Secretary, Department of Social Security v Garratt

[1992] FCA 512

Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: CHERYL GARRATT
No. N G693 of 1991
FED No. 512
Social Security
(1992) 109 ALR 149
(1992) 27 ALD 321

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Gummow J.(1)

CATCHWORDS

Social Security - family allowance - cancellation - fresh claim - whether allowance payable from date of cancellation or determination of claim - construction of s. 168 - meaning of "notice was given" in para. 168(4)(a) of the Social Security Act 1947 - whether service by post sufficient - whether ss. 28A, 29 of Acts Interpretation Act 1901 applicable - transitional provisions - Social Security (Rewrite) Transition Act 1991.

Social Security Act 1947

Social Security (Rewrite) Transition Act 1991

Acts Interpretation Act 1901

Re Secretary, Department of Social Security and Perkins (1990) 20 ALD 427 disapproved.

HEARING

SYDNEY

#DATE 17:7:1992

Counsel and solicitors for
the Appellant: Mr J.S. Hilton instructed by the

by Australian Government Solicitor

Counsel and solicitors for
the Respondent: Mr G. Miller instructed

by Jennifer E. Darin

ORDER

THE COURT ORDERS THAT:

1. The appeal be allowed and the decision of the Administrative

Appeals Tribunal given 10 October 1991 be set aside.

2. The case be remitted to the Administrative Appeals Tribunal to be

determined according to law.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal, heard in the original jurisdiction of the Court, from the Administrative Appeals Tribunal ("the AAT") upon questions of law, pursuant to s. 44 of the Administrative Appeals Tribunal Act 1975. The appeal raises issues as to construction of various provisions of Parts X, XVIII and XIX of the Social Security Act 1947 ("the Act").

1. The decision of the AAT was given on 10 October 1991. That was after the coming into effect on 1 July 1991 of the Social Security Act 1991 ("the 1991 Act"). Section 3 of the Social Security (Rewrite) Transition Act 1991 repealed the Act, with effect from the coming into force of the 1991 Act. However, it was accepted before me that the substantive law applicable both by the AAT and this Court remains that contained in the Act. The reasoning supporting that conclusion is to be found in the decision of O'Connor J., as President of the AAT, in Cirkovski v Secretary, Department of Social Security (30 January 1992, unreported).

2. The respondent was in receipt of family allowance as provided for in Part X of the Act. On 22 November 1989 a determination was made, pursuant to sub-s. 168(1) of the Act, to cancel family allowance with effect from the date of the determination. The respondent received no payment after October. After events which I later describe, including the lodgment of a new claim (with the deemed lodgment date of 18 July 1990) payment recommenced. However, the respondent contended that she should receive "arrears" in respect of the intervening period commencing with what appears to have been the date of the last payment, 19 October 1989.

3. The AAT affirmed the decision of the Social Security Appeals Tribunal ("the SSAT") dated 15 October 1990 that the family allowance "be restored" to the respondent "from the date of cancellation". The AAT also requested the appellant to assess the amount payable to the respondent. The SSAT had set aside a decision made on 25 July 1990 by a Delegate of the appellant that "arrears cannot be paid to you from October 1989". The Delegate's decision had been affirmed by an Authorised Review Officer whose decision was conveyed by letter to the respondent dated 17 August 1990. The Delegate had also notified the respondent that if she wished for payments to be restored to her she should complete a claim form. Family allowance payments would then commence from the next available pay day, 26 July 1990. As I have indicated above, this is what happened.

4. Before dealing further with the facts it is necessary to outline some provisions of the Act.

5. Part X (ss. 79-93) is headed "Family Allowance". Section 82 qualifies certain persons, of whom the respondent is one, to receive family allowance in respect of dependent children. Family allowance is payable to a person in respect of a child on each "family allowance pay day" on which the person is qualified to receive family allowance in respect of that child (s. 87). The expression "family allowance pay day" means Thursday, 29 December 1988 and each succeeding alternate Thursday (sub-s. 79(1)).

