Powell and Secretary, Department of Defence

[2016] AATA 1056

Powell and Secretary, Department of Defence [2016] AATA 1056 (21 December 2016)

Division	GENERAL DIVISION
File Number(s)	2016/0120
Re	Rodney Powell
APPLICANT
And	Secretary, Department of Defence
RESPONDENT

DECISION

Tribunal	Mr S. Webb, Member
Date	21 December 2016
Place	Canberra

The decision under review is affirmed.

........................................................................

Mr S. Webb, Member

Catchwords

DEFENCE – Defence home ownership assistance scheme – occupation of home - subsidy certificate – cessation of occupation of home prior to draw down of loan – date on which subsidy was payable - meaning of ‘first authorisation date’ – determination that subsidy was payable not documented – alleged maladministration and errors causing disadvantage – subsidy paid even though payability criteria not met – conditions in which subsidy stops being payable – meaning of ‘entitlement period’ and ‘monthly authorisation period’ - period of home occupancy – discretion to reduce period of home occupancy not exercised – date on which subsidy stops being payable – mandatory refusal to authorise continued payment of monthly subsidy – decision affirmed

PRACTICE AND PROCEDURE – jurisdiction – Defence home ownership assistance scheme – decision not the exercise discretion to shorten period of home occupancy – alleged maladministration and errors causing disadvantage - overpayment and recovery of subsidy – Tribunal jurisdiction confined to ‘external review’ of ‘internal review’ decision – no jurisdiction to review discretion in respect of home occupancy period, overpayment or recovery decisions

Legislation
Defence Home Ownership Assistance Scheme Act 2008, ss 3, 16, 27, 28, 32, 36, 39, 42, 44, 57, 67, 71, 76
Defence Force (Home Loans Assistance) Act 1990, s20A

Cases

Minister for Immigration and Multicultural Affairs v Al-Miahi [2001] FCA 744

REASONS FOR DECISION

Mr S. Webb, Member

21 December 2016

1. As a serving member of the Australian Army, Major Rodney Powell availed himself of home ownership subsidies provided in support of people in his position. Things did not go well, however. Soon after a new scheme came into effect, he received interstate posting orders. A Defence Signal led him to believe that he may still be eligible for subsidy. He applied for and was granted a subsidy certificate. He set in motion arrangements for a loan in order to meet the requirements for payment of subsidy. Delays occurred in the finalisation of arrangements for the loan and payment of subsidy, by which time he had taken up the new posting and he had ceased to occupy the home for which subsidy was sought. This notwithstanding, payment of subsidy was authorised and made.

2. Some years later, a delegate of the Secretary decided that subsidy was not payable and an overpayment had been made, which Major Powell repaid. He sought review of this decision, but the decision was confirmed. Unhappy with this result, he applied for external review.

3. At hearing, Major Powell represented himself. He informed me that he did not intend to give oral evidence despite being provided with an opportunity to do so.

   Issues

4. At the hearing, Major Powell explained that he was seeking reimbursement of the amount he repaid in respect of the alleged overpayment. He cavils with the Secretary’s decision not to exercise discretion to reduce the required period of home occupancy and he argues very strongly that he was disadvantaged by maladministration and errors committed by those administering the subsidy scheme and their agents. He informed me that he does not agree with the Secretary’s decision not to authorise continued monthly payments of subsidy.

5. The issues Major Powell has raised require careful consideration of the Defence Home Ownership Assistance Scheme Act 2008 (the 2008 Act) and the construction of relevant terms, and the Tribunal’s jurisdiction. As will appear, the Tribunal only has jurisdiction to review the Secretary’s decision not to authorise continued monthly payments of subsidy and it is necessary, therefore, to make the correct or preferable decision in respect of that issue.

   The 2008 Act and construction of terms

6. Operative provisions of the 2008 Act came into effect on 1 July 2008. Prior to this date, home ownership subsidies were available to eligible members of the Australian Defence Force under the Defence Force (Home Loans Assistance) Act 1990 (the 1990 Act).

7. By operation of s 20A of the 1990 Act, subsidy was not payable under both enactments:

   20A  Condition of payment of subsidy—subsidy under one scheme only

   (1) This section applies if subsidy (2008 Act subsidy) is, or has ever been, payable to a person under the Defence Home Ownership Assistance Scheme Act 2008.

