FEDERAL COURT OF AUSTRALIA Callander v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2012] FCA 238 Citation: Callander v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2012] FCA 238 Appeal from: Callander v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 659 Parties: CALLANDER v SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS File number: WAD 417 of 2011 Judge: BARKER J Date of judgment: 15 March 2012 Catchwords: ADMINISTRATIVE LAW – question of law – nature of an appeal pursuant to s 44(1) of Administrative Appeals Tribunal Act 1975 (Cth) – overpayment – disability support pension – age pension – calculations pursuant to Social Security Act 1991 (Cth) – application of the formula – failure to provide adequate information to a decision-maker Legislation: Administrative Appeals Tribunal Act 1975 (Cth) s 37, s 44(1) Social Security Act 1991 (Cth) s 8(1A)(e), s 8(1B), s 8(2), s 8(4), s 8(5), s 8(8), s 117(a), s 1064, s 1064-A1, s 1064-A2, s 1064E-1, s 1223(1), s 1237AAD, s 1237A(1) Social Security (Administration) Act 1999 (Cth) s 100(1), s 180(1) Federal Court Rules 2011 (Cth) R 33.12(2)(b) Cases cited: Comcare v Etheridge [2006] FCAFC 27; (2006) 149 FCR 522 Date of hearing: 24 February 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 41 Counsel for the Applicant: The Applicant appeared in person Counsel for the Respondent: Mr PR MacLiver Solicitor for the Respondent: Australian Government Solicitor IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 417 of 2011 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: WILLIAM JOHN CALLANDER Applicant AND: SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS Respondent JUDGE: BARKER J DATE OF ORDER: 15 March 2012 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the respondent's costs of the application to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 417 of 2011 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: WILLIAM JOHN CALLANDER Applicant AND: SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES & INDIGENOUS AFFAIRS Respondent JUDGE: BARKER J DATE: 15 March 2012 PLACE: PERTH REASONS FOR JUDGMENT APPEAL AGAINST AAT DECISION 1 By notice of appeal filed 10 October 2011, the applicant seeks to appeal from a decision of the Administrative Appeals Tribunal (Tribunal or AAT) made on 23 September 2011. The AAT set aside a decision of the Social Security Appeals Tribunal (SSAT) made on 24 February 2011, relating to the assessment of the applicant's disability support pension and age pension to take account of the applicant's wife's employment income, and in effect, restored the earlier decision of an authorised review officer (ARO). ISSUE 2 The key issue in this proceeding is whether the AAT correctly applied the statutory formula under the Social Security Act 1991 (Cth) (SS Act) for the payment of the relevant pensions. OUTLINE OF FACTS 3 The applicant was granted a disability support pension under the SS Act which was transferred to an age pension on 3 July 2008. 4 On 29 January 2010 a review was conducted by the Australian Taxation Office (ATO) which indicated that the applicant's wife's taxable income was in fact in excess of her declared earnings. This is not in issue. 5 On 28 September 2010 a delegate of the respondent found that the applicant had been overpaid for his disability support pension in the sum of $457.67 for the period 14 May 2008 to 2 July 2008, and overpaid for his age pension in the sum of $4,756.70 for the period 3 July 2008 to 23 September 2010. The applicant was informed of the corresponding debts raised against him. 6 On 5 October 2010 the applicant requested a review of the decision to raise and recover the debts. 7 On 17 December 2010, a Centrelink ARO varied the decision and increased the disability support pension debt to $549.20 but waived the recovery of $203.85, and reduced the age pension debt to $3,404.28, with the full amounts to be recovered from the applicant. The period for which the disability support pension debt was calculated by the ARO was 6 April 2008 to 2 July 2008. 8 The ARO apparently also determined that, based on the earnings amounts declared for his partner, the applicant had been underpaid the age pension by $232.25 from 24 September 2010 to 16 December 2010. 9 On 17 January 2011 the applicant lodged an application for review of the ARO's decision with the SSAT. 10 On 24 February 2011, the SSAT affirmed the decision to raise a disability support pension debt of $549.20 and recover part of this debt. The SSAT however varied the ARO's decision with respect to the age pension debt, and extended the amount of the debt to $4,756.70, and set aside the decision to pay arrears of age pension of $232.25 for the period 24 September 2010 to 16 December 2010. 11 On 14 March 2011 the applicant applied to the AAT for a review of the SSAT decision. 