Whiteford and Commissioner for Superannuation

[2007] AATA 1581

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION  [2007] AATA 1581

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No.  A 2006/227

GENERAL  ADMINISTRATIVE  DIVISION		)
Re		DIANE WHITEFORD

Applicant

And COMMISSIONER FOR SUPERANNUATION

Respondent

DECISION

Tribunal J.W. Constance, Senior Member

Date24 July 2007

PlaceCanberra

Decision

1. The decision of the Commissioner made in August 2006 that Ms Whiteford not be allowed a further period to that prescribed by subsection 154(2) of the Superannuation Act 1976 in which to seek a reconsideration of the decision of a delegate of the Commissioner made 15 October 1993 is set aside.

2. In substitution for the decision set aside it is decided that Ms Whiteford be allowed until and including 16 May 2005 to request a reconsideration under subsection 154(2) of the Superannuation Act 1976  of the decision of the delegate of the Commissioner made 15 October 1993.

…….............................................

J.W. Constance, Senior Member

CATCHWORDS

SUPERANNUATION - late application to preserve benefits- extension of time to reconsider refusal - whether Applicant entitled to extension of time on the balance of the factors set out in Hunter Valley and Re Ward.

Superannuation Act 1976 (Cth), ss 137, 154, 157(1)

Hunter Valley Developments Pty Ltd and Others v Cohen, Minister for Home Affairs and Environment (1984) 3 FCR 344

Re Ward and Commissioner for Superannuation (1995) 36 ALD 287

Hamilton v Commissioner for Superannuation [2003] AATA 122

REASONS FOR DECISION

J.W. Constance, Senior Member
24 July 2007

INTRODUCTION

1.      In 1991 Ms Whiteford applied to the Commissioner to have recognised a late application to preserve the benefits which had accrued to her under the Superannuation Act 1976 (Cth) at the time of her resignation from the Public Service in 1980. In 1993 she was notified that her application was refused. It was not until 2005 that Ms Whiteford requested the Commissioner to reconsider this refusal. Such a request is to be made within 30 days of receiving notice of the decision or within such further period as the Commissioner allows. The Commissioner refused to allow a further period for making the request.

2.      Ms Whiteford has applied to the Tribunal to review the decision of the Commissioner not to allow a further period to that referred to in the Act in which to seek a reconsideration of the 1993 decision.

3.      For the reasons which follow I have decided that the decision of the Commissioner should be set aside and the further period sought by Ms Whiteford should be allowed.

EVIDENCE AND FINDINGS OF FACT

4.      Unless otherwise stated, the following findings of fact are made on the basis of the evidence of Ms Whiteford.  I am satisfied of the findings made on the balance of probabilities. 

5.      Ms Whiteford was born in 1949 and joined the Commonwealth Public Service in 1970.  When she joined the Service she became a member of the Commonwealth Superannuation Fund.  Shortly after joining the Fund she received a letter providing her with information concerning her superannuation benefits.  This letter included a statement that if she resigned before attaining the age of 60 years a refund would be made of all her contributions to the fund.[1]

[1] Ex. A2.

6.      In July 1980 Ms Whiteford resigned from the Public Service to care for her two young children.  At that time she intended to return to work in the Service once her children were of school age.  Ms Whiteford went to the Personnel Section of her Department to hand in her letter of resignation and to fill out the necessary paperwork.  Amongst the forms handed to her by the Personnel Officer on duty at the time was a Form S2A[2].  Ms Whiteford does not know the name of this officer.

[2] Ex. A3.

7.      Form S2A was headed “Application for Refund of Accumulated Contributions/Lump Sum Benefit or Election for Preservation of Superannuation Rights." The form gave three options to the person completing it and required a deletion of whichever options were inapplicable. The options were alternatives under the provisions of the Superannuation Act. They were to:

·apply for a refund of accumulated contributions;

·apply for payment of a lump sum benefit;

·elect for preservation of superannuation rights.

