Gligurovska and Secretary, Department of Social Services (Social services second review)
[2016] AATA 945
•28 November 2016
Gligurovska and Secretary, Department of Social Services (Social services second review) [2016] AATA 945 (28 November 2016)
Division
GENERAL DIVISION
File Number
2015/5353
Re
Ilinka Gligurovska
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Brigadier AG Warner, Member
Date 28 November 2016 Place Perth The Tribunal affirms the decision under review.
......(Sgd)..................................................................
Brigadier AG Warner, Member
CATCHWORDS
SOCIAL SECURITY – disability support pension – income maintenance period – whether income maintenance period has been correctly applied – whether duration of income maintenance period has been correctly calculated – whether applicant in severe financial hardship – decision under review affirmed
LEGISLATION
Social Security Act 1991 – s 8 – s 14A – s 19C(3) – s 19C(4) – s 19C(5) – s 23(1) – s 1064 – F1 to 1064 – F14
Social Security (Administration) Act 1999
CASES
Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Glasson and Secretary, Department of Education, Employment and Workplace Relations (2009) AATA 969
Re Naumoski and Secretary, Department of Education, Employment and Workplace Relations (2013) AATA 214Secretary of Department of Education, Employment and Workplace Relations v Ergin (2010) FCA 1883
SECONDARY MATERIALS
Guide to Social Security Law
REASONS FOR DECISION
Brigadier AG Warner, Member
28 November 2016
INTRODUCTION
Mrs Ilinka Gligurovska has applied to this Tribunal for a review of a decision of the Administrative Appeals Tribunal, Social Service and Child Support Division (“AAT1”) on 3 September 2015 (T2/5-10). AAT1 affirmed a decision of an Authorised Review Officer (“ARO”) of the Department of Human Services (“the department”) dated 17 March 2015 (T9/66-72) to apply an income maintenance period (“IMP”) to Mrs Gligurovska’s disability support pension (“DSP”) during the period 30 January 2015 to 24 September 2015.
Mrs Gligurovska and her husband and nominee, Mr Cane Gligurovska attended the hearing. Only Mr Gligurovska chose to give evidence at the hearing of this application. Mr Gligurovska was assisted by an interpreter, Mr Babi Blajeski.
ISSUES
The issues before this Tribunal are:
(a) whether the IMP has been correctly applied; and
(b) if so, whether Mrs Gligurovska is in severe financial hardship that makes it appropriate to exercise the discretion contained in s 1064F-11 of the Social Security Act 1991 (the Act), to determine that the whole, or any part, of the period does not apply to her.
The respondent’s Statement of Issues, Facts and Contentions also submits, in relation to the clarification of issues:
The Applicant filed a Statement of Issues at the first preliminary conferences of this matter on 25 November 2015. The Applicant contends that an issue before this Tribunal includes, ‘Should the Applicant lose access to the Transitional Arrangements for the calculation of her rate of DSP?’
The Secretary contends that the decision with respect to the Applicant’s DSP rate being subject to the transitional arrangements or current arrangements (the DSP rate decision), is not currently before this Tribunal. The Tribunal does not have jurisdiction to review the DSP rate decision pursuant to section 142 and section 179 of the Administration Act and section 43 of the Administrative Appeals Tribunal Act 1975 (AAT Act) (Exhibit 5 paragraphs 2.2 - 2.3) .
The Tribunal agrees, and records its appreciation for the explanation of this matter provided to Mr Gligurovska by Mr Burgess during this hearing.
BACKGROUND
Mrs Gligurovska is 63 years of age and has been in receipt of DSP since 27 April 2004 (T5/53).
Mrs Gligurovska’s husband, Mr Gligurovska, was formerly employed by Baker Hughes Australia Pty Ltd (“Baker Hughes”) (T11/122-136). He ceased work on 22 January 2015 (T4/52) and received a termination payment from Baker Hughes on 30 January 2015 of $45,607.00 comprising $19,204.34 for redundancy, $6,858.69 for ‘in lieu of notice’, $11,039.61 for annual leave, $10,067.45 for long service leave and $57.88 for ‘other’ (T4/52).
On 26 February 2015, the department decided to apply an IMP from 30 January 2015 to 17 September 2015 on Mrs Gligurovska’s DSP. This decision reduced her DSP rate to nil (T6/55).
The Employment Separation Certificate related to Mr Gligurovska’s cessation of work details the periods covered by his termination payments as follows:
(a)Redundancy payment – 14 weeks;
(b)In lieu of notice payment – 5 weeks;
(c)Annual leave payment – 8 weeks; and
(d)Long Service Leave payment – 7 weeks (T4, p52).
