Re Strauss and Secretary, Department of Family and Community Services

Case •

[2005] AATA 608

•

28 June 2005

Administrative

Appeals

Tribunal
 

DECISION AND REASONS FOR DECISION [2005] AATA 608

ADMINISTRATIVE APPEALS TRIBUNAL      )          

)          Q2004/235

GENERAL ADMINISTRATIVE DIVISION )
JAMES STRAUSS

Applicant

SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Justice Downes, President

Date28 June 2005

PlaceSydney

Decision

The decision under review is affirmed.

..................[sgd]............................

President

CATCHWORDS

Social Security - Jurisdiction of tribunal - exempt lump sum – determination or decision of Secretary - decision of officer – power to make determination – power of original decision-maker – no delegation of power to exempt - life assurance - accumulated bonuses treated as income received within a twelve month period - Social Security Act 1991 (Cth), sections 8(11)(d), 1073

Administrative Appeals Tribunal Act 1975 (Cth), section 43

Social Security Act 1991 (Cth), sections 8, 8(1), 8(8)(b), 8(11), 8(11)(d), 9A(7), 22, 23(1), 55, 501(2A), 542C(2)(b), 603F(2)(b), 660YFA, 730, 746(1), 751(1), 758(1), 1061ZZBJ(1) and (2), 1061ZZGF(1), 1067C(2), 1073, 1099DB, 1099DC, 1120A(2) and (3), 1184A(4), 1184E(1) and (2), 1224D(2) and 1237AAB(5)

Social Security (Administration) Act 1999 (Cth) sections 3(3), 9A(1B), 9A(6), 9B(1D), 9B(5), 126, 127, 129, 129(5), 140(1,) 140(2), 142, 149(1), 179, 234,

Australian Securities and Investments Commission v Donald (2003) 136 FCR 7

Clark and Secretary, Department of Family and Community Services [2003] AATA 1291

Clements and Secretary, Department of Family and Community Services (2004) 79 ALD 163

Davies and Secretary, Department of Family and Community Services (2002) 71 ALD 161

Drake v Minister for immigration and Ethnic Affairs (1979) 24 ALR 577

Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 644

Lees v Comcare (1999) 56 ALD 84

McLaughlin and Secretary, Department of Family and Community Services (2003) 73 ALD 774

Meschino v Secretary, Department of Family and Community Services (2001) 65 ALD 220

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24

Read and Secretary, Department of Family and Community Services (2004) 82 ALD 475

Reye and Secretary, Department of Family and Community Services (2003) 79 ALD 648

Secretary, Department of Family and Community Services and AXO3C [2003] AATA 1292

Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32

The Commonwealth v Grunseit (1943) 67 CLR 58

Varcoe and Secretary, Department of Family and Community Services [2000] AATA 1002

Walton v Gardiner (1993) 177 CLR 378

Guide to Social Security Law, Guidelines 4.3.2.30, 4.3.2.35, 4.3.9.20

REASONS FOR DECISION

Justice Downes, President

Introduction

  1. Subsection 8(11) of the Social Security Act 1991 (“the Act”) authorises the Secretary of the Department of Family and Community Services to determine that certain amounts should be treated as income. The applicant received an amount representing accumulated bonuses under an endowment policy of life insurance. The Secretary did not make a determination under subs 8(11), nor delegate the authority to do so to any relevant decision-maker. Accordingly, the Tribunal, substituting its decision for that of the original decision-makers and the Social Security Appeals Tribunal, had no power to make the determination. These prior decision-makers erred in considering the question, but because they declined to make the determination, the resulting decisions are correct and should be affirmed.

  2. In September 1964 James Strauss took out an endowment policy of life assurance with the Producers Citizens’ Co-operative Assurance Co. Ltd.  Thereafter, he made the required premium payments until the policy matured in September 2003.  During this period bonuses accrued to the policy.  When the policy matured Mr Strauss was paid $16,825.50.  This was made up of $6,236.10 in premiums and $10,589.40 in bonuses.