8.      Ms Whiteford said that she recalls the Personnel Officer saying to her, words to the effect:

“the only option that applies to you is the refund.  You haven't been in the fund long enough for the other two to apply to you." [3]

[3] Ex. A1.

On the basis of this advice Ms Whiteford applied for a refund of her accumulated contributions.

9.      The Commissioner has argued that I should not accept this evidence as a reliable account of the reason why Ms Whiteford did not elect to preserve her benefits at the time she resigned.  I do not accept this argument.  When she gave evidence Ms Whiteford impressed me as being an honest witness who gave her evidence to the best of her recollection.  There was nothing in her evidence or demeanour which gave me any reason to doubt her truthfulness.

10.     In deciding to accept Ms Whiteford’s account of what she was told I also take into account that when she commenced her employment Ms Whiteford was informed that if she resigned her contributions would be refunded to her.  On the basis of Ms Whiteford’s evidence I am satisfied that sometime during her first period of employment the rules relating to this requirement were changed, although she was unaware of this at the time she resigned.  This is a possible explanation as to why the Personnel Officer may have given incorrect information.  It is also relevant that some years after Ms Whiteford resigned Form S2A was amended to give additional information as to the option of preserving superannuation benefits.

11.     Ms Whiteford received a refund of contributions of $3954.16 which she paid into an interest bearing deposit on 22 August 1980.  Ms Whiteford gave evidence that the funds were placed in this deposit account “for 4 1/2 years “ [4] and then used as a deposit on an investment property.  She said that she had no need for the money when it was received and that at the time she was interested in saving for her retirement.  She also gave evidence that as she intended to return to work in the Public Service she would have preserved her benefits had she known that she could have done so.  For the reasons already stated I accept Ms Whiteford as an honest witness and I accept this evidence.

[4] Ex. A1.

12.     Ms Whiteford rejoined the Public Service in November 1986.  In late 1991 she learned for the first time that it was possible to have superannuation entitlements preserved upon resignation and that it was possible to apply for a late election to do so. On 22 October 1991 Ms Whiteford wrote to the Commissioner advising that she wished to preserve her superannuation benefits at the time of her resignation in July 1980.[5]

[5] Ex. R12.

13.     On 15 October 1993 a delegate of the Commissioner issued a direction that he was not satisfied that in all the circumstances the election made by Ms Whiteford on 22 October 1991 should be recognised.[6]  Ms Whiteford was advised of this direction by letter of 18 October 1993.[7]  This letter included the following advice:

“If you are dissatisfied with the delegate’s decision you may request, in writing, that the decision be reconsidered.  A request to reconsideration should be made within 30 days of receipt of the decision.  A copy of section 154 of the Act, which details the review process, it enclosed."

[6] Ex. R15.

[7] Ex. R5.

14.     On reading the letter, Ms Whiteford felt that her honesty was being questioned.  This was a reasonable reaction as the delegate stated that he had “difficulty accepting” [8] that she was given the advice she claimed to have been given by the Personnel Officer.  She was very upset by this.  She also formed the view that to seek a reconsideration she would need to provide further evidence to corroborate her claim.  She did not know where she could obtain such evidence, although she intended to give further consideration to this question.  Unfortunately, within a few days of receiving the letter, Ms Whiteford's husband was seriously injured in a motorcycle accident and she did not give further consideration to the letter from the Commissioner within the 30 day period referred to.  Once the 30 day period had expired she assumed that there was nothing further that could be done and she was unaware that it was possible to obtain an extension of time within which to seek a reconsideration.

[8] EX. R15.

