Catterall; Secretary, Department of Social Services and (Social services second review)
[2016] AATA 691
•8 September 2016
Catterall; Secretary, Department of Social Services and (Social services second review) [2016] AATA 691 (8 September 2016)
Division
GENERAL DIVISION
File Number(s)
2015/5262 &
2015/5263
Re
Secretary, Department of Social Services
APPLICANT
And
Graham Catterall &
Vanessa Catterall
RESPONDENT
DECISION
Tribunal Senior Member R W Dunne
Date 8 September 2016 Place Adelaide That the decision of the Social Services & Child Support Division of the Administrative Appeals Tribunal made on 3 September 2015 be set aside.
........................[Sgd]........................................
Senior Member R W Dunne
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Newstart Allowance – age pension – travel overseas – extension of deeming rules – purchase of asset-tested income stream – amending Act – continuously receiving income support payment – statutory interpretation – decision under review set aside.
LEGISLATION
Social Security Act 1991 (Cth), ss 23 and 38B
Social Security (Administration) Act 1999 (Cth), ss 42, Schedule 2 clauses 3 and 4(1) and 80
Social Services and Other Legislation Amendment Act 2014 (Cth), clause 48(2) of Part 2 of Schedule 11
CASES
Amalgamated Society of Engineers v The Adelaide Steamship Co Limited (1920) 28 CLR 29
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
De Waal and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 635
REASONS FOR DECISION
Senior Member R W Dunne
8 September 2016
INTRODUCTION
The applicant in this proceeding is Secretary, Department of Social Services (“Centrelink”). The respondents are Vanessa and Graham Catterall.
The respondents are both presently in receipt of age pension, but Mrs Catterall has only been receiving that benefit since May 2015. Prior to that, she was receiving newstart allowance (“NSA”).
In November 2014, Mrs Catterall used the balance of her superannuation to purchase an allocated pension. At that time, the allocated pension was not subject to the deeming rules in the Social Security Act 1991 (“Act”).
On 1 January 2015, the Social Services and Other Legislation Amendment Act 2014 (“Amending Act”) changed the law so that certain investments became subject to the deeming rules. However, application provisions in the Amending Act meant that certain persons would not be subject to the changed law. These persons are sometimes referred to as being “grandfathered”.
The respondents went overseas for a holiday on 21 February 2015 and returned on 20 March 2015. When they returned, Mrs Catterall’s NSA resumed, but at a reduced rate. Mr Catterall’s age pension had also reduced from 21 February 2015. These reductions were because of the application of the deeming rules.
When the respondents sought internal review of the decision to apply the deeming rules, an authorised review officer (“ARO”) found that the decision was correct. Mrs Catterall applied for further review by the Social Services & Child Support Division of the Administrative Appeals Tribunal (“AAT1”).
AAT1 set aside the determinations that had affect from 20 March 2015 and sent the matters back to Centrelink for reconsideration in accordance with the direction that, on and from 20 March 2015, the relevant amendments made by the Amending Act do not apply in relation to the respondents.
Centrelink has applied to this Tribunal for review of the decision of AAT1.
At the hearing, the applicant was represented by Mr B Dube from Sparke Helmore and the respondents were represented by Ms M Riley from Welfare Rights Centre (SA) Inc. I received into evidence the T documents[1] lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Cth), together with documents annexed to the respondents’ statement of facts and contentions marked Annexure 1-6.[2]
[1] Exhibit A1.
[2] Exhibit R1.
ISSUE FOR THE TRIBUNAL
The issue for the Tribunal is whether Mrs Catterall can be considered, since 1 January 2015, to have been continuously receiving an income support payment within the meaning of clause 48(2)(c)(i) of Part 2 of Schedule 11 of the Amending Act. (the “Relevant Provisions”).