  3. From 1996 Mr Strauss had been in receipt of a social security benefit called a Newstart Allowance.  In 2000 this was changed to a Mature Age Allowance.  On 23 December 2003 he became entitled to an age pension and has been in receipt of an age pension since then.  These social security benefits are means tested.

  4. When Mr Strauss received the proceeds of his life assurance endowment policy the portion of the proceeds which represented accumulated bonuses was treated as income received within a twelve month period.  This had the effect of reducing the weekly allowance payment for a short time and subsequently the pension payment.

  5. The original decision to effect the reduction was made by a Customer Service Officer of the Commonwealth Services Delivery Agency (Centrelink), L.M. Curran.  That officer reviewed the decision and confirmed it in writing on 27 November 2003.  The critical decision was that “the balance of the bonus received from the life insurance is to be assessed as income for 12 months from 06/11/03.”  Mr Strauss applied for a further review of the decision.  That review was undertaken by an Authorised Review Officer, James Herbert.  Mr Herbert affirmed the decision in writing on 15 December 2003.  Mr Strauss applied to the Social Security Appeals Tribunal for review of that decision.  On 9 March 2004 that Tribunal affirmed the decision.  Mr Strauss now seeks further review.  I propose to affirm the decision for the reasons that follow.

  6. There was an oral hearing in this matter on 25 February 2005.  During the hearing it emerged that the parties were not in a position to put final submissions on the jurisdiction of the Tribunal.  I gave leave to both parties to file supplementary written submissions.  Both parties filed written submissions.  The last submission was received on 27 April 2005.  Further communications to the Tribunal by the parties concluded on 30 May 2005.  It was not until then that the Tribunal was in a position to consider its decision.

The Issues

  1. Section 660YFA of the Act provides that “A person’s mature age allowance rate is worked out by using Benefit Rate Calculator B at the end of section 1068 (see Part 3.6)”. Section 55 of the Act provides that “A person’s age pension rate is worked out … using Pension Rate Calculator A at the end of section 1064 (see Part 3.2)”. Both Calculators contain an income test component. They both contain a requirement to “Work out the amount of the person’s ordinary income …” (Pension Rate Calculator A Module E; Benefit Rate Calculator B Module G).

  2. Section 1073 of the Act relevantly provides:

    “1073(1)         “…[I]f a person receives… an amount that:

    (a)is not income within the meaning of Division 1B or 1C of this Part; and

    (b)is not:

    (i)income in the form of periodic payments; or

    (ii)ordinary income from remunerative work undertaken by the person; or

    (iii)an exempt lump sum

    the person is, for the purposes of this Act, taken to receive one fifty-second of that amount as ordinary income of the person during each week in the 12 months commencing on the day on which the person becomes entitled to receive that amount.”

  3. It is common ground that the payment representing bonuses is within s 1073 and that whether it is to be treated as ordinary income in accordance with the section depends upon whether the payment was “an exempt lump sum.” All that is required for s 1073 to operate is receipt of an amount which is not within paras (a) or (b). It does not need to be income in accordance with ordinary concepts. It is appropriate that I should say that I do not agree with the decisions of the Tribunal in Clark and Secretary, Department of Family and Community Services [2003] AATA 1291, Secretary, Department of Family and Community Services and AXO3C [2003] AATA 1292 and Reye and Secretary, Department of Family and Community Services (2003) 79 ALD 648 in which DP Muller dealt with issues such as those which arise in the present matter by determining that the amounts received were “assets” and not “income”. I note, although it is not relevant, that if the receipt of the payment representing accumulated bonuses had been income in accordance with ordinary concepts then it would have been excluded from the definition of “ordinary income” in subs 8(1) of the Act if it were “an exempt lump sum.”

Determinations that an amount is an “exempt lump sum”

  1. This matter accordingly turns upon whether the amount received was an “exempt lump sum”. If it is not, the decisions below were correct and must be affirmed. “Exempt lump sum” is defined in subs 8(11) of the Act as follows:

    “8(11)   An amount received by a person is an exempt lump sum if:

    (a)the amount is not a periodic amount (within the meaning of subsection 10 (1A)); and

    (b)the amount is not a leave payment within the meaning of points 1067G-H20, 1067L-D16 and 1068-G7AR; and

    (c)the amount is not income from remunerative work undertaken by the person; and

    (d)the amount is an amount, or class of amounts, determined by the Secretary to be an exempt lump sum.