12 On 23 September 2011, as explained further below, the AAT set aside the SSAT decision under review, substituted its decision, and published written reasons for its decision. the AAT's DECISION 13 The AAT considered the applicant's evidence and made the following findings of fact: On 29 January 2010 a review was conducted due to information obtained from the Australian Taxation Office which showed that the applicant's wife's taxable income of $44,554 on 21 July 2009 exceeded her declared earnings of $29,868. A letter was sent to the applicant identifying the discrepancies and inviting him to contact Centrelink. On 9 February 2010 applicant spoke to the Centrelink Customer Support Officer (CSO) to review his payments. The CSO recorded in its database that the procedure was explained to the applicant, the applicant was advised to notify Centrelink if his wife's wages varied in the future, and the applicant was aware that his wife's employer would be contacted. The applicant's wife's income continued to fluctuate over the succeeding months. After contacting the wife's employer, a delegate for the respondent decided that the applicant had been overpaid $457.67 and $4,756.70. Before and during the debt period (14 May 2008 to 23 September 2010) Centrelink sent the applicant notices to notify Centrelink if his or his partner's income changes. 14 At [15]-[17] the AAT considered the following key issues for determination: Whether the applicant been overpaid disability support pension for the period 6 April 2008 to 2 July 2008 and age pension for the period 3 July 2008 to 16 December 2010. If so, whether the overpayments are debts due the Commonwealth. If so, whether the recovery of the debts, or any part thereof, should be waived or written off. 15 The AAT reviewed all the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) by the respondent. 16 The AAT also considered fresh calculations provided to the AAT in the respondent's statement of facts and contentions filed 3 June 2011. At [4.10]-[4.12] of the statement the respondent stated that the overpayment was recalculated to assist the AAT and the applicant, and showed the maximum rate of pension, which was broken up into columns of dates for each concluding fortnight, explained as follows: The first row provides the maximum rates of pension, rent assistance and pharmaceutical allowance and gives a total maximum payment rate. Under the heading 'Income test' the income thresholds, the associated taper rates and the cutoff limit at which pension is no longer payable, less any reductions, such as working credits [R1 pp. 1-22]. The personal affecting income is the amount of income that is reduced by applying the taper per dollar in excess of the maximum rate of AP. However, as Mrs Callander's earnings and other income were over the amount previously declared, Mr Callander was only entitled to a part of the payment of the pension at a rate less than he had received (as shown in 'Debt Report' section of the calculations- see below). The amounts as shown under the part 'Debt Report' shows the amounts Mr Callander was entitled to receive in the same date columns. The following row headed 'Paid' is the amount of pension that was paid to Mr Callander for each fortnight. The final heading – 'Overpaid' provides an itemised list of the debt components and total amount overpaid. Page 274 to 276 provides a list of Mrs Callander's income which was taken from the verified earnings presented by her employer [R3: pp.52-71] (Emphasis in original) 17 The AAT found that the debt amount varied from that of the SSAT decision due to the recalculations made in accordance with these fresh calculations and, in accordance with s 180(1) of the Social Security (Administration) Act 1999 (Cth) (Administration Act) which varied the decision of the SSAT. 18 On 23 September 2011 the AAT formally set aside the SSAT decision handed down on 24 February 2011 and substituted it with the following decision: The applicant has been overpaid social security pensions during the period 28 March 2008 to 23 September 2010. The amounts of pension overpaid for the periods 28 March 2008 to 22 May 2008 and 6 June 2008 to 9 September 2010 are recoverable debts due to the Commonwealth of Australia. Recovery of the debt amount for the period 23 May 2008 to 5 June 2008 in the sum of $262.51 is to be waived pursuant to s 1237A(1) of the SS Act. 19 The AAT also found that: The applicant's perspective on how the debt should be calculated was not supported by the law; The applicant's rate of pension was calculated correctly under the transitional arrangements. As the applicant failed to comply with the information notices issued to him and his pension could be retrospectively reduced: see s 100(1) of Administration Act and s 1223(1) of the SS Act. The applicant was aware of his obligation requirements by way of information notices issued to him, and following his conversation with the Centrelink Customer Support Officer on 9 February 2010. There is no evidence that the applicant provided