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

[2011] AATA 111

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 111

ADMINISTRATIVE APPEALS TRIBUNAL      )

)No 2010/4660  and 4661

GENERAL ADMINISTRATIVE DIVISION		)
Re		LAURENCE HALL AND ROBYN HALL

Applicant

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

Respondent

DECISION

Tribunal Mr S. Webb, Member

Date18 February 2011

PlaceCanberra

Decision The decision under review is affirmed.

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

Mr S. Webb, Member

CATCHWORDS

SOCIAL SECURITY - Pension Bonus Scheme - disposition of assets - disposal preclusion period - accrual requirements to qualify for payment - requirements not satisfied - claimants relied on information provided - no discretion - decision affirmed

Social Security Act 1991, ss 92B, 92C, 92N, 92P, 92Q, 92T, 92U, 92V, 92X, 92Y, 93D, 93E, 93UA, 1126AC, 1126AD, Pt 3.12 div 3, 1237A

REASONS FOR DECISION

18 February 2011 Mr S. Webb, Member         

1.      Laurence and Robyn Hall made a gift to their daughter and relied on information provided to them by Centrelink in relation to the Pension Bonus Scheme. They registered for the Scheme and worked past retirement age. Later, they claimed payments under the Scheme. The claims were rejected, however, by primary determination and on review. Mr and Mrs Hall are unhappy with this result.

2.      The issue to be decided is whether Mr and Mrs Hall are entitled to payments under the Pension Bonus Scheme. Specifically, I must decide whether a disposal preclusion period applies and whether Mr and Mrs Hall satisfy all of the required qualification criteria for payment.

3.      The relevant facts are not in dispute and are set out in the Secretary’s Statement of Facts and Contentions[1]. Mr and Mrs Hall owned equal shares in a property with their daughter, X. The property was sold. On 30 October 2006, they gave their shares of the sale proceeds to X to assist her with the purchase of a larger house, thereby disposing of a total amount of $236,666[2]. Subsequently, Mr Hall paid an amount of Capital Gains Tax in respect of the proceeds he and his wife derived from the property sale. Later, on reaching qualifying age for the Age Pension, Mr Hall consulted a Centrelink Financial Information Services officer in relation to the Pension Bonus Scheme[3]. The record of this consultation includes reference to the gift Mr and Mrs Hall made to their daughter and to a projected amount of Pension Bonus payment[4]. He lodged an application for registration under the Scheme[5] in which he set out information concerning the gift to his daughter in 2006[6]. His registration was accepted. On 11 July 2008, in the acceptance notice, Centrelink informed Mr Hall that he was “registered as an accruing member from 2 June 2008”[7]. On 27 August 2008 Centrelink processed Mrs Hall’s registration for the Pension Bonus Scheme[8]. It appears that changes were made to Mr Hall’s records on that day, in respect of his gift to his daughter in 2006 – his membership status in the Scheme was changed from “accruing” to “non-accruing”[9]. There is no evidence that Mr Hall was notified of this change at the time or until 4 June 2009, when Centrelink issued a notice certifying that Mr Hall was a non-accruing member of the Scheme for the period from 2 June 2008 to 1 June 2009[10]. Prior to this occurring, however, on 13 April 2010 Mr Hall again consulted the Centrelink Financial Information Services officer[11]. The record of this consultation includes references to the gift to Mr and Mrs Hall’s daughter, to projected amounts of Pension Bonus payments, and an oblique reference to the end of a preclusion period “in 18 months”[12]. On 27 May 2010 Mr and Mrs Hall lodged a combined claim for Age Pension and payment under the Pension Bonus Scheme[13], in which they informed Centrelink that they ceased to meet the ”work test” on 15 May 2010[14]. Age Pension was granted from 17 May 2010[15].  On 18 June 2010 Centrelink notified Mr and Mrs Hall that Pension Bonus was not payable “because you have not accrued at least one full-year bonus period”[16]. Subsequently these determinations were reviewed and affirmed by an Authorised Review Officer[17] and by the Social Security Appeals Tribunal[18].

[1] Secretary’s Statement of Facts and Contentions, 18 January 2011, pp2-3 at [3] to [17].

[2] T52 and T53.

[3] T8.

[4] T8 folio 52.

[5] T13.

[6] T13 folio 73.

[7] T14.

[8] T16 folio 77.

[9] T53 folio 245 and Exhibit A refer.

[10] T19 and T10 folio 67.

[11] T23.

[12] T23 folios 96 and 97.

[13] T28.

[14] T28 folio 127.

[15] T34 folios 189 and 197

[16] T34 folios 186 and 194.

