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

[2021] AATA 5318

Jeffress and Secretary, Department of Social Services (Social services second review) [2021] AATA 5318 (24 November 2021)

Division: General Divison

File Number(s):      2021/1450, 2021/1451

Re:Raymond Jeffress and Janice Jeffress

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

Decision

Tribunal:Member P Ranson

Date:24 November 2021

Place:Brisbane

The decision under review, being whether, on June 1 2020, the Respondent properly determined the rate of age pension payable to the Applicants' is affirmed.

....................[SGD]......................

Member P Ranson

Catchwords

SOCIAL SECURITY – age pension – assets test – income test - assets revaluations – bulk revaluation – exceptional economic circumstances – COVID-19 pandemic – shares value – decision affirmed

Legislation

Social Security Act 1991 (Cth)

Cases

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.

Secondary Materials

Social Security Guide

REASONS FOR DECISION

Member P Ranson

24 November 2021

APPLICATION FOR REVIEW

1. The Australian government provides a range of social security benefits to its citizens and other eligible residents. The delivery of those payments and services, especially social security payments, is provided by Services Australia through Centrelink.

2. Mr Raymond Jeffress (Mr Jeffress) and Mrs Janice Jeffress (Mrs Jeffress) have been recipients of age pensions for many years. They also have a portfolio of Australian shares, which Mr Jeffress monitors regularly with the aid of a spreadsheet.

3. Mr Jeffress is aware of the standard procedure of Centrelink to automatically revalue the financial investments of social security recipients whose benefits are subject to an income test and or an assets test. These automatic revaluations are carried out on 20 March and 20 September each year. He is also aware of Centrelink’s ability to conduct bulk revaluations of financial investments if certain events occur. One such event was the correction in the Australian stock market resulting from lockdowns associated with the COVID-19 pandemic.

4. Mr Jeffress has educated himself on the workings of the age pension system and when necessary he contacts Centrelink to update the value of their share portfolio. One such update was requested by Mr Jeffress, on behalf of himself and Mrs Jeffress, on 27 March 2020 when he identified the value of their share portfolio had fallen dramatically. This resulted in a valuation much less than the value derived a week earlier from the automatic revaluation.

5. It is also standard practice for Centrelink to notify social security recipients of changes to the value of their financial assets and the effect of periodic changes on the amount each recipient is paid. Notifications can be made by letter, either posted or online at MyGov, social media and website posts.

6. The Secretary recalculated the entitlement of Mr and Mrs Jeffress to age pensions effective from 1 June 2020 by using the value of their share portfolio a week earlier. There is no evidence to indicate Centrelink notified Mr and Mr Jeffress specifically or generally of that revaluation or the recalculation of their age pensions. Mr Jeffress was adamant there was a disintegration of Centrelink’s systems because the first he knew of the change to their fortnightly pension was when he saw the new amount on their bank statement. He later became concerned there might be collusion between Centrelink and the AAT in deciding his case.

7. The issue for Mr Jeffress was that in conducting a bulk review as Centrelink did on 22 May 2020 and effective 1 June 2020, coupled with his review instigated on 27 March 2020, he and Mrs Jeffress suffered a reduced pension because the value of their share portfolio went up thereby reducing their age pensions whereas most age pensioners received an increase. As he was not notified of the change, he had no ability to object to it.

8. Mr Jeffress contacted Centrelink many times and no one seemed to know why the change had occurred on 1 June 2020, so he eventually applied to this Tribunal for a review, which affirmed the decisions of Centrelink. Dissatisfied with the outcome of the first review he applied again to this Tribunal for a second review.

9. As discussed below, once the law was fully explained to Mr Jeffress at the second hearing, he agreed the revaluation of his share portfolio and the subsequent recalculation of their age pension entitlements was correct. The issue then became one of possible compensation for maladministration by Centrelink for not notifying him.

10.  For the reasons below, the previous decision of this Tribunal, see [‎24], should be affirmed, that is, the Tribunal finds Centrelink properly revalued the share portfolio of Mr and Mrs Jeffress on 22 May 2020, and the amount of their age pension entitlements from 1 June 2020 arising from that revaluation are correct.

PROCEDURAL BACKGROUND

11.  The parties in this case are:

Applicant

Raymond Jeffress (Mr Jeffress).

Janice Jeffress (Mrs Jeffress)

Respondent

Secretary, Department of Social Services (the Secretary)

12.  There are two separate applications in this case. The application by Mr Jeffress is Tribunal case number 2021/1450 and the application by Mrs Jeffress is Tribunal case number 2021/1451. As the facts and circumstances for each case are the same, both cases were heard together. This decision applies to both cases.

