Derrick and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2009] AATA 375

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 375

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/5534

GENERAL ADMINISTRATIVE DIVISION		)
Re		RONALD DERRICK

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Prof. T Sourdin, Member

Date22 May 2009

PlaceSydney

Decision The Tribunal affirms the decision under review.

...................[sgd]...........................

Prof. T Sourdin    
  Member

CATCHWORDS

Pension bonus scheme - Applicant transferred from disability support pension to age pension - Applicant received age pension between 2001 and 2008 at reduced amounts with requirements to pay back most monies received as income of spouse was higher than estimated – spouse sought information about pension bonus scheme in 2001 however claim not received by Centrelink - Applicant argued that legislation should not be applied as he did not apply for pension (and was transferred) and suffered significant financial detriment - Respondent submitted that the legislation provided no discretion in the case of the Applicant because he had been receiving age pension before spouse’s application for the pension bonus - Respondent's argument preferred -  decision under review affirmed.

Relevant Act/s

Social Security Act 1991 – section 92C

Administrative Appeals Tribunal Act 1975 – section 37

Acts Interpretation Act 1901 – section 15AA

Relevant Case Law

Re Walsh and Secretary, Department of Family and Community Services [2003] AATA 163

Kondos and Secretary Department of Families, community Services and Indigenous Affairs [2006] AATA 997

Brutnell and Secretary, Department of Family and Community Services [2002] AATA 436

Rodham and Secretary Department of Families, Community Services and Indigenous Affairs [2007] AATA 1331

REASONS FOR DECISION

22 May 2009 Prof. T Sourdin, Member

1.The pension bonus scheme commenced on 1 July 1998, and stipulates that a person who has received age pension previously is precluded from receiving the pension bonus. The pension bonus scheme is designed to encourage individuals to stay in the workforce and not claim an age pension by providing a tax free bonus when individuals eventually retire. Mr Derrick, the Applicant before the Tribunal, acknowledges that he received a reduced age pension between 2001 and 2008, but considers that he should be eligible for the pension bonus because he was transferred to the age pension without making an application (he had previously been in receipt of a disability support pension which was also a reduced amount because of his partner’s earnings) and because most of the monies that he received on the age pension had to be paid back because of his partner’s earnings.

2.Mrs Derrick (the Applicant’s wife) who had also reached the age pension age was employed throughout this period as a nursing sister and because of her wages, Mr Derrick only received a small amount of the age pension. Mr Derrick says that had he been advised, he would have chosen to take the pension bonus and that this would have meant that he would have received approximately $20,000 rather than the $6,132.93 he did receive over the relevant five year period. Mr Derrick indicated that if he was to receive the bonus, he would pay the pension back.

3.Mr Derrick, through his daughter Ms McCann also indicated that his wife had made an enquiry about the pension bonus scheme in July 2001 and had completed forms to apply for the scheme at that time. However, there is no record of Centrelink receiving these forms.

4.The Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, who is the Respondent in these proceedings, has told Mr Derrick that pursuant to the Social Security Act 1991 (“the Act”), a person who has received age pension previously is precluded from the pension bonus scheme. The Respondent submitted that the legislation provides no discretion in Mr Derricks’s case.

5.After carefully considering the legislation as well as a number of authorities, I ultimately preferred the Respondent's argument and affirmed the decision under review although I note that it may be that Mr Derrick’s situation can be considered in relation to a claim for customer compensation. My reasons follow.

ISSUE BEFORE THE TRIBUNAL

6.The only issue before the Tribunal was whether Mr Derrick can be paid the pension bonus.

THE RELEVANT LEGISLATION

7.Section 92C of the Act provides:

Qualification for pension bonus

92C.  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; or

(iii) DFISA bonus under Part VIIAB of the Veterans’ Entitlements Act.

FACTS NOT IN DISPUTE

8.I have noted the following from the documents lodged pursuant to section 37 of the Administrative Appeals TribunalAct 1975 (the T-documents), the submissions of the parties and the findings of the Social Security Appeals Tribunal that were not in issue:

(a)Mr Derrick was born on 12 October 1936, and on 12 October 2001, Mr Derrick reached the eligible age for the age pension.

(b)Mrs Derrick received forms relating to the pension and the pension bonus scheme on 16 July 2001. There was no record within Centrelink of these forms being returned although Mrs Derrick indicated that they were returned.

(c)On 28 September 2001, Centrelink wrote to Mr Derrick and advised him that he was to be paid the age pension from 12 October 2001.

