Walton and Secretary, Department of Employment and Workplace Relations
[2007] AATA 1362
•25 May 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 1362
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2006/2551
GENERAL ADMINISTRATIVE DIVISION ) Re PETER WALTON Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Mr Peter Taylor SC, Senior Member Date25 May 2007
PlaceTamworth
Decision The decision under review, as varied by the Secretary’s 19 April 2007 letter, is affirmed.
[sgd]
Mr Peter Taylor SC
Senior Member
CATCHWORDS
SOCIAL SECURITY – pensions – disability support pension – variation of decision pursuant to section 180(1) of the Social Security (Administration) Act 1999 – whether notice of decision given – rate reduced due to incorrect computer coding – decision under review affirmed.
LEGISLATION
Social Security (Administration) Act 1999 – sections 3, 83, 109, 180
Social Security Act 1991 – sections 8, 9, 23, 117, 118, 1064, 1076, 1081, 1082
Administrative Appeals Tribunal Act 1975 – section 25
CASELAW
Re Wills and Secretary, Department of Social Security (1998) 54 ALD 271
Re Secretary, Department of Family and Community Services and Plug (2000) 62 ALD 187
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Secretary, Department of Family and Community Services v Rogers (2000) 65 ALD 185
Austin v Secretary, Department of Family and Community Services (1999) 57 ALD 330
Re Secretary, Department of Social Security and Sting (1995) 39 ALD 721
Re Peura and Secretary, Department of Family and Community Services (2003) 78 ALD 570
Re Secretary, Department of Employment and Workplace Relations and Spinapolice [2006] AATA 191
Re Rigg and Secretary, Department of Family and Community Services [2006] AATA 9
Re Hutton and Secretary, Department of Family and Community Services [2005] AATA 330
Re Fairweather and Secretary, Department of Family and Community Services [2005] AATA 201
REASONS FOR DECISION
25 May 2007
Mr P Taylor, SC Senior Member
1. Mr Walton was paid a disability support pension from 31 August 2002 until about 5 July 2006. On 5 July 2006 he turned 65 and became eligible for the age pension. Prior to that, on 7 June 2006, Centrelink sent Mr Walton an income and asset review form which was preparatory to a transfer from the disability support pension to the age pension. The income and asset review form listed the information currently held by Centrelink. It recorded that Mr Walton had no money invested in superannuation but did have a number of managed investments. A telephone enquiry made by Mr Walton to Centrelink on 28 June 2006 confirmed that his disability support pension rate had been calculated on the basis of the managed investments as they had been recorded in the income and asset review form.
2. Centrelink’s records, in so far as they classified Mr Walton’s assets as managed investments, rather than superannuation investments, were wrong. On 4 July 2006 Mr Walton returned the income and asset review form to Centrelink with the corrected details of his superannuation investments. On 5 July 2006 Mr Walton wrote to Centrelink requesting payment of all of the arrears of his disability support pension. Mr Walton’s letter attached copies of his superannuation fund investment records. On 25 July 2006 Centrelink again wrote to Mr Walton providing a revised statement of "all of the income and assets" currently recorded as relating to him. The letter listed "managed investments" with a current asset value of $4,500, and also listed his interest in a number of superannuation funds. The letter suggests that Centrelink’s pre 28 June 2006 records were inaccurate. In the review proceedings before the Tribunal, the Secretary did not suggest the contrary.
3. On 26 July 2006 Centrelink wrote to Mr Walton about his request to be paid disability support pension arrears. The letter informed him that his pension rate had been updated from 28 June 2006, which was the date of Mr Walton’s telephone enquiry to Centrelink. His request to be paid the balance of the arrears was refused. The basis of the refusal was that his request had been made more than 13 weeks from the date the relevant disability support pension rate decision had been made. The consequence of this was said to be that section 109(2) of the Social Security (Administration) Act 1999 precluded any favourable decision relating to payment of the arrears from taking effect before 28 June 2006 (the date of Mr Walton’s request for review).
4. Mr Walton’s letter, dated 22 August 2006, requested a review of the decision refusing his request to be paid arrears for the period prior to 28 June 2006. On 6 September 2006 Centrelink confirmed the refusal of his application. On 27 September 2006 Mr Walton requested a review by an Authorised Review Officer. The Authorised Review Officer’s decision of 24 October 2006 affirmed the original decision. In its 1 December 2006 decision, the Social Security Appeals Tribunal affirmed the decision of the Authorised Review Officer.