15.     In April 2005, as a result of a chance discussion with a friend, Ms Whiteford learned that she may be able to seek a review of the determination of the Commissioner even though the 30 day period had expired.  After further investigations, Ms Whiteford applied to the Commissioner by letter of 16 May 2005 to be allowed to submit an application for reconsideration of the 1993 determination.[9]  In that request she stated that the main reasons for her not proceeding with their application for reconsideration in 1993 were:

“1. I experienced a number of personal crises that took me well beyond the prescribed 30 day period;

2. The delegate’s letter did not give any indication that the 30 day period could be extended;

3. I believe that it was highly likely that (in 1993) the Reconsideration Committee would have affirmed the delegates decision; and

4. Although I tried, I was unable in 1993 to procure evidence to refute some of the delegate’s statements are believed to be accurate."

[9] Ex. R18.

16.     On 25 March 2006 the Commissioner decided not to allow Ms Whiteford a further period in which to request a reconsideration of the 1993 decision.  This was affirmed in August 2006.  It is this latter decision which is the subject of the application before me. 

17.     The Commissioner relied upon the following additional facts of which I am satisfied on the evidence.

17.1    In 1977, when she was employed by the Department of Veterans’ Affairs, Ms Whiteford elected to reduce her superannuation contributions.[10] At the time she made this election Ms Whiteford was at the end of a period of acting in higher duties and decided to reduce her contributions to their previous level.  She also was about to go on maternity leave and the family would no longer have the benefit of her income.

17.2    In December 1979 (i.e. before Ms Whiteford resigned), her husband obtained a permit to construct a garage at their home. The subsequent construction of the garage was financed from a loan account held by Mr Whiteford.

17.3    After Ms Whiteford paid the refund of her contributions into the interest bearing deposit funds were transferred between various accounts held by her husband and/or herself, including the interest bearing deposit and her husband’s loan account.  Ms Whiteford agreed that it was “artificial” to say that the money she received from the refund of contributions was the same as that which she contributed to the purchase of the investment unit in 1984.  However an amount not less than the refund was retained in one or more of the accounts until the deposit was paid, and Ms Whiteford was of the view that her refund had contributed to the deposit paid on the unit.

17.4    In December 1984 Mr Whiteford purchased the unit in Canberra.  It was purchased in his name alone for tax reasons.  Both Mr and Ms Whiteford borrowed the additional funds necessary to complete the purchase.

17.5    The unit was sold in December 1988.[11]  The decision to sell was made because of rising interest rates.

[10] Ex. R6.

[11] Ex. R11.

STATUTORY BACKGROUND

18. Under section 137 of the Superannuation Act 1976 (Cth) Ms Whiteford could have elected to preserve her benefits any time between one month before and 21 days after the date of her retirement.

19.     Subsection 157(1) provides:

“ Notwithstanding anything contained in this Act, where an election under this Act is made by a person after the expiration of the period allowed by or under this Act for the making of the election, and the Commissioner is satisfied that in all the circumstances of the case it is desirable that the election should be recognised, the Commissioner may direct that the election be treated as if it had been made within the period allowed and election shall have effect accordingly."

20. Section 154 provides that a person affected by a decision under subsection 157(1) may seek a reconsideration of that decision by written notice given within 30 days of receiving notice of the decision “or within such further period as the Commissioner allows”. 

21. A reconsidered decision of the Commissioner made under section 154 can be reviewed by this Tribunal: subsection 154(6).

ISSUE FOR DETERMINATION

22.     The issue for determination is whether Ms Whiteford should be allowed a further period (i.e. up until the receipt of her request of 16 May 2005) in which to request the Commissioner to reconsider his decision of 15 October 1993.  The decision was that he was not satisfied in all the circumstances that it was desirable that the election made by Ms Whiteford in October 1991 should be recognised.  The election made in October 1991 was that Ms Whiteford’s superannuation benefits as at the time of her resignation from the Public Service in July 1980 be preserved.  The question of whether the election should be recognised is not before the Tribunal in these proceedings.

DETERMINATION OF THE ISSUE

The relevant case law

23.     The starting point for most considerations of applications for extension of time is the decision of the Federal Court in Hunter Valley Developments Pty Ltd and Others v Cohen, Minister for Home Affairs and Environment (1984) 3 FCR 344. The following principles were set out to guide, although not in any exhaustive manner, the outcome of the exercise of a discretion to grant an extension of time for the making of an application under an enactment.

