Houben and Secretary, Department of Social Services (Social services second review)
[2023] AATA 153
•15 February 2023
Houben and Secretary, Department of Social Services (Social services second review) [2023] AATA 153 (15 February 2023)
Division:GENERAL DIVISION
File Number: 2022/3037
Re:Jan Houben
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
Decision
Tribunal:Mrs J C Kelly, Senior Member
Date:15 February 2023
Place:Sydney
The reviewable decision made on 22 March 2022 by the Social Services & Child Support Division of the Tribunal is affirmed.
................................[sgd]........................................
Mrs J C Kelly, Senior Member
Catchwords
SOCIAL SECURITY – age pension – assets value exceeded assets limit – whether there has been a manifest error caused by the respondent’s alleged misconduct – whether it is appropriate to reconsider a matter previously decided by the tribunal – reviewable decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Cases
Comcare Australia v Grimes (1994) 33 ALD 548
Giger and Repatriation Commission (Veterans’ entitlements) [2017] AATA 1219
Re Scott and Commissioner for Superannuation (1986) 9 ALD 491
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
15 February 2023
Introduction
Mr Houben was granted age pension on 16 September 2013 with effect from 5 June 2013.
It was cancelled with effect from 9 March 2021 because the value of his assets was found to exceed the ‘assets value’ limit. Mr Houben followed the review process. I am reviewing the decision made on 22 March 2022 by the Social Services & Child Support Division of the Tribunal (AAT1) which effectively affirmed the cancellation decision.
The assessment of Mr Houben’s assets included attributing to him 49% of the net assets of EJF Engineering Pty Ltd (the company). He maintains that he was assessed in September 2013 as a ‘non-attributable stakeholder’ and has never requested a review of that decision. He claims that the assessment made on 16 December 2013 that his rate of age pension would be assessed on a company income attribution of 0% and a company asset attribution of 50% with effect from 12 December 2013 was unlawful and that thereafter, Centrelink (the agency) has, in summary, misbehaved, as I understand it because it has acted upon the 16 December 2013 assessment. His allegations include fraud and corruption.
Mr Houben pursued review of the 16 December 2013 assessment to an Authorised Review Officer, to the then Social Security Appeals Tribunal (the SSAT) and finally to the Tribunal which on 13 April 2015 affirmed the decision of the SSAT to reduce the percentage of assets of the company attributed to him to 49%. Thereafter, his age pension has been calculated on the basis of the 49% attribution percentage.
The material Mr Houben provided shows that he complained about the actions of the agency in 2013, to the then Minister in 2014, to the former President of this Tribunal in 2015, to the Ombudsman in 2016, and to the Commonwealth Attorney-General in 2020.
He was advised in 2015 that he could appeal to the Federal Court but did not do so.
The first question for me to consider is whether I should exercise the discretion conferred by section 33(1)(a) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) to allow Mr Houben to relitigate the 2015 decision because he was assessed in September 2013 as a non-attributable stakeholder and the decision made in December 2013 that he was an attributable stakeholder and the appropriate attribution percentage was 49% was wrongfully made and maintained by the agency.
Mr Houben contended that Deputy President the Honourable Brian Tamberlin QC, who made the 2015 Tribunal decision, was deceived by the agency.
The undisputed facts
Mr Houben has not disputed any of the following facts.
He and his son established the company in about 2002. Initially, he owned 51 of the ordinary shares issued by the company and his son owned 49 shares. In May 2013, he sold two of his shares to his son, leaving him with 49 shares and his son with 51 shares. Mr Houben had ceased playing an active role in the company some years before because he was caring for his wife who was suffering from dementia.
Voting rights attached to his shares, and he is entitled to dividends and capital distribution on wind up.
If the 49% attribution percentage is applied, based on the company’s 2019/20 financial statements, the value of his assets exceeded the applicable assets test threshold and therefore his age pension payments had been correctly cancelled.
The law relating to reconsidering previous decisions of the Tribunal
As the Respondent properly conceded, this is a hearing de novo. It referred to numerous authorities on the principles relevant to the Tribunal allowing reconsideration of a matter that has been decided previously by the Tribunal. The circumstances are limited. The Respondent contended that there was no basis for the Tribunal to reconsider the percentage attribution percentage determined in the 2015 decision.
