ANGUS and LENORE MACDOUGALL and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 406

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 406

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/5773

GENERAL ADMINISTRATIVE DIVISION		)
Re		ANGUS and  LENORE MACDOUGALL

Applicants

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

Respondent

DECISION

Tribunal M J Carstairs, Senior Member

Date1 June 2010

PlaceBrisbane

Decision The Tribunal refuses the application to extend time to lodge an application for review of the decision affirmed by the Social Security Appeals Tribunal on 18 July 2006.

....................[Sgd]..........................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Application for extension of time – Means test treatment of private trust – No satisfactory explanation for delay in seeking review – No evident merit in applicant’s case – Extension of time declined.

Social Security Act 1991 (Cth), s 1207V(2)(a)

Administrative Appeals Tribunal Act 1975 (Cth), ss 29(2), 29(7)

Social Security (Administration Act) 1999 (Cth), s 181

REASONS FOR DECISION

1 June 2010  M J  Carstairs, Senior Member

1.      Angus and Lenore MacDougall seek the review of a decision made by Centrelink in 2002.  That decision attributed the income and assets of The AA and LN MacDougall Family Trust (“the trust”) to them personally, for the purposes of calculating their entitlement to payments of social security pension.  The decision was made after the introduction into the Social Security Act 1991 (“the Act”) of new provisions that allowed such attribution to occur.  Mr and Mrs MacDougall requested a review some years later and the matter came before the Social Security Appeals Tribunal in July 2006, where the original decision was affirmed as being correct.

2.      There matters lay, until Mr and Mrs MacDougall lodged an application for review with this Tribunal on 4 December 2009.  Because there is a 28 day time limit for seeking review of a decision,[1] Mr and Mrs MacDougall needed to be granted an extension of time if the matter was to be reviewed at all.

[1] Administrative Appeals Tribunal Act 1975, s 29(2).

3.      The matter was adjourned by the Tribunal so that the parties could lodge materials and submissions going to the merits of the decision under review.  This was to assist in deciding whether the discretion to extend time should be exercised.  Such discretion is not ordinarily exercised if the matter is shown to have no prospects of success—in other words, no merit—there being no evident purpose in allowing an extension of time where an applicant is unlikely to succeed in the substantive application.  The respondent's position was that the extension of time would not be opposed if the applicants could show their application had merit.

4.      The subsequent direction of the Tribunal (dated 28 January 2010) read as follows:

1.…

2.the Secretary lodge and serve those documents … directly relevant to the merits of the application to review the decision,

3.within 42 days … the Secretary lodge and serve an outline of submissions on the merits of the decision sought to be reviewed,

4.within 56 days … the applicant lodge submissions going to the merits of the decision sought to be reviewed.

5.      I note the respondent complied as directed.  Mr and Mrs MacDougall did not file a document setting out their submissions on the merits of the decision under review.  They did however provide a letter (dated 12 March 2010) stating that they had sold the majority of previously held shares and reduced the super fund.  These matters would be relevant to their current circumstances but not to the decision under review before me.

THE ISSUES

6.The sequence of decision-making relevant to the current review was as follows:

§  The original Centrelink decision was affirmed by an authorised review officer in 2006.  Pursuant to the Centrelink decision, Mr and Mrs MacDougall's age pensions had to be calculated by taking into account the assets and income of the trust.

§  A decision was made by the Social Security Appeals Tribunal on 18 July 2006 affirming the correctness of Centrelink's decision.

7.      At the hearing, it was not entirely clear that Mr MacDougall (who spoke on behalf of both applicants) fully understood that the Tribunal was limited to considering the decision under review as here stated.  It seemed that Mr MacDougall was more concerned to dispute Centrelink’s current treatment of their pension entitlements.  This was evident in his letter to the Tribunal dated 12 March 2010. I attempted to explain to Mr MacDougall that his and his wife’s current pension matters are not under review before this Tribunal, for the reason that there has been no review of their current entitlements by the Social Security Appeals Tribunal—a necessary step before a matter can be reviewed here.[2]   

[2] Social Security (Administration Act) 1999, s 181.

8.      The only decision under review was that made by Centrelink which determined how trust income and assets were to be assessed from 2002.

BACKGROUND

9. The trust came into existence well before the changes in the Act (referred to above and effective from 2002) came about. The trust deed was executed on 21 June 1983.[3] 

[3] T4.

10. Part 3.18 of the Act provides for the “Means Test Treatment of Private Companies and Private Trusts”. It allows for the assets and income of private companies and trusts to be attributed to individuals seeking a social security payment. Such persons are then assessed under income and assets tests which determine the rate of pension they will be paid.

11.     Before the introduction of these new measures, assets and income were only attributed to a person where legal ownership (or a fixed right of income) could be established.  The new provisions were intended to prevent people using private trusts and companies to remove their assets and income from the means-testing provisions for social security payments. Mr MacDougall, I note, made it plain at the hearing that he regarded these provisions as unjust and not in accord with usual commercial practice.

