Brignell and Secretary to Department of Family and Community Serv Ices

[2003] AATA 177

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 177

ADMINISTRATIVE APPEALS TRIBUNAL       )          No N2002/361

GENERAL ADMINISTRATIVE DIVISION
Re		John Spencer Brignell

Applicant

And Secretary to Department of Family and Community Services

Respondent

DECISION

Tribunal P.J. Lindsay, Senior Member

Date24 February 2003

PlaceSydney

Decision

The decision under review is set aside.  In substitution therefor the Tribunal remits the matter of entitlement to the pension bonus to the respondent for reconsideration in accordance with the directions that:

- the applicant is not disqualified for a pension bonus by reason of s.92C(b) of the Social Security Act 1991.

-   the applicant’s registration as a member of the pension bonus scheme takes effect from 3 August 1998.

(sgd) P. J. Lindsay

Senior Member

CATCHWORDS

SOCIAL SECURITY – pension bonus scheme – applicant paid age pension – failure to disclose income – age pension overpayment repaid – whether applicant entitled to pension bonus – decision set aside.

Social Security Act 1991 – ss.92C, 92H, 92T

Re Secretary, Department of Social Security and Jessop (1989) 17 ALD 62

REASONS FOR DECISION

P. J. Lindsay, Senior Member       

1. This is an application by Mr John Spencer Brignell (the applicant) for review of a decision made by the Secretary to the Department of Family and Community Services (the respondent) on 12 December 2001. The respondent’s decision was to reject the applicant’s claim that he was eligible to receive a pension bonus under Part 2.2A of the Social Security Act 1991 (the Act).  On 19 February 2002, the Social Security Appeals Tribunal (SSAT) affirmed the decision by one of the respondent’s authorised review officers that payment of age pension during 1996 to 1998 disqualified the applicant for entitlement to a pension bonus.  The applicant seeks a review by the Tribunal of the SSAT’s decision.

2. At the hearing, the applicant represented himself and Mr G. Lozynsky from Centrelink represented the respondent. The applicant gave evidence. The Tribunal had before it the documents (T documents) lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975.

3.      The issue to be decided is whether the applicant is qualified for the pension bonus.

4. The legislation for the pension bonus scheme is found in Part 2.2A of the Act. In the outline to the measure, s.92A of the Act states that “A person who qualifies for an age pension but defers claiming that pension may be able to get a single lump-sum pension bonus.”  The policy underlying the legislation was defined by the Hon. Phillip Ruddock MP, Minister for Immigration and Ethnic Affairs representing the Minister for Social Security in the Second Reading Speech for the Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998:

This scheme, which complements other Government measures for the aged, is designed to provide an incentive for older Australians to remain in the workforce. … By choosing to work longer, people can add to their individual savings for retirement.

The scheme will apply to people who qualify for age pension (or equivalent Veterans’ Affairs payments) but who delay their retirement and keep working.  …

5.      Section 92C sets out the eligibility criteria:

Qualification for pension bonus

A person is qualified for a pension bonus if:

(a) both:

(i) the person starts to receive an age pension at or after the time when the person makes a claim for the pension bonus; and

(ii) that age pension is received otherwise than because of a scheduled international social security agreement (within the meaning of section 1208); and

(b) the person has not received an age pension at any time before making a claim for the pension bonus; and

(c) the person is registered as a member of the pension bonus scheme; and

(d) the person has accrued at least one full-year bonus period while registered as a member of the pension bonus scheme; and

(e) the person has not received:

(i) a social security pension (other than an age pension or a carer payment); or

(ii) a social security benefit; or

(iii) a service pension (other than a carer service pension); or

(iv) an income support supplement (other than an income support supplement that is payable as a result of the operation of subclause 8(3) of Schedule 5 to the Veterans' Entitlements Act);

at any time after the person qualified for an age pension; and

(f) the person has not already received:

(i) another pension bonus; or

(ii) a bonus under Part IIIAB of the Veterans' Entitlements Act.

Note: Subclause 8(3) of Schedule 5 to the Veterans' Entitlements Act deals with income support supplement for carers.

