Bogdan and Secretary, Department of Social Services (Social services second review)

Bogdan and Secretary, Department of Social Services (Social services second review) [2020] AATA 1433 (21 May 2020)
Division:GENERAL DIVISION
File Number(s): 2019/0108
Re:Ioan Bogdan
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member B J Illingworth
Date:21 May 2020
Place:Adelaide

The decision under review is set aside and in substitution it is ordered that the Applicant is entitled to an increase in rate of age pension from 31 March 2018.
............................[Sgnd].....................................
Senior Member B J Illingworth
CATCHWORDS
SOCIAL SECURITY – age pension – date from which the Applicant was to be paid an increase in rate of age pension – decision under review set aside
LEGISLATION
Social Security Act 1991
Social Security (Administration) Act 1999
REASONS FOR DECISION
Senior Member B J Illingworth
21 May 2020
INTRODUCTION

This matter relates to an application filed by Mr Ioan Bogdan (“the Applicant”) for review of a decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal (“AAT1”) dated 3 December 2018, varying the decision of an Authorised Review Officer (“ARO”) of the Department of Human Services (“Centrelink”) to entitle the Applicant to an increase in rate of age pension from 26 September 2017.
The issue before the AAT1, and the ARO, was the date from which the Applicant was to be paid an increase in rate of age pension. The ARO decided the Applicant was entitled to a rate increase and payment of arrears for the period 26 April 2018 to 13 May 2018. The AAT1 varied that decision such that the date from which the increase took effect was 26 September 2017.
At the hearing before the Tribunal, the Applicant appeared unrepresented. The Secretary of the Department of Social Services (“the Respondent”) was represented by Ms Lee-Anne Odgers from the Department of Human Services.
In the Respondent’s Statement of Facts, Issues and Contentions (“SoFIC”), it was submitted that both the ARO and AAT1 fell into error and that the date from which the Applicant was entitled to an increase rate of age pension was 31 March 2018.
The Applicant’s application was driven by advice from his accountant that he had an entitlement to an increase in his rate of pension from 1 July 2017 and his sense of grievance that he was underpaid his pension entitlement for the whole of the 2017/2018 financial year. The Applicant did not have regard to the statutory regime that operated with respect to determining the date from which any increase in the rate of pension was to occur and the requirement upon the Applicant to give notice of a change of income which enlivened a review of the rate of pension.
The Tribunal explained to the Applicant the basis upon which the Tribunal was obliged, at law, to decide the date of effect of the new rate of pension and hence his entitlement for back payment of aged pension. This was also outlined in the Respondent’s SoFIC.
The Applicant was offered the opportunity to take some advice on the operation of the law in relation to determining the date from which back payment was to be calculated and whether he wished to maintain his application for review. The Applicant said that he had received advice from his accountant that from 1 July 2017 he was entitled to an increase in his rate of aged pension and he invited the Tribunal to back date his entitlement to that date. He wanted to proceed with the hearing.
BACKGROUND
The Applicant is 68 years of age and has been in receipt of the age pension since 15 September 2016. At that time, the Applicant was operating a fencing and earthwork business through a family trust. The Applicant received an income through the trust, and it was this income that was used to determine the Applicant’s rate of age pension.
On 8 September 2017, the Applicant provided Centrelink his family trust finances.
On 26 September 2017, the Applicant contacted Centrelink to advise that the income of the trust had reduced and asked that his change in pension be processed urgently as he anticipated receiving an increase in his rate of age pension and that he was in financial hardship.
On 6 November 2017, the Applicant’s rate of age pension was reviewed (“first rate decision”) and he was paid arrears for the period 8 September 2017 to 27 October 2017.
From 28 October 2017, his base rate age pension increased. The Applicant did not file an application to review that first rate decision.
On 26 April 2018, the Applicant advised Centrelink that his business was no longer operating.
On 7 May 2018, the Applicant’s accountant prepared a letter advising that the family trust ceased business trading on 31 March 2018 and attached financial reports for the year ending 30 June 2017. The letter stated that the net equity of the family trust was ten dollars and advised that the company was to be deregistered following finalisation of the sale of assets, the lodgement of the 2018 final tax return and the payment of creditors.
On 14 May 2018, the Applicant delivered the accountant’s letter and attached financial reports to Centrelink.
On 14 August 2018, the Applicant provided Centrelink with a financial report relating to the family trust for the 2017/2018 financial year.
On 24 September 2018, the Applicant’s rate of age pension was reviewed (“second rate decision”). His income was reassessed as nil; however, Centrelink decided not to pay arrears of the age pension earlier than 13 May 2018, being the date one day before the accountant’s letter was given to Centrelink on 14 May 2018.
On 8 October 2018, the ARO varied the second rate decision to extend the period of payment of arrears of increased rate of age pension from 26 April 2018, being the date when the Applicant contacted Centrelink to advise that the business was no longer operating.
The ARO only had regard to the question of the correct date from which to pay arrears of age pension arising from the second rate decision. The ARO did not consider the first rate decision. There was no application for review of first rate decision before the ARO.
The Applicant applied to the AAT1 for review of the ARO’s decision.
On 3 December 2018, the AAT1 decided that the date from which the Applicant’s increase in age pension should take effect was 26 September 2017, being the date the Applicant first advised Centrelink that the income of the trust had reduced. This date preceded the first rate decision.
