Eleonara Stergiopoulos and Secretary, Department of Social Services (formerly Families, Housing, Community Services and Indigenous Affairs)

[2013] AATA 720

[2013] AATA 720

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/5706
Re	Eleonara Stergiopoulos
APPLICANT
And	Secretary, Department of Social Services (formerly Families, Housing, Community Services and Indigenous Affairs)
RESPONDENT

DECISION

Tribunal	Mr John Handley, Senior Member
Date	9 September 2013
Place	Melbourne

The Tribunal affirms the decision of the Social Security Appeals Tribunal dated 9 November 2012.

(sgd) John Handley 

Senior Member

SOCIAL SECURITY – application to the Social Security Appeals Tribunal (SSAT) for review of a decision of an Authorised Review Officer (ARO) made on 6 January 2006 – decision concerned rate of entitlement to Age Pension under the hardship provisions – SSAT convened in March 2006 – application was withdrawn before review was completed – application made to the SSAT in September 2012 to review the decision of the ARO of 6 January 2006 – SSAT did not review that decision – decision that any entitlement commenced from the date of the application to the SSAT in September 2012 – applicant was then receiving proper entitlement to Age Pension – application to the SSAT in 2012 was more than 13 weeks after notice of the decision of the ARO was received – entitlement to arrears of Age Pension exist only from date of application to SSAT in 2012.

LEGISLATION

Social Security Act 1991 ss 1129, 1130

Social security (Administration Act) 1999  s 152(4)

CASES

Re Drake and Minister of Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

REASONS FOR DECISION

Mr John Handley, Senior Member

8 October 2013

1. At the conclusion of the hearing on 9 September 2013, I gave oral reasons for my finding that an entitlement sought by the applicant, Mrs Stergiopoulos for an increase in age pension (AP) was denied by s 152(4) of the Social Security (Administration) Act 1999 (the Administration Act).

2. The applicant has subsequently requested written reasons for that decision. 

3. On reflection, it has become obvious to me that the Social Security Appeals Tribunal (SSAT) did not review a decision of an Authorised Review Officer (ARO) made on 6 January 2006. Rather it decided only that s 152(4) of the Administration Act prohibited entitlement to an increase in AP.

4. The applicant is entitled to review and reasons which I have prepared and found below.

5. Whilst I am satisfied that the ARO’s decision should in part be set aside, s 152(4) does disentitle the applicant to an increase in AP from 12 August 2005, when her application was first made.

6. The applicant was present at the hearing and assisted by an interpreter.  She was represented during the review by her daughter, Aliki and her son Sotiris.  Ms Heffernan appeared on the behalf of the respondent.  In broad terms, the facts of this application are not in dispute.

7. In July 2005 the applicant was in receipt of AP.  Real estate was owned by her, which was not her principle residence (the Preston property).  The respondent commenced a review of the value of her assets, which included a valuation of that property.  It was eventually determined that the applicant was entitled to AP at a reduced rate because the combined value of her assets exceeded the allowable limit.

8. The applicant contended that the Preston property, which was occupied by Sotiris, was extensively contaminated with asbestos, was unable to be rented and should be regarded as an unrealisable asset.  The applicant also contended that a commercial lease value of nil ($0.00) should be applied when calculating her rate of AP.  The respondent accepted that the Preston property was unrealisable but contended that it was obliged, as a matter of policy, to value the property under the State Housing Authority Rental Rebate scheme which would result in notional rental income from it.  That decision was made on 9 September 2005.

9. The applicant challenged that decision and sought review from an ARO.  On 6 January 2006 the ARO affirmed the primary decision.

10. On 13 January 2006 an application was lodged with the SSAT seeking a review of the decision of the ARO.  The SSAT convened on 1 March 2006.

11. The T‑documents lodged by the respondent indicate that the applicant decided, during the currency of the hearing, to withdraw the application.

12. In a Statement of Facts and Contentions (SFCs) lodged by Aliki prior to the commencement of the hearing, she recorded that one of the SSAT members indicated to the applicant that she may be worse off if a decision was made on review (at [11]).  She recorded:

    …My mother hearing this became quite distressed and frightened through the whole appeal process and was very concerned that her pension would be reduced even further.  My mother did not withdraw from the appeal, it was on the information discussed at the SSAT. 

    During the hearing of this review, Aliki said the SSAT did not make a decision, her mother did not withdraw and we walked out.

13. In September 2007 the respondent introduced an asset test regime which automatically gave the applicant eligibility for an increased rate of AP.

