SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS and BRIAN BENSTED

[2010] AATA 395

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 395

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/6118

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Applicant

And BRIAN BENSTED

Respondent

DECISION

Tribunal Dr K S Levy RFD, Senior Member

Date27 May 2010

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

Senior Member

CATCHWORDS

SOCIAL SECURITY – Aged pension – Social Security Appeals Tribunal did not err in finding s 110 of the Social Security (Administration) Act 1999 was applicable – Responsibility for the errors falls with the Department – Section 109 of the Social Security (Administration) Act 1999 applies – Decision under review affirmed.

Administrative Appeals Tribunal Act 2004 (Cth) ss 3, 29

Social Security Act 1991 (Cth) s 23

Social Security (Administration) Act 1999 (Cth) ss 78, 109,110,129

Austin v Secretary, Department of Family and Community Services (1999) FCA 938

Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321

Director General Social Services v Chaney (1980) 3 ALD 161

Griffith University v Tang (2005) 221 CLR 99

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355

Re Frost and Secretary, Department of Social Security (1995) AATA 10360

Re Kelly and Secretary, Department of Social Security (1995) 39 ALD 476

Re: Young and Telstra Corporation (1993) 32 ALR 307

Secretary, Department of Families, Housing, Community Services v Rogers (2000) 104 FCR 272

REASONS FOR DECISION

27 May 2010 Dr K S Levy RFD, Senior Member           

INTRODUCTION

1.      The applicant, Brian Bensted, applied for and was granted age pension from 23 December 2008, the day he turned 65 years of age.  He had declared all of his assets and subsequently discovered that the basis for calculating the rate of age pension was incorrect.  He applied for a review of the decisions that determined the amount paid.  Internal review by an authorised review officer determined that he was entitled to be paid arrears backdated to 18 June 2009.  He sought further review from the Social Security Appeals Tribunal (SSAT).  That Tribunal upheld his appeal and set aside the original decision and determined that he was entitled to arrears as from the original date to which he was entitled to age pension, 23 December 2008.  The Secretary has now lodged an appeal against the SSAT decision dated 24 December 2009.

FACTS

2.      Mr Bensted made an application for age pension on 21 November 2008 and completed an income and assets questionnaire.  On 22 December 2008, Centrelink created a summary of his assets and income which were to be taken into account when calculating the amount of pension payable.  He was advised on the same date that his application was approved and that he would be paid age pension from 23 December 2008.

3.      There is no evidence that the summary created on 22 December 2008 was ever provided to the applicant.  However, the Department’s advocate, Mr McQuinlan, told the Tribunal that eighteen (18) advice letters were sent to Mr Bensted between 22 December 2008 and 11 September 2009.  Those letters indicated that the rate of pension paid was based on his income and assets.  Those letters, which are computer generated and have some standard text, stated that if he did not agree with the decision regarding the rate of pension payable, he should contact Centrelink and request a reconsideration of his case.  Those letters further stated that if he did not ask for the decision to be reviewed within 13 weeks, than any arrears payable might only be paid from the date of his request.

4.      Centrelink also forwarded two other letters to Mr Bensted dated 25 March 2009 and 1 July 2009.  Those letters were “Account Statements” and showed pension and allowances paid and in addition, included income and asset details.  Mr Bensted then wrote a letter to Centrelink on 7 August 2009 seeking a review of the rate of pension on the basis that the assets taken into account in calculating his pension were not in fact owned by him at the time the decision was made on 22 December 2008.  He received no response to that letter and on 11 September 2009, went to Centrelink in person to request a review.  The initial decision in response to his request was to pay the correct rate of pension with effect from 11 September 2009.  He sought further review of that decision and an Authorised Review Officer (ARO) determined on 3 November 2009 that as the original calculation was based on an errors by Centrelink, a more favourable interpretation was available and arrears were then determined to be paid from 18 June 2009.  That determination noted that he first queried the age pension in person on 11 September 2009 and that his query should be taken to be a request for review of the decision made within the 13 weeks following 11 September 2009, the earliest decision in that period being the decision of 18 June 2009.  Consequently, the latter date was selected as the date from which he could be paid arrears under the law.

