Re Polchow and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2011] AATA 224
•5 April 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 224
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/2925
GENERAL ADMINISTRATIVE DIVISION ) Re KARL POLCHOW and
CHRISTA POLCHOWApplicants
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr Egon Fice, Senior Member Date5 April 2011
PlaceMelbourne
Decision The Tribunal affirms the decision of the Social Security Appeals Tribunal dated 4 June 2010. ............[sgd] Egon Fice.................
Senior Member
SOCIAL SECURITY – pension bonus scheme – age pension – work test – special circumstances – five bonus periods – 13 week limit – gainful work – domestic duties – record-keeping – rental property – evidentiary certificate
Administrative Appeals Tribunal Act s 37
Social Security Act 1991 ss 92T, 92T(2), 92T(4), 92U, 92U(e), 92V, 92X, 92X(1), 92Y, 92Z, 93, 93A, 93B, 93C, 93C(1), 93C(3), 93E(5), 93E(6), 93E(7)
Social Security (Administration) Act 1999 ss 21(2), 21(3), 22, 22(2), 23, 23(1)
Beadle v Director-General of Social Security (1985) 7 ALD 670
Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277
Groth v Secretary, Department of Social Security (1995) 40 ALD 541
Senate Community Affairs Legislation Committee, Consideration of legislation referred to the committee, Social Security and Veteran’ Affairs Legislation Amendment (Pension Bonus Scheme) Bill 1998 (May 1998)
Chambers 21st Century Dictionary, 1999, reprinted 2004
The Shorter Oxford English Dictionary (3rd ed as at 1983) vol 1
REASONS FOR DECISION
5 April 2011 Mr Egon Fice, Senior Member 1.
Mr and Mrs Polchow lodged an application for the age pension and pension bonus on 18 March 2009. This was despite the fact that Mrs Polchow reached pension age on 5 August 1999 and Mr Polchow reached pension age on
6 September 1999.
2. On 2 October 2009 Mr Polchow was informed by Centrelink that his claim for the pension bonus had been rejected. Mrs Polchow’s claim for the pension bonus was rejected on 30 September 2009. Mr and Mrs Polchow requested that their respective decisions regarding the pension bonus be reviewed by an authorised review officer (ARO). On 3 February 2010 the ARO advised Mr and Mrs Polchow that their respective decisions made by Centrelink had been affirmed.
3. Mr and Mrs Polchow lodged applications with the Social Security Appeals Tribunal (SSAT) on 5 May 2010 seeking a review of the ARO’s decision. On 4 June 2010 the SSAT affirmed the decisions made by the ARO. Mr and Mrs Polchow lodged applications with the Tribunal on 15 July 2010 seeking a review of the SSAT decision.
4. Because Mrs Polchow’s right to be paid the pension bonus is dependent upon Mr Polchow passing the work test in the course of a bonus period, the issues I need to determine are related to Mr Polchow’s work. They are:
(a)the date on which Mr Polchow’s last qualifying bonus period ended;
(b)whether Mr and Mrs Polchow lodged their claims for the pension bonus within the mandatory period for claiming set out in the Social Security (Administration) Act 1999 (the Administration Act); and
(c)if Mr and Mrs Polchow do not satisfy the time limits for making a claim, whether there are special circumstances in their case which would allow discretion to be exercised to extend the period of time for making a claim for the pension bonus.
OPERATION OF THE PENSION BONUS SCHEME
5. In order to properly understand the reasons for my decision, I need to explain in some detail the operation of the pension bonus scheme. It is complex. Nevertheless, I shall attempt to explain its operation in simple terms.
6. The pension bonus scheme was designed to increase labour market participation of retirement age persons. Those persons who have reached retirement age and who defer claiming the age pension can accrue a bonus of between one and five years from the time they first qualify for the age pension, until they reach 75 years of age. By accruing up to five bonus periods prior to claiming the age pension, the person entitled to the pension bonus would receive a tax free lump sum payment calculated on the number of qualifying bonus periods that person has accrued.
7. To become eligible for the pension bonus, a person must lodge an application for registration during the period which commences 13 weeks before the person qualifies for the age pension and ends 13 weeks after that date (s 92H(1)). Once registered, the person’s membership is accruing unless it becomes non-accruing.