details of his wife's actual income each fortnight, as he was required to do, given that her income fluctuated on a regular basis over the period of the debt. The applicant was overpaid disability support pension totalling $582.94 for the period 28 March 2008 to 2 July 2008, and $3,749.27 age pension for the period 3 July 2008 to 9 September 2010, totalling $4,332.21. The AAT agreed with SSAT when it found that a portion of the debt for the period 23 May 2008 to 5 June 2008 totalling $262.51 should be waived because it was "solely" due to administrative error made by the Commonwealth in accordance with s 1237A(1) of the SS Act. The applicant did not receive the payments in good faith. There are no special circumstances that make it desirable to waive the recovery of the applicant's debt in accordance with s 1237AAD of the SS Act. There has been no evidence that the respondent engaged in fraudulent conduct. applicant's contentions 20 In this appeal, the applicant is self-represented. In the notice of appeal filed 19 October 2011, the applicant purports to appeal the decision of the AAT in its entirety, and seeks an order that "The Judgment be set aside" and the he be paid "for money owed to him due to the miss calculation (sic) of his pension". The applicant stated the question of law in the following terms: 1. Social Security ACT 1991 :- S1237(A) and S1064 (B) – (BA1) 2. NOT C/L Version of the Law 21 In the notice of appeal under the heading "Grounds relied on" the applicant refers to an attached document titled "Appeal to the Federal Court From AAT Decision 23/9/2011 No : 2011/0916" and sets out the following (summarised) grounds: The applicant's pension was calculated incorrectly. The respondent withheld information even though the applicant sought to obtain, by way of freedom of information, a copy of his file and a letter sent to him from the respondent. There has been "corruption", his pension has been "fraudulently reduced" and "all parties rubber stamp it and they don't listen" to the applicant's contentions. The Centrelink ARO's report was wrong and relied on incorrect information in relation to his wife's payslips, his circumstances when his wife's nephew came to live with the couple in February 2010, "rent money" and the applicant's wife's fortnightly tax. Centrelink erred when it used "two different sets of figures to produce their calculations". 22 During the hearing on 24 February 2012 the applicant expressed his concerns as follows: The applicant is concerned by the irregularities in the calculations performed and reviewed by the respondent's delegate, ARO, SSAT and the AAT According to the applicant's own spreadsheet calculations, contained in the applicant's bundle received by the Court on 6 February 2012, he does not owe the respondent any debt, rather, the respondent owes the applicant money. (In the document titled "Pension Calculation Variations" the applicant manipulated the original ARO's figures to highlight the alleged calculation errors in red.) The applicant states that his argument is supported also by a handwritten note from the Centrelink Manager in the Warwick branch "6/12/10 3.30pm Up to Clink to check amount is correct. Previous debts raised have been proven incorrect". The applicant says that calculation errors occurred when his wife's nephew came to live with them when he was granted family benefits and when there was a change to his rent benefits. QUESTION OF LAW 23 This is an appeal under s 44(1) of the AAT Act which provides that: A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding. 24 It is well-established that only a question of law may be considered on an appeal: Comcare v Etheridge [2006] FCAFC 27; (2006) 149 FCR 522 [13]–[16]. 25 As such, the notice of appeal must, in conformity with R 33.12(2)(b) of the Federal Court Rules 2011 (Cth), state the precise question or questions of law to be raised on the appeal. 26 The respondent submits that the applicant's grounds of appeal do not amount to a clear articulation of any question of law arising in relation to the AAT's decision, as required under s 44(1) of the AAT Act, and as such, the appeal should be dismissed. 27 In the circumstances I consider that, in substance, the applicant has raised a question of law concerning the proper application of the formula for the calculation of his pension entitlement, under the SS Act, but not otherwise. So only the first ground of appeal relied upon will be considered, the other grounds not raising any relevant questions of law. Consideration 28 As identified by the AAT, the following legislative provisions are relevant. 