SUBMISSIONS BY THE PARTIES

5.      The applicant in these proceedings is the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs.  On his behalf, the departmental advocate, Mr McQuinlan said that the SSAT was in error in determining that arrears of age pension should be paid back to the original date of 23 December 2008.  In particular, the Tribunal was told that:

(1)The SSAT erred and s 110 of the Social Security (Administration) Act 1991 (Cth) (the Administration Act) cannot apply to a grant decision where it is an existing payment. Mr McQuinlan said that that section only applies where there is a rate increase under s 78 of the Administration Act. The applicant contends that as no rate decision was in place it therefore cannot apply as there is no increase in rate.

(2)Alternatively, Mr McQuinlan said that the “decision” for the purpose of s 109 of the Administration Act was determined “erroneously” by the SSAT by fixing the value of Mr Bensted’s assets as the “decision”. The SSAT determined that the first advice showing an Account Statement was issued on 1 July 2009 and therefore full arrears are payable under s 109(1) of the Administration Act. The applicant Department says that the SSAT decision should be set aside and that the decision of the ARO dated 3 November 2009 is the correct decision, ie. that arrears can only be backdated to 18 June 2009.

6.      The respondent was a man of few words at the hearing.  He submitted that he had provided all of the correct information prior to the original decision to grant him aged pension.  He submitted that there was no basis for him not to be paid the correct amount from 23 December 2008 merely due to errors within the Department.

ISSUES

7.The issues to be determined are:

(1)Did the SSAT err in finding s 110 of the Administration Act can apply to grant decisions?

(2)Is Mr Bensted entitled to arrears under s 109 of the Administration Act from the date of the original decision, or is his entitlement limited to 13 weeks from the date of a “request” for review?

CONSIDERATION

8.      The relevant legislative provisions in determining this matter are as follows:

SOCIAL SECURITY ACT 1991 - SECT 23

General Definitions

…

"decision" has the same meaning as in the Administrative Appeals Tribunal Act 1975.

Note: subsection 3(3) of the Administrative Appeals Tribunal Act 1975 defines    decision as including:

*    making, suspending, revoking or refusing to make an order or determination;

*    giving, suspending, revoking or refusing to give a certificate, direction,          approval, consent or permission;

*    issuing, suspending, revoking or refusing to issue a licence, authority or         other instrument;

*    imposing a condition or restriction;

*    making a declaration, demand or requirement;

*    retaining, or refusing to deliver up, an article;

*doing or refusing to do any other act or thing.

…

SOCIAL SECURITY (ADMINISTRATION) ACT 1999 - SECT 78

Rate increase determination

If the Secretary is satisfied that the rate at which a social security payment is being, or has been, paid is less than the rate provided for by the social security law, the Secretary must:

(a)determine that the rate is to be increased to the rate provided for by the social security law; and

(b)       specify the last‑mentioned rate in the determination.

…

SOCIAL SECURITY (ADMINISTRATION) ACT 1999 - SECT 109

Date 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.

(3)       If:

(a)a decision (the original decision) is made in relation to a person's social security payment; and

(b)       the person is not given notice of the original decision; and

(c)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.

…

SOCIAL SECURITY (ADMINISTRATION) ACT 1999 - SECT 110

Date of effect of favourable determination

(1)Subject to subsections (1A) to (11) (inclusive), if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect:

(a)on the day on which the person so informed the Department; or

(b)       on the day on which the event or change occurred;

whichever is the later.

…

SOCIAL SECURITY (ADMINISTRATION) ACT 1999 - SECT 129

Application for review

(1)Subject to subsections (3) and (4), a person affected by:

(a)       a decision of an officer under the social security law; or

(c)a decision of an officer under the Farm Household Support Act 1992 ; or

(e)a decision under section 44‑24 of the Aged Care Act 1997 by the Secretary or by a person to whom the Secretary has sub‑delegated power under section 96‑ 2(7) of that Act;

may apply to the Secretary for review of the decision.

