NEVILLE BULLOCK and COMMONWEALTH SUPERANNUATION CORPORATION
[2012] AATA 274
•9 May 2012
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2011/4489
GENERAL ADMINISTRATIVE DIVISION )Re: NEVILLE BULLOCK
Applicant
And: COMMONWEALTH SUPERANNUATION CORPORATION
Respondent
CORRIGENDUM
TRIBUNAL: Senior Member Dr K S Levy, RFD
DATE: 31 May 2012
PLACE: Brisbane
The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application as follows:
The amount “$7,508.69” where it appears at paragraph 35(2) on page 13 should instead read “$7,598.69”.
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Senior Member
[2012] AATA 274
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/4489
Re
NEVILLE BULLOCK
APPLICANT
And
COMMONWEALTH SUPERANNUATION CORPORATION
RESPONDENT
DECISION
Tribunal Senior Member Dr K S Levy, RFD
Date 9 May 2012 Place Brisbane The decision under review is affirmed.
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Senior Member Dr K S Levy, RFD
CATCHWORDS
PUBLIC ADMINISTRATION – Superannuation – Defence Force Retirements and Death Benefits – Periods of continuous full-time service – Election required to remain in Defence Force Retirement and Death Benefits Scheme – Automatic transfer to Military Superannuation and Benefits Scheme – Legislative interpretation – Overpayment of benefit – Debt due to Commonwealth – Write off of debt – Decision under review affirmed
LEGISLATION
Acts Interpretation Act 1901 (Cth)
Defence Force Retirement and Death Benefits Act 1973 (Cth)
Military Superannuation and Benefits Act 1991 (Cth)
CASES Auckland Harbour Board v R [1924] AC 318 Bird v John Sharp and Sons Pty Ltd (1942) 66 CLR 233 Defence Force Retirement and Death Benefits Authority v Gregory (2009) 176 CLR 535 Defence Force Retirement and Death Benefits Authority v Mathews (2011) 192 CLR 197 Director-General of Social Security v Hales (1982) 47 ALR 281 Ku-ring-gai Municipal Council v Attorney-General NSW (1957) 99 CLR 251 Metcalf and Commonwealth Superannuation Corporation [2012] AATA 261 Project Blue sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Riddell v Secretary, Department of Social Security (1993) 42 FCR 443
REASONS FOR DECISION
Senior Member Dr K S Levy, RFD
9 May 2012
INTRODUCTION
The applicant, Neville Bullock, completed 21 years eligible service with the Defence Force. His service was with the Australian Army. On cessation of that service, he received retirement pay under s 23 of the Defence Force Retirement and Death Benefits Act 1973 (Cth) (“the DFRDB Act”) provided by the Defence Forces Retirement and Death Benefits Scheme (“the DFRDB scheme”).
Following his discharge in 2004, the applicant subsequently undertook two periods of continuous full-time service (“CFTS”) and elected to perform a third period of CFTS. He was required to inform the Commonwealth Superannuation Corporation (“CSC”) if he wished to elect to remain a member of the DFRDB scheme for the period of the CFTS. As part of that requirement, he had to inform the CSC of that election prior to the commencement date of the third period of CFTS. He did not so inform the CSC and therefore was deemed to be a member of the Military Superannuation and Benefits Scheme (“MSB scheme”). He requested that the oversight be considered and that he be regarded as being a member of the DFRDB scheme for the purposes of the third period of CFTS, which was service with the Army Reserve for the period 13 September 2010 to 30 November 2010, although it was subsequently extended to conclude on 17 April 2011 (“the relevant period”). The relevant period was a period of less than 12 months service as a member of the Reserve. The matter was considered by the Defence Force Case Assessment Panel but the applicant’s application was refused. He now seeks review by this Tribunal in relation to that decision.
