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

Khuu and Secretary, Department of Social Services (Social services second review) [2019] AATA 419 (19 March 2019)
Division:GENERAL DIVISION
File Number(s): 2018/2612
Re:Khai Khuu
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member N Manetta
Date:19 March 2019
Place:Adelaide

The Tribunal affirms the decision under review.
...............[Sgnd].............................
Senior Member N Manetta
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances - carer payment – eligibility – incorrect assessment of assets - request for recalculation under s 129 – whether applicant is entitled to back payment under s 109 - decision under review affirmed
LEGISLATION
Social Security Administration Act 1991
Social Security Act 1991
REASONS FOR DECISION
Senior Member N Manetta
19 March 2019

This is an application by Mr Khai Khuu seeking a review of a Level I decision of this Tribunal dated 6 April 2018. This decision affirmed earlier decisions taken in Centrelink that Mr Khuu was ineligible to receive a further back-payment of his carer payment benefit under s109 of the Social Security Administration Act 1991 (“the Administration Act”). At the hearing before me, Mr Khuu represented himself; Mr Morris appeared for the Respondent.
CRITICAL QUESTION
Mr Khuu was eligible to receive a carer payment from 24 August 2015. His assets were initially assessed by Centrelink at a higher level than they warranted, with the consequence that Mr Khuu was underpaid the benefit for some time. The error was corrected in due course, and Mr Khuu was paid arrears[1] to 26 September 2016. Mr Khuu’s application before the Tribunal is that the back-payment should be extended to 24 August 2015.
[1] The Respondent maintained before me that the extent of arrears paid was unduly generous to Mr Khuu but that issue is not directly before me and I do not take the matter further.
STATEMENT OF CONCLUSION
In my opinion, Mr Khuu is not entitled under s 109 of the Administration Act to a further back-payment. I propose to affirm the decision under review. For reasons I shall explain, however, I recommend an ex gratia payment be made to Mr Khuu.
BACKGROUND
I set out first certain salient background facts. Mr Khuu, who was born in 1962, was married for some time but divorced in 2009. He has one child from his marriage, a son, born in 2007. Following the divorce, questions arose as to custody of the son and the amount of family tax benefit each parent was entitled to receive. Mr Khuu gave evidence that he obtained, in his words, “almost full’ custody of his son in 2015 (equating to some 75% of time) and in late 2016 or early 2017, he obtained full custody. This arrangement was not formalised, however, until 2018 when the Federal Circuit Court made an order to this effect.
On the income-earning side of his life, Mr Khuu took over his parents’ business in 1999. He ran an Asian-groceries business, located initially in the Adelaide Central Market and subsequently at two further locations, in Thebarton and in Grote Street, Adelaide. He closed the Central Market store and then the Thebarton warehouse because of “family issues” as he put the matter. He then focussed his commercial efforts on the Grote Street premises. Unfortunately, Mr Khuu found himself in a dispute over the rights to income from a car park, and he lost a very expensive legal action. Meeting the costs associated with that action affected the cash flow to the Grote Street business so adversely that the bank called in its loan.
Unfortunately, this led to the liquidation in 2014 of the various corporate entities involved in the running of Mr Khuu’s business. A complicated structure had been recommended to him by lawyers and accountants.
As Mr Khuu had guaranteed these entities’ indebtedness, and as he was unable to meet the guarantee from personal resources, he was bankrupted and a trustee in bankruptcy was appointed in June 2015 to realise his estate. I note Mr Khuu was discharged from bankruptcy in 2018.
In respect of his son, Mr Khuu initially received a family tax benefit and a parenting benefit under the Social Security Act, 1991. Mr Khuu gave evidence that this latter benefit was cancelled when his son turned eight on 21 August 2015, and that he had to “transfer” to a carer payment (with effect from 24 August 2015).
Before transferring to the carer payment, however, Mr Khuu was, I note, in dispute with Centrelink over the level of parenting payment he was eligible to receive. (He also disputed the amount of family tax benefit he received in 2012 to 2013, but I need not take that aspect of his dealings with Centrelink any further as it is not relevant to the issues before me.)
In respect of his parenting payment, Centrelink had taken the view that the amount Mr Khuu was eligible to receive should be reduced to nil because he had some $292,000 in assets. It is sufficient for present purposes to note that, in broad terms, these assets consisted of loans payable to Mr Khuu from some of the corporate entities that had gone into liquidation in connection with Mr Khuu’s groceries business. Mr Khuu submitted to Centrelink that the loans were commercially worthless given the companies’ liquidation and that they should not be taken account of in an assessment of his eligibility for social security. Mr Khuu applied in writing to have the decision taken in respect of his parenting payment reviewed.
He gave evidence, which I accept, that he was advised to fill out a Centrelink form headed “Review of a decision”[2]. He signed the form on 15 July 2015 and provided it to Centrelink together with an explanatory letter, also dated 15 July 2015. Given the intricacy of Mr Khuu’s affairs, the review application was assigned to a so-called “complex assessment officer” who suggested, amongst other things, that Mr Khuu forgive the debt or debts owed to him by the corporate entities and that he apply for a back-payment on hardship grounds. Mr Khuu applied for a back-payment on hardship grounds on a form dated 21 July 2015. In the event, Mr Khuu received a full back-payment of his parenting payment.