The total amount of unused leave entitlements and final gross redundancy payments accumulated by Mr Gligurovska at the time of separation from Baker Hughes on 30 January 2015 was 34 weeks (T5/42).
Mrs Gligurovska sought internal review of the department’s decision of 26 February 2015 on the basis that the IMP should be equivalent to the amount of weeks paid and should cease on 1 June 2015. Mrs Gligurovska also requested that the IMP be waived due to her personal circumstances and on the basis of “severe financial hardship” (T11/144).
By decision dated 17 March 2015, an ARO varied the original decision under review and applied an IMP from 30 January 2015 to 24 September 2015 (T9/66-72).
On 7 July 2015, Mrs Gligurovska sought review of the ARO decision. On 3 September 2015, AAT1 affirmed the decision of the ARO (T2/5-10). The circumstances of the relevant AAT1 hearing are described in the decision as follows:
Mrs Gligurovska and her nominee Mr Gligurovska attended the hearing by conference telephone. An interpreter in the Macedonian language also attended the hearing by telephone conference.
At the hearing Mr Gligurovska advised the tribunal that he was not prepared to provide any evidence or submissions to the tribunal, as he wanted the matter adjourned to a date in October 2015. He also stated that he had not had a chance to review the papers provided by the Department. He further stated that he wanted to resolve this issue by sitting down at a meeting with Centrelink.
Following these submissions the tribunal advised the applicant and her nominee that the matter would be re-scheduled for hearing on 11 September 2015 at 10.30am. The applicant and her nominee both stated that they would not attend the hearing at the proposed rescheduled date and would only attend a hearing scheduled in October 2015. Mrs Gligurovska stated that if the tribunal was able to deal with the application on the papers it should do so.
The tribunal refused the request to adjourn the hearing to a date in October and advised the applicant and her nominee that they could proceed to give their evidence at the hearing as scheduled or at the adjourned date proposed by the tribunal. If they chose not to make any submissions or give evidence the tribunal would proceed to determine the matter on the papers before it.
The applicant and her nominee both advised that they would not make submissions or give evidence at the hearing. The tribunal proceeded with the hearing on the basis of the evidence before it (T2/1-2).
EVIDENCE
The evidence before the Tribunal in the present matter comprised:
·The “T Documents” (T1-T11, pp 1-148);
·Applicant’s Statement of Issues (23 pages) (Exhibit 1);
·Applicants Documents / Application Added Documents / Applicants Added Documents 2 (A1-A21) (Exhibit 2);
·Applicant Statement of Issues 2 dated 18 August 2016 (Exhibit 3);
·Fortnightly expenses for Ilinka and Cane Gligurovska (8 pages) (Exhibit 4);
·Secretary’s Statement of Issues, Facts and Contentions dated 1 April 2016 (Exhibit 5); and
·The oral evidence of Mr Cane Gligurovska.
RELEVANT LEGISLATION AND POLCY PROVISIONS
The statutory provisions relative to this review are contained in the Act and the Social Security(Administration) Act1999, and are referenced where appropriate in the analysis below.
Relevant policy advice is also contained in the Guide to Social Security Law (“the Guide”). Although policy is not binding it will ordinarily be followed unless there is a cogent reason not to do so (see Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 645 per Brennan J).
ANALYSIS
AAT1 concluded from the evidence available to it that Mrs Gligurovska contended that:
·Her husband no longer works and is on the age pension.
·They both have to take care of her husband’s elderly parents.
·They need the money to take care of his parents.
·They have a range of living expenses, bills and medical products that cost a lot of money (T2 para 27).
The tenor of Mr Gligurovska’s contentions before this Tribunal was that:
·He was not paid $45,607 on 30 January 2015, rather it was only around $39,000;
·He had around $10,000 in the bank during the IMP but the amount varied and he had credit card liabilities;
·The IMP should have been for 33 rather than 34 weeks;
·His termination payment from Baker Hughes provided a financial situation which would not be repeated and that he should be able to dispose of the money as he saw fit; and
·Approximately $31,000 of his termination payment was used for funeral expenses for his father who died on 6 October 2015.
Has the IMP been correctly applied?
Sections 1064-F1 to 1064-F14 of the Act provides for IMPs that are related to DSP payments.
The legislative purpose of the IMP was upheld by the Federal Court in Secretary, Department of Education Employment and Workplace Relations v Ergin [2010] FCA 1483 (Ergin) when it was held that:
The legislative purpose served by the “income maintenance period" regime is clear. A person who, upon becoming unemployed, receives a termination payment is expected to use that payment to cover his or her reasonable living expenses and is not entitled, immediately, to receive income support from the public purse. The SS Act provides a formula pursuant to which the length of any “income maintenance period" is to be calculated. Once the period has expired the person is entitled to the benefit claimed provided that he or she remains otherwise eligible.