8. The first bonus period accrues if a person passes the work test for a full year period, which is calculated as 365 days. Each succeeding full year period after the first bonus period of a person’s accruing membership of the pension bonus scheme is a bonus period which accrues to the person (s 92T(2) Social Security Act 1991 (the Act)).
9. Bonus periods must be consecutive (s 92T(4)). The only exception to this rule is where a bonus period is separated from another bonus period by a period of non‑accruing membership. As this does not apply in Mr and Mrs Polchow’s case, I will not attempt to describe it.
10. After accumulating one bonus period, a member of the pension bonus scheme may lodge a claim for the pension bonus at the same time that the person lodges a claim for the age pension. The two are linked because the amount of the pension bonus is calculated according to a formula which takes into account the amount of the age pension to which the claimant is entitled to be paid. There are a number of strict rules which set out the period in which a claim must be made. These rules are set out in the Administration Act. In particular, the rules set out in s 22 and s 23 of the Administration Act may be relevant in Mr Polchow’s case.
11. As I have indicated above, after completing a full year period which is a qualifying period for the pension bonus scheme, the accruing member of the scheme may lodge a claim for the pension bonus. In fact, even where the person has only worked for what is described as a part-year period, which is a period less than 365 days following the first year, the number of days worked in that period is taken into account when calculating the pension bonus. Therefore, the rules regarding the claim period may depend on whether the last bonus period was a full-year period or a part-year period. If the last bonus period was a full-year period, then s 22 of the Administration Act applies. It provides:
22 Last bonus period a full-year period
(1)If a person’s last bonus period is a full-year period, the lodgement period for a claim by the person for pension bonus is the period of 13 weeks immediately following that bonus period. However, this rule does not apply if:
(a)the person is an exempt partnered person for the purposes of section 24 at the end of the person’s last bonus period; or
(b)the person’s membership of the pension bonus scheme becomes non-accruing immediately after the end of the person’s last bonus period; or
(c)the person is a post-75 member of the pension bonus scheme and has a post-75 work period (see subsection 26(2)).
(2)For the purposes of this section, if a person has accrued only one full-year bonus period, that period is the person’s last bonus period.
12. If the last bonus period is a part-year period, then s 23 of the Administration Act applies. It provides:
23 Last bonus period a part-year period
(1)If a person’s last bonus period is a part-year period, the lodgement period for a claim by the person for pension bonus is:
(a)the period of 13 weeks beginning at the end of that bonus period; or
(b)if the Secretary allows a longer period—that longer period.
However, this subsection does not apply if:
(c)the person is an exempt partnered person (see subsection 24(2)) at the end of the person’s last bonus period; or
(d)the person’s membership of the pension bonus scheme becomes non-accruing immediately after the end of the person’s last bonus period; or
(e)the person is a post-75 member of the pension bonus scheme and has a post-75 work period (see subsection 26(2)).
(2) If:
(a)subsection (1) applies to a person’s claim for pension bonus; and
(b)the claim is lodged within a period allowed under paragraph (1)(b);
Division 6 of Part 2.2A of the 1991 Act has effect, in relation to the calculation of the amount of that pension bonus, as if the person had not accrued the part-year bonus period.
13. After some research, I was able to locate the reason why the period of 13 weeks was selected for the purposes of ss 22 and 23 of the Administration Act as being the time limit within which, after the last bonus period, a claim must be made. In a report prepared by the Senate Community Affairs Legislation Committee dated May 1998, the committee provided the following reasons for the 13 week limit:
DSS and DVA noted, however, that the Scheme provides that a bonus payment can only be made to a person who is able to claim and receive an age (or equivalent DVA) pension within 13 weeks of their retirement or within 13 weeks of failing to meet the work test requirements for a year. The 13 week limits were included to minimise the capacity of people to disperse or reduce their retirement savings following the cessation or reduction in work.
14. In special circumstances, a longer period may be permitted before a claim is made. This is provided for in ss 21(2) and (3) of the Administration Act which state:
21General rule
…
(2)However, the Secretary may in special circumstances allow a person a longer period to make a claim than the period fixed by this Subdivision. If the Secretary does so, the lodgement period for the person’s claim is the period allowed by the Secretary.