In addition, during the relevant period, Mr Bullock was overpaid as he retained his retirement pay under the DFRDB scheme to which he was not entitled, because he has been deemed to be a member of MSB scheme. This was a consequence of the election not being communicated to the CSC prior to 13 September 2010. The overpayment is $7,598.69. He seeks also to have that overpayment written off.
ISSUES
The issues for determination by the Tribunal are:
(1) Did Mr Bullock cease to be a member of the DFRDB scheme on 13 September 2010 and become a member of the Military Superannuation and Benefits scheme under the Military Superannuation and Benefits Act 1991 (Cth) (“the MSB Act”); and
(2) Is the overpaid pension of $7,598.69 a recoverable debt? If so, should the overpayment be written off or recovered under s 126(4) of the DFRDB Act?
THE FACTS
Mr Bullock was affirmed and gave evidence before the Tribunal. His evidence was that he completed the relevant form (“the D100 form”) on 4 August 2010 and endeavoured to fax it from a military unit. He said the fax machine did not work and he left it for the Orderly Room Chief Clerk to fax it on his behalf.
Mr Bullock also provided a statutory declaration which says that:
(1) A fax confirmation record was not maintained by the unit; if fax receipts were not collected within a few days, they were shredded;
(2)He attempted to fax the D100 form the same day he signed it; that is 4 August 2010. Not having been successful in faxing it himself, he left the form for the Orderly Room Chief Clerk, Sergeant Stanley, to fax it for him. He stated that he informed Sergeant Stanley that he intended to remain with the DFRDB scheme while on CFTS as he had done in 2007; and
(3)His CFTS was for less than 12 months service with the Army Reserve. He stated that he has now completed three periods of CFTS since leaving the Australian Regular Army and that he was aware of the requirements to remain with the DFRDB scheme. He states that “an element of misadministration by my supporting unit is a contributing factor to confusion surrounding the submission of the D100”.
Sergeant Stanley was also asked for a Statutory Declaration and he has stated that:
(1) Mr Bullock paraded on a number of occasions in his unit prior to 13 September 2010;
(2)He did not witness the D100 form being completed but he did receive a form from the applicant;
(3)He did not recall the exact day when it was faxed but he said it would have been towards the end of August as the last day he was in the unit was 10 September 2010;
(4)There was no fax confirmation advice placed on file;
(5)The normal procedure was for fax confirmation forms to be collected by the responsible person or sender. Uncollected forms would be shredded approximately twice weekly; and
(6)He advised the applicant that the fax had been sent the next time he spoke to him.
In relation to the overpayment, it appears that as a result of the election not being effectively communicated to the CSC prior to the commencement of the period of CFTS, there was, therefore, no advice to cease the applicant’s fortnightly entitlements of retirement pay. As a result, a debt of $7,598.69 has been incurred by Mr Bullock.
CONSIDERATION
I have considered all of the evidence in making a determination about the issues in dispute.
THE RELEVANT LAW
The statutory provisions which are relevant are as follows:
Defence Force Retirement and Death Benefits Act 1973
61B Election by recipient member intending to resume full‑time service
(1) Where a person:
(a) who is a recipient member; or
(b) in respect of whom deferred benefits are applicable under section 78;
intends to resume full‑time service:
(c) as a member of the Permanent Forces; or
(d) as a member of a Reserve for a continuous period of not less than 12 months;
the person must, before resuming service, in writing addressed to the Authority, elect:
(e) to become a contributing member; or
(f) to become a member of the MSB scheme.
(2) Subsection (1) does not apply if the person has previously:
(a) made an election under that subsection; or
(b) made, under subsection (3), an election to become a member of the MSB scheme.
(3) A recipient member who:
(a) intends to resume full‑time service as a member of a Reserve for a continuous period of less than 12 months; and
(b) has not previously made, under this section, an election to become a member of the MSB scheme;
must, before resuming service, in writing addressed to the Authority elect whether or not to become a member of that scheme.