13.  The hearing in this application occurred on 3 September 2021 (the Hearing). the Secretary was represented by Mr Samuel Harvey (Mr Harvey). Mr Jeffress and Mr Harvey appeared in person. Mr Jeffress also appeared on behalf of Mrs Jeffress.

FACTS, ISSUES AND CONTENTIONS

14.  The historical facts around the revaluation of financial assets of Mr and Mrs Jeffress are set out in detail in [3] to [9] of the Respondent’s Statement of Facts & Contentions (SFIC) dated 9 August 2021[1] and are summarised below.

[1] Exhibit 2, page 1.

15.  The SFIC sets out in detail the law relevant to this case with which the Tribunal concurs. As a copy of the SFIC was provided to Mr and Mrs Jeffress prior to the Hearing, which he acknowledged, that law will not be reproduced in this decision other than to confirm the relevant legislation is contained in Social Security Act 1991 (Cth) (the Act).

16.  The Secretary also relies on Policy in the Social Security Guide, especially at 4.6.6.10, which provides additional revaluations of market linked managed investments and listed securities may occur in exceptional economic circumstances. An example of such circumstances includes the GFC in 2008.

17.  Re Drake[2] sets out that policy in the Guide should be applied by the Tribunal in the absence of cogent (convincing or compelling) reasons not to do so.

[2] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.

18. The Secretary issued letters to Mr and Mrs Jeffress on various occasions in March 2020. On the second page of each letter is a notice requiring the recipient to report certain changes within 14 days, including changes in the value of their financial investments of more than $2,000. The Secretary asserts the notices on page two of these letters are notices to the recipient under section 68 of the Act.

19.  Mr and Mrs Jeffress have been in receipt of age pensions for many years. They also have a share portfolio which qualifies as financial investments for the purpose of the Centrelink assets test. Mr Jeffress diligently records the value of their combined share portfolio each day by means of a spreadsheet.

20. Centrelink automatically revalue financial investments on 20 March and 20 September each year in accordance with subparagraph 1084A(b)(i) and (ii) of the Act. Centrelink can also conduct bulk revaluations if certain conditions are met, such as a major correction (up or down) in the share market. Similarly, a pension recipient can request a revaluation at any time by calling and requesting a ‘trial run’. If the trial run reveals a reduction of more than $2,000 the new value can be adopted.

21. Although he may not realise it, Mr Jeffress relies on subparagraph 1084A(b)(iii) of the Act and the Social Security Guide at 4.6.6.10 when he asks for a trial run valuation of their share portfolio.

22.  The automatic revaluation due 20 March 2020 went ahead as normal and for Mr and Mrs Jeffress the value of their share portfolio was $281,212[3]. On 27 March 2020, Mr Jeffress requested a trial run and the value of their share portfolio had reduced to $221,795[4] and that lower value was adopted for them with a consequent increase in their fortnightly pensions.

[3] Exhibit 2, Attachment B, page 9.

[4] Exhibit 2, Attachment B, page 10.

23.  On 1 June 2020, the Secretary requested Centrelink to conduct an out of cycle bulk revaluation of financial investments as the value had fallen relative to then value on 20 March 2020[5]. the Secretary considered the stock market correction arising from COVID-19 lockdowns that year was a major economic event. The expectation of the Secretary was most pensioners received an increase in their pensions. For Mr and Mrs Jeffress, who already had a much lower valuation for them from 27 March 2020, it meant an increase in the value of their financial investments to $245,602[6] and a corresponding reduction in their fortnightly pensions. The effect of all these changes is shown in the chart, created by the Tribunal, below.

[5] Exhibit 2, Attachment E, page 16.

[6] Exhibit 2, Attachment B, page 11.

24.  Mr Jeffress asserts he was not notified of the bulk revaluation on 1 June 2020 nor the consequences for their age pensions. He says he received a letter on 17 August 2020 advising of the new rates for their age pensions[7], which was confirmed by Mr Harvey at the Hearing. In any event, August 2020 was well after the event. Irate this had happened without notice or explanation, Mr Jeffress contacted Centrelink several times and no one could provide him with an answer. He believed the reduction was done incorrectly and requested review by an Authorised Review Officer (ARO) of the 1 June 2020 assessments, who affirmed the initial decisions , on 8 October 2020. Still dissatisfied, Mr Jeffress applied to the Social Security and Child Support Division (AAT1) of this Tribunal for a review of the decision by the ARO.

[7] Exhibit 1, T Documents, T10, page 45.