(3)Subsection (2) does not apply in relation to a claim for which the lodgement [period is fixed by subsection 23(1).
15. As s 21(3) provides, the special circumstances extension does not apply to a person whose last bonus period was a part-year period. It only applies where their last bonus period is a full-year period.
16. As I have said, an accumulating member of the pension bonus scheme can only accumulate a maximum of five qualifying pension bonus periods. If a person has accrued five bonus periods, each of those bonus periods is regarded as a qualifying bonus period (s 93E(5)). However, where a person has accrued more than five bonus periods and the last bonus period is a full year period, each of the five most recent bonus periods are qualifying bonus periods (s 93E(6)). If the last bonus period is a part-year period and a person has accrued more than five bonus periods, each of the five most recent full-year bonus periods are qualifying bonus periods (s 93E(7)). In other words, if an accruing member has accrued five bonus periods but continues working for part of a subsequent year, while that part-year period may affect the 13 week time limit imposed on a claim for a pension bonus (s 23(1) of the Administration Act), it does not become a qualifying bonus period as the previous five full year bonus periods are taken into account when calculating the pension bonus due to that member.
17. The meaning of the expression bonus period is set out in s 92T of the Act. The most significant aspect of the bonus period as far as Mr and Mrs Polchow are concerned is that to satisfy that definition, the person or person’s partner must pass the work test. That applies whether the bonus period is a full-year period or a part-year bonus period. Division 5, Part 2.2A of the Act deals with the work test. Section 92U deals with the full year period and s 92V for a part-year period.
18. As far as Mr Polchow is concerned, in order to pass the work test for a full‑year period, he was required to satisfy the Secretary that the total number of hours gainfully worked by him during that period was at least 960 and that at least 640 of those hours were worked in Australia. To pass the work test for a part-year period, an accruing member of the bonus scheme must satisfy the Secretary that he or she gainfully worked during that period for at least the pro-rated number of hours which is worked out using the formula:
960 x
number of days in the period
365
At least two-thirds of the total number of hours must be worked in Australia.
19. Before dealing with what is and what is not gainful work, it is useful to apply the above framework to Mr Polchow’s circumstances. Because Mr Polchow claimed he continued to work for some eight and a half years after he had reached the pension age, it is the final five year period of his working life with which we must be concerned.
Relevant Periods
20. I must bear in mind that Mr Polchow’s final working period might only be a part-year period and therefore I would need to consider the five full year periods prior to Mr Polchow commencing his final part-year period. The starting point is the date on which Mr Polchow lodged his claim for the age pension and the pension bonus. That was on 18 March 2009. Because he became an accruing member of the pension bonus scheme on 6 September 1999, I need to examine the intervening periods to determine when Mr Polchow ceased to accrue bonus periods due to his inability to satisfy the work test. I then need to determine whether Mr or Mrs Polchow made a claim for the pension bonus within the allowed 13 week period after Mr Polchow no longer satisfied the work test.
The Work Test – Gainful Work
21. The work test requires the Secretary to be satisfied about the number of hours a person gainfully works during a full-year period or a part-year period. The expression gainful work is defined in s 92X of the Act. It provides:
92X Gainful work—basic rule
(1)For the purposes of this Part, gainful work is work for financial gain or reward, whether as an employee, a self-employed person or otherwise, where:
(a)the work involves a substantial degree of personal exertion on the part of the person concerned; and
(b)the work is carried on within or outside Australia.
(2)Subsection (1) is to be ignored in determining the meaning of an expression used in a provision of this Act other than this Part.
22. Nevertheless, the Secretary has discretion to treat an activity as gainful work in circumstances which do not satisfy the definition of that expression. The circumstances in which this discretion might be exercised are set out in s 92Y of the Act. It provides:
92Y Secretary’s discretion to treat activity as gainful work
(1) If a person satisfies the Secretary that:
(a)the person, or the person’s partner, has engaged in a particular activity; and
(b)the activity involves a substantial degree of personal exertion on the part of the person or the person’s partner, as the case may be; and
(c)the activity does not consist of voluntary work for a charitable, welfare or community organisation; and
(d)because of special circumstances, the activity should be treated as gainful work;
the Secretary may determine that this Part has effect as if the activity were gainful work.