On 9 January 2019, the Applicant applied to the General Division of the Administrative Appeals Tribunal for a review of the AAT1’s decision. In his application, he said that the financial year starts on 1 July, not on 26 September, and he was “short paid” his pension for the 2017/2018 financial year. He maintained that arrears in age pension should date from 1 July 2017.
LEGISLATIVE FRAMEWORK
The legislation relevant to this matter is the Social Security Act 1991 (“the Act”) and the Social Security (Administration) Act 1999 (“the Administration Act”).
Section 55 of the Act relevantly provides that the Applicant’s rate of age pension is calculated by using the Pension Rate Calculator A at the end of s 1064 of the Act.
The rate of age pension as calculated under s 1064 of the Act and continues to apply until, pursuant to s 123(3) of the Administration Act, one of the following applies:
(a)a further determination in relation to the payment under 78, 79, 81A or 85A takes effect; or
(b)the payment becomes payable at a lower rate under section 98, 99 or 100.
Section 78 of the Administration Act provides:
If the Secretary is satisfied that the rate at which a social security payment is being, or has been, paid is less than the rate provided for by the social security law, the Secretary must:
(a)determine that the rate is to be increased to the rate provided for by the social security law; and
(b)specify the last-mentioned rate in the determination.
The date of effect of the new rate determination is determined by s 110 of the Administration Act, which relevantly provides:
(1)Subject to subsections (1A) to (11A) (inclusive), if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect:
(a) On the day on which the person so informed the Department; or
(b) On the day on which the event or change occurred; whichever is later.
…
(2)Subject to subsection (2A), if a favourable determination is made following a person having given the Department a statement about a matter in accordance with a notice under section 67 or 68, the determination takes effect on the day on which the matter arose.
A favourable determination includes a determination made under s 78 of the Administration Act.
If the Applicant now wished to challenge the first rate decision, the provisions of s 109 of the Administration Act apply. Section 109 of the Administration Act provides:
(1)If:
(a)    a decision (the original decision) is made in relation to a person's social security payment; and
(b)    a notice is given to the person informing the person of the original decision; and
(c)    within 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)    the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the determination embodying the original decision took effect.
(2)If:
(a)    a decision (the original decision) is made in relation to a person's social security payment; and
(b)    a notice is given to the person informing the person of the original decision; and
(c)    more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)    the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the application for review was made.
Relevantly, s 68(2) of the Administration Act provides:
The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a)inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;
(b)give the Department one or more statements about a matter that might affect the payment to the person of the social security payment;
(c)give the Department one or more statements about a matter that might affect the operation, or prospective operation, of Part 3B in relation to the person.
ISUE TO BE DETERMINED BY THE TRIBUNAL
The issue to be determined by the Tribunal in this matter is the date from which the Applicant was to be paid arrears of age pension.
CONSIDERATION
The AAT1’s decision to backdate the payment of pension arrears to 26 September 2017 was made on the basis that on that day the Applicant advised Centrelink that his income had decreased such that he was entitled to an increase in aged pension and that this contact appeared to have been overlooked by the ARO.
The AAT1 said that the second rate decision to increase the Applicant’s pension rate was a determination under s 78 of the Administration Act and, thus, a favourable determination under s 110 of the Administration Act. The AAT1 therefore decided that the increase in age pension was to take effect from 26 September 2017.
However, it was not the case that the ARO overlooked the communication of 26 September 2017. That communication was part of the process leading to the first rate decision, which decision was not before the ARO. The AAT1 decision failed to have regard to the Applicant providing Centrelink with his trust finances on 8 September 2017 and advising Centrelink on 26 September 2017 that the income of the trust had reduced, resulting in the first rate decision by Centrelink.
The Applicant was advised of the rate change effected by the first rate decision by a letter from Centrelink dated 6 November 2017, which advised him of the outcome of the review, namely that he was to receive arrears in age pension from 8 September 2017 to 28 October 2017 and thereafter an increase in this base rate of age pension.
That letter dated 6 November 2017 also included a notice which required the Applicant to tell Centrelink within 14 days if, inter alia, his gross income changed or was likely to change. That notice was a notice given pursuant to s 68(2) of the Administration Act. Relevantly, the Applicant responded to this notice on 26 April 2018.
Subject to the Applicant applying to review that first rate decision, the arrears of age pension and ongoing entitlement was finally determined by that decision.
Having been the subject of a decision made in relation to his social security payment, and having also received notice of that decision, the Applicant did not file an application for review of the decision, namely the first rate decision, pursuant to s 129 of the Administration Act.
The second rate review occurred after the Applicant advised Centrelink on 26 April 2018 that his business was no longer operating and then on 14 May 2018 by producing a letter from his accountant with attached financial documents. That letter advised that the Applicant’s business ceased trading on 31 March 2018. Following the second rate decision on 24 September 2018, the Applicant applied on 25 September 2018 for a review of the Centrelink decision.