Military Superannuation and Benefits Act 1991
6 Membership of Superannuation Scheme
(1) Subject to subsection (2), each of the following persons is, by force of this section, a member of the Scheme:
(a) a member of the Permanent Forces;
(b) a member of the Reserves who is rendering continuous full‑time service under an undertaking to serve for a period of not less than 12 months;
(c) a member of the Reserves who is rendering continuous full‑time service under an undertaking to serve for a period of less than 12 months unless that member has elected not to become a member of the Scheme under section 61B of the DFRDB Act.
(2) In spite of subsection (1), a person is not a member of the Scheme if the person is an eligible member of the Defence Force for the purposes of the DFRDB Act.
In s 3(1), the Authority was defined to mean the DFRDB Authority.
However, as from 1 July 2011, the Superannuation Legislation (Consequential Amendments and Transitional Provisions) 2011 Act (Cth) abolished the DFRBD Authority, transferring its role to the CSC. Any action taken by the Authority prior to 1 July 2011 is deemed to be a matter for which the CSC is now responsible.
For the purpose of s 6(2) of the DFRDB Act, an “eligible member of the Defence Force” is defined in s 3(1) of the DFRDB Act. That definition includes a person undertaking Reserve service, but it excludes a person included in s 5A of the DFRDB Act.
Section 5A(1) of the DFRDB Act excludes a person who becomes a member of the Defence Force on or after 1 October 1991, but s 5A(2)(b) provides a saving provision for former servicemen who undertake subsequent service and make an election for superannuation, in the following terms:
…
(b) a person to whom section 61B applies and who has elected under that section to become a contributing member;
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Mr Bullock is a person to whom s 5A(2)(b) applies. He therefore, at the time of completing the D100 form, was a person eligible to elect to remain under the DFRDB Act. He is also a “recipient member” as defined in s 3(1) of that Act as he is entitled to retirement pay.
ISSUE 1 – Is Mr Bullock a Member of the DFRDB scheme or the MSB scheme for the third period of CFTS?
The critical question then is whether Mr Bullock made an election which satisfied s 61B of the DFRDB Act. Section 61B(3) is relevant here and Mr Bullock was therefore required to “… elect whether or not to become a member of that scheme”, that is, the MSB scheme. If an election is not made, or is ineffective, ss 6(1)(c) and 6(2) of the MSB Act provides that he will be a member of the MSB scheme:
(a)Unless the member has elected not to be a member of the MSB scheme (s 6(1)(c); and
(b)Unless he is “… an eligible member of the Defence Force for the purposes of the DFRDB Act” (s 6(2)).
Both these elements are required and the election not to be within the MSB Scheme is central to that more recent scheme. In order to answer the issues in dispute, it is necessary to consider the purpose of these provisions as intended by Parliament. Both the relevant statutes and their interrelationship is important in determining the intention of Parliament (see Bird v John Sharp and Sons Pty Ltd (1942) 66 CLR 233; Ku-ring-gai MunicipalCouncil v Attorney-General NSW (1957) 99 CLR 251). In a pragmatic sense, the parliamentary intention is to be found by using a purposive approach (see for example, the High Court of Australia’s ruling in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381, 382, which was given statutory force in s 15AA of the Acts Interpretation Act 1901 (Cth)). The purpose of these statutory provisions in the MSB Act and the DFRDB Act is therefore to be found by a distilled reading of both statutes. The logic of the schemes is in some way facilitated by also tracing the development of military and other Commonwealth superannuation laws over the past 60 years or so (see Metcalf and Commonwealth Superannuation Corporation [2012] AATA 261 at [21]).
The facts of this case are essentially not in dispute. However, the applicant claims to have faxed a copy of the D100 form and provided a statutory declaration from a person who was the Orderly Room Chief Clerk on the day of the purported faxing. That form was never received by the CSC.