(2)The determination has effect accordingly.
23. The management of family financial investments does not count as gainful work (s 93 of the Act). Similarly, domestic duties in relation to a person’s place of residence do not count as gainful work. Section 93A provides:
93A Domestic duties in relation to a person’s place of residence do not count as gainful work
(1)Unless the Secretary otherwise determines, work undertaken by a person is taken not to be gainful work for the purposes of this Part if the work consists of carrying out:
(a)domestic tasks; or
(b)household maintenance tasks; or
(c)gardening tasks; or
(d)similar tasks;
in relation to:
(e)the person’s place of residence; or
(f)if the person has 2 or more places of residence—any of those places of residence.
(2)For the purposes of this section, a place of residence includes:
(a)if the place is a dwelling-house—any land or building that is adjacent to the dwelling-house and that is used primarily for private or domestic purposes in association with that dwelling-house; or
(b)if the place is a flat or home unit—a garage or storeroom that is used for private or domestic purposes in association with the flat or home unit.
24. Although an accruing member may request the Secretary to provide a written certificate setting out the total number of hours gainfully worked by an accruing member during any period, Mr Polchow did not avail himself of those provisions which are set out in s 93B of the Act. That has caused some problems for Mr Polchow. In order to satisfy the Secretary that he worked the requisite number of hours set out in s 92U of the Act, Mr Polchow needed to satisfy the Secretary that he complied with the record-keeping requirements set out in s 93C. The Secretary may waive compliance with the record-keeping requirements in relation to a period (s 92U(e)). The record-keeping requirements set out in s 93C(1), require a person who has received a group certificate or who has lodged a tax return during the relevant period, to be in a position to produce those documents to the Secretary and to keep a recognised work record which can be produced to the Secretary if required. A recognised work record is described in s 93C(3) of the Act in the following way:
Recognised work record
(3)For the purposes of this section, a recognised work record, in relation to a person, is a written statement signed by the person that sets out, in relation to gainful work carried on by the person during a particular period:
(a)the nature of the gainful work; and
(b)the dates on which the gainful work was carried on; and
(c)the total number of hours gainfully worked; and
(d)the total number of hours gainfully worked in Australia; and
(e)in a case where any of the gainful work was carried on in the capacity of employee—the name or names of the employer or employers concerned; and
(f)such other particulars as the Secretary requires.
25. The Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (the Secretary) conceded that Mr Polchow met the work test for five full-year consecutive bonus periods between 6 September 1999 and 5 September 2004. The Secretary also conceded that Mrs Polchow met the work test for the first five full-year consecutive bonus periods from 5 August 1999 to 4 August 2004. However, the Secretary contended that Mr Polchow did not meet the work test from 6 September 2004 nor, correspondingly, did Mrs Polchow meet that test from 5 August 2004.
26. Mr Polchow testified that he was a furniture maker and worked as a carpenter after coming to Australia in 1954. After some two years, he set up his own business through a corporate entity, Country Artisans Pty Ltd (Country Artisans). Country Artisans was de-registered on 31 March 2007. Nevertheless, Mr Polchow contended that he performed work for his company until its de-registration. He contended that he was actively looking for work and conducted the day to day affairs of the company until de-registration.
27. However, be that as it may, that contention misses the point. The work test is based on the expression gainful work. Gainful work is defined as work for financial gain or reward. With respect, simply being a director of a company looking for work cannot satisfy the requirement that the individual has performed work for financial gain or reward. The word financial is defined as: of or pertaining to finance or money matters (The Shorter Oxford English Dictionary). In the context of s 92X(1) of the Act, the word finance means: 1 money affairs and the management of them ▫ Government finance. 2 the money or funds needed or used to pay for something. (Chambers 21st Century Dictionary). The word gain means: 1 to get, obtain or earn (something desirable). The word reward means: 1 something given or received in return for work done, a service rendered, good behaviour, etc (Chambers 21st Century Dictionary). Therefore, it should be apparent that the expression gainful work in the context of the Act means work which involves a substantial degree of personal exertion on the part of the person concerned which results in that person receiving money or some other form of payment for that work.