Pursuant to s 23(1) of the Act, an IMP is a period of time in which a person who has received termination or leave payments, has these payments treated as “ordinary income”. The ARO explained IMP, in the Tribunal’s view clearly and simply, in the 17 March 2015 decision thus:
If a person has ceased employment, then any lump sum leave or termination payment is assessed as income. This income is assessed for a period equal to the amount of time the leave or termination payment would have covered, had it been paid in instalments equal to the person’s regular wage. This is called the income maintenance period.
An income maintenance period usually precludes a person’s partner from receiving any Disability Support Pension, or at least reduces the amount which can be paid. The income maintenance period commences on the day that the person is paid the lump sum or termination payment (T9/69).
“Ordinary income” is defined at s 8 of the Act as income that is not maintenance income or an exempt lump sum. Section 1064-F14 defines “termination payment” as including a redundancy payment, a leave payment relating to a person’s employment that has been terminated and any other payment that is connected with the termination of a person’s employment. According to the Guide (at 4.3.4.10), a “termination payment” includes leave payment, redundancy payment (including a payment in lieu of notice) and any other payment connected with termination of employment
Mr Gligurovska received the following payments:
·Annual leave - $11, 039.61 (8 weeks);
·Long Service Leave - $10,067.45 (7 weeks);
·Days in lieu of notice - $6,858.69 (5 weeks); and
·Redundancy - $19,204.34 (14 weeks) (T4/52).
During this 34 week IMP period, Mr Gligurovska’s $45,607.00 lump sum payment is treated as “ordinary income” and assessed under the relevant income test (T4/52).
Section 1064-F1 of the Act provides that the IMP applies to the person and, if the person is a member of a couple, to the person’s partner.
Section 1064-F5 of the Act provides that if a person’s employment has been terminated and the person receives a “termination payment” (whether as a lump sum payment, as a payment that is one of a series of regular payments or otherwise), the person is taken to have received “ordinary income” for a period (the IMP) equal to the period to which the payment relates. The Tribunal is satisfied that s 1064-F5 applies to Mrs Gligurovska as a consequence of the termination of Mr Gligurovska’s employment and his receipt of ordinary income for a period of 34 weeks.
Section 1064-F8 of the Act provides that if a person is subject to an IMP pursuant to s 1064-F5, the IMP starts on the day on which the termination payment was made. In the present consideration, Mr Gligurovska was paid his termination payments on 30 January 2015. It follows that the IMP with respect to Mrs Gligurovska commences on 30 January 2015.
Pursuant to s 1064-A1 of the Act, the maximum payment rate for DSP is calculated by adding the following amounts:
(a)the person’s maximum basic rate;
(b)the amount of pension supplement;
(c)the energy supplement (if any); and
(d)the amount per year (if any) for rent assistance in accordance with s 1070A(b) of the Act.
The department’s Customer Screen Prints indicate that with respect to DSP, Mrs Gligurovska’s maximum payment rate as at 30 January 2015 was $644.00 per fortnight T11/112). As at 30 January 2015, Mrs Gligurovska’s ordinary income (being half of the combined ordinary income of Mr and Mrs Gligurovska) was $39,140.95 per annum (T1/103).
The Tribunal is satisfied that Mrs Gligurovska is subject to an IMP of 34 weeks commencing on 30 January 2015 and that her DSP rate has been correctly reduced to nil. The Tribunal notes that this finding is consistent with those of the ARO and AAT1, and the relevant contentions of the respondent. Because the amount of ordinary income Mrs Gligurovska received during this period exceeded her potential fortnightly entitlement to DSP, under s 1064 of the Act, DSP is not payable during the determined IMP unless that IMP can be reduced.
Was the duration of the IMP correctly calculated?
Mrs Gligurovska disputes the number of weeks the IMP is to be applied to her DSP.
The Guide at 4.3.4.10 sets out that if a person’s employment has ceased, the length of an IMP is calculated by adding together:
1)the number of weeks (or days) that the leave payments represent; and
2)the number or weeks that the portion of the termination payment based on the employee’s wage (e.g. 2 weeks redundancy payment for every year of service) represents; and
3)the number of weeks that the portion of the termination payment NOT based on the employee’s gross wage (e.g. a gratuity payment) represents. This is obtained by dividing that portion of the termination payment by the relevant weekly wage (1.1.R.143) and then rounding down this figure to a whole week figure. A 5 day working week is used (T3/47).