(d)On 12 October 2001, Mr Derrick reached the age of 65 years and was automatically transferred from the disability support pension to the age pension by Centrelink.

(e)According to the Respondent’s submissions, Mr Derrick was paid the age pension in the following amounts (after deductions of overpaid amounts as a result of his partners earnings) –

(i)Financial Year 2001 / 2002 - $1127.10

(ii)Financial Year 2002 / 2003 - $1722.10

(iii)Financial Year 2003 / 2004 - $1,316.44

(iv)Financial Year 2004 / 2005 - $1493.29

(v)Financial Year 2005 / 2006 - $474.00

(f)Mrs Derrick registered for the pension bonus scheme on 22 September 2004 and her application was backdated to her age pension qualification date of 11 May 2000. Mrs Derrick continued to meet the pension bonus scheme work test until she retired on 3 March 2008. She received a pension bonus on 15 April 2008 (at the couple rate).

(g)On 28 March 2008, action was also taken to register Mr Derrick and although he met the pension bonus work test (because of Mrs Derrick’s accrual periods, he did not qualify because he had received the age pension.

(h)On 24 July 2008, an Authorised Review Officer affirmed a Centrelink decision not to pay Mr Derrick the pension bonus (T10).

(i)The Social Security Appeals Tribunal affirmed that decision on 22 October 2008 (T2).

(j)Mr Derrick applied to the Administrative Appeals Tribunal for review of that decision on 24 November 2008 (T1).

THE APPLICANT

9.The Applicant lives in a fairly remote part of New South Wales (in Barraba) with his wife and disabled son and was represented at the hearing by telephone by his daughter, Ms McCann who resides in Gunnedah. She argued that Mr Derrick was transferred to the age pension; that is, he did not apply to receive it and that this action meant that he was deprived of the benefits he would have otherwise received on the pension bonus scheme. Ms McCann indicated that had her mother been registered properly for the pension bonus scheme in 2001, then her father would not have been disadvantaged.

10.In addition, Ms McCann indicated that her father was required to repay most of the age pension amount that he received as his wife was still earning an income. Ms McCann also indicated that the relevant Centrelink Guide to Social Security Law (p 21 of the Respondents Submissions dated 12 May 2009) suggested that Centrelink customers who could be automatically transferred to the age pension should be asked under certain circumstances to provide income and assets information (and lodge a claim) and that customers who could be adversely affected should be contacted and offered a choice between payments.

11.Ms McCann submitted that her parents were elderly and that it was difficult to understand the pension bonus scheme. She indicated that her father would have assumed that the payment that he was given was the correct one and that he would not have questioned the automatic transfer to the age pension. She also indicated that her parents did not have internet access and that it was very difficult for them to make the long trip to a Centrelink office to seek advice.

12.Ms McCann also emphasised the injustice and the financial loss her father had suffered and that he did not want to get anything ‘extra’ and would repay the reduced pension amount he received if he was eligible for the bonus.   

THE RESPONDENT

13.Ms Schuster, who appeared for the Respondent, submitted that in order to qualify for a pension bonus, a person must satisfy each of the requirements of paragraphs (a) to (f) of section 92C of the Act. She noted that Mr Derrick received the age pension from October 2001 and that he had received a letter notifying him to transfer to the scheme in September 2001. She submitted that Mr Derrick was not qualified to be paid a pension bonus because he does not satisfy part (b) of section 92C, and that therefore, the decision to reject his claim for pension bonus was correct.

14.She noted that in Re Walsh and Secretary, Department of Family and Community Services [2003] AATA 163, Deputy President Handley considered this issue and found:

“… in the Tribunal's view Mrs Walsh's receipt of age pension between February 1995 and January 1997 is conclusive in terms of disqualifying her from receipt of a pension bonus.”

THE TRIBUNAL

15.I have noted the arguments of both parties, and am appreciative of their analysis of the case law, and the approach taken by Ms McCann. The facts are not in dispute; I have noted them in the paragraphs above, and accept them as provided to me.

16.I have considered the submissions and facts in this case, the legislation, being the Social Security Act 1991 and the Acts Interpretation Act 1901, the case law and the Explanatory Memorandum to the Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998, and the Second Reading Speech for the same Bill by the Hon. Phillip Ruddock, the then Minister for Immigration and Ethnic Affairs representing the Minister for Social Security.

17.I accept that Mr Derrick did not apply for an age pension but was transferred onto the pension. Section 92C of the Act deals with eligibility for pension bonus, and specifies that a person is qualified for a pension bonus if he starts to receive an age pension at or after the time when he makes a claim for the pension bonus, and he has not received an age pension at any time before making a claim for the pension bonus.