work claimed by mr polchow
28. I had in evidence before me work records which were completed by Mr Polchow for the pension bonus scheme. The entries on those documents are not contemporaneous with the work claimed to have been done, but rather, they were completed by Mr Polchow’s daughter-in-law after Mr Polchow’s lodgement of a claim for the age pension. This followed Centrelink’s request for proof of the hours Mr and Mrs Polchow had worked for each year after reaching pension age. For that reason, some of the hours worked on any particular day do not match the work actually done. For example, on 7 September 2004, 45 hours is logged in relation to conducting work on a verandah and the roof of a building. There are a number of entries on any one day which exceed 24 hours. However, as I understood that material, those entries represented the completion of that work although the hours in fact worked are, at best, an estimate.
29. Likewise, between 6 September 2004 and the date on which Mr and Mrs Polchow claimed the age pension and the pension bonus, much of Mr Polchow’s recorded work time is related to work carried out on the property where Mr and Mrs Polchow reside. That property is substantial and in addition to Mr and Mrs Polchow’s residence, there is another dwelling on that property which was renovated to create rental accommodation on the upper level; and the lower basement area was converted into additional rental accommodation. Both parts of that building had tenants and income is paid to Mr and Mrs Polchow by the tenants. Mr Polchow also carried out works around that property including stone retaining walls, gardens, paths and a water tank. I had in evidence photographs of the works carried out, and they are clearly extensive.
30. In addition to the initial work records which were included in the s 37 documents, I was provided with a further bundle of revised work records for the period 6 September 2004 to 31 December 2008. These revised work records were also prepared by Mr Polchow’s daughter-in-law, Ms Naomi Polchow, who testified that she obtained additional information from Mr Polchow’s diaries, which were also provided to me. Ms Polchow testified that the additional information was compiled with Mr Polchow’s assistance and also after consultations with their accountant, Mr Peter Skipworth. The additional entries made by Ms Polchow resulted in the addition of some 95 hours work in the first 12 month period; some 464 hours in the next 12 month period concluding in September 2006; an additional 264 hours in the following year ending September 2007; and a further 67 hours for the following year ending on 30 August 2008.
31. The work recorded as having been undertaken by Mr Polchow in the years following the first five bonus periods indicate the following types of work:
(a)lawn mowing and gardening related to the two level dwelling which was let to tenants;
(b)work Mr Polchow conducted as an artisan, which included repair and restoration of furniture, carpentry work and the relaying of carpet and vinyl;
(c)inspecting damaged premises the subject of insurance claims and providing quotations to the insurer;
(d)improvement works on the rental property, including constructing a second flat on the ground level of the rental dwelling; and
(e)substantial construction of retaining walls, car parking space and water tank for the rental property.
32. Mr Andrew Flower of counsel, who appeared on behalf of Mr and Mrs Polchow, submitted that all of the works conducted in upgrading and developing the rental property, including maintaining the lawn and gardens, satisfied the work test because it is properly described as work for financial gain or reward. He submitted that although only some minor payments were made to Mr Polchow by tenants for upkeep of the lawn and gardens, the enhancement of the rental premises, including fitting out the lower section of the dwelling so that an additional flat was constructed, resulted in Mr Polchow being able to earn higher rental from the premises as well as increased rental due to the additional accommodation. With the greatest respect to Mr Flower, I cannot agree with that submission.
33. As the Senate Community Affairs Legislation Committee report indicates, the objectives of the pension bonus scheme are to:
(a)increase labour market participation of retirement age persons;
(b)allow people who defer their pension to increase their retirement savings during the deferment period; and
(c)restrain growth in pension outlays.
34. The report also states that the scheme recognises the contribution made by people who remain in employment and defer their age pension by providing a reward for this behaviour. It is targeted at those persons who have a substantive attachment to the workforce when reaching retirement age and continue to undertake substantial work. These objectives are clearly satisfied by compliance with the basic rule regarding gainful work. In other words, the work itself must result in the person receiving monetary or other recompense for that work to enable them to increase their retirement savings while at the same time deferring receiving the age pension. In simple terms, the person’s gainful work enables the person to meet his or her living expenses as well as providing some additional savings. The person does not require any supplementary form of income by way of pension.
