Lucian Constantin and Lucia Constantin and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2009] AATA 637

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 637

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          Nos:      2008/6211 &

GENERAL ADMINISTRATIVE  DIVISION		)  2008/6212
Re		Lucian Constantin and Lucia Constantin

Applicants

And Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

Respondent

DECISION

Tribunal Mr G. L. McDonald, Deputy President

Date27 August 2009

PlaceMelbourne

Decision The Tribunal varies the decision under review to accord with the respondent’s concession that the applicants’ rates of pension be increased from 29 December 2007 to 28 July 2008.

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Deputy President

CATCHWORDS – SOCIAL SECURITY – aged pension – applicants operating partnership business but did not inform Centrelink – applicants reported income received to Centrelink – applicants did not object to Centrelink’s notices – recommendation to Centrelink’s Customer Compensation Program – decision under review varied to incorporate respondent’s concession

Administrative Appeals Tribunal Act 1975 s 37

Social Security Administration Act 1999 ss 109 and 110

REASONS FOR DECISION

27 August 2009 Mr G. L. McDonald, Deputy President    

1.      The applicants are in receipt of aged pension.  They have received a small income from operating a business in partnership since 2000.  The receipt of income, depending on the amount and the circumstances, can affect the rate at which the pension is payable.  Mrs Constantin has received an aged pension since 2004 and Mr Constantin since 15 May 2008.  Prior to receipt of the aged pension, Mr Constantin received a mature age allowance which was also subject to adjustment if the recipient received income.

2. At the hearing Mr Constantin represented himself and his wife. The respondent was represented by Ms Ailsa Bramley. The Tribunal had before it the documents filed for the purposes of satisfying s 37 of the Administrative Appeals Tribunal Act 1975 (“T documents”) and documents lodged by applicants on 5 February and 19 June 2009.

3.      The applicants are claiming that the rate at which their pensions are paid should be revised from 1 July 2006.  Initially the respondent determined that the rate of adjustment could only be applied from 28 July 2008, that being the date on which the applicants lodged copies of their tax returns for the 2006/2007 financial year.

4.      That decision was affirmed on review before the Social Security Appeals Tribunal (“SSAT”).  Subsequently the respondent has conceded, for reasons which have no bearing on the outcome of this case, that the date should be adjusted to 29 December 2007.  The issue then is whether the commencement date, for what would be a higher rate of pension to both applicants, should be made for the period 1 July 2006 to 28 December 2007 inclusive.

5.      The difficulty arises in this case because there was a lack of clarity over the manner in which the applicants were paid for their services.  The partnership was paid on a job by job basis.  Mr Constantin told the Tribunal that he reported the income he received for the work undertaken.  He had provided to the respondent copies of cheques paid to the partnerships and receipts issued on behalf of the partnership.  From time to time the respondent carried out cross checking with the Australian Taxation Office (“ATO”) to ensure the income declared to it matched that contained in the applicants’ income tax returns.  The Tribunal was told that there was not much retained in the respondent’s paper files but what was retained confirmed that there was no disparity between the figures provided in the tax return to those notified to the Department.

6.      From time to time the applicants were required to complete an Income and Assets Review form issued by the Department.  It was Mr Constantin’s evidence that he was unaware of the Department’s requirement for notifying returns arising from the business partnership.  An example is found in the completion of such a form by the applicants dated 6 December 2004.[1]  They have ticked on the form “no” in answer to a question as to whether they were involved in a partnership business.  Mr Constantin told the Tribunal that he asked a counter officer at Centrelink what he was required to answer as he thought that the Department may differently categorise what constituted a ‘partnership’ from the categorisation used by the ATO but that he could never get a definition of what the Department classified as a partnership.

[1] T documents, T5.

7.      On behalf of the respondent it was conceded that throughout the period the Department could and should have handled the information concerning the income received from the applicants better than transpired to be the case.  It should have picked up that the income the applicants were receiving was not in the form of wages but sums paid for undertaking work as a contractor.  There was no evidence of the applicants being paid regular weekly or fortnightly amounts as wages and of superannuation guarantee or income tax instalments being deducted.

8.      There is no dispute and it is accepted that the applicants have notified the details of the sums earned and if it had been realised that those sums were paid to them in their capacity as contractors and not employees then the rate at which their pension is paid would have higher.

9.      The difficulty facing the applicants is that they did not object to any of the decisions (that is, notices advising of their rate of payment) notified to them by the Department in the period 1 July 2006 to 28 December 2008.  It was only in January 2008, when the applicant had a discussion with Ms Moar, a Centrelink review officer, did it apparently come to light that Mr Constantin may not have being receiving a wage and that therefore the rate of pension paid may be incorrect.