   (2)  Subsidy is not payable on a loan to the person under this Act on or after the earliest day the 2008 Act subsidy became payable

8. As can be seen, home loan subsidy under the 1990 Act ended on the earliest day that subsidy became payable under the 2008 Act.

9. In order to determine when subsidy is ‘payable’ under the 2008 Act it is necessary to consider the terms of s 28 –

   28  Entitlement—criteria

   When subsidy becomes payable

   (1)  Subsidy becomes payable to a subsidised borrower in relation to a loan to the borrower if:

   (a)  the loan is made by a declared loan provider; and

   (b)  the loan is secured by a mortgage over an interest (including a leasehold interest) in land; and

   (c)  the conditions under Subdivision B are met.

   (2)  Subsidy becomes payable to a subsidised borrower with effect from the beginning of the monthly authorisation period during which subsection (1) starts to apply in relation to the borrower.

   When subsidy continues to be payable

   (3)  After subsidy becomes payable to a subsidised borrower, monthly subsidy continues to be payable to him or her during a continuous period (an entitlement period) until it stops being payable under section 36, subject to section 44 (revocation of authorisation of payment of subsidy).

   Note 1:       If subsidy is payable to a person, the person is a subsidised borrower (see section 3).

   Note 2:       If payment of subsidy is suspended under section 61 because of a subsidised borrower’s death, the suspension does not break the continuity of the entitlement period.

   Note 3:       If the Secretary revokes an authorisation under section 44 in relation to an entitlement period, subsidy is taken never to have been payable during the period.

10. For reasons that will appear, it is important to note the meaning given to the term ‘entitlement period’ – a continuous period in which subsidy continues to be payable.

11. Thus, the earliest date on which subsidy under the 2008 Act is payable is the beginning of the ‘monthly authorisation period’ in which a loan of the required kind is ‘made’ and the conditions under Subdivision B are met.

12. The term ‘monthly authorisation period’ is given meaning by s 57(3), which provides –

    (3)  The monthly authorisation period begins at the start of a day of one month, and ends immediately before the start of a day (the authorisation day) of the next month, as worked out in accordance with:

    (a)  if, for the purposes of section 81, a senior employee of an authorised Commonwealth contractor is performing the Secretary’s functions under this Division under a delegation—the agreement mentioned in subsection 81(3); or

    (b)  in any other case—a determination made by the Minister for the purposes of this section.

13. Subdivision B of Part 4 of the 2008 Act sets out the criteria for determination of subsidy payability. The following provisions apply in Major Powell’s case –

    29  When subsidy becomes payable—eligibility and service credits

    The following conditions must be met:

    (a)  a subsidy certificate held by the subsidised borrower must be in force;

    (b)  the subsidised borrower must have a service credit under section 46.

    Note:          Immediately after the first authorisation day for the subsidy, the subsidy certificate stops being in force (see section 22). If subsidy stops being payable (under section 36), the subsidised borrower can only again become entitled to subsidy under this Division if he or she is given a new subsidy certificate.

    30  When subsidy becomes payable—use of subsidised loan

    (1)  The Secretary must be satisfied that the subsidised loan is used, or is to be used, to do one of the following:

    (a)  to buy the interest in land, if there is a house on the land;

    …

    32  When subsidy becomes payable—occupation of house as a home (non-building loan)

    Scope

    (1)  This section applies if the subsidised loan is:

    (a)  for the purpose covered by paragraph 30(1)(a) (to buy a house and land), or to discharge another loan for that purpose; and

    (b)  not for the purpose of building work, or to discharge another loan for that purpose.

    Subsidy condition

    (2)  The Secretary must be satisfied that the subsidised borrower, or a dependant of the subsidised borrower, occupies a house on the land as a home.

    Note 1:       This condition need only be satisfied for the first year after the first authorisation day for the subsidy (see section 39).

14. Where these conditions apply but are not met in the particular circumstances, subsidy under the 2008 Act is not payable.

15. The term ‘first authorisation day’ is defined in s 3 in the following terms –

    3  Definitions

    In this Act:

    …

    first authorisation day, for subsidy that is payable during an entitlement period, means the first authorisation day after subsidy becomes payable for the entitlement period.