[2] Exhibit R1, p 284.
As I have indicated, the parenting payment ceased when Mr Khuu’s son turned eight on August 21, 2015. At that point, Mr Khuu was eligible to receive a carer payment. He received a form from Centrelink concerning his level of assets, which he filled out and returned on 22 October 2015.
Unfortunately, a low rate only of carer payment was approved because of a high level of assets wrongly attributed to Mr Khuu. The high level of assets included, once again, the corporate loans that were commercially worthless. I note that he had earlier been refused a “newstart” allowance, once again on account of his supposed assets.
He gave evidence that he assumed the only way to prove he had no assets was to contact his trustee in bankruptcy, Mr Gregg Johnson. Mr Morris conceded in his closing address, fairly, that Mr Khuu genuinely believed Mr Johnson would follow the matter up with Centrelink.
On the evidence before me, however, Mr Johnson did not seek from Centrelink a review of its decision with respect to Mr Khuu’s assets so far as the carer payment was concerned. My review of the “T” Documents[3] shows that Mr Johnson did not contact Centrelink with a clear request to have Mr Khuu’s asset levels recalculated in connection with the carer payment. I accept that Mr Johnson did write letters to the Department on 16 September 2015 and 22 October 2015[4]. The letters were written in connection with Mr Khuu’s earlier unsuccessful application for a “newstart” allowance, however. Mr Johnson pointed out that he was Mr Khuu’s trustee in bankruptcy and that all Mr Khuu’s assets would vest in him for the benefit of creditors. Mr Johnson requested an identification of the assets Mr Khuu was said to have, but he stopped short of requesting a review of the decision made in respect of the “newstart” allowance. The plain implication of the letter of 16 September 2015, however, is that Mr Khuu had, broadly speaking, no entitlement to any assets. Of some concern is the fact that Mr Johnson’s correspondence went unanswered. Had Mr Johnson’s inquiry been pursued by Centrelink, Mr Khuu’s true asset levels would have been discussed in correspondence and, presumably, accepted by Centrelink.
[3] Exhibit R1.
[4] Exhibit R1, at pp 403-4.
Mr Morris submitted to me that this correspondence did not amount to a request for a review even in respect of the rejected application for a “newstart” allowance. I need not decide that issue because even if it did amount to a request for a review, it was directed to the payment of the “newstart” allowance only[5].
[5] I note Exhibit R3 shows that Mr Khuu sent Mr Johnson an email on 15 September 2015 in respect of his failed applications for a “newstart” allowance. Mr Johnson’s faxed letter to Centrelink is dated 16 September 2015 and refers specifically to Centrelink’s decision in respect of an “unemployment pension”.
Eventually, Mr Khuu himself wrote a letter to the Department on 5 September 2017 and handed in the letter at the branch office of Centrelink in Henley Beach. Subsequently, a decision was taken to reduce the assessed level of Mr Khuu’s assets in respect of his carer payment application to nil, which resulted in payment to him of the benefit at the full rate.
In the event, a back-payment of the benefit was made to September 2016. Mr Khuu’s application to this Tribunal seeks, as I have said, a backdating of the benefit to August 2015.
REASONING
Mr Khuu’s legal entitlement to a further back-payment depends on s 109 of the Administration Act, the first three subsections only of which are relevant:
109 Date of effect of favourable determination resulting from review
(1) If:
(a) a decision (the original decision) is made in relation to a person's social security payment; and
(b) a notice is given to the person informing the person of the original decision; and
(c) within 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d) the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the determination embodying the original decision took effect.
(2) If:
(a) a decision (the original decision) is made in relation to a person's social security payment; and
(b) a notice is given to the person informing the person of the original decision; and
(c) more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d) the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the application for review was made.
(3) If:
(a) a decision (the original decision) is made in relation to a person's social security payment; and
(b) the person is not given notice of the original decision; and
(c) the person applies to the Secretary, under section 129, for review of the original decision; and
(d) the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the determination embodying the original decision took effect.
The effect of subss 109(1)-(3) is clear in my opinion. These subsections specify comprehensively the date of effect of a favourable determination when an application to the Secretary is made under s 129. Three mutually exclusive situations are addressed. The first situation arises where a notice is given informing a person of the original decision and the application for review under s 129 is made within 13 weeks of the notice being given. The second situation arises where the application for review is made more than 13 weeks after the notice is given. The third situation arises where the application for review is made in circumstances where the person has not been given notice of the original decision. Any conceivable situation will fall within one of these mutually exclusive categories. Once the category is assigned, the subsection specifies the date on which the favourable decision is to take effect.
