Parker and Repatriation Commission (Veterans' entitlements)
[2023] AATA 3179
•5 October 2023
Parker and Repatriation Commission (Veterans' entitlements) [2023] AATA 3179 (5 October 2023)
Division:GENERAL DIVISION
File Number(s): 2021/4361
Re:Roderick Leon Parker
APPLICANT
AndRepatriation Commission
RESPONDENT
DECISION
Tribunal:Senior Member George
Date:5 October 2023
Place:Adelaide
Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets-aside the reviewable decision made by the delegate of the Respondent dated 26 April 2021 and remits the matter with a direction that the Applicant was eligible to be paid a Service Pension within the terms of section 45TC(1)(a) of the Veterans’ Entitlement Act 1986 (Cth) at the time he lodged his claim for a Pension Bonus on 13 November 2020.
...................[Sgnd].........................
Senior Member George
CATCHWORDS
VETERANS AFFAIRS – pension bonus scheme – service pension – whether assets double counted – set-off – decision under review set-aside
LEGISLATION
ADMINISTRATIVE APPEALS TRIBUNAL ACT 1975 (CTH)
Veterans’ Entitlements Act 1986 (Cth)
CASES
Gye v McIntyre (1991) 171 CLR 609
Metal Manufactures Pty Limited v Morton [2023] HCA 1
SECONDARY MATERIALS
REASONS FOR DECISION
Senior Member George
5 October 2023
This is an application for review of a decision of a delegate of the Respondent that Mr Roderick Leon Parker (“the Applicant”) was not eligible to receive payment of a Service Pension, and who’s claim for a Pension Bonus under the Veterans’ Entitlement Act 1986 (“the Act”) was disallowed.
The Applicant was born in July 1930 and is aged 93 years. He served in the Royal Australian Air Force between 1948 and 1956. He is a veteran of the Korean War and he also served in Japan.[1]
[1] Exhibit R1, T-Documents, T3, Application for Gold Card for Veterans of Australia’s Defence Force, page 19.
On 18 June 2018, the Department of Human Services wrote to the Applicant to inform him that he was registered as a member of the Pension Bonus Scheme.[2]
[2] Exhibit J1, Joint Hearing Book, page 4.
In November 2020, the Applicant completed applications for payment of a Service Pension and a Pension Bonus.[3] These documents were lodged on 13 November 2020.[4]
[3] Exhibit R1, T-Documents, T7, Claim for Service Pension – Part A – Eligibility, pages 30-45; T8, Claim for Service Pension or Income Support Supplement – Part B – Income and Assets (and attachments), pages 46-107.
[4] Exhibit R1, T-Documents, T1.1, Reviewable decision, page 9; Exhibit J1, Joint Hearing Book, Applicant’s Statement, page 27.
On 25 January 2021, a delegate of the Respondent determined that the Applicant was not eligible for payment of a Service Pension on the basis that the Applicant’s assessed assets were above the threshold that allowed for payments. The letter was dated 27 January 2021.[5]
[5] Exhibit R1, T-Documents, T14, Determination, rejecting claim for payment of service pension, pages 155-157.
On 25 January 2021, a delegate of the Respondent furthermore decided that the Applicant was not eligible for payment of a Pension Bonus on the basis that the application was made out of time and also that no Service Pension was payable. The letter was dated 27 January 2021.[6]
[6] Exhibit R1, T-Documents, T15, Determination, rejecting claim for payment for pension bonus, pages 158-159.
On 16 March 2021, the Applicant’s accountant, Mr Pitt, sought review of the determination to refuse the Applicant a Pension Bonus.[7]
[7] Exhibit R1, T-Documents, T16, Request for reconsideration, pages 160-161.
On 26 April 2021, the Respondent affirmed the decision that the Applicant was not entitled to payment of a Pension Bonus (“the Reviewable Decision”).[8]
[8] Exhibit R1, T-Documents, T1.1, Reviewable decision, pages 6-16.
On 29 June 2021, the Applicant filed an application for review of the Reviewable Decision with the Tribunal.[9] In correspondence dated 26 March 2023, the Applicant’s position was clarified that he sought a review of both determinations to refuse his application for a Service Pension and to refuse his application for a Pension Bonus.[10]
[9] Exhibit R1, T-Documents, T1, Application for Review of Decision, pages 1-5
[10] Exhibit J1, Joint Hearing Book, Email from R McCann re Applicant’s response to Respondent’s Position, page 35.
