Snow and Secretary, Department of Social Services (Social services second review) - [2022] AATA 365

Snow and Secretary, Department of Social Services (Social services second review) [2022] AATA 365 (3 March 2022)
Division:GENERAL DIVISION
File Number(s): 2018/3716
Re:Christopher Aslin Snow
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Senior Member Dr N A Manetta
Date:3 March 2022
Place:Adelaide

The Tribunal sets aside the Level 1 decision of this Tribunal and substitutes the following decision:
(a) the Authorised Review Officer’s decision be set aside; and
(b) the matter be remitted to the respondent with a direction that any arrears of pension from August 2017 onwards be calculated and paid to the applicant in accordance with the Tribunal’s reasons.

…………………[Sgnd]………………………
Senior Member Dr N A Manetta
SOCIAL SECURITY – age pension – whether applicant should be paid arrears – where applicant has interest in private trust – extinguishment of private trust by operation of law unbeknownst to applicant – limits on Tribunal’s jurisdiction to order payment of arrears- discussion of s 126 of the Social Security (Administration) Act 1999 (Cth) – AAT1 decision under review set aside and substituted.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Cases
DKLR Holding Co (No 2) Pty Ltd v. Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, at 463
Re Lewis and Secretary, Department of Social Services [2015] AATA 898
Secondary Materials
HAJ Ford and WA Lee, Principles of the Law of Trusts (Thomson Reuters) (Loose-leaf Service)

