Samuel Hale and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2013] AATA 165
Administrative Appeals Tribunal
ADMINISTRATIVE APPEALS TRIBUNAL )
) No: 2012/2983
General Administrative Division )
Re: Samuel Hale
Applicant
And: Secretary, Dept of Families, Housing, Community Services and Indigenous Affairs
RespondentDIRECTION
TRIBUNAL: Mr RP Handley, Deputy President
DATE: 18 April 2013
PLACE: Sydney
The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975, to alter the text of the decision in this application as follows.
- Where at paragraph 20 the decision currently reads:
“…does not constitute notice of a decision made on 4 November 2011…”
The decision shall now read:
“…does not constitute notice of a decision made on 4 November 2009…
.................................[sgd]..................................
Mr RP HandleyDeputy President
[2013] AATA 165
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/2983
Re
Samuel Hale
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
Decision
Tribunal Deputy President RP Handley
Date 22 March 2013 Place Sydney The decision under review is set aside and remitted to the Respondent with a direction that Mr Hale’s shares in York Capital Ltd be re-valued at $22,500 from 16 July 2009 until 27 June 2011.
..........................[SGD]..............................
Deputy President RP Handley
Catchwords
SOCIAL SECURITY - age pension – asset-reduced rate of payment - whether sufficient notice of relevant decision and appeal rights given – whether sufficient evidence was available to revalue shares – decision set aside
Legislation
Social Security Act 1991
Social Security (Administration) Act 1999
Cases
Re Peura and Secretary, Department of Community Services (2003) 78 ALD 570
Austin v Secretary, Department of Family and Community Services (1999) 92 FCR 138
Secretary, Department of Family and Community Services v Rogers (2000) 104 FCR 272
REASONS FOR DECISION
Deputy President RP Handley
22 March 2013
Mr Hale has applied for the review of a decision of the Social Security Appeals Tribunal (SSAT) affirming a decision of an authorised review officer and a delegate of the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (the Department) to refuse payment of arrears of age pension earlier than 28 June 2011.
BACKGROUND
Mr Hale, who is aged 74, has received the age pension since 2003. On 1 March 2007, he purchased $90,000 worth of ‘Cumulative Participating Redeemable Preference Shares’ in York Capital Ltd (York), the term of which was one year with the dividend to be paid on the date of maturity, 6 March 2008. The value of these shares was taken into account for the purpose of calculating the rate at which Mr Hale’s age pension was payable.
On 23 December 2008, Mr Hale notified Centrelink that he was no longer receiving income from York and provided a copy of a letter from York’s solicitors, dated 12 December 2008, confirming this together with letters from the Administrators of York confirming that York was no longer in administration. York’s solicitor’s letter stated that York’s shareholders had not received any benefit from the company since August 2007, that York did not intend to declare or pay any dividend in the near future, and that York intended to make a partial return of capital to shareholders, expected to take place after an annual general meeting on 9 February 2009.
On 16 July 2009, Mr Hale phoned Centrelink and made an appointment to discuss the reduction in the value of his assets and with a view to his being granted a deeming exemption for a failed investment in respect of his York shares (as to which see below) or, alternatively, a revaluation of his assets to reflect their reduced value. In both instances, a successful outcome to his application would result in an increase in the rate of age pension payable. Mr Hale attended an interview with Centrelink on 28 July 2009 and, on 11 August 2009, he supplied a copy of a letter from a Director of York dated 22 June 2009 stating York’s asset position and that York’s current liquid assets “reflects a possible return of some 25 cents in the dollar in a liquidation scenario”.
Centrelink’s computerised records indicate that a decision was made to refuse Mr Hale’s application on 4 November 2009. On 11 November 2009, Centrelink sent Mr Hale a standard quarterly Centrelink Statement giving him information “about his payments, income and other details”, his obligation to notify Centrelink of any change in his circumstances, and his right to appeal a Centrelink decision and the time limits applying to appeals against such decisions. Although Mr Hale’s assets were listed as including his $90,000 investment in York, there was no specific reference to his application made in July 2009.
On 7 July 2011, Mr Hale attended a Centrelink office and provided a copy of a letter dated 5 July 2011 from the Australian Securities and Investments Commission (ASIC) stating that the Federal Court had made orders winding up York on 28 June 2011. Centrelink’s computerised records indicate that while this information was forwarded to a Complex Assessment Officer on 7 July 2011, it was not otherwise actioned. On 12 December 2011, Mr Hale contacted Centrelink to find out what action Centrelink had taken in response to this information.
On 14 December 2011, a Centrelink officer advised Mr Hale that his York shares would be valued at zero from 28 June 2011, a decision that was affirmed by an authorised review officer on 9 February 2012. Mr Hale sought a review by the SSAT which, on 4 June 2012, also affirmed the decision. On 13 July 2012, Mr Hale applied to the Tribunal for a review of this decision.