FINDINGS OF FACT

9.      I make the following findings of fact in relation to the evidence:

(1)Eighteen (18) advice letters raised by the applicant Department do not provide information which assisted the respondent in identifying the incorrect asset records.  Those letters dealt only with rates of pension being paid.

(2)There were two “Account Statements” dated 25 March 2009 and 1 July 2009 which indicated the Department’s records of Mr Bensted’s assets.

(3)The letter by Mr Bensted to the Department of 7 August 2009 was forwarded in good faith by Mr Bensted and is accepted as a formal request for review.

(4)Arrears payments of $138.22 (for period 11 September 2009 to 6 October 2009) and $370.05 (for period 30 June 2009 to 10 September 2009) making a total of $508.27 paid to Mr Bensted as arrears for the period 30 June 2009 to 6 October 2009.  As a result, the period in dispute is 23 December 2008 to 29 June 2009.  Based on the arrears payments already made, this would amount to $1,000 (approx) for the period in dispute.

(5)The decision to grant age pension required subsidiary findings about the value of assets as steps in the process to the ultimate decision to grant pension.  These subsidiary findings were intermediate factual findings, which were closely related in time and in context.

Issue 1: Can s 110 of the Administration Act apply to grant decisions?

10.     On behalf of the Department Mr McQuinlan submitted that using the value of Mr Bensted’s assets cannot be a “decision”. Reliance is placed on Griffith University v Tang (2005) 221 CLR 99 where, at [89], the Court said that two criteria must be satisfied for a decision to be made under an enactment:

(1)The decision must be expressly or impliedly required or authorised by the enactment; and

(2)The decision must itself confer, alter or otherwise affect existing or new legal rights or obligations derived from the general law or statute. 

11.     Both of these criteria must be satisfied.  I accept that these criteria are met in this case.  The SSAT also relied on the decision of the Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321. The applicant says that the SSAT relied on this case and utilised, the value of assets as “the final or operative determinative decision, at least in a practical sense” rather than “merely a step along the way to a rate decision”[1].

[1] Paragraph 12 of the SSAT decision

12.     I accept this as a correct statement of the SSAT decision.  However, this point is central to the applicant’s case. Consideration of the statutory meaning of “decision” is also fundamental to determining these issues.

13. The statutory provisions must be the starting point. Section 129 of the Administration Act provides that an appeal lies against a decision of an officer under Social Security law, and a person affected may apply to the Secretary for review of that decision. The term “decision” is defined in s 23 of the Social Security Act 1991 (Cth) (the Act) and adopts the meaning of that word in s 3(3) of the Administrative Appeals Tribunal Act 1975 (Cth). That definition is quite extensive and has been outlined previously; and, it relevantly includes the making of an order or determination.

14.     Primarily, a decision is intended to mean a final or ultimate decision rather than an intermediate decision.  In Director General Social Services v Chaney (1980) 3 ALD 161 Deane J (with Fisher J concurring) said at [179] that the definition in s 3(3) “is, prima facie, a reference to the ultimate or operative determination rather than a reference to an adjudication or determination of issues arising in the course of making such an ultimate or operative determination. The indication which s 3(3) provides to that effect is, however, slight.”

15.     That section was also considered in Re: Young and Telstra Corporation (1993) 32 ALD 307. There, O’Connor J (President of the Tribunal at the time) considered submissions about the competing policy considerations of the Act. She referred to the legislation being “beneficial in intent”, but did not accept that a policy consideration that the Commonwealth’s financial liability should provide a policy reason to minimise the application of the statutory provisions to an applicant (at [309]).

16.     A decision, i.e. an ultimate decision versus a step along the way to a rate decision, pertains to the grant of age pension in this case.  That decision cannot be made without the fundamental building blocks or elements necessary to make the decision.  In other words, the information about assets and income are fundamental to making the ultimate decision.  The fact that the ultimate decision is flawed if one of the elements (the value of assets) is in error, indicates the weight that is to be given in circumstances where the decision in question is weakened by a piecemeal or vertical view of the elements of the decision as opposed to a comprehensive or horizontal view of the decision, as the components in such a decision are integral to the ultimate decision (see Director General Social Security v Chaney).