25.  On 12 February 2021 the AAT1 affirmed the decision of the Secretary, that is, the revaluations on 1 June 2020 were correct. That day, Mr and Mrs Jeffress lodged applications for review of the AAT1 decision with the General Division of this Tribunal. In their applications for review, Mr and Mrs Jeffress state the reasons:[8]

‘Member King made the wrong decision – he did not hear all my information that I had. Member King also advised wrongly that hearing started early --- (No , it was a late start by him ) Member King was in a hurry , as he had another appointment , --- I was never told that a time limit applied . I thought that this was a tribunal hearing --- not a fixed time hearting [hearing]. Three (3) calls to Centrelink by me --- not one knew why we were revalued --- plus one (1) of the call centre employees stated that as I was receiving a carers allowance, my file was checked for my eligibility, but more importantly when I went to next level (ARO), that person also did not know what I was talking about, and that 100% proof is in her e-mail which is on file. Member King mentioned the word “compensation “ --- but he has not awarded any --- I have been misled. Take all my evidence this time --- and I request face to face again thank you.’

[8] Exhibit 1, T Documents, T1, page 3.

26.  The Secretary identified the only issue to be decided in this case as:

·     Did the Agency properly revalue the Applicants’ [Mr and Mrs Jeffress] share portfolios on 1 June 2020?

27.  In his application for review, Mr Jeffress said the decision in AAT1 was wrong and compensation was mentioned but not delivered. During the Hearing, Mr Jeffress confirmed the issue in this case to be compensation for maladministration on the part of Centrelink for not notifying he and Mrs Jeffress of the bulk revaluation on 1 June 2020 and the change to their age pensions as a result.

28.  The following documents were admitted into evidence:

Exhibit 1	Section 37 T-Documents paged 1 to 579.
Exhibit 2	Respondent’s Statement of Facts & Contentions (SFIC) dated 9 August 2021 (with Attachments A – E).

29.  As Mr Jeffress did not make any submissions or submit any documents in support of either case, the Tribunal must rely solely on his oral evidence provided at the Hearing plus Exhibits 1 and 2.

30.  The Tribunal has considered all the written evidence supplied to it by the Secretary and the oral evidence of Mr Jeffress and Mr Harvey at the Hearing. Not all the evidence is referred to at length in this decision record. That does not mean it has not been considered in determining the outcome. It is sometimes unnecessary to canvass all aspects, arguments, and history of a case in the decision record.

MR AND MRS JEFFRESS’S EVIDENCE

31.  As Mr and Mrs Jeffress did not provide any written evidence, they rely on the oral evidence of Mr Jeffress at the Hearing. Ultimately, Mr Jeffress agreed the revaluation on 22 May 2020 and the consequent reduction on their age pensions from 1 June 2020 were valid and correct. The following extracts from the transcript of the Hearing reveals this.

32.  In relation to the validity of the notices on page two of Centrelink letters;[9]

MEMBER:  Putting that aside [a reference to the letters from Centrelink advising of pension changes], the point we’re trying to make now is that on the back of those letters or forms or whatever you wish to call them, there is a form of words that begins with, “What you must tell us.”

WITNESS:  Yes, I know all that.  I know the rules.

MEMBER:  All right.  So you accept that the wording on the back of those letters amount to a notice under section 68?

WITNESS:  Whatever section it is, I accept.

[9] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2021/1450 & 1451, Member Ranson, 3 September 2021), page 33.

33.  Mr Harvey pointed out the relevance of s 1084A:[10]

MR HARVEY: … Section 1084A is the relevant section that lists the points in time or the basis on which a person’s listed securities can be revalued and (b)(iv) is the basis on which the Secretary relies on the revaluation occurring in this case and (iv) states:

Following an event that effects the relevant investments and is subject of a notice given under section 68 of the Administration Act.

The Secretary contends that the event is the increase in valuation of more than $2,000 that’s specified in the section 68 notices sent to Mr and Mrs Jeffress.

[10] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2020/1450 -1451, Member Ranson, 3 September 2021), page 35.

34.  Mr Jeffress initially disagreed and later agreed with Mr Harvey:[11]

MEMBER:  Now, we’ve been through section 68 and the validity of a notice and you’ve accepted that that is so.  So my question to you then is – and you’ve made the point several times, rightly so – we’re in the middle of a world pandemic.  Do you see that that might at some level equate to an event that effects the relevant investments?  Your investments.

WITNESS:  The answer is yes.

[11] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2020/1450 -1451, Member Ranson, 3 September 2021), page 36.

35.  To support his assertion that he and Mrs Jeffress were not advised on a timely basis of the bulk revaluation:[12]

WITNESS:  And it says here, “Tell the customer [referring to a letter from Centrelink, T16, p64] that the revaluation on 1 June will include” – and that’s what I’ve gotten written there in long hand, we did not get told. …

MEMBER:  Are you saying then that you were never advised in any form, writing, MyGov, any other way that the revaluation had occurred on 1 June.  The only way you knew about it was your pension changed.