6.      The applicant argues that, even though he was paid the age pension prior to making his application for the pension bonus, he had not been entitled to the age pension.  He has since repaid the overpaid age pension and argues that, in net terms, he did not receive a benefit from those payments.  He contends, therefore, that he is not a person who has received the age pension before claiming the pension bonus.  For the respondent it is contended that, according to the ordinary meaning of “received”, the applicant received the age pension before his claim for the pension bonus and accordingly, he did not satisfy the condition for eligibility in par (b) of s.92C.   Further, the respondent submitted that there were other reasons for affirming the SSAT’s decision and firstly noted that the applicant was not registered as a member of the pension bonus scheme until 29 August 2001.  In the respondent’s submission the applicant cannot receive a pension bonus with respect to any period prior to registration.  Finally, the respondent referred to s.92C(d) and submitted that the applicant did not qualify for the pension bonus because he had not accrued a full year period while registered as a member of the scheme, even if he passed the work test.

7.      The applicant was born on 10 September 1931.  He is currently receiving the age pension and a war disability pension. After successfully sitting for the government entrance examination for graduates, the applicant commenced employment on 28 September 1995 with the Department of Immigration and Multicultural Affairs (the Department), working at the Refugee Review Tribunal (RRT).  This employment continued for six years until 13 September 2001 (T2).  Prior to his working at the RRT, he said he had been employed at the University of Queensland in a variety of roles including deputy bursar, senior administrator, tutor and lecturer.  He took early retirement.

8.      In evidence, the applicant stated that he currently resides on his own in government housing, his wife having died some years ago.  He has three sons.  For approximately ten years after his wife’s death he had sole responsibility for support of a schizophrenic son, a responsibility that cost him in excess of $50,000 and has severely strained his financial position.  That son is currently residing with another son in order to give the applicant a break.  He does, however, intend for his son to move back in with him in the short term.

9.      On the basis of Centrelink’s records, the Tribunal finds that prior to 10 September 1996 on the applicant’s turning 65, he was paid disability support pension and from that date he was automatically transferred to the age pension. 

10.     The applicant’s evidence is that he continued to receive the age pension while working at the RRT because he relied on the advice from Centrelink officers that, on his level of income, he was entitled to the pension.  He said he twice made enquiries at different Centrelink branches regarding his entitlement to age pension.  He said he showed the officers a copy of his appointment by the Department that stated his income was approximately $16,000 a year.  The officers advised him that, because his wage from the RRT was well short of the average basic male wage in New South Wales, he was entitled to age pension.  The Tribunal notes that Mr Lozynsky could neither confirm nor deny that this advice was provided.  The Tribunal accepts the applicant’s uncontradicted evidence that he was advised by Centrelink that his income from the RRT did not affect his entitlement to receive the age pension.

11.     The applicant conceded that, during the time he was receiving the age pension while working at the RRT, it was likely he received notices from Centrelink informing him of his obligation to tell them if there was a change in his circumstances.  But relying on the oral advice from the Centrelink officers, he took it for granted he was entitled to receive the age pension.  As a result, he consistently failed to read Centrelink’s letters.   He does claim, however, that had the letters specifically stated he was not entitled to the money, or suggested he was acting improperly, he would have taken prompt action.

12.     Centrelink cancelled his age pension in October 1998 after the applicant came forward and informed Centrelink about his level of income.  He did so, he said, following contact from the Australian Taxation Office who advised him that his income exceeded the cut-off for age pension entitlement.  Centrelink subsequently raised two debts because of non-disclosure of income.  The debt in relation to disability support pension was $8,026 was for the period from commencing employment at the RRT on 28 September 1995 to 5 September 1996.  The debt in relation to his age pension was $20,013 for the period from 19 September 1996 to 29 October 1998. 

13.     Later, the applicant was prosecuted for fraud and he pleaded guilty.  The magistrate ordered a suspended sentence and fined him $1,000.  He was still required to repay the debts owed to Centrelink.  At the hearing before the Tribunal, he maintained he had not set out to commit fraud.

14.     In September 2001, he became eligible to receive his superannuation entitlement of around $30,000 in respect of his employment at the RRT.  His evidence is that he voluntarily informed Centrelink of his impending receipt of the superannuation money, whereupon Centrelink served garnishee notices under s.1233 of the Act on his bank seeking recovery of the debt.  Through the garnishee action, the applicant’s debt to Centrelink of approximately $28,000 including interest was paid in full. In a separate application to the Tribunal, he sought review of the respondent’s decision to recover the balance of debt in full by way of garnishee action but he later withdrew the application.