5. Mr Walton lodged his application for review with the Administrative Appeals Tribunal on 18 December 2006. Prior to the Tribunal’s review hearing, the Secretary conceded in its Statement of Facts and Contentions dated 17 April 2007 that Mr Walton had not been notified of some decisions relating to his disability support pension rate. (These “decisions” appear to have been changed payment rates calculated from updated computer data relating to Consumer Price Index increases and market value asset revaluations. Changes made in this way are contemplated by section 83 of the Social Security (Administration) Act 1999 and operate as deemed rate determinations made by the Secretary.)
Variation of Decision pursuant to section 180(1) Social Security (Administration) Act 1999
6. As a result of the concession referred to in Paragraph 5, the Secretary tendered a letter dated 19 April 2007 (Exhibit 5). This letter recorded a further decision that Centrelink had issued an arrears payment of $2,668.18 for the specified periods that had been the subject of the concession. The effect of this decision was to grant Mr Walton’s disability support pension arrears claim, with the exception of three short periods. Those periods were:
(a)27 November 2002 - 19 March 2003
(b)1 April 2004 - 30 June 2004
(c)30 March 2005 - 30 June 2005.
7. Centrelink’s letter of 19 April 2007 takes effect as if it was the decision made by the Social Security Appeals Tribunal: section 180 Social Security (Administration) Act 1999. This section also requires Mr Walton's review application to be treated as if it was an application for a review of the new or varied decision.
8. The 19 April 2007 letter explains that it corrects an under payment that arose because "certain exempt superannuation products" were included as managed investments in the calculation of the pension rate. Since that was the challenge Mr Walton made to the disability support pension rate, the application for review by the Tribunal thereafter proceeded on the basis that the $2,668.18 payment accurately reflected Mr Walton's proper entitlement. Consequently, the only matter in contention in the Tribunal review proceedings was the balance of Mr Walton’s claim for arrears, covering the three periods to which I have earlier referred (see Paragraph 6).
Was adequate notice given of the disability support payment rate?
9. In relation to the periods outlined in paragraph 6, the Secretary contends that Mr Walton was given due notice of the disability support payment rate and that, as a consequence, any decision determining a new rate for those periods could not take effect prior to 28 June 2006. The adequacy of the notice given to Mr Walton is the determinative consideration because of the terms of sections 109(1) to 109(3) of the Social Security (Administration) Act 1999. The provisions provide as follows:
“109 Date of effect of favourable determination resulting from review
(1)If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)a notice is given to the person informing the person of the original decision; and
(c)within 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the determination embodying the original decision took effect.
(2)If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)a notice is given to the person informing the person of the original decision; and
(c)more than 13 weeks after the notice is given, the person applies to the Secretary, under section 129, for review of the original decision; and
(d)the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the application for review was made.
(3)If:
(a)a decision (the original decision) is made in relation to a person’s social security payment; and
(b)the person is not given notice of the original decision; and
(c)the person applies to the Secretary, under section 129, for review of the original decision; and
(d)the favourable determination is made as a result of the application for review;
the favourable determination takes effect on the day on which the determination embodying the original decision took effect.”
10. It may be observed that the Secretary’s 19 April 2007 decision involves an implicit concession that Mr Walton was not given requisite notice of the rate decisions for the periods to which that decision relates. On that basis, section 109(3) of the Social Security (Administration) Act 1999 applies to payment relating to those periods. In relation to the remaining periods for which payment of arrears has been refused, the Secretary contends that section 109(2) applies. The notice letters relied on by the Secretary in relation to those other periods were dated 2 December 2002, 11 March 2004 and 7 March 2005.
11. The 2 December 2002 letter informed Mr Walton that his disability support pension would be paid at a rate of $414.39, plus some additional allowances. The total regular payment was to be $420.19. The notice disclosed that in calculating the pension rate, he had been regarded as having an annual income of $3,991.85. Information on the back of the 2 December 2002 letter informed Mr Walton that he was required to notify changes to his assets, other than financial investments, if they were more than $39,053.75. It also required him to notify Centrelink if his financial investments were more than $113,696.25. The letter said that this amount was $1,000 more than the value of Mr Walton’s recorded financial investments.
12. The 11 March 2004 letter disclosed that the disability support pension rate was $432.86 per fortnight. With the pharmaceutical allowance, the total regular payment rate was $438.66. The letter again said that the pension rate had been determined after taking into account Mr Walton’s annual income of $5,157.05. The letter continued:
“The deeming rate for financial investments below $35,600...has been changed to 3.00%. The deeming rate for financial investments above this amount has been changed to 5.00%. These deeming rate changes reflect general increases in the income people can receive from a range of widely available investments.