The hearing proceeded by telephone on 7 September 2023. The Applicant was represented by his advocate Mr McCann of the Vietnam Veterans, Peacekeepers and Peacemakers Association of Australia. The Respondent was represented by Ms Audsley of Australian Government Solicitor.
LEGISLATIVE FRAMEWORK
The qualification for a Pension Bonus is contained in s 45TC(1) of the Act, as follows:
(1) A person is qualified for a pension bonus if:
(a)the person starts to receive an age service pension at or after the time when the person makes a claim for the pension bonus; and
(b)the person has not received an age service pension at any time before making a claim for the service 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 a carer payment); or
(ii) a social security benefit; or
(iii)a service pension (other than an age service pension or a carer service pension); or
(iv)income support supplement (other than income support supplement that is payable as a result of the operation of subclause 8(3) of Schedule 5);
at any time after the person’s special date of eligibility for an age service pension; and
(f)the person has not already received:
(i)another pension bonus;
(ii)a pension bonus within the meaning of the Social Security Act.
The Respondent has neatly summarised the Pension Bonus as “a once only, tax-free lump sum payment which is payable to a person who upon reaching the retirement age or the qualifying age, defers retirement and continues working for at least one year”.[11]
[11] Exhibit J1, Joint Hearing Book, Statement of Position of the Respondent, page 32, paragraph [24].
CONSIDERATION
The central issue for the Tribunal to consider is whether the Applicant is entitled to the Pension Bonus, and in particular whether the Applicant was eligible to be paid a Service Pension within the terms of s 45TC(1)(a) of the Act at the time he lodged his claim for a Pension Bonus at 13 November 2020, which required his total assets at this time to be under $583,000. [12]
[12] Exhibit J1, Joint Hearing Book, Statement of Position of the Respondent, page 42, paragraph [2].
The Respondent’s Statement of Position, dated 14 July 2023, sets out the background facts of this matter in chronological form. Having regard to that chronology, and the documents upon which it relies, the Tribunal is satisfied of the following facts:
(a)On 8 September 2009, the Applicant completed an application to Register with the Pension Bonus Scheme;
(b)On 11 December 2009, the Repatriation Commission confirmed that the Applicant and his partner had decided to register with Centrelink. Accordingly, their Pension Bonus Registrations with DVA had been withdrawn;
(c)On 16 March 2020, the Applicant retired or ceased working;
(d)On 9 November 2020, the Applicant completed an Application for payment of a Pension Bonus;
(e)On 11 November 2020, the Applicant completed a Claim for Service Pension;
(f)The Respondent received the Claim for Service Pension and the application for Pension Bonus on 13 November 2020;
(g)On 25 January 2021, a delegate of the Respondent decided that the Applicant was not eligible for payment of the Pension Bonus for the following reasons:
(i)the claim was not lodged within the required lodgement period – being 13 weeks after the date of retirement. The lodgement period ended on 15 June 2020, 13 weeks after the Applicant’s retirement on 16 March 2020; and
(ii)there was no Service Pension payable.
(h)On 27 January 2021, a delegate of the Respondent determined that the Applicant was not eligible for payment of a Service Pension as the value of the Applicant’s assets was above the threshold that would allow for payments. The Applicant’s assets needed to be below $538,000, but his assets were calculated to be $588,284.37. The calculation of the figure of $588,284.37 in assets was included in a letter to the Applicant dated 27 January 2021,[13] which was itemised as follows:
[13] Exhibit J1, Joint Hearing Book, Income/Assets Summary, page 157.
(i)‘Business’, with a value of $263,905.00;
(ii)‘Managed Investments’, with a value of $98,088.00;
(iii)‘Savings Bank Accounts’, with a value of $158,302.00;
(iv)‘Loans, Bonds and Debentures’, with a value of $26,000.00;
(v)‘Shares’, with a value of $3,989.37; and
(vi)‘Other Assets’, with a value of $38,000.
(i)On 16 March 2021, the Applicant’s accountant sought review of the determination dated 25 January 2021 for the following reasons:
1. “Special circumstances – COVID 19
During COVID-19 lockdowns, Mr Parker exercised caution by staying home as much as possible, in accordance with Commonwealth Government policy. It is unreasonable to be disqualified on the grounds that documentation was not completed within a certain time, during a pandemic, by someone who is over 90 years old. It is contrary to government policy to disregard Mr. Parker’s adherence to Commonwealth Government guidelines, of not leaving his home during the pandemic. For such a critical decision to lapse due to COVID lockdown, without special consideration is without care and grace for a veteran.