REASONS FOR DECISION
Senior Member Dr N A Manetta
3 March 2022

The applicant, Mr Christopher Aslin Snow, seeks a review in this Tribunal of the rate at which his age pension under the Social Security Act 1991 (Cth) has been paid to him over a number of years. In essence, Mr Snow seeks a decision from the Tribunal that he be paid arrears of age pension he did not receive, but which he claims he ought to have received, starting in 2010.[1] The essence of Mr Snow’s claim before me[2] is that there has been a wrong assessment of his assets and income because his interest in a private trust called the “Mardick Trust” was taken into account in an incorrect way; and, in particular, Mr Snow submits that the Trust came to an end by operation of law on 18 May 2010.
[1] To the extent Mr Snow seeks an order from the Tribunal for the payment of damages, I note that I have no jurisdiction in that regard.
[2] This is the submission Mr Snow now wishes to make to the Tribunal. His application notice to this Tribunal (at Level 2) raises an objection that “the Trust” was an “exempt lump sum” and ought to have been treated in this way: see Ex R1, at p 4 .
At the hearing of certain preliminary questions, Mr Snow represented himself; Mr Burgess appeared for the respondent. At later interlocutory hearings, Mr Nocera appeared for the respondent.
PROCESS BEFORE THE TRIBUNAL
I set down certain preliminary questions to be determined before the matter would progress to a possible further hearing. My intention in proceeding in this way was to hear and receive evidence and then determine, first, whether Mr Snow was entitled to any payment in arrears of his pension, and, secondly, if Mr Snow was correct in his submission that he was owed a payment, whether he was correct in his further contention that he was entitled to a payment of arrears from 2010 (or in any event from a date earlier than 2017). The answers to these preliminary questions were intended by me to inform a subsequent stage of the hearing, if any were needed, as to the quantum of the arrears. Either I would rule Mr Snow was entitled to no payment in arrears of his pension (in which case the decision under review would simply be affirmed); or I would rule that Mr Snow was entitled to a payment in arrears to the date of his application for an internal review in August 2017; or I would rule that Mr Snow was entitled to a payment in arrears from 2010 (or from some other date earlier than August 2017). The second and third of these three possible outcomes would necessitate recalculations in the respondent’s Department, which, if disagreed with by Mr Snow, would lead to a second stage of my review. The first outcome would lead to no second stage of the review.
Proceeding in this way seemed to me to be the most efficient and fair way to conduct the hearing. I prepared interim reasons dated 29 October 2021 as a result of the hearing in respect of the preliminary questions, but I indicated in the reasons that no formal decision had yet been made. I distributed the interim reasons to the parties but did not publish them. I further indicated that my final published reasons would be prepared at the conclusion of the matter and I reserved the right to add to the interim reasons or amend them.
Given the finding in my interim reasons that Mr Snow was entitled to an arrears payment from 2017 onwards, a further stage to the review (namely, one to determine quantum) became necessary, but that further hearing did not eventuate for reasons I shall explain in due course.
The preliminary questions I set down concern my jurisdiction to rectify any payment error as far back as 2010 in light of the fact that Mr Snow’s first formal request for a review of the calculation of his age pension was made by him on 18 August 2017. They also concerned the significance of what Mr Snow asserted was the extinguishment of the Mardick Trust that he maintained came about by operation of law when he became both its sole trustee and sole beneficiary in May 2010. Mr Snow also asked me to consider a further question which I have also set out and answered at paras [55]ff[3]. Finally, Mr Snow asked me to consider a submission in respect of s 126 of the Act and I have done so at paras [58]ff.
[3] This is the question concerning an “exempt lump sum” raised in the application notice to the Tribunal (Level 2).
I now set out the background facts including my analysis of the Mardick Trust.
BACKGROUND FACTS
Mr Snow gave evidence before the Tribunal which I accept. He was born on 8 October 1942 and is, therefore, 79 years of age. He was born in Adelaide and worked first as a journalist and then as a public servant. He made an application in December 2009 for the age pension and retired fully, as I understand his evidence, in March 2010. Mr Snow also gave evidence, which I accept, that he had an entitlement under a private discretionary trust called the Mardick Trust.
Mardick Trust
According to Mr Snow, the Mardick Trust was set up by Mr Snow’s father[4], a practising dentist. Mr Snow gave evidence that the legal firm of Magarey and Magarey drew the Trust documents in 1984. The Indenture establishing the Mardick Trust was in evidence before me: Ex R2 at pp 20ff. It is drawn in conventional terms and clearly establishes what is commonly referred to as a “discretionary trust”.
[4] And also perhaps by his mother.
Mr Snow’s father was married and the couple had three children: Mr Snow and Mr Snow’s two sisters. Mr Snow said there was no discussion in the family about the Mardick Trust when it was set up in 1984. I accept that evidence.
The original trustees were Mr Snow’s father, Mr Snow’s mother, and a company associated with Magarey and Magarey called “Gimalo Administrators Pty”. I understand this company acted as a trustee of many of Magarey and Magarey’s private client trust funds. I note that Mr Snow’s mother died in 1995 and his father in 2005. I accept Mr Snow’s evidence that after his parents’ deaths, Gimalo Administrators Pty became the sole Trustee by right of survivorship, and no additional trustee was appointed at that time. This situation was permitted by cl 22 of the Indenture.