    Note:          For the definition of authorisation day, see section 57. The authorisation day is at the end of a monthly authorisation period (as defined in section 57). Subsidy becomes payable from the beginning of the first monthly authorisation period during which section 28 starts to apply.

    …

16. Major Powell asserts that the term ‘first authorisation day’ is ambiguous and he urged me to construe it most beneficially as the day on which loan approval was given. He says this occurred on 18 December 2008.

17. There are several flaws in this reasoning. Firstly, the term is defined in s 3. I can understand his difficulty understanding what it means, as the interlaced provisions of the 2008 Act are somewhat confusing and the language is dense. To properly determine the ‘authorisation day’ in a month in a particular case, reference to the Ministerial determination under s 57(3) is required. But this is not necessary to understand the meaning of the term. It is the first ‘authorisation day’ after subsidy becomes payable under s 28 of the 2008 Act.

18. Payment of subsidy is subject to authorisation by the Secretary under s 27 –

    27  Entitlement—authorisation by Secretary

    Authorisation of initial payment

    (1)  The Secretary must authorise the payment of subsidy to a person if subsidy becomes payable to the person under subsection 28(1).

    Note:          An authorisation under this subsection may be revoked under section 44. In certain circumstances related to membership of the Reserves, the authorisation may be varied under section 45.

    (2)  The Secretary:

    (a)  must refuse to authorise the payment of subsidy to a person under subsection (1) if subsidy has not become payable to the person under subsection 28(1); and

    (b)  despite subsection (1), may refuse to authorise the payment of subsidy to a person under that subsection if, in relation to a previous entitlement period:

    (i)  the person failed to comply with section 42 (which deals with the disclosure of changes of circumstances); or

    (ii)  the Secretary has revoked an authorisation of the payment of subsidy to the person under section 44.

    Note:          Part 5 provides for the administrative review of a decision to refuse to authorise the payment of subsidy.

    Authorisation of continuing monthly payments

    (3)  The Secretary must (on a monthly basis) authorise the continued payment of monthly subsidy to a person while subsidy continues to be payable to the person under subsection 28(3).

    Note:          Monthly subsidy is paid to the subsidised borrower’s loan provider on a monthly basis (by a payment into the borrower’s subsidised loan account for the borrower’s benefit) under Division 4.

    (4)  The Secretary must refuse to authorise the continued payment of monthly subsidy to a person if subsidy stops being payable to the person under section 36.

    Note:          Part 5 provides for the administrative review of a decision to refuse to authorise the continued payment of monthly subsidy.

19. The use of the word ‘must’ signifies the mandatory nature of these provisions, subject only to the discretion conferred by s 27(2)(b). The payability of subsidy is an ongoing criterion for authorisation of continuing monthly payments; where subsidy stops being payable, authorisation of continued monthly payment of subsidy must be refused.

20. Circumstances in which subsidy stops being payable are set out in s 36, which relevantly provides in respect of the issues raised in this case –

    36  When subsidy stops being payable—general

    Subsidy stops being payable to the subsidised borrower, in relation to the entitlement period:

    (a)  if an event mentioned in an item in the following table occurs; and

    (b)  with effect from the start of the monthly authorisation period in which the critical time provided for that item occurs.

When subsidy stops being payable
Item	Event	Critical time
…
6	The Secretary is satisfied that the condition under section 39 or 40 (relating to occupation of the house) is not met	As soon as the condition is not met
8	The Secretary is satisfied that the condition under section 42 (relating to the disclosure of changes of circumstances) is not met in relation to an event	At the earlier of the following times: (a) the time the subsidised borrower becomes aware of the event; (b) the constructive knowledge time mentioned in subsection 42(3)
10	Authorisation for the payment of subsidy to the subsidised borrower is revoked in accordance with a notice given by the Secretary under subsection 44(2)	When subsidy first became payable

Note:          The Commonwealth may recover, as overpayments, any subsidy paid to a subsidised borrower after subsidy has stopped (or is taken to have stopped) being payable to him or her (see Division 6).

1. At this point I should say that while issues relating to the disclosure obligation of Major Powell under s 42 and the reference in the primary decision[1] to revocation under s 44 were discussed, these matters were not pressed.

