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

[2008] AATA 419

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 419

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/5891

GENERAL ADMINISTRATIVE DIVISION		)
Re		MARGARET McDONALD

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms G Ettinger, Senior Member

Date22 May 2008

PlaceSydney

Decision The Tribunal affirms the decision under review.

..................[sgd]............................

Ms G Ettinger     
  Senior Member

CATCHWORDS

Pension Bonus Scheme - Applicant worked in paid employment after the age of 60 - Applicant had received aged pension between 1996 and 1998 during a period of part-time employment as she was not eligible for other income support payments such as Newstart - the pension bonus scheme which commenced on 1 July 1998 precludes persons who have received the age pension from eligibility - Applicant argued that legislation should not be applied retrospectively in the sense that when she received the age pension it was before the pension bonus scheme came into existence - Respondent submitted that the legislation provided no discretion in the case of the Applicant because she had been receiving age pension before her application for the pension bonus - Respondent's argument preferred - not a question of retrospectivity -  decision under review affirmed.

Social Security Act 1991 s 92C

The Acts Interpretation Act 1901 s 15AA

Explanatory Memorandum, Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998

Second Reading Speech, Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998

Maxwell v Murphy (1957) 96 CLR 261

Re Walsh and Secretary, Department of Family and Community Services [2003] AATA 163

Re Noel Archibald McKenzie and Secretary, Department of Social Security (AAT 4837, 20 December 1988)

Doro v Victorian Railways Commissioners [1960] VR 84

Re Tallon and Secretary, Department of Social Security (1988) 15 ALD 6

REASONS FOR DECISION

22 May 2008 Ms G Ettinger, Senior Member     

1.      The pension bonus scheme commenced on 1 July 1998, and stipulates that  a person who has received aged pension previously, is precluded from the pension bonus. Mrs McDonald, the Applicant before the Tribunal, acknowledges that she received the age pension between 1996 and 1998, but considers that she is eligible for the pension bonus because she received it before the pension bonus scheme commenced, and argues that legislation should not apply retrospectively. She emphasises that she received the age pension during a period when she was in parttime rather than fulltime employment, and was not eligible for other income support such as Newstart.

2.      However the Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, who is the Respondent in these proceedings, has told Mrs McDonald that pursuant to the Social Security Act 1991, (the Act), a person who has received aged pension previously, is precluded from the pension bonus scheme. The Respondent submitted that the legislation provides no discretion in Mrs McDonald’s case.

3.      I preferred the Respondent's argument, finding that it not a question of retrospectivity, and affirmed the decision under review. My reasons follow.

ISSUE BEFORE THE TRIBUNAL

4.      The only issue before the Tribunal was whether Mrs McDonald can be paid pension bonus.

THE RELEVANT LEGISLATION

5. Section 92 of the Social Security Act 1991 (the Act) provides:

Qualification for pension bonus

92C.  A person is qualified for a pension bonus if:

(a)       both:

(i)        the person starts to receive an age pension at or after the time when the person makes a claim for the pension bonus; and

(ii)       that age pension is received otherwise than because of a scheduled international social security agreement (within the meaning of section 1208); and

(b)       the person has not received an age pension at any time before making a claim for the pension bonus; and

(c)       the person is registered as a member of the pension bonus scheme; and

(d)       the person has accrued at least one full-year bonus period while registered as a member of the pension bonus scheme; and

(e)       the person has not received:

(i)        a social security pension (other than an age pension or a carer payment); or

(ii)       a social security benefit; or

(iii)      a service pension (other than a carer service pension); or

(iv) an income support supplement (other than an income support supplement that is payable as a result of the operation of subclause 8(3) of Schedule 5 to the Veterans’ Entitlements Act);

at any time after the person qualified for an age pension; and

…..

(f)        the person has not already received:

…..

(i)        another pension bonus; or

(ii) a bonus under Part IIIAB of the Veterans’ Entitlements Act; or

(iii) DFISA bonus under Part VIIAB of the Veterans’ Entitlements Act.