6. Part XVIII (ss. 158-171) is headed "Claims, Payment, Notification, Review, Cancellation and Related Matters". In construing these provisions it must be borne in mind that whilst the present case is concerned with family allowance, this Part operates upon a whole range of pensions, benefits and allowances created by the Act. Section 158, so far as immediately relevant, provides that the payment of an allowance under Part X shall not be made except upon the making of a claim for that allowance, and that the Secretary "subject to this Act", is to determine claims. The words which I have quoted from s. 158 accommodate that section to specific provision made elsewhere, in particular, in s. 168. Section 159 relevantly provides that a claim shall be made in writing in accordance with an approved form and lodged in an office of the Department in Australia or some other approved place. Speaking of the Act as it then stood, Davies J said that one effect of ss. 158 and 159 is that once a pension or benefit has been cancelled, the previous recipient has no entitlement to restoration thereof until that person has lodged a further claim in accordance with those sections: Freeman v Secretary, Department of Social Security (1988) 19 FCR 342 at 345.

7. Sub-section 163(2) provides:
   

"163(2) The Secretary may give, personally or by post, to any person to whom or on behalf of whom a pension, benefit or allowance is being paid under this Act a notice requiring that person to furnish to the Department or to the officer specified in the notice, within the period and in the manner specified in the notice, a statement, in accordance with a form approved by the Secretary, relating to any matter that might affect the payment to that person of the pension, benefit or allowance."

The relevant period for compliance specified in the notice should be not less than 14 days (sub-s. 163(4)). The section establishes a criminal offence by sub-s. (5). This states:

"163(5) A person shall not -

(a) refuse or fail to comply with a notice under sub-section

(1) or (2) to the extent that the person is capable of complying with it; or

(b) in purported compliance with such a notice, knowingly or recklessly furnish information that is false or misleading in a material particular. Penalty for any contravention of this sub-section:

(c) in the case of a natural person - $1,000 or imprisonment for 6 months, or both; or

(d) in the case of a body corporate - $5,000."

Thus, the relevant obligation of compliance with notices is created by sub-s. 163(5) rather than the earlier sub-sections. That this is the proper construction of the legislation is indicated by the reference to sub-s. 163(5) in sub-para. 168(2)(a)(i) (to which I will shortly come). The significance of the criminal liability created in s. 163 has been overlooked in some decisions upon the legislation; see, for example Re Secretary, Department of Social Security v Shanahan (1991) 23 ALD 623 at 625-6.

1. Sub-section 164(2) empowers the Secretary to obtain information from third parties.

2. On 14 October 1989 there was issued a notice directed to the respondent at an address "33 Balmoral Street Northmead 2152". The notice required the provision of certain information within 21 days and stated that "If you do not return this letter with the questions answered we cannot continue to pay you after 28 December 1989." The letter was returned on 26 October 1989 to the mail room on the Department marked "not at this address". In November 1989, acting pursuant to the Secretary's power in s. 164, a Delegate requested the respondent's bank, at the branch where there was maintained an account into which the family allowance was being paid, to inform him of the respondent's residential address. The bank was the National Mutual Royal Bank, at 74-80 George Street, Parramatta. The bank supplied the address as 33 Balmoral Road, Northmead. This response was received by the Department on 17 November 1989. There followed the cancellation on 22 November 1989.

3. The cancellation was effected by a determination under sub-s. 168(1), this provides:-
   

"168(1) Subject to sub-section (2), if -

(a) having regard to any matter that affects the payment of a pension, benefit or allowance under this Act;

(b) by reason of the refusal or failure of any person to comply with a provision of this Act; or

(c) for any other reason,

the Secretary determines that a pension, benefit or allowance should be cancelled or suspended, or that the rate of a pension, benefit or allowance is more than it should be, the Secretary may, be determination, cancel or suspend, or decrease the rate of, the pension, benefit or allowance with effect from the date of the determination or such later date as is specified in the determination.