14. In October 2010 the respondent arranged another valuation of the Preston property.  The Australian Valuation Office (AVO) valued the property at $325,000.  On 1 November 2010 the applicant was advised that the rate of her AP would be reduced because of an increase in the value of her assets.

15. The applicant sought reconsideration of that decision on or about 5 November 2010, principally challenging the valuation.  That application was later withdrawn.

16. On 9 August 2012, the applicant contacted Centrelink to ascertain why the asset hardship provisions had ceased to apply to her.  She also expressed concern that she was not advised of that change.  On 6 September 2012, the applicant applied for review by an ARO of a decision to cease to apply the hardship provisions.  That decision was affirmed on 25 October 2012.  An application to review that decision was lodged with the SSAT on 9 November 2012.

17. On 6 September 2012 the applicant also applied to the SSAT for review of the decision of the ARO made on 6 January 2006 (which affirmed the decision to reduce her rate of AP on the basis of the value of her assets).  On 9 November 2012 the SSAT made its decision.  It is that decision which is under review in these proceedings.  I will return to it later in these reasons.

18. On 15 November 2012 Centrelink advised the applicant that the Preston property should be treated as unrealisable and disregarded under the hardship provisions.  The rate of her pension was increased.

19. On 19 December 2012 the applicant applied to the Administrative Appeals Tribunal to review the decision made by the SSAT on 9 November 2012.

    Compensation claim

20. The applicant applied to the Department of Human Services for compensation for defective administration, alleging negligence and economic loss.  The period of loss was alleged to have been from 24 August 2005 to 14 May 2012.  The basis for the claim was the provision of incorrect advice concerning the asset hardship provisions.

21. On 2 July 2013 the applicant was notified that her claim was partially successful.  An officer of the Department of Human Services determined that she had an entitlement to an additional payment of AP for the period 1 November 2010 to 14 May 2012.  Within that period she should have been paid the maximum rate of AP under the asset hardship provisions because the Preston property should have been valued as if it were to be leased commercially.  The officer advised that consideration would not be given to compensation being paid for the period between 12 August 2005 and 31 October 2010 because this period was the subject of an appeal (this application) to the AAT which, if successful, exposed a potential entitlement to an increased rate of pension during the same period.  Therefore, if compensation had been paid for that period and the applicant succeeded in her review, the officer advised that she was at risk of overpayment and recovery action.

22. On 11 February 2013, an ARO decided that the applicant should have been advised to seek a commercial lease valuation and if that had been undertaken it would have resulted in a valuation of the Preston property at nil ($0.00) and fortnightly pension would have been paid at a higher rate.  Under the asset hardship rules, an entitlement to increased pension can be backdated for a maximum period of 6 months.  Accordingly, the applicant was advised that the rate of AP would be reassessed and paid at a higher rate from 15 May 2012.

23. The applicant contended in these proceedings that compensation should have been paid from 12 August 2005, when an application was made for increased pension under the hardship provisions until 31 October 2010, being the day preceding the commencement of a period within which compensation was paid. 

    The Reviewable Decision

24. The claim for an increased rate of AP under the hardship provisions, made on 12 August 2005 commenced the process of review, initially by a decision of the ARO and the application to the SSAT which convened on 1 March 2006.  The decision of the ARO, made on 6 January 2006, is the decision the applicant sought to challenge before the SSAT on 9 November 2012 and which is under review in this application.

25. The information above with respect to the claim for compensation for defective administration is recorded to demonstrate the ambit of the entitlement sought by the applicant by her challenge to the ARO decision of 6 January 2006.  This Tribunal does not have jurisdiction to review decisions concerning compensation.  The applicant and her representatives were given that advice during the hearing.

    Conclusion and reasons for decision

26. An issue which needs to be determined is whether the applicant withdrew her appeal before the SSAT on 1 March 2006.  If it was withdrawn, it is taken never to have been made (s 130(2) Administration Act).

27. The applicant's representative said she and her mother walked out from the SSAT during the currency of its hearing in 2006.  She said the application was not withdrawn.

28. On 28 March 2006 an officer of the SSAT wrote to the applicant and confirmed that she had withdrawn her appeal.  She was advised that she was entitled to again apply for review of the same decision.  The officer wrote that if her appeal was successful at a later date, she may be disadvantaged because there are time limits on payments of arrears (T1, p.148).

29. The SSAT reasons for decision made on 9 November 2012 (T1, p.6) record that the previous application to it was withdrawn due to Mrs Stergiopoulos’ ill-health.