17.     However, in a case such as this, care must be exercised so that it does not amount to a ‘splitting of hairs’ or where from a statutory interpretation viewpoint, it may result in defeating “the correct or preferable decision” requirement (s 29(1B)(b) of the Administrative Appeals Tribunal Act 1975 (Cth)). It should not be a superficial basis to defeat the legislation which is beneficial in nature or to use one of the policy platforms of the Act (financial liability of the Commonwealth). Here, the value of the claim, if successful, would be $1,000 (approx).

18.     The notice given to the applicant is another critical factor.  The Secretary has referred me to the Secretary, Department of Families, Community Services v Rogers (2000) 104 FCR 272 where Cooper J said:

I would not limit the content of the notice to a communication to the benefit recipient that a decision has been made to pay him or her a particular allowance at a particular rate …

Rather, I construe the phrase as meaning any decision capable of review …which, upon review, leads to a favourable determination under section 293.  It would include, for example, a decision … which is not a decision to pay the pension at a particular rate which, however, upon review, reveals that the effect of the decision is that the pension recipient has been, or will be, paid at a lesser rate than that provided for in the Act.

19. This is a relevant and pertinent authority. The decision in this case was to pay a lesser rate than provided for in the Administration Act. The Secretary says only where there is a rate increase under s 78, will s 110 apply. The Secretary also points out that no rate decision was in place. However, on close reading, s 110 seems unambiguous but broader than the Secretary suggests. It says that if a favourable determination is made following a person informing the Department of “the occurrence of an event” or “change in circumstances”, the favourable determination takes effect on the later of the day the person informed the Department or the day on which the event or change occurred.

20. Clearly, the Secretary’s suggestion that it cannot refer to s 78 is not sustainable. Section 78 is of broad application. The section requires that if the Secretary is satisfied that the rate is less than the rate provided for under the law then the Secretary “must” determine that the rate is to be increased to the rate provided by social security law.

21. A review of a decision under s 78 might be undertaken under one of the provisions which regulates the payment of arrears where there is a decision favourable to an applicant. Sections 109 and 110 of the Administration Act provide for review in certain circumstances. Section 109 deals with limitations on payment of arrears following a review and specifies the effective date depending on whether a notice has been given to an applicant of the “original decision”. Section 110(1) is of broader application and does not refer to a “review” as described in s 109. However, it clearly involves reconsideration of a decision. The other subsections in section 110 deal with certain specific situations which are not relevant here.

22. Therefore, there is no reason why s 110(1) could not apply here. The “occurrence of an event” in this case could be the original provision of asset values by Mr Bensted. Therefore, s 110(1)(a) can apply here and it could be argued that the determination would have to take effect on the date he informed the Department. This is the same date as the date the event occurred. As found by the SSAT, that date must be modified to the 23 December 2008, the first legally effective date that MrBensted qualified for age pension. I therefore find that in relation to Issue 1, the SSAT did not err in finding s 110 could apply to a grant decision in the present circumstances. That finding also relates to the fact that the error by the Department is a significant component of the facts here. I refer to this aspect in more detail in dealing with s 109.

Issue 2: What is the effect of s 109 of the Administration Act on Mr Bensted’s entitlement?

23. Even if s 110 did not apply, the question as to what would be the effect of s 109 of the Administration Act must be answered. This is the question posed by Issue 2. If an original decision is made and a notice is given informing the applicant of the decision, then, under s 109(1), if a claim is made within 13 weeks of the notice provided by the Secretary, then a favourable determination on “review”, will take effect on the day that the original decision took effect. Under s 109(2), if the claim is made after 13 weeks of the notice being issued, then any favourable determination can take effect only from the date the application for review was made.

