Peers and Repatriation Commission

[2009] AATA 681

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 681

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/4818

VETERANS' APPEALS DIVISION		)
Re		ALAN PEERS

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal Ms Naida Isenberg, Senior Member
Ms Jill Toohey, Senior Member

Date9 September 2009

PlaceSydney

Decision The decision under review is affirmed.

....................[Sgd]....................

Ms Naida Isenberg
  Presiding Member

CATCHWORDS

VETERANS’ AFFAIRS – service pension – applicant also in receipt of a superannuation pension – Undeducted Purchase Price applicable – service pension increased – date of effect of favourable determination – whether applicant notified Department of Undeducted Purchase Price – whether Department under duty of care to ensure correct pension entitlements paid – decision under review affirmed.

Veterans’ Entitlements Act 1986 (Cth) ss 54, 56C, 56G, 56G(2), 56G(3)

Beadle v Director-General of Social Security (1985) 7 ALD 670

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Murray and Repatriation Commission [1994] AATA 225

REASONS FOR DECISION

9 September 2009 Ms Naida Isenberg, Senior Member
Ms Jill Toohey, Senior Member    

background

1.      Alan Peers retired from his position with the Sydney Water Board on 18 August 1992. On 25 November 1992, the Repatriation Commission (‘the Department’) granted him a service pension with effect from 12 November 1992.  At the time, he was not receiving superannuation.

2.      On 2 July 1993, the Department received a letter and supporting documentation from Mr Peers advising that he had been granted a fortnightly pension from the State Superannuation Fund (‘SSF’) with effect from 8 June 1993.  Accordingly, the Department reduced his service pension with effect from 5 August 1993.  Since then, the Department has reviewed and adjusted Mr Peers’ service pension from time to time as his circumstances have changed.

3.      Depending on the circumstances, a pension from a superannuation fund may include an Undeducted Purchase Price (‘UPP’), the amount of which is tax deductible.  The effect of a UPP is to increase the amount a person may earn before their service pension is reduced.

4.      Legislative amendments which came into effect on 1 July 2007 led to a data-matching exercise by the Department and the SSF of their records of UPPs for veterans in receipt of a superannuation pension.  On 23 October 2007, the Department learned that, whereas SSF had a record of a deductible amount for Mr Peers, the Department did not.

5.      On learning of the deductible amount applicable to Mr Peers’ superannuation pension, the Department recalculated his service pension entitlement and determined that he was entitled to an increase in his service pension of $12.48 per fortnight.

6.      On 6 August 2008, the Department wrote to Mr Peers advising him that his service pension had been increased with effect from 23 October 2007, being the date on which it had learned of the UPP applicable to his superannuation pension.

7.      On 15 August 2008, Mr Peers wrote to the Department asking it to review its decision.  He maintained the increase should take effect from 8 June 1993 when he started receiving a superannuation pension, and said he had informed the Department of the UPP at that time.  On 2 October 2008, the Department affirmed its decision of 6 August 2008.  Mr Peers seeks review of the Department’s decision.

issues

8.      The issue for the Tribunal is whether the increase in Mr Peers’ service pension should take effect from 23 October 2007 or some earlier date.

9.      In determining this issue, the Tribunal must consider:

i.whether Mr Peers notified the Department of the UPP and, if so, when;

ii.if Mr Peers did not notify the Department of the UPP, whether the discretion in subsection 56G(3) of the Veterans’ Entitlements Act 1986(Cth) (‘the VE Act’) should be exercised in his favour so that the increase in his service pension is back-dated.

relevant legislation

10. Section 56C of the VE Act provides that, subject to an exception which is not relevant here, if the Commission is satisfied that the rate at which a service pension is being paid is less than that provided for by the Act, the Commission must determine that the pension be increased to the rate specified in the determination.

11. The date of effect of the favourable determination under section 56C is to be worked out in accordance with section 56G.

12. Subsection 56G(2) provides that a favourable determination made after a person has advised the Department of a change in circumstances, and where the change is not a decrease in the rate of the person’s maintenance income, takes effect on the day on which the advice was received or on the day on which the change occurred, whichever is the later.

13. Subsection 56G(3) provides that, in any other case, the favourable determination takes effect on the day on which it was made or on such later day or earlier day as is specified in the determination.

14. Pursuant to section 54 of the VE Act, the Secretary may require a person to notify any changes in their circumstances.

did mr peers advise the department of the upp?

15. The Department accepts that, if Mr Peers did notify it of the UPP, then he is entitled by virtue of subsection 56G(2) to back payment to the date of notification. However, the Department maintains that Mr Peers did not notify it of the deductible amount in his superannuation pension and says it only came to light on 23 October 2007 following the data-matching exercise.