We use recent market prices to work out the value of your shares and managed investments and update these values every six months.
The basic rate of your payment has increased in line with the cost of living index rise and to keep up with the increases in Male Total Average Weekly Earnings.”
13. The information set out on the back of the 11 March 2004 letter informed Mr Walton that he was required to notify changes to his assets, other than financial investments, if they were more than $45,368.86. It also required him to notify Centrelink if his financial investments were more than $118,381.14. Again the letter said that this amount was $1,000 more than the value of Mr Walton’s recorded financial investments.
14. The 7 March 2005 letter disclosed that the disability support pension rate was $431.06 per fortnight. With the pharmaceutical allowance, the total regular payment rate was $436.86. The rate had been calculated after taking into account an annual income of $6,112.62. Again the letter explained that:
“We use recent market prices to work out the value of your shares and managed investments and update these values every six months.
The basic rate of your payment has increased in line with the cost of living index rise and to keep up with the increases in Male Total Average Weekly Earnings.”
15. The information set out on the back of the 7 March 2005 letter informed Mr Walton that he was required to notify changes to his assets, other than financial investments, if they were more than $35,187.44. It also required him to notify Centrelink if his financial investments were more than $137,812.56. This amount was $1,000 more than the value of Mr Walton’s recorded financial investments.
16. All of the letters (dated 2 December 2002, 11 March 2004 and 7 March 2005) contained the following section:
“If you think our decision is wrong, please phone us or come in and see us. We will check the facts and explain the decision. If you still do not agree, you can ask for one of our Authorised Review Officers (ARO) to look at it. The ARO is an officer who has no previous involvement in your case and if the decision is wrong, the ARO can correct it. The ARO can also tell you how you can appeal to the Social Security Appeals Tribunal (SSAT) if you still do not agree. Both the ARO review and the SSAT appeal are free. Remember, if you do not ask for the decision to be reviewed within 13 weeks of being told about it, you may only get back payment from the date you ask.”
17. The preceding summary of the relevant letters shows that they disclosed to Mr Walton the amount of the annual income that had been taken into account in calculating his disability support pension payment. Each letter also disclosed, on its reverse page, the amount of Mr Walton's financial investments. However, the letters varied in the extent of their disclosure of the way in which the amount of the annual income had been assessed, and the apparent relevance of the "financial investments" amount to the determination of the disability support pension rate.
18. The 2 December 2002 letter provided no additional information. It merely recorded the amount of the annual income that had been used in determining the payment rate. Apart from whatever might be implied from the use of the term "financial investments", the letter contained no information expressly linking the recorded amount of those investments to the determination of the payment rate.
19. The 11 March 2004 letter set out the "deeming rate for financial investments" as "important information”, immediately after a statement of the amount of annual income that had been used to calculate the payment rate. The context in which that explanation appears in the letter discloses that the "annual income" amount is an assessment based upon a notional rate of return on the amount of the person’s "financial investments". Furthermore, the 11 March 2004 letter also explained that the value of the financial investments was determined by reference to current market prices. However, it may be observed that although the 11 March 2004 letter appears to use the expression "financial investments" and "shares and managed investments" as synonymous expressions, it does not refer explicitly to the person's investment in superannuation funds. A discerning reader would probably conclude that superannuation investments were not taken into account in determining annual income for the purpose of assessing the payment rate. This conclusion, however, was not explicitly stated in the 11 March 2004 letter itself. Nor was there any information from which a reader could discern the identity of the assets, included in the "financial" or "managed investments”, that had been taken into account in the assessment.
20. The 7 March 2005 letter also explained that market prices were used to determine the value of shares and "managed investments”, and that values were updated every six months. That explanation appears as "important information" immediately after the disclosure of the annual income amount used to calculate the payment rate. Therefore, even though the relevant rate of return is again not stated, the context impliedly discloses that the annual income amount has been derived from a notional return based on the value of that person's “managed investments". However, there was no information to explicitly distinguish between "managed investments” and the person’s superannuation assets. Similarly, there was no information from which the recipient could identify the assets that had been included in the "managed investments” and taken into account in determining the payment rate.
21. The disability support pension rate applicable to Mr Walton was calculated in accordance with the Rate Calculator in section 1064 of the Social Security Act 1991: see section 117(a) Social Security Act 1991. The Rate Calculator includes eight modules. The basic rate calculation process requires a determination, using Modules A to C, of the "maximum payment rate". That rate is then potentially reduced by the application of income and asset tests. Module E contains an “ordinary income test”. Module F contains additional criteria for "ordinary income for the purposes of disability support pension”. Module G contains an assets test.