(2) Where a determination is made under sub-section (1) -

(a) by reason of the refusal or failure of any person to comply with a provision of this Act, other than -

(i) sub-section 163(5) in relation to a notice under sub-section 163(2); or

(ii) sub-section 164(3); or

(b) by reason that an amount has been paid by way of pension, benefit or allowance that, but for the false statement or misrepresentation of any person, would not have been paid,

a date earlier than the date of the determination may be specified in the determination as the date from which the cancellation, suspension or decrease, as the case may be, takes effect."

1. In the notification of the cancellation it was said that the Department did "not have enough information to decide whether we can still pay you". Counsel for the applicant did not contend that the determination was based upon para. (b) of sub-s. 168(1), for failure of the respondent to comply with sub-s. 163(5). Rather, he put the matter as one where the determination had been made having regard to matters affecting the payment of the family allowance, something with which para. (a) of sub-s. 168(1) is concerned. In my view that concession plainly was correctly made.

2. The notification to the respondent of the cancellation of the family allowance was returned to the Department on 29 or 30 November 1989 with the envelope again marked "not at this address". The notification had been addressed to the respondent at 33 Balmoral Street, Northmead.

3. More than 3 months then passed. The significance of this delaywill appear later. On 18 July 1990 the Department received a letter from the respondent stating that she had not received payments since October 1989. It later transpired that she had moved with her family in July 1989 from the Sydney metropolitan area to an address in Running Stream. Mr and Mrs Garratt had been allowing the payments to build up in the bank account to provide funds for repairs to their car. They said that they had paid for a postal redirection and had not received any of the relevant communications from the Department.

4. Clearly, in those circumstances, there could have been no commission of an offence under sub-s. 163(5), if only because not having received the notice, the respondent was not capable of complying with it, within the meaning of para. 163(5)(a).

5. Section 172 is contained in Part XIX. It provides that the Secretary may review a decision of an officer under the Act and may, inter alia, set the decision aside and substitute a new decision. Further, a person affected by a decision may apply to the Secretary for a review of it (s. 173). However, in the events that happened there was, and in this regard I accept a submission for the appellant, no review of the determination under sub-s. 168(1) to cancel the family allowance.

6. The controversy with which eventually the AAT was required to deal concerned the consequences of the favourable determination by the Delegate, made in July 1990, of a new claim by the respondent. This produced the commencement of payments on 26 July 1990. The question is whether the favourable determination of her claim should have carried with it a right to "arrears". In that regard it is necessary to turn to further provisions of s. 168. Sub-ss. (3) and (4) are in the following terms:-
   

"168(3) If, having regard to any matter that affects the granting of a claim for, or the payment of, a pension, benefit or allowance under this Act, the Secretary decides that the claim should be granted, a payment of the pension, benefit or allowance should be made or the rate of the pension, benefit or allowance is less than it should be, the Secretary may, by determination, grant that claim, direct the making of that payment or increase that rate, as the case may be.

(4) A determination under subsection (3) takes effect:

(a) if the determination is made following a person having applied to the Secretary under subsection 173(1) for review of a previous decision where:

(i) a notice was given to the person to whom the relevant pension, benefit or allowance was or could have been payable advising the person of the making of the previous decision and the review was sought, or the appeal made, within 3 months after that notice was given; or

(ii) no notice was given to the person referred to in subparagraph (i) advising the person of the making of the previous decision; on the day on which the previous decision took effect;

(b) if subparagraph (a)(i) would apply but for the person concerned having sought the review or made the appeal outside the period of 3 months referred to in that subparagraph - on the day on which the person sought the review or made the appeal;

(c) if the determination is made following a person having advised the Department of a change in circumstances (other than a change consisting of a decrease in the rate of the person's maintenance income) - on the date on which that advice was received or on the day on which that change occurred, whichever is the later;

(ca) in the case of a determination granting a claim when none of the preceding paragraphs applies - on the day on which the determination was made or on such later day or earlier day as is specified in the determination; or

(d) in any other case - on the day on which the determination was made or on such later day or earlier day (not being a day more than 3 months before the determination was made) as is specified in the determination."