LEGISLATION
The legislation relevant to the decision in this proceeding is contained in the Social Security Act 1991 (“Act”), the Social Security (Administration) Act 1999 (“Administration Act”) and the Relevant Provisions. To best explain how all the legislation operates, I set out first the application provisions that apply to the Relevant Provisions. These application provisions relevantly read:
“48 Application provisions
(1) The amendments made by Part 1 apply in relation to working out the ordinary income of a person in relation to days occurring on or after 1 January 2015.
(2) However, if:
(a)a person was receiving an income support payment immediately before 1 January 2015; and
(b)either:
(i) an asset-tested income stream (long term), that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994, was being provided to the person immediately before 1 January 2015; or
(ii) an asset-tested income stream (long term), that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the standards determined in an instrument under subparagraph 1099DAA(1)(b)(ii) of the Social Security Act 1991, was being provided to the person immediately before 1 January 2015; and
(c)since the start of that day:
(i) the person has been continuously receiving an income support payment; and
(ii) that asset-tested income stream (long term) has been provided to the person;
then the amendments made by Part 1 do not apply in relation to the person (the primary beneficiary) and that asset-tested income stream (long term).
…”
In relation to the Act, the word “receive” in s 23(1) is defined in s 23(2) and s 23(4) as follows:
“23(1) In this Act, unless the contrary intention appears:
…
receive has the meaning given by subsections (2), (3), (4), (4A) and (4AA).
…
(2) For the purposes of this Act (other than section 735), a person is taken to be receiving a payment under this Act from the earliest day on which the payment is payable to the person even if the first instalment of the payment is not paid until a later day.
(4) For the purposes of this Act, a person is taken to be receiving a social security payment until the latest day on which the payment is payable to the person even if the last instalment of the payment is not paid until a later day.”
In relation to the Administration Act:
(a)section 42 and clause 4 of Schedule 2 provides the general rule for a start date as the day on which the claim is made. Clause 4(1) reads:
“4 Start day—early claim
(1) If:
(a)a person (other than a detained person) makes a claim for a relevant social security payment; and
(b)the person is not, on the day on which the claim is made, qualified for the payment; and
(c)assuming the person does not sooner die, the person will, because of the passage of time or the occurrence of an event, become qualified for the payment within the period of 13 weeks after the day on which the claim is made; and
(d)the person becomes so qualified within that period;
the claim is taken to be made on the first day on which the person is qualified for the social security payment.
…”(b)section 80 provides for the cancellation or suspension of a social security payment. Section 80(1) reads:
“(1) If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:
(a) who is not, or was not, qualified for the payment; or
(b) to whom the payment is not, or was not, payable;
the Secretary is to determine that the payment is to be cancelled or suspended.”
BACKGROUND
Further to the matters that are described in paragraphs 5 to 7 of these reasons, the material background in this proceeding (largely extracted from the statements of facts and contentions prepared for the applicant and the respondents) follows below.
Mr Catterall was granted age pension from 1 May 2012. Mrs Catterall was granted NSA from 19 March 2012 and commenced receiving age pension from 29 May 2015. On 31 July 2014 Mrs Catterall contacted Centrelink to make an appointment with a Financial Information Services (“FIS”) officer. The appointment was to discuss options for managing her assets and income. The purchase of an income stream was suggested by the FIS officer. On 8 November 2014, Mrs Catterall purchased from Australian Super an allocated and market linked income stream. On 17 November 2014 she advised Centrelink, by letter, about the change in her asset holding.
On 1 December 2014, Mr Catterall enquired with Centrelink about travelling to New Zealand and the effect the overseas travel would have on his age pension. He was travelling to New Zealand with his wife on 16 December 2014 and returning to Australia on 29 December 2014. Mrs Catterall also called Centrelink to have her NSA reporting date changed because of her impending trip to New Zealand.
On 16 December 2014 Centrelink sent a letter to Mrs Catterall advising that her NSA had been stopped because she was not in Australia.
On 1 January 2015, certain amendments to the Act were made by the Amending Act and those amendments extended the deeming rules relating to account-based income streams. Part of the Amending Act made provision for “grandfathering” previous provisions with respect to the income-test treatment of account-based income streams.