22. In determining a person’s income for the purpose of calculating the disability support pension rate, returns on superannuation investments are not taken into account unless the person has either reached pension age or is actually receiving a superannuation pension or annuity. This is because of the exclusions contained in section 8(8)(b)(i) and (iv) of the Social Security Act 1991. A person’s “deemed”, rather than “actual” income” from financial assets is taken into account because of the provisions in sections 1076, 1081 and 1082 of the Social Security Act 1991. But in determining the amount of any “deemed” income it is necessary to identify the relevant “financial assets”. According to the definitions in section 9(1) of the Social Security Act 1991, “financial assets” include "financial investments", and “financial investments” include "managed investments". As a result of the further definition in section 9(1B)(d) of the Social Security Act 1991, "managed investments" include a person's investment in a superannuation fund, subject to one important exclusion. The exclusion is that while a person is below pension age, their investment in a superannuation fund is "not a managed investment for the purposes of this Act”: section 9(1C)(a) Social Security Act 1991.
23. In determining a person’s “assets” for the purpose of calculating the disability support pension rate, Module G of the Rate Calculator firstly requires identification of the person’s relevant assets. Section 1118(1) of the Social Security Act 1991 requires that when calculating the value of a person’s assets for this purpose, the value of the person’s investment in a superannuation fund is to be disregarded unless the person has either reached pension age or is actually receiving a superannuation pension or annuity.
24. It is clear from these provisions, given the terms of the letters dated 2 December 2002, 11 March 2004 and 7 March 2005, that the Secretary calculated Mr Walton’s disability support pension rate after taking into account his “deemed” income from financial investments. In his application for disability support pension, dated 5 August 2002, Mr Walton disclosed (i) deposit accounts totalling $28,613; (ii) that he held no managed investments; and (iii) investments in superannuation funds. Given that these were the only assets relevant to an assessment of his “financial assets” for the purposes of the Social Security Act 1991, and the level of deemed income indicated in the letters, it is reasonably apparent that the Secretary took into account at least some of Mr Walton’s superannuation investments when calculating his disability support pension rate.
25. It has not been clearly established how Mr Walton’s superannuation investments came to be taken into account in the rate calculation. Mr Walton contends that the information about his superannuation investments was first supplied to Centrelink in connection with a Health Care Card application he made in September 2001. This does not, however, seem a likely explanation. The disability support pension application Mr Walton submitted on 5 August 2002 required up to date information about his financial assets. Immediately before submitting the application, Mr Walton obtained some current statements (dated variously 2 and 5 August 2002). It therefore seems probable that the up to date investment information would have been provided to Centrelink with, or shortly after, the 5 August 2002 disability support pension application.
26. It is clear, however, that the legislation neither required nor permitted the Secretary to make any determinative decision about the classification of Mr Walton’s investments. In particular, there was no statutory warrant to do anything other than record his “managed” and “superannuation” investments according to their true character. The Secretary was simply required to calculate the disability support pension rate by applying the statutory Rate Calculator. In relation to the application of the income and assets tests that formed part of the Rate Calculator, the Secretary was obliged to apply them according to the true nature of Mr Walton’s investments.
27. Consistent with the statutory provisions, the Secretary submitted that a decision had not been made in relation to the classification of Mr Walton’s investments. The asset information Mr Walton provided was simply misclassified as a result of an administrative error within Centrelink’s data records. The incorrect data had thereafter been used in the computer calculation of the disability support pension rate. According to the Secretary’s submission, a mere administrative error of this kind, made without deliberation, could not properly be regarded as a “decision” in any relevant sense. The Secretary contended that the only relevant “decision” that had been made was the determination of the disability support pension rate. That decision had been notified, for the purpose of section 109(2) of the Social Security (Administration) Act 1999, in each of the letters of 2 December 2002, 11 March 2004 and 7 March 2005.
28. The Applicant’s submissions also questioned whether the administrative classification of Mr Walton’s investments could properly be described as a relevant or operative “decision” by the Secretary. According to the Applicant, however, the Secretary’s “decision” in relation to the determination of Mr Walton’s disability support pension rate involved a further “decision” about the classification of his investments. Alternatively, the Secretary’s mere communication of the disability support pension rate was not relevantly intelligible, and therefore did not constitute “notice” for the purpose of section 109 of the Social Security (Administration) Act 1999, unless it contained some explanation of the classification of Mr Walton’s financial assets.
What amounts to a “decision” for the purpose of section 109 of the Social Security (Administration) Act 1999?