15.     The applicant made a number of telephone enquiries about the pension bonus scheme during 2001.  On 29 August 2001 he was registered for the pension bonus scheme as an accruing member (T11).  He enquired on 28 September 2001 whether he was entitled to the pension bonus for the period that he was working at the RRT after his age pension had been cancelled.  By letter dated 28 September 2001 (T11) Centrelink advised him that although he had been accepted as a member of the pension bonus scheme, “ … we will not be able to pay you a bonus because you have previously received income support payments since qualifying for Age Pension.”  Upon request by the applicant, an authorised review officer of Centrelink reviewed the decision to reject his claim for the pension bonus and on 12 December 2001 (T14) affirmed it stating “Unfortunately you did receive the age pension from when you turned 65.  This means that you are not qualified for the bonus”.  Following this, the applicant appealed to the Social Security Appeals Tribunal (SSAT) on 17 December 2001 (T2). 

16.     The applicant informed Centrelink on 12 December 2001 (T13) that as most of his superannuation money had been garnisheed in extinguishing his debts to Centrelink, he was hoping that his financial hardship would be relieved by a payment of the pension bonus. On 14 December 2001, the applicant wrote to Centrelink attaching an application form for the pension bonus for the three years from 1998 to 2001.  He wrote “It is important for me to state that I first became aware of the Scheme [pension bonus scheme] only two months ago.  I had never heard anything about it before then.”  He added in relation to his financial position, “I often think how costly for me has been that false advice I got from Centrelink officers back in 1996.  Instead of having a small nest-egg to care for my son and self in my final years I am virtually bereft.”  It appears, however, that Centrelink had a record of a telephone call from the applicant on 3 August 1998 enquiring about the pension bonus scheme.  During cross-examination the applicant said he found out about the pension bonus scheme fairly early, possibly in 1997 or 1998.  He remembered making a telephone call to Centrelink at that stage and being informed that he was not eligible because he had been receiving the age pension. He said that later on, he went into a Centrelink office, made a similar enquiry and received the same response. 

17.     The applicant said he was asking the Tribunal on review, to approach the issue of eligibility in a different way, or as he put it “to look at the big picture.”  He had repaid all his age pension for earlier years, a matter not contested by the respondent.  During 1998 to 2001, when he was working and not receiving the age pension, he submitted his actions had resulted in a saving of public money.  Being denied the pension bonus in these circumstances was harsh.   He referred to his being provided incorrect Centrelink advice at the outset, and to his volunteering information to Centrelink about possible overpayment and about his superannuation pay-out, which the respondent garnisheed in full, leaving him at age 72 with very little.

18. In Mr Lozynsky’s submission, the applicant could not satisfy the eligibility criterion in s.92C(b) of the Act because he had received age pension from September 1996 and prior to his claim for the pension bonus. He referred to the decision of Senior Member McMahon (as he then was) in Re Secretary, Department of Social Security and Jessop (1989) 17 ALD 62 and in particular to the following passage (at 65) “The ordinary and natural meaning of the word ‘receive’ has reference to the physical act of taking something into one's possession. ‘Receiving’ and ‘is not receiving’ have corresponding meanings. There is nothing difficult or obscure in understanding the meaning of these words, either in the abstract or in the context in which they are found.” In the present proceedings, it was submitted for the respondent that the age pension was received at the time it was available for the applicant’s use, which occurred on payment into the applicant’s bank account. While confident about its interpretation of the word ’received’ in s.92C(b), the respondent’s statement of facts and contentions referred to the following commentary about Re Jessop found in Social Security and Family Assistance Law by P. Sutherland and A. Anforth (Federation Press, 2001):

The Tribunal’s decision should not be construed as meaning that there are no circumstances in which a payment actually received will be deemed not to have been received.  The Tribunal was here dealing with a payment which was legally made at the time although it subsequently became repayable.  The Tribunal stressed this point.  The Tribunal seems to have left to one side the issue of whether a payment, which was illegal at the time it was made, could be deemed to have been received within the meaning of the Act.

It was also contended for the respondent that, even if s.92C(b) did not disqualify him, the effect of ss.92C(c) and 92C(d) was that the applicant was not entitled to the pension bonus for any period prior to his registration. Finally, it was submitted that a person must accrue a full year period of registered membership prior to qualifying for a bonus.