Paragraph (ca) was added by s. 20 of the Social Security Amendment Act 1988, with effect (see s. 2) from 16 December 1987. A new para. (d) had been added with effect from the same day by the Social Security and Veterans' Entitlements Amendement Act (No. 2) 1987, s. 53. A note by the Delegate on his file, dated 25 July 1990 states, with obvious reference to the letter received from the respondent on 18 July, "New claim required. Allowee contacted outside the 3 months following cancellation. Advise sent to last known address 22/11/89. Address unchanged at bank when contacted. No arrears payable, ss. Act 168/4." That view as to the need for a new claim was consistent with Freeman v Secretary, Department of Social Security (supra).

1. The favourable determination of July 1990 was communicated by the Delegate by a letter in which he responded to the respondent's letter he received 18 July 1990, the terms of which I have set out earlier in these reasons. The Delegate's letter was dated 25 July 1990 and the material portions read as follows:
   

"I refer to your recent letter regarding the cessation of your Family Allowance Payments.

In October 1989, correspondence was sent to your address of 33 Balmoral Road, Northmead. This was returned to the Department marked that you no longer resided at that address and therefore as your whereabouts were unknown, Family Allowance payments could not be continued. As you did not contact the Department within 3 months of the date of cancellation of your payments, arrears cannot be paid to you from October 1989.

However, if you wish payments to be restored to you, it will be necessary for you to complete the enclosed claim form giving details of your income, as soon as possible. As you contacted this office by letter on 18 July 1990, your claim will be deemed to have been lodged on that day, and Family Allowance payments will commence from the next available payday. (ie 26 July 1990)

If you have any queries, please contact this office as soon as possible."

1. Plainly, in my view, the Delegate was not treating the letter as an application by the respondent under s. 173 for a review of the determination under s. 168(1) to cancel the family allowance. The respondent was reliant upon the Department for knowledge of her rights in relation to the position in which she had found herself. That may have been an unfortunate state of affairs, but I would not attribute to her the making of an application under s. 173 when none was made.

2. In response to the Delegate's letter of 25 July 1990 the respondent completed, on 28 July 1990, a form headed "Claim for Family Payments". Mr Garratt telephoned the Delegate and was told there could be review of the decision that arrears could not be paid. This review was requested and made by an Authorised Review Officer in August. As I have indicated earlier in these reasons, the decision was unchanged. The respondent was notified by letter dated 17 August 1990. The writer stated the decision under review as that made on 25 July 1990 "to refuse arrears of Family Allowances". The letter stated:
   

"If you contact this Department within 3 months of us stopping payment then we can consider paying arrears. As you waited over 6 months to contact us I am unable to pay any arrears, and affirm the decision."

1. The SSAT, whose decision was affirmed by the AAT, said in its statement of reasons that it presumed that in making the decision communicated by the letter of 25 July 1990 the Delegate:
   

"... relied on Departmental policy which explains section 168(4)(d) of the Act in deciding not to pay arrears of family allowance. The policy applied was that arrears of family allowance would have been payable if Mrs Garratt had contacted the Department within three months of the date of cancellation of family allowance."

However, the SSAT also said that it found that the respondent "remained eligible for family allowance from the date of cancellation" and it substituted a new decision that family allowance was payable from the date of cancellation.

1. I accept the submission of counsel for the applicant that this misconstrued the statutory scheme and that the error was perpetuated in the reasons of the AAT. But I do not accept what the applicant submits was the proper construction of the Act.