The Indenture set out the following provisions with respect to income. By cl 3(a), the Trustees were permitted “in their absolute and uncontrolled discretion” at any time before the expiration of any “Accounting Period” (effectively, a financial year ending 30 June) to pay some or all of the net income arising in the Accounting Period to any one or more of the “General Beneficiaries”. The “General Beneficiaries” were defined in cl 1(b) to include, broadly speaking, Mr Snow’s father and mother, and their children, grandchildren, and spouses. Also included were any charitable institution or purpose selected from time to time by the Trustees in their absolute discretion and any “eligible trust” or eligible corporation”, both of which are defined terms. Clause 3(b) provided, broadly speaking, that at the end of the Accounting Period, any undistributed income should be held on trust for such of Mr Snow and his sisters who were living at that point in time (i.e., on 30 June).
Clause 5 of the Indenture dealt with the vesting of the Trust Fund. It provided that on the “Vesting Day” (which was fixed as 30 June 2031 unless the Trust had been brought to an end earlier), the Trustees would hold the Trust Fund on trust for such of Mr Snow and his sisters who were living on the Vesting Day (with a proviso that if one or more of these three had died in the meantime, his or her share would be taken by his or her child or children). The corpus of the Trust Fund was not immediately vested, therefore, in any beneficiary.
Clause 4 gave the Trustees a very broad power that effectively cut across cll 3 and 5. Under cl 4, the Trustees had “an absolute and uncontrolled discretion” to transfer any part of the Trust Fund to any of the General Beneficiaries at any time. This power was wide enough to permit the Trust to be brought to an end at any time.
As I have noted, after Mr Snow’s father’s death in 2005, Gimalo Administrators Pty, a Magarey and Magarey company, became sole Trustee by right of survivorship. Magarey and Magarey became in due course “Magarey Farlam”. One of Magarey Farlam’s employees was found to have embezzled large amounts of trust money held by the firm. As a result, Magarey Farlam’s assets were “frozen” at a point after Mr Snow’s father’s death, according to Mr Snow. These included the Mardick Trust’s assets held at that time by Gimalo Administrators Pty as sole Trustee of the Mardick Trust.
In the ensuing Supreme Court proceedings, Mr Snow said he was represented by Scales and Partners, and he took legal advice from them. New Trustees were appointed to the Mardick Trust in due course, and the appointments were confirmed by the Supreme Court. The new Trustees were certain chartered accountants, Messrs Caulfield and Albertini, in substitution for Gimalo Administrators Pty.
So, pausing at this point, I note that the new Trustees held the Mardick Trust Fund on the terms I have previously described. At an operational level, the Trust no doubt functioned as one where the Trustees held income and capital on trust for Mr Snow and his two sisters in equal shares. But the legal situation was somewhat different. The Trustees had a power under the Indenture to distribute income and capital to one or more of Mr Snow, his sisters, and/or other “General Beneficiaries” in their discretion. The equitable interest in the Fund would formally vest in the three siblings on the Vesting Day, but only if they were alive on that day and only to the extent that the Fund had not been distributed earlier to one or more of the General Beneficiaries. That was the legal position established by the Trust Deed in 1984 and it persisted.
It is sufficient for present purposes to note that Mr Snow eventually found himself in dispute with his sisters, and he also had differences with Messrs Caulfield and Albertini over their administration of the Trust. A deed was executed in 2009, and it was in evidence before me (see Ex R2 at pp 51ff). This deed records the terms of a settlement that addressed the differences among the siblings, and it also addressed the Trust’s future. The copy of the deed before me is undated except for the year “2009” (which is typed), but I assume the deed was executed some time in 2009. Mr Snow gave evidence that his appointment as sole Trustee was given effect to on 18 May 2010 by a further deed, which was also in evidence before me (see Ex R2 at p 48). I accept this evidence.
The net result of the settlement may be summarised as follows. Effectively, the outgoing trustees, Messrs Caulfield and Albertini, were to pay specified amounts from the Trust Fund to each of Mr Snow’s sisters in full and final satisfaction of their present and future entitlements under the Trust (see cl 3.1); and, when that had occurred, the outgoing trustees were to be replaced by Mr Snow (see cl 3.4).
On the evidence before me, therefore, Mr Snow became sole Trustee of the Mardick Trust on 18 May 2010 and was responsible for administering it. He had the power to distribute the Fund to himself under cl 4 of the Deed but he did not proceed to do so. In answer to a question from me in this regard, Mr Snow confirmed that despite the settlement, he decided to keep the Trust on foot because he was contemplating legal action in the form of a claim against an indemnity fund administered by the Law Society of South Australia in respect of practitioner defalcations. He confirmed to me also that this was a decision he took because he believed the Trust had to continue to exist if he were to initiate a valid legal action in this regard. Mr Snow gave evidence that he was taking legal advice from Scales and Partners in the matter. I note that in the event Mr Snow did not, as trustee of the Mardick Trust, seek legal redress against the indemnity fund, but his intention at the time was to keep his options open. Mr Snow also said in his evidence that he was still very angry with Messrs Caulfield and Albertini over their administration of the Trust and that he wanted to keep the Trust going in case he decided to launch legal action against them (despite cl 4 of the settlement deed which prevented any such action). I accept his evidence in this regard.
As I have indicated, Mr Snow applied for his pension in December 2009. He began to receive his pension entitlement in 2010. Clearly enough, the level of Mr Snow’s pension might be affected by any interest he held in the Mardick Trust. A 100-percent interest in the assets of the Trust was attributed to him by Centrelink. Centrelink accepted that he was both sole trustee and beneficiary of the Trust[5]. That 100-percent level of attribution is not disputed by Mr Snow as such.
