Caspersz; Secretary, Department of Family and Community Services
[2003] AATA 1300
•18 December 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1300
ADMINISTRATIVE APPEALS TRIBUNAL N° V2003/858
GENERAL ADMINISTRATIVE DIVISION
Re: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Applicant
And:STANMORE CUTHBERT CASPERSZ AND CLARICE THELMA CASPERSZ
Respondents
DECISION
Tribunal: M.J. Carstairs, Member
Date: 18 December 2003
Place: Melbourne
Decision:The Tribunal sets aside the decision under review and substitutes the decision that the date of effect of the favourable determination increasing the rate of the respondents’ age pension is 16 July 2002.
(sgd) M.J. Carstairs
Member
SOCIAL SECURITY – age pension – pensions paid at rates lower than entitled – what constitutes notice of decision
Social Security (Administration) Act 1999 s109, s110
Austin v Secretary, Department of Family and Community Services (1999) 57 ALD 330
Secretary, Department of Family and Community Services v Rogers (2000) 65 ALD 185
Re Secretary, Department of Family and Community Services and Plug [2000] AATA 744
Re Peura and Secretary, Department of Family and Community Services [2003] AATA 1123
Re Frost and Secretary, Department of Social Security (AAT 10360, 17 August 1995)
REASONS FOR DECISION
18 December 2003 M.J. Carstairs, Member
1. This is an application by the Secretary, Department of Family and Community Services (the applicant) for review of a decision made by the Social Security Appeals Tribunal (the SSAT) on 3 July 2003. The SSAT set aside decisions made by a delegate of the applicant to increase the rates of the age pensions of Stanmore Cuthbert Caspersz and Clarice Thelma Caspersz (the respondents) from a date no earlier than 19 July 2002.
2. At the hearing the applicant was represented by Mr M. Todd, a Centrelink advocate. Mr Caspersz presented the case on behalf of his wife and himself and was assisted in the hearing by his accountant, Mr N. Bandara.
3. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act1975 as well as the Statement of Facts and Contentions filed by the applicant on 16 September 2003.
BACKGROUND
4. The respondents each receive age pension, and Mr Caspersz receives carer allowance, as his wife is ill. Their rates of age pension are affected by their financial investments. In 1995 they advised the applicant that they had purchased two AMP annuities, and that the annuities would mature in five years, that is on 1 February 2001. The applicant’s delegate made a computer record of the annuity and the date of maturity. The respondents’ rates of pension were recalculated as a result of the annuities.
5. When the annuities matured, the respondents purchased different financial investments with the proceeds. Centrelink continued to assess the annuities as assets because it was unaware of the different financial investments.
6. In about July 2002, the respondents with the assistance of Mr Bandara made enquiries about their rates of pension. Over the next month the true nature of the new investments was clarified and the rates of pension were adjusted. However, the decision made by the applicant’s delegate was that the rate of pension could not be retrospectively adjusted from 1 February 2001. The applicants sought review of this decision on 26 August 2002 (T23). The SSAT decided that the respondents’ pensions could be adjusted from 1 February 2001, and that arrears of pension could be paid, except for the period from 6 June 2001 to 11 September 2001.
7. The applicant now seeks review of the SSAT decision, the issue being the amount of arrears of pension, if any, that can be paid to the respondents.
EVIDENCE
8. At the hearing the applicant and respondents advised the Tribunal that they did not dispute the facts as found by the SSAT in its decision. These facts are set out above in paragraphs 4, 5, 6, and 7.
9. The documentary materials before the Tribunal included the following letters to each of the respondents:
(a)letters dated 27 June 1996 (the first letters) (T8) stating that the rate of pension will be $195.90 per fortnight starting from 11 July 1996. The letters went on to state, under a heading, "What has happened to change the amount that you get", that there had been a cost of living increase and a change of rules to work out income from financial investments. In the part headed "How we have assessed your combined yearly income," the letters stated that the respondents' financial investments were assessed at $627.20; superannuation/annuities was assessed at $13,474.00, and total income was assessed at $14,101.20;
(b)letters dated 1 February 2001 to Mr Caspersz and 15 February 2001 to Mrs Caspersz (the second letters) (T9,T10) advising that the respondents had been assessed as eligible for a Bonus Payment of $1000 on the basis of taxable income assessed as $12,834 for Mr Caspersz and $12,833 for Mrs Caspersz for the 1998/1999 financial year; and
(c)letters dated 19 June 2001 (the third letters) (T11) stating that the rates of payment of age pension were:
(i) between 6 June 2001 and 19 June 2001 ‑ $568.22;
(ii) between 20 June 2001 and 3 July 2001 ‑ $277.46; and
(iii)from 19 July 2001 onwards (referred to as regular payment) ‑ $268.31.
The third letters went on to state, under the heading "Information used for calculating your regular payment", that the rate of age pension was based on a combined annual income amount of $13,934.56.