29. Section 25(3) of the Administrative Appeals Tribunal Act 1975 gives the word “decision” a potentially wide meaning. The word has the same meaning for the purpose of section 109 of the Social Security (Administration) Act 1999: see section 3(1) and 3(2) Social Security (Administration) Act 1999 and section 23(1) Social Security Act 1991. However, even given this width of meaning, a “decision” does not include a merely administrative misrecording of a pensioner’s personal and financial information. Such an error does not constitute a decision for the purpose of section 109 of the Social Security Act 1991. Consequently, in Re Wills and Secretary, Department of Social Security (1998) 54 ALD 271 (‘Wills’) the Tribunal held that a merely administrative error (again involving the inaccuracy of Centrelink computer data) did not constitute a decision. In Re Secretary, Department of Family and Community Services and Plug (2000) 62 ALD 187 (‘Plug’) the Tribunal appeared to take the same view.
30. These decisions, and the approach they reflect, is consistent with the decision of the High Court in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 (‘Bond’). In that decision, Mason CJ (with whose views all the other members of the court substantially agreed – see Brennan J at 365, Deane J at 369, Toohey and Gaudron JJ at 377) said that the word “decision” ordinarily referred to a published ruling or adjudication. Most narrowly, a “decision” was a ruling that definitively determined the proceedings – as in the case of final orders made by a court. Less narrowly, a decision included the determination of some substantive issue arising in the proceedings. Most widely, a decision included the determination of any question of substance in the proceedings (i.e. one of law, fact or procedure): see Bond at 335. But even in this wider inclusive sense, a “decision” was properly distinguished from its reasons and it did not include a conclusion that merely operated as a step in the chain of reasoning underlying the relevant decision: see Bond at 336. At 337 Mason CJ said
“...a reviewable "decision" is one for which provision is made by or under a statute. That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.”
31. Mason CJ continued by stating at 340-341:
“If the statute requires or authorizes the decision-maker to determine an issue of fact as an essential preliminary to the taking of ultimate action or the making of an ultimate order, then it would follow from what has already been said that the determination of the issue of fact would be a reviewable decision. The decision that the licensees were no longer fit and proper persons to hold their licences was just such a determination.
However, in ordinary circumstances, a finding of fact, including an inference drawn from primary facts, will not constitute a reviewable decision because it will be no more than a step along the way to an ultimate determination. Of course an ultimate determination which depends upon a finding of fact vitiated by error of law or made without evidence is reviewable ….. In such a case the finding of fact may be challenged as an element in the review of the ultimate determination. But the point remains that ordinarily a finding of fact will not be susceptible to review independently of the ultimate decision.”
32. The reasoning expressed in the above passages from the judgment in Bond underlies the later decision in Secretary, Department of Family and Community Services v Rogers (2000) 65 ALD 185 (‘Rogers’). In that case, the Secretary had reduced the amount of a pension payment as a result of taking into account certain compensation payments as part of the pensioner’s income. Determining the rate in that manner involved a misinterpretation of the relevant Rate Calculator in the Social Security Act 1991. The particular error was that the compensation payments were relevant only in the calculation of an additional benefit, rather than in the calculation of the basic pension rate itself. After the mistake had been corrected, the pensioner (Mrs Rogers) unsuccessfully sought payment of arrears. The claim covered the whole four-year period in which the mistake had operated. During that period, Mrs Rogers had been given notices that identified the total amount of the income that had been taken into account, and the individual components of the total. The components were the annual compensation payments, earnings and bank interest. The notices did not disclose, however, the precise way in which the compensation amount had been applied in arriving at the pension rate stated in the notices.
33. In Rogers, Cooper J in the Federal Court rejected the pensioner's contentions that, in the absence of disclosure of the precise way in which the compensation amount had been applied, she had not been given relevant notice of the Secretary's decision. The relevant parts of Cooper J’s reasons are as follows at 196:
“[31] A notice is a notification, a making known, a communication of some matter from one person to another. In the statutory context, the statute identifies the matter to be notified by the notice. Notice is given when it is received by the person to whom the notice is to be given: the giving and receiving of the notice are two aspects of the same action and are simultaneous. Consequently, the giving of notice ordinarily will require that the person to be given notice actually receives notification of the matter to be communicated. Of course, whether by statute or contract, this two-sided act of giving and receiving of notice may be deemed to be done by some act other than actual receipt of the notification by the recipient: Sun Alliance and London Assurance Co Ltd v Hayman [1975] 1 WLR 177 at 183, 184, 185.
