Loren and Secretary, Department of Family and Community Services

[2004] AATA 595

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 595

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2003/131

GENERAL ADMINISTRATIVE  DIVISION		)
Re		JUSTINA LOREN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Associate Professor B W Davis AM (Part-time Member)

Date11 June 2004

PlaceHobart

Decision The decision under review is affirmed.

[Sgd B W Davis]

Part-Time Member

CATCHWORDS

Social Security - age - pension -claim - eligibility - qualified - payable - cancellation - combined income - periodic compensation payments - allowed limits - continuity of qualification - date of commencement - arrears - SSAT.

Social Security Act 1991

Social Security (Administration) Act 1999

Guide to Social Security Law

Re Drake and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60

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

Re Catt and Secretary, Department Family and Community Services (2000) AATA 1101

Re Kavadas and Secretary, Department of Family and Community Services (2004) AATA 74

Re Freeman and Secretary, Department of Social Security (1988) 87 ALR 506

Re Dorrian and Secretary, Department of Family and Community Services (2000) AATA 89

REASONS FOR DECISION

11 June 2004	Associate Professor B W Davis AM (Part-time Member)
Decision Under Review

1.      The decision under review is a decision of Centrelink dated 25 November 2002 to grant age pension from 11 November 2002.

The Issue

2.      The issue in this appeal is whether the applicant is entitled to receive age pension from a date earlier than 11 November 2002.

Standard of Proof

3.      The standard of proof is on the balance of probabilities and to the reasonable satisfaction of the Tribunal.

Legislation

4. The relevant legislation is ss43 and 44 of the Social Security Act 1991 and various sections of the Social Security (Administration) Act 1999, including Schedule 2, Part 2, dealing with the start date of claims.   The Guide to Social Security law is also relevant.

Background

5.      Mrs Justina Loren was born on the 1 November 1930.   She was granted a Commonwealth Seniors Health Card in January 1999 and in 2000, made a claim for age pension that according to a letter Centrelink sent to her on 17 July 2000, was cancelled because the combined income of Mr and Mrs Loren was above the allowable limit.

6.      On 25 November 2002, Mrs Loren lodged a further claim for age pension, which was granted on 11 November 2002, the day her husband had contacted Centrelink Financial Information Service (FIS) in Hobart on her behalf about entitlement to pension.

7.      On 3 January 2003 the applicant requested the start day of pension be reviewed, and payment backdated to 20 September 2001, which was the date of commencement of an amendment to social security law beneficial to her payability.

8.      On 11 February 2003, the original decision-maker at Centrelink reviewed and affirmed the decision to start payment from 11 November 2002.   At Mrs Loren’s request the matter was then referred to an authorised review officer (ARO) who affirmed the decision on 13 February 2003.   In outline summary the ARO’s reasons were:

·     Social security law requires a person make a claim before a payment can be granted;

·     Subject to certain conditions being met after an intention to make a claim is notified, payment may be made from that date of notification;

·     A delayed claim for payment because of ignorance of qualification is not a relevant consideration; and

·     There was no legal basis for payment of age pension before 11 November 2002.

9.      On 1 May 2003, Mrs Loren lodged an application for review by the Social Security Appeals Tribunal (SSAT).    The hearing was conducted in Hobart on 1 July 2003.   Mrs Loren attended and spoke to the Tribunal.    She was accompanied by her husband and her Federal Member of Parliament, Mr Duncan Kerr who represented her.

10.     The SSAT considered a range of evidence, including Centrelink documents, correspondence between the applicant and Centrelink, newsletters from Centrelink outlining policy changes and written representations dated 18 February 2003 by Mr Duncan Kerr MHR on behalf of Mrs Loren.   In the course of considering this information an issue arose as to whether Mrs Loren’s initial application for age pension had been properly dealt with, whether her claim of mid 2000 remained operative and whether the start day for grant of age pension should be 11 November 2002 or earlier.

11.     Having considered relevant statutory provisions and related this to the evidence before it, the SSAT decided the decision under review should be affirmed, but made a suggestion for further action, namely that Centrelink should consider a payment to the applicant under provisions of the CDDA (Compensation for Detriment Caused by Defective Administration) because of incorrect advice.

12.     Mrs Loren sought review by the Administrative Appeals Tribunal on 1 August 2003.   Both the applicant and the respondent filed statements of facts and contentions prior to the hearing.