10. Section 109 of the Social Security Administration Act 1999 (“the Administration Act”) provides:

(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.

(4)       If:

(a)a decision (the original decision) is made in relation to a person’s social security payment; and

(b)the person is given a notice informing him or her of the original decision; and

(c)the Secretary reviews the decision under section 126 without any application under section 129 for review of the decision having been made; and

(d)as a result of the review, the favourable determination is made within 13 weeks after notice of the original decision was given to the person;

the favourable determination takes effect on the day on which the determination embodying the original decision took effect.

(5)       If:

(a)a decision (the original decision) is made in relation to a person’s social security payment; and

(b)the person is given a notice informing him or her of the original decision; and

(c)the Secretary reviews the decision under section 126 without any application under section 129 for review of the decision having been made; and

(d)as a result of the review, the favourable determination is made more than 13 weeks after notice of the original decision was given to the person;

the favourable determination takes effect on the day on which the review was begun by the Secretary.

(6)       This section does not apply to determinations to which section 110A applies.

(7)       For the purposes of this section, if:

(a)the Secretary makes a decision constituted by a determination made under section 78 to increase the rate at which a social security payment is being, or has been, paid; and

(b)the determination is made because an amount has been indexed or adjusted by the operation of Part 3.16 of the 1991 Act;

then:

(c)each person whose rate of social security payment is, or was, affected by the determination is taken to have been given notice of the determination and of the increased rate; and

(d)the notice is taken to have been given on the day on which the amount was so indexed or adjusted.

11. Section 110 provides:

(1)Subject to subsections (1A) to (11) (inclusive), if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect:

(a)       on the day on which the person so informed the Department; or

(b)       on the day on which the event or change occurred;

whichever is the later.

(1A)If a favourable determination is made in relation to a person who has not reached pension age:

(a)following the person’s having informed the Department of the occurrence of an event or change of circumstances; and

(b)       because, in an instalment period of the person:

(i)there is a decrease in the amount of employment income that is earned, derived or received, or that is taken to have been earned, derived or received, by the person; or

(ii)the person has ceased to earn, derive or receive, or to be taken to earn, derive or receive, employment income;

the determination takes effect on the first day of the instalment period, or on the first day of the instalment period in which the person so informs the Department, whichever is the later.

(2)Subject to subsection (2A), if a favourable determination is made following a person having given the Department a statement about a matter in accordance with a notice under section 67 or 68, the determination takes effect on the day on which the matter arose.

(2A)If a favourable determination is made in relation to a person who has not reached pension age:

(a)following the person’s having given the Department a statement about a matter in accordance with a notice under section 68 that relates to the payment of the social security payment in respect of an instalment period specified in the notice; and

(b)       because, in the instalment period:

(i)there is a decrease in the amount of employment income that is earned, derived or received, or that is taken to have been earned, derived or received, by the person; or

(ii)the person has ceased to earn, derive or receive, or to be taken to earn, derive or receive, employment income;

the determination takes effect on the first day of the instalment period.

(3)       Subject to subsection (3A), if:

(a)a person and his or her partner (the partner) are each receiving a social security payment; and

(b)the partner has been given a notice under section 68 that requires the partner to give the Department a statement; and

(c)the notice relates to the payment of the partner’s social security payment in respect of a period specified in the notice; and

(d)the partner gives the Department a statement, in accordance with the notice, about a matter that arose during the specified period; and

(e)following the giving of the statement, a favourable determination is made in relation to the person’s social security payment;

the determination takes effect on the day on which the matter arose.

(3A)     If:

(a)a person and his or her partner (the partner) are each receiving a social security payment; and

(b)       the partner has not reached pension age; and

(c)the partner has been given a notice under section 68 that requires the partner to give the Department a statement; and

(d)the notice relates to the payment of the partner’s social security payment in respect of an instalment period specified in the notice; and

(e)the partner gives the Department a statement, in accordance with the notice, about a matter that arose during the instalment period; and

(f)following the giving of the statement, a favourable determination is made in relation to the person’s social security payment; and

(g)       the determination is made because, in the instalment period:

(i)there is a decrease in the amount of employment income that is earned, derived or received, or that is taken to have been earned, derived or received, by the partner; or

(ii)the partner has ceased to earn, derive or receive, or to be taken to earn, derive or receive, employment income;

the determination takes effect on the first day of the instalment period.