[17] T39.

[18] T2.

4.      Mr Hall represented himself and his wife at hearing. In his submission, the information he and his wife were provided concerning the Pension Bonus Scheme was insufficient and defective. He says that they consulted the Financial Information Services officer on two occasions and fully disclosed all relevant information. In his submission, the “life changing” decision that he and his wife took to cease work on 14 May 2010 and apply for the Age Pension and Pension Bonus payments was based on the information provided to them by this officer. Mr Hall says that he only became aware of a problem regarding payments under the Scheme when he received certification of his registration in the Scheme (dated 4 June 2010) and rejection of his claim (dated 18 June 2010). In Mr Hall’s submission, people such as he and his wife, who are not experts in matters relating to social security legislation, should be able to rely, with certainty, on information provided to them by Centrelink officers. Mr Hall accepted that sometimes, unfortunately, errors may occur, but in his submission, in those circumstances, appropriate mechanisms should exist to rectify any resulting detriment to those concerned, and to compensate for any losses that may have resulted. For these reasons, Mr Hall urged me to set aside the decision under review so that he and his wife could be paid the Pension Bonus amounts they had been expecting.

5.      Unfortunately for Mr and Mrs Hall, I cannot make such a decision.

6.      Under the Social Security Act 1991 (the Social Security Act), Pension Bonus is only payable if all of the qualification criteria are satisfied. Those criteria include a requirement for the claimant to have at least “one full-year bonus period”[19]. A “full-year bonus period” is the first full-year of the person’s accruing membership of the Pension Bonus Scheme for which he or she satisfies the “work test”[20]. A person who is registered for the Scheme has an accruing membership unless their membership is non-accruing (or they are over the age of 75)[21]. A person has non-accruing membership, relevantly, if he or she is subject to a “disposal preclusion period” while a member of the Pension Bonus Scheme[22]. A “disposal preclusion period”, relevantly, is the period of five years commencing on the day on which the person disposed of an asset with the value of $10,000 or more in one year or assets with the value of $30,000 or more over five years, during which the value of the person’s assets are increased by half of the value of the asset disposed of[23].

[19] Sections 92C, 93D and 93E, Social Security Act 1991.

[20] Sections 92B, 92T, 92U and 92V, Social Security Act 1991.

[21] Section 92N, Social Security Act 1991.

[22] Section 92P, Social Security Act 1991.

[23] Sections 92B, 93UA, 1126AC and 1126AD, Social Security Act 1991.

7.      On the facts of this case, as agreed, it is clear that Mr and Mrs Hall disposed of assets with a value greater than $10,000 on 30 October 2006. It follows that they are subject to a disposal preclusion period of five years commencing on that date and ending on 29 October 2011. During this preclusion period and subsequent to their registration under the Pension Bonus Scheme in 2008, Mr and Mrs Hall are non-accruing members of that Scheme. It is also very clear that they did not have at least one full-year bonus period when they lodged claims for payment of Pension Bonus.

8.      That being so, their claims must fail and the decisions under review must be affirmed.

9.      There are a number of further things to say in this rather unfortunate case.

10.     Firstly, Mr and Mrs Hall appear to have proceeded on the basis of either wrong information or a wrong understanding about the effect of the gift they gave their daughter in 2006 on their membership status (and their entitlement to payments within five years) under the Pension Bonus Scheme. If the information contained in the records of interview with the Centrelink Financial Information Services officer is anything to go by, the information they were provided with by Centrelink is either ambiguous or wrong; I can go no further on the present evidence. In either case, at least as far as the records of interview are concerned, the information is sufficiently defective to be a cause of concern. Mr and Mrs Hall were entitled to expect accurate information from Centrelink about these matters, and they were entitled to rely on the information they were given. This is what they did. Mr and Mrs Hall are not experts in matters relating to social security and related legislation and they relied on the accuracy of the information provided to them by Centrelink Financial Information Services officers.

11.     Mr Hall asserted that he was not provided with accurate or sufficiently detailed information in brochures and other documents provided to him by Centrelink (or that were published subsequent to his registration). He says that the information did not clearly set out, in language that he could understand, the possible effect a gift may have on his eligibility for payments under the Scheme, as result of a disposal preclusion period. On the materials before me I cannot determine whether or not this is correct. Nevertheless, what can be said is that it is important that the information provided to registrants under the Pension Bonus Scheme contains information about the disposal preclusion period provisions.