The Applicant argued that the request for a review by the Tribunal, related to both his change in pension following the first rate and second rate decisions. The Respondent rejected that submission and argued that the AAT1’s jurisdiction was limited to considering only the date of rate of change of age pension following the second rate decision.
The Respondent submitted that the application for review was made the day following the Applicant being advised of his second rate decision and the decision to pay arrears for the period 14 May 2018 to 14 September 2018, noting that from 15 September 2018 the Applicant’s base age pension increased.
Even if the Applicant’s submission was accepted, and the application for review related to both the first rate and second rate decision, the application, insofar as it related to the first rate decision, occurred more than 13 weeks after the notice was given to the Applicant. Any favourable determination in respect of that decision would only take effect from the day on which the application for review was made, namely 25 September 2018, not 1 July 2017 as was submitted by the Applicant.
The Applicant submitted that every quarter of each year he delivered to Centrelink in person, his financial details. This had been his ongoing practice including during 2017. He argued therefore that Centrelink had, before the date of the first rate decision, received from him, advice as to change of income which entitled his rate of pension to be increased on and from 1 July 2017.
Hence, before deciding the question of the Tribunal’s jurisdiction and allowing the opportunity for the Applicant to place his best evidence before the Tribunal, the application was adjourned for the Applicant to produce evidence of those records, and the date of delivery of those records to Centrelink. The Respondent was also to make enquiries with Centrelink whether such records were received.
When the hearing reconvened, the Applicant provided a bundle of documents dated from 2016 to 2018 including financial records relating to the family trust, profit and loss statements and tax returns. He did not provide evidence of when those or other documents had been delivered to Centrelink. He simply maintained that he did so by leaving documents at the Centrelink office each yearly quarter. The Applicant further advised that his accountant also regularly delivered the same documents, each yearly quarter, to Centrelink electronically.
The Respondent advised that following review of Centrelink records, there was no record of the Applicant delivering financial documents as indicated. The application was again adjourned to enable the Applicant to adduce such evidence from his accountant in relation to delivery of documents to Centrelink.
When the matter reconvened, the Applicant’s accountant, Mr T, and bookkeeper/accountant, Ms T, gave evidence which can be briefly summarised.
The accountants did not send financial records electronically to Centrelink each quarter, as suggested by the Applicant.
The accountants provided quarterly financial records to the Applicant and it was for him to deliver them to Centrelink. The accountants had no record of that delivery occurring.
The accountants provided records relating to the Applicant’s financial details electronically to Centrelink on two occasions, namely on 3 August 2016 and on 19 December 2018, following a request from Centrelink for those records.
CONCLUSION
The decision that was the subject of the application for review was the second rate decision granting the Applicant an increase in base pension and payment of arrears. The application for review was not an application that related to an increase in age pension and payment of arrears arising from the first rate decision dated 6 November 2017. The Applicant never sought review of that decision.
Hence, insofar as the AAT1 took into account the Applicant’s advice to Centrelink on 26 September 2017 of reduction of income, that advice was not relevant to the application that was before the AAT1.
Jurisdiction was limited to considering the second rate decision following notice given to Centrelink by the Applicant on 26 April 2018 and 14 May 2018 that the business had ceased trading.
That second rate decision gave rise to an increase in the Applicant’s base age pension on and from 15 September 2018 and grant payment of arrears from 14 May 2018 to 14 September 2018.
In accordance with the s 68(2) of the Administration Act, the Applicant gave notice to Centrelink on 26 April 2018 of a specified event or change in circumstance, namely the cessation of business. Centrelink records for that date confirm the Applicant advised an officer of Centrelink of a specified event or change, namely that the business was no longer operating. There was discussion between the Applicant and the Centrelink officer about the provision of evidence from the Applicant’s accountant. That evidence from the accountant, namely the letter and attachments dated 7 May 2018, was provided by the Applicant to Centrelink on 14 May 2018.
In determining the date of effect of the new rate of age pension, s 110(2) of the Administration Act provides that a favourable determination made by Centrelink after a person has provided a statement about a matter in accordance with a s 68(2) of the Administration Act, will take effect on the day in which the matter arose. In this case, that change in event was the cessation of the Applicant’s business which arose on 31 March 2018, which was the date the Respondent urged upon the Tribunal as the date from which an increase should take effect.
The Tribunal agrees with the Respondent’s submission. Hence, pursuant to s 110(2) of the Act, 31 March 2018 is the date from which the Applicant’s entitlement to arrears in his rate of age pension is to be calculated.
DECISION
The decision under review is set aside and in substitution it is ordered that the Applicant is entitled to an increase rate of age pension from 31 March 2018 but no earlier.

59. I certify that the preceding fifty eight (58) paragraphs are a true copy of the reasons for the decision herein of Senior Member B J Illingworth

..................[Sgnd]..................................
Associate
Dated: 21 May 2020

Date of hearing:

27 June 2019;

3 October 2019; and

28 January 2020

Applicant:

Self-represented

Advocate for the Respondent:

Lee-Anne Odgers, Department of Human Services

[2020] AATA 1433

21 May 2020

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Jurisdiction

Procedural Fairness

Remedies

Statutory Construction