On 21 February 2015, Mr and Mrs Catterall again departed Australia and, by virtue of the departure, Mrs Catterall’s NSA was suspended. On the same day, Mr Catterall’s age pension was reduced as a result of the cessation of the application of the Amending Act to Mrs Catterall. On 20 March 2015, Mr and Mrs Catterall returned to Australia. Mrs Catterall’s NSA resumed from that date, but at a reduced rate as a result of the cessation of the application of the Relevant Provisions to her.
On 24 March 2015, Mrs Catterall contacted Centrelink to query why the deeming rules had been applied to the account balance of her allocated income stream and why the “grandfathering” provisions had been lost. She claimed she had been given incorrect information and/or “given wrong advice”. On 8 April 2015, Mr and Mrs Catterall wrote to Centrelink to appeal the decision regarding the loss of the “grandfathering” provisions. On 4 May 2015 and 8 July 2015, an ARO made affirming decisions in relation to Mrs Catterall’s NSA rate and Mr Catterall’s age pension rate. On 12 June 2015 and 8 July 2015, Mrs Catterall and Mr Catterall sought review of the ARO decisions by AAT1. On 3 September 2015, AAT1 decided that the Amending Act applied to Mrs Catterall’s Australian Super investment and that:
(a)because the income stream had been purchased before 1 January 2015, it was subject to the exception in the Relevant Provisions; and
(b)s 38B of the Act applied.
EVIDENCE
In giving her evidence, Mrs Catterall said that she was given wrong advice and/or incorrect information by Centrelink when she met the FIS officer. She relied on this information when she decided to purchase the Australian Super investment. As a result, the deeming rules in the Act were applied to her income and, as a result, to the income of her husband. For deeming purposes, at the relevant time their income comprised NSA, age pension, part UK pension and share dividends. They received no income from paid work. Mrs Catterall said that Centrelink was claiming there was a break in continuity of her NSA payments and that the grandfathering provisions would not apply. She said she was receiving NSA and communications from Centrelink whilst she was away and there was no break in continuity so that her income stream should continue to be exempt from the deeming rules. In relation to her interview with the FIS officer on 31 July 2014, she said she was advised that it would be beneficial to commence an income stream before 1 January 2015 because the rules about deeming were changing. She said her documents list showed that she had regularly notified Centrelink about her overseas travel, and that whilst she was overseas she did not expect to be paid NSA.
CONSIDERATION
Since 1 January 2015, can Mrs Catterall be considered to have been “continuously receiving an income support payment” within the meaning of clause 48(2)(c)(i) of Part 2 of Schedule 11 of the Amending Act?
If you go into Google on the internet and search the “deeming rules”, you are told:
“The deeming rules are a central part of the social security income test. They’re used to assess income from financial assets for Social Security and Veterans’ Affairs income support payment purposes. Deeming assumes that financial investments are earning a certain rate of income, regardless of the amount of income they’re actually earning. If income support payment customers earn more than these rates, the extra income isn’t assessed.”
In s 23 of the Act, the term “income support payment” means a payment of:
(a)a social security benefit; or
(aa)a job search allowance; or
(b)a social security pension; or
(c)a youth training allowance; or
(d)a service pension; or
(e)income support supplement.
In this case, it was Mrs Catterall’s contention that she was given incorrect and/or incomplete information by Centrelink, and she relied on that information when deciding to purchase the Australian Super investment. This is most unfortunate but, like the AAT1 Member, I am unable to take that matter any further. It is possible that it may be dealt with differently, elsewhere.
