KWCS and Secretary, Department of Social Services (Social security second review) - [2025] ARTA 1027

KWCS and Secretary, Department of Social Services (Social security second review) [2025] ARTA 1027 (11 July 2025)
Applicant/s:  KWCS
Respondent:  Secretary, Department of Social Services
Tribunal Number:                2023/2359

Tribunal:Senior Member Suthers (second review)
Place:Perth
Date:11 July 2025

Decision:The Tribunal affirms the decision under review.

................[SGD]..................
Senior Member
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been removed from this decision and replaced with generic information so as not to identify involved individuals as required by

ss 201(1A)-201(1B) of the Social Security (Administration) Act 1999 (Cth).
CATCHWORDS
SOCIAL SECURITY –– Pension Loans Scheme –– calculation and recovery of loan with charges and interest –– scope of permissible review
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Acts Interpretation Act 1901 (Cth)
Administrative Review Tribunal Act 2024 (Cth)
Administrative Review Tribunal (Consequential and Transitional Provisions No.1) Act 2024 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
CASES
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Frugtniet v Australian Securities and Investments Commission [2019] HCA 16
Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 599; (1992) 39 FCR 225
McDonald v Director General of Social Security [1984] FCA 57; (1984) 1 FCR 354
Minister for Immigration and Ethnic Affairs v Pochi (1980) 31 ALR 666
Re Brian Lawlor Automotive Pty Ltd v Collector of Customs (NSW) (1978) 1 ALD 167
Telstra Corporation Ltd v Barrow (1994) 35 ALD 461
SECONDARY MATERIALS
Australian Government, Guides to Social Policy Law, Social Security Guide
Statement of Reasons
SUMMARY

The Pension Loans Scheme (‘the Scheme’), in essence, allows pension recipients who are entitled to less than a full pension to receive regular amounts ‘topping up’ the payments they receive, up to a maximum rate, by way of a loan from the Commonwealth.
Compounding interest is applied to the sum of the loan payments received that exceed the pension entitlement, and the establishment costs. A participant in the Scheme may be required to provide security, by way of a charge that may be registered over real property, for the debt created by the loan (‘the Debt’).
After a long career as a licensed conveyancer, the Applicant became a recipient of the aged pension, but she was entitled to less than the full pension due to the value of her assets, as assessed at the time.
On 27 August 2010, she completed and signed a request form seeking payment under the Scheme, which was lodged through Services Australia (‘Centrelink’).
The Applicant nominated a property she owned at the time (‘the Initial Security’) as security for the loan. At that time, she already owed monies on the property under a mortgage to the Australia and New Zealand Banking Group Limited (‘ANZ’).
In answer to a question on the request form asking, ‘how much do you wish to receive as a loan…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: KWCS and Secretary, Department of Social Services (Social security second review) [2025] ARTA 1027
Case: [2025] ARTA 1027
Decision Date: 11 July 2025

CaseChat Overview and Summary

In the matter of KWCS and Secretary, Department of Social Services (Social security second review), the Applicant sought to review the decisions of the Administrative Appeals Tribunal (AAT) regarding her participation in the Pension Loans Scheme. The Applicant argued that she was unaware of the compounding interest on the loan when she entered the Scheme and that the fees for releasing and registering caveats over the properties she used as security were excessive. The Applicant also contended that she attempted to cancel the loan upon discovering the interest charges but was unsuccessful.

The legal issues the court had to address included whether the Applicant's understanding of the terms of the loan, particularly the compounding interest, was sufficient when she entered the Scheme, and if the fees for releasing and registering caveats were reasonable. The court also considered whether the Applicant's attempts to cancel the loan were handled appropriately by Centrelink.

After reviewing the relevant legislation, including the Social Security Act 1991 (Cth) and the Social Security Guide, and considering the Applicant's submissions, the court found that the Applicant had sufficient knowledge of the loan terms when she entered the Scheme. The court also determined that the fees charged for the registration and release of caveats were reasonable and within the permissible scope of the Scheme. Furthermore, the Applicant's attempts to cancel the loan were handled in accordance with the prescribed procedures. As a result, the court affirmed the AAT's Decision.

The final orders of the court affirmed the AAT's Decision, dismissing the Applicant's second review application. The Applicant was not entitled to any relief from the debt she owed under the Pension Loans Scheme.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