[32] A requirement that a person be given notice of something does not demand that the matter be brought home to the person's understanding or knowledge; nor is notice synonymous with knowledge: Nguyen v Refugee Review Tribunal (1997) 74 FCR 311 at 320, 325, 332 ; 50 ALD 35 at 42, 46–7, 52 citing with approval Goodyear Tyre and Rubber Co (GB) Ltd v Lancashire Batteries Ltd [1958] 1 WLR 857 at 863 and Cresta Holdings Ltd v Karlin [1959] 1 WLR 1055 at 1057–8. However, notice requires that the matter of which a person is to have notice must be brought clearly to the person's attention: Goodyear Tyre and Rubber Co at 863; Austin at FCR 146–7; ALR 338–9.
[33] In my view, the matter to be communicated by the “notice” referred to in s 299(2), (3) and (4) is the making of a decision in relation to an SPP which is a reviewable decision under s 1240 of the Act. That involves two elements; the fact that a decision has been made and the content of the decision. The subsections make no reference to any requirement that the notice contain reasons or sufficient information for the recipient of the notice to understand the main reason for the decision and so be in a position to know whether or not to exercise the person's right to seek a review. Nor, in my view, do any principles of procedural fairness require that such a requirement be read into the provisions of s 299.”
34. The reasoning expressed in these paragraphs is directly applicable to the circumstances of the present case. Each of the relevant letters relied upon by the Secretary stated the pension rate that would apply, the income that had been taken into account in calculating the rate and the value of the "financial investments" that had been recorded as held by Mr Walton. Nevertheless, it was contended on Mr Walton’s behalf that the notice was deficient because it did not explicitly disclose that the stated pension rate was less than the rate that would have applied if his "financial investments" had been properly recorded. Mr Walton's submissions relied upon the following three further passages from the judgment in Rogers, where Cooper J. said at 197-198:
“[38] … I would not limit the content of the notice to a communication to the benefit recipient that a decision has been made to pay him or her a particular allowance at a particular rate. Although that may well be the most common decision, I do not read, for the reasons I have given, the words “a decision … is made in relation to a sole parent pension” as being limited to a decision to pay the pension at a particular rate. Rather, I construe the phrase as meaning any decision capable of review under [now s 129 of the SS(A) Act] …. which, upon review, leads to a favourable determination under [now s 78 of the SS(A) Act] … It would include, for example, a decision … which is not a decision to pay the pension at a particular rate which, however, upon review, reveals that the effect of the decision is that the pension recipient has been, or will be, paid at a lesser rate than that provided for in the Act.
[39] I turn now to the letter sent to Mrs Rogers on 29 March 1993. The letter directed Mrs Rogers’ attention to the subject matter of the communication. The subject matter was her pension payments. She was advised that from 8 April 1993 her pension would be $153.70. The sentence “Your pension has reduced because of a change in your circumstances” conveys to the reader that a decision has been made to reduce her pension to the stated amount for the stated reason. There is an invitation to contact the writer if more information is required. Finally, the letter advised Mrs Rogers what she could do if she thought that the decision was incorrect. …
[40] Any reasonable recipient in the position of Mrs Rogers would know upon reading the letter that a decision had been made to reduce her SPP to $153.70 per fortnight from 8 April 1993 because the decision-maker believed that there had been a change in her circumstances which required a reduction in the pension…”
35. The Applicant’s submissions emphasised the reference, in the passages cited from Rogers at 197-198, to the fact that the notice disclosed a reduction in the amount of pension being paid to Mrs Rogers. The submissions pointed out that there was nothing on the face of the letters sent to Mr Walton to indicate to him that his pension rate was less than the potential maximum that would apply if his superannuation investments had not been taken into account. But this submission deals with the particularity of the individual circumstances in the Rogers case without paying proper regard to the principle that the decision applies. The relevant decision in Rogers was the determination of the pension rate. Payments continued for over 4 years. Given the provisions for indexation and revaluation of assets, it ought to be assumed that after its initial reduction, the pension rate increased from time to time during that period. Nevertheless, there is nothing in the reasoning in Rogers to suggest that the sufficiency of any periodic rate notice depended on the mere comparison of the new rate with the previous rate. The real thrust of the reasoning in Rogers is to emphasise that the relevant decision is the determination of the rate. The reasoning is not based on that rate’s relativity to either previous payments or to the theoretical maximum rate that could or should have been paid.