The principle relevant to this case is that if there has been a manifest error caused by the agency’s misconduct, such as Mr Houben alleges, it is appropriate to reconsider the matter.[1]
[1] Re Scott and Commissioner for Superannuation (1986) 9 ALD 491 [499]; Comcare Australia v Grimes (1994) 33 ALD 548; Giger and Repatriation Commission (Veterans’ entitlements) [2017] AATA 1219.
Has there been such a manifest error?
To answer that question, it is necessary, first, to set out what happened in 2013.
On 5 June 2013, the Applicant applied for age pension. He provided a claim form, an income and assets form and a MOD PC: Private Company form (the PC form).
In the PC form, Mr Houben named his accountant as the person to contact about details he gave in the form and for future annual financial statements of the company (the contact person).
Question 14 in the PC form asked in which month the contact person wanted the annual review conducted, and explained:
We will review the income and assets for the company annually to coincide with the lodging of the company income tax return.
The month chosen should be shortly after the company income tax return has been lodged.
In answer, Mr Houben wrote ‘December’.
In answer to question 21, Mr Houben stated that there were 100 ordinary shares in the company that had voting rights attached, entitlement to dividends and entitlement to capital distributions on wind up.
At question 22, he stated that he held 49 ordinary shares valued at $49 and his son held 51 shares valued at $51.
Question 26 to 27 asked for details of the assets held by the company other than shares in the company or in other private companies. Mr Houben listed assets with a current market value of approximately $200,000.
In answer to question 32 about income received from the company in the last financial year, Mr Houben wrote that he had received $68,861 as ‘salary & dividend’ for the financial year 2011-2012.
In answer to question 60, he ticked boxes indicating that he was providing the following documents for the company:
·the latest tax return;
·the profit and loss statement;
·depreciation schedule;
·balance sheet; and
·a profit and loss statement and/or balance sheet ‘if the most recent completed year is not an accurate reflection of the current circumstances of the company’.
On 22 July 2013 the agency wrote to Mr Houben requesting evidence of the following:
·receipt of funds for the sale of his two shares in the company to his son on 24 May 2013;
·an interim profit and loss statement for the company for the period 1/7/2012 to 24/5/2013 (because he had included a balance sheet showing a loss of $168,428);
·the amount of wages he was paid by the company for the year ended 30/6/2013;
·the amount of any dividend he expected to receive from the company for the year ended 30/6/2013; and
·a copy of the company bank statements for the period 1 April 2013 to 31 May 2013.
On 13 August 2013, a Complex Assessment Officer (CAO) assessed Mr Houben as a joint controller of the company and attributed 0% of the company’s income and 50% of the company’s assets to Mr Houben. The CAO had a balance sheet for the company ‘at 24/5/2013’ which showed net assets of $809,098.
The agency sent Mr Houben a notice dated 16 September 2013 advising him that he had been granted age pension from 5 June 2013, and his pension rate was calculated on a combined annual income of $48,049.28.
According to the decision of AAT1, a file note dated 22 October 2013 recorded that Mr Houben requested an explanation of the 16 September 2013 advice.
On 23 October 2013, the agency wrote to the Applicant, apparently in response to his request. A CAO explained ‘the income from (the company) which has been used to assess your entitlement to Age Pension’. He had received a company dividend (plus franking credits) in the 2011/2012 financial year totalling $43,714 which would be assessable income for a period of 12 months from the date of the distribution pursuant to section 1073 of the Social Security Act 1991 (Cth) (the Act). On one of the copies of the document before the Tribunal, Mr Houben has written: ‘Non Controller income assessment’. The note requested minutes of directors meeting declaring the 2011/12 dividend, and the minutes of directors meeting for the 2012/13 financial year if it had been prepared, to confirm the date and amount of any dividend for that financial year.
Minutes of Meeting of Directors of the company dated 30 June 2012 and 30 June 2013 were stamped received by the agency on 13 December 2013. The minutes showed that a fully franked dividend of $60,000 was payable on the ordinary shares and paid to shareholders on 30 June 2012 and no dividend was payable for the 2013 financial year.