24.     Generally, the decision will be the ultimate decision. In this case, that is the decision of 22 December 2008.  I accept the applicant’s point that the SSAT relied on the value of assets as the final or operative decision rather than being an intermediary step (Bond’s case).  I have determined that in this case, those steps are so integrally connected to the ultimate decision and are close in context and in chronology in relation to the decision of 22 December 2008, that the decision is not adversely affected by that decision alone.

25.     With respect to notice and the effect of s 109(2), the Secretary relies on the eighteen (18) letters which were provided to Mr Bensted between the date of the decision and the date he first raised the matter with the Department. However, these can be of no assistance to the Secretary in this context as these letters do not reveal any information regarding the (erroneous) nature of the original decision. While there was a summary prepared on 22 December 2008, there is no evidence that Mr Bensted ever saw that document.

26.     The Secretary also relies on the ARO’s decision as being the correct decision. That decision has some logic in the scheme of the legislation when compared with the original decision of 22 December 2008.  But in my view, that does not take account of a number of factors:

(1)Mr Bensted originally made a request for review by letter dated 7 August 2009.  Even though the Department never answered that request, it should not be overlooked and there is authority that that request could be regarded as an original point of claim for review (Austin v Secretary, Department of Family and Community Services (1999) FCA 938). Looking at that potential as a basis for determining whether the decision by the SSAT is correct, it could be argued that the effective date under s 109(2) should be 7 August 2009. That proposition would however result in a less beneficial outcome for the applicant than the decision of the ARO.

(2)All of these considerations overlook the fundamental nature of the error.  That is, the applicant is essentially arguing that the respondent should be held accountable for the Department’s error if it took account of the previous information on file at the time Mr Bensted applied on 21 November 2008, rather than using the correct information he provided to the Department on that date. 

27.     It cannot have been the intention of Parliament that this beneficial legislation could discriminate against an applicant in Mr Bensted’s position when the error was entirely attributable to the Department’s processing.  The purposive approach is clearly the contemporary approach to be adopted in statutory interpretation and is now well established (see Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355). The review of a decision under s 109 is not to be rigidly applied in all cases (see Director Social Security v Chaney; and the approach adopted by O’Connor J in Re: Young and Telstra Corporation).  These authorities emphasise the approach sanctioned by the High Court of Australia since that time (e.g. the Project Blue Sky case).

28.     Reliance on the purposive approach has more relevance in some cases than others.  In the present case, the evidence demonstrates the responsibility for the error was wholly that of the Department and was continued until it was first raised by Mr Bensted.  That responsibility cannot be displaced by some oversight of Mr Bensted in not being aware of that error.  It is true that he received two letters on 25 March 2009 and 1 July 2009, both of which referred to the asset position.  However, as Mr Bensted stated at the hearing, he assumed the Department was correct.  In any event, the first page of the notice of 25 March 2009 under the heading “Rate of Payment”, states “Note:  Your Age Pension is currently paid under the income test”.  The income and assets details were on page 3 of the notice and it is understandable that Mr Bensted was not likely to audit the accuracy of those details when the incomes test was said to be the basis of payment of his Age Pension.

29. Therefore, the strict approach often adopted in relation to the interpretation of s 109 is only reasonable when the Department has “clean hands” in its handling of the particular case. This is well supported in the case of Re Frost and Secretary, Department of Social Security (1995) AATA 10360 and Re Kelly and Secretary Department of Social Security (1995) 39 ALD 476, both of which have facts similar to the present case and where the departmental errors had been extensive. In both of those cases, it was held that the Department could not succeed and that the concept of review under s 109 should not be strictly adopted in such cases. I find this is also the correct or preferable decision in this case.

30.     In the circumstances of this case, I find that the decision of the SSAT is correct.  The decision under review is affirmed.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K S Levy RFD, Senior Member

Signed: ......................[Sgd].......................................................
              Kate Slack, Research Associate

Date/s of Hearing  22 April 2010
Date of Decision  27 May 2010
Solicitor for the Applicant          Rick McQuinlan, departmental advocate

Respondent was self-represented