FACTS NOT IN DISPUTE

6. I have noted the following from the documents lodged pursuant to section 37 of the Administrative Appeals TribunalAct 1975 (the T-documents).

7.      Mrs McDonald was born on 22 December 1934 (T6/17), and accordingly on 22 December 1994, Mrs McDonald reached age pension age.

(a)Mrs McDonald commenced to be paid age pension on 22 August 1996 (T3/7).

(b)At her request, Mrs McDonald’s age pension payments were stopped on 5 March 1998 (T4/10).

(c)The Pension Bonus Scheme commenced on 1 July 1998.

(d)Mrs McDonald claimed age pension and pension bonus on 21 June 2007  (T6/15).

(e)Centrelink decided on 21 June 2007 that pension bonus could not be paid to Mrs McDonald (T8).

(f)On 24 July 2007 Mrs McDonald requested review of the decision not to pay her pension bonus (T10).

(g)On 19 September 2007 an Authorised Review Officer affirmed the decision not to pay Mrs McDonald pension bonus (T15).

(h)The Social Security Appeals Tribunal affirmed that decision on 25 October 2007  (T2).

(i)Mrs McDonald applied to the AAT for review of that decision on 3 December 2007 (T1).

THE APPLICANT

8.      The Applicant was represented by her daughter, Ms Anne McDonald. She argued that at the time Mrs McDonald claimed and received age pension between 1996 and 1998, she had to do so to support herself, as she was not able to secure fulltime work, and no other form of income support was available to her. She submitted that at that time, the pension bonus scheme had not yet commenced, and that the application of the legislation in the way Centrelink and the Social Security Appeals Tribunal had interpreted it, had a measure of retrospectivity, and had been applied incorrectly.

9. Ms Anne McDonald referred to section 92C, dealing with a person’s eligibility for age pension if certain conditions apply, submitting that the words of the Act which follow subsection 92C(e)(iv) being “at any time after the person qualified for an age pension;…”, should be read as “at any time after 1 July 1998” (being after the pension bonus scheme was introduced). Ms McDonald referred to section 15AA of the Acts Interpretation Act 1901, and several leading authorities on the retrospective application of statutes, including Maxwell v Murphy (1957) 96 CLR 261.

10.     Ms McDonald also emphasised the injustice and the financial loss her mother would suffer if the pension bonus were denied her, as she had been led by Centrelink to understand that she was eligible for it. In that regard Ms McDonald referred to letters received from Centrelink in 2002 and 2003, which she submitted confirmed her mother as still registered for the pension bonus from 25 July 2001.  She also indicated that when her mother attended at Centrelink in January 2007 to inquire whether she was eligible for the pension bonus, she was told she should apply for it.

THE RESPONDENT

11. Mr Larcombe who appeared for the Respondent submitted that in order to qualify for a pension bonus, a person must satisfy each of the requirements of parts (a) to (f) of section 92C of the Act. He noted that Mrs McDonald acknowledged receipt of age pension between August 1996 and March 1998. Therefore, when she lodged her claim for pension bonus on 21 June 2007, Mrs McDonald had already been in receipt of age pension. He submitted that the Secretary contended therefore that Mrs McDonald was not qualified to be paid a pension bonus because she does not satisfy part (b) of section 92C, and that therefore, the decision to reject her claim for pension bonus was correct.

12.     He noted that in Re Walsh and Secretary, Department of Family and Community Services [2003] AATA 163 DP Handley considered this issue and found:

“… in the Tribunal's view Mrs Walsh's receipt of age pension between February 1995 and January 1997 is conclusive in terms of disqualifying her from receipt of a pension bonus.”

13. He noted the Applicant’s contention that section 92C(b) should be interpreted as referring to receipt of a pension “at any time” after the pension bonus scheme was introduced. Mr Larcombe submitted that the pension bonus scheme created a right which had not previously existed. He submitted that certain of the case law referred to by Ms Anne McDonald concerns existing rights, but that in this case, no rights to pension bonus existed prior to 1 July 1998.

