MacDonald and Secretary, Department of Social Services (Social services second review)
[2015] AATA 556
•9 July 2015
MacDonald and Secretary, Department of Social Services (Social services second review) [2015] AATA 556 (9 July 2015)
Division
GENERAL DIVISION
File Numbers
2015/2762
2015/2763
Re
Douglas MacDonald
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Egon Fice, Senior Member
Date 9 July 2015 Place Melbourne Regarding application 2015/2762, the Tribunal determines that it does not have jurisdiction to hear the application.
Regarding application 2015/2763, the Tribunal refuses the application under section 29(7) of the Administrative Appeals Tribunal Act 1975 for an extension of time to lodge this application for review of a decision.
..........................[sgd]..............................................
Egon Fice, Senior Member
Catchwords
SOCIAL WELFARE – Pensions, payments and allowances – Carer payment – Age pension – Rate – Assets test – Administrative law – Administrative Appeals Tribunal – Jurisdiction – No jurisdiction as SSAT did not affirm, vary or set aside decision under review – Extension of time – Extension refused as limited prospects of success
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) s 29
Social Security (Administration) Act 1999 (Cth) s 179
Cases
Budd v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1540 (17 October 2008)
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
REASONS FOR DECISION
Egon Fice, Senior Member
31 July 2015
The genesis of both applications made by Mr Douglas MacDonald may be found in a decision of the Department of Human Services (Centrelink) made on 3 October 2012 to reduce the rate of Carer Payment and Age Pension payable to Mr MacDonald. At the heart of this dispute is a loan which Mr MacDonald provided to a company called Nezono Pty Ltd (Nezono) which, in April 2013, had a balance of $88,212.
On 4 November 2005 Mr MacDonald and his wife transferred their shares in Nezono to his son, thereby making the son the sole shareholder of Nezono. Mr MacDonald ceased to have any further involvement in the company when he ceased being paid director’s fees in March 2012. Between 4 July 2012 and 28 April 2013 Nezono continued to record a debt owing to Mr MacDonald in the amount of $88,212. On 29 April 2013 Mr MacDonald executed a deed referred to as a Deed of Debt Forgiveness (the Deed). The recital on the Deed recorded (emphasis in original):
A.The Borrower is indebted to the Lender for $88,000 – as appeared in the last financial statements (the Debt).
B.The Lender has resolved to forgive the debt on the terms and conditions of this deed.
The Borrower is defined in the Deed as Gregory D Macdonald in its (sic) capacity as trustee of Nezono Pty Ltd. While this description does not make any legal sense as there is no apparent trust and Nezono is a proprietary company, I understand the borrower to be Nezono and Mr Gregory McDonald, who was then the sole director, executed the deed on its behalf.
Mr MacDonald sought review of the Centrelink decision by an Authorised Review Officer (ARO). On 21 June 2013 the ARO set aside the decision of Centrelink and determined that Mr MacDonald’s rate of age pension should be increased with effect from 28 March 2013 on the ground that he was to be attributed with 0% of the income and assets of Nezono and that his loan to that company had been forgiven on 29 April 2013. Mr MacDonald was additionally entitled to arrears of carer payment from 4 July 2012 to 27 March 2013. The ARO also decided that the loan sum of $88,212 was a financial asset of Mr MacDonald for the period 4 July 2012 to 28 April 2013 and had to be taken into account when calculating his entitlement to the carer payment and age pension. The ARO decided that the amount of $78,212 was to be included as a financial asset for a period of five years starting on 29 April 2013 on the basis that he had gifted the loan monies to the company at the time of executing the Deed.