30. I am satisfied and find as a fact that the application was withdrawn before the SSAT in 2006.  I make that finding on the basis of the letter of 28 March 2006 from an officer of the SSAT and the decision of the SSAT Member of 9 November 2012.

31. At paragraph 11 of the SFCs lodged on behalf of the applicant, it is recorded my mother did not withdraw from the appeal, it was on the information discussed at the SSAT (which was that she may be worse off).

32. I interpret that comment to mean that the SSAT Members gave the applicant advice that the legislation then existing and the extent of her assets might have caused those Members to conclude that the rate of her pension could be reduced.

33. That information and the evidence of the applicant's representative during the hearing that she and her mother walked out satisfies me that the applicant understood the advice that the SSAT Members gave her, she acknowledged the risk of proceeding and decided to discontinue and therefore, withdrew from the appeal.

34. There is no time limit for lodging an application for review with the SSAT of a decision made by an ARO.  Additionally, the SSAT did not make a decision in the application that was before it in 2006.  The applicant was therefore, not prohibited from applying to the SSAT on 6 September 2012 for review of the ARO decision made on 6 January 2006.

35. Accordingly, whilst the applicant is entitled to again seek a review of the ARO decision made on 6 January 2006, any entitlement to pension will be subject to s 152(4) of the Administration Act which is reproduced as follows:

    (4)       If:

    (a)a person is given written notice of a decision under the social security law; and

    (b)the person applies to the SSAT more than 13 weeks after the notice was given for review of the decision; and

    (c)the SSAT varies the decision or sets the decision aside and substitutes a new decision; and

    (d)       the effect of the decision of the SSAT is:

    (i)to grant the person’s claim for a social security payment or a concession card; or

    (ii)to direct the making of a payment of a social security payment to the person or the issue of a concession card to the person, as the case may be; or

    (iii)      to increase the rate of the person’s social security payment;

    the social security law has effect as if the decision under review had taken effect on the day on which the application was made to the SSAT for review of that decision.

36. In the present application, the SSAT, on 9 November 2012, reviewed the application lodged on 6 September 2012.  That was more than 13 weeks after notice of the decision made on 6 January 2006.  Any entitlement by a decision varied or substituted would take effect from the date the application to the SSAT was made namely, 6 September 2012.  

37. On 6 September 2012, the applicant did not have any entitlement greater than she was then receiving because of the decision made by an ARO on 11 February 2013 (attachment 5 of her SFCs and paragraph 22 earlier) which entitled her to AP at the maximum rate under the hardship provisions from 15 May 2012.

38. The AAT is empowered by s 179 of the Administration Act to review decisions made by the SSAT.  It is not empowered to review the reasons for a decision.  In conducting its review, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing either affirming, varying or setting aside the decision under review and if the latter, either make a decision in substitution or remit the matter for reconsideration (s 43(1) Administrative Appeals Tribunal Act 1975 (the AAT Act)).

39. The SSAT concluded that even if it had found that the decision made on 9 September 2005, which was ultimately affirmed by the ARO on 6 January 2006, was incorrect, arrears of AP could not be paid to the applicant because of the operation of s 152(4) of the Administration Act. In those circumstances, the SSAT decided to affirm the decision under review.

40. With respect, the SSAT affirmed the ARO’s decision of 6 January 2006 without reviewing that decision. It found that the provisions of s 152(4) prohibited entitlement, if any, before 6 September 2012, the date on which the applicant applied for review by the SSAT. The applicant was entitled to a review of the ARO’s decision, even if there was no practical benefit to the applicant of a successful outcome.

41. In the event that this Tribunal accepts the applicant’s submissions and finds that she was receiving the AP at a rate less than her proper entitlement between 12 August 2005 and 31 October 2010, s 152(4) will prevent her from obtaining any arrears.

42. In preparing these reasons for my decision which follow, I have had regard to the documents lodged by the respondent pursuant to s 37 of the AAT Act, the submissions lodged by both parties prior to the hearing and the evidence and submissions heard during the hearing.

43. Ordinarily, the rate of a person’s pension is calculated using the Pension Rate Calculator A in s 1064 of the Social Security Act 1991 (the Act). The calculation takes into account the lower value of either the applicant’s assets or income. However, in this case, the respondent accepts that the applicant’s rate should be calculated in accordance with the hardship provisions found in s 1129 of the Act on the basis that the Preston property is an unrealisable asset that should be disregarded under s 1130 of the Act (respondent’s SFCs at [4.5]).