[5] Although not all documentation had been finalised at this point, Centrelink proceeded on the basis that the settlement deed would soon be implemented fully: see Ex A5, p 1.
Mr Snow’s pension entitlement was calculated on an assumption that the Trust was valid and legally enforceable. I note the Trust continued to operate and financial statements were prepared on an annual basis, and Mr Snow himself believed at this time that the Trust was legally enforceable. Mr Snow now contends that the Trust had no valid existence after 18 May 2010 for reasons I shall come to.
Mr Snow gave evidence that in 2014 he spoke with a “complex assessment officer” (“CAO”) from Centrelink as he was concerned at that time that he might not be receiving all of his pension entitlement. The discussion led to no change in the pension amount Mr Snow was paid.
Mr Snow did not take any action formally to seek an internal review of the level of pension he was receiving. He did not seek independent advice in relation to the matter either. Mr Snow gave evidence before me that in 2015 he had planned to take the matter up again with Centrelink but decided not to. He did not pursue the matter in 2016 either. In August 2017, he formally asked for an internal review for the first time. The end result of the internal review, which has led to the proceedings in this Tribunal, was that the level at which Mr Snow’s pension had been paid was confirmed. In this Tribunal, at Level 1, the decision was affirmed: see Exhibit R1 at pp 5ff. When he sought an internal review, Mr Snow was concerned about what he maintained was the wrongful inclusion of certain capital gains arising from the sale of shares held by the Trust[6].
[6] See Ex R1, p 12.
I understand from Mr Snow that in 2018 the Trust was in fact formally dissolved, and, from that point on, Mr Snow was paid his pension entitlement on the basis that all assets formerly held by him as Trustee of the Mardick Trust were now held by him in his own right.
REASONS
Cessation of the Mardick Trust
It is convenient to consider first the primary submission Mr Snow has made to me. Mr Snow submitted very strongly that the Mardick Trust ceased to exist in law after his sisters had renounced their entitlements and he became sole trustee of the Trust on 18 May 2010. That is the first plank in Mr Snow’s submissions.
Mr Snow contended that on 18 May 2010, the legal title to the Trust’s assets (held by him as sole Trustee) merged with the equitable title (held also by him as sole beneficiary) and he became an absolute owner. It followed, in Mr Snow’s submission, that on 18 May 2010 the assets and income of the Mardick Trust should have been considered as personal assets and income he held in his own right with no trust interposed. This was the legal position, he said, even though he himself had decided to keep the Trust on foot and was not aware of this legal principle until relatively recently.
In support of this submission, Mr Snow referred me to the principle of law that a sole trustee may not be a trustee for himself or herself alone and that any trust cast in these terms is invalid. For this reason, Mr Snow maintained that on 18 May 2010, the Mardick Trust terminated by the supervening operation of this principle of law: see, for example, HAJ Ford and WA Lee, Principles of the Law of Trusts (Thomson Reuters) (Loose-leaf Service) at [5.530].
As I understood Mr Burgess’s submissions, the respondent accepts that Mr Snow is correct in his view of the legal position as of 18 May 2010, and that Mr Snow’s entitlement to a pension ought to have been calculated on the basis that the Mardick Trust did not exist in law from 18 May 2010 onwards. The respondent further concedes that if this approach is taken, Mr Snow’s pension entitlement will in fact increase. Before Mr Burgess’s involvement in the file, the respondent had in fact maintained before me, both orally and in filed submissions, that the level of Mr Snow’s pension entitlement would not increase even if Mr Snow were considered the absolute owner. At the hearing in respect of the preliminary questions, however, Mr Burgess advised the Tribunal that the respondent’s position had changed in this regard: the respondent now accepts that Mr Snow would have been paid a higher rate of pension if he had been considered to own the assets of the Mardick Trust in his own right.
Mr Burgess submitted, therefore, that the appropriate decision on the application before this Tribunal was a remitting of the matter for recalculation of Mr Snow’s pension entitlements from 2017 onwards. Mr Burgess disputed that any recalculation in Mr Snow’s favour should go back as far as 2010, although he accepted that it should go back to 2017, when Mr Snow first requested an internal review.
I am prepared to act on Mr Burgess’s concession in order to effect what I would regard as substantial fairness in this matter[7] because I do accept that, as a matter of practicality, Mr Snow became, in effect, the sole owner of the Trust assets on 18 May 2010.
[7] A result supported in my view by s 2A of the Administrative Appeals Tribunal Act, 1975.
I do wish to record, however, that the legal position is complicated and not cut and dried in my opinion. I turn now to consider the legal position.
I accept that Mr Snow became the sole Trustee of the Mardick Trust on 18 May 2010. I also accept that his sisters had renounced any further entitlement under the Trust by virtue of the settlement deed.
The Indenture drawn in 1984 specified beneficiary entitlements. As I have earlier said, clause 3(a) provided that the Trustees had an uncontrolled discretion to pay any part of the annual income of the Trust to any of the so-called “General Beneficiaries”, a defined term that embraces a wider group than that of Mr Snow and his sisters. I have also noted that cl 4 provided that the Trustees might distribute any part of the Trust Fund including capital at any time in their absolute discretion to any one or more of the “General Beneficiaries” and that cl 5 provided for the vesting of the Trust Fund only on the “Vesting Day”.