Mr and Mrs MacDonald sought a review of the ARO decision by the Social Security Appeals Tribunal (SSAT). On 19 August 2013 the SSAT decided to affirm the decision of the ARO made on 21 June 2013. That decision was posted to Mr MacDonald on 23 August 2013. Although that decision was reviewable by this Tribunal by reason of the provisions set out in s. 179 of the Social Security (Administration) Act 1999 (the Administration Act), no application for review was lodged by either Mr or Mrs MacDonald. Section 179(1) has effect subject to s. 29 of the Administrative Appeals Tribunal Act 1975 (AAT Act). Section 29(2)(a) of the AAT Act provides that the prescribed time for the purposes of lodging an application for review with the AAT is 28 days after the document setting out the terms of the decision which is to be reviewed is given to the applicant.
Instead, it appears Mr MacDonald contacted Centrelink on 27 January 2015 seeking a review of the decision to regard the decision made to characterise the $88,212 loan to Nezono as having been gifted to his son or, presumably, to the company on 29 April 2013. On 18 February 2015, following another review by an ARO, the ARO decided that the decision to treat the loan as having been gifted was correct. I should mention at this point that this was in fact the decision of the SSAT on review and it was not open to Centrelink or to a new ARO to again review that decision. If Mr MacDonald was dissatisfied with the SSAT decision, his only recourse was to seek a review by the AAT. That is so even though Mr MacDonald apparently sought to rely on the financial records of Nezono which were different to those provided to the SSAT. In fact, in his reasons for the decision, the ARO made it clear that he was not able to further review a decision made by the SSAT.
Regardless, Mr and Mrs MacDonald again lodged an application seeking a review by the SSAT of the decision of the ARO made on 18 February 2015.
In a decision made on 20 May 2015, the SSAT decided that it did not have the legal power to consider the matter. It determined that the decision regarding the loan monies disposed of by Mr MacDonald on 29 April 2013 had already been determined by the SSAT in August 2013 and could not again be reviewed by the SSAT. That decision was undoubtedly correct.
Undeterred, on 4 June 2015 Mr MacDonald lodged an application for review of the SSAT decision dated 20 May 2015 with this Tribunal.
The only question which arose on the hearing of matter 2015/2762 was whether this Tribunal had jurisdiction to review the decision made by the SSAT on 20 May 2015. At the conclusion of the hearing, I gave oral reasons why I was of the view that the Tribunal did not have jurisdiction. On 24 July 2015 Mr MacDonald requested written reasons for my decision and these are those reasons.
Matter 2015/2762
The powers of review by the AAT of decisions made by an officer of the department under the Social Security Law are set out in Division 5 of Part 4 of the Administration Act, as it existed at the relevant time (these provisions were amended as a consequence of the amalgamation of the SSAT and the AAT commencing 1 July 2015). Section 179(1) provided:
179 (1) [review of decisions by AAT] If:
(a)a decision has been reviewed by the SSAT; and
(b)the decision has been affirmed, varied or set aside by the SSAT;
application may be made to the AAT for review of the decision of the SSAT.
The purported decision on which Mr MacDonald relied was that made by the SSAT on 20 May 2015 where it said it did not have the legal power to consider the matter. It should be immediately apparent that on 20 May 2015, the SSAT did not review any decision made by an ARO. It simply stated it was without power to do so. In fact, even the ARO made it clear that he was not able to further review a decision made by the SSAT – that being a reference to the first decision of the SSAT made on 19 August 2013. In other words, the problem for Mr MacDonald is that instead of seeking a review by the AAT following the SSAT decision made on 19 August 2013, he went back to Centrelink effectively seeking a review of the SSAT decision. Centrelink is not authorised by law to review an SSAT decision. In fact, it is bound by such a decision. Mr MacDonald’s only avenue for review was an application to the AAT following that decision.
It should be immediately apparent that Mr MacDonald’s lodgement of an application to this Tribunal on 4 June 2015 in matter 2015/2762 seeking a review of a purported decision made by the SSAT on 20 May 2015 is invalid. On that day the SSAT did not review the decision made by the ARO nor did it affirm, vary or set aside that decision. Those are the only grounds set out in s. 179(1) of the Administration Act that establish this Tribunal’s jurisdiction to review a decision made by the SSAT. Absent those grounds, this Tribunal has no jurisdiction.