10. The first and third letters set out what information must be provided to Centrelink. The first letters, under the heading "What you must tell us", stated that under the legislation (both the first and third letters refer to s68 and s69 of the Social Security Act1991) the respondents must advise:
…
if you or your partner buy or sell any shares of managed investments;
…
if you or your partner’s combined financial investments go above $16,344 (this is $1,000 more than the value of financial investments we have recorded for you);
if you or your partner start any new accounts;
…
11. The first letters, but not the third, also required that the respondents must advise Centrelink if your combined income… is incorrect.
12. A computer record (T14) noted that on 16 July 2002 Centrelink was advised that the respondents had transferred their money to different investments during the previous year and other information recorded might be incorrect. Review forms, headed "Income and Assets Review" (T15), were returned on 19 July 2002 and stated that the respondents held $114,125 in an AMP Balanced Fund and $5007 in a BT Fund. On 6 August 2002, Centrelink sent letters (T18) to the respondents stating that their new rate of payment would be $286.38 each per fortnight. In the course of the respondents asking for further clarification about their assessments (T19), the situation regarding what took place with the annuities in February 2001 was clarified (T21). A letter dated 19 August 2002 (T22) advised the respondents that they would be paid $355 per fortnight from 19 July 2002, the date on which the "Income and Assets Review" forms were lodged.
CONSIDERATION OF THE ISSUES
13. The Social Security (Administration) Act 1999 (the Act) provides for the administration of a system of social security payments under the Social Security Act 1991. Under s78 of the Act:
78 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.
14. The Act refers to and defines, for different purposes, the term favourable determination. The respondents discovered that they were being paid at a lesser rate than was due under the legislation. Under the Act a new determination needed to be made. Section 108 defines such a decision under s78, correcting the rate of pension, as a favourable determination. Section 109 and 110 set dates of effect for favourable determinations of this kind.
15. Section 109 of the Act deals with setting the date of effect of the favourable determination where the favourable determination comes about because a review has been conducted, whether the review occurred at the claimant's request, or was on the applicant’s own motion. The facts of the present matter raise only the question of review at the respondents’ request. The date that may be set under s109 turns on whether notice is given to the person informing the person of the original decision. Section 109 of the Act provides:
109(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.
109(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.
109(3) ...If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)the person is not given notice of the original decision; and
(c)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.
16. Section 110 of the Act provides for the setting of dates of effect where claimants provide information about changed circumstances:
110(1) …Subject to subsections (2) to (11) (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 the later.
17. The Federal Court, in Austin v Secretary, Department of Family and Community Services (1999) 57 ALD 330 and Secretary, Department of Family and Community Services v Rogers (2000) 65 ALD 185, interpreted sections of the Social Security Act 1991 which are essentially the same as s109 and s110 of the Act. Both cases looked at whether certain letters or forms constituted sufficient notice to a social security recipient that a decision had been made. The Federal Court decisions have been applied in decisions of the Tribunal, including Re Secretary, Department of Family and Community Services and Plug [2000] AATA 744 and Re Peura and Secretary, Department of Family and Community Services [2003] AATA 1123.
18. Mr Todd submitted that the first letters and third letters were valid notices under the legislation, and the respondents were under an obligation to notify the applicant that they had purchased different investments. He said there was no record that the respondents advised Centrelink about the changed financial investments until July 2002.
19. Mr Todd submitted that although the respondents had advised Centrelink in March 1995 that they had AMP annuities due to mature in February 2001, this was not sufficient to discharge their obligations to keep Centrelink informed about changed circumstances. He submitted that many possible events could have affected the maturity of the annuities between 1995 and 2001.
20. Mr Todd said that the information provided in July 2002 about the change to investments came within the expression an event or change of circumstances, and s110 of the Act applied to it, limiting the date of effect to the date upon which Centrelink was notified of the change of circumstance. That date was 19 July 2002; the date set by the original decision‑maker in a decision dated 19 August 2002. Mr Todd said that the respondents were told of this decision on 19 August 2002, and this notice of decision was the original decision referred to in s109 of the Act. He said that as the respondents sought review of the decision within 13 weeks, it followed that the date of effect of any favourable decision on review was limited by s109(1) of the Act, to 19 July 2002. He referred the Tribunal to the Federal Court decision in Austin.
21. Mr Todd submitted that there was no decision made in February 2001. Therefore, s109 of the Act cannot apply earlier than July 2002, since the application of s109 is dependent on there being an original decision being made, for which notice is or is not given. He submitted that the Tribunal should set aside the SSAT decision and reinstate the decision increasing the rates of pension from 19 July 2002 only.
22. The respondents submitted that it is difficult for pensioners to understand the calculations used by Centrelink to assess income. The respondents believed that the amount that they were receiving was calculated correctly. Mr Bandara said that in February 2001, when the investment matured, Mrs Caspersz was very ill. Nevertheless, Mr Caspersz was confident that he had sent the information to Centrelink in February 2001. Mr Caspersz told the Tribunal that although he usually delivered documents personally to Centrelink, on this occasion he could not find the time to deliver it because of his wife’s poor state of health. Mr Bandara said that s109 of the Act allowed the requests in July 2002 to be treated as requests for review, and s109 then allowed arrears to be paid in certain circumstances. He said that there was no question that the respondents were entitled to be paid more after the annuities matured, and the correct outcome now is that they should be paid.