16.     Mr Peers gave evidence that he advised the Department in July or August 1993, and again in September 1994, of the UPP. He says he wrote to the Department three times in mid-1993 about his superannuation.  The first letter, sent in early June 1993, was to advise the Department that he intended applying for a superannuation pension.  The second letter, dated 29 June 1993, advised the Department that the SSF had agreed to pay him a pension as of 8 June 1993.

17.     Mr Peers says he sent a third letter within several days of the second.  It was prompted by a chance meeting with another veteran who told him he would be entitled to a UPP and that he should notify the Department about it.  Mr Peers says that, immediately following this meeting, he visited the office of the SSF administrator where an officer calculated his UPP entitlement and advised him of it orally.  That night, he wrote to the Department to advise of the amount of the UPP.  He did not receive a reply.  He did not ask the SSF for written confirmation of the UPP and he did not follow up with the Department but he assumed that the matter was in hand.

18.     In September 1994, Mr Peers says, he wrote to the Department for the fourth time in connection with his superannuation.  This time he forwarded a copy of a letter dated 8 September 1994, which he had received from the Australian Taxation Office (‘the ATO’). The letter, which is headed “Income Tax: Undeducted Purchase Price/Annuity Rebate”, advised:

You are entitled to a deduction for the Unused Undeducted Purchase Price of your superannuation pension, as calculated below.

and, further:

A rebate is also allowable on the assessable portion of the pension.

19.     Mr Peers says he sent a copy of this letter to the Department within a day or two of receiving it, with a handwritten covering note; he did so as a courtesy and by way of information.  He did not receive a reply and he did not expect one as he assumed the UPP was already being taken into account in assessing his pension.

20.     The copy of the ATO letter dated 8 September 1994 submitted in evidence bears a number of handwritten notations made by Mr Peers.  One notation reads:

Tax pack item 31, other deductions

21.     Mr Peers gave evidence that this and other notations reflected his conversation with a Mr Taylor, an officer identified in the ATO letter whom he telephoned to clarify the calculation of his UPP.  He says the particular notation refers to Mr Taylor’s advice about where on a tax return to include the UPP.

22.     The only one of Mr Peers’ letters on the Department’s file is the second, dated 29 June 1993, in which he advised he had been granted a superannuation pension.  He recently inspected his files pursuant to the Freedom of Information Act1982 (Cth) and he confirms that none of the other three letters is on file.  Mr Peers offered several possible explanations for this, related to inefficiency or worse on the part of the Department, including suggesting that the Department had kept the only one of his letters that resulted in his service pension being decreased; each of the others would have resulted in his pension being increased.

23.     Mr Peers gave evidence that he kept copies of all his correspondence with the Department, including the relevant letters, but that the volume of correspondence was such that, in 1995, he discarded most of it; as he was not having any problems with the Department at the time and assumed the UPP was in hand, he had no reason to keep copies of these particular letters.

24.     The Department submits that the reason only one of the letters is on its file is that Mr Peers did not send the others; in particular, he did not send either letter concerning the UPP.

25.     We note that, in a letter dated 13 August 2008 seeking review of the Department’s primary decision, Mr Peers stated:

As a matter of fact, I notified the Department, of my receipt of a State Super Pension, and the amount I received, on the same day that I advised the Department of my deductible amount, which is also known as the UPP, and is the same amount each year (Mr Peers’ underlining).

26.     Attached to the letter dated 29 June 1993, in which Mr Peers advised the Department that he had been granted a superannuation pension, were a letter from the Water Board, an Employment Separation Certificate and a letter from State Super. None of these documents refers to the UPP.

27.     Also in evidence is an Income and Assets Statement submitted to the Department by Mr Peers in early 1995 following his separation from his wife.  Question 8 on that form asked if he was receiving superannuation, worker’s or other compensation or other pension.  He indicated he was receiving superannuation in the form of a pension.  Immediately under this question, the form instructs as follows:

If you are currently receiving a pension from a superannuation fund, in respect of which you receive a tax deduction, please include a copy of your latest tax return.

28.     Mr Peers did not include a copy of his latest tax return.  His responses when cross-examined about this were not easy to follow.  He told the Tribunal the form was about his separation from his wife and, in any event, in his opinion, he was not receiving a ‘tax deduction’ as specified in the form.  He conceded that the UPP was reflected in his tax return but he “left it to the ATO to do the calculations”.

29.     It is not at all clear why Mr Peers did not send the Department his tax return in 1995 as requested.  He had every reason to advise the Department of something that would operate in his favour.  It is difficult to reconcile his explanation that he was not, in his opinion, receiving a tax deduction, with the letter from the ATO dated 8 September 1994 advising in clear terms that he was entitled to a deduction, or with his notations on the letter.

