TERENCE DRUETT and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2013] AATA 333
[2013] AATA 333
Division GENERAL ADMINISTRATIVE DIVISION File Numbers
2012/3901, 2012/3966
Re
TERENCE DRUETT
APPLICANT
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
RESPONDENT
DECISION
Tribunal MARK HYMAN, MEMBER
Date 23 May 2013 Place Canberra An increase in social security benefit resulting from the recipient of a benefit informing Centrelink of a change in circumstances may only be backdated to the date when the recipient informed Centrelink of the change. The applicant informed Centrelink of the relevant change on 28 May 2012 and the increase in benefit may only be backdated to that date. The decision under review is affirmed.
.....................................[sgd]...................................
MARK HYMAN, MEMBER
Catchwords
SOCIAL SECURITY – pensions, benefits and allowances – disability pension – age pension – change in circumstances – when applicant informed Centrelink – backdating of benefits – benefits backdated to date when Centrelink informed of change in circumstances – decision under review affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) section 37
Social Security Act 1991 (Cth) sections 43, 55, 94, 117, 1064
Social Security (Administration) Act 1999 (Cth) sections 66A, 68, 72, 74, 78, 108, 109, 110
Cases
Re Frost and Secretary, Department of Social Security [1995] AATA 228
Re Rogers and Secretary Department of Family and Community Services [2001] AATA 94
Re Secretary Department of Social Security and Wall [1996] AATA 228
Secondary Materials
Oxford Online Dictionary
REASONS FOR DECISION
MARK HYMAN, MEMBER
23 May 2013
The applicant, Mr Druett, receives age pension, and has done so since he turned 65 in August 2011. Before that time he received disability support pension, from 26 June 2009 until his 65th birthday.
Under either pension, the amount a claimant receives is dependent on income. Mr Druett’s income increased on 10 July 2010, when two lodgers moved into his house and began paying him rent. Mr Druett’s pension was reduced as a result.
The two lodgers moved out a few months later, in October 2010. Centrelink increased Mr Druett’s pension again only from 28 May 2012, refusing to backdate the increase, on the basis that he had not earlier provided notice of his drop in income when the lodgers moved out. That decision was successively affirmed by an authorised review officer and the Social Security Appeals Tribunal (SSAT). Mr Druett has now applied to this Tribunal seeking a review of the SSAT’s decision.
Issues
The issues before me are:
(a)When did Mr Druett inform Centrelink of the drop in his income when the lodgers moved out of his house?
(b)From what date should Mr Druett’s pension be increased?
A hearing was held on 15 February 2013, and, following the submission of further evidence, the hearing was resumed by telephone on 25 March 2013. Mr Druett appeared in person, and the Secretary was represented by Ms Jennifer Maclean, a Department of Human Services Program Litigation and Review Branch advocate.
The documentation under section 37 of the Administrative Appeals Tribunal Act 1975 (the T-documents) was taken into evidence. Mr Druett gave oral evidence.
Supplementary material was provided by Centrelink, and by Empire Financial Planning (‘Empire’), Mr Druett’s financial adviser. Centrelink did not or could not submit the original Rent Certificate form completed by Mr Druett’s two lodgers, but submitted a blank Rent Certificate form. Empire submitted schedules of income-related information they had provided to Centrelink on Mr Druett’s behalf in the second half of 2011.
The statutory context
The Social Security Act 1991 (the Act) sets out the conditions applying to disability and age pension. In each case, a claimant’s assets and income influence the rate at which the benefit is paid. Increases in the value of assets or in income can reduce the rate at which the benefit is paid, and if sufficiently great, the rate can be reduced to nil. Section 43 sets out the basis under which a person can qualify for age pension, and section 94 sets out the basis for disability pension. Section 55 specifies that the rate of a person’s age pension is calculated under section 1064; and section 117 specifies that a person’s rate of payment of disability pension is calculated under the same section. Section 1064 sets out the method used to calculate the benefit in each case, taking account of the claimant’s income and assets.
When a person’s circumstances change, their entitlements under the Act change accordingly. The rules governing these changes are set out in the Social Security (Administration) Act 1999 (the Administration Act). The essential thrust of the relevant provisions of the Administration Act is that it is the responsibility of claimants to inform the Secretary (in practice, a role delegated to Centrelink) promptly when circumstances affecting their entitlements change.
Section 66A imposes a general requirement on people who are in receipt of benefits to inform Centrelink within 14 days when their circumstances change if the change might affect their benefit. Section 68 enables the Secretary to give a written notice to a person receiving a benefit, requiring the person to submit information on any matter that might affect the payment of the benefit. Section 72 sets out the rules governing the notice. Under section 74 it is an offence not to comply with a notice.
Section 78 of the Administration Act allows the Secretary to increase the rate at which a benefit is payable if satisfied that the rate being paid is less than that payable under social security law. Under section 108, an increase made under section 78 is a ‘favourable determination’. Section 110 provides that if a person receiving a benefit receives a favourable determination after informing Centrelink of a change in circumstances, the determination takes effect from when the person informed Centrelink, or when the change occurred, whichever is later. The provision is subject to a number of exceptions, none of which are relevant in the present instance.