23. The Tribunal reached its decision taking into account the written and oral evidence and the submissions at the hearing. The Tribunal agrees with the applicant’s submission that the second letters have no role to play in deciding the question of whether arrears can be paid. Although the second letters are a notice of a decision, and refer to income details, they are not decisions about the pensions and are based on taxable income in a previous year. Age pension is not assessed on taxable income, hence while they are notices of decisions, they have no bearing on the outcome of this matter. The first letter and third letters deal directly with the respondents’ age pensions and the rates of those pensions. These letters had two functions. The letters advised the respondents about decisions made about the rates of their pensions. The letters also set out their obligations under the Act. (The later repeal of s68 and s69 of the Social Security Act1991 referred to in these letters does not affect the ongoing nature of the respondents’ obligations).
24. The Tribunal is satisfied that the first and third letters were valid notices about the respondent's obligations. The respondents were therefore required to notify Centrelink of the changed circumstances in February 2001, when they purchased new financial investments. The material shows the changed investments were managed investments, and so came within the letters’ references to …if you or your partner buy or sell any shares of managed investments. The first letters also set out that the respondents must advise if your combined income… is incorrect. As a consequence of the changed financial investment the combined income amount set out in the first letters also changed. The respondents were required to advise Centrelink of that change to combined income.
25. The Tribunal is satisfied that specific obligations were set out in the first and third letters and could not be met merely by having told Centrelink five years earlier that the investment in the annuities would mature in 2001. The respondents had a positive obligation to advise Centrelink of the new information about the investments. The Tribunal is satisfied that the respondents did not tell Centrelink about the change of circumstance. Mr Caspersz thought that he sent the letter of advice, but acknowledged that he was preoccupied with his wife’s health at the time. On the balance of probabilities the Tribunal is satisfied, as was the SSAT, that the respondents did not notify Centrelink of the change of circumstances. Centrelink did not have knowledge of the change, and continued to assess the rate of the pensions taking into account the income from the annuities.
26. The Tribunal agrees with the applicant’s submission, that although the respondents told Centrelink in 1995 that the annuities would mature in 2001, this was not sufficient to discharge their obligations generally or discharge the specific obligation arising from the notice under s68 of the Social Security Act1991 contained in the first and third letters.
27. The Federal Court decisions of Austin and Rogers establish that there is no requirement, for a notice of decision to be valid, that the reasons for decision be given. In Rogers the Court said at page 196:
…
A requirement that a person be given notice of something does not demand that the matter be brought home to the person’s understanding or knowledge; nor is notice synonymous with knowledge…
In my view, the matter to be communicated by the “notice” referred to…is the making of a decision in relation to a… [pension] which is a reviewable decision under s 1240 of the Act. That involves two elements; the fact that a decision has been made and the content of the decision…
28. In Austin the Federal Court said that, in the case of a decision correctable under the equivalent of s78 of the Act, it must be a communication that a decision has been made to pay him or her…at a particular rate.
29. The Tribunal is satisfied that the first and third letters meet the requirements as described by the Federal Court for valid notices of decision. The Tribunal finds that the first and third letters were valid notifications of decisions about the rate of the respondents’ pensions and they provided information about income being used as the basis of the assessment of the rates of pension. The decisions also provided full information about appeal rights in regard to the decisions, a matter addressed by the Federal Court in Rodgers. After the annuities matured in February 2001, and Centrelink continued to assess the rates of pension including the annuities, the respondents were told of this in the third letters.
30. A claimant’s enquiries about the rate of payment may sometimes be characterised as both a request for review and the giving of information about changed circumstances. That is the case here. When both s109 and s110 of the Act apply and produce different dates of effect, then logic and good administration dictate that the earlier date prevails.
31. Applying s109 of the Act to the facts of this case, the first and third letters are notices of original decisions within the meaning of that section. The respondents did not seek review of either decision within 13 weeks of the notices being given to them. It follows that the date of effect is the date the respondents made an application for review, which the Tribunal finds is 16 July 2002, the date of a computer entry (T14) when the respondents or Mr Bandara told Centrelink that the investment information was incorrect. In all the circumstances this contact should be treated as requests by the respondents for review of the decisions about the rates of their age pensions: Re Frost and Secretary, Department of Social Security (AAT 10360, 17 August 1995).
DECISION
32. The Tribunal sets aside the decision under review and substitutes the decision that the date of effect of the favourable determination increasing the rate of the respondents’ age pensions is 16 July 2002.
I certify that the thirty‑two [32] preceding paragraphs are a true copy of the reasons for the decision of:
M.J. Carstairs, Member
(sgd) Olympia Sarrinikolaou
Clerk
Dates of hearing: 10 October 2003
Date of decision: 18 December 2003
Advocate for applicants: Self-represented
Advocate for respondent: Mr M. Todd, Centrelink
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