If the Trustees did not distribute income, the income was to be held at the end of each accounting period on trust for such of the three children (namely, Mr Snow and his two sisters) who were living at that point in time. I accept that once the two sisters had renounced (under the settlement deed) all their entitlement under the Trust, Mr Snow, as Trustee, would hold the income at the end of each accounting period on trust for himself if he had not earlier paid it out as Trustee. I also accept that, as a practical matter, once Mr Snow became Trustee, he became solely entitled to administer the Trust’s affairs. This included specific powers to appoint all income and capital to himself at any point in time.
I further accept that it is undoubtedly a principle of trusts law that a sole trustee may not hold property on trust simply for himself or herself. Accordingly, to cite an example given in the textbooks in one form or another, a settlement where property is transferred to “X” alone on trust for “X” alone, with no other trusts or powers, does not give rise to a valid trust: see, for example, Ford and Lee, op cit, at [5.510]. If a trust were drawn in such terms, it would be invalid from the outset. If this situation arose because of later events, the trust would become invalid from that point on, a situation of supervening invalidity. The legal title to the Trust fund would merge with the equitable title at that point in time, making the trustee an absolute owner: see, for example, DKLR Holding Co (No 2) Pty Ltd v. Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, at 463. It is also accepted that a person cannot owe the fiduciary duties of a trustee to himself: see Ford and Lee, op cit, at [5.530].
I accept these propositions. In the case of the Mardick Trust, there was no invalidity from the outset. If there had been a supervening termination of the trust by operation of law, it came about on 18 May 2010 because Mr Snow became entitled, as sole Trustee, to appoint the Trust Fund to himself alone and because he owed no fiduciary duties to anyone else at that point in time.
Of course, if Mr Snow had transferred all of the Fund to himself on that day, that action would have ended the Trust. That did not occur, and the critical legal question to my mind is whether the Trust nevertheless ended by operation of law on 18 May 2010 when Mr Snow’s right as sole Trustee to transfer the Fund to himself first arose.
The answer to this question depends, in my opinion, on what, if any, rights enforceable in a Court any of the other “General Beneficiaries” had vis-à-vis Mr Snow, as Trustee. If at least one of them had legal standing to approach a competent Court to seek an order compelling Mr Snow to consider exercising his discretion in his, her or its favour, that might be enough to preserve the Trust notwithstanding that any such legal action might be a remote possibility at best. That would be a situation where Mr Snow continued to owe, technically, fiduciary duties to another person until he chose to distribute the entirety of the Fund to himself. On the other hand, if no person had legal standing on 18 May 2010 to invoke the assistance of a Court, the Trust must have come to an end in my opinion as the Indenture ceased to impose any enforceable fiduciary obligations on the Trustee as of that date. In that event, it must follow that Mr Snow was free to treat the Fund as his own on 18 May 2010, and, in the absence of any enforceable fiduciary obligations binding him, the Trust must be taken to have ended by operation of law.
Given the respondent’s concession, on which I am prepared to act, I do not need to take the question further; but I wish to note that working through this question and answering it correctly would require a close examination of the Indenture and settlement deed and some considerable knowledge of the law of trusts. I wish to make that point explicitly because Mr Snow pressed me with a submission that he ought to have been advised by the CAO in 2014 that the Trust was invalid from 2010 onwards, even though he made no such suggestion to him.
I do not accept Mr Snow’s submission, and in fact I must say that I reject it quite firmly. Mr Snow presented Centrelink with a Trust which he believed was valid and operational. He did so in 2010 and again in 2014. Indeed, in his evidence to me, Mr Snow made it clear that he had taken advice and decided to keep the Trust operational in order to preserve his legal standing to bring certain actions he was then contemplating. The Trust continued to operate and financial statements were prepared on an ongoing basis: see Ex R1, pp 82-262. The Trust continued to operate because Mr Snow decided it should continue. In these circumstances, I do not believe that Mr Snow has a reasonable basis for complaining that the CAO did not examine the various deeds in question and identify and then determine a somewhat arcane legal question against Mr Snow’s own understanding at the time. Mr Snow did not raise the potential invalidity of the trust as an issue for the CAO’s consideration. I do not think it was the CAO’s responsibility to initiate an investigation into the Mardick Trust’s validity or provide advice to Mr Snow on that question, especially when the advice had not been sought. The CAO was entitled to assume the validity of the Trust as Mr Snow himself had put the Trust forward as one he was administering.
This is an important point in my opinion. Mr Snow’s submissions imply, as I have said, that it was the responsibility of the respondent’s officers to review his Trust documents, discover a cause of invalidity, and advise him accordingly. He maintains that Centrelink was in dereliction of its responsibilities to him in not identifying the supervening invalidity of the Trust. In effect, this assumes that Centrelink had the responsibilities of a private legal adviser vis-à-vis Mr Snow. That misstates the position in my opinion. The CAO explained to Mr Snow how his pension entitlement had been arrived at, but he was in no sense an adviser to Mr Snow on the Trust’s legality. I do not accept Mr Snow’s submission in this regard.
Questions for Preliminary Determination
The questions that I reserved for consideration on a preliminary basis may now be answered. The first question I must decide is how far back this Tribunal might extend its jurisdiction in its review. Mr Snow asks me to consider his pension entitlements from 2010 onwards, or in any event, before 2017. Mr Burgess submits that my jurisdiction is limited by reference to the point at which Mr Snow requested an internal review, namely, in August 2017.