   [1] T5.

2. The key issue in dispute is the condition applying to home occupancy under s 39 –

   39  When subsidy stops being payable—occupation of house as a home (non-building loan)

   Scope

   (1)  This section applies if the subsidised loan is:

   (a)  for the purpose covered by paragraph 30(1)(a) (to buy a house and land), or to discharge another loan for that purpose; and

   …

   Subsidy condition

   (2)  At any time during the period covered by subsection (3), the subsidised borrower, or a partner or dependant of the subsidised borrower, must occupy a house on the land as a home.

   (3)  This subsection covers the period:

   (a)  starting on the first authorisation day for the subsidy; and

   (b)  ending:

   (i)  1 year after that day; or

   (ii)  if the Secretary is satisfied that there are service requirements, or exceptional circumstances, justifying a shorter period of occupation—at an earlier time approved by the Secretary in writing.

3. As can be seen, subsidy stops being payable if the 12 month occupancy rule is not met, subject only to the Secretary approving a shorter period if there are service requirements or exceptional circumstances to justify doing so.

4. Should an overpayment of subsidy occur under s 66, the overpaid amount may be recoverable from the subsidised borrower, the debtor, under s 67, or from the subsidised loan account under s 68.

5. Provision is made under s 71 for ‘internal review’ of certain decisions –

   71  Internal review—reviewable decisions

   Each of the following decisions is a reviewable decision:

Reviewable decisions
Item	Decision	Provision under which decision is made
1	To refuse to consider an application for a subsidy certificate	Subsection 15(2)
2	To refuse to give a subsidy certificate	Subsection 16(3)
3	To vary a subsidy certificate	Subsection 24(1)
4	To cancel a subsidy certificate	Section 25
5	To refuse to authorise the payment of subsidy	Subsection 27(2)
6	To refuse to authorise the continued payment of monthly subsidy	Subsection 27(4)
7	In a notice under section 43, to state a day for subsidy to stop being payable to a person that is later than the day requested by the person	Subsection 43(3)
8	To revoke an authorisation of the payment of subsidy	Subsection 44(2)
9	To vary an authorisation of the payment of subsidy (when this Act applies as if a subsidised borrower has not been a member of the Reserves)	Subsection 45(2)
10	To determine the end of a period of warlike service	Subsection 48(3)
11	To recover a due amount in the way provided by section 68	Subsection 68(1)
12	To refuse to extend the time for making an application for review of a decision	Subsection 74(3)
13	A decision under the regulations that is declared by the regulations to be a reviewable decision for the purposes of this section	The provision of the regulations under which the decision is made

1. No provision is made for internal review of any other decision. From this it follows that a decision in respect of reducing a home occupancy period under s 39, the amount of an overpayment under s 66, or recovery of an overpayment from a debtor under s 67 is not capable of internal review under s 71. Absent other mechanism for review, administrative decisions of those kinds may be capable of judicial review under the Administrative Decisions (Judicial Review) Act 1977.

2. Provision is made under s 76 for ‘external review’ by the Administrative Appeals Tribunal of an ‘internal review’ decision, but not otherwise.

   Jurisdiction

3. From this it follows that the jurisdiction conferred upon the Tribunal by operation of s 76 is confined to review of an ‘internal review’ decision. This means that the Tribunal’s jurisdiction is confined to the species of primary decision that are capable of ‘internal review’, as set out in the Table in s 71.

4. The Tribunal is not a court, and it does not exercise power at large. As a creature of statute, its jurisdiction is conferred by legislation and enlivened by application.

5. In Major Powell’s case, the only aspect of the issues raised that is capable of external review by the Tribunal, is the internal review decision,[2] affirming the primary decision on 13 July 2015 to refuse authorisation for continued monthly payment of subsidy.

   [2] T3.

6. That being so, as I informed Major Powell during the hearing, the Tribunal has no jurisdiction or power to review decisions relating to reduction of the occupancy period under s 39(3), overpayment under s 66, or recovery of an overpayment under s 67. Furthermore, the Tribunal has no jurisdiction or power to determine issues relating to the alleged maladministration, errors and resulting disadvantage about which Major Powell is most upset. I am unable to resolve those issues or to provide the relief he seeks.