The Secretary contends that the number of weeks IMP to be applied to Mrs Gligurovska’s DSP is 34 weeks. The Secretary relies on the details provided within Mr Gligurovska’s employment separation certificate (T4/52). For the reasons already outlined above, the Tribunal agrees.
Was Mrs Gligurovska in severe financial hardship such as to enliven the discretion to disregard the whole, or part, of the IMP?
An IMP can be shortened if the person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure. Section 1064-F11 of the Act relevantly provides:
If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while an income maintenance period applies to the person, the Secretary may determine that the whole, or any part, of the period does not apply to the person.
Note 1: For in severe financial hardship see subsection 19C(2) (person who is not a member of a couple) and subsection 19C(3) (person who is a member of a couple).
Note 2: For unavoidable or reasonable expenditure see subsection 19C(4).
Note 3: If an income maintenance period applies to a person, then, during that period:
(a) the pension claimed may not be payable to the person; or
(b) the amount of the pension payable to the person may be reduced
There is no dispute that Mr and Mrs Gligurovska are a couple. For a person who is a “member of a couple” such as Mrs Gligurovska, “severe financial hardship” is defined as having less in liquid assets than twice the fortnightly maximum amount of pension that would be paid if the person’s claim was granted and the income maintenance period did not apply: s 19C(3) of the Act. The term “liquid assets” is defined in s 14A of the Act. The term encompasses all the termination monies that Mr Gligurovska was paid on 30 January 2015 and any other funds, such as bank deposits, at Mr Gligurovska’s disposal.
“Unavoidable or reasonable expenditure” is defined in s 19C(4) of the Act as follows:
(4) Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonable work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:
(a) the reasonable costs of living that the person is taken, under subsection (6) or (7), to have incurred in respect of:
(i) if the person is serving a liquid assets test waiting period – that part of the period that the person has served; or
(ii) if the person is subject to a seasonal work preclusion period – that part of the period that has expired; or
(iii) if an income maintenance period applies to the person – that part of the period that has already applied to the person;
(b) the costs of repairs to, or replacement of, essential whitegoods situated in the person’s home;
(c) school expenses;
(d) funeral expenses;
(e) essential expenses arising on the birth of the person’s child or the adoption of a child by the person;
(f) expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;
(g) the costs of essential repairs to the person’s car or home;
(h) premiums in respect of vehicle or home insurance;
(i) expenses in respect of vehicle registration;
(j) essential medical expenses;
(k) any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.
“Reasonable costs of living” is defined in s 19C(5) of the Act:
(5) The reasonable costs of living of a person include, but are not limited to, the following costs:
(a) food costs;
(b) rent or mortgage payments;
(c) regular medical expenses;
(d) rates, water and sewerage payments;
(e) gas, electricity and telephone bills;
(f) costs of petrol for the person’s vehicle;
(g) public transport cost;
(h) any other costs that the Secretary determines is a reasonable cost of living in relation to a person.
Section 19C(7) of the Act sets out the amount of “reasonable costs of living” which are applicable to s 19C(4)(a) for a person who is a “member of a couple”. It provides that the reasonable costs of living must not exceed:
in the case of a person to whom an income maintenance period applies--twice the amount of allowance or parenting payment (as the case may be) that would have been payable to the person during that part of the income maintenance period that has already applied to the person, if the period did not apply to the person.
Mrs Gligurovska seeks to have the discretion which arises under s 1064-F11 of the Act exercised in her favour. The provision provides the Tribunal, with the discretion to determine that all or any part of the IMP does not apply if the recipient is in "severe financial hardship” where that severe financial hardship resulted from her incurring "unavoidable or reasonable expenditure” while the IMP applied.
In Ergin, the Federal Court relevantly held (at [33]) that:
The judgment which the decision-maker is required to form must be made in a practical manner. The judgment will, normally, fall to be made in the course of an income maintenance period. Just when, during such a period, the issue will arise will usually depend on when an applicant seeks the favourable exercise of the Secretary’s discretion. At whatever point such a request is made, it will be necessary for the Secretary to examine the financial position of the applicant at that time and then to ascertain how the applicant has disposed of the termination payment. [Emphasis added]
The Tribunal must determine whether there are any grounds upon which to exercise a discretion to treat all or any part of the IMP as not applying to Mrs Gligurovska. The Tribunal must be satisfied that:
(a)Mrs Gligurovska is in “severe financial hardship”;
(b)Mrs Gligurovska is suffering such hardship because she has incurred “unavoidable or reasonable expenditure”; and
(c)such expenditure has been incurred while the IMP has been applied.