23.1      An application will not be granted unless the court or tribunal is positively satisfied that it is proper so to do; the prescribed period is not to be ignored; it is a precondition to the exercise of discretion that an acceptable explanation of the delay be shown.

23.2      Action taken by an applicant before making the application for extension of time is relevant; an applicant who has rested on his or her rights is less likely to succeed.

23.3      Any prejudice shown to have been suffered, or likely to be suffered, by the respondent as a result of the delay is a material factor.

23.4      The absence of prejudice is not enough to justify an extension of time and public considerations of fairness can be taken into account.

23.5      The merits of the substantial application are relevant.

23.6      Considerations of fairness between an applicant and others in a similar position are relevant.

24.     The above principles were considered by this Tribunal in relation to an application for an extension of time under the Superannuation Act 1976 (Cth) in Re Ward and Commissioner for Superannuation (1995) 36 ALD 287. In that matter the Tribunal was considering an application to review a decision not to direct that a late application to preserve benefits be treated as being within time, however the principles set out are applicable to the application before me. These principles are set out in detail at 290-293 of the decision and include the following.

·“There is a public interest in enforcing procedural time limits which extends beyond the immediate parties." Commissioner for Superannuation v Boardman (1994) 50 FCR 236.

·“The time limit specified in the statute gives a prima facie rule as to when the application should have been made. Before an exercise of discretion in the applicant's favour can occur, it must be made to appear that it is fair and just in all the circumstances to extend time. One of the relevant considerations will be whether there was a reasonable explanation for the delay, although the absence of a reasonable explanation is not necessarily fatal: Comcare v A’Hearn (1993) 119 ALR 85 at 88."

·"The time limit has its purpose, but the Act recognises that there will be deserving cases where fairness to the applicant requires that the time limit be relaxed. In such cases it is the policy of the Act, and the legal right of the applicant, to a favourable exercise of discretion under s157(1). If the proper application of s157(1) to individual cases, results in many people obtaining recognition of late election, so be it, that is the law: Boardman ALD 581; ALR at 252."

·"Most provisions which authorise an extension of time are instances of beneficial legislation which, accordingly should be applied beneficially." Chalk v Commissioner for Superannuation (1994) 33 ALD 420.

·"In the exercise of discretion under s157 it may be more important to consider the consequences of extending or refusing to extend time, than to debate the reasons why the act was not done in time: Chalk ALD 425."

·"Extension of a procedural time limit gives a party an opportunity of establishing rights but to recognise a belated election immediately confers rights.  However in each case the question is whether it is fair and just that the party who was out of time should by the exercise of discretion be extended the rights which would have been enjoyed had the act in question been done within time: Boardman at ALD 577; ALR 248."

25.     Having considered all of the principles set out in these decisions I am of the view that the following are the relevant principles to be considered in deciding this application.

25.1I must be positively satisfied that is proper to grant this application.

25.2The prescribed period must not be ignored, “but the Act recognises that there will be deserving cases where fairness to the applicant requires that the time limit be relaxed.” [12]

25.3It is relevant to consider whether Ms Whiteford has “rested on her rights".

25.4The need for finality in decision-making is to be considered.

25.5It is relevant to consider whether there will be any prejudice to the Commissioner if the application is granted.

25.6Public considerations such as the effect of the decision and considerations of fairness between Ms Whiteford and other persons in a like position are relevant.

25.7Ultimately, should Ms Whiteford succeed in having an election to preserve her benefits recognised, those benefits will fully reflect the total period of her service in the Public Service which would be in accordance with the general policy of the Superannuation Act. This is to be balanced against the requirement that time limits be applied where appropriate to ensure the orderly administration of the superannuation scheme.

25.8Whether there is a reasonable explanation for the delay is a relevant factor, although the absence of such an explanation is not necessarily fatal to the application.