44. Section 1130(2) provides that there is to be deducted from the person's social security pension maximum payment rate an amount equal to the person's adjusted annual rate of ordinary income.  Section 1130(3) sets out the formula for calculating the person’s adjusted annual rate of ordinary income which includes the greater of either:

    (i)        the person's annual rate of ordinary income from unrealisable assets; or

    (ii)       the person's notional annual rate of ordinary income from unrealisable assets…

    Section 1130(5) of the Act provides that the notional annual rate of ordinary income from an unrealisable asset is:

    (a)the amount per year equal to 2.5% of the value of the person's and the person's partner's unrealisable assets; or

    (b)the amount per year that could reasonably be expected to be obtained from a purely commercial application of the person's and the person's partner's unrealisable assets

    whichever is the less.

45. Part 4.6.7.90 of the Guide to Social Security Law (the Guide) modifies s 1130(5) when the unrealisable asset is a property occupied by a near relative or a long term tenant with a low income.  In this instance, the commercial lease value is calculated as the amount the occupier would pay under the State Housing Authority rental rebate formula (25 per cent of the occupier’s income).  The Guide is not binding on decision-makers and should generally be applied unless there are cogent reasons not to do so (Re Drake and Minister of Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634).

46. The main issue for the applicant is the amount the respondent used to determine her notional rate of ordinary income for the purpose of calculating her adjusted rate of ordinary income.  It would appear that the original decision-maker and the ARO felt compelled to adopt the formula in the Guide on the basis that her son had been occupying the Preston property since 1992. 

47. The Preston property was valued at $235,000 by the Australian Valuation Office (AVO) in August 2005.  The AVO’s report was not in the documents provided to the Tribunal.  Parts of it are found within the decision of the ARO.  It appears that the AVO attributed to the property a commercial lease value of $5,600.  Again, in the absence of the report, it is difficult to understand the basis for these values.  It is unclear how or whether the AVO addressed the presence of asbestos in their valuation. 

48. It is inconceivable that the Preston property, apparently riddled with asbestos, could have any rental value in either the residential or commercial market.  The lethal consequences of exposure to asbestos have been well known for many years.  Equally, it is inconceivable that any prospective residential or commercial tenant would occupy it. 

49. A letter from Nelson Alexander, local real estate agents, dated 3 October 2005 records that the Preston property cannot be offered for rental because it has a serious ASBESTOS problem that would be a public liability if it were tenanted (T11, p. 180).  In these circumstances and in the absence of further evidence, I have concluded, in addition to the property being unrealisable in August 2005, the amount per year that could reasonably be expected to be obtained from a purely commercial application of the person's and the person's partner's unrealisable assets (s 1130(5)(b)of the Act) was nil ($0.00).  Put another way, it had no capacity to attract any rental income.  This is the same finding made by an ARO in the recent decision of 11 February 2013 (refer paragraph 22).

50. It was submitted on behalf of the applicant, that the respondent preferred to apply the policy found in the Guide rather than the legislation.  This submission has merit.  The Act does not require a calculation of notional income based on the State Housing Authority’s rebate formula nor does it make provision for relatives who occupy the unrealisable asset.  I acknowledge that in some circumstances and given the beneficial nature of the Act, it may be appropriate to apply the exception found in the Guide.  However, in this case, the Guide was preferred over the Act to the detriment of the applicant.  There was no cogent reason to do so.  As recorded earlier, an entitlement to compensation consequent on this finding is outside the jurisdiction of this Tribunal.  That application must be pursued elsewhere. 

1. In summary, I have no option but to affirm the decision under review because of the operation of s. 152(4) of the Administration Act. However, had the applicant sought review by the SSAT within 13 weeks of the ARO’s decision on 6 January 2006, the outcome would have been different. For reasons expressed above, it is likely that I would have set decide the decision under review and substituted a decision that the notional annual rate of ordinary income for the unrealisable asset (the Preston property) was nil ($0.00) at 12 August 2005.

   Decision

2. The Tribunal affirms the reviewable decision dated 9 November 2012.

I certify that the preceding 52 (fifty -two) paragraphs are a true copy of the reasons for the decision herein of

Mr John Handley, Senior Member

(sgd) Olympia Sarrinikolaou

Associate

Dated 8 October 2013

Date(s) of hearing	9 September 2013
Advocate for the Applicant	Ms A. and Mr S. Stergiopoulos
Advocate for the Respondent	Ms P. Heffernan
Solicitors for the Respondent	Centrelink, Program Litigation and Review Branch