It is apparent that s 61B(3) allows a member to elect to remain in the DFRDB scheme but it is the member’s responsibility to ensure that it is completed prior to the commencement of the service (see Part E of the form). In this case, Mr Bullock completed a form on 4 August 2010; it was apparently faxed by Sergeant Stanley in late August 2010 (some three to four weeks later) and Mr Bullock commenced CFTS on 13 September 2010.
Section 61B(3) provides that the election must be made and forwarded to the CSC prior to commencement of the relevant period of service. At the least, any election was not communicated and therefore it was not effectively carried out. That being the case, Mr Bullock did not satisfy s 6(1)(c) of the MSB Act and, therefore, as a matter of law, he was deemed to be a member of the MSB scheme for his third period of CFTS.
That interpretation is consistent with precedents submitted by Mr Dylan on behalf of the respondent. I note, in particular, the Federal Court decisions of Defence Force Retirement and Death Benefits Authority v Gregory (2009) 176 FCR 535 and Defence Force Retirement and Death Benefits Authority v Mathews (2011) 192 FCR 197.
I note also that Sergeant Stanley, in his statutory declaration, declared that Mr Bullock had said that he had previously had some difficulty with the CSC and wanted to obviate any difficulties on this occasion regarding the third period of service. However, the evidence reveals no extenuating circumstances which would have prevented Mr Bullock from following up his application between the 4th August and 13th September 2010, a period of almost six weeks. Also, he was a Warrant Officer and an experienced administrator and, therefore, one would expect (apart from his own admission of being acutely aware of the requirements) that he would have been well aware of the requirements and importance of ensuring that the form was submitted by the deadline date. However, the evidence shows almost no vigilance on his part over that six week period between the initial attempt to fax his form and the commencement date of the third period of CFTS.
I therefore find that the intention of Parliament was such that unless the member completed the election and submitted it prior to the commencement of service, then the result is that the law deems the member to be a member of the MSB scheme from that point and is irreversible for the future. I find therefore that the decision of the Defence Force Case Assessment Panel is correct and Mr Bullock is not entitled to receive benefits as part of the DFRDB scheme during his third period of CFTS.
DECISION AS TO MEMBERSHIP OF DFRDB/MSB SCHEME
The decision of the Defence Force Case Assessment Panel is affirmed.
ISSUE 2 – The Overpayment
As stated above, there has been an overpayment of $7,598.69.
The relevant statutory provisions are:
Sections 126(4) and (5) DFRDB Act
126 Recovery of amounts payable to Commonwealth
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(4) Where, for any reason (including the making of, or cancellation of, an election under this Act), an amount of benefit has been paid that is not payable, or has become not payable, the amount so paid may be recovered by the Authority, on behalf of the Commonwealth, in a court of competent jurisdiction as a debt due and payable to the Commonwealth.
(5) Where, for any reason (including the making of, or cancellation of, an election under this Act), an amount of benefit has been paid that is not payable, or has become not payable, and the person to whom that amount was paid is receiving, or is entitled to receive, a benefit, that amount, or such part of that amount as the Authority determines, may, if the Authority in its discretion so directs, be recovered by deduction from that benefit.
…
The essential facts relevant to the overpayment are that on the one hand the overpayment arose independently of the actions of Mr Bullock. On the other hand, however, I note that he acknowledges that he was very familiar with the requirements of his obligations and the importance of timing in having his election communicated to the CSC. In the face of those facts, there is evidence that he took very little action between the 4th August and the 13th September 2010 to ascertain whether his application had been faxed or received by CSC. He left his application with Sergeant Stanley on the 4th of August 2010. Sergeant Stanley said he faxed it in late August and that he had advised Mr Bullock the next time that he saw him. There is no evidence that Mr Bullock had inquired with the CSC prior to his commencement of CFTS on 13 September 2010.