A file note dated 16 December 2013, recorded that a CAO reviewed Mr Houben’s income from the company based on additional information that he had provided and determined that the distributions made to him by the company could be assessed as nil from 30 June 2013.
On the same day, the agency issued a notice to Mr Houben setting out his rate of age pension based on combined assets of $545,456 and combined annual income of $3,648.24.
On 30 December 2013 the agency sent Mr Houben a letter setting out all of the income and assets that the agency held on his records. It included $0 income and $404,549 assets in respect of the company and asked him to advise within 14 days of receiving the notice if the details were incorrect.
Why Mr Houben’s belief is misconceived
Contrary to Mr Houben’s belief that the agency assessed him as a ‘non-attributable stakeholder’, on 13 August 2013 the CAO assessed Mr Houben as an attributable stakeholder and determined the attribution of income and assets.
The 16 September 2013 rate of pension was based on his income, which included the dividend he had received from the company for the 2011/2012 financial year based on the information available to the agency. That is, the rate of pension assessment was made on the basis that he was an attributable stakeholder.
The rate of age pension is calculated under both the assets and income tests and the test that results in the lower rate, or nil payment, applies.[2] It follows, that when the 16 September 2013 decision was made, Mr Houben’s income, including his income from the company, resulted in a lower rate of pension than if the assets test were applied.
[2] Social Security Act 1991 (Cth) s 1064, 1064-A1.
In December 2013, information about the company for the 2012/2013 financial year had been provided to the agency. The income and assets on which the 16 December 2013 assessment was made were set out in the 30 December 2013 notice to Mr Houben. Mr Houben had received no dividend in that financial year. It is apparent that applying the assets test resulted in the lower rate of pension. The assessment included assets of the company attributable to Mr Houben of $404,549, 50% of the net assets of the company. The 16 December 2013 decision was not unlawful.
The agency’s decision-making in 2013 consistently took into account that Mr Houben was an attributable stakeholder. Whether his income, including from the company, or his assets, including the assets of the company that were attributable to him, were considered to assess the rate of pension depended on which resulted in the lower rate of pension payable. There was no decision that he was a ‘non-attributable stakeholder’ as Mr Houben believes.
Mr Houben’s other claim that the 16 December 2013 was made unlawfully because he did not ask for a review of the 16 September 2013 decision is also misconceived. I accept that he did not request a review of the decision. He asked for an explanation on 22 October 2013 and was provided with one in the letter of 23 October 2013. The agency continually requested information about his financial circumstances and he provided it, including company records in December 2013. It made a decision based on the up-to-date information, that is for the 2012/2013 financial year, as it is required to do.
I would add that if the agency had made a decision that Mr Houben was a ‘non-attributable stakeholder’ at one point of time, it could and should have made a decision that he was an ‘attributable stakeholder’ if information it received later justified such a decision.
For the above reasons, Mr Houben’s belief that the agency has acted unlawfully and misbehaved thereafter, is misconceived. I have considered what he described as a letter from a ‘whistle-blower’ but I give it no weight because no date or identification information is provided and it is inconsistent with the evidence that I consider to be reliable.
I am not satisfied that there has been a manifest error that justifies reconsidering the Tribunal’s 2015 decision that affirmed the decision of the SSAT to reduce the percentage of assets of the company attributed to him to 49%.
Mr Houben only challenged the reviewable decision because it applied the 49% asset attribution percentage which was affirmed in the 2015 Tribunal decision that I have decided not to review.
For the above reasons, the reviewable decision is affirmed.
I note that Mr Houben submitted separately a claim for consideration under the hardship provisions on 24 May 2021 which was rejected by the agency on 7 January 2022. It is open to Mr Houben to seek review of that decision.
Decision
The reviewable decision made on 22 March 2022 by the Social Services & Child Support Division of the Tribunal is affirmed.
I certify that the preceding 46 (forty-six) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member
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Associate
Dated: 15 February 2023
Date of hearing: 1 September 2022 Applicant: In person Solicitors for the Respondent: Mr B Hearnden, Hunt & Hunt Lawyers
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