I accept the Respondent’s contention that s 109, on a proper construction, does not call for any discretion to be exercised by an administrator or by this Tribunal on review. Rather, each of the three subsections in s 109 quoted above specifies a series of conditions which, if applicable, will lead to the consequence specified immediately after paragraph (d) in each subsection. It follows, in my opinion, that as a matter of construction, Mr Khuu’s claim to the Tribunal is governed by an application of sub-ss 109(1), (2) and (3) and not by a discretion.
Each of sub ss 109(1)(a), (2)(a), and (3)(a) is drafted in identical terms; namely, a decision (called an “original decision”) is made “in relation to a person’s social security payment”. In my opinion, it is necessary to identify the specific social security payment or payments in relation to which an (initially) adverse decision has been made. It is a decision in relation to a specific social security payment or payments that is made the “original decision” for the application of the remaining paragraphs in each subsection.
In this case, Mr Khuu suggested the decision in question was the erroneous calculation of the level of his assets. I note that Mr Morris submitted that a calculation of assets cannot of itself be “a decision” for the purposes of s 109. I need not decide whether that submission is correct. I shall assume, without deciding, that a calculation of asset levels can be a decision for these purposes.
Mr Khuu submitted that the application he made in July 2015 seeking a review of his parenting payment should be considered to be an application to the Secretary under s 129 in respect of the decision concerning the level of his assets for his carer payment. Mr Khuu’s submission was, in effect, that his asset levels had been wrongly determined in respect of his parenting payment and that he applied for a review of that decision in July 2015 in writing. As the same erroneous decision in respect of his asset levels was carried over and applied in respect of his carer payment, his application for a review in July 2015 should be considered to be an application for a review of his asset levels in respect of his carer payment even though he had not yet been transferred to it.
I appreciate the common sense force of Mr Khuu’s argument. I believe, however, that s 109 of the Administration Act is drafted on a different assumption. The “original decision”, as that expression is used in s 109, is defined to be a decision taken “in relation to” a particular social security payment or payments. I do not think one can say that Centrelink had taken any decision in relation to Mr Khuu’s carer payment in July 2015. It is true that a decision had been taken in respect of Mr Khuu’s parenting allowance, but it had not yet been taken in respect of his carer payment. I appreciate that, as a matter of common sense, once Mr Khuu’s assets had been assessed for the purposes of his parenting allowance, that same asset assessment would most likely be used for the purposes of calculating his entitlement to a carer payment. Nevertheless, I do not think it can be said that any decision in respect of the appropriate level of assets to be taken into account in respect of Mr Khuu’s carer payment was made until a Centrelink officer came to consider the question. Certainly, Centrelink required Mr Khuu to submit a further form in respect of his assets when he claimed the carer payment, and the carer payment is a separate and distinct social security benefit.
It follows, in my opinion, that the “original decision” as to Mr Khuu’s asset levels so far as they impacted the rate at which his carer payment was to be paid was taken only at the time his eligibility for a carer payment was considered, and not at the earlier time of the consideration of his application for a parenting allowance. It also follows, in my opinion, that when s 109 is applied to Mr Khuu’s circumstances, he did not apply, nor did Mr Johnson, his trustee in bankruptcy apply, to the Secretary under s 129 for a review of the “original decision” in respect of the carer payment until Mr Khuu himself requested a review in 2017. Since that was more than 13 weeks after notice was given to Mr Khuu of the rate at which the carer payment would be paid, sub s 109(2) applied. Subsection (2) limits the backdating of arrears to the date on which the application for review was made.
EX GRATIA PAYMENT
I am concerned, however, that the Department should have made such a serious error in the calculation of Mr Khuu’s asset levels given its contemporaneous decision (in connection with Mr Khuu’s parenting benefit) that Mr Khuu did not have any valuable loan assets. Mr Khuu made the unfortunate, but bona fide, assumption that his trustee in bankruptcy needed to handle the matter when the same error was made in respect of the rejection of his applications for a “newstart” allowance and carer payment. I am also concerned that Mr Johnson’s letters to Centrelink concerning Mr Khuu’s asset levels went unanswered. The very fact that Mr Khuu was bankrupt should have alerted Centrelink to the unlikelihood of his having an ongoing entitlement to any significant assets. In all the circumstances, I would recommend an ex gratia payment be made to Mr Khuu so that he receives arrears to the date of commencement of his carer payment.
FORMAL DECISION
Whilst noting my strong recommendation that Mr Khuu receive an ex gratia payment, I shall affirm the decision under review.

29. I certify that the preceding 28 (twenty-eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member N A Manetta

................[Sgnd]..........................
Associate
Dated: 19 March 2019

Date of hearing: 13 and 19 February 2019

Applicant: In person

Advocate for the Respondent: Oliver Morris, Department of Human Services

[2019] AATA 419

19 March 2019

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Appeal

Jurisdiction

Procedural Fairness

Remedies

Statutory Construction

Date of hearing:	13 and 19 February 2019
Applicant:	In person
Advocate for the Respondent:	Oliver Morris, Department of Human Services