14.     Mr Larcombe submitted that the Secretary did not accept Mrs McDonald’s argument, and contended that the words of the section are unambiguous, and clearly express the qualification criteria intended by Parliament. He submitted that the words “at any time”  should be given their ordinary meaning.

15.     He contended on behalf of the Secretary that the amendment to the Act relating to pension bonus is prospective and not retrospective. The amendment established the pension bonus scheme, and at the same time set criteria for qualification mentioned above. 

16.     Commenting on the case law, Mr Larcombe submitted:

·     That even though Re Noel Archibald McKenzie and Secretary, Department of Social Security (AAT 4837, 20 December 1988) recognised retrospectivity the case can be distinguished because section 153 had been amended twice, and the pension bonus scheme was created afresh;

·     That Doro v Victorian Railways Commissioners [1960] VR 84 was a case about existing and not new rights (as in the case of the pension bonus), and could be distinguished on that basis;

·     That the Tribunal in Re Walsh and Secretary Department of Family and Community Services [2003] AATA 163 accepted that the pension bonus scheme created a new right, and that Mrs Walsh was not eligible for the pension bonus for reasons not dissimilar to those Mrs McDonald faces.

THE TRIBUNAL

17.     I have noted the arguments of both parties, and am appreciative of their analysis of the case law, and Ms McDonald’s concern for her mother’s welfare. The facts are not in dispute; I have noted them in the paragraphs above, and accept them as provided to me.

18.     I have considered the submissions and facts in this case, the legislation, being the Social Security Act 1991, and the Acts Interpretation Act 1901, the case law and the Explanatory Memorandum to the Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998, and the Second Reading Speech for the same Bill by the Hon Phillip Ruddock, the then Minister for Immigration and Ethnic Affairs representing the Minister for Social Security.

19.     I accept that Mrs McDonald, who is a widow, has been supporting herself, and that she has worked in paid employment past the age of eligibility for pension. What has occurred however is that between 1996 and 1998, when she was working in parttime employment and required some income support, she was already eligible for age pension, and exercised her right to claim age pension.

20. Then on 1 July 1998, the age pension bonus scheme was introduced. Section 92C of the Act deals with eligibility for pension bonus, and specifies that a person is qualified for a pension bonus if she starts to receive an age pension at or after the time when she makes a claim for the pension bonus, and she has not received an age pension at any time before making a claim for the pension bonus (my emphasis).

21.     Unfortunately, on a reading of the section, Mrs McDonald would appear to qualify for the pension bonus but for the undisputed fact that she has received an age pension before applying for the pension bonus scheme. I note of course her argument that she could not have applied at that time in 1996 because the pension bonus scheme only commenced in 1998, and that accordingly the legislation is being applied retrospectively and to her disadvantage.

22.     In coming to a decision, I have considered the Explanatory Memorandum to the Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998, and the Second Reading Speech for the same Bill by the Hon Phillip Ruddock. 

23.     In the Second Reading Speech, Mr Ruddock emphasised that the pension bonus scheme is voluntary, that it is the person’s choice to enter the scheme based on their particular circumstances and preferences, and that it is designed to provide an incentive for older Australians who qualify for age pension, but who choose to remain in the workforce and delay their retirement. He also stated that: “The Scheme will provide for the payment of a lump sum bonus, the amount of which will increase more than proportionally with the number of years that a person delays claiming age pension.” Clearly the pension bonus scheme was set up as an incentive to delay the claiming of age pension and encourage those who wished to remain in the workforce after reaching pensionable age to do so.

24. The Explanatory Memorandum mentions various sections of the Bill, and in particular, relevantly with section 92C, which deals with the qualifications for pension bonus. The Explanatory Memorandum specifies a number of conditions, and states that a person is qualified for pension bonus if:

“(a)  the person starts to receive age pension after they make a claim for the pension bonus (claims for age pension and pension bonus must be lodged together: see subsection 93L(1), and the age pension is received otherwise than because of a scheduled international social security agreement …. : the pension bonus is available only to those persons who receive an ‘autonomous’ age pension ….