12.     Secondly, in July 2008 Centrelink erroneously notified Mr Hall that he was an ”accruing member” of the Pension Bonus Scheme. It appears that there may have been administrative errors made when processing his Pension Bonus Scheme registration information. On the present evidence it appears likely that his gift to his daughter was not properly coded until 27 August 2008, when Mrs Hall’s application for registration was processed. Nevertheless, Centrelink failed or omitted to notify him of the initial processing error and the change in his status under the Scheme, from an “accruing member” to a “non-accruing member”. The evidence before me reveals that Mr Hall was not informed about this change until June 2010, following his retirement, even though he had taken appropriate action to obtain further information from Centrelink about his financial circumstances and entitlements in April 2010, prior to ceasing employment.

13. Thirdly, the Social Security Act does not provide a mechanism to address the errors that have occurred in relation to the Pension Bonus Scheme in this case. The discretions concerning non-accruing membership[24], “gainful work”[25] and financial hardship[26] are not applicable in the circumstances. The Act provides a mechanism to waive the recovery of a debt if the debt is solely attributable to Commonwealth administrative error[27], but no such general provision exists to alleviate loss or detriment to a social security claimant that is attributable to Commonwealth administrative error in circumstances such as these. The only mechanisms for redress in such circumstances are the Compensation for Detriment caused by Defective Administration (CDDA) scheme administered by the Secretary and, conceivably an Act of Grace payment. These mechanisms are beyond the Tribunal’s jurisdiction.

[24] Section 92Q, Social Security Act 1991.

[25] Section 92Y, Social Security Act 1991.

[26] Part 3.12 Division 3, Social Security Act 1991.

[27] See section 1237A, Social Security Act 1991, for example.

14.     Finally, I note that the Social Security Appeals Tribunal made suggestions concerning CDDA in Mr Hall’s case[28]. It appears that the matter was assessed and rejected by a delegate of the Secretary[29]. There are two further things to say about this.

[28] T2 folios 16-17.

[29] T43 and T44.

15.     The documents relevant to the CDDA process that are before me contain errors and omissions. The decision purports to respond to a claim by Mr and Mrs Hall, but that is not correct as Mr and Mrs Hall made no such claim – the suggestion came from the Social Security Appeals Tribunal in the context of its decision on 21 September 2010. The CDDA decision documents that are before me are not signed or dated. From this distance it is not possible to determine when the decision was made. The text of the CDDA decision does not refer to all of the errors made by Centrelink, including the defective information they were provided on two occasions by Centrelink’s Financial Information Service, the erroneous notice concerning Mr Hall’s accruing membership status and the error in coding the gift to his daughter and communicating his change in status under the scheme as a result. It is clear on the evidence before me that the CDDA decision maker formed the view, correctly, that had the Centrelink errors not been made, Mr and Mrs Hall would not have qualified for Pension Bonus until 30 October 2012. Nevertheless, to my mind, if the errors had not been made Mr and Mrs Hall would have been able to make an informed decision about the timing of their retirement and related financial arrangements while still in employment. This is what they attempted to do, and believed they had done. It is tolerably clear that Centrelink’s errors frustrated their efforts and caused detriment, not least by denying them the opportunity to make a properly informed decision prior to their retirement. While I do not intend to discuss the content of the CDDA decision, for that is not my role, the present documents do not make clear whether this aspect of Mr and Mrs Hall’s case was squarely addressed in the CDDA process.

16.     Finally, and perhaps most importantly, it is not clear whether Mr and Mrs Hall were provided with procedural fairness in the CDDA decision-making process. It appears that Mr Hall provided information to the CDDA decision maker by telephone on 8 November 2010, but it is not clear on the present evidence whether he and Mrs Hall were sufficiently informed about the issues and the decision-making process in advance, or whether they were given an adequate opportunity to present their case. I note that Mr Hall says he received the Social Security Appeals Tribunal decision on 5 October 2010, little more than one month prior to his involvement in the CDDA process. I also note that the text of the CDDA decision does not reveal whether Mr Hall was invited to put additional evidence or to test evidence that was before the decision-maker.

17.     Of course, these observations do not bear upon my decision in this case. They are intended, simply, to indicate the desirability of providing robust, transparent and impartial mechanisms for redress in cases such as this. To my mind, circumstances such as those arising in this case highlight the desirability of providing a mechanism for redress within the legislative framework, with attendant rights of review to enable relevant information to be obtained and evidence to be thoroughly tested. Of course these are policy matters for others to consider.

I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member

Signed:         ..................[sgd]..............................................................
           H. Choi (Associate)

Date of Hearing  14 February 2011
Date of Decision  18 February 2011
Representative for the Applicants             Self Represented
Representative for the Respondent          Jennifer McLean