2. Working hours
Mr Parker managed and was a Director, Powershift Tractors (NSW) Pty Limited, which finally closed in 2020, having lost a large contract at the Kimbricki Waste Disposal Centre, on renewal of the contract, a tendering process. Mr Parker was working full-time from home, managing a fleet of earth-moving equipment (eighteen units), staff of between 10 and 12 (depending upon needs), ordering fuel, speaking to suppliers, negotiating disputes, authorizing payroll as though her were at an Office in Sydney. The hours worked exceeded 0 hours a week, even though attendance at the Centre may have been once a week.
3. Personal Assets
Included in the assets is the net equity of the Company at 30 June, 2020, totalling $263,905. An asset of the Company are shareholder advances of $288,534, Mr Parker, share of the loan is 50%, $127,757. Mr Parker withdrew $100,000 when the business closed, in anticipation the Company would be wound up within twelve months. The $100,000 is in his bank account. The net assets include this figure, so is double accounting the asset.
Mr Parker’s equity in the Company is 60% and Mr Kevin Mole’s is 40%. To include the total nets assets, when the full assets are not due to him, ignores Corporations Law.[14]
(j)On 26 April 2021, the Respondent affirmed the determination dated 25 January 2021 and the determination dated 27 January 2021.
[14] Exhibit R1, T-Documents, T16, Request for Reconsideration, pages 160-161.
In the course of these proceedings, the Respondent submitted that they no longer put in issue that the application for Pension Bonus was lodged outside the lodgement period. However, they consider that the Applicant does not meet the eligibility requirement to qualify for the Pension Bonus because the Service Pension was not payable to the Applicant at the time that he lodged his application for the Pension Bonus. Central to this issue is the calculation of the figure of $588,284.37 in assets and contention by the Applicant of apparent ‘double-counting’ of $100,000.
The Tribunal has noted the Loan Facility Agreement of 8 October 2020 between the Applicant and his former company,[15] and the Applicant’s declaration on 9 October 2020 that he was owed $100,000 by this company.[16] The Tribunal has also noted the email of Mr Scott Turner of Hedge and Associates dated 26 July 2023, the material parts of which read as follows:
[15] Exhibit R1, T-Documents, T8, Powershift Tractors Loan Facility Agreement, pages 64 – 77.
[16] Exhibit R1, T-Documents, T8, Claim for Service Pension – Private Company, page 110.
In an attempt to explain the “double counting” of the $100,000, I outline a scenario based on Rod’s position with the DVA.
· The company has paid $100,000 cash to a shareholder.
· The company accounts record it as an asset being a “shareholder loan”.
· The amount is receipted in the shareholder’s bank account.
· The shareholder has a personal liability to the company of $100,000 as the funds have been given as a loan.
· The company proceeds into liquidation, with a shareholder owing $100,000 to the company and there are no creditors.
· A liquidator is required to distribute funds to shareholders in accordance with the % of shares held.
· The distribution can be either cash or “in specie”. In this case it would be “in specie” as the shareholder owes money to the company, with no ability to repay the loan (unless his house is sold) and is owed money by the company.
· Therefore, the loan is offset against the equity distribution.
· As a result of the above, the shareholder has and only will receive one payment of $100,000. There is no basis for the DVA to count the payment to Rod and then say he will also have access to the assets of the company.[17]
[17] Exhibit J1, Joint Hearing Book, Email of Scott Turner, pages 50-51.
On 1 October 2021, Mr Pitt wrote to the Respondent addressing the reasons why the Applicant lodged his claim outside of the lodgement period. Materially, Mr Pitt also wrote:
The claim that Mr Parker has an asset in the company is misleading. The receivable listed in the Company balance sheet, at 30 June, 2020, is to Mr Parker and the other shareholder Mr K Mole. Accordingly, you cannot view Mr Parker, [as] having a benefit in the asset, of the Company (receivable), when the asset, in part, is himself, and it is payable by him. The term mutuality applies, it is not possible to create an asset and liability to yourself.[18]
[18] Exhibit J1, Joint Hearing Book, Letter of Charles Pitt, page 2.
