Garvey and Secretary, Department of Family and Community Services

[2002] AATA 1283

DECISION AND REASONS FOR DECISION [2002] AATA 1283

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2001/756

GENERAL ADMINISTRATIVE  DIVISION       )          
           Re      ROBERT JOSEPH GARVEY      
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Deputy President Don Muller       

Date12 December 2002             

PlaceBrisbane

Decision      The Tribunal affirms the decision to reject the Applicant's claim for invalid pension in December 1985, pursuant to the provisions of the Social Security Act 1947.

............Signed..................................
  D.W. MULLER
  DEPUTY PRESIDENT

CATCHWORDS
SOCIAL SECURITY – income test
Social Security Act 1947: s.30

REASONS FOR DECISION

Deputy President Don Muller                   

1. The Applicant, Robert Joseph Garvey, seeks a third review by the Administrative Appeals Tribunal of a decision made by a delegate of the then Department of Social Security on 6 December 1985 to reject the Applicant's claim for an invalid pension.

2. The history of the matter may be summarised as follows:

   (i)Mr. Garvey has been unemployed since 1984.

   (ii)In December 1985, Mr. Garvey lodged a claim for an invalid pension pursuant to the provisions of s.30 of the Social Security Act 1947. He was then 43 years of age and he had a wife and six dependent children between the ages of four and 18 years living with them in the matrimonial home.

   (iii)At the time of Mr. Garvey's application for invalid pension:

   (a)His wife was employed and was receiving an annual salary.

   (b)Mr. Garvey had investments in shares and debentures and moneys on deposit in several banks, credit unions and building societies.

   (c)Mr. Garvey and his wife were joint owners of their matrimonial home and another residential property.

   (d)Mr. Garvey owned three other residential properties.

   (e)In support of his claim for pension, Mr. Garvey provided an estimate of the income he and his wife would receive in the 12 month period ending December 1986 as follows:

   Rental income         $ 16,396.00
   Dividends                 $   2,748.82
   Interest  $   4,749.00
   Salary (wife)             $ 23,764.00
     $ 47,657.82

(f)The four residential properties which provided the rental income had been purchased with the assistance of substantial borrowed funds charged against each property.  The estimated expense in generating the rental income, including interest, was $43,365.

(g)Mr. Garvey contended that the amount of his and his wife's income for the purposes of the Act was the sum of $4,292.82, being the amount of income to be received by them from all sources less the expenditure upon the rental properties.

(iv)Mr. Garvey's claim for an invalid pension was rejected by the Department on the ground that the expenses associated with the derivation of income from the rental properties could not be offset against the income from other sources and that, therefore his income was too high to receive the invalid pension.

(v)The Social Security Appeals Tribunal affirmed the decision of the Department.

(vi)On 5 August 1988 the Administrative Appeals Tribunal affirmed the decision of the Social Security Appeals Tribunal.

(vii)On appeal to the Federal Court, Spender J held that expenses associated with the derivation of income from any source could be offset against income from all other sources.

(viii)On appeal to the Full Federal Court, the Full Court delivered its judgment on 7 December 1989 and said, among other things:

"In defining 'income' the Act was concerned with what amount was available to a pensioner to meet commitments and outgoings after the pensioner had drawn together the net returns of various sources of income.  It was not concerned with what amount was left in the pensioner's hands after that income had been received and had been applied to various commitments and outgoings including the losses of business activities that had produced no net income.  There would have been an expectation underlying the act that any applicant for income assistance in the form of a pension would have corrected or relinquished any such activities which occasioned loss.  The purpose of the relevant part of the Act was very clear, namely to maintain a basic level of income for those who were unable to receive sufficient income to provide for themselves.  It was not the purpose of the Act to provide a further source of income for a person who had applied his or her income to maintain a business conducted at a loss or upon outgoings incurred in acquiring or maintaining assets.  (See Read v Commonwealth of Australia (1988) 78 ALR per Brennan J at p.662).
In our opinion, the decision in Haldane-Stevenson v Director-General of Social Security does not depart from that view in any way.
With respect to his Honour, we are of the view that the definition of 'income' in the Act does not permit the 'negative yield' of one source of income to be off-set against the yield from other sources.  In truth, a 'negative yield' is no more than a demonstration of the lack of a source of income.  The loss sustained by the failure of that source to provide an excess of income over the expenditure incurred in that activity has no relevance to any other source of income."

(ix)On 28 September 1990, Mr. Garvey made a fresh application to the Department for an invalid pension.  A delegate of the Department decided on 30 November 1990, to reject that application.  This decision was affirmed on 6 February 1991.

(x)The delegate's decision was affirmed by the Social Security Appeals Tribunal on 10 April 1991.

(xi)On 30 July 1991, Mr. Garvey applied to the Administrative Appeals Tribunal for an extension of time within which to lodge an application for review of the decision of the Social Security Appeals Tribunal.