(4)       If:

(a)a favourable determination is made following the death of a person’s partner (the partner); and

(b)the favourable determination is made because the person elects not to receive bereavement payments; and

(c)       within the bereavement period:

(i)the person notifies the Department, orally or in writing or in a manner approved by the Secretary, of the partner’s death; or

(ii)        the Secretary otherwise becomes aware of the death;

the determination takes effect on the day on which the partner died.

(5)       If:

(a)a favourable determination is made following the death of a person’s partner (the partner); and

(b)       immediately before the partner died, the partner:

(i)was not receiving a social security pension, a service pension or income support supplement; and

(ii)        was not a long‑term social security recipient; and

(c)within the period of 4 weeks starting on the day after the day on which the partner dies:

(i)the person notifies the Department, orally or in writing or in a manner approved by the Secretary, of the partner’s death; or

(ii)        the Secretary otherwise becomes aware of the death;

the determination takes effect on the day on which the partner died.

(9)       If:

(a)the favourable determination is made as a result of the Secretary forming the opinion, for the purposes of subsection 5(12) of the 1991 Act, that a young person will not, or would not, if an application were duly made, receive payments under a prescribed educational scheme; and

(b)the Secretary is notified that the young person has been refused payment under a prescribed educational scheme within 28 days after the person is notified of that refusal;

the determination takes effect on the day on which the determination is made or on such earlier or later day as is specified in the determination.

(10)     If:

(a)the favourable determination is made because, for the purposes of subsection 5(11) of the 1991 Act, a young person is not qualified to receive a payment under a prescribed educational scheme; and

(b)the young person, or another person or organisation, was previously in receipt of a payment under a prescribed educational scheme in respect of the young person but the payment has since ceased; and

(c)the Secretary was notified, within 28 days after the payment was granted, that it was no longer being received;

the determination takes effect on the day on which the determination is made or on such earlier or later day as is specified in the determination.

(11)     If:

(a)the favourable determination is made because, for the purposes of subsection 5(11) of the 1991 Act, a young person is not qualified to receive payments under any prescribed educational scheme; and

(b)no application has been made for payments in respect of that young person under any prescribed educational scheme; and

(c)the Secretary is satisfied that it is reasonable that no such application has been made; and

(d)the young person ceased, within 13 weeks after becoming a prescribed student child, to be a prescribed student child because the Secretary formed an opinion for the purposes of paragraph 5(12)(c) of the 1991 Act;

the determination takes effect on the day on which the young person became a prescribed student child.

(12)     This section does not apply to determinations to which section 110A applies.

12.     A consideration of the applicability of those sections to the applicants’ circumstances, where no objection has been lodged to the notices issued, results in an inability on the Department’s part to adjust the payment of the rate to reflect the applicants’ true circumstances.

13.     The Tribunal is left with varying the decision under review to accord with the respondent’s concession by directing that the rate be adjusted taking into the applicant’s circumstances from 29 December 2007.

14.     The respondent helpfully notified the Tribunal that there was a pending application lodged by the applicants under the Department’s Customer Compensation Program.  While the Tribunal has no role to play in making decisions under that program it was informed by the respondent that any recommendation made by the Tribunal would be considered.  The Tribunal is satisfied that there were an unfortunate set of circumstances giving rise to the applicants’ pensions not being paid at the correct rate.  As is conceded, the Department should have identified the applicants’ circumstances at earlier point.  The applicants have at all times been honest in declaring the extent of their income to the Department.  The applicants were unaware of the formal requirements which they needed to implement to have the rate of payment reviewed.  Mr Constantin’s explanation that he did not understand how to categorise earnings from a business is at first glance somewhat improbable.  However, it must be borne in mind that he was not born in Australia and may have experienced some difficulty in understanding what was required of him.  He, however, tried to obtain information and as stated earlier has been open and honest in his dealings with the Department.  The respondent accepts that Mrs Constantin is in the same situation as her husband and that both should be treated equally.

15.     With the above factors in mind the Tribunal recommends that consideration be given to compensating the applicants a sum which would represent 75% of the sum which they would otherwise have received if their circumstances had been recognised earlier for the period 1 July 2006 to 28 December 2007 inclusive.  In determining to recommend this figure the Tribunal has taken into account the fact that the applicants’ entitlement was more likely than not diminished for the period since 2000 and certainly for the period post the 2002 tax year.

I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of

Mr G. L. McDonald, Deputy President

Signed:         .....................................................................................
  Associate                  Grace Horzitski

Date/s of Hearing  14 August 2009
Date of Decision  27 August 2009
Solicitor for the Applicant          Self-represented
Solicitor for the Respondent     Ms A Bramley, Centrelink Legal Services