Molinaro and Secretary, Department of Family and Community Services

[2004] AATA 1333

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION[2004] AATA 1333

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No V2004/323

GENERAL ADMINISTRATIVE  DIVISION		)
Re		GLORIA MOLINARO

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr John Handley, Senior Member

Date15 December 2004

PlaceMelbourne

Decision The decision under review is affirmed.

(Sgd)  John Handley

Senior Member

SOCIAL SECURITY – claim made by applicant for Disability Support Pension – s94 qualification achieved but denied benefit by income limits – moneys paid under Dairy Structural Adjustment Program – irrevocable authority that all payments to be made to applicant’s bank – whether DSAP payments are “income” – whether the payments were “derived” or “received” for applicant’s own use or benefit – decision affirmed

Social Security Act 1991 s8(1), s94 and s1064/E3

Dairy Produce Act 1986

REASONS FOR DECISION

15 December 2004 Mr John Handley, Senior Member           

1. The applicant applies to review a decision made by the Social Security Appeals Tribunal (“SSAT”) on 19 February 2004. The SSAT then decided to affirm a decision previously made by an officer of Centrelink to reject her claim for Disability Support Pension (“DSP”). The basis for the rejection was a finding that the income of Mrs Molinaro exceeded permissible limits imposed by s1064 of the Social Security Act 1991 (“the Act”).

2. The application was listed for hearing in Bendigo on 7 December 2004. On 3 December 2004 it was learnt that Mrs Molinaro was seriously ill and would be unable to attend the hearing. It was also learnt during a Telephone Directions Hearing with Mr Taylor, the solicitor for Mrs Molinaro, and Mr Perdon, on behalf of the respondent, that the facts in this application were not in dispute. Accordingly it was decided that the application should be reviewed on the basis of documents lodged. At the time of preparation of this decision the respondent had filed a number of documents pursuant to s37 of the Administrative Appeals Tribunal Act 1975 ("the Act") together with a Statement of Facts and Contentions.  Mr Taylor also lodged a Statement of Facts and Contentions on behalf of Mrs Molinaro.  I had regard to those documents in making this decision.

the facts

3. Mrs Molinaro is presently 59 years of age having been born on 24 November 1943. She made application for DSP on 20 March 2003. Medical assessments were undertaken and Centrelink ultimately decided on 22 August 2003 that she met all qualifying criteria under s94 of the Act but the claim was rejected on the basis that her income exceeded permissible limits (T28, p105-106). In making that finding Centrelink regarded payments made under the Dairy Structural Adjustment Program (“DSAP”) as “income” within the meaning of the Act.

4.      Prior to making her application for DSP, Mrs Molinaro had been engaged in primary production.  She earned income from that pursuit and by reference to income tax returns lodged, significant income was received from milk sales.

5.      It would appear from the documents lodged that Mrs Molinaro made application to the Dairy Adjustment Authority (“DAA”) – pursuant to its policy of deregulation of the dairy industry – for a “basic market milk payment right” within the meaning of the Dairy Produce Act 1986 (“the Produce Act”). The DAA assessed Mrs Molinaro as having an entitlement to 23,071 units in the DAA Register of Units which entitled her to a payment right with a face value of $738,264.00. It was also decided by the DAA that the sum would be paid quarterly, over a period of eight years, in the sum of $23,071, each payment being made directly to the National Australia Bank (“NAB”) pursuant to an authority given by Mrs Molinaro to the DAA and NAB.

6.      It appears that in exchange for those payments, or by way of security, the NAB advanced Mrs Molinaro the sum of $552,192 which was used by her to meet outstanding debts.

7.      Centrelink has regarded the quarterly payments to the NAB, upon the authority of Mrs Molinaro, as “income” and has disqualified her from an entitlement to DSP.

the legislation

8.      “Income” is defined at s8(1) of the Act in the following terms:

income, in relation to a person, means:

(a)an income amount earned, derived or received by the person for the person's own use or benefit; or

(b)a periodical payment by way of gift or allowance; or

(c)a periodical benefit by way of gift or allowance;

but does not include an amount that is excluded under subsection (4), (5) or (8).

9.      An “income amount” is also defined at s8(1) of the Act in the following terms:

income amount means:

(a)valuable consideration; or

(b)personal earnings; or

(c)moneys; or

(d)profits;

(whether of a capital nature or not).

10.     “Ordinary income” is defined at s8(1) of the Act as follows:

ordinary income means income that is not maintenance income or an exempt lump sum.

11. Part 3.2 of the Act under Module E provides the mechanism for the calculation of DSP monetary entitlement by regard to the “ordinary income” of a person.