19.     In Re Jessop, special benefit was being paid to the husband of an applicant for family allowance supplement.  The relevant legislation provided that, in such circumstances, the applicant was not entitled to the supplement.  Subsequently, due to his receipt of a compensation payment, the husband was obliged to refund the special benefit.  His wife then argued that her husband should be regarded as not having received the special benefit, and thus she was entitled to the supplement.  Senior Member McMahon said it was not possible to look at the application for the supplement retrospectively.  At the time of the claim for the supplement, the special benefit was being paid to the husband and thus the wife was not then entitled to the supplement.  At p.65 Senior McMahon observed that “There was no dispute between the parties that special benefit was properly payable to the respondent’s husband at the relevant time.  He was entitled to it by virtue of the then existing circumstances.  It could not be suggested that payment was at that time illegal or not in accordance with law.”

20.     Section 43 of the Act contains the criteria for qualification for the age pension.  The applicant satisfied those criteria on turning 65.  The rate of age pension payable to him, however, was affected by the amount of his income from other sources: ss.55 and 1064 of the Act.  It was not disputed, and the Tribunal finds, that while he was working at the RRT, his level of income resulted in a nil rate of age pension being payable to him.  In the Tribunal’s opinion, the decision in Re Jessop may be distinguished. Here, prior to cancellation of the age pension in October 1998, the applicant was not entitled to the amount of age pension paid to him. The Tribunal accepts the applicant’s uncontradicted evidence that he has paid it back in full. On these facts, it can be appreciated that the applicant has not received the benefit of the age pension during the period from his turning 65 in September 1996 to September 2001 when he finally retired. He is an individual who chose to continue working past retirement age. He is one of the intended beneficiaries of the policy reflected in Part 2.2A of the Act. The Tribunal, therefore, accepts the applicant’s submission that s.92C(b) does not disqualify him for the pension bonus.

21.     That, however, is not the end of the matter. There are a number of other conditions in s.92C for the applicant to satisfy so as to qualify for the pension bonus.  Before going to those, the Tribunal notes the registration requirements for the pension bonus scheme that are contained in s. 92H of the Act:

…

(2) If a person's date of qualification for the age pension occurs before 1 July 1998:

(a) the person must lodge an application during the period that begins on the commencement of this section and ends 13 weeks after 1 July 1998; and

(b) if registration occurs as a result of an application lodged within that period—the registration takes effect on 1 July 1998.

Note: The Secretary may extend the period: see subsection (3).

Late applications

(3) The Secretary may extend the period within which a person must lodge an application. If registration occurs as a result of an application lodged during an extended period, the registration takes effect:

(a) on the date on which the application is lodged; or

(b) if the Secretary decides that it should take effect on another date—on that other date.

(4) The Secretary must not make a decision to extend the period within which a person must lodge an application unless, if it were assumed that the person had been a member of the pension bonus scheme throughout the pre-application period:

(a) the person would have been a non-accruing member for all of the pre-application period; or

(b) both:

(i) the person would have been an accruing member for some or all of the pre-application period; and

(ii) the person would have passed the work test for each test period that is applicable to the person.

Note 1: Pre-application period is defined by subsection (5).

Note 2: Test period is defined by subsection (6).

(5) For the purposes of this section, the pre-application period is the period beginning on:

(a) in the case of a person whose date of qualification for the age pension occurs on or after 1 July 1998—the person's date of qualification for the age pension; or

(b) in the case of a person whose date of qualification for the age pension occurs before 1 July 1998—1 July 1998;

and ending on the date on which the person lodged the application.

…

22. Having qualified for the age pension prior to 1 July 1998, the applicant was required to have lodged an application for registration as a member of the pension bonus scheme no later than 13 weeks after 1 July 1998. Registration as a member of the pension bonus scheme is mandatory and an important element in the scheme of Part 2.2A of the Act. Applying for registration is a separate procedure to making a claim for the pension bonus: s.92M. Under s.92H(3) the Secretary has a discretion whether to accept a late application for registration. The discretion was exercised to extend the time for applying to register as the applicant was registered as an accruing member of the pension bonus scheme from 29 August 2001. His explanation for not applying for registration at the time when he first made enquiries about the pension bonus scheme on 3 August 1998 (T4), was that he was advised that his receiving the age pension disqualified him. He said he accepted that advice. Later, he received legal advice to the effect that he could argue he was qualified for the pension bonus for the period commencing from cancellation of his age pension, a period when he said he was “a clean skin.” Apart from his enquiry in August 1998 and again in January 2001, the applicant did not take any action to apply for registration until 29 August 2001.