The facts
Except with regard to how and when Centrelink was informed of Mr Druett’s changes in circumstances, the facts are not at issue. Mr Druett qualified for and received disability support pension from 26 June 2009 and transitioned to age pension from 19 August 2011. Mr Druett does not dispute that two lodgers moved into his house in May or June 2010. This change came to Centrelink’s notice through its data matching activities, because the two lodgers, who were students, applied to Centrelink for rent assistance. Mr Druett signed their application as landlord.
Once Centrelink became aware of the rental income Mr Druett was receiving, a Household Questionnaire was sent to him. He completed it, recording, among other details, the rental income of $110 per week from each lodger. On the basis of this information, Centrelink recalculated Mr Druett’s pension. Mr Druett does not dispute the lower payment figure that Centrelink so derived.
The evidence of Mr Druett is that the two lodgers moved out of his house in October 2010. I accept that evidence, which is not contested by Centrelink. According to Centrelink Mr Druett’s pension increased only from 28 May 2012 because it was at that time that he informed Centrelink that he was no longer receiving the rental income from the lodgers. Mr Druett does not dispute that the lower pension rate and the reason for it came to his attention, and that of Centrelink, on 28 May 2012, although he insists the change in his circumstances was, or should have been, evident to Centrelink earlier.
Centrelink, in accordance with its normal practice, sent regular letters to Mr Druett advising him of his pension payment rate and related information (collated in the Tribunal documents at T6). These letters in each case made a request for information on changes in circumstances relevant to the benefit being paid (such as changes in income), noting that the request was an information notice under social security law. Mr Druett said that he did not read the letters, but passed them to his financial advisers, Empire.
The arguments of the parties
Mr Druett said that he had made ‘an error’ but argued that Centrelink had also erred. He said that he had informed Centrelink on more than one occasion that the lodgers had moved out. He had first done so through the Rent Certificate form he had signed when the lodgers moved in, as he had nominated the date when the rental arrangement would come to an end. He had done so again through the updated income information Empire had provided to Centrelink at or shortly after his transition to age pension. He further argued that Centrelink, which had access to his records, including his tax records, had the means to keep track of his income, and had fallen short of its proper function in not doing so. Centrelink should have known, for example, that his rental income from the lodgers had stopped when Centrelink stopped paying rent assistance to the lodgers.
Ms Maclean argued that the social security law placed the obligation on Mr Druett to inform Centrelink of any change in circumstances. Mr Druett had been sent letters alerting him to his obligation to keep Centrelink informed. If he did not read them, as he had admitted, that made any resulting loss of benefits his own responsibility. Section 110 of the Administration Act clearly requires that the earliest those receiving pensions can receive the benefit of a favourable determination is from the time they inform Centrelink of their change in circumstances. From time to time Centrelink might become aware of discrepancies through its data matching activities, but that did not absolve claimants of the responsibility of keeping Centrelink informed, which was their legal obligation. Nor could Centrelink be held responsible if Empire had failed to pass on information about Mr Druett.
Consideration
Whether Mr Druett’s pension can be backdated to some date before 28 May 2012 depends on the application of section 110 of the Administration Act. That section, relevantly, as noted above, provides that if a favourable determination is made because a person has informed Centrelink of an occurrence or event, or a change in circumstances, the determination takes effect when the person informed Centrelink of the change.
The decision in this matter turns on two questions, one of fact and one of law. The question of fact is what Centrelink knew, or ought to have known, about the change to Mr Druett’s circumstances and when it knew or ought to have known it. The question of law is whether the conveying of that information to Centrelink, or Centrelink’s discovery of that information, constituted Centrelink being ‘informed’ by Mr Druett for the purposes of section 110 of the Administration Act.
When did Centrelink know of the change in Mr Druett’s circumstances?
Mr Druett argues that Centrelink knew, was informed, or should have known well before 28 May 2012. He asserts that information was passed to Centrelink on the Rent Certificate form he signed for the two lodgers; and/or through income schedules supplied by Empire following his transition to age pension. Further, he asserts that Centrelink should have known in any case.
The Rent Certificate completed by Mr Druett’s lodgers is not in evidence, as Centrelink did not or could not find it. Ms Maclean has submitted, however, a blank Rent Certificate form. Mr Druett says that the completed form clearly signalled an end to the rental arrangement. The blank form has fields for entering various information, including rental amounts, kind of property rented and the start date for rental arrangements, but none for when the rental arrangement is expected to come to an end. It would only be possible for the completed form to signal a clear end to the rental term if Mr Druett, or perhaps another person, such as one of his lodgers, had annotated it outside the spaces provided for information to be entered. If that had occurred, Mr Druett would surely have remembered the circumstances more clearly and emphatically than he appears to have done. Mr Druett impresses as a person of integrity and in general I accept his evidence, but his recall of the way in which relevant material might have been forwarded to Centrelink is clearly somewhat uncertain, judging for example from his insistence that Empire provided information to Centrelink about his change in income (see below). I have no evidence before me to corroborate Mr Druett’s statement, and in the absence of such corroboration I am not persuaded that information about the end of the rental arrangement was provided on the Rent Certificate. I would, of course, have been more confident in reaching a conclusion if a copy of the form had been found, and it is a matter of regret that it has not been filed.
