Clark and Secretary, Department of Family and Community Services

[2003] AATA 250

Administrative

Appeals

Tribunal

 

DECISION [2003] AATA 250

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   N2002/615

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Keith and Norma Clark

Applicants

And Secretary, Department of Family and Community Services

Respondent

DECISION

Tribunal Mr RP Handley, Deputy President

Date4 March 2003

PlaceWallsend

Decision For the reasons given orally at the conclusion of the hearing, the Tribunal affirms the decision under review.

...............................................

RP Handley
  Deputy President 

DECISION

4 March 2003 Mr RP Handley, Deputy President          

This is an application by Keith and Norma Clark (“the Applicants”) for a review of a decision of the Social Security Appeals Tribunal (“SSAT”) made on 27 March 2002 to set aside a decision of a delegate of the Secretary, Department of Family and Community Services (“the Respondent”) and to remit the matter to the Respondent with directions that Mr and Mrs Clark are entitled to arrears of age pension from 23 June 2001. At the hearing, which was held in Wallsend, the Applicants were self represented and the Respondent was represented by Susan Mantaring, Advocate, of Centrelink. The evidence before the Tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the T documents”), together with the documents tendered by the parties at the hearing. Mr and Mrs Clark gave oral evidence at the hearing.

Background

Mr Clark was born on 10 December 1923 and is aged 79.  Mrs Clark was born on 11 September 1925 and is aged 77.  On 13 February 1992, Mr and Mrs Clark were granted the age pension.  On 16 September 1999, they advised the Respondent that they had transferred a block of land at Lot 418 Gan Gan Road, Anna Bay valued at $60,000 to their son.  On 20 September 1999, the Respondent wrote to Mr and Mrs Clark advising them of their total combined assets which included the deprived asset coded at $50,000 from the transfer of the land. 

On 16 March 2000, Mrs Clark informed the Respondent that she had received $78,000 from a legacy under her mother's will and that Mr Clark had received $1000.  On 27 March 2000, the Respondent wrote to Mr and Mrs Clark advising that their age pension had been reduced because of the increase in their total combined assets.  On 23 June 2001, the Respondent wrote to Mr and Mrs Clark advising of an increase in their total combined assets as a result of a revaluation of another block of land they held from $130,000 to $150,000. 

On 21 August 2001, Mr and Mrs Clark made a representation to the Respondent through the National Party candidate for their electorate, Ian Shaw.  On 13 December 2001, an authorised review officer determined that the transfer of the land to their son involved the transfer of the legal interest in the land under a constructive trust and was not a gift and because Mr and Mrs Clark were not transferring any beneficial interest in the land.  The review officer awarded arrears of pension from 21 August 2001 being the date of the Clarks' representation to the Respondent.  This decision was confirmed by a different authorised review officer on 9 January 2002. 

On 10 January 2002, Mr and Mrs Clark lodged an application for a review of the decision with the SSAT.  On 27 March 2002, the SSAT notified Mr and Mrs Clark that they had set aside the decision and remitted the matter to the Respondent with directions that arrears of pension be paid from 23 June 2001.  On 3 May 2002, Mr and Mrs Clark lodged an application for a review of the SSAT decision by the Tribunal.  They subsequently lodged a claim for compensation for detriment caused by defective administration in respect of arrears of age pension for the period 16 September 1999 to 20 August 2001.  The ground for this claim was that on 16 September 1999 a departmental officer failed in her duty of care by not telling Mr and Mrs Clark about constructive trusts.  On 15 October 2002, this claim for compensation was rejected on the basis that it had not been established that Mr and Mrs Clarks’ loss was caused by defective administration.  The Tribunal notes that there is no right of administrative review by the Tribunal in respect of such a decision. 

Applicable Legislation
The relevant legislation is s 109(1) and s 109(2) of the Social Security (Administration) Act 1999 (“the Act”) which states as follows:

(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.

Mr and Mrs Clark's evidence
Mr Clark said that in 1978, their oldest son, Bruce, who is a panel beater and their next son, Ian, who is an electrician, were both working in Western Australia.  Bruce and Ian asked their parents to buy a block of land for them at Anna Bay which is near Nelson Bay where they could set up a business.  Mr and Mrs Clark did this on the basis that the ownership of the land was to be shared equally between Bruce and Ian.  However, since their sons were still in Western Australia, the land was registered in Mr and Mrs Clark's names.  Three or four months later, Bruce and Ian returned to New South Wales and set up a business on the block of land which they operated for the next 21 years. Then in 1999, they decided to dissolve their partnership.  This was an amicable agreement as Bruce no longer wished to be involved in the panel beating business because of a downturn in such business.

Bruce and Ian agreed that Ian would buy out Bruce's share but, to do this, he needed to borrow money from the bank and to secure this borrowing, the bank required the title deeds of the land.  Mr and Mrs Clark therefore arranged with their solicitors for the title of the land to be transferred to Ian and this occurred on 15 September 1999.  Mr and Mrs Clark then contacted Centrelink to inform them of the transaction.  They arranged to see Ms Robyn McLean, a financial information service officer, at Centrelink on 16 September 1999 and explained to her what had occurred in the terms set out above.  Ms McLean told them that in law the transfer constituted a gift to their son of $60,000 and, allowing for the transfer of $10,000 permitted by law, this meant that the remaining $50,000 would be recorded as an asset of which they had deprived themselves by gift for the purposes of assessing the rate of age pension payable to them over the next five years.