    Note:  Some examples of the kinds of lump sums that the Secretary may determine to be exempt lump sums include a lottery win or other windfall, a legacy or bequest, or a gift – if it is a one-off gift.”

Accepting that paras (a) to (c) are satisfied by the receipt in question, the ultimate matter for my determination is whether the amount falls within para (d).

Was there a prior “Determination”?

  1. The first inquiry must be whether the holder of the office of Secretary, or some delegate for the purpose of making determinations under subs 8(11) had, prior to the making of the decision under review, determined that the amount was an exempt lump sum. The answer is that there has been no such express determination. The next inquiry is whether any such determination has been made for a “class of amounts” which includes the amount.

  2. The Department of Family and Community Services has produced a Guide to Social Security Law. It is available on the internet. Guideline 4.3.2.35 addresses “Other Income Exempt from Assessment – s 8(11) Exempt Lump Sums.” It contains a section headed “List of lump sums that have been specifically exempted under Section 8(11).” Thirty four determinations are listed. Against the description “Miscellaneous” at the end of the 34 determinations the following appears:

    “Other individual exempt payments, where customers will hold an 8(11) Determination signed by the Secretary of FaCS.”

The only determination with any relevance to the present matter is Determination 1 of 2004 made on 16 March 2004 which identifies “Superannuation Government co-contribution amounts paid to low income earners.”  The amount presently under consideration does not fall within that description. 

  1. It follows that at the time the matter came before the Customer Service Officer and at the time of each subsequent decision there was no existing determination by the Secretary or a delegate by which the amount under consideration was within para 8(11)(d).

  2. An alternative argument raised by the respondent was that there was no reviewable decision before the Tribunal because the decision merely carried out a statutory requirement by applying a rate and was accordingly no more than a mathematical calculation.  I do not agree.  Making a calculation and deciding what payment should be made is classic administrative decision-making even if no discretion is involved.  A mistake may be made.  Review will enable the mistake to be corrected.  The first part of the conjunction “correct or preferable decision” refers exactly to such a situation.  Meschino v Secretary, Department of Family and Community Services (2001) 65 ALD 220 at 227 [30], relied upon by the respondent, relates to the referral of a file which is quite different to the making of a calculation with only one result.

Did the decision under review involve a reviewable “Determination”?

  1. The only way Mr Strauss could succeed in his claim is if the decisions under review themselves amounted to reviewable determinations under para 8(11)(d) or if the Administrative Appeals Tribunal has power now to make a determination.

  2. The review of social security decisions is provided for in Part 4 of the Social Security (Administration) Act 1999.  That part distinguishes between review of “a decision of an officer” and review of “a decision made by the Secretary himself or herself”.  The former may be reviewed by the Secretary (s 126).  The latter may not (s 127).

  3. Section 129 of the Administration Act provides for application to be made to the Secretary for review of a decision of an officer. Subsection 129(5) provides:

    “A reference in this section to a decision of an officer under the social security law includes a reference to a determination that the Secretary is taken, by virtue of a provision of the social security law, to have made.”

“The social security law” is defined in subs 3(3) of the Administration Act to refer only to acts of the Parliament.

  1. The review may be conducted by the Secretary, the Chief Executive Officer of Centrelink or an authorised review officer (subs 135(1)).  In most cases application may be made to the Social Security Appeals Tribunal for the review of such a review decision (s 142).  Application may be made to this Tribunal for review of decisions of the SSAT (s 179).

  2. Two questions arise.  First, did the Customer Service Officer or the Authorised Review Officer who decided what pension or allowance should be paid to Mr Strauss have any authority to make a determination under para 8(11)(d)?  Secondly, did either officer purport to exercise any such authority?