Matter 2015/2763
The second matter, 2015/2763, arises from an application lodged by Mr MacDonald seeking review once again of the SSAT decision made on 20 May 2015. However in addition to that application, Mr MacDonald also lodged an application for an extension of time for lodging an application for review of a decision. In the extension of time application, Mr MacDonald referred to the SSAT decision dated 19 August 2013. While this of course created some confusion, I understood Mr MacDonald’s application in this matter to be an application which should have been brought by him to this Tribunal following the 19 August 2013 decision by the SSAT.
In order to be able to proceed with that application, because it was made well outside the prescribed time for making an application which is 28 days after the terms of the decision have been given to an applicant (AAT Act s. 29(2)(a)), Mr MacDonald needs to satisfy the Tribunal that it is reasonable for him to proceed with that application. The Tribunal’s power to extend the time for making an application is set out in s. 29(7) of the AAT Act and it provides:
(7) The Tribunal may, upon application in writing by a person, extend the time for the making by that person of an application to the Tribunal for a review of a decision (including a decision made before the commencement of this section) if the Tribunal is satisfied that it is reasonable in all the circumstances to do so.
The matters which must be considered by this Tribunal in determining whether it is reasonable to extend time for making an application are well-established. They arise essentially from two decisions of the Federal Court of Australia, Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 and the unreported decision in Budd v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1540 (17 October 2008).
While there are a number of matters which are ordinarily considered by the Tribunal in determining whether it is reasonable to grant an extension of time, there is one critical factor in this case which tells strongly against such a grant. That is, whether Mr MacDonald’s application has merit. In examining whether his claim has merit, it is not the role of Tribunal to, in effect, pre-hear the substantive matter. It simply needs to be satisfied by the material before it that an applicant has some prospects of success on the substantive hearing. The absence of prospects of success is fatal to an extension of time application because there is no point in proceeding to a full hearing where an applicant cannot succeed. That would be improper and a total waste of resources.
In fairness to Mr MacDonald, I should set out the detailed reasons he gave for his application. He said:
At the time of the original SSAT hearing, I was asked for any further proof that a loan to a company didn’t exist. As the company accountant was incarcerated for previous financial fraud, I was unable to produce proof demanded by the SSAT. I was unable to appeal the SSAT decision due to being unable to secure proof until well after the time limit to appeal the SSAT decision. The SSAT applied a date the loan existed from “a deed of forgiveness” (29/04/2013) that Centrelink had advised by deception that filling in the deed would prove the loan didn’t exist. I have proof the loan didn’t exist in 2011 and the business was sold in 2008. Also I wasn’t allowed to put to the tribunal prepared questions which I consider to be unfair.
In essence, Mr MacDonald claimed in his oral submissions and then the statement I have set out above that he did not make a loan to the company and that he was coerced, by Centrelink, into executing the Debt Forgiveness Deed. The SSAT found that Mr MacDonald had made a loan to Nezono and it had evidence of that in the form of a balance sheet for the financial year ended 30 June 2010. In the material provided to me on this application, I had a copy of that balance sheet which lists the following current liability:
Loan – DJ MacDonald $88,212
The SSAT dealt in detail with Mr MacDonald’s claim that the loan referred to in the 2010 balance sheet of Nezono did not exist. It appears Mr MacDonald relied heavily on the fact that the company’s accountant was dishonest and had used the company for his own purposes. Even if that were correct, it does not explain the presence of the liability which the company had to Mr MacDonald. The was no obvious basis for the claim that the company accountant could benefit in some way by inserting that current liability in the company’s account. In fact, it is likely that it would be detrimental. Mr MacDonald could not provide earlier financial statements for Nezono to the SSAT.