It is certainly the case that Empire provided information to Centrelink about Mr Druett’s financial affairs, and copies have been submitted both by Mr Druett and by Centrelink. The relevant schedules are those provided by Empire to Centrelink on 18 August 2011, 19 December 2011 and 10 April 2012. These schedules, however, relate to Mr Druett’s superannuation arrangements, and detail the assets held by his superannuation fund and the income it pays to him. There is nothing in any of the schedules that purports to set out Mr Druett’s income more broadly. These schedules, with their covering letters, do not constitute information to Centrelink about Mr Druett’s reduction in income when the two lodgers left his house.
That leaves the possibility that Centrelink was aware of Mr Druett’s circumstances through its own processes – by noting the cessation of rent assistance to the lodgers, or by other means such as broader data matching. As Centrelink became aware of Mr Druett’s increase in income through its data matching activities, presumably it is at least a reasonable possibility that it became aware through a similar process that his income had decreased once more to its earlier level. Mr Druett argued that even if Centrelink did not know of his change in circumstances, it had access to the necessary information, and therefore it should have known.
There remains the question, however, whether even if Centrelink was aware of Mr Druett’s decrease in income, it could be said that Mr Druett ‘informed’ Centrelink for the purposes of section 110 of the Administration Act. Ms Maclean argued that only if a person directly informed Centrelink could the requirements of section 110 be met; that there was no way Centrelink could be constructively informed through some more indirect route. But the social security law is beneficial and remedial legislation. Although that general conclusion needs to be applied carefully, given that many parts of the social security law are intended to limit benefits or impose penalties for not complying with its requirements, it is to be expected that provisions governing access to entitlements would be applied generously unless the relevant provisions clearly signal otherwise. Thus in a succession of cases dealing with section 109 of the Administration Act, which covers the date of effect of a favourable determination following a request for a review, this Tribunal and the courts have adopted a broad understanding of what might constitute a request for review for the purposes of the section: see, for example, Re Frost and Secretary, Department of Social Security [1995] AATA 228, Re Wall and Secretary, Department of Social Security [1996] AATA 228, Re Rogers and Secretary Department of Family and Community Services [2001] AATA 94.
In the event I do not need to decide whether Mr Druett informed Centrelink through the Rent Certificate or through the schedules provided by Empire, as I have not accepted the contentions of fact underlying those arguments. With regard to Mr Druett’s argument that Centrelink was informed for the purposes of section 110 through its internal processes and resources, that is surely giving too generous a reading to the concept of ‘inform’. In the Oxford Online Dictionary the word has the meaning ‘give someone facts or information, tell’. The sense of the word clearly implies that the person doing the informing has at least some role in passing information to the person who receives it. The sense of section 110 is that it is the act of the recipient of the benefit in passing information to Centrelink that provides the timing of the effect of the favourable determination that follows; in the absence of such an act, it is difficult to see how there could be a clear moment at which a favourable determination could take effect.
That is consistent with the broader scheme of the Administration Act. A clear part of that scheme is that the responsibility is placed on claimants and the recipients of benefits to assert their entitlements and to inform Centrelink accurately of their circumstances and relevant changes to them. This is clear from, for example, section 13, which states as a general principle (to which there are numerous exceptions) that a person who wants a social security payment must claim it; from section 66A, which as noted above, imposes a general requirement to keep Centrelink informed of relevant circumstances; and from sections 109 and 110, which set out the rules governing the date of effect of favourable determinations, providing for earlier application where a recipient of a benefit has acted promptly. Indeed, if Centrelink’s information were as complete as Mr Druett imagines, it is hard to see why provisions such as sections 109 and 110 would be needed. The existence of these and other provisions, such as section 66A requiring information to be passed to Centrelink, surely implies that the organisation does not have complete and perfect information and must rely on those receiving benefits to keep it informed.
It is evident that Mr Druett did not keep track of his rate of payment and did not alert Centrelink when his circumstances changed, either through the arrival of the two lodgers or through their departure. He admitted to not reading the letters Centrelink sent him; those letters, while dense, are not incomprehensible, and it is well established that they meet Centrelink’s legal obligations. Mr Druett may have relied on Empire to keep Centrelink informed, but even if that is so – and I make no such finding ‒ it gives rise to an issue between him and Empire, not between him and Centrelink.
Mr Druett informed Centrelink of his change in circumstances on 28 May 2012 and the higher rate of benefit may only be paid from that date.
Decision
The decision under review is affirmed.
I certify that the preceding 29 (twenty -nine) paragraphs are a true copy of the reasons for the decision herein of Mark Hyman, Member ....................................[sgd]....................................
Associate
Dated 23 May 2013
Dates of hearing 15 February and 25 March 2013 Applicant In person Advocate for the Respondent Jennifer Maclean Solicitors for the Respondent Department of Human Services Program Litigation and Review Branch
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