On 7 March 2023, in a single decision, the AAT affirmed the ARO decisions of 17 February 2022 and 20 October 2022 (the ‘AAT’s Decision’). The Applicant has sought second review of the AAT’s decision[1] which is the matter before me.[1] Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth) (the ‘Transitional Act’), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Administrative Review Tribunal (the ‘Tribunal’). The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. The Applicant now says that she did not understand, when she requested to enter the Scheme, that she would be required to pay compounding interest on the loan. She says she only discovered that in 2010, and that she then repeatedly tried to cancel the loan. She says that the fees for releasing and registering the caveats over the two properties she gave as security are exorbitant. A hearing was conducted on 28 February 2025. The Applicant gave evidence and represented herself. The Secretary was represented by Mr Burgess, a solicitor. However, after it was subsequently discovered that there were issues regarding the constitution of the Tribunal, the parties agreed to have the matter determined on the papers by me, without a further hearing but with regard to the documents tendered in the proceedings and the transcript of the hearing conducted on 28 February 2025. As I was satisfied that the issues for determination in the proceeding could be adequately determined in the absence of the parties in those circumstances, I have proceeded to determine the matter on the papers.[2][2] See ss 106(1)-(2) of the Administrative Review Tribunal Act 2024 (Cth) (‘ART Act’). For the reasons that follow, I will affirm the AAT’s Decision. It is necessary to set out, to an extent, the law and relevant policy to be considered. Centrelink administers social security, including the aged pension and the Scheme, under the provisions of, relevantly, the Act, and the Social Security (Administration) Act 1999 (Cth) (‘the Administration Act’). It also does so by reference to the Australian Government’s ‘Guides to Social Policy Law, Social Security Guide’ (‘the Guide’), where relevant. The Guide contains governmental guidelines and statements of policy as to how the relevant legislation is to be applied. Section 1136 of the Act provides that a person who wishes to participate in the Scheme must make a signed, written request to do so. The request must specify their property which is available for security for the loan, and the rate of loan payments (by way of advances) they wish to receive. Section 1135 of the Act outlines how a debt is created through a person’s participation in the Scheme:1If the rate of the pension payable by operation of the pension loans scheme is more than the rate that would have been received by the person but for the operation of the scheme, the person owes a debt to the Commonwealth.…3This is how to work out the amount of the debt owed by the person from time to time:Method statementStep 1. Work out the sum of the amount of pension received by the person from time to time under the pension loans scheme: the result is the primary loan amount.Step 2. Add to the primary loan amount the amount of any registration costs payable by the person under subsection 1143(4): the result is the registration cost adjusted amount.Step 3. Take away from the registration cost adjusted amount the sum of the amount of pension (if any) that would have been received by the person but for the operation of the scheme: the result is the basic amount of debt.Step 4. Add to the basic amount of debt the amount of interest payable. The interest payable is compound interest at the rate fixed under subsection (4) and compounding fortnightly: the result is the total amount of debt.Step 5. From the total amount of debt take away any amount of the debt already paid to the Commonwealth: the result is the current amount of debt owed by the person.4The rate at which compound interest is payable under subsection (3) is the rate fixed from time to time by the Minister by legislative instrument.

Ratio Decidendi

Legal Principle Established

Centrelink administers social security, including the aged pension and the Scheme, under the provisions of, relevantly, the Act, and the Social Security (Administration) Act 1999 (Cth) (‘the Administration Act’). It also does so by reference to the Australian Government’s ‘Guides to Social Policy Law, Social Security Guide’ (‘the Guide’), where relevant. The Guide contains governmental guidelines and statements of policy as to how the relevant legislation is to be applied. Section 1136 of the Act provides that a person who wishes to participate in the Scheme must make a signed, written request to do so. The request must specify their property which is available for security for the loan, and the rate of loan payments (by way of advances) they wish to receive. Section 1135 of the Act outlines how a debt is created through a person’s participation in the Scheme:1If the rate of the pension payable by operation of the pension loans scheme is more than the rate that would have been received by the person but for the operation of the scheme, the person owes a debt to the Commonwealth.…3This is how to work out the amount of the debt owed by the person from time to time:Method statementStep 1. Work out the sum of the amount of pension received by the person from time to time under the pension loans scheme: the result is the primary loan amount.Step 2. Add to the primary loan amount the amount of any registration costs payable by the person under subsection 1143(4): the result is the registration cost adjusted amount.Step 3. Take away from the registration cost adjusted amount the sum of the amount of pension (if any) that would have been received by the person but for the operation of the scheme: the result is the basic amount of debt.Step 4. Add to the basic amount of debt the amount of interest payable. The interest payable is compound interest at the rate fixed under subsection (4) and compounding fortnightly: the result is the total amount of debt.Step 5. From the total amount of debt take away any amount of the debt already paid to the Commonwealth: the result is the current amount of debt owed by the person.4The rate at which compound interest is payable under subsection (3) is the rate fixed from time to time by the Minister by legislative instrument. Pursuant to s 1138 of the Act, the property offered as security is subject to a charge in favour of the Commonwealth to secure the payment of the debt, and the charge continues until the debt is repaid or recovered, even if the person ceases to be part of the Scheme. Section 1139 provides that for an individual participant in the Scheme, the Commonwealth is not generally entitled to recover the debt until after the person’s death, but s 1140 allows for recovery of the debt if the person ceases to own the real assets which are subject to a charge under s 1138 of the Act. Section 1142 of the Act sets out how to withdraw from (that is cease participating in) the Scheme. It requires a request for withdrawal that is in writing, signed, and ‘lodged at an office of the Department’.[3] [3] Section 1142(3) of the Act.