   Authorisation of continued monthly payments of subsidy

7. In order to resolve the issue of authorisation of continued monthly payment of subsidy for the purposes of s 27, it is necessary to set out the brief relevant facts arising from the present evidence (about which there is no dispute).

8. Major Powell and his wife purchased and occupied the family home at Cranbrook in Townsville in 2006.

9. On 25 August 2008 he received a posting order requiring him to relocate from Lavarack Barracks at Townsville to RAAF Williams outside Melbourne in Victoria.[3]

   [3] T8 folio 53.

10. In September 2008, a Defence Signal was issued in respect of ‘service requirements’ and the discretion to shorten the home occupancy requirement under the 2008 Act.[4] Major Powell believed that this allowed him to obtain a home ownership assistance subsidy under that Act.

    [4] T10 folios 62-63.

1. He applied for and was issued a ‘subsidy certificate’ on 8 October 2008.[5] His application for a subsidy certificate contained a declaration that Major Powell signed. As will appear, the information and the declaration he provided in this document are relevant to assessment of his eligibility for payment of subsidy.

   [5] T13 folio 91.

2. Major Powell set about making arrangements with the Defence Force Credit Union (the Credit Union), a ‘declared loan provider’, for a loan of the requisite kind. What then occurred is a matter of concern. Lawyers representing the Credit Union, MacGillivrays, confirmed approval of a loan (number 3862850) on 18 December 2008.[6] Unfortunately, incorrect loan documentation was attached to this letter – the documents related to a different loan offer by a different lender (Perpetual Trustees Corporation Limited (Perpetual)) to different borrowers at a different address in a different amount.[7] On 18 March 2009, MacGillivrays provided Major Powell with replacement loan documentation that was again incorrect, this still cited Perpetual as the lender. It was not until 9 April 2009 that correct loan documentation was provided.

   [6] T7 folio 39.

   [7] Ibid. folios 41-42.

3. On 19 January 2009, Major Powell took up his posting in Victoria, having sometime before ceased to occupy the family home at Cranbrook.

4. This notwithstanding, on 29 June 2009 Major Powell was notified that “monthly subsidy payments under the defence Home ownership Assistance Scheme will commence on 3 August 2009. This will be your DHOAS payment for the month of July”.[8]

   [8] T12 folio 89.

5. Years later, following disclosure of information by Major Powell in the context of a fresh application for a subsidy certificate, a decision was made on 15 July 2015, that subsidy was not payable in respect of his Cranbrook property and that the period of occupancy would not be reduced. Furthermore, an overpayment was raised against Major Powell, which he duly repaid. The terms of this decision are somewhat opaque. Nevertheless, it purports to revoke authorisation of subsidy under s 44, and concludes that continued monthly payment of subsidy is refused.

6. These matters were subject to internal review. While the internal review decision is also somewhat difficult to follow and short on detail, it is quite clear that the decision maker affirmed the decision under s 27(4) of the 2008 Act.

7. At hearing, counsel for the Secretary informed me that no determination or declaration of the payablility of Major Powell’s subsidy in 2009 was made or retained, and the only proof that the matter was decided is in the resulting payment from July 2009.

8. If this is correct, it is a disturbing state of affairs. It would be of great concern that public money would be paid out without, first, a proper assessment of Major Powell’s entitlement to payment of the subsidy and the decision maker reaching a state of satisfaction that the subsidy was payable, and second, creation of appropriate documentation and records, setting out the decision and the reasons for it.

9. Determination of payability of subsidy lies at the heart of the defence home ownership assistance scheme provided by the 2008 Act. This is a jurisdictional fact in a matter of this kind that would be better established by direct evidence than by inference, and it cannot be assumed. Furthermore, for an inference of this kind to be drawn, it must be logical and supported by evidence that does not reasonably admit a different conclusion.[9]

   [9] See Minister for Immigration and Multicultural Affairs v Al-Miahi [2001] FCA 744 at [34], for example.

10. It is to avoid difficulties of this kind that proper documentation of administrative decisions should be recorded, including the facts found and the materials or information on which these are based, and some statement of reasons, however brief, for conclusions reached under the applicable legislation.