AAT Hearing

13.     The hearing was conducted in Hobart on 5 May 2004.   The applicant was represented by Mr Duncan Kerr MHA of counsel and the respondent by Mr Brian Sparkes.

14.     In opening submissions, Mr Kerr for the applicant stated that errors had been made by Centrelink in interpreting and applying statutory provisions and he would identify a correct and preferable decision.   Mr Kerr argued that a distinction existed between “eligibility” and “payability” of age pension;  Mrs Loren’s initial application had been incorrectly cancelled, when her eligibility continued to exist and suspension of payment should have been adopted, not cancellation.    Further, Centrelink had failed to keep her informed of later statutory amendments to eligibility situations, thus she had suffered an economic disadvantage.   Third, there had been errors in information supplied, so retrospective review should result in some form of compensation payment.   For all these reasons his client was entitled to age pension at a date earlier than the second claim of November 2002.

15.     In elaboration of the applicant’s case Mr Kerr drew attention to an error in Centrelink’s statement of 17 July 2000 that Mrs Loren’s age pension was cancelled because the combined income of herself and husband exceeded the allowable limit.  The real situation was that Mrs Loren was eligible for age pension, but at the nil rate.  This did not constitute cancellation, thus her initial claim continued and should have been recognised when a later claim was made.

16.     There had been failure to keep Mrs Loren fully informed of changes in pension’s eligibility and statutory or administrative provisions, including an amendment made in September 2001 which would have permitted her to receive age pension; because she was not notified, she suffered economic disadvantage and only became aware of the situation in late 2002.   Centrelink claimed she should have noted the changed situation via its newsletter, but this was not sent to her after cancellation of pension.

17.     There had been an opportunity to amend this situation when she sought review by Centrelink in May 2003, but an ARO had merely affirmed the decision and never considered grounds for retrospective compensation.    The SSAT had been more discerning and had recommended a CDDA payment should be considered.   In any event there was power under s85 of the Social Security Administration Act 1989 for the Secretary to exercise discretion and make backdated payment from the time of initial application.

18.     Mr Kerr drew attention to the recent case of Kavados and Secretary, Department of Family and Community Services (2004) AATA 74 (29 January 2004) to illustrate errors must be corrected and pension reinstated if circumstances warrant this.

19.     In response to these submissions, counsel for the respondent (Mr Brian Sparkes) argued that Centrelink had correctly applied the law and granted age pension on 11 November 2002 when a valid claim was made.   The applicant was seeking to revive a claim lodged in July 2000, but that claim was correctly cancelled and there was no provision for “continuing eligibility”.  The Act talks about “qualification” and “payability”, but before a social security payment can be granted a person must be qualified and the payment must be payable.   The Act is clear that cancelling a pension ends entitlement and cannot be revived; however applicants are free to make a new claim and the Department will respond.  This is what occurred in Mrs Loren’s case.

20.     Mr Sparkes agreed that discretion existed to suspend payment rather than cancellation, but this was rarely used, principally for short-term circumstances, since long-term suspension led to unanticipated outcomes not always advantageous to the applicant.    There was no capacity to “revive” claims; if new circumstances arose, a new claim must be lodged.   All of these provisions had been thoroughly tested in law and the Tribunal should note case determinations such as Catt and Secretary, Department of Family and Community Services (2000) AATA 1101 (14 December 2000) limiting appeal applications to a period of 13 weeks after decision.

21.     The nature of cancellation was thoroughly canvassed in Freeman and Secretary, Department of Social Security (1998) 87 ALR 506, which clearly determined that a decision to cancel a pension or benefit brings an end to entitlement, but does not preclude further claims in future.

22.     The applicant had contended Kavadas and Secretary, Department of Family and Community Services (2004) AATA 74 supported her case, but s137 of the Social Security (Administration) Act 1999 (“the Administration Act”) makes it clear a decision to cancel pension cannot be voided and prevents revival of that decision.

23. There is provision for appeal, but the period for lodging such an application is 13 weeks and payment of arrears is limited to very special circumstances. (Sections 109, 129 and 137 of the Administration Act) and Mrs Loren did not appeal in July 2000 and did not seek review until January 2003.