2. One may accept that the respondent at all material times was qualified under s. 82 and that a family allowance was payable under s. 87, but nevertheless once there had been a determination to cancel the family allowance under sub-s. 168(1), then in the circumstances of this case the payment of family allowance might be resumed only upon the making of a claim and its determination.

3. In some circumstances a family allowance ceases to be payable if certain events occur without any determination under sub-s. 168(1) to cancel it. Examples are provided by sub-ss. 169(1), (2). These are linked to the occurrence of events stipulated in a prior notice given by the Secretary under sub-s. 163(1).

4. Sub-sections 168(3) and (4) are to be read together. They supply special provisions which deal with a range of cases involving pensions, benefits and allowances, including those which involve the operation of s. 169 as well as consequences of determinations to cancel made under sub-s. 168(1). They enable the Secretary, inter alia, to decide that a claim made after payment has ceased by reason of cancellation should be made with effect from the particular date which is made applicable by sub-s.(4).

1. Counsel for the applicant contended that these sub-sections do not apply to permit the fixing of an effective determination date which would allow an entitlement to payments under s. 87 with effect from a time when, whilst the claimant might have been qualified under s. 82 (as in this case) the claimant was not the subject of a presently subsisting favourable determination. Alternatively, the applicant submitted that if any paragraph applied to this case it was not (ca) but (d). The result on the facts of this case would then be that no "arrears" were payable. Counsel referred to the decision of the AAT in Re Secretary, Department of Social Security and Perkins (1990) 20 ALD 427 at 432-3.

2. The AAT there accepted the submission for the Secretary that a provision such as para. (ca), despite the width of its terms, is only applicable to cases where a determination unfavourable to a grantee has been set aside. In that case there had been no application under s. 173 for review of a previous decision and the result, it had been submitted, was that para. (ca) would apply.

3. In my view there is no reason to read down the terms of these provisions, and in particular para. (ca), in such a fashion. In Perkins (at 433) an extra example was given of the application, if construed as it reads, of para. (ca) to cases where there had been serious delay in making a claim by a person with a continuing entitlement. It was said that the Parliament cannot have intended such a result. In my view, the point is that para. (ca) confers a discretion not an entitlement to payment. In that regard, it operates quite different from paras. (a), (b) and (c). Each of these paragraphs requires the determination to take effect on that particular day which is identified by the operation of a criteria specified in the paragraph. A delay in claiming a particular entitlement would plainly be a factor to be taken into account in the exercise of discretion in that case.

4. Paragraph (ca) is expressed to apply to a determination where none of the preceding paragraphs applies. In the instant case none of paras. (a), (b) or (c) is applicable. The result is that, consistently with para. (ca) the determination takes effect from the day on which it was made or on such later date or earlier day as is specified in it.

5. The effect of the letter of 25 July 1990 was that the determination was deemed to have taken effect on the date of receipt of the respondent's letter on 18 July 1990, so that payments commenced on the next family allowance payday. This was 26 July 1990. It would have been open to the Delegate to determine an earlier day as the operative date. However, as I have indicated, the Delegate proceeded on the footing, stated in the letter, that because the respondent did not contact the Department within 3 months of the date of cancellation, arrears could not be paid to her from October 1989. This would have been the case if para. (b) applied. But para. (b) would only apply if, by reason of its linkage to para. (a), the determination had been made following an application by the respondent under sub-s. 173(1). That was not the case.

6. Accordingly, in my view, the Delegate fell into error of law in failing to exercise the discretion given by the applicable paragraph, para. (ca), to fix an earlier or later day to that specified in the determination; that error has been perpetuated by the failure to correct it by the SSAT and the AAT.

7. That is sufficient to dispose of the appeal. But I should refer to some further submissions.

8. The result which I have indicated differs from that which would obtain if the cancellation had been reviewed upon application made by the respondent under s. 173. There would then have been no discretion exercisable under sub-s. 168(4). The determination would take effect either upon the date of the cancellation (para.(a)) or the date on which the review was sought (para.(b)). Which of these were applicable would depend upon whether notice of the making of the decision to cancel the family benefit had been given to the respondent, within the meaning of para. (a). On the facts there had in truth been no such notification received by her.