35. It should be apparent that Mr Polchow could properly have claimed the age pension after having accrued five bonus periods and nevertheless conducted the works he did on the rental property without those works in any way affecting the amount of pension to which he was entitled. Clearly, that work was not carried out in substitution for receiving the age pension as it could have equally been undertaken while receiving the age pension. He was not paid for that work.
36. There is also a second argument against Mr Flower’s submission. The work Mr Polchow conducted on the rental property may well have enhanced the capital value of that property, although even that is not certain. While it may have allowed Mr Polchow to demand higher rental for that property (although there was no evidence of that before me), if it did, then the increased rental cannot be described as financial gain or reward arising from his exertions. Any increased rentals would arise from the improved appearance and facilities attributed to the property. They would simply be an indirect consequence of the work performed. Accordingly, I find that the work Mr Polchow conducted after September 2004 in respect of the rental properties does not satisfy the basic rule regarding gainful work set out in s 92X of the Act.
37. Even if I am wrong about whether work on Mr and Mrs Polchow’s rental property can properly be described as gainful work, I cannot accept that Mr Polchow satisfied the work test set out in s 92U of the Act. That is because in order to satisfy that test, Mr Polchow either needed to satisfy the record-keeping requirements in s 93C or those record-keeping requirements needed to be waived. They were not waived. The work records in evidence before me, including the revised work records prepared by Ms Polchow, were all prepared many years after the work was conducted. All of the hours are stated in round figures and, quite plainly, are merely estimates of the hours worked. For example, regarding maintenance of the gardens and grounds around the rental property, six hours is attributed to that task every week without any variation. This is despite the fact that Mr Polchow has, during that period, suffered from a number of illnesses.
38.
For the purposes of the work test, the simple attribution of six hours per week for those activities is, in my opinion, unlikely to be correct. In addition to that, there are numerous entries regarding work described as general maintenance to which
14 hours per week has been allocated. These entries suffer from the same problem I have just described. They are, in my opinion, unlikely to be accurate.
39. While the statements I have made about record-keeping may appear harsh, the problem is that record-keeping by persons enrolled in the pension bonus scheme is an essential requirement for the scheme to operate fairly. In fact, participants in the pension bonus scheme may request the Secretary to provide them with a written certificate stating that they have worked the requisite number of hours to meet the work test (s 93B of the Act). Where a person makes a request for a certificate and the record-keeping requirements set out in s 93C of the Act have not been complied with, the Secretary may refuse to issue the certificate.
40. Mr and Mrs Polchow received annual reminder notices from Centrelink regarding the pension bonus scheme. Those letters stated that they would find it helpful to receive confirmation that at the end of each working year, they were on track regarding the scheme. They were informed that if they produced their work record documents to the Centrelink officer, they would be issued with an evidentiary certificate confirming that they had met the scheme’s requirements for the year. Those letters also informed Mr and Mrs Polchow that if they chose not to seek to obtain an evidentiary certificate, it may be more difficult for them when they come to claim the age pension. The letters reminded Mr and Mrs Polchow that they needed to lodge their bonus claim within 13 weeks of ceasing work or within 13 weeks from the date that they no longer met the work test.
41. Ms Polchow explained that the additional entries made on the revised work records were the result of a careful examination of Mr Polchow’s diaries over the period commencing September 2004 until Mr Polchow applied for the aged pension. While I was able to reconcile some of the entries on the work records with the diaries provided by Ms Polchow, there are many entries which I cannot reconcile. In fact most entries in the diaries have no times stated at all, and on some occasions, there simply are no entries. Then there are entries on particular days in the revised work records which clearly exceed the number of hours in a day. For example, 14 January 2006 a total of 59 hours work is recorded. While I accept that may be an amalgamation of work from other dates, it is not apparent from the diary entries. It appears to be a reconstruction of the work done for a particular client over a period of time but I have no means of substantiating those entries. It necessarily follows that I cannot accept the reconstructed work records as being a reasonably accurate record for the work conducted in any 12 month period.