18.Unfortunately, on a reading of the section, Mr Derrick would appear to qualify for the pension bonus but for the undisputed fact that he has received an age pension before applying for the pension bonus scheme.

19.A number of Tribunal decisions have dealt with the questions that arise here, where a person claims pension bonus after receiving age pension.  A consistent line of authority in this Tribunal confirms that receipt of age pension or other social security payments prevents payment of pension bonus at a later date[1].  The cases note the absence of discretionary provisions in the legislation[2]. 

[1] Kondos and Secretary Department of Families, community Services and Indigenous Affairs [2006] AATA 997; Brutnell and Secretary, Department of Family and Community Services [2002] AATA 436

[2] Kondos at para 7

20.Ms Schuster referred to two Tribunal decisions where the Tribunal found that the prior payment of age pension had been nullified[3].  In my view, these cases as has been noted in previous Tribunal decisions are limited to their particular facts: in one, the applicant had not been qualified for age pension and later was required to repay the money he had received; in the other, the Tribunal accepted the applicant’s evidence that he had gone to Centrelink to enquire about the pension bonus scheme and believed that when he completed the age pension claim form, it was so that Centrelink could test his entitlements for pension bonus. The question is whether Mr Derrick’s case is similar to the second case – that of Rodham. 

[3] Rodham and Secretary Department of Families, Community Services and Indigenous Affairs [2007] AATA 1331

21.In Rodham, the Tribunal carefully considered a number of matters that are relevant in Mr Derrick’s case. In Rodham, after first turning to past cases the Tribunal discussed the circumstances surrounding Mr Rodham’s claim:

“In Re Shipman and Secretary, Department of Family and Community Services [2004] AATA 287 an elderly farmer sought and received age pension for nearly two years before he registered for the PBS.  As a result he was not eligible for the pension bonus.

In Re Brutnell and Secretary, Department of Family and Community Services [2002] AATA 436 the applicant sought Centrelink benefits during periods of illness when she was unable to work.  It was Centrelink‘s decision that she be paid age pension (and widow’s pension).  Later she applied for pension bonus but was precluded because of having previously received age pension.

I do not think this case is like either of those matters because in each of those matters the applicant had sought Centrelink benefits.  It was only later that entitlement to pension bonus was contemplated.  In this matter, Mr Rodham enquired about pension bonus, and for reasons known only to Centrelink, he was erroneously paid age pension.

The matter is more akin to Re Brignell and Secretary, Department of Family and Community Services (2003) 73 ALD 302 to which I was also referred.  The Centrelink position in that matter was effectively the same as in the present matter: once age pension was paid to the applicant he was for evermore precluded from the pension bonus under the legislation. 

In Brignell the advocate relied on Re Secretary, Department of Social Security and Jessop (1989) 17 ALD 62.

Jessop was distinguished in Brignell on the basis that Mr Jessop had an entitlement at the relevant time, whereas Mr Brignell had no entitlement at all.  The advocate for Centrelink pointed out that in the present matter Mr Rodham had an entitlement (to age pension), albeit to only about $300 over a period of several months.  Like Mr Jessop 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.”  But Mr Rodham had not sought it, and it was paid to him, I accept, in error.

The Tribunal in Brignell effectively accepted that Mr Brignell’s receipt of age pension could be nullified by its repayment.  At the hearing in the present matter the solicitor for Mr Rodham offered on behalf of his client to repay the $302.87.  That offer was refused by the advocate because Centrelink would not know how to accept a payment.  In fairness, payments to Centrelink (other than in response to a claim by Centrelink of overpayment of benefit) would be rare indeed.  I do not know if Mr Rodham has since attempted to make that payment.

The Tribunal in Brignell also referred to the following commentary about 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.

The Tribunal in Brignell took 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 Rodham is also such a person: an older person who has remained in the workforce, and is entitled to the incentive payment to do so, that is, the pension bonus.

It is bizarre to suggest that because Mr Rodham was erroneously paid approximately $300 which was characterised as age pension that he should be precluded from pension bonus in an amount the Centrelink advocate conceded may be in the vicinity of $45,000.

I am prepared to adopt the approach of the Tribunal in Brignell and find that, subject to payment to Centrelink of $302.87, Mr Rodham is not precluded from payment under the PBS.”