The AAT1 Member said that the changes to the law made by the Amending Act apply to Mrs Catterall only for the period for which her NSA was not payable because she was absent from Australia from 21 February 2015 to 19 March 2015. However, the Member said that when her NSA allowance became payable again from 20 March 2015, the amended legislation did not apply to her in relation to the Australian Super investment. On my reading of all the relevant legislation, I believe this observation is incorrect. The legislative change brought about by the Amending Act took effect from 1 January 2015. As a result, the amended law from that date applied to certain investments which were made subject to the deeming rules. The relevant application provisions in Part 2 of the Amending Act were contained in Schedule 11. At the risk of repeating what is contained in paragraph 11 of these reasons, clause 48 of Schedule 11 relevantly reads:
“48 Application provisions
(1) The amendments made by Part 1 apply in relation to working out the ordinary income of a person in relation to days occurring on or after 1 January 2015.
(2) However, if:
(a)a person was receiving an income support payment immediately before 1 January 2015; and
(b)either:
(i) an asset-tested income stream (long term), that is an account‑based pension within the meaning of the Superannuation Industry (Supervision) Regulations 1994, was being provided to the person immediately before 1 January 2015; or
(ii) an asset-tested income stream (long term), that is an annuity (within the meaning of the Superannuation Industry (Supervision) Act 1993) provided under a contract that meets the standards determined in an instrument under subparagraph 1099DAA(1)(b)(ii) of the Social Security Act 1991, was being provided to the person immediately before 1 January 2015; and
(c)since the start of that day:
(i) the person has been continuously receiving an income support payment; and
(ii) that asset-tested income stream (long term) has been provided to the person;
then the amendments made by Part 1 do not apply in relation to the person (the primary beneficiary) and that asset-tested income stream) long term).
…”
In looking at clause 48(2), it is common ground that when Mrs Catterall was receiving NSA (which, from paragraph 23 above and the definitions in s 23(1) of the Act, is an income support payment) and that in November 2014 when she purchased the Australian Super investment, she commenced receiving an asset-tested income stream which was being provided to her immediately before 1 January 2015. And, if since the start of that date she had been continuously receiving an income support payment and the asset-tested income stream had been provided to her, then the deeming rules would not apply to that asset-test income stream.
However, the issue that arises is whether she had “been continuously receiving an income support payment” since 1 January 2015? In paragraph 25 of his reasons, the AAT1 Member acknowledged that Mrs Catterall had not actually been continuously receiving a NSA since 1 January 2015. It was clear that payment was broken by the period for which the payment was not payable because she was outside Australia. It is acknowledged that the break in actual continuity means that the changed law is applicable to Mrs Catterall and the Australian Super investment from the start of that break.
The AAT1 Member then suggests that, were it not for s 38B of the Act, that would indeed be the end of the matter. In analysing s 38B, the AAT1 Member compared the expression “having received an income support payment in respect of a continuous period” in s 38B(1) and the expression “continuously receiving an income support payment” in clause 48(2)(c)(i) of the Amending Act. In doing so, he then finds that s 38B does operate in a way that is relevant to the Relevant Provisions and Mrs Catterall is therefore not subject to the amended legislation as at 20 March 2015. Ms Riley (for the respondents) agrees with that approach. In paragraph 3.13 of the statement of facts and contentions for the respondents, she says that Mr and Mrs Catterall contend that the Act allows for Mrs Catterall to be treated as if she was continuously receiving NSA by virtue of s 23 and s 38B.
For the applicant, Mr Dube contends that the expression “continuously receiving an income support payment” in clause 48(2)(c)(i) should be given its ordinary meaning and the deeming provision in s 38B of the Act does not apply. He says the long-established principle of statutory interpretation is that the natural and ordinary meaning of the section or sections in an Act is the starting point of interpretation of any section: see Amalgamated Society of Engineers v The Adelaide Steamship Co Limited[3] and Project Blue Sky Inc v Australian Broadcasting Authority[4] . Applying those principles, there is little doubt (as appears to have been conceded by AAT1 in its decision) that the ordinary meaning of “continuously receiving” did not apply to Mrs Catterall by virtue of her departure from Australia on 21 February 2015 and the resulting suspension of her NSA.
[3] (1920) 28 CLR 129 at [161-2].
[4] (1998) 194 CLR 355.