25.9Is it fair and just that Ms Whiteford should be given an opportunity to establish her right to have her belated election recognised being an opportunity which she would have enjoyed had she acted within time?

[12] Re Ward and Commissioner for Superannuation at p.291.

The Commissioner’s argument

26.     The Commissioner has argued that Ms Whiteford’s statement of her reasons for not requesting a reconsideration in 1993 [13] show that she did actively turn her mind to whether she should make such a request and decided not to do so. At the time of her husband’s accident Ms Whiteford took one day off work, which suggests that, at that time, his situation was not known to be so serious as to prevent Ms Whiteford sending a simple letter requesting a reconsideration.  On these bases it was put that there was no adequate explanation for the delay.

[13] Ex.R18.

27.     It was also put on behalf of the Commissioner that, having considered her position and deciding not to proceed further until 2005, Ms Whiteford had “rested on her rights” in the intervening period of twelve years.  In these circumstances the Commissioner was entitled to treat the matter as having been finalised.

28.     On the question of prejudice to the Commissioner the following statement of Deputy President Muller of this Tribunal in Hamilton v Commissioner for Superannuation [2003] AATA 122 was relied upon:

“Elections play a central role in the determination of entitlements of contributors and the orderly administration of the scheme.  The regime of internal and external review of decisions established by section 154 of the Act is designed to promote the orderly administration of the scheme by ensuring that the question of whether a person is entitled to late election is capable of being determined unequivocally and in a timely manner.  Failure to comply with the time limits prescribed under the Act is prejudicial to the orderly administration of the scheme.  It is especially prejudicial to the respondent having to devote considerable resources to investigating events which occurred over 20 years ago, as is the case here.” [14]

[14] At para 9.

The Commissioner argued that by reason of the passage of time the application would have to be assessed without the advantage of contemporaneous evidence.

29.     The Commissioner argued that Ms Whiteford does not have strong prospects of making out her substantive case. It was put that Ms Whiteford’s actions over the years were inconsistent with the actions of a person who would have preserved her benefits or who was interested in maximising her retirement income.  These were:

·the reduction of her superannuation contributions in 1977;

·the building of the garage about the time of her retirement and the use of  funds which may have included the refunds to finance that project;

·the relatively short term of the investment in the unit which was an asset of her husband;

·the funds received from the refund could not be traced directly to the investment.

Further Ms Whiteford’s evidence as to the misinformation she was given is uncorroborated and there is no suggestion that she was under any disability when the form was completed.

30.     As to the issue of fairness it was put by the Commissioner that it would not be fair to allow Ms Whiteford to seek a review now as she had considered her options in 1993 and decided not to proceed at that time.  It was argued further that to allow the extension would be unfair to those contributors who had exercised their elections within the time prescribed.

Reasoning

Explanation for the delay

31.     I accept that Ms Whiteford’s concern for her husband following his accident explains why she did not seek a review within the 30 day period, but I do not accept that his subsequent ill health or any other family difficulties are a valid explanation for a delay continuing until 2005.  However on the basis of her sworn evidence I am satisfied that when she received advice of the Commissioner’s decision Ms Whiteford was unaware that the time for seeking a reconsideration could be extended, and that she believed that without providing additional evidence it was highly unlikely that any reconsideration would be in her favour. In all the circumstances I am satisfied that this is a reasonable explanation for the delay until Ms Whiteford learned that it was possible to seek a reconsideration even though this was many years later

“Resting on rights” and the need for finality

32.     It is clear that prior to 2005 Ms Whiteford took no action to inform the Commissioner that she wished to seek a reconsideration and the Commissioner was entitled to consider the matter finalised at the expiration of the 30 day period or at the latest within a few months of that time.  It is also clear that there is a need in the administration of the scheme for finality in decisions as to whether a member of the scheme wishes to preserve benefits.  In this regard I agree with the views expressed by Deputy President Muller.  These considerations weigh against granting the extension sought in this case.  However as I have accepted Ms Whiteford’s evidence that she was unaware of her right to seek a review I do not accept the argument that she “rested on her rights”.  For someone to rest on his or her rights it is necessary for that person to be aware of those rights.

