant's own evidence, he worked between 9-16 hours per week. On the balance of probabilities therefore, it is doubtful that he could satisfy the correct 10 hour per week test in sub-s.198(2AA)(c) as it then was.

28. The Tribunal does not need to make a conclusive finding on this point however, as the notice received by the applicant (T4) also required notification if the applicant's income increased. The applicant became aware on 2 July 1997 that he had received income. He notified the Department on 3 or 4 July 1997 of his commencement of employment and his wish to cease receipt of Carer Pension. He is to be commended in this regard for his prompt attention to this matter once he had knowledge of what he was receiving by way of income.

29. That income was received sometime around 20 June 1997. However, it represented an arrears payment in respect of the period 23 May 1997 to 20 June 1997. The question before the Tribunal therefore, is whether the notification obligation arises

(a) as from the date at which the applicant became aware of receipt of income; or,

(c) as from the date the received income was intended to represent and accrue from?

30. To put this in context, did the applicant's notification obligations as to an increase in income arise on 23 May 1997, 20 June 1997 or 2 July 1997?

31. Section 8 of the Act defines "income" inter alia as "an income amount earned, derived or received by the person for the person's own use or benefit". That definition was considered by the Tribunal in Re Shelmerdine and Secretary, Department of Family and Community Services [2000] AATA 91. In that case Mr Shelmerdine had worked on 22 August 1997 but had not been paid for that day's work until some months later. The Tribunal stated (inter alia) at paragraph 15:

"... I consider that the applicant had "earned" the income on 22 August 1997, although the income was payable at a later date. In this matter the income was paid finally when the producer had paid the after tax sum to the applicant's agent, and the agent had taken his commission...I consider that income can be earned or derived but not received until a later time. As Shepherd J remarked in Inguanti v Secretary, Department of Social Security 80 ALR 307 at 311:

The use of the verbs "earned", "derived" and "received" in juxtaposition in the definition of "income" in the Act strongly suggests that each was intended to have a different meaning. Notwithstanding that the word "derived" can mean "received", I reject the submission made on behalf of the applicant that "derived" is used in that sense here. Sometimes moneys will be earned, derived and received simultaneously. At others they will be earned or derived but not received until a later time. ...' "

32. In the present case, this Tribunal concurs with the reasoning of the Tribunal in Re Shelmerdine. As the income received by the applicant on or about 20 June 1997 was paid in respect of work performed from 23 May 1997 to 20 June 1997, the income was in fact earned as from 23 May 1997. Something is "earned" at the time the work giving rise to entitlement to remuneration is performed. Whether or not it is paid at that time does not affect the fact that it is earned at the time of performance.

33. It follows that even though the applicant was unaware of such earnings, he still had notification obligations as from the first working date money was paid in respect of, namely 23 May 1997. Section 1224 of the Act is couched in such terms that knowledge is not a prerequisite. It is merely enough that earnings accrued. There was therefore an increase in income, constituting a notifiable event, even if such income was not received until a later date. Given that the applicant was unaware of receipt of any income, it appears that there was in fact no way that the applicant's failure to notify in respect of increase in income could have been prevented.

34. The applicant's failure to notify within 14 days of 23 May 1997 gives rise to an overpayment only if the increased income level renders him ineligible for Carer Pension. The Tribunal concurs with the departmental officer's calculations (T12/55) in that it was only from 29 May 1997 onwards that the applicant's income level could be said to be high enough to preclude payment of Carer Pension. It is from this date therefore that a debt accrues pursuant to s.1224 of the Act and the Tribunal so finds.

35. Turning to waiver, the applicant raised a number of issues such as delay in raising the debt and the Department contacting his employer without first discussing the matter with him. These are matters (as Ms Hunt described them) of "poor administration" rather than "departmental error" and are therefore the providence of the Commonwealth Ombudsman, not this Tribunal. The point remains that the applicant was paid Commonwealth monies in respect of a period of time for which he was not entitled to receive such monies, as he was paid wages (albeit belatedly) in respect of this same period. The Tribunal can find no circumstances which would warrant waiver in this case.

36. The Tribunal concludes by suggesting that the respondent give attention to the form of the Carer Pension notices. Departmental officers should be encouraged to ensure that Carer Pension recipients are fully informed and made aware of what notification obligations they have, how much work they can do, and how much income they can derive before putting their benefit in jeopardy.

37. For the reasons set out above, and pursuant to s.43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.

I certify that the 37 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE

Signed: .....................................................................................