On this preliminary question, I would make the following observations. Section 109 of the Social Security (Administration) Act 1999 (Cth) (“the Administration Act”) is a most detailed provision and it clearly limits the arrears that may be paid in this case to the date of the decision in relation to which a review has been sought. In this case, a review was sought on 18 August 2017 in relation to a decision reached on 15 August 2017. This clear limitation on jurisdiction is not affected in my opinion by s 126 of the Administration Act permitting the Secretary to conduct a review of a decision on his own motion at any time. I accept the respondent’s submission that as a matter of law my jurisdiction in this review is limited by s 109(1) to 15 August 2017.
The limitations in s 109 have been imposed by Parliament. It may be thought to be unfair by some, even many, in the community, but it does represent the legal position I am obliged to apply.
Request for review
I have considered whether there was a request for a review before 18 August 2017. I have concluded, on the evidence before me, that there was not. I accept that in a number of decisions, the Tribunal has indicated a willingness to treat a review as having been requested by social security recipients who have expressed themselves in an informal way only. There is, however, a difference in my opinion between, on the one hand, social security recipients querying the calculation of an entitlement with an officer (i.e., inquiring how the calculation might have been arrived at), and, on the other hand, social security recipients indicating, albeit informally, that they desire an internal review of the decision. In my opinion, this is an important distinction.
In this connection, it is convenient for me to refer to my own earlier decision in Re Lewis and Secretary, Department of Social Services [2015] AATA 898 at [26] – [27]:
“26. Ms Riley emphasised that an application for internal review can be of the most informal kind.[8] I do not doubt that an application for review can be informal and that an applicant need not use the word ‘review’. Nor need an applicant for review have any appreciation of the scheme of the Act or the Administration Act. I also accept that a single enquiry can amount to an application for review[9]; but, equally, not every enquiry at a counter seeking clarification of an entitlement amounts to an application for review that must be referred by Centrelink staff to an ARO. That appears to me to be the effect of Ms Riley’s argument, which I cannot accept in that unrestricted form.
27. A person may be merely seeking in his or her own mind a clarification or an explanation on the one hand; or a person may be seeking, on the other hand, to have his or her entitlement reconsidered within Centrelink; that is, he or she may be seeking ‘a review’. In my opinion, Mr Lewis was seeking merely a clarification or explanation from counter staff, not a reconsideration of his entitlement. Had he intended to seek a reconsideration within Centrelink, he would have asked the staff member how he might go about requesting it. His discussion with the counter staff member is more consistent with his merely having sought an explanation or clarification, and not a review.”
[8] The footnote reads: “Basing this submission on dicta in Re Evelyn Frost and Secretary, Department of Social Security [1995] AATA 228.”
[9] The footnote reads: “As it did in Re Secretary, Department of Social Security and Marsh (1996) 42 ALD 639 where the Tribunal noted at [14] that a single telephone inquiry raising specific matters relating to the calculation of a pension entitlement amounted to an application for review in that case.”
There is nothing Mr Snow has put to me in his submissions (including the submissions he filed after the interim reasons were delivered) that has persuaded me that the distinction I drew in Re Lewis is incorrect as a matter of law. Accordingly, the question becomes whether Mr Snow sought a review before 2017, however informally, and in particular in 2014, when he had discussions with the complex assessment officer, which on the evidence before me was the first occasion on which he queried his pension entitlement after its grant in 2010.
I do not believe Mr Snow intended in his own mind in 2014 to seek an internal review as opposed to an explanation of how his pension entitlement had come to be calculated. In my opinion, this is decisive. In this regard, I bear in mind that Mr Snow is a person of sophistication and does not have the same very limited understanding of administration that many social security recipients who are far less educated have. I certainly accept that Mr Snow did not follow the complex calculations that were required in his case, but he is certainly well educated and was well able to request an internal review after his discussion with the CAO if he had been so minded.
I bear in mind that Mr Snow believed, at the time, that the Trust was legally effective and so there was no reason for Mr Snow to be dissatisfied with the CAO’s explanations. Moreover, when Mr Snow did decide to take matters further in 2017, he asked for an internal review. Between 2014 and 2017, he did not take the matter up with Centrelink, and his evidence to me was that he had planned to take the matter up again in 2015 but decided not to.
I further note that Mr Snow was written to on 6 November 2014 by the respondent (see Ex A5, p 19) in connection with the calculation of his pension entitlements. That letter expressly advised him of his legal right to seek an internal review and to take matters further to the Social Security Appeals Tribunal and from there to this Tribunal. The letter Mr Snow received dated 22 December 2014 also included a section (see Ex A5, p 25) entitled “If you do not agree with a decision” in which appeal rights are described.
In light of all this evidence, I do not believe Mr Snow ever intended in his own mind to seek an internal review of his pension entitlements until he made his application for a review in 2017. The interaction he had with Centrelink in 2014 reflected his desire for a clarification of how his pension rate had come to be calculated.
Accordingly, as my jurisdiction is limited by s 109 to the date Mr Snow first asked for a review, it follows that Mr Snow’s legal entitlement to any arrears of pension goes back to August 2017 only, and not any earlier.
The second preliminary question was what effect, if any, the extinguishment of the Mardick Trust had on Mr Snow’s pension entitlements. In light of the respondent’s concession, on which I have already indicated I am prepared to act, that there is a practical difference and that the respondent proposes to recalculate Mr Snow’s pension entitlement from 2017 onwards on the footing that the Mardick Trust was extinguished in 2010, the question need not be answered.