Possible prejudice to the Commissioner

33.     As I have indicated above I accept that there is some prejudice to the Commissioner in administering the scheme should there now not be finality in a decision made in 1993.  I also accept that it is unlikely that the Commissioner will be able to locate any witness to the events of July 1980.  However there is no evidence that the Commissioner is in any worse position now than that in which he was in 1993 when Ms Whiteford could have required a reconsideration of the Commissioner’s decision as a matter of right. I am not satisfied that the Commissioner has suffered any prejudice by reason of the delay in seeking a reconsideration as distinct from prejudice occasioned by the delay in making the election to preserve benefits.

Public considerations

34.     There are no factors in this case which suggest that there will be any detrimental public effect should the time for seeking a reconsideration be extended.  I do not accept the Commissioner’s argument that to extend time would be unfair to those who made their elections in time.  First, the legislation makes provision for extensions to be granted in several circumstances and so recognises that these can be granted even though many members will have exercised their rights in accordance with the time limits prescribed.  Secondly the extension of time being sought by Ms Whiteford to permit her to seek a reconsideration; if granted, will not necessarily permit her to exercise her election out of time.  Any person in Ms Whiteford’s situation can exercise his or her rights under the Act in the same manner as has Ms Whiteford.

Substantive merits

35.     While I do not wish to in any way pre-empt the decision whether to treat the election as having been made in time, on the basis of the evidence before me I am satisfied that Ms Whiteford has made out a case that she has a reasonable chance of succeeding on the substantive question.  Whilst she has no evidence to corroborate what she was told in 1980 in my opinion this does not weaken the case she has put before me.  Ultimately in these circumstances a decision has to be made by the decision-maker as to whether Ms Whiteford is to be accepted as a truthful person who has accurately recalled what happened in 1980.  If when the time comes her credibility is in doubt it may be appropriate to investigate the possibility of corroboration.  On the other hand if the decision-maker is otherwise satisfied that Ms Whiteford was misinformed, and that she did not seek to exercise her right to have the decision of the Commissioner reconsidered for the reasons stated, the lack of corroboration will not matter.

Fairness and justice

36.     Ultimately it is a matter of balancing the considerations outlined above (some of which are competing) together with the obvious proposition that time limits in legislation are included for the purpose of being applied.  In balancing the various considerations I have taken into account that Ms Whiteford is only seeking an extension of time to seek a reconsideration of the Commissioner’s decision and that this was a right to which she was entitled had she acted in time. I have accepted her evidence as to the initial reason she did not elect to preserve her benefits and her explanation for the very considerable delay in seeking a reconsideration.  In these circumstances it is fair and just that she have the opportunity to seek a reconsideration in circumstances when the delay in seeking that reconsideration has been explained and has not been shown to have caused undue prejudice to the Commissioner.

DECISION

37. The decision of the Commissioner made in August 2006 that Ms Whiteford not be allowed a further period to that prescribed by subsection 154(2) of the Superannuation Act 1976 in which to seek a reconsideration of the decision of a delegate of the Commissioner made 15 October 1993 is set aside.

38. In substitution for the decision set aside it is decided that Ms Whiteford be allowed until and including 16 May 2005 to request a reconsideration under subsection 154(2) of the Superannuation Act 1976  of the decision of the delegate of the Commissioner made 15 October 1993.

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of J.W. Constance, Senior Member.

Signed:          .....................................................................................

Geoff Foley, Associate

Date of Hearing  25 June 2007

Date of Decision  24 July 2007
Counsel for the Applicant               Wayne Sharwood
Solicitor for the Applicant               Pamela Coward & Associates
Counsel for the Respondent          Andrew Dillon
Solicitor for the Respondent         Australian Government Solicitor