  3. In this application the Secretary seeks to rely upon evidence showing what decision-making authority was in place at the relevant times.  The evidence was originally in the form of copies of delegations not purporting either to be signed or dated which were furnished with the supplementary submissions.  The applicant said that these documents proved nothing and asked that they be disregarded.  In reliance upon Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 at 40, 41 the applicant submitted that I should “assume [that there was] power in the decision-maker”. In response to this submission the respondent forwarded signed copies of the delegations. They were received by the Tribunal on or about 5 May 2005. The applicant, through his solicitor, has now stated that he agrees that “the documents were signed by the persons identified on the dates shown and are the only relevant delegations”. In the absence of other evidence I will infer that the documents are effective delegations in accordance with their terms.

  4. The delegations have effect under s 234 of the Administration Act. In accordance with their terms, the Secretary delegated “all [his] powers under the [Act] except [his] powers under subsections 9A(1B), 9A(6), 9B(1D) and 9B(5) of that Act, to the person appointed, or for the time being performing the duties of Chief Executive Officer in Centrelink.” The Chief Executive Officer delegated all those powers to the Deputy Chief Executive Officer. She also delegated specified powers to the holders of specified offices. These included at least Authorised Review Officers. The delegations include delegations of the powers under s 8 of the Act except that the delegation by the Chief Executive Officer to the holders of specified offices limits the extent of the delegation of those powers. The delegation of powers under s 8 is couched in the following terms: “To statutory limit except the power to exempt lump sum amounts under paragraph 8(11)(d).” The delegations did not therefore confer any relevant authority on the Authorised Review Officer or the Customer Service Officer.

  5. In these circumstances, and in the absence of any specific deeming provision, I do not think that subs 129(5) assists the applicant.

  6. Accordingly, as part of their decision-making, the Customer Service Officer and the Authorised Review Officer were authorised to consider whether para 8(11)(d) applied but they were not authorised to determine that an amount was an exempt lump sum.  They could consider whether, for example, the Secretary had made a positive determination, but they could not make one themselves.  I note that the delegation refers to a “power to exempt” and para 8(11)(d) actually refers to a determination of an amount “to be an exempt lump sum” but that cannot alter the position.  The intention is clear.  This result does not seem to me to be surprising.  It is consistent with the distinction drawn by the legislation between decisions of officers and determinations by the Secretary.   It is also consistent with the way in which the Secretary has gone about making determinations.  It follows that neither the Customer Service Officer nor the Authorised Review Officer had any authority under para 8(11)(d).

  7. The next question is whether the Customer Service Officer, the Authorised Review Officer or the SSAT purported to make a determination under para 8(11)(d). Understandably, the Customer Service Officer did not expose any reasoning in the decision relating to the way s 8(11)(d) was dealt with. However, the Authorised Review Officer did.

  8. The reasoning of the Authorised Review Officer was as follows:

    “Section 8(11) of the SSA defines an exempt lump sum as an amount that is not a periodic payment, and not a leave payment, and not income from remunerative work, and an amount that has been determined by the Secretary of the Department of Family and Community Services to be an exempt lump sum.

    Section 4.3.2.31 of the Guide to Social Security Law (the Guide) contains a list of amounts, or classes of amounts, that have been specifically approved as exempt lump sums.  The maturity value of insurance policies has not been included as a specifically approved exempt lump sum.

    Section 4.3.2.30 of the Guide contains guidelines for assessing whether a particular lump sum may be exempted as income, despite not being specifically approved.

    This section states that a lump sum that:

    ·is unlikely to be repeated; and

    ·cannot be reasonably expected to be received or necessarily anticipated; and

    ·does not represent receipt of money for services rendered

    can be classed as an exempt lump sum.

    I consider that the receipt of funds from an insurance policy can be reasonably anticipated, and that, therefore, a lump sum received on realisation of such a policy does not fit the definition of an exempt lump sum contained in the Guide.”

The SSAT proceeded on the basis that one question before it was “should these moneys be treated as exempt lump sums?”  It concluded that “insurance payouts [such as the one under consideration] were not intended to be exempt lump sums”.