Further Preliminary Question
Mr Snow also asked me to decide that in any event “the Mardick Trust” came to him as a bequest. It should have been excluded from the assessment of his pension entitlements altogether as an “exempt lump sum”: see s 8(11) of the Social Security Act 1991. I considered this question together with the other preliminary questions since it was convenient to do so.
Mr Burgess drew a distinction, which I accept, between a bequest (which comes as a capital asset to a beneficiary) and any future income from the bequest. Future income from a bequest is not excluded from assessment, as a capital bequest might be. I accept that distinction in principle. To the extent, if any, that Mr Snow advances a submission that income from the Mardick Trust ought to have been excluded as an “exempt lump sum”, I do not accept it.
But I would also note that the death of Mr Snow’s father did not lead to any change of ownership in the Trust assets. Mr Snow’s entitlement under the Trust did not come to him as a bequest under his father’s will. On the evidence before me, when Mr Snow’s father died, the legal ownership of the Trust assets, that is the trusteeship, passed, by right of survivorship, to Gimalo Administrators Pty, as sole Trustee. Mr Snow’s entitlement as a beneficiary of the Mardick Trust did not change on his father’s death. His contingent entitlement to net annual income (provided he was alive on 30 June each year and the income had not already been distributed) remained the same, and his contingent entitlement to corpus on the future Vesting Day (provided he was alive on that day and the corpus had not already been distributed under cl 4) also remained the same.
MR SNOW’S SUBMISSION CONCERNING SECTION 126
Mr Snow pressed me with a further submission concerning s 126 of the Administration Act. I now deal with that submission. As I understood the submission, Mr Snow maintains that the Secretary has the jurisdiction under s 126 to order the payment of arrears of his pension from 2010 onwards (or at least from 2014 onwards). Mr Snow submits that standing “in the shoes”, so to speak, of the Secretary, I have the same powers.
Section 126 is in the following terms:-
“Review of decisions by Secretary
(1) The Secretary may review, subject to subsection (2), a decision of an officer under the social security law if the Secretary is satisfied that there is sufficient reason to review the decision.
(2) The Secretary may review a decision:
(a) whether or not any person has applied for review of the decision; and
(b) even if an application has been made to the AAT for review of the decision.
(3) The Secretary may:
(a) affirm a decision; or
(b) vary a decision; or
(c) set a decision aside and substitute a new decision.
(4) If:
(a) the Secretary sets a decision aside under subsection (3); and
(b) the Secretary is satisfied that an event that did not occur would have occurred if the decision had not been made;
the Secretary may, if satisfied that it is reasonable to do so, determine that the event is taken to have occurred for the purposes of the social security law.”
Mr Nocera indicated at the last directions hearing before I reserved my decision that he felt he had not had an adequate opportunity to address me on this section. I accepted that, and I indicated that I would call the parties back if it proved necessary for me to hear further submissions. It has not proved necessary to do so.
I accept that as a matter of law my jurisdiction in respect of Mr Snow’s application for a review is limited to reviewing the decision made on 15 August 2017 and does not extend to my reviewing other decisions that may have been made in the past. I also accept that any payment of arrears I direct to be calculated and paid to Mr Snow must be limited to a period commencing in August 2017 given s 109 of the Administration Act and the date of Mr Snow’s request for a review.
I also note that s 109(5) would appear to limit in this case the payment of arrears in any section-126 review to “the day on which the review was begun by the Secretary”. This provision does not assist Mr Snow to have his pension entitlement recalculated from an earlier time onwards.
The Tribunal does have a power, however, under s 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 (Cth), to set aside a decision under review and to remit the matter for reconsideration in accordance with any directions or recommendations it might make. Moreover, I am aware the Department operates an ex gratia payment scheme, and this Tribunal sometimes recommends that consideration be given by the Secretary to the making of a payment under that Scheme[10].
[10] I did so, for example, in Re Lewis and Secretary, Department of Social Services [2015] AATA 898.
I do not need to decide the exact legal scope of s 43(1)(c)(ii) in the light of s 109 of the Administration Act. I am prepared to assume in Mr Snow’s favour that I might remit the matter with a recommendation that Mr Snow be paid his pension to some earlier date than August 2017 (by way of an ex-gratia payment if not by way of a formal entitlement under s 126).
Before I were to take this step, however, I would have to be satisfied that the evidence before me warranted the making of a recommendation. I am not persuaded on the evidence before me that this course is warranted. It is certainly true, as Mr Snow contends, that on the assumption the Mardick Trust became invalid on 18 May 2010, he has been underpaid his pension entitlements. I accept that. I also accept that the sums involved are considerable.
But the Administration Act provides, in s 109, a very clear limit on the payment of arrears. I have discussed this limitation above. The provisions in s 109 are also, in my opinion, an important matter that I should bear in mind. I have already referred in this case to the fact that Mr Snow decided not to take the matter up again in 2015 and that he presented the Department with an operating Trust.
I have also decided that Mr Snow could not reasonably have expected the CAO to identify a supervening invalidity in the Trust. There is nothing in the evidence before me that suggests unfair or misleading treatment by Centrelink, although I appreciate that s 109 of the Act does provide a significant “brake” on the payment of arrears. On the evidence that has been placed before me, however, I do not believe I should make any recommendation in respect of the payment of arrears of pension.