12.     According to the trust deed, Mr and Mrs MacDougall were the trustees.  Their children and grandchildren were beneficiaries.  There was a later amendment of the trust deed which purported to make Mrs MacDougall a beneficiary of the trust as well.

13. A trust will be a “controlled private trust” as a result of a wide range of direct and indirect relationships, including where a person is a trustee of the trust. Mr and Mrs MacDougall as trustees of the trust pass the “control test” under s 1207V(2)(a) of the Act. On the evidence, Mr and Mrs MacDougall are attributable stakeholders of the trust.

14.     It seems that when the legislative changes were mooted to be introduced in 2001/02, the MacDougalls told Centrelink they were intending to take steps to wind up the trust.  In evidence were various documents drawn up at this time, apparently with that intention in mind, and providing that Mr and Mrs MacDougall’s children would take over the trust and Mr MacDougall would retire. However various records indicate that Mr MacDougall did not relinquish his role as principal and trustee.

15.In that regard, Centrelink’s written submission cited the following:

§  Mr MacDougall signed tax returns on behalf of the trust for the tax years 2000/01; 2002/03; 2003/04; 2004/05; and 2006/07.[4]

§  Mr MacDougall signed the Trust Financial Statement as trustee.

§  Mr and Mrs MacDougall signed Minutes of a Meeting of Trustees on 28 June 2007, resolving income distribution of the trust for that tax year.

§  Mr MacDougall continued to sign letters to Centrelink from 2002 to 2006 as “Trustee for AA and LN MacDougall Trust”.

[4] T19.

CONSIDERATION

16.     Principally, the issue before me is whether Mr and Mrs MacDougall ought to be granted an extension of time to seek review.  However that question will be determined through a consideration of the substantive merits.

17.     It is, however, worth observing at the outset that statutory limitation periods are the general rule which ought to be observed, and granting an extension of time is the exception. Adhering to time limits is important in the context of decision-making and good administrative practice generally.  There is unquestionably value in finality with matters of this kind, especially in instances of substantial delay.  Records can be lost, and matters become harder to follow up or prove with the passage of time.

18. However, when a person requests an extension of time it is important to consider all the relevant circumstances and in particular to understand, amongst other things, how any delay occurred. Some explanations of delay will be compelling; others less so. The terms used in s 29(7) of the Administrative Appeals Tribunal Act 1975 must be kept in mind.  The subsection states that the Tribunal must be satisfied, before exercising the discretion to grant an extension of time, that it is “reasonable in all the circumstances to do so”.  It is true that no binding principles govern the exercise of the discretion, but it is unusual that the MacDougall’s have left the matter in abeyance for as long as they have. 

19.     Mr MacDougall could not explain fully why delay occurred in their case.  However from what Mr MacDougall said and from the materials on file, it was apparent that Mr MacDougall has continued—sporadically—to agitate the matter of Centrelink’s treatment of the trust with Centrelink.  However his actions in that regard fell short of requesting a review of the decision at those times. 

20. I note that the Tribunal’s direction dated 28 January 2010 required Mr and Mrs MacDougall to provide written submissions addressing the merits of the case. They did not do so. I have examined the reasons of the Social Security Appeals Tribunal, and I see no evident error in their application of the law to the facts. I would come to the same conclusions as did the Social Security Appeals Tribunal and would be satisfied, taking into account the provisions in the Act, that 100% of the assets and income of the trust ought to be attributed to Mr and Mrs MacDougall and applied in working out their pension entitlements.

21.     It does not seem to me at all appropriate that the applicants now be allowed to re-open the earlier decisions. 

22.     If, as Mr MacDougall implied, the trust arrangements have altered so that there are new matters that Centrelink ought to take into account, that question is properly in the arena of primary decision-making, not of an appeal.  It is a well recognised principle of administrative review that processes of review should be seen as a continuum: a person can succeed in having a decision changed by the production of better evidence.  But there was no new evidence produced with respect to the earlier period to which this review pertains that would lead to a different outcome.

23.     Mr MacDougall made it quite plain at the hearing that he was mostly concerned with the injustice of the legislation and that he believes an overly legalistic view was prevailing.  However this Tribunal must apply the law as enacted.  In this case the law is clear.

24.     For these reasons I do not see this as an appropriate case in which to exercise the discretion to extend time.  There was no satisfactory explanation for the delay in seeking review; nor was there evident merit in the applicants’ case. 

DECISION

25.     The Tribunal declines the application to extend time for lodging an application for review of the decision affirmed by the Social Security Appeals Tribunal on 18 July 2006.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of M J Carstairs, Senior Member.

Signed: ............................[Sgd].....................................
  Mátyás Kochárdy, Associate

Date of Hearing  10 May 2010
Date of Decision   1 June 2010
The Applicants were self-represented       
Advocate for the Respondent   Mr R Hamilton