11. In this instance, the present evidence reasonably admits only one logical conclusion – the Secretary relied on the information provided by Major Powell in the Application for a Subsidy Certificate when assessing whether subsidy was payable. As will appear, contrary to Major Powell’s submission, I am satisfied that is what occurred.

12. I understand that Major Powell believed the Defence Signal issued in September 2008 enabled him to qualify for and obtain subsidy. I also note his submission that his attempts to obtain or to provide further information about the subsidy scheme were unsuccessful. Whether Major Powell attempted to provide notification of his changed circumstances prior to July 2009 is not clearly established. Even if he did make such efforts, as he alleges, those efforts failed – on the available materials, no such information was received and recorded by those administering the defence home ownership assistance scheme.

13. There is no evidence before the Tribunal to suggest that, prior to subsidy being paid as of July 2009, Major Powell provided any further information of relevance beyond that set out in the Application for a Subsidy Certificate he signed on 24 September 2008, which appears to have been received by the Department of Veterans Affairs’ on 7 October 2008.[10]

    [10] T14 folios 94-102.

14. This is an important document for two reasons. The information set out on the cover page describes the mechanism for payment of subsidy under the heading ‘How to access DHOAS subsidy’.[11] As can be seen, this does not expressly include a further decision-making step in relation to the assessment of payability, although that is implied. Perhaps more important is the acknowledgement Major Powell gave in the declaration he signed –

    “I acknowledge that I must give notice of a change in the information given in this form that may affect my eligibility under the DHOAS.”[12]

    [11] Ibid, folio 94.

    [12] Ibid, folio 102.

15. Two consequences flow from this. Firstly, in all likelihood, it is Major Powell’s failure (for whatever reason) to provide notice of the change in his circumstances at the time that underlies the overpayment of subsidy to him – subsidy was paid on the basis of information he provided when seeking a subsidy certificate. Secondly, if that is correct, the failure to notify is a relevant matter to have regard to under s 36, specifically item 8 of the Table set out in s 36(1) with reference to the condition for stopping payment of subsidy under s 42.

16. As will appear, these considerations do not change the result of Major Powell’s application. By any measure, when the Secretary decided to refuse authorisation for continued monthly payment of subsidy on 13 July 2015, subsidy was not then payable and it had not been since the ‘critical time’ specified in respect of Item 6 in the Table set out in s 36(1), or conceivably under Item 8 in that Table. Both of these ‘critical time’ dates turn on the date Major Powell ceased to occupy the home at Cranbrook in January 2009, whereupon he failed to notify the Secretary of the change in his relevant circumstances.

17. For this reason, alone, his application cannot succeed. The conditions precent to stopping payment of subsidy under s 39(3) and s 42(2)s are made out on the balance of probabilities as of a date on or about 19 January 2009. It follows that the terms of s 36(1) are satisfied and s 27(4) operates with mandatory effect, such that authorisation of continued monthly payment of subsidy must be refused from 15 July 2015.

18. This means that the decision under review must be affirmed.

19. In closing, I should say that Major Powell’s arguments in respect of the circumstances that pertained to him believing he was entitled to subsidy are not persuasive. Even if I accept that he believed the Defence Signal issued in September 2008 provided a firm basis for him to obtain subsidy on the basis of a reduced period of occupancy, he was obliged to notify the Secretary or the Department of Veterans’ Affairs of the change in his relevant circumstances as of on or about 19 January 2009. Even if his efforts to communicate with those administering the scheme were frustrated for some reason, he could have satisfied the notification obligation he was under, pursuant to the declaration he made, in writing. The present evidence does not establish that this occurred.

20. The fact that errors were made in the processing or administration of his loan approval does not change this obligation, or the result of these proceedings.

21. Clearly enough, as I have said, Major Powell is aggrieved by these matters and the disadvantage he asserts. Whether there are grounds for other remedies to his grievances, such matters are not for me to determine. He has been informed of his options by those representing the Secretary, and those are matters for him to consider.

    Decision

22. The decision under review is affirmed.

I certify that the preceding 57 (fifty -seven) paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member

........................................................................

Associate

Dated 21 December 2016

Date(s) of hearing	16 December 2016
Applicant	In person
Solicitors for the Applicant	Minter Ellison