In particular, I do not believe that a recommendation in this regard is warranted simply because there has been an underpayment of pension. If I followed that course, the limitation in s 109 of the Administration Act might be routinely avoided.
I should emphasise that I am not making a positive recommendation that arrears not be paid. I am merely deciding that I do not believe on the evidence before me that I should make a recommendation that they be paid as part of my review. I wish to make that plain because I am aware from Mr Snow’s statements at the last directions hearing that he has made an application to the respondent that s 126 be invoked to review earlier pension decisions made in his case. I understand from Mr Snow that this application is still under consideration. He may also make an application for an ex-gratia payment. There may be a wider range of factors and evidence that Mr Snow would wish to put before the Secretary’s delegate in this regard, including, for example, his financial position, and these may prove persuasive. I offer no comment on that. So far as the evidence before me is concerned, however, I do not believe I should make any recommendation that arrears of pension be paid from a date earlier than August 2017.
FINAL DISPOSITION OF MR SNOW’S APPLICATION BEFORE THE TRIBUNAL
As a result of the interim reasons, the respondent was required to recalculate Mr Snow’s pension entitlement from August 2017 onwards. That was done. Mr Snow disagreed with the recalculation and indicated that he wished to arrange for discussions to take place between his accountant and the respondent’s CAO to see if they could agree the amount of pension payable to him by way of arrears from 2017 onwards. That seemed a sensible course to take, and I adjourned the matter and even directed that those discussions take place. I intended to reconvene in due course to hear submissions on quantum if, but only if, the parties could not agree the amount. I would have the benefit of the parties’ experts’ views in any subsequent hearing.
Mr Snow indicated recently in an email to Mr Nocera that he had reconsidered his position, and that he no longer wished the discussions to take place. At the next and final directions hearing, I did not direct that the discussions take place against Mr Snow’s wishes, and I proceeded to reserve my decision. I decided against prolonging the review and attempting to fix the amount of arrears myself after any further hearing given Mr Snow’s decision to withdraw instructions from his accountant to meet with the respondent’s CAO.
Trying to be as fair as possible, I have decided that the appropriate decision for me to make in this review is to set aside the departmental decision and to remit the matter to the respondent with a direction that any arrears of pension from August 2017 onwards be calculated and paid to Mr Snow.
FORMAL DECISION
73.As I understand matters, I am, technically, reviewing the Level 1 decision of this Tribunal, which affirmed the decision of the departmental Authorised Review Officer. My formal decision will be, therefore, to set aside the Level 1 decision and substitute the following decision:
(a)the Authorised Review Officer’s decision be set aside; and
(b)the matter be remitted to the respondent with a direction that any arrears of pension from August 2017 onwards be calculated and paid to Mr Snow in accordance with the Tribunal’s reasons.

74. I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr N A Manetta.

.............................[Sgnd]............................
Legal Administrative Assistant

Dated: 3 March 2022

Date of hearing:
4 February 2021, 1 February 2022, 15 February 2022

      Applicant: Self-Represented

      Advocate for the Respondent:

Ashley Burgess, Sparke Helmore

Domenic Nocera, Sparke Helmore