29 Section 117(a) of the SS Act provides that the rate of disability support pension for a person who is not permanently blind, and has not turned 21 years of age, is worked out using the pension rate calculator A at the end of s 1064 of the SS Act. 30 Section 1064 of the SS Act provides that a person's pension is calculated using the pension rate calculator contained in s 1064-A1 of the SS Act. Section 1064-A1 of the SS Act provides a method statement for working out a person's maximum rate of pension, as follows: Module A—Overall rate calculation process Method of calculating rate 1064-A1 The rate of pension is a daily rate. That rate is worked out by dividing the annual rate calculated according to this Rate Calculator by 364 (fortnightly rates are provided for information only). Method statement Step 1. Work out the person's maximum basic rate using MODULE B below. Step 1A. Work out the amount of pension supplement using Module BA below. Step 3. Work out the amount per year (if any) for rent assistance in accordance with paragraph 1070A(b). Step 4. Add up the amounts obtained in Steps 1, 1A and 3: the result is called the maximum payment rate. Step 5. Apply the ordinary income test using MODULE E below to work out the income reduction. Note: Module F contains provisions that may apply to working out the ordinary income of a person, and the ordinary income of a partner of the person, for the purposes of disability support pension. Step 8. Take the income reduction away from the maximum payment rate: the result is called the income reduced rate. Step 9. Apply the assets test using MODULE G below to work out the reduction for assets. Step 10. Take the reduction for assets away from the maximum payment rate: the result is called the assets reduced rate. Step 11. Compare the income reduced rate and the assets reduced rate: the lower of the 2 rates, or the income reduced rate if the rates are equal, is the provisional annual payment rate. Step 12. The rate of pension is the amount obtained by: (a) subtracting from the provisional annual payment rate any special employment advance deduction (see Part 3.16B); and (b) if there is any amount remaining, subtracting from that amount any advance payment deduction (see Part 3.16A); and (c) adding any amount payable by way of remote area allowance (see Module H). Note 1: if a person's assets reduced rate is less than the person's income reduced rate, the person may be able to take advantage of provisions dealing with financial hardship (sections 1129 and 1130). Note 1A: If a person's rate is, or is to be, an income reduced rate or an assets reduced rate, and at least one of those reduced rates is not a nil rate, the person may be able to take advantage of provisions dealing with the pension loans scheme (sections 1133AA to 1144). Note 2: Section 1210 deals with the application of income and assets test reductions. Note 3: the rate calculation for a member of a couple is affected by the operation of points 1064-A2 and 1064-A3. Note 4: in some circumstances a person may also be qualified for a pharmaceutical allowance under Part 2.22. Note 5: a person's rate may also be reduced because the person or the person's partner receives compensation (see section 1173) or because the person or the person's partner is receiving a foreign pension (see scheduled international social security agreements at section 1208). Note 7: Clause 146 of Schedule 1A may affect the provisional annual payment rate in step 11. 31 The pension rate calculator contained in s 1064-A1 sets out that a person's maximum rate of pension is reduced by taking into account the person's ordinary income, which is calculated in accordance with Module E contained under s 1064E-1 of the SS Act which states that the amount of a person's ordinary income is worked out on a yearly basis and provides additional steps to follow. Module E—Ordinary income test [see Appendix for CPI adjusted figures] Effect of income on maximum payment rate 1064-E1 This is how to work out the effect of a person's ordinary income on the person's maximum payment rate: Method statement Step 1. Work out the amount of the person's ordinary income on a yearly basis. Note 1: For the treatment of the ordinary income of members of a couple see point 1064-E2. Note 2: Module F contains provisions that may apply to working out the ordinary income of a person, and the ordinary income of a partner of the person, for the purposes of disability support pension. Step 2. Work out the person's ordinary income free area (see point 1064-E4 below). Note: a person's ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person's maximum payment rate. Step 3. Work out whether the person's ordinary income exceeds the person's ordinary income free area. Step 4. If the person's ordinary income does not exceed the person's ordinary income free area, the person's ordinary income excess is nil. Step 5. If the person's ordinary income exceeds the person's ordinary income free area, the person's ordinary income excess is the person's ordinary income less the person's ordinary income free area. Step 6. Use the person's ordinary income excess to work out the person's reduction for ordinary income using points 1064-E10 to 1064-E12 below. Note 1: see point 1064-A1 (Steps 5 to 8) for the significance of the person's reduction for ordinary income. Note 2: the application of the ordinary income test is affected by provisions concerning: • the general concept of ordinary income (sections 1072 and 1073); • the work bonus (section 1073AA); • business income (sections 1074 and 1075); • deemed income from financial assets (sections 1076 to 1084); • income from income streams (sections 1095 to 1099DAA); • disposal of income (sections 1106 to 1112); 32 Income is defined by s 8(2) of the SS Act as any income earned, derived or received by any means and any source, but does not include "excluded amounts" stated in s 8(4), s 8(5) or s 8(8). 