42. In any event, it is clear even from the revised work records that between 1 January 2008 and 18 March 2009, the hours recorded almost entirely, save for some 67.75 hours, relate to general maintenance on the residential property. If Mr Polchow was continuing to do insurance maintenance and other remunerated work, it had all but ceased by January 2008. In fact, Centrelink’s records of contact with Mr Polchow record that on 5 October 2006 Mr Polchow told a customer service officer at Centrelink that he was not entitled to the age pension at that time due to the assets owned by himself and his wife. The file note made by the Centrelink officer records that Mr and Mrs Polchow lived on 20 acres on one title with two houses and also owned a property in Mansfield. The Centrelink officer then recorded this:
They have been registered for the pbs [pension bonus scheme] but Mr. P said they stopped work a year or so back and told couldn’t get a bonus.
43. On 13 October 2006 a Centrelink file note records that Mr and Mrs Polchow attended a conference with a financial adviser at Centrelink as they wanted to lodge an age pension and pension bonus claim. Again, the Centrelink financial adviser who recorded the file note indicated Mr and Mrs Polchow said they owned a property in Mansfield valued at approximately $185,000. At that time, Mrs Polchow stated she ceased work two years previously and Mr Polchow said that he did work when he could get some to supplement their income.
44. In my opinion, although Mr Polchow continued to do gainful work in 2005 and 2006, that work did not satisfy the work test requirement set out in s 92U of the Act. It was less than 960 hours per year. By 2007 that work had almost entirely ceased. Even if I were to accept what is set out in Mr Polchow’s revised work records, the work he carried out in the year before making a claim for the pension bonus scheme and the age pension was only approximately 68 hours. Therefore, I find that Mr Polchow did not satisfy the work test set out in s 92U of the Act after 5 September 2004 or, as far as Mrs Polchow is concerned, 4 August 2004. Quite plainly, Mr and Mrs Polchow did not make a claim for the pension bonus within 13 weeks following their fifth bonus period. They do not, therefore, qualify for the pension bonus. To be eligible for the pension bonus, they would need to establish that there were special circumstances which caused them to lodge a late claim for the pension bonus.
SPECIAL CIRCUMSTANCES
45. Although not defined in the Act, the expression special circumstances has been the subject of judicial comment for many years. The Full Court of the Federal Court in Beadle v Director-General of Social Security (1985) 7 ALD 670, said at 674:
… More difficult would be questions of ignorance, illiteracy, isolation, illness and the like. 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. …
46. In Boscolo v Secretary, Department of Social Security (1999) 53 ALD 277, French J said, at 281-282:
[18] The word “special” conditioning “reasons” or “circumstances” guards the entrance to the exercise of many different statutory discretions. It is generally futile to search for its meaning in terms of other words. It is in essence instrumental, a direction to the decision-maker that the discretion it constrains is not lightly to be enlivened. … The core of the requirement for “special circumstances” or “special reasons” is that there be something unusual or different to take the matter the subject of the discretion out of the ordinary course: Minister for Community Services and Health v Chee Keong Thoo (1988) 78 ALR 307 at 324: Burchett J. But that does not require that the case be extremely unusual, uncommon or exceptional: Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 ; 27 ALD 309 ; 108 ALR 322.
47. In Groth v Secretary, Department of Social Security (1995) 40 ALD 541, Kiefel J said, at 545, after referring to Beadle’s case:
… for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.
48. For Mr and Mrs Polchow to take advantage of the special circumstances provision in s 22(2) of the Administration Act, they need to demonstrate that their circumstances were unusual or not the ordinary case.
49. Mr Flower submitted that there were special circumstances in Mr and Mrs Polchow’s case because they properly held a subjective belief that by continuing to work, they would continue to be eligible under the pension bonus scheme. Mr Flower submitted that Mr and Mrs Polchow did not lodge claims for the pension bonus because Mr Polchow believed he was able to work.
50. With respect to Mr Flower’s submission, the evidence discloses quite a different reason for Mr Polchow continuing to work. In fact Mr and Mrs Polchow attended Centrelink offices on 13 October 2006 with the clear intention of lodging an age pension and bonus scheme claim. In fact, on 19 May 2005 when Mr and Mrs Polchow attended a conference with a Centrelink financial adviser seeking advice about the age pension and pension bonus, the financial adviser noted that the second property owned by Mr and Mrs Polchow at Mansfield had been on the market for nine months. They were clearly attempting to dispose of it. That officer also noted:
pbs [pension bonus scheme] amt wld be very low in view of their low entitlemnt undr the asset test.