  1. Although both the Authorised Review Officer and the SSAT affirmed the decision not to treat the accumulated bonuses as an exempt lump sum they do appear to have addressed the question of whether the bonuses could be determined to be within para 8(11)(d). They did not simply deal with the matter on the basis that a prior determination by the Secretary or a delegate was required. I can understand why they adopted this approach. Parts of the Guidelines, as appears from the decision by the Authorised Review Officer, appear to lay down principles to be applied in determining whether an amount is an exempt lump sum. However, those statements must be taken as relating to an application to a person with the requisite authority and not to an officer, not having any delegated authority under para 8(11)(d), who is making a decision as to what pension or allowance is payable. There are also some decisions of the Administrative Appeals Tribunal which appear to support the view that a determination under s 8(11)(d) might be made by an officer calculating the amount of a pension. I will refer to these below.

Can this Tribunal make a “Determination”?

  1. Another matter which arises is whether the Administrative Appeals Tribunal, in a review by it, has power which the original decision-maker did not have, to make a determination under the paragraph?  The answer must be no.  First, the function or jurisdiction of the Tribunal is to review the decision of the SSAT (s 179 of the Administration Act).  The function of the SSAT is to review the decision of the Authorised Review Officer (s 142).  In each case the Tribunal is to affirm, vary or set aside the decision and, in the last case, to substitute a decision or send the matter back (s 43 of the Administrative Appeals Tribunal Act 1975; s 149(1) Administration Act).  As has often been pointed out (e.g. Lees v Comcare (1999) 56 ALD 84; Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32), s 43 authorises the Tribunal to “exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision”. Where the decision-maker is authorised to make a determination on an issue the Tribunal may be able to make a different determination, even a determination under a different statutory provision (Australian Securities and Investments Commission v Donald (2003) 136 FCR 7). It may be able to make a determination when the original decision-maker did not make one. However, it is fundamental that the Tribunal, and any review body, cannot have power to make a decision which the original decision-maker did not have. What was fundamental to the decision in ASIC v Donald was that the decision-maker could have made the decision ultimately made by the Tribunal.  If in the present case the original decision-makers had no authority to make a determination under para 8(11)(d), neither does the Tribunal.  The same is, of course, true for the SSAT.

  2. One further statutory provision requires consideration. Subsection 140(1) of the Administration Act gives the SSAT authority to review “all decisions of an officer under the social security law”. Subsection 140(2), which is identical to subs 129(5), is as follows:

    “140(2) A reference in this section to a decision of an officer under the social security law includes a reference to a determination that the Secretary is taken, by virtue of a provision of the social security law, to have made.”

  3. Subsections 129(5) and 140(2) deal only with decisions of officers.  They do not deal with decisions actually made by the Secretary.  They assume that there are decisions of officers which are to be taken to have been made as determinations by the Secretary.  If the Secretary had delegated his power under para 8(11)(d) to officers then a decision of an officer on the topic would seem to be within the subsection.  However, in the absence of delegation, the subsection cannot operate.

  4. There is, of course, no reason why Mr Strauss could not have applied personally to the Secretary for a determination in his favour under para 8(11)(d). Whether or not an unfavourable determination would be subject to review would depend upon whether the Secretary is an “officer” and whether the determination is a decision. Officer is defined in s 23(1) of the Act as “a person performing duties, or exercising powers or functions, under or in relation to the social security law …” That must include the Secretary. Were it not for the presence of subs 140(2) in the Administration Act it might have been necessary to distinguish decisions from determinations. There are a number of sections of the Act which confer power on the Secretary to make “determinations” which must be distinguished from the ordinary decision-making which much of the Act requires (ss 9A(7), 22, 501(2A), 542C(2)(b), 603F(2)(b), 730, 746(1), 751(1), 758(1), 1061ZZBJ(1) and (2), 1061ZZGF(1), 1067C(2), 1099DB, 1099DC, 1120A(2) and (3), 1184A(4), 1184E(1) and (2), 1224D(2) and 1237AAB(5)). Some of these provisions relate to “guidelines determined by the Secretary”. The Tribunal must be free not to apply guidelines (cf ReDrake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 644), but it might be a surprising result if the SSAT and the Tribunal could redraft them. Nevertheless, once a determination “taken” or deemed to have been made by the Secretary is a decision which can be reviewed, as provided in s 140(2), it is difficult to see why an actual determination of the Secretary is not also a decision and thus capable of being reviewed.