36. This conclusion does not involve any contradiction of Cooper J’s statement in Rogers that he would not confine relevant decisions to the mere nomination of the pension rate and would extend the concept of a “decision” to include “a decision … which is not a decision to pay the pension at a particular rate which, however, upon review, reveals that the effect of the decision is that the pension recipient has been, or will be, paid at a lesser rate than that provided for in the Act”: Rogers at 198. In that part of the judgment, Cooper J should be understood as referring to decisions such as those notified in the 7 March 2005 letter, concerning changes in the deemed income rate or the asset threshold value, that would apply in the determination of the pension rate. If matters of that kind were the subject of actual separate determination, or if they constituted express determinations actually made in the course of a rate determination decision, they might be regarded as reviewable “decisions”.
37. The submissions made on Mr Walton’s behalf also relied on the decision of Drummond J in Austin v Secretary, Department of Family and Community Services (1999) 57 ALD 330 (‘Austin’). Austin was a case in which the Secretary had overstated the amount of the pensioner’s income which had led to an under calculation of the rate of payment. Payments continued for years at the incorrect rate. The Federal Court held that payment statements issued to the pensioner did not constitute notice of the relevant decision. This was because they were merely statements of the amount that had been paid into the pensioner’s bank account rather than statements of the actual decision that had been made in determining the applicable pension rate. In Austin at 339 Drummond J said:
[36] “A clear statement by the respondent that a decision has been made fixing the rate of payment of NSA at a particular figure or that a decision has been made cancelling or suspending NSA, as opposed to information from which an inference to one or other of those effects might be drawn, is, in my opinion, required before a communication can constitute a “notice” within {what is now s 109 of the SS(A) Act 1999}. It is not enough for there to be a “notice” of a prior decision within {what is now s 109(2) or 109(3) of the SS(A) Act 1999} that there is notification to the recipient of the amount of the payment of NSA required to be made by that prior decision. At most, that involves notice being given of only the result or effect of a decision that fixes the rate of NSA to be paid, without any notification that that amount has been fixed by a decision that has been made ….”
38. If this passage is taken out of context it may appear to give some support to Mr Walton’s contentions in the present case. Properly understood, however, it does not. The passage is explicitly directed towards the distinction between a statement that merely advised of the fact of payment, and a statement notifying the fact that a decision had been made determining the relevant benefit rate. This distinction was clarified in later passages of the judgment where Drummond J said that various letters sent to the pensioner did constitute notice, notwithstanding that they did not refer to the erroneous basis on which the rate calculation had been carried out. These letters constituted adequate notice if (i) they adequately conveyed that a decision had been made determining the rate at which the pension was to be paid; and (ii) the determination did in fact result solely from the application of the statutory Rate Calculator and did not include any adjustments involving factors not provided for in the Calculator: see Austin at 341. Indeed, Drummond J expressly approved the Tribunal’s decision in Re Secretary, Department of Social Security and Sting (1995) 39 ALD 721 and held that a notice did not have to set out the underlying reasons for the decision: see Austin at 337.
39. If Drummond J’s reasoning in Austin is applied to the 3 contentious letters in the present case, it justifies each of the letters being regarded as notice of the Secretary’s decision of the rate at which disability support pension was payable to Mr Walton. In each instance the letters advised the amount of the “regular payment” that was to be made from a prospective future date. It gave the components of that total payment and stated, in particular, the amount of the disability support pension. It also disclosed the information that had been used in calculating the “regular payment”. Finally, each letter set out the pensioner’s review rights. That section of the letter explicitly referred to the contents of the letter as a “decision” to which the statutory review rights applied. In my opinion, each of the letters therefore satisfied what Drummond J described in Austin as the requirement that the notice must convey the fact and content of the relevant decision, rather than merely the effect of the decision.
40. The Applicant nevertheless relied on the Tribunal’s decision in Re Peura and Secretary, Department of Family and Community Services (2003) 78 ALD 570 (‘Peura’). Peura was a case concerning a claim for pension arrears, where the pension rate had been erroneously reduced as a result of a decision to attribute certain trust income to the pensioners. The letter foreshadowing the trust income attribution decision had been written to one of the pensioners, but the actual decision was not the subject of any express notice. The pensioners did receive a letter, similar to those involved in the present case, setting out the pension rate, the amount of some additional allowances and a statement of the annual income amount that had been used to determine the pension payment rate. The Tribunal held that this letter did not constitute notice of the actual decision that had been made, based upon legislative changes that had introduced new trust attribution rules: see Peura at 576 and 580. The Tribunal said that "where the rate of pension is changed as a result of changed circumstances or the manner in which those circumstances are assessed, merely advising the recipient of the rate of his or her pension only constitutes advice of the effect of the decision": see Peura at 580 and 582. This passage was relied upon by the Applicant. He contended that in the present case, none of the letters disclosed the circumstances upon which the Secretary's rate determination had been based - at least in so far as the decision involved taking into account the Applicant's superannuation investments.