51. The evidence indicates that Mr Polchow decided to continue working after accruing five bonus periods because he had been informed that if he applied for the age pension and bonus scheme at the conclusion of those five accrued bonus periods, both his pension amount and pension bonus would be very low and possibly insufficient for Mr and Mrs Polchow to meet their cost of living. That appears to be because of the reduction imposed on their age pension by reason of owning the Mansfield property. They had not been able to sell that property by early 2005. That is the reason Mr Polchow continued to work.
52. Mr Flower also made submissions regarding Mr Polchow’s deteriorating health, particularly in the 12 months prior to claiming the age pension and pension bonus. While I acknowledge that Mr Polchow’s health did deteriorate in that 12 month period, and that Mrs Polchow also suffered from a significant medical condition, there is no evidence that Mr Polchow’s illness impacted at all on his ability to claim the age pension and pension bonus immediately after completion of the fifth year of accrued bonuses. In fact, the evidence indicates he intended to make that application, attending Centrelink with Mrs Polchow in order to do so, but after being advised of the minimal benefits that they would have obtained from the pension bonus scheme as a result of a significantly reduced age pension, they simply elected not to lodge a claim at that time.
53. Mr and Mrs Polchow seem to fall into that category of applicants for the age pension and pension bonus which the Senate Community Affairs Legislation Committee explained was the reason for the 13 week limit. That is, the limit was inserted to minimise the capacity of people to disperse or reduce their retirement savings following the cessation or reduction of work. No doubt that also extends to disposal of assets which might lower or even preclude the age pension being paid. I therefore find that there are no special circumstances in Mr and Mrs Polchow’s case which would allow a longer period within which to make claim for the pension bonus.
CONCLUSION
54. After accruing the maximum five bonus periods under the pension bonus scheme, Mr and Mrs Polchow did not lodge a claim for the pension bonus until some five years after accumulating those five pension bonus periods. Nevertheless, Mr Polchow contended that he had continued to perform gainful work in that subsequent five year period. However, the work records produced by Mr Polchow were a reconstruction of the hours he worked, made from his diary and memory. Those work records were revised, simply from his diaries. However, an examination of the diaries revealed that except for a couple of entries, the actual work time under each entry was not recorded. Furthermore, the entries recorded on the revised work records on occasions are clearly an aggregate of work performed for a particular client. It is simply not possible to reconcile those hours worked with the diary entries and accordingly, on the balance of probability, I have found that they cannot be relied upon.
55. In any event, the more significant number of hours recorded as having been worked by Mr Polchow related to works conducted on an additional dwelling on Mr and Mrs Polchow’s property which was used to provide rental accommodation; and work conducted in maintaining the grounds and gardens surrounding that dwelling. I have found that this work was not work for financial gain or reward and therefore did not satisfy the basic rule regarding gainful work set out in s 92X of the Act.
56.
I have also examined the provisions set out in s 21(2) of the Administration Act dealing with an extension of time in which to lodge an application for the age pension and pension bonus. I have found that there were no special circumstances in Mr and Mrs Polchow’s case. In fact, on the balance of probability, they delayed making their application for the pension bonus for the reason that at the completion of five bonus periods, their entitlement to the age pension would have been significantly reduced as a result of the assets test. Given that the amount of pension bonus is linked directly to the amount of age pension payable to a qualified applicant, Mr and Mrs Polchow deferred making that claim in 2004 or 2005 for that very reason. The 13 week claim limit was imposed on pension bonus claimants to prevent claimants from delaying making a claim in the very circumstances which apply to
Mr and Mrs Polchow. Mr and Mrs Polchow were given adequate notice in correspondence from Centrelink about the 13 week limitation period.
57. In my opinion, the decision made by the SSAT on 4 June 2010 denying Mr and Mrs Polchow the pension bonus was correct. I affirm that decision.
I certify that the fifty-seven [57] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr Egon Fice, Senior MemberSigned: .........[sgd]....................................................................
E. Montalto, AssociateDate of Hearing 17 February 2011
Date of Decision 5 April 2011
Counsel for the Applicant A. Flower
Advocate for the Respondent A. Carson, Centrelink Advocacy Branch
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