WITNESS:  The only time I knew about it was when we got the bank statement because I noticed two payments in June not what they should have been.

MR HARVEY:  Member, in Mr Jeffress’ case, he would have first been aware by being notified – other than checking his bank accounts – the notice that the agency first sent is what’s contained in the T documents and the first one is – sorry, Member, on 17 August 2020.  That’s T10, page 45.

[12] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2020/1450 -1451, Member Ranson, 3 September 2021), page 38 - 39. 

36.  Mr Harvey addresses the issue of compensation:[13]

MR HARVEY:  It didn’t happen [notification of the change made on 1 June 2020].  I can’t speak as to whether it should have happened and generally – and I know – I was going to save this to the end – to my closing submission – Mr Jeffress has talked a lot about what he says is maladministration and, frankly, yes, he points to a lot of things that are recorded in the docs in terms of him contacting and being told - not being properly advised or, you know, been told of another reason why his aged pension went down.  In that type of, you know, potential maladministration is something that I would suggest to Mr Jeffress could form a claim for compensation for defective administration. There’s quite a process for that.

MR HARVEY:  But for today’s purpose, for today’s hearing, it is the decision under review about whether or not it was right to make that re-evaluation and the lack of a notice in terms of what it gives for Mr Jeffress from a legal point of view is that he’s not bound by the 13-week arrears limitation provisions until he is properly notified.  So, by receiving the notice on 13 August he has 13 weeks from that date in which to appeal that decision but, other than that, I can’t provide, Member, any - - -

[13] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2020/1450 -1451, Member Ranson, 3 September 2021), page 40 – 41.

37.  In relation to the matter under review, that is, was the revaluation on 22 May 2020 and effective from 1 June 2020 done correctly:[14]

MEMBER:  My question is, putting aside you didn’t know, putting aside all of that, my question is, given what the value of your share portfolio was on 22 May, and I know you know that, did Centrelink correctly calculate your pension based on that portfolio value?

WITNESS:  Yes.

MEMBER:  So, what that says is that they applied the law correctly.  Putting aside why they picked that date, that they applied the law correctly.

WITNESS:  Yes.

[14] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2020/1450 -1451, Member Ranson, 3 September 2021), page 52.

38.  As to the real issue for Mr Jeffress:[15]

MEMBER:  They didn’t advise, no, I fully get that.  I understand, I’ve made a note of it.  Mr Harvey’s confirmed all the correspondence that came to you is in the T documents and there is nothing there [notifying the change from 1 June 2020].  The first one, the letter to you, doesn’t appear until August of 2020.  So, what that’s saying to me is, the issue for you isn’t did they correctly calculate your pension on that day based on your portfolio, as it was on 22 May, but whether you were correctly notified and, as a result, are you entitled to compensation?

WITNESS:  I say yes.

[15] Transcript of Proceedings, Re Jeffress, Jeffress and Secretary of Department of Social Services (Administrative Appeals Tribunal 2020/1450 -1451, Member Ranson, 3 September 2021), page 52.

39.  Based on the above exchanges, the Tribunal is satisfied Mr Jeffress now understands the revaluation of their share portfolio on 22 May 2020 was validly done and the calculation of their age pensions from 1 June 2020 was accurate. It is also clear Mr and Mrs Jeffress were not notified at all about the change on 1 June 2020.

40.  Accordingly, the Tribunal finds Centrelink did properly revalue the Applicants’ [Mr and Mrs Jeffress] share portfolios on 1 June 2020.

CONCLUSION

41.  The issue in this case as set out in paragraph [‎25] is whether Centrelink validly revalued the share portfolio of Mr and Mrs Jeffress on 1 June 2020.

42.  Mr Jeffress now acknowledges the revaluation was validly made and the calculation of their age pensions from 1 June 2020 were correct. The issue for Mr Jeffress is whether he and Mrs Jeffress are entitled to compensation for maladministration by Centrelink for not notifying them of that change. Whilst the Tribunal has no power to grant compensation, it notes it is open to Mr and Mrs Jeffress to apply to Centrelink for consideration of their case.

DECISION

43.  The decision under review, being whether, on 1 June 2020, Centrelink properly determined the rate of age pension payable to Mr and Mrs Jeffress, is affirmed.

1.       I certify that the preceding 43 (forty-three) paragraphs are a true copy of the reasons for the decision herein of Member P Ranson

…………………[SGD]………………………..
Associate
Dated: 24 November 2021

Date of Hearing:	3 September 2021
Applicants:	In Person
Solicitor for the Respondent:	Services Australia