When Mr Clark objected to this, Ms McLean said this was how the law was applied and suggested that there was nothing more Mr and Mrs Clark could do about it.  Ms McLean did not mention that they could appeal against this decision within three months although Mr and Mrs Clark acknowledged that this was stated on the reverse of the letter dated 20 September 1999 which notified them of the change in the rate of pension payable.  At no time did Ms McLean mention a constructive trust.  Mr and Mrs Clark believe she should have done so and the fact that she did not reflects her inadequate training.  Because Ms McLean had advised Mr and Mrs Clark that this was how the law was applied they thought there was nothing more they could do about it. 

It was not until mid 2001 when Mrs Clark found she could no longer manage on the amount of pension and investment income they were receiving that they again queried whether Centrelink had made the correct decision.  They therefore contacted Ian Shaw, the National Party candidate for their local electorate who in turn contacted Centrelink in Canberra on their behalf on 21 August 2001.  When this did not result in any favourable action, Mr and Mrs Clark contacted Senator John Tierney who made representations on their behalf to the Minister, Senator Amanda Vanstone.  This led to recognition of Mr and Mrs Clark having held the land for their sons under a constructive trust.

Submissions for the Applicant

Mr and Mrs Clark submitted that they had suffered a loss of pension as a result of incorrect advice from Ms McLean for which they should be compensated.  Ms McLean gave them the wrong information.  She said the transfer of land was a gift and Mr and Mrs Clark relied on this. 

Submissions for the Respondent

Ms Mantaring, for the Respondent, said the Respondent now recognises that a constructive trust was created in respect of the block of land in Anna Bay in 1999. However, Mr and Mrs Clark did not seek a review of the decision of 20 September 1999 reducing the rate at which their aged pensions were payable until 21 August 2001 when Mr Shaw made representations to Centrelink on their behalf.  This was more than three months after notification of the decision on 20 September 1999.  As Mr and Mrs Clark acknowledge, the letter of 20 September 1999 notified them that they had three months within which to seek a review.

Ms Mantaring said the application of s109(2) of the Act means that arrears of age pension can only be payable from the day on which the application for the later favourable determination was made. Ms Mantaring noted that Mr and Mrs Clark's claim for compensation for defective administration is currently being investigated by the Commonwealth Ombudsman. The Department's decision to refuse payment of compensation is not a decision which is reviewable by the Tribunal.

Consideration Of The Law And Findings

On the basis of Mr and Mrs Clark's evidence, the Tribunal finds, that on 16 September 1999 they provided a financial information service officer, Ms Robyn McLean with all relevant information concerning the transfer of ownership of the block of land at Anna Bay to their son, Ian.  This included background information concerning their purchase of the land in 1978 for their sons, Bruce and Ian, who were soon to return to New South Wales from Western Australia to set up a business.  Ms McLean informed Mr and Mrs Clark that the transfer of the block to Ian for $60,000 was a gift.  Gifts of $10,000 were permitted under the Social Security legislation.  The excess value over and above $10,000 would be treated as a gift of $50,000 which would be taken into account in calculating the rate of age pension payable to Mr and Mrs Clark over the next five years.

The Tribunal finds that because Ms McLean informed Mr and Mrs Clark that this situation arose by operation of the law, they believed there was no point in challenging the decision.  It was not until mid 2001, when Mrs Clark had difficulty in managing from their age pension and investment income, that they decided to challenge the decision made in September 1999 and took it up - first with their National Party candidate, Mr Shaw, and later with Senator Tierney. 

In the Tribunal's view, Mr and Mrs Clark relied on the advice provided by the Centrelink officer to their detriment.  They did not seek to challenge the decision as they might have done but it was reasonable for them to assume in the circumstances that there was little point in doing so.  This is a matter the Commonwealth Ombudsman may wish to consider in investigating the complaint made by Mr and Mrs Clark concerning the Department's refusal to pay compensation for defective administration.  As stated above, the Tribunal has no jurisdiction in respect of that decision. 

With regard to the arrears of pension claimed by Mr and Mrs Clark the Tribunal must apply s 109(1) and s 109(2) of the Act in making its decision. There is no discretion in the matter. Since Mr and Mrs Clark did not seek a review of the decision of 20 September 1999 within three months, s 109(2) provides that any later favourable determination after a review will take effect on the day on which the application for the favourable determination was made. The Act does not permit backdating the favourable determination to the date of the original decision.

The Tribunal considers that the SSAT made the correct decision in stating that arrears of age pension were payable to Mr and Mrs Clark from 23 June 2001.  This was the date of the last determination in respect of the rate of pension payable to Mr and Mrs Clark before they sought review on 21 August 2001 with the assistance of Mr Shaw.  Section 109(1) provides that where a review is sought within 13 weeks of notification of a decision and a favourable determination is made as a result, that favourable determination takes effect on the day on which the decision review took effect. 

Thus, while the Tribunal recognises that Mr and Mrs Clark were paid age pension at a lower rate of pension than that to which they were entitled as a result of Departmental advice, the application of s 109(2) of the Act prevents recovery of the arrears of pension from 20 September 1999. The further investigation of the decision denying compensation for defective administration is, as stated above, a matter for the Commonwealth Ombudsman. The Tribunal therefore affirms the decision under review.

I certify that the preceding 8 pages are a true copy of the oral decision herein of Mr RP Handley, Deputy President

Signed:         .......................................................................................
  Associate

Date/s of Hearing  4 March 2003
Date of Decision  4 March 2003
Representative for the Applicant               Self represented
Representative for the Respondent          Ms S Mantaring, Advocate