THE RELEVANT LEGISLATION
The rate of age pension payable to a person is worked out in accordance with the provisions of the income and assets tests set out in the Social Security Act 1991 (the SS Act). A person’s payment rate is reduced according to whether and how one of the tests applies. The details of those tests and their application are not relevant for the purposes of this decision. Suffice it to say, the value of Mr Hale’s shares in York were taken into account in calculating the rate at which his age pension was payable.
Section 1084 of the SS Act provides what is referred to as a ‘deeming exemption’ by which the Minister may determine that certain investments are not to be regarded as financial assets. The section states:
1084Certain money and financial investments not taken into account
(1)The Minister may determine that:
(a)specified financial investments; or
(b)a specified class of financial investments;
are not to be regarded as financial assets for the purposes of section 1076, 1077 or 1078.
(2)If a financial investment is an unrealisable asset for the purposes of section 1129, 1130B or 1131, the financial asset is not to be regarded as a financial asset for the purposes of section 1076, 1077 or 1078.
(3)A determination under subsection (1):
(a)must be in writing; and
(b)takes effect on the day on which it is made or on such other day (whether earlier or later) as is specified in the determination.
However, this only applies in respect of income-reduced rates of payment. Mr Hale received an income-reduced rate of pension from 16 to 27 July 2009 but otherwise received an asset-reduced rate of payment to which the deeming provisions do not apply. In any event, the exercise of the Minister’s power under s 1084 is not one that can be exercised by the Tribunal.
The other relevant legislative provision in Mr Hale’s case is s 109 of the Social Security (Administration) Act 1999 (the Administration Act). This section states relevantly:
109Date of effect of favourable determination resulting from review
(1)If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)a notice is given to the person informing the person of the original decision; and
(c)within 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the determination embodying the original decision took effect.
(2)If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)a notice is given to the person informing the person of the original decision; and
(c)more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the application for review was made.
MR HALE’S EVIDENCE
Mr Hale said he contacted Centrelink’s Dapto office about the value of his York shares having received the letter dated 22 June 2009 from a Director of York about the reduced value of his investment (referred to above). He subsequently attended the Dapto office (on 28 July 2009) and spoke with a Centrelink ‘Financial Information Service Officer’ about the value of his investment, when he was told he could provide further information to Centrelink concerning his investment. On 1 August 2009, he completed an ‘Application for a Deeming Exemption for a Failed Financial Investment’ in respect of his York shares. On 11 August 2009, Mr Hale contacted Centrelink who ‘actioned’ the application.
Mr Hale said Centrelink told him to keep on supplying them with any relevant information about his York shares. He was never told of any appeal rights he might have or of time limits applying in respect of his seeking a review of a decision. When nothing happened in response to his application to Centrelink and Mr Hale had received no further information from York and had been unable to contact York by phone, Mr Hale contacted his local Federal MP Jennie George to advocate on his behalf. Mr Hale provided the Tribunal with copies of letters received from Ms George, who wrote to ASIC on 20 October 2009 asking for information about York, and who wrote to Mr Hale on 4 and 12 November 2009 with information supplied by ASIC and the written response she had received from her enquiry on his behalf to Centrelink. Mr Hale said the letters from Centrelink to Ms George made no mention of his appeal rights in respect of any Centrelink decision or applicable time limits.
When Mr Hale received his quarterly statement from Centrelink dated 11 November 2009, it made no specific reference to his application, merely detailing his assets, including the $90,000 York shares. He assumed from the letter that, given his previous discussion with Centrelink officers, he should keep on supplying Centrelink with relevant information about his York investment and Centrelink might eventually accept what he was saying – that his York investment was virtually worthless. Mr Hale did not understand the statement dated 11 November 2009 to mean that a decision had been made about his application. He thought it was just the standard quarterly statement sent to him by Centrelink.
Mr Hale said that apart from trying to find out what was happening about his investment from York, he also contacted ASIC and the Financial Ombudsman Service. Then, after Ms George retired, he followed up by contacting his new Federal MP Stephen Jones about the matter.
DISCUSSION
At the hearing, Mr Turton, for Mr Hale, accepted that the deeming provisions set out in s 1084 of the SS Act do not apply and he did not contend that the hardship provisions set out in s 1129 of the SS Act applied in Mr Hale’s case. The first issue for the Tribunal, therefore, is whether Mr Hale was notified of a decision by Centrelink to refuse his application for a deeming exemption in respect of his York shares or for a reduction in their valuation for the purpose of calculating the rate of age pension payable. Ms Mantaring, for the Secretary, contended that the Centrelink statement dated 11 November 2009 was notification of the decision to refuse his application because it detailed Mr Hale’s assets and also referred him to his appeal rights and the applicable time limits. Mr Turton contended that the Centrelink statement could not be considered to be notification of a decision because it made no reference to Mr Hale’s application.