Mutuality, as raised by Mr Pitt, is a form of set-off. It has been considered in relatively recent terms in Metal Manufactures Pty Limited v Morton [2023] HCA 1 at 6-8 where the majority consisting of Kiefel CJ, Gordon, Edelman and Steward JJ relied upon the decision of Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ in Gye v McIntyre (1991) 171 CLR 609 at 623 (‘Gye’) to explain “mutual dealing” in the following terms:
The first is that the credits, the debts, or the claims arising from other dealings be between the same persons. The second is that the benefit or burden of them lie in the same interests. In determining whether credits, debts or claims arising from other dealings are between the same persons and in the same interests, it is the equitable or beneficial interests of the parties which must be considered: see, eg, Hiley. The third requirement of mutuality is that the credits, debts, or claims arising from other dealings must be commensurable for the purposes of set-off under the section. That means that they must ultimately sound in money.
In his minority judgment in Metal Manufactures Pty Limited v Morton, at 25, Gageler J (who will succeed Kiefel CJ later this year) noted that the concept of mutuality “must be understood purposively within the statutory context in which it is employed”. To this end, it was open to the delegate to consider the loan to be an ‘unrealisable asset’ within the meaning of s 5L of the Act or the effect of an unsecured loan on the value of assets under s 52ZZU of the Act. The delegate made no such considerations, nor does the Tribunal see any such considerations arising on the evidence before it.
Consistent with the reasoning in Gye and Metal Manufactures Pty Limited v Morton, the facts in this matter surrounding the apparent double counting of the $100,000 loan indicate that:
(a)the credits, the debts, and the claims arising from other dealings are between the same persons; and
(b)the benefit or burden of the credits, the debts, and the claims lie in the same interests; and
(c)the credits, debts, and the claims arising from other dealings are ultimately sound in money.
Accordingly, the Tribunal is satisfied that there is no basis to count the $100,000 loan to the Applicant and then assert he will also have access to that same amount as an asset of his former company.
Taking these findings into account, the Tribunal is satisfied that the calculation of the figure of $588,284.37 on 27 January 2021 was incorrect and that the correct calculation was $488,284.37. It flows from this that the Applicant was eligible to be paid a Service Pension within the terms of s 45TC(1)(a) of the Act at the time he lodged his claim for a Pension Bonus on 13 November 2020, which required his total assets at this time to be under $583,000.
Accordingly, the correct decision is that the Tribunal set-aside the reviewable decision made by the delegate of the Respondent dated 26 April 2021. The Tribunal remits the matter with a direction that the Applicant was eligible to be paid a Service Pension within the terms of s 45TC(1)(a) of the Act at the time he lodged his claim for a Pension Bonus on 13 November 2020. The preferable course is that the Respondent assesses the Applicant’s application for a Pension Bonus against the remaining criteria and calculates any funds owing to the Applicant. Noting the Applicant’s age, the Tribunal trusts that this will occur expeditiously.
For completeness, an issue regarding Goods and Services Tax liabilities was raised during the hearing. It is unnecessary to make specific findings on this issue given the findings made above. Furthermore, the operation of s 56G of the Act would almost certainly preclude the Tribunal from making a favourable finding regarding this issue as of 13 November 2020.
DECISION
Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975 (Cth), the Tribunal sets-aside the reviewable decision made by the delegate of the Respondent dated 26 April 2021 and remits the matter with a direction that the Applicant was eligible to be paid a Service Pension within the terms of section 45TC(1)(a) of the Veterans’ Entitlement Act 1986 (Cth) at the time he lodged his claim for a Pension Bonus on 13 November 2020.
I certify that the preceding 25 paragraphs are a true copy of the reasons for the decision herein of Senior Member George
.............................[sgnd]..................................
Associate
Date of Decision: 5 October 2023 Date of Hearing: 7 September 2023 Representation for the Applicant: Mr R McCann
Vietnam Veterans, Peacekeepers and Peacemakers Association of AustraliaSolicitor for the Respondent: Ms B Audsley
Australian Government SolicitorANNEXURE A
26. EXHIBIT
DESCRIPTION OF EVIDENCE
PARTY
DATE OF DOCUMENT
DATE RECEIVED
DATE TENDERED
J1
Joint Hearing Book
R/A
Various
6/9/2023
7/9/2023
R1
T-Documents
R
Various
28/7/2023
7/9/2023
R2
Respondent’s Email to the Tribunal Comprising a Section of Legislation
R
7/9/2023
7/9/2023
7/9/2023
R3
Social Security and Veterans’ Affairs Legislation Amendment (Pension Bonus Scheme) Act 1998
R
N/A
6/9/2023
7/9/2023
Key Legal Topics
Areas of Law
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Administrative Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Judicial Review
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Procedural Fairness
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Remedies
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Statutory Construction
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Standing
0
2
0