Harley and Secretary, Department of Social Services (Social services second review)

[2016] AATA 370

Harley and Secretary, Department of Social Services (Social services second review) [2016] AATA 370 (3 June 2016)

Division	GENERAL DIVISION
File Number	2015/0490
Re	Royston Harley
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member N A Manetta
Date	29 April 2016
Date of written reasons	3 June 2016
Place	Adelaide

For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal affirms the decision under review.

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Senior Member N A Manetta

CATCHWORDS

SOCIAL SECURITY - Pension Bonus – applicant delaying application for over a year – special circumstances to permit late lodgement – no special circumstances found to exist

LEGISLATION

Social Security Act 1991

Social Security (Administration) Act 1999 ss 17, 21, and 22

CASES

Whiterod and Secretary, Department of Social Services [2016] AATA 168

REASONS FOR DECISION

Senior Member N A Manetta

3 June 2016

1. After delivery of my oral decision, a request was made for written reasons, which I now publish.

2. This is an application by Mr Royston Harley for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 13 January 2015.  The SSAT affirmed decisions taken in the Respondent’s Department that Mr Harley was ineligible to receive a pension bonus under the Social Security Act, 1991 (the Act).  Mr Harley represented himself; Mr Visser appeared for the Respondent.

   SUMMARY OF CONCLUSION

3. I have decided to affirm the decision under review, and my reasons follow.

   BACKGROUND FACTS

4. Mr Harley, who was nearly 75 at the time of the hearing before me, is a qualified mining engineer and was, from 1991 to 2013, the managing director of his own business involving grit-blasting and spray-painting.  He is not sure how he came to be aware of the pension bonus scheme under the Act.  He understood accurately, however, the essentials of the scheme.  If a person worked after reaching the statutory pensionable age of 65 and did not claim the age pension during this period, he or she would receive a bonus.[1]  Mr Harley recalls registering for the pension bonus scheme in 2005, when he had turned 65.  

   [1] Provided he or she was otherwise qualified to receive it.

5. He suffered a heart attack in 2013, at age 72.  He was hospitalised and did not resume work.  He sold up his business, together with its goodwill, for a total of $220,000 in, he believes, July or August 2013.  Mr Harley did not lodge a claim for a pension at that time nor did he lodge a pension bonus application.  The two must be lodged together.[2]  At this point, I note that the pension bonus scheme under the Act was subject to a requirement that a claim for both the pension and the bonus had to be made within 13 weeks of the person’s cessation of work.[3]

   [2] Section 17(1)(a) of the Social Security (Administration) Act, 1999 (hereafter “the Administration Act”).

   [3] Or, more strictly, within 13 weeks of the cessation of the last bonus period: see s 22(1) of the Administration Act.

6. Mr Harley’s evidence was that he knew there was a three-month claim period and was also aware, in a general sense, of a special circumstances power to allow payment of the bonus after the elapse of three months.

7. Mr Harley deferred making an application for the pension and the bonus.  In fact, having ceased work on 28 June 2013 or thereabouts, Mr Harley only lodged his application for a pension and the bonus approximately one year later, on 3 July 2014.  He was granted an age pension in August of that year, but a bonus was refused him on account of his failure to file his claim in a timely way (namely, in the 13-week period to which I have earlier referred).

8. Without setting out the statutory provisions,[4] I note that this decision was correct so far as Mr Harley’s entitlement to a bonus as of right is concerned.  This leaves, however, the question of the exercise of the statutory “special circumstances” discretion.  The period within which a pension bonus application may be made may be extended in “special circumstances”.[5]

   [4] Sections 21 and 22 of the Administration Act.

   [5] Section 21(2) of the Administration Act.

9. Hearing the matter afresh on the evidence before me, I must decide whether special circumstances exist in this case.  In my opinion, the answer to this question is no.

   REASONS

10. Mr Harley submitted a medical report[6] in the form of a letter addressed to the Tribunal’s conference registrar from Dr D Middleton stating:

    “This letter is to document the health issues that Mr Royston Harley was having in June and July 2013.

    He presented to our surgery on 4^th June 2013, with symptoms suggestive of a myocardial infarction.  He went to Ashford Hospital, where this diagnosis was confirmed.  He was treated in Ashford for approximately 2 weeks.  In July he was re-admitted for another week, during which time a pacemaker was inserted.

    We saw him again on July 31^st when he was suffering significant side-effects from medication.  And later in August he complained of fainting spells and suffered a fall.

    Clearly during this 2 or 3 months of ill health, his mental state would have been adversely affected.”

    [6]  Exhibit A2.