9. Unlike s. 163, sub-s. 168(4)(a) does not speak of notice being given personally or by post. The phrase it employs is "a notice was given". Accordingly, s. 168 is quite different in its terms from those of s. 42 of the Hire Purchase Act 1959 (Q) considered in Fancourt v Mercantile Credits Limited (1983) 154 CLR 87. In my view, sub-s. 168(4) is not a provision which authorises or requires any document to be served by post within the meaning of s. 29 of the Acts Interpretation Act 1901 ("the Interpretation Act").

10. Paragraphs (a) and (b) of sub-s. 168(4) are not directed to any particular manner of service of notices. They are concerned with the fixing of a date which is determinative of the right of persons in relation to pensions, benefits and claims under the Act. The date is fixed by criteria which operate favourable or adversely to those persons by reference to their action or inaction over a particular period after notice was given. The paragraphs operate after there has been, upon application by person or persons affected by it, a review by the Secretary under sub-s. 173(1) of the decision of which notice was given.

11. In this setting, the rights of persons should not readily be construed so as to fix upon something less than the giving of notice and to accept an imputed notification as sufficient for the operation of the legislation. The delay which has adverse consequences as specified in paras. (a) and (b), is delay after notice.

12. Section 28A of the Interpretation Act states:
    

"28A(1) For the purposes of any act that requires or permits a document to be served on a person, whether the expression 'serve', 'give' or 'send' or any other expression is used, then, unless the contrary intention appears, the document may be served:

(a) on a natural person

(i) by delivering it to the person personally; or

(ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document; or

(b) .....

(2) Nothing in subsection (1):

(a) affects the operation of any other law of the Commonwealth, or any law of a State or Territory, that authorises the service of a document otherwise than as provided in that subsection; or

(b) affects the power of a court to authorize service of a document otherwise than as provided in that subsection."

1. In my view, s. 28A has no immediate operation in the circumstances arising under paras. (a) and (b) of sub-s. 168(4). In a review under s. 173 the decision maker may be satisfied by the applicant that despite notice having being sent by pre-paid post to the address of the place of residence or business of the person in question which was last known to the Department, (within the meaning s. 28A of the Interpretation Act) the addressee had no notice given to him or her. The operation of the criteria in paras. (a) and (b) under sub-s. 168(4) will follow the outcome of the review. The result will be that persons will not be subjected to an adverse operation of those paragraphs by the fixing of the 3 months' period there referred to by reference to notice they never had.

2. In that special sense sub-s. 168(4) displays a contrary intention within the meaning of s. 28A of the Acts Interpretation Act.

3. It was accepted by both parties at all stages of the review process that the respondent had in fact not received the communication sent out by the Department in November 1989 to the Northmead address. But, for the other reason I have given, the absence of review under sub-s. 173(1), paras. (a) and (b) had no application in this case.I have dealt with the questions of notice to indicate that I have not overlooked the careful arguments addressed on the point.

4. However that may be, the decision of the AAT must be set aside and the case remitted to the AAT to be determined according to law. There has, as yet, been no exercise of the discretion conferred by para. 168(4)(ca) as to the day on which the determination to grant Mrs Garratt's claim on her fresh application, is to take effect. In accordance with the arrangement between the parties, of which counsel informed the Court, there will be no order as to costs.

5. I should add that counsel referred me to the unreported decision of Jenkinson J. in Secretary, Department of Social Security v O'Connell (19 May 1992). This decision concerned payment of "arrears", but his Honour does not appear to have been referred to the important operation of sub-ss. 168(3) and (4) of the Act. Accordingly I have not been able to derive assistance from it in dealing with the submissions in the present case, in which there was much reliance upon those provisions.