24.     The respondent agreed there was a question as to how much detailed information Centrelink was required to provide to its large clientele, nonetheless the law was the law and ignorance of the law was no excuse.   It had always been open to Mrs Loren to raise any claim she wished and the Department would be required to respond to it.   Centrelink had acted lawfully in Mrs Loren’s case and she had been granted age pension as soon as a valid claim was lodged; it was merely that the previous claim could not be revived and no arrears were payable.

25.     Counsel for the applicant made brief final submissions, summarising issues he considered the Tribunal must deal with, and urged payment of arrears to the applicant.

Analysis

26.     The Tribunal is required to stand in the shoes of the original decision-maker, considering all evidence anew, noting relevant statutory provisions and case determinations.

27.     There are a range of issues to be considered in the current case.   Was grant and cancellation of age pension in July 2000 lawfully made?   Did the applicant have any accrued right from that decision and should her claim have been suspended rather than cancelled?   Did Centrelink fail to keep her informed of subsequent statutory or administrative changes which might affect her situation?   Was she given inappropriate or incorrect information and if so, what remedy might apply?

28.     The respondent has conceded the applicant is entitled to receive age pension at a reduced rate from the date of her second and valid claim, dated 11 November 2002.   There is remarkably little information about the earlier claim, but the parties appear agreed a claim for age pension was made in mid 2000, then cancelled on 17 July 2000 on grounds the combined income of the applicant and her husband exceeded allowable limits.   The Tribunal considers this may have been inappropriate advice; the correct situation appears to have been that Mrs Justina Loren was eligible for age pension, but probably at the nil rate.   (Section 44 of the Act).    However, the Tribunal has not been provided with information which might permit it to fully clarify the situation, thus the only certain conclusion is that Mrs Loren’s age pension was cancelled at the time.

29.     The SSAT concluded that the applicant was never advised it was her husband’s periodic compensation payments which were treated as a direct deduction from pension calculations based on their combined income.   The SSAT considered Mrs Loren was unaware of direct deductions arising from compensation payments until late 2002. 

30.     The letter from Centrelink on 17 July 2000 and a follow-up letter dated 20 July 2000 did inform Mrs Loren of a right of appeal, but she did not pursue this course of action at the time and may not have recognised the appeal period was limited to 13 weeks.   At a later stage of proceedings she did not pursue a claim for age pension which was sent to her at her request on 25 June 2001, and although she claims to have been monitoring changes in “qualification” for pension, did not submit a valid claim until November 2002.

31.     The applicant has also argued suspension of pension payment should have occurred, rather than cancellation.   The Tribunal considers this to be a matter for Centrelink to determine on a case-by-case basis.   Section 3.4.1.60 of the Social Security Guide indicates suspension should only be granted on a short-term basis in special circumstances, otherwise cancellation is appropriate.   The relevance of the Guide to administrative review of government decisions has been the subject of a number of previous Federal Court and Tribunal decisions.    The Tribunal is required to consider the Guide as a policy instrument, see for example Re Drake and Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60, Re Drake (No 2) and Minister for Immigration and Ethnic Affairs  (1979) 2 ALD 634 and Re Walsh and Secretary, Department of Family and Community Services (2002) AATA 881. While s80 of the Administration Act grants discretion to the Secretary of the Department of Family and Community Services to cancel or suspend pension in particular circumstances, there is no obligation upon the Secretary to necessarily adopt suspension.

32. The applicant has also raised the issue of “ongoing eligibility”, arguing that once Mrs Loren had lodged a claim for age pension in mid 2000, there was a capacity to revive that claim at any time, since she had not withdrawn it. The respondent claims this to be incorrect in law; there is a substantial body of statutory provisions and case determinations which prove that once a claim is made and later cancelled, that claim cannot be revived and a new claim is essential before a further determination can be made. This applies even if the person may have been qualified for payment for some time before an actual claim is made (s109 of the Administration Act).

33. Section 11(1) of the Administration Act emphases that a social security benefit cannot be granted unless a valid claim is made; s36 obliges the Secretary to determine the claim made and relevant date of commencement (ss40(1) and 108). Section 123 provides for the benefit to continue until such time as a further determination may be made or the benefit ceases to be payable; s129 sets out grounds for appeal, but limits this to a 13 week period; and s137 confirms that prior decisions cannot be revived once a decision has been made in accordance with social security law.