Section 126 does not make specific provision for write off or waiver of a debt. However, I note the Defence Force Case Assessment Panel considered guidelines which have been issued in that respect entitled “General Principles and Procedural Guidelines for the Recovery of Overpayments” and which are relevant to s 126 of the DFRDB Act. Mr Dylan also submitted that the Financial Management and Accountability Act 1997 (Cth) prescribes that in relation to public monies, all overpayments should be recovered. That statutory provision is of wide application to Commonwealth public monies and must be considered to be of considerable force as a principle of general application in cases such as this one.
I have also considered the principles of law relevant to recovery of overpayments in Auckland Harbour Board v R [1924] AC 318, where the Privy Council held that a debt owed to the Crown is recoverable even where administrative error is involved. The administrative error in Mr Bullock’s case is due to the fact that no information had been provided to the CSC which may have alerted them earlier to Mr Bullock’s CFTS which commenced on 13 September 2010. There has been no negligence or incompetence on the part of the CSC in relation to the overpayment. In considering recovery of an overpayment under this Act, I note the words “may be” used in s 126 do not demand a mandatory recovery but are discretionary. It is therefore appropriate to consider judicial comment about the application of this discretion.
Mr Dylan referred me to the Director-General of Social Security v Hales (1982) 47 ALR 281. That case is authority for the proposition that even where there are cases of hardship, refund of overpayment must always be a paramount consideration. Shephard J said in that case, “[a]fter all, the legislature has expressly provided for recovery of overpayments in the very legislation pursuant to which these benefits are paid. Thus it contemplated recovery from persons to whom overpayments of social service benefits had been made” (at page 323). Those comments are also pertinent to the DFRDB Act.
I note also that relevant factors that might be taken into account were set out in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443. The Court there referred to relevant factors being “…individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purpose of the Act…” (at 450).
No submissions were made about any personal factors relevant to Mr Bullock’s financial situation. Also, there is no relevant information in that regard in the documents presented to the Tribunal other than the facts outlined above. A strict interpretation must be given to the statutory provisions here and Mr Bullock is prima facie liable to repay the overpayment. Against those provisions, I find there is no individual hardship or unfairness to Mr Bullock or any fault on the part of the CSC that was within its control. It was a matter of personal responsibility under s 61B of the DFRDB Act and there is no legal basis for Mr Bullock to be regarded as having delegated that responsibility to Sergeant Stanley.
I therefore make findings that:
(a)Mr Bullock did not have an entitlement to retirement pay under the DFRDB Act once he commenced CFTS;
(b)that the amount is recoverable under s 126(4);
(c)having considered the relevant factors as well as the facts presented, Mr Bullock’s debt is, in my view, recoverable; and
(d)I note the observation made at paragraphs 55-57 of the decision of the Defence Force Case Assessment Panel where it appears that Mr Bullock was paid his retirement pay when he undertook his first period of CFTS in February to October 2007 and to which he would not have been entitled, as his election on that occasion appears also to have been invalid. The Defence Force Case Assessment Panel noted a need for further investigation. There is no evidence presented about whether that has been commenced or concluded, but the outcome of those inquiries could well be important and relevant to this case also.
In making my finding above that the overpayment is recoverable, I note that any amount of overpayment could be recovered by deduction from future benefits (s 126(5)). The speed with which such recovery action will occur is a matter for the CSC, including taking account of any action or investigation, as recommended by the Defence Force Case Assessment Panel in its earlier decision.
DECISIONS AS TO THE ISSUES
I determine that:
(1)The applicant became a member of the MSB scheme in accordance with s 6(1)(c) of the Military Superannuation and Benefits Act 1991 (Cth) as from 13 September 2010; and
(2)The overpayment of $7,508.69 is a recoverable debt; that it should be not written off; and that it should be recovered by the CSC under the provisions of s 126 of the DFRDB Act.
I certify that the preceding 35 (thirty five) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr K S Levy, RFD.
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Associate
Dated 9 May 2012
Date(s) of hearing 15 March 2012 Applicant In person Solicitors for the Respondent Andrew Dillon
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