11. I accept this report.  Nevertheless, whilst it explains Mr Harley’s failure to lodge a pension bonus application in July and August 2013, it does not explain the failure to lodge an application after that time, and, in particular, it does not explain a failure to make an application well before July 2014.

12. It would appear that a conscious decision to delay making a claim for a pension, and for the bonus, was made by Mr Harley after his recovery from his heart attack.  I note that Mr Harley put to the Authorised Review Officer[7] that he was given poor information by a bank employee in respect of the timing of his application and decided to follow that advice.  Mr Harley appears to have put a similar submission to the SSAT; namely, that he believed he would have received nothing if he had applied within 13 weeks and so decided to delay making an application.  I have already indicated that I do not accept Mr Harley’s submission that his medical condition explains fully his failure to lodge an application before July 2014.

    [7]  Exhibit R1, T3, page 7.

13. Having said that, I do not accept Mr Visser’s unqualified submission that Mr Harley could not demonstrate “special circumstances” because, once it was concluded that he had deliberately omitted to lodge an application in time, then that was an end of the matter.  It seems to me that no such unqualified proposition emerges from decisional law in this Tribunal (or elsewhere).

14. An applicant might wrongly believe he is entitled to no bonus at all and then defer making an application in the hope of receiving at least something.  This is what appears to have occurred here.  In such a case, if it can be shown that the applicant would not receive more than he or she would have received had an application been made in good time, there may be – I need put it no higher than that – special circumstances justifying an extension for the making of the application.  Whilst I accept there is no accrued right to a pension bonus,[8] there is clearly an expectation of receiving one, and the sums of money involved can be considerable as they are in this case.  

    [8] See Whiterod and Secretary, Department of Social Services [2016] AATA 168 at paragraphs [17]ff.

15. My difficulty, however, in this case is as follows.  The Respondent submitted, and Mr Harley did not suggest to the contrary, that Mr Harley would have received $23,667.32 as a pension bonus if he had lodged an application in time.  If I were to extend the time for the making of an application to 3 July 2014, when he finally lodged his application, Mr Harley would receive a pension bonus of $38,150.84, which is some $14,483.52 more.  Again, Mr Harley did not dispute this figure.

16. Mr Harley notes, by way of counterbalance, that he deferred claiming an age pension for an entire year, which the Respondent has calculated as involving $10,231.85.  Again, Mr Harley did not dispute this calculation.  Nevertheless, even taking this sum into account, I note that if an extension of time were granted, the Respondent would stand to be $4,251.67 worse off, and Mr Harley commensurately better off, as a result of Mr Harley’s own decision to defer making a claim for the pension and the bonus.  Looking at all the circumstances, I do not believe that it is appropriate that Mr Harley receive such a significant windfall as a result of having deliberately delayed the lodging of his application. 

17. I am particularly concerned, however, that Mr Harley, acting no doubt imprudently, has lost $23,667.32 in pension bonus.  This is not a case where Mr Harley would have received nothing had he made a claim in good time.

18. I was initially hopeful that I could exercise a power so as to allow Mr Harley to receive at least some part of his pension bonus. The power under s 21 of the Administration Act, however, is to extend the final date for an application to be made, but I cannot simultaneously reduce the pension bonus to which Mr Harley would be entitled if I exercise that power. Mr Visser, for the Respondent, submitted in writing in response to a question from me that the Tribunal has no power on a review (standing in the shoes of the administrator) to reduce the pension bonus to an amount not exceeding the amount Mr Harley would have received had he made a timely application. Mr Harley did not offer a contrary view, no doubt because of a lack of familiarity with the legislation. I am not aware myself of any power an administrator has, or this Tribunal on a review has, to work what I might call “practical fairness” in this case. That is, the inevitable consequence of my extending the date for the making of the application for the bonus would be to give Mr Harley the windfall to which I have referred.

19. It follows that I am left with a somewhat stark choice: either Mr Harley receives nothing by way of pension bonus or he receives $4,251.67 more than he would have received if he had made an appropriate application in compliance with the regulatory provisions.  In the circumstances of this case, I have decided it would be inappropriate for Mr Harley to receive such a significant windfall as a result of his own decision to delay making his application.  I do not find “special circumstances” justifying this consequence exist.

    FORMAL DECISION

20. I affirm the decision under review.

I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision herein of Senior Member N A Manetta

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Administrative Assistant

Dated 3 June 2016

Date(s) of hearing	12 October 2015, 16 November 2015 and 29 April 2016
Applicant	In person
Advocate for the Respondent	Mr C Visser
Solicitors for the Respondent	Department of Human Services