34. The notion of an enduring claim has been effectively dismissed by the Tribunal and Federal Court, since it is clearly contrary to ss123 and 137 of the Administration Act. The Federal Court in Freeman v Secretary, Department of Social Security (1988) 87 ALR 506 per Davies J said:

“ … the nature of a cancellation of the pension is different in substance
and effect from that of suspension.  A decision suspending a pension has an
ongoing effect and the suspension may be terminated at any appropriate time.
It may well be within the ambit of the Tribunal's decision to terminate a
suspension if the facts before the Tribunal showed that the pension or benefit
ought to have been suspended only up to a particular date.  A decision
cancelling a pension does not have ongoing effect in that way.  A decision
cancelling a pension or benefit brings to an end the entitlement to a pension
or benefit.  Entitlement to the pension or benefit only revives on the
lodgment of a proper claim for the grant of the pension or benefit.”

35.     The applicant has claimed that Centrelink failed to keep her informed of statutory, policy and administrative changes after her initial claim was cancelled.    Centrelink has rejected this assertion on grounds its periodic newsletters perform that function and to do more would impose a heavy burden on an agency already coping with a substantial workload.   The Tribunal agrees there is an issue about how much material an agency must provide, equally there is an obligation on citizens to keep themselves informed about statutory provisions and entitlement criteria.   In the case of Mrs Loren, the key question is not whether she should have been kept informed in a period when she had no claim before the agency, but rather whether she was accurately informed when specific issues or situations arose.   The Tribunal has not been able to discover any situation other than in mid 2000 where information was misleading or inaccurate and even there an attempt to state reasons was not entirely erroneous, but could have been more clearly and specifically stated.

36.     Mrs Loren admitted that she had monitored newspaper and radio reports about social security benefits, including budget changes, nonetheless she did not discern until late 2002 that changes had been made to compensation policy in 2001.  At her request, information about a concession card had been sent to her on 4 July 2001 and an “age pension new claim pack” was included, but she did not utilise this and it was only in late 2002 following further inquiries on her behalf, that her second and valid claim for age pension was lodged and granted.

37.     In considering all these matters a distinction needs to be drawn between eligibility and payability.   Eligibility for age pension is largely a function of age and therefore once achieved is ongoing.   Payability is a different matter, involving consideration of income and whether other assets are assessable or not in calculating what rate of pension should apply.   This reinforces the need for each claim to be considered on its merits at a point in time and if such circumstances change, then a new claim will need to be lodged and determined.

38.     Having considered all of the above evidence and other documentation of the case, the Tribunal has decided on the balance of probabilities that the decision under review should be affirmed i.e. that age pension should be paid from 11 November 2002, but not before that date.    The reasons are as follows:

(a)There is no evidence before the Tribunal to demonstrate the original decision to grant age pension and then cancel it in July 2000 was incorrectly or unlawfully made.  There  is evidence the reason given was incorrect or least inaccurate.

(b)Cancellation or suspension of pension is at the discretion of the Secretary, based on the merits of each case.   The Secretary was not obliged to favour suspension over cancellation.

(c)There is no legal capacity to revive the initial claim. Relevant sections of the Administration Act make it clear the Department can only act when a new and valid claim is submitted.

(d)The Department acted swiftly and correctly when a valid claim for age pension was lodged in November 2002.

(e)There is no legal obligation on Centrelink to maintain contact with past clients whose cases have been determined.   There is a general obligation to keep the public informed of developments in social security law and administration; there is a more specific obligation to keep clients fully and accurately informed when individual claims or queries arise.

39.     The Tribunal notes that the SSAT recommended Centrelink consider a payment in this matter under the CDDA scheme.   The SSAT considered Mrs Loren had suffered economic loss as a result of Centrelink’s incorrect advice about why her initial claim was rejected and there was defective administration in the case.   After examining the evidence anew, the Tribunal concurs that Centrelink should consider a payment to Mrs Loren under the CDDA scheme.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis AM (Part-time Member)

Signed:  K L Miller (Administrative Assistant)

Date/s of Hearing  5 May 2004
Date of Decision  11 June 2004
Counsel for the Applicant         Mr Duncan Kerr MHR
Solicitor for the Applicant           
Counsel for the Respondent     Mr Brian Sparkes
Solicitor for the Respondent     Centrelink