(xii)On 29 November 1991, the Administrative Appeals Tribunal refused Mr. Garvey's application for an extension of time within which to lodge the substantive application for review.  Deputy President Forgie said, among other things:

"In now seeking to lodge an application for review of the SSAT's decision dated 10 April, 1991, Mr Garvey is effectively seeking to re-open the issues considered by the Full Court.
Looking at the definition of "income" considered by the Full Court and, more recently, by the SSAT, I do not accept Mr Garvey's submission that the definition of "income" has been amended considerably since he lodged his first claim for an invalid pension.  Certainly, it has been amended but the effect of the amendment is to add the words "whether of a capital nature or not" after the words "personal earnings, moneys, valuable consideration or profit" appearing in the definition of "income" in sub-section 3(1) of the Act.  These words were added to clarify the meaning of "income" rather than to alter it.  This is apparent from the explanatory memorandum circulated by the then Minister for Social Security, Mr Howe, when introducing the amendments to the Social Security and Veterans' Affairs (Miscellaneous Amendments) Bill, 1986.
This distinction between capital and income is not relevant in Mr Garvey's case for they do not affect the meaning of the words "personal earnings, moneys, valuable consideration or profit" in the context of the consideration of whether or not a loss of the sort incurred by Mr Garvey should be taken into account.
15.  Since the Full Court's judgement, there has been no other judgement of the Full Court or of the High Court detracting from its conclusion.  It necessarily follows that, however incorrect Mr Garvey may consider the Full Court's judgement to be, his prospects of success in this Tribunal are negligible.  If I were to exercise my discretion to extend the time within which Mr Garvey might lodge his application, I would be acting at odds with the principles set out in the Hunter Valley Development case to which I have referred above.  It would lead simply to re-litigation of the same issues which have already been argued and the conclusion inevitable.  I refer particularly to those requiring me to consider the prospects of his success and also for the need for there to be finality in proceedings between parties.
16.  Although I recognise that Mr Garvey feels very strongly about the issues he has raised, I cannot grant his application for an extension of time within which to lodge his substantive application for review."

(xiii)Mr. Garvey was eventually granted a disability support pension on 14 November 1996.

(xiv)On 14 February 2001, Mr. Garvey sought to re-open his claim for pension going back to 6 December 1985.  A customer service officer for Centrelink decided on 7 March 2001 not to reconsider the 1985 claim.

(xv)On 23 July 2001, an Authorised Review Officer declined to re-open Mr. Garvey's case.

(xvi)On 6 August 2001, the Registrar of the Social Security Appeals Tribunal informed Mr. Garvey that the Social Security Appeals Tribunal was "not in a position to revisit the matter already dealt with by the court".

1. At this hearing Mr. Garvey submitted that his wife's salary of $23,764.00 should have been reduced by an amount of $18,059.67, representing a total of expenses associated with her occupation as a teacher.  That is, Mr. Garvey submitted that his wife had a net income of $5,704.33 from her salaried occupation and that their combined income fell below the threshold of $20,311.20, which would have resulted in his eligibility for invalid pension.  The $18,059.67 was claimed to be made up as follows:

   PAYE Tax  $ 5,460.00
   Travelling to work expenses  $ 3,700.00
   Clothes for work  $    800.00
   Teachers Registration  $    100.00
   Purchase of Professional books              $    100.00
   Depreciation of Professional library         $     50.00
   Union Dues  $    140.00
   Fete expenses  $    400.00
   Trivia Night expenses  $    407.38
   Unpaid Supervision of early arrivals        $ 5,092.29
   HECS payments  $ 1,500.00
   Self Education travel  $    210.00
   Self Education books  $    200.00
     $18,059.67

2. The term "income" was defined in sub-section 6(1) of the Act.

   "6(1) 'income', in relation to a person, means personal earnings, moneys, valuable consideration or profits earned, derived or received by that person for the person's own use or benefit by any means from any source whatsoever, within or outside Australia, and includes, a periodical payment or benefit by way of gift or allowance…"

   There was no reference in the definition of income to any allowances which may or may not have been made for expenses or deductions.  There was no concept, for the purposes of the Social Security Act 1947, of allowable deductions as there was in the Income Tax Assessment Act 1936. Many deductions allowable under the Tax Act would not have been appropriate deductions under the Social Security Act. The Social Security Act provides for income maintenance. The benefit payable should depend on actual income, not a notional income. Nevertheless, it has generally been accepted that deductions from income may be taken into account for the purposes of the Social Security Act if they are associated with the income.

3. As a starting point, I believe that it is helpful to assess whether or not the deductions claimed in the case of Mrs Garvey's income would have been allowable under the Tax Act. If not, then they certainly should not be used to reduce her income for the purposes of the Social Security Act. There was no Tax return tendered in relation to Mrs. Garvey's financial affairs. The Tribunal has no way of knowing whether or not Mrs. Garvey claimed the above deductions in the tax year 1985/86. No documentary substantiation was placed before the Tribunal in relation to any of the claimed deductions.

4. The following amounts would not have been allowable tax deductions and in any event I disallow them for the purposes of the Social Security Act:

   Travelling to work expenses  $3,700.00
   Clothes for work  $   800.00
   Fete expenses  $   400.00
   Trivia night expenses  $   407.38
   Unpaid supervision of early arrivals         $5,092.29

1. The following expenses, if actually paid, may have been allowed as deductions:

   Teachers registration  $    100.00
   Purchase of Professional Books              $    100.00
   Depreciation of Professional Library       $     50.00
   Union Dues  $    140.00
   Hecs payments  $ 1,500.00
   Self Education travel  $    210.00
   Self Education Books  $    200.00
     $ 2,300.00

Nevertheless, even if $2,300 had been deducted from Mrs. Garvey's annual salary of $23,764.00, it would still have left an income of at least $21,464 which was above the cut-off amount of $20,311.20.

1. The fact of the matter is that in 1985 Mr. Garvey was not entitled to be paid invalid pension.

2. The decision to reject Mr. Garvey's claim for invalid pension for 1985 is yet again affirmed.

   I certify that the 9 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President Don Muller

   Signed:         .....................................................................................
              C. O'Donovan, Associate

   Date/s of Hearing   4 February 2002
   Date of Decision  12 December 2002
   Applicant   Mr. Garvey, himself
   Respondent   Mr. S. Letch, departmental advocate