22.In Rodham’s case, Mr Rodham had made a claim for the pension bonus and was then incorrectly paid the age pension. Notably, the Tribunal considered in that case that Mr Rodham “had not sought [the pension]”. It could also be said in this case that Mr Derrick did not seek the age pension – he was simply transferred to the age pension.

23.However, the facts are different in that Mr Rodham had actively sought the pension bonus. Here, there is evidence that Mrs Derrick may have sought the pension bonus in 2001 and had sent in forms which were not received by Centrelink. However, there was no evidence that Mr Derrick had done so. Before receiving the age pension, he was notified by letter that he would be transferred to that particular pension and at that point he could have telephoned Centrelink and discussed this transfer. He did not contact Centrelink. However, whilst this matter may not have involved a clear administrative mistake and an erroneous payment (as in Rodham), there is an issue about whether Centrelink could have done more to assist the Applicant.

24.In coming to a decision, I have considered Rodham and found that Mr Derrick’s circumstances are different from those in that case. Rodham involved a clear error whereas Mr Derrick’s circumstances suggest that he may not have been aware of his options and that he received no advice about the alternatives that were open to him.

25.I have also considered the Explanatory Memorandum to the Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998, and the Second Reading Speech for the same Bill. In the Second Reading Speech, Mr Ruddock emphasised that the pension bonus scheme is voluntary, that it is the person’s choice to enter the scheme based on their particular circumstances and preferences, and that it is designed to provide an incentive for older Australians who qualify for age pension, but who choose to remain in the workforce and delay their retirement.

26.It is clear that the Bonus Scheme is an ‘opt in’ scheme that involves the exercise of choice. Clearly the pension bonus scheme was set up as an incentive to delay the claiming of age pension and encourage those who wished to remain in the workforce after reaching pensionable age to do so. Unfortunately for an applicant such as Mr Derrick who is a partner of a spouse working past age pension entitlement age, these options were not clear to him and he was simply transferred to the age pension scheme with little exercise of choice.

27.The Explanatory Memorandum mentions various sections of the Bill, and in particular, relevantly with section 92C, which deals with the qualifications for pension bonus. The Explanatory Memorandum specifies a number of conditions, and states that a person is qualified for pension bonus if:

“(a) the person starts to receive age pension after they make a claim for the pension bonus (claims for age pension and pension bonus must be lodged together: see subsection 93L(1), and the age pension is received otherwise than because of a scheduled international social security agreement …. : the pension bonus is available only to those persons who receive an ‘autonomous’ age pension ….

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

….”

28.It is the final paragraph which is of particular relevance to Mr Derrick, and speaks of eligibility for pension bonus for a person who “has not received an age pension at any time before making a claim for the pension bonus”. I see no ambiguity in the words of section 92C of the Act, and am satisfied that the construction which would promote the object under the Act is to reward persons who have become eligible for age pension, but have continued in the paid work force, and delayed making a claim for age pension.

29.I am satisfied that there is no discretion in the legislation which I might be able to exercise to mitigate what Mr Derrick sees as his loss. 

30.However, in the context of the matters that I have referred to above, I also note that once my decision is handed down, Centrelink will proceed to consider whether Mr Derrick might be eligible for payment under the Commonwealth scheme for “Compensation for Detriment caused by Defective Administration”, which provides agencies with discretionary authority to compensate where there is no legal entitlement but where a claimant has suffered loss as a result of an agency's defective administration.  No doubt the various matters in my reasons, the matters raised by Ms McCann (including the fact that Mr Derrick did not make application but was automatically transferred to the age pension as well as the suggested actions in the Guide to Social Security Law which may suggest that an Applicant in Mr Derrick’s situation be contacted prior to an automatic pension transfer taking place) as well as other matters can now be considered fully, in order to assess whether Mr Derrick can be compensated for the loss that he has sustained. 

31.In conclusion, I am satisfied that the words of section 92C are clear and unambiguous and that Mr Derrick is not eligible for pension bonus because he had, prior to applying for pension bonus, received age pension for which he became eligible. There is no discretion for the Tribunal to consider the broader circumstances unless they relate to matters such as the erroneous payment referred to in Rodham. Here, although the payment might not have complied with best administrative practice, it could not be categorised as erroneous as was the case in Rodham.

DECISION

32.     The Tribunal affirms the decision under review.

I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Prof. T Sourdin, Member.

Signed:         ......................................[sgd]..........................................

Associate

Date of Hearing  29 April and 18 May 2009
Date of Decision  22 May 2009

Appearance for the Applicant  Ms A McCann

Solicitor for the Respondent                 Ms H Schuster, Centrelink Legal Services