23.     There are two limbs to s.92H(3).  First, there is the respondent’s discretion to extend time for applying to be registered as a member of the pension bonus scheme.  That discretion has been exercised.  Secondly, the provision deals with the time from which registration, based on a late application, takes effect.  Par (b) of s.92H(3) gives the Secretary a power to decide on a date, other than the date on which the late application was lodged, as the effective date.  Mr Lozynsky referred the Tribunal to the Guide to Social Security Law prepared by the Department of Family and Community Services.  In relation to s.92H(3), the Guide states that the respondent may backdate registration if there are special circumstances.  The following are examples of the customer’s individual circumstances that the Guide states may warrant backdating the registration:

- was overseas;

- lives in a remote area;

- speaks little or no English;

- saw the original Budget announcement (which did not indicate a requirement to register) and thought they did not have to register; or

-   did not see advertising of the scheme and based on their  knowledge of the local advertising coverage, the delegate considers the customers’ claims to be reasonable.

It is noted that the expression ‘special circumstances’ does not appear in the legislation.

24.     The applicant asks for the discretion in s.92H(3)(b) to be exercised and his membership in the pension bonus scheme to take effect from the cancellation of his pension.  He said Centrelink advised him in August 1998 that he was not qualified to join the pension bonus scheme as he had been receiving the age pension.  Accordingly, he dropped the matter.  The Tribunal considers that his action was quite understandable.  He made a further enquiry about membership in January 2001 and followed up with a formal application on 29 August 2001.  The Tribunal is troubled by the statement in his letter of 14 December 2001 to Centrelink that he learned about the scheme only in October 2001, thus contradicting his evidence at the hearing that it was some years ago that he became aware of the scheme.  Against that is his unchallenged evidence that he acted on incorrect Centrelink advice at the outset, he alerted Centrelink to the overpayment of age pension leading to its immediate cancellation and he informed Centrelink about his superannuation payment details to enable the debt to be fully recovered.  He was paid age pension until 29 October 1998 without entitlement, but has repaid all of the overpayment. The Tribunal also takes into account that the purpose of the pension bonus scheme is to encourage people to remain in the workforce, defer retirement and receipt of the age pension. The applicant’s actions mark him as a person intended to benefit from the pension bonus scheme.  Mr Lozynsky submitted that the Tribunal should not exercise its discretion because the applicant failed to declare his income while being paid the age pension.  While that may be so, nevertheless the applicant has repaid his debt. His failure to respond to Centrelink notices regarding income limits for pension recipients is not a matter that the Tribunal sees as relevant to explaining why he did not pursue registration in the pension bonus scheme.  The Tribunal is satisfied, therefore, that it is appropriate in the circumstances of this matter to backdate the effect of registration to 3 August 1998.  He is qualified for the bonus only in respect of bonus periods accruing from that date: s.92C(c).

25.     The respondent raised s.92C(d) which requires a person to accrue a minimum, one full-year bonus period while registered.  This leads to s.92T concerning the accrual of bonus periods.  It states:

92T(1) The first bonus period that accrues to a person is the full-year period of the person's accruing membership of the pension bonus scheme:

(a) that began on whichever of the following dates is applicable:

(i) if the person was an accruing member of the pension bonus scheme on the date the person's registration as a member took effect—the date the registration took effect;

(ii) in any other case—the date on which the person first became an accruing member of the pension bonus scheme; and

(b) for which the person passes the work test.

Note: Accruing membership is defined by section 92N.

As the applicant is an accruing member, the bonus period starts from the date of his backdated registration, 3 August 1998.  The work test, in the applicant’s situation, requires him to have gainful work for at least 960 hours in the year commencing from that date (s.92A)..  The matter should be remitted to the respondent to determine whether the applicant satisfied the work test during his period of accruing membership.

26.     For these reasons, the decision under review is set aside.  In substitution therefor the Tribunal remits the matter regarding the applicant’s entitlement to the pension bonus to the respondent for reconsideration in accordance with the directions that:

- the applicant is not disqualified for a pension bonus by reason of s.92C(b).

-   the applicant’s registration as a member of the pension bonus scheme takes effect from 3 August 1998.

I certify that the preceding 26 paragraphs are a true copy of the decision and reasons for decision of P.J. Lindsay, Senior Member:

Signed:         
          ....................................................................................……………………………….

Associate

Date of Hearing  25 October 2002

Date of Decision  24 February 2003

Applicant  Self-represented

Respondent’s Representative     Centrelink