At paragraph 29 above, the Tribunal established that Mrs Gligurovska’s maximum DSP payment as at 30 January 2015 was $644.00. For Mrs Gligurovska to be considered to be in “severe financial hardship”, her liquid assets needed to be less than twice that amount, that is less than $1,288.00.
In Exhibit 5 at paragraphs 4.34 - 4.39, the respondent provided detailed information on the financial position of Mrs Gligurovska and Mr Gligurovska at the relevant time. The Tribunal has confirmed that information in the evidence before it, and repeats it as follows:
The Applicant has produced evidence of her financial position by way of her Centrelink Statement for DSP (T7, p58-60) which showed her assets as at 9 March 2015 as follows:-
(d)Cash/investments/savings - $66.00;
(e)Household and personal effects - $1,500.00;
(f)Motor vehicles - $4,000.00;
(g)Motor vehicles - $2,500.00
The Applicant has produced recent evidence of her financial position by way of her husband’s Income Statement (A14 to the Applicant’s Statement of Issues) and her husband’s bank statements for the period 17 December 2014 to 10 March 2015 (A12 to the Applicant’s Statement of Issues).
Those records show that on 28 January 2016, the Applicant’s husband had received, as part of regular fortnightly entitlements and payments at $777.00 comprising of carer allowance, age pension, energy supplement and pension supplement payments. Other details of income included fortnightly financial investment income at $30.94 and fortnightly foreign pension at $76.49 (A14 to the Applicant’s Statement of Issues).
Those records also showed the Applicant’s husband’s assets as at 28 January 2016 as follows:-
(h)Cash/investments/savings - $66.00;
(i)Household and personal effects - $750.00;
(j)Motor vehicle, boat and caravan - $6,500.00;
(k)Managed investments (MLC Masterkey business super funds) - $86,576.92.
The ARO noted from discussions with the Applicant’s husband that Applicant held joint liquid assets of approximately $10,000 in their Commonwealth Bank account (T9, p69).
The Secretary contends that the value of the Applicant’s liquid assets as at the commencement of the IMP includes the relevant termination payment of $45,607.00 and the Applicant’s husbands managed investments assessed on 28 January 2016 at $86,576.92 (A14 to the Applicant’s Statement of Issues). The Applicant’s liquid assets also include as at 9 March 2015 savings of $66.00.
There is no evidence before the Tribunal that Mrs Gligurovska satisfied the requirements described above for being in “severe financial hardship”.
Even if the Tribunal reached a conclusion that Mrs Gligurovska was in “severe financial hardship”, to exercise the discretion to shorten the IMP the Tribunal would need to be satisfied that the “severe financial hardship” resulted from her incurring “unavoidable or reasonable expenditure” during the IMP: Glasson and Secretary, Department of Education, Employment and Workplace Relations (2009) AATA 969.
The term “unavoidable and reasonable expenditure” is defined and limited (see paragraph 36 above), and includes funeral expenses. The Tribunal noted the explanation of Deputy President Handley, included in the AAT1 decision dated 3 September 2015, in Re Naumoski and Secretary, Department of Education, Employment and Workplace Relations (2013) AATA 214 that “section 19C is not an exhaustive statement of what is or is not unavoidable or reasonable expenditure, and it needs to be appreciated when construing the meaning of this language that this is beneficial legislation”.
The Tribunal acknowledges, with regret, the death of Mrs Gligurovska’s father-in-law on 6 October 2015, after the expiry of the IMP. Before the Tribunal, Mr Gligurovska detailed the significant funeral costs, including a monument/headstone costing $12,330, he and Mrs Gligurovska incurred following the death of his father. However, there is no evidence that this expenditure, in total $33,199, occurred during the IMP or contributed to “severe financial hardship” as defined in the Act.
CONCLUSION
The Tribunal, having regard to all the evidence and the circumstances of this matter, is satisfied that the IMP applied to Mrs Gligurovska’s DSP was calculated and applied correctly. The Tribunal is also satisfied that Mrs Gligurovska does not meet the definition of being in “severe financial hardship”. It follows that the Tribunal cannot exercise the discretion to disregard part or all of the IMP.
DECISION
For the reasons outline above, the Tribunal affirms the AAT1 decision of 3 September 2015.
I certify that the preceding 48 (forty -eight) paragraphs are a true copy of the reasons for the decision herein of Brigadier AG Warner, Member .....(Sgd).........................................................
Administrative Assistant
Dated 28 November 2016
Date of hearing 23 August 2016 Representative for the
ApplicantMr C Gligurovska Representative for the
RespondentMr A Burgess
Solicitors for the Respondent
Sparke Helmore Lawyers
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