Was the amount “an exempt lump sum”?

  1. Because an application could probably still be made to the Secretary for a determination under para 8(11)(d) in favour of the applicant I propose to consider the question.  My conclusion may enable me finally to dispose of the matter.  I will do so on the assumed basis that all relevant powers and discretions are available to me.

  2. The note to subs 8(11) is part of the subsection (see subs 39(1A) of the Act). The note confers a discretion (“may determine”). The discretion must be exercised on proper legal grounds and in accordance with the policy of the Act. The factors identified in the note must be considered. Whether other matters may be considered depends upon whether the:

    “enumerated factors are exhaustive or merely inclusive. If the relevant factors … are not expressly stated, they must be determined by implication from the subject-matter, scope and purpose of the Act.”

per Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39, 40. See also Brennan J in Walton v Gardiner (1993) 177 CLR 378 at 409.

  1. The evident policy, shown by existing determinations by the Secretary under the section, by his submissions in prior applications for review to which reference will be made and by his submissions in this matter, is that bonus payments under endowment life policies of assurance should not be determined to be exempt lump sums.

  2. The categories in the note would not encompass lump sum endowment policy bonuses.  It has been said that all these categories relate to one off windfall payments.  I would be inclined to characterise them slightly differently as receipts over which the recipient has no control as to entitlement.  You can buy a lottery ticket but you have no control over whether it wins.  You can look after a relative but you have no control over whether this is remembered in a will.  However, you can make a contract of endowment life assurance which provides in detail as to entitlements, including entitlements to bonuses, though not necessarily the amount, and as to the circumstances in which the benefit will be paid.

  3. It is argued that if the bonuses are not treated as exempt those who were members of superannuation funds will be in a more advantageous position than those with endowment life insurance.  In reliance upon a decision of the Tribunal (Varcoe and Secretary, Department of Family and Community Services [2000] AATA 1002), to which further reference will be made, the applicant submitted as follows:

    “(a)it was unfair, unjust and inequitable to treat all the return on the Applicant’s investment over the period of many years, excluding only the actual premiums paid, as income received in one year.

    (b)in comparison to the very lengthy period during which the premiums were paid, the Applicant had only been in receipt of social security benefits for a very short time.

    (c)the delegate’s approach failed to take into account the effect of inflation, in that the premiums would have [sic] be worth much more when paid, than at the time of the decision in “real money” terms.

    (d)there was an inequality in the treatment of lump sum superannuation payments and lump sum payments on maturity of age insurance policies.”

Accordingly, the bonuses should be determined to be exempt.  There are problems with this argument.

  1. First, it is not clear to me that the different treatment of superannuation schemes and endowment policies does lead to unfairness, injustice or inequity or that any of the other matters are made out.  Comparing one aspect of the treatment of superannuation schemes and endowment policies is not sufficient.  A true comparison would require examination, for example, of how the amounts were treated after receipt.  These matters have not been fully ventilated before me.  Indeed, the parties have not been able to agree on at least one of them.  Determining what is fair requires more than comparing one aspect of the way two types of investment are treated.  A full comparison would involve subjective elements.  These would be likely to give rise to different opinions.  Minds might differ as to whether there was unfairness, injustice or inequity.  Grounds (a) to (c) do not seem to me necessarily to lead to unfairness.  Social security is primarily concerned with addressing an applicant’s means at the time payments are to be made and not the applicant’s investment history.

  2. Secondly, there is an undoubted Government policy to limit the circumstances in which receipts of money are not to be treated as income.  Paragraph 8(11)(d) is evidence of this.  The Guidelines exhibit a policy which seeks to confine determinations under para 8(11)(d) to amounts which “cannot be reasonably expected to be received or necessarily anticipated” (Guideline 4.3.2.30).  The Guidelines do recognise that some payments from superannuation funds will be exempted but that is pursuant to this test and is limited to particular kinds of payments.  The exceptions may be said to prove the rule.  Guideline 4.3.9.20 is as follows:

    “Conventional life insurance policies – bonuses

    Bonuses on conventional life insurance policies are NOT assessed as ongoing income during the term of the policy.  On maturity, the difference between the maturity payment and the sum of the purchase price and premiums paid by the investor IS assessed as income for 12 months.  This applies for both pension and benefit purposes.”