(b) the person has not received an age pension at any time before making a claim for the pension bonus;

….”

25.     It is the final paragraph which is of particular relevance to Mrs McDonald, and speaks of eligibility for pension bonus for a person who “has not received an age pension at any time before making a claim for the pension bonus”.  It  is not in dispute that Mrs McDonald did in fact receive age pension between 1996 and 1998 before she applied for pension bonus, and before the introduction of the pension bonus scheme on 1 July 1998.

26. I have noted that section 15AA of the Acts Interpretation Act 1901 states that in the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act shall be preferred to a construction that would not promote that purpose or object. I see no ambiguity in the words of section 92C of the Act, and am satisfied that the construction which would promote the object under the Act is to reward persons who have become eligible for age pension, but have continued in the paid work force, and delayed making a claim for age pension. Mrs McDonald does not come into that category as she had earlier made a claim for, and been eligible for, and been paid age pension for some two years.

27.      I am satisfied that there is no discretion in the legislation which I might be able to exercise to mitigate what Mrs McDonald sees as her loss. 

28.     For the sake of completeness, I have considered the case law to which I have been referred, and make comment on certain of the cases.

29.     I noted Ms Anne McDonald’s submission in relation to Maxwell v Murphy (1956) 96 CLR 261, which was that the case reaffirmed the common law rule that statutes are not to be given retrospective operation does not apply to statutes that are concerned with procedure only. I am satisfied that the pension bonus scheme conferred a new right, that is a right to pension bonus on certain persons who satisfied the requirements pursuant to section 92C of the Act from 1 July 1998, and that this was a substantive right.

30.     I noted that in Archibald and McKenzie, retrospectivity is recognised, but that accepted the Respondent’s argument that that case can be distinguished.

31.     I noted that in Re Tallon and Secretary, Department of Social Security (1988) 15 ALD 6, the Tribunal emphasised that the words “receiving a pension” should be given their “plain ordinary meaning”. The Tribunal in that case, in finding for the Applicant, was referring to existing rights to sickness benefit at a particular period in time, (provided the Secretary was satisfied Tallon met the conditions for it), whereas in Mrs McDonald’s case no rights to pension bonus existed until the scheme became operative in 1998, and until she applied. Accordingly Re Tallon can be distinguished, and has no application in this case.

32.     In Walsh (supra), the Tribunal affirmed the decision that Mrs Walsh was not eligible for pension bonus for reasons similar to those Mrs McDonald faces, although if Mrs Walsh had applied for and been paid carer pension, she may not have been precluded from receiving pension bonus. However because she had received age pension, she was precluded from pension bonus as Mrs McDonald is. 

33.     Ms McDonald cited Doro (supra) in relation to the injustice she perceived towards her mother if the pension bonus were not to be granted to her.  I have noted that the case deals with retrospectivity, and discusses the nature and degree of injustice which may result from giving a statute a retrospective operation. I am satisfied that Doro deals with existing rights to damages, and an increase in payments for damages incurred for which the Victorian Railways Commissioners may have been held responsible.  The case may be distinguished as the pension bonus is concerned with a newly created, rather than an existing right. 

34. In conclusion I am satisfied that the words of section 92C are clear and unambiguous and that Mrs McDonald is not eligible for pension bonus because she had, prior to applying for pension bonus received age pension for which she became eligible. There is no discretion for the Tribunal to consider.

DECISION

35.     The Tribunal affirms the decision under review.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member

Signed:         ..........[sgd]......................................................................

Associate

Date of Hearing  20 March 2008
Date of Decision  22 May 2008

The Applicant  Self represented & assisted by Ms A McDonald

Representative of the Respondent           Mr J Larcombe, Secretary, Department of Families, Community Services and Indigenous Affairs