30.     A large bundle of letters from the Department to Mr Peers between 1992 and 2008 is in evidence.  The letters advise about adjustments to his pension and many refer to advices from Mr Peers about changes in his circumstances.  He submits, and we accept, that he takes seriously his obligation to notify the Department of changes affecting his pension entitlement.  However, to accept that he notified the Department about the UPP would entail a finding that three letters about his superannuation, two of them specifically about the UPP, were lost in the post, lost or mislaid within the Department or, as Mr Peers suggested in his evidence, deliberately misplaced by the Department.  Had only one letter gone astray, we may have been prepared to afford him the benefit of any doubt.  However, we do not accept that, of all the advices he sent to the Department over the years, only those on which he seeks to rely went astray.

31. On balance, we are not satisfied that Mr Peers notified the Department of the UPP in 1993 or 1994. It is possible that he was mistaken and under a misapprehension that the Department was aware of the UPP. We do not suggest that he is being untruthful, but the weight of the evidence is against him. It follows that subsection 56G(2) of the VE Act does not apply in this case.

should the discretion in s 56G(3) be exercised in mr peers’ favour?

32. Mr Peers’ advocate relied solely on subsection 56G(2) and the claim that Mr Peers notified the Department of the UPP in 1993 and 1994. He did not press any argument about the exercise of the discretion in subsection 56G(3), however, the Department conceded that the discretion is available in a case such as this (see Re Murray and Repatriation Commission [1994] AATA 225 at [15]), and it is appropriate for the Tribunal to consider how, if at all, it should be exercised. The VE Act gives no guidance in this regard.

33.     In Beadle vDirector-General of Social Security (1985) 7 ALD 670, the Federal Court upheld a decision of the Tribunal in which the Tribunal observed that an expression such as ‘special circumstances’ is by its nature “incapable of precise or exhaustive definition” but looks to circumstances that are “unusual, uncommon or exceptional” and depend on the context in which they occur: Re Beadle and Director-General of Social Security (1984) 6 ALD 1.

34.     The Federal Court said:

It would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase ‘special circumstances’, although lacking precision, is sufficiently understood in our view not to require judicial gloss.

35. Subsection 56G(3) does not, itself, refer to ‘special circumstances’. However, it is implicit in a discretion that something about the particular case takes it out of the ordinary.

36.     The obligation to inform the Department of his circumstances was on Mr Peers.  He was aware of the obligation.  He was also aware of the existence of the UPP and that it was of benefit to him. There may have been room for misunderstanding about the UPP but there is nothing to suggest that Mr Peers was misled by advice from the Department or anyone else.  Even if he believed the UPP was being taken into account already, he had only to comply with the instruction in the Department’s Income and Assets form to include a copy of his latest tax return for it to come to light immediately.  He has not offered any satisfactory explanation for failing to notify the Department in 1993 and, in particular, in 1994 when he received the ATO advice.

37. We cannot find anything out of the ordinary or uncommon about Mr Peers’ circumstances such that the discretion in subsection 56G(3) should be exercised in his favour.

38. Finally, in both written and oral submissions, Mr Peers maintained that the Department is under a duty of care to ensure that veterans receive their correct pension entitlement. We understand this submission to be that a duty exists regardless of whether Mr Peers notified the Department and that the discretion in subsection 56G(3) should be exercised in his favour.

39.     In support of this submission Mr Peers says the Department knew, or should have known, about the UPP because every veteran in receipt of a superannuation pension is entitled to a UPP.  If this were so, and the Department had failed in its duty, it might be grounds for exercising the discretion in Mr Peers’ favour.

40.     The Department disputes that such a duty of care exists and says, in any event, the submission is based on an incorrect assumption. The Department states that a person’s entitlement to a UPP depends on a range of factors including the rules governing their superannuation scheme, taxation laws applicable at different times of their membership and the type of superannuation pension.

41.     The Department submits that the majority of veterans in receipt of defined benefit superannuation incomes are not entitled to a deductible amount and so it has always required veterans to declare whether they are entitled to a UPP.  It submits that, as advised in December 2008, approximately 39% of all NSW State Superannuation pension recipients who were also veterans were entitled to a UPP and “historically” only 20% have had UPPs.

42.     It is not clear on what basis in law the duty is said to arise but we do not accept that any duty of care owed by the Department in respect of pension entitlements extends to shifting the onus to notify changes in circumstances from the recipient to the Department.

decision

43.     For these reasons, we affirm the decision under review.

I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Ms Naida Isenberg, Senior Member and Ms Jill Toohey, Senior Member

Signed: .........................[Sgd].............................
  Associate: Jennifer Wong

Date of Hearing  27 August 2009 
Date of Decision  9 September 2009
Advocate for the Applicant       Mr B Billing
Counsel for the Respondent     Mr G.L. Purcell