  3. Questions have arisen as to whether the “ejusdem generis” rule of construction should be applied to the note to subs 8(11). That rule generally applies to the construction of a general phrase concluding a list identifying specific objects. An insurance policy covering specific risks might conclude with the phrase “and any other risks”. The rule might cause the concluding words to be read as if they covered “any other similar risks”. The note is not in that form.

  4. The ejusdem generis rule is a rule of construction employed by courts exercising judicial power to determine the meaning of words.  Naturally, Tribunals are frequently called upon to decide questions of law and determine the meaning of words.  However, merits review tribunals such as the Commonwealth review tribunals are not exercising judicial power but executive or administrative power.  They are ultimately engaged in administrative decision-making which frequently requires the exercise of discretion.  This is recognised by the formula which guides their decision-making, namely that they must reach “the correct or preferable decision” (Drake v Minister for immigration and Ethnic Affairs (1979) 24 ALR 577 at 582 l 22 and 589 l 20). The second part of the conjunction was expressly chosen to describe circumstances in which a discretion is being exercised.

  5. Although it seems to me that rules such as the ejusdem generis rule can provide guidance to an administrative decision-maker, a careful analysis of the way it has been employed in the past is less helpful than simply using its underlying principles as an aid to the proper exercise of the discretion.  That seems to me to be the approach that the note calls for.

  6. I have referred to the policy contained in the Act and the Guidelines. Although the Tribunal can depart from policy it should be restrained in doing so (see Drake (No 2) at 645). The policy of the Act, as appears from subs 8(11) and its note, does indicate that the circumstances in which an amount will be determined to be an exempt lump sum will be limited. The words of the note give some guidance as to where the exceptions may lie. They would not seem to encompass the proceeds of insurance policies. However, that does not preclude the exercise of a discretion to include such a payment. Nevertheless, the policy of the Guidelines appears also not to favour the inclusion of such amounts. That must be the basis upon which the Act relevantly has been administered although the decision in at least one matter in the Tribunal would seem to be at odds with this.

  7. A further argument raised by the applicant was that to deny the amount “exempt status” would be to give s 8(11)(d) retrospective effect to bonuses accruing before it came into effect. Either the legislation should not be so construed or the resulting inequity should result in a positive determination. I do not agree with these submissions. First, the relevant subsection is subs 1073(1). It operates on receipt of an amount. It is not retrospective. Secondly, the provision has the requisite degree of specificity to operate even if it was retrospective. Thirdly, the whole scheme under which pensions are provided for needs to be looked at and not just one provision relating to calculation. So viewed, any argument based on retrospectivity must fail.

  8. Had I the jurisdiction to deal with the question whether the amount paid to Mr Strauss as bonuses should be determined to be an “exempt lump sum” under para 8(11)(d) of the Act I consider that the preferable decision would be to decline to make the determination . That is consistent with the policy of the Act. It is consistent with the policy of the Secretary and the Department. There are no countervailing considerations which mean that the preferable decision in the present case is otherwise.

  9. There are five decisions of the Tribunal which address the issues raised in this matter.  They are Varcoe and Secretary, Department of Family and Community Services [2000] AATA 1002, a decision of Senior Member Dwyer, Davies and Secretary, Department of Family and Community Services (2002) 71 ALD 161, a decision of Senior Member Purcell, McLaughlin and Secretary, Department of Family and Community Services (2003) 73 ALD 774, a decision of Deputy President Wright, Clements and Secretary, Department of Family and Community Services (2004) 79 ALD 163, a decision of Member Kenny, Read and Secretary, Department of Family and Community Services (2004) 82 ALD 475, a decision of Senior Member Imlach. With the exception of Varcoe the Tribunal affirmed a decision that an amount was not an exempt lump sum in each case.