41. In my opinion, the Applicant's argument should not be accepted. Firstly, both the decisions in Austin and Rogers affirmed the proposition that "notice" of a decision for the purposes of section 109 of the Social Security Act 1991, did not require disclosure of the reasons for the decision. In Peura, the Tribunal explicitly accepted that proposition as it was bound to do: see Peura at 579 and 580. The Tribunal also acknowledged, with implicit approval, previous decisions in Wills and Plug, where both cases held that the relevant notice did not have to include the reasons for the decision. It is implicit in this reasoning, and the decisions of the Tribunal upon which it is based, that a mere error in the calculation of the pension rate, in the application of the appropriate Rate Calculator, does not involve the making of a decision for the purposes of the Social Security Act 1991. In contrast, the critical fact relied upon by the Tribunal in Peura was that the Secretary had in fact made an actual decision, involving applying the amended legislation to attribute trust income to the pensioners. That "decision" was an integral part of the decision involved in determining the actual pension rate. Consequently, a letter that merely informed the pensioners of the latter rate did not constitute notice of the actual decision in relation to the treatment of trust income.
42. In Re Secretary, Department of Employment and Workplace Relations and Spinapolice [2006] AATA 191 the pensioner had unsuccessfully sought to recover two years of underpayment of her parenting payment. The underpayment arose because the Secretary had calculated that payment rate on the basis of an incorrect record that overstated the amount of the pensioner’s income: see Spinapolice at [37]. Notices were given to the pensioner informing her of the rate of the pension payment. They disclosed the past payment rate, the future payment rate, and the date when the new rate would take effect. They also included, although in a standard format, information about the pensioner’s rights of review. In holding that notice was not required to be given of the reasons for the Secretary's decision, the Tribunal applied the decisions in Austin, Rogers and Peura. In these circumstances, the Tribunal held that the pensioner had been given notice of the relevant decision.
Conclusion
43. The basic approach taken in the decisions to which I have referred is to observe the distinction between the operative decision and the reasons for decision. The decisions also observe a distinction between mere errors in pension rate calculation and errors that are attributable to some additional operative decision. In the former category are decisions such as Rogers (erroneous inclusion of compensation payments as income); Rigg (failure to include rental assistance in a carer payment); Re Hutton and Secretary, Department of Family and Community Services [2005] AATA 330 (2.5 years of underpayment of parenting payment as a result of incorrect recording of reported income – notice of pension rate decision sufficient); Re Fairweather and Secretary, Department of Family and Community Services [2005] AATA 201 (Austudy underpayment because maintenance payments wrongly taken into account as income – payment rate notice sufficient). In the latter category are decisions such as Peura (the incorrect attribution of trust income to the pensioner). The decision in Peura appears to proceed on the basis that the pension rate decision itself necessarily involved, as an essential part of the decision making process (and not merely part of the reasoning process in the application of the relevant Rate Calculator), another explicit decision about the attribution of trust income.
44. This distinction between the reasons for a decision, and the making of a separate substantive decision as part of the rate decision, is determinative in the present case. The Secretary did not make, nor was he required or permitted to make, any specific decision altering the factual classification of Mr Walton’s financial assets. The mistake in Centrelink’s records of Mr Walton’s financial assets was merely the reason why the disability support pension rate was determined to be payable at the rates set out in the Secretary’s letters. It did not reflect any actual decision by the Secretary, and certainly not one made in the course of the rate decision itself.
45. Having regard to their terms, as relevantly described in the earlier parts of these reasons, each of the letters of 2 December 2002, 11 March 2004 and 7 March 2005 gave Mr Walton notice of the disability support pension rate decisions made by the Secretary. Consequently, having regard to the terms of section 109 of the Social Security (Administration) Act 1999, the disability support pension rate for the periods to which those letters apply cannot have effect prior to 28 June 2006.
46. The decision under review, as varied by the Secretary’s 19 April 2007 letter, is affirmed.
I certify that the preceding 46 paragraphs are a true copy of the reasons for the decision herein of Mr Peter Taylor SC, Senior Member
Signed: [Skye Owen]
AssociateDate of Hearing 19 April 2007
Date of Decision 25 May 2007
Appearance for Applicant Merrie BottAdvocate for the Respondent Ken Bullock of Centrelink, Legal Services
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