33 Employment income, in reference to ordinary income, excludes leave payments where the person is not engaged on a continuing basis: see s 8(1A)(e) of the SS Act. Section 8(1B) of the SS Act discusses the relevance of a partner's income and states: For the avoidance of doubt, if: (a) a person is treated, for the purposes of working out the person's ordinary income, as having earned, derived or received any ordinary income that was in fact earned, derived or received, or taken to have been earned, derived or received, by the partner of the person; and (b) that ordinary income would be characterised as employment income in the hands of the partner if the partner were not a member of a couple; then for the purposes of this Act, that ordinary income is to be similarly characterised in the hands of the person. 34 Section 1064-A2 of the SS Act provides that: Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V). 35 The AAT also referred to s 100(1) of the Administration Act which deals with the issuing of notices requiring recipients to inform the respondent of changes to their circumstances: Automatic rate reduction—recipient not complying with subsection 68(2) notice (1) Subject to subsection (2), if: (a) a person who is receiving a social security payment is given a notice under subsection 68(2); and (b) the notice requires the person to inform the Department of the occurrence of an event or change of circumstances within a specified period (the notification period); and (c) the event or change of circumstances occurs; and (d) the person does not inform the Department of the occurrence of the event or change of circumstances within the notification period in accordance with the notice; and (e) because of the occurrence of the event or change of circumstances, the rate of the social security payment is to be reduced; the social security payment becomes payable to the person at the reduced rate on the day on which the event or change of circumstances occurs. 36 The respondent, in its submissions, summarised the AAT's decision, that if the matters set out in s 100(1)(a) to (e) of the Administration Act are satisfied, the social security payment becomes payable to the person at the reduced rate on the day on which the event or the change of circumstance occurs. The AAT at [35] to [36] found the applicant failed to comply with the information notices issued to him, because he did not advise of changes to his wife's earnings, and therefore his pension could be retrospectively reduced. 37 The AAT also referred to s 1223(1) of the SS Act which deals with debts arising from overpayment and states as follows: (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. 38 If the AAT applied a wrong principle when making the calculations then there may have been a legal error, but that was not the case here. The AAT correctly applied the appropriate steps in calculating the applicant's disability and age pension under the rate calculator A contained in s 1064-A1 of the SS Act. Rate calculator A clearly indicates that the income reduction is to be made after adding any rent allowance to the amount of pension. 39 The underlying principle in calculating pension under the SS Act is the more income a person receives the less they will receive by way of pension, and as such, the applicant's wife's fluctuating income was relevant. Under s 1064-A2 of the SS Act where two people are members of a couple, they will be treated as pooling their resources and sharing them on a 50/50 basis. As a result of the information obtained from the applicant's wife's employer, the respondent examined the applicant's entitlements and found that he had been overpaid various amounts each fortnight during the relevant period. 40 There was no misapplication of the statutory formula by the AAT when it had regard to the information supplied by the applicant and the respondent. Accordingly, there was no error of law in the decision of the Senior Member of the AAT. ORDERS 41 The Court makes the following orders: 1. The application be dismissed. 2. The applicant pay the respondent's costs of the application to be taxed if not agreed. I certify that the preceding forty one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker. Associate: Dated: 15 March 2012