12.     As may be seen by the above definitions, “ordinary income” is “income” that is not maintenance income or an exempt lump sum.  For the purposes of this application the DAA payments are not “maintenance income” or “an exempt lump sum” as defined elsewhere within the Act. The “income” referred to in the definition of “ordinary income” is income being an “income amount” also as defined in the Act.

13.     Accordingly the “ordinary income” for the purposes of s1064/E3 of Module E is the “income amount” earned, derived or received for a person’s own use or benefit.  The “income amount” – for the purposes of this application – comprises “moneys” that is earned, derived or received for the person’s own use or benefit.

14.     For the purposes of this application I am satisfied that the payments received by the NAB on behalf of Mrs Molinaro under the DSAP do amount to “income” as defined because the payments are “derived” and are “received” for the “person’s own use or benefit” and those payments are “moneys”.  I acknowledge that the definition of “income” refers to an “income amount”, “received by the person”, but I do not, for the purposes of this application draw any distinction between moneys actually received in the hand of a person as opposed to moneys received by another entity on behalf and with the consent of that person.  In the present case the NAB received the quarterly payments from the DAA but it does so upon the authority and consent of Mrs Molinaro.  The word “received”, as it appears, is sufficiently broad and permits a finding that Mrs Molinaro, in the circumstances of this application, has received the DSAP payments.  There could be no dispute that those payments as received are in fact for her own use or benefit being the repayment of moneys advanced to her by the NAB.

15.     Mr Taylor on behalf of Mrs Molinaro contended that his client does not derive income as a result of her DSAP payments and has denied that she has any legal entitlement to the DSAP payments.

16.     As may be seen by the above I am also satisfied that those payments are “derived” and in fact are “derived” for her own use or benefit.  The “use” is the repayment of loan moneys and the “benefit” is the ability to use those quarterly payments as security of the loan funds advanced by the NAB.

17.     Mr Taylor also contended that any entitlement to those payments ceased on 19 November 2002 when Mrs Molinaro was declared a bankrupt.

18.     The documents presently on the Tribunal file indicate that a sequestration petition was lodged by Victoria Grain Stores Pty Ltd.  As a result of a hearing on 19 November 2002 Mrs Molinaro was declared an undischarged bankrupt.

19.     The extract from the National Personal Insolvency Index records the Trustee in Bankruptcy as Clyde Peter White.  Mr White is a member of the firm MGI Meyrick Webster who on 19 February 2003 (T12) wrote to Mrs Molinaro confirming that a sequestration order was made by the Federal Magistrates’ Court on 19 November 2002.  Attached to that letter is a report to creditors where the DSAP payments were identified.  Mr White reported that pursuant to the loan between Mrs Molinaro and the NAB, the quarterly DSAP payments of $23,071 will continue to be paid and will be paid to the bank pursuant to the loan.  The report confirms that the loan is secured by an irrevocable authority with the DAA made in favour of the NAB.  Mr White has concluded that “There will be no recovery from this source”.

20.     I am therefore unable to accept – with respect – the contention of Mr Taylor that entitlement to those payments ceased on 19 November 2002.  Mrs Molinaro has, since that date, a continuing entitlement with DSAP to receive those payments and she continues to remain irrevocably bound to the NAB to have those payments applied in repayment of the loan moneys advanced to her.  Despite bankruptcy she continues to have an “income amount” “derived” for her own “use or benefit”.

21.     In those circumstances the DSAP payments continue to be “ordinary income” for the purposes of calculating any entitlement to DSP under Module E.

conclusion

22.     This is a very unfortunate application.  Mrs Molinaro is perilously ill and does not have income.  Her husband was self-employed but is also ill and is unable to earn.  Other members of her family are unable to provide financial assistance.  She is being denied DSP only by reason of the surrender by her of her interest as a dairy farmer in exchange for payments pursuant to the DSAP.  Those payments have been applied entirely for the discharge of debts.  Despite this, she has been declared bankrupt.

23. During the Directions Hearing on 3 December 2004, the opportunity to recover special benefit pursuant to s729 of the Act was discussed.

24.     That entitlement is not the subject of these proceedings however in the circumstances presently faced by Mrs Molinaro, I would urge that favourable consideration be given to her having an entitlement to those benefits.  She has previously demonstrated to Centrelink that she is unable to earn.  Moneys are presently being received or derived under the DSAP scheme but those moneys have been, and continue to be, applied to meet repayments on a loan which has been expended to pay outstanding debts.  Mrs Molinaro does not enjoy the benefit of those moneys to the extent that she is permitted to meet day to day expenses or have an income by way of pension for which she would otherwise qualify but for the DSAP payments.

25.     In these circumstances I would suggest that in the event for a claim for special benefits is made that the discretion to award such payments should be favourably exercised.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of
Mr John Handley, Senior Member

Signed:         Holly Weston
  Associate

Date of Hearing  7 December 2004 Heard on the Papers
Date of Decision  15 December 2004