  10. In Varcoe, the Department of Family and Community Services conceded that the Tribunal had power to make a determination under para 8(11)(d) [16 and 17].  That does not accord with the position on the facts before me.  However, part of the formulation of the concession [17] may suggest that it was limited to a concession that the Tribunal could review an existing determination.  That would distinguish Varcoe from the present case.

  11. In Davies Senior Member Purcell considered whether a favourable determination should be made but declined to do so.  She analysed Senior Member Dwyer’s decision in Varcoe.  She agreed “that there [was] an inequality in the treatment of lump sum superannuation payments and lump sum payments on maturity of age insurance policies” [23] but she declined to follow Varcoe.  She said [23]:

    “The notes to the section set out some examples of the kinds of lump sums that the secretary might determine to be exempt lump sums – such as a lottery win or other windfall, a legacy or bequest, or a one-off gift. These examples relate to unexpected, non-anticipated amounts. Such a description does not apply to the type of product, the insurance policy with bonuses, that the applicant held. I consider that it is not of the character contemplated by section 8(11)(d) of the Act. I am satisfied that it is not “an exempt lump sum” in accordance with the Act.”

  12. Deputy President Wright in McLaughlin, speaking of superannuation and insurance, found that there was “no relevant discrepancy or inequality in the treatment accorded to these two different sources of retirement funds” [35]. He also found that “there is a plain legislative intent to confine exempt payments in accordance with the tenor of the note to s 8(11)(d) to unexpected windfalls, fortuitous receipts of money and the like” [36]. At the conclusion of his reasons Deputy President Wright addressed the question of jurisdiction I have considered above. He concluded [42]:

    “Even if I were persuaded that there was merit in the argument that a determination should be made by the secretary so as to exempt the relevant lump sums in the present case, this is not a decision which in the absence of persuasive authority I would regard myself as having power to make.”

Deputy President Wright based his conclusion on similar reasoning to mine.  However, he did characterise the making of a determination under para 8(11)(d) as a legislative act.  I have not come to that conclusion.  I consider it to be an administrative decision.  Latham CJ said in The Commonwealth v Grunseit (1943) 67 CLR 58 at 82:

“The general distinction between legislation and the execution of legislation is that legislation determines the content of a law as a rule of conduct or a declaration as to power, right or duty, whereas executive authority applies the law in particular cases.”

  1. In Clements Member Kenny considered McLaughlin, including the passages on jurisdiction, but expressed no views upon them himself.  He did note that the views in McLaughlin “deny the exercise of any discretion by a decision-maker under the Act to treat a lump sum as being exempt unless the appropriate application was made to the respondent’s means test policy section” [23]. However, he concluded on the merits that the relevant amount, which was not the proceeds of an insurance policy, “was not an exempt lump sum” [25].

  2. Senior Member Imlach in Read concluded that the “weight of legal authorities … is against the proposition that bonuses that have accrued in redeemed life insurance policies should be classed as exempt income under s 8(11)(d) of the Act” [27]. She also adopted the analysis of DP Wright relating to jurisdiction.

  3. The facts and submissions put before me, particularly on the question of jurisdiction, were more extensive than those that have been put before the Tribunal previously.  I draw special attention to the details of the delegations which were before me.

  4. I conclude that a decision-maker required to consider subs 8(11) of the Act will not have jurisdiction to make a determination under para 8(11)(d) unless power to do so has been delegated. Since the making of such a determination is administrative in nature there is no inhibition upon the Secretary delegating the power if he considers that to be appropriate. Where the power has not been delegated to an original decision-maker or a reviewing decision-maker neither the Social Security Appeals Tribunal nor the Administrative Appeals Tribunal will have jurisdiction to make a determination.

  5. The decision under review is affirmed.

I certify that the 52 preceding paragraphs are a true copy of the reasons for the decision herein of Justice Downes, President

Signed:     .....[sgd]................................................................
                  Peter Pikis, Associate

Date of Hearing  25  February 2005
Date of Final Submissions                 30 May 2005
Date of Decision  28 June 2005

Counsel for the Applicant                  Ms C Heyworth-Smith
Solicitor for the Applicant                   Welfare Rights Centre

Counsel for the Respondent             Mr R Derrington SC

Solicitor for the Respondent              Australian Government Solicitor

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