Both parties referred to the decision of the Tribunal in Re Peura and Secretary, Department of Community Services (2003) 78 ALD 570, where, at [37], the Tribunal said, referring to the decisions of the Federal Court in Austin v Secretary, Department of Family and Community Services (1999) 98 FCR 138; [1999] FCA 938, and Secretary, Department of Family and Community Services v Rogers[2000] FCA 1447; (2000) 104 FCR 272:
From the reasoning of the Federal Court in both Austin and Rogers I think that the correct approach in considering whether the letters relied upon constitute notice of the relevant decision may be summarised as follows:
·the Tribunal should identify the decision of which notice is to be given;
·the letters should be construed objectively;
·the letters should be intelligible, that is they should inform the recipient of the making of the decision and the content of it;
·where the rate of pension is changed as a result of changed circumstances or the manner in which those circumstances are assessed, merely advising the recipient of the rate of his or her pension only constitutes advice of the effect of the decision; and
·the letters need not advise the reasons for the decision.
I agree that this is the correct approach. In this instance, the claimed notice of decision is the Centrelink statement dated 11 November 2009. This appears to be the standard Centrelink statement sent to social security recipients quarterly, setting out the payments made and the income and assets taken into account in calculating the rate of pension payable. The notice also refers to recipients’ obligations to notify Centrelink of changes in their circumstances and to their right to a review if they do not agree with a decision made. The notice makes no reference to Mr Hale’s application made to Centrelink in July 2009 and there is no reference to any decision made in respect of such application.
In my view, a reasonable person reading the statement would be unaware that a decision had been made in response to an application and would have considered this statement as being just the usual three monthly statement. This is especially so if the reasonable person is endowed with Mr Hale’s background of dealings with Centrelink in July and August 2009 and bearing in mind the active steps he took to try and find out what had happened to his York investment. I accept Mr Turton’s submission that the evidence clearly demonstrates that Mr Hale was not a person who had ‘sat on his hands’.
Thus, I am satisfied that the Centrelink statement of 11 November 2009 does not constitute notice of a decision made on 4 November 2011 to refuse Mr Hale’s application and, that being so, s 109(2) of the Administration Act does not apply.
I note that on 12 December 2011, Mr Hale contacted Centrelink to find out what action Centrelink intended to take following the winding up of York. On 14 December 2011, when Centrelink notified Mr Hale of a decision to value his York shares at $nil from 28 June 2011, the date on which the Federal Court made an order winding up York, he immediately sought a review of that decision by an authorised review officer.
When I raised with the parties at the hearing the date of effect of a favourable decision in Mr Hale’s case, it was not disputed that the commencement date for a favourable decision should be the date on which Mr Hale contacted Centrelink about the value of his York shares, which was 16 July 2009. Thus, the remaining issue to be determined is what value should be attributed to Mr Hale’s York shares at that date.
The only evidence as to the value of the York shares on 16 July 2009 is the letter dated 22 June 2009 from a Director of York, Chris Teoh, giving a brief update on York’s financial position. Mr Teoh states relevantly:
... We are disappointed to report that we have not yet completed the preparation of the audited financials for the year to 30 June 2008. The delay has been due to the difficulty of collating the company’s documents from a number of different locations around the country and getting up to date information relating to outstanding loans. However, we are close to completing the audit and expect to have it done within the week.
As an update in the interim, let me provide you with an update of some developments with York:
1) York has currently got liquid assets (comprising cash and current and collectible loans) of approximately $800,000. This reflects a possible return of some 25 cents in the dollar in a liquidation scenario.
...
In my view, in the absence of any other evidence, this evidence, being from a seemingly reliable source, is sufficient to support a finding that as at 16 July 2009, the value of Mr Hale’s shares in York was 25 cents per share. I note that Centrelink’s computerised records reveal that on 28 October 2009, a ‘Complex Assessment Officer’ enquired of Centrelink’s ‘Helpdesk’ whether the above evidence “is enough information for me to revalue the shares at 25% of his [Mr Hale’s] purchase price. ie $90,000 x 25c = $22,500”. The ‘Helpdesk’ response, on 4 November 2011, was that the information was too vague to be used to revalue the shares.
In the particular circumstances of this case, I disagree. The information is from a Director of York, referring to the preparation of audited reports. It should be remembered that the SS Act is beneficial legislation and its application should be approached accordingly. Whilst I accept that Centrelink’s task in valuing assets in this sort of situation is a difficult one and the implications of this decision may have implications for other shareholders in York who were in receipt of social security benefits at the time, that is not sufficient reason to deny Mr Hale his entitlements.
DECISION
The decision under review is set aside and remitted to the Respondent with a direction that Mr Hale’s shares in York Capital Ltd be re-valued at $22,500 from 16 July 2009 until 27 June 2011.
I certify that the preceding 26 (twenty-six) paragraphs are a true copy of the reasons for the decision herein of Deputy President RP Handley. ....................[SGD]............................................
Associate
Dated 22 March 2013
Date(s) of hearing 15 March 2013 Date final submissions received 15 March 2013 Solicitors for the Applicant Illawarra Legal Centre Solicitors for the Respondent Program Litigation and Review Branch
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