I note that the applicant does not agree that there is any ambiguity in the expression “continuously receiving”. However, even if there was ambiguity and the common law purposive approach to interpretation and/or the application of s 15AA of the Acts Interpretation Act 1901 were considered, the applicant contends that the outcome would be the same. It seems to me that this reasoning is correct and if the purposive approach is applied the proper interpretation of clause 48(2)(c)(i) of Schedule 11 results in a conclusion that Mrs Catterall was not “continuously receiving an income support payment” from 1 January 2015 upon her departure from Australia on 21 February 2015.
Moreover, the Explanatory Memorandum to the Social Services and Other Legislation Amendment Bill 2013 identified that the estimated financial impact of extending the deeming rules to account-based income streams was ‘a saving of $161.7 million over four years’. Page 73 of the Explanatory Memorandum set out the intended purpose of clause 48(2) of Schedule 11. It said:
“It is intended that, if a person’s income support payment ceased to be payable and, on a later date, the same or another income support payment becomes payable to the person, that person would be subject to the amendments made by Part 1 from the day that the income support payment ceases to be payable to that person.”
On the evidence given by Mrs Catterall, Ms Riley has submitted that the Tribunal should infer continuous receipt from correspondence that has been received by Mrs Catterall from Centrelink. Mr Dube submitted (and I agree) that subsections 23(2) and 23(4) of the Act cannot in any way be envisaged to constitute receipt of an income support payment, simply because of the correspondence from Centrelink. I am unaware of any case law that could be relied upon to suggest that in some way an administrative letter from the administering department has the characteristic of amounting to receipt, or continuing receipt, of a payment under an Act.
Mr Dube also contended that s 18A of the Acts Interpretation Act 1901, which provides that “where a word or phrase is given particular meaning, other parts of speech and grammatical forms of that word or phrase have corresponding meaning”, does not apply in this proceeding. The expression “continuously receiving” is not a part of speech or a grammatical form of the expression “continuous period”.
Finally, Mr Dube referred to the decision of Deputy President Jarvis in De Waal and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs.[5] He contended that, although it is not a principle of statutory interpretation, the construction proposed by the applicant presently is consistent with the decision in De Waal, which interpreted the scope of s 38B of the Act. In my view, having read De Waal and what the Deputy President said, I see no reason why his decision does not provide persuasive support to the applicant’s case.
[5] [2009] AATA 635 at [54].
SUMMARY
To summarise the evidence and the submissions that have been put, in my opinion the effect will be as follows:
(a)clause 48(2)(c)(i) of Part 2 of Schedule 11 of the Amending Act did not apply to Mrs Catterall on her departure from Australia on 21 February 2015 and it was not re-established on her return to Australia on 20 March 2015;
(b)the calculation of Mrs Catterall’s NSA from 20 March 2015 required the inclusion of her Australian Superannuation allocated pension as “deemed income” in working out her ordinary income; and
(c)the calculation of Mr Catterall’s age pension from 21 February 2015, by virtue of Mrs Catterall being Mr Catterall’s partner and nominee, required the inclusion of her Australian Superannuation allocated pension as “deemed income” in working out his ordinary income.
CDDA SCHEME
Having regard to what I say in paragraph 35, it is possible that the respondents (or Mrs Catterall) might have grounds to make a claim for compensation under the CDDA Scheme.
DECISION
The AAT1 decision should be set aside and in its place it be determined that clause 48(2)(c)(i) of the Relevant Provisions did not commence to apply again to Mrs Catterall on her return to Australia on 20 March 2015 and accordingly her entitlement to NSA and Mr Catterall’s entitlement to age pension should be determined on that basis.
I certify that the preceding 37 (thirty-seven) paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne ......................[Sgd]..........................................
Administrative Assistant
Dated 8 September 2016
Date(s) of hearing 28 Jun 2016 Advocate for the Applicant Mr B Dube Solicitors for the Applicant Sparke Helmore Advocate for the Respondent Ms M Riley Solicitors for the Respondent Welfare Rights Centre (SA) Inc
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