I did have in evidence before me a letter from the accountants who took over the accounting function following the detected fraud of the previous accountant. That letter is dated 5 March 2013. What it indicates is that the previous accountant and BAS Agent, Saligari & Associates, fraudulently lodged Business Activity Statements thereby obtaining GST refunds for a number of clients and it transferred those monies into its own name. Plainly, that has nothing whatsoever to do with the entry in the balance sheet disclosing a current liability to Mr MacDonald. Furthermore, Mr MacDonald did not provide any earlier financial statements for Nezono to this Tribunal.
I did have in evidence minutes of a meeting said to be a Meeting of the Directors of Nezono dated 30 June 2012. Present at that meeting was said to be GD MacDonald and DJ MacDonald. That minute states Mr MacDonald was to retire as a director of Nezono on 30 June 2012. The minute also states that Mr MacDonald relinquished any liabilities or assets vested with or held by Nezono. Unfortunately for Mr MacDonald, there are two problems with the minute.
The first is that the minute was only provided to Centrelink on 30 April 2013, which was after Centrelink made its original decision regarding the rate of carer payment and age pension to which Mr and Mrs MacDonald were entitled. In fact, Mr MacDonald also provided Centrelink with a balance sheet as at 30 June 2012 which discloses the loan from Mr MacDonald to Nezono appears to have been transferred to GD MacDonald, who I believe is Mr MacDonald’s son. That balance sheet discloses a loan provided to Nezono by Mr GD MacDonald in the amount of $75,702 for the 2011 financial year and $105,983 for the 2012 financial year. There was no explanation for this loan amount by Mr MacDonald’s son to Nezono and the reasonable inference to be drawn is that Mr MacDonald transferred his asset, being the debt owed to him by Nezono, to his son.
The second problem is that the minute, by itself, cannot discharge Nezono’s liability to Mr MacDonald. Unfortunately, on its face, these documents appear to be an attempt by Mr MacDonald to rid himself of assets after being told by Centrelink that those assets needed to be taken into account when determining the rate of social security payments he had claimed.
Then, to cap it off, Nezono and Mr MacDonald entered into a Deed of Debt Forgiveness which is dated 29 April 2013. In that Deed Mr MacDonald is described as the Lendor [sic]. Mr GD MacDonald is said to be the Borrower in his capacity as trustee of Nezono. That of course discloses a misunderstanding by the drafter of the document regarding the legal capacity of the trustee. Nezono is a proprietary company, not a trust. Putting that to one side, the first recital expressly states that Nezono is indebted to Mr MacDonald in the sum of $88,000. Mr MacDonald signed that document in his capacity as the Lender and his son, G D MacDonald, has signed, apparently, as the Borrower, although I believe it was intended to have been signed on behalf of Nezono which was in fact the borrower.
It should be apparent to Mr MacDonald that he cannot now resile from the fact that he accepted Nezono owed him a debt which resulted from loan moneys being provided to the company. That debt was approximately $88,000 at the time of his application for social security payments. The Deed of Debt Forgiveness simply confirms that position and, without further evidence, the minute of the meeting held on 30 June 2012 along with the subsequent Balance Sheet for Nezono simply supports the fact that Nezono’s liability was probably not extinguished but rather transferred to Mr MacDonald’s son. Either way, the asset must be treated as an asset for the period of five years starting on the day which the disposal took place, as the SSAT did.
Therefore, on its face, Mr MacDonald’s claim in matter 2015/2763 does not have prospects of success. It is for that reason that the extension of time sought by Mr MacDonald to lodge that application should be refused.
I certify that the preceding 27 (twenty -seven) paragraphs are a true copy of the reasons for the decision herein of Egon Fice, Senior Member ...............................[sgd].........................................
Associate
Dated 31 July 2015
Date of hearing 9 July 2015 Applicant In person Advocate for the Respondent Mr J Henderson Solicitors for the Respondent Department of Human Services
Key Legal Topics
Areas of Law
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Administrative Law
Legal Concepts
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Jurisdiction
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Limitation Periods
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Extension of Time
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