Whitehead and Secretary, Department of Social Services (Social services second review)

Whitehead and Secretary, Department of Social Services (Social services second review) [2017] AATA 2557 (6 December 2017)
Division:GENERAL DIVISION
File Number: 2017/4430 and 2017/4437
Re:Yvonne and Ross Whitehead
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Member D K Grigg
Date:6 December 2017
Place:Brisbane

The decision under review is affirmed.
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Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – age pension – date of effect of favourable determination – whether section 43(6) of the Administrative Appeals Tribunal Act 1975 applies – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Otter Gold Mines Ltd v Australian Securities Commission (1997) 26 AAR 99
SECONDARY MATERIALS
Guide to Social Security Law (2017, Cth)
REASONS FOR DECISION
Member D K Grigg
6 December 2017

The Applicants are recipients of the aged pension.[1] Mrs Whitehead applied for the aged pension on 27 August 2015.[2] Mr Whitehead was already a recipient of the aged pension at that time.
[1] Exhibit 1, T Documents, T16, pages 87 – 88 and 90 – 91, Centrelink records.
[2] Exhibit 4, Mrs Whitehead’s Claim for the Aged Pension dated 27 August 2015
The rates at which people (who are not permanently blind) are paid an aged pension is determined using the Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991 (Cth) (“Act”) and is affected by, among other things, a person’s income and the value of their assets.[3] The maximum basic rate payable varies depending upon a person’s family situation.[4]
[3] Section 55(a), Act.
[4] Section 1064-B1, Act.
Until 12 January 2017, the Applicants’ rate of age pension was calculated with reference to their income and assets including rental income they earned from a property they own in Brendale (“Brendale Property”).[5]
[5] Exhibit 1, T Documents, T6, pages 51 – 52, Centrelink notice dated 21 September 2015; T7, pages 53 – 54, Centrelink notice dated 21 September 2010.
On 31 August 2015 the Applicants provided Centrelink with information that as of 1 September 2015 they were no longer receiving any rental income from the Brendale Property as their tenants had vacated and a new lease had not been arranged.[6]
[6] Exhibit 1, T Documents, T4, page 41, Material submitted to Centrelink by the Applicants dated 31 August 2015.
On 6 September 2015 Centrelink requested that the Applicants provide information regarding their superannuation fund.[7]
[7] Exhibit 1, T Documents, T5, pages 43 – 44, Letter from Centrelink to Mrs Whitehead dated 6 September 2015.
On 11 September 2015 Mrs Whitehead sent Centrelink the superannuation fund information that had been requested and again reiterated that they had not received any rental income from the Brendale Property since 31 August 2015.[8]
[8] Exhibit 1, T Documents, T5, page 45, Letter from Mrs Whitehead to Centrelink dated 11 September 2015.
On 21 September 2015 Centrelink sent letters to the Applicants noting the combined annual income amount of $17,144.40 (i.e. rental income) against which the age pension had been calculated and set out that they were required to notify Centrelink within 14 days if there are any changes to their situation.[9]
[9] Exhibit 1, T Documents, T6 and T7, pages 51-55, Letters from Centrelink to the Applicants dated 21 September 2015.
On 25 October 2016 Mr Whitehead received a letter from Centrelink advising that there were changes to the pensions assets tests which would take effect from 1 January 2017.[10] As a result of this upcoming change, the Applicants told the Tribunal they thought they would be receiving an increased rate of aged pension. When they did not receive the rate of payment they expected, Mrs Whitehead telephoned Centrelink on 12 January 2017 querying the rate of payment and was provided with a form to update their details.[11]
[10] Exhibit 5, Letter from Centrelink to Mr Whitehead dated 25 October 2016.
[11] Exhibit 1, T Documents, T17, page 108, Centrelink records.
On 21 January 2017 Ms Whitehead wrote to Centrelink:[12]
(a)confirming that they still did not have a tenant for the Brendale Property and were not receiving any rental income;
(b)to ask why they had not been notified if any changes were to occur with their receiving their part pension; and
(c)confirming that at her last visit to Centrelink, in August/September 2015, a Centrelink officer had explained that they were over the asset limit by $20,000 at that time and therefore their pension had been reduced.
[12] Exhibit 1, T Documents, T8, page 56, Letter from Ms Whitehead to Centrelink dated 21 January 2017.
On 23 January 2017 Mrs Whitehead telephoned Centrelink again and asked why the rental income was being maintained in their aged pension calculation when she had previously advised Centrelink they had not received any rental income since 31 August 2015. A Centrelink officer told Ms Whitehead that she had not indicated that she would never receive any rental income in the future. Mrs Whitehead told the Centrelink officer that she had assumed that a rate of payment was being assessed under the new assets test and was not aware that it was also being impacted by the rental income they had previously earned from the Brendale Property. Mrs Whitehead also said that she had asked someone at the local Centrelink office about a rate of pension and was told that a reduced rate of pension was payable because their assets were over the impact level. Mrs Whitehead said that she had expected her rate of age pension to increase with the 1 January 2017 asset test changes, and that when she realised that there had been no changes that was when she queried the assessment.[13]
[13] Exhibit 1, T Documents, T17, pages 108-112, Centrelink records.
On 26 January 2017 Centrelink advised Mrs Whitehead that it had determined to set the rental income to $0.00 from 1 September 2015 but to not pay arrears of age pension because she did not request a review of the decision to continue to assess rental income within 13 weeks of receiving the letters sent on 21 September 2015.[14]
[14] Exhibit 1, T Documents, T9, page 57, Letter from Centrelink to Mrs Whitehead dated 26 January 2017.
Centrelink’s position is that the Applicants did not notify Centrelink within 13 weeks of receiving these letters that that was an incorrect income amount and that in fact the income amount was less as a result of the Brendale property being untenanted.
The Applicants argue that their age pension should be reassessed from 1 September 2015 because they informed Centrelink that they were no longer receiving rental income on 31 August 2015.
Claim History
As a result of Centrelink’s decision, the Applicants sought a review by an Authorised Review Officer (“ARO”). The appeal to the ARO was partially successful in that the ARO determined that the Applicants’ age pension could be reassessed from 12 January 2017.[15]
[15] Exhibit 1, T Documents, T 10 and T 11, pages 59 – 70, Authorised Review Officer’s Decisions and Notes dated
21 February 2017.
On 29 March 2017, Mrs Whitehead lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal.[16] The SSCSD rejected the Applicants’ claim and affirmed the ARO’s decision on 18 July 2017.[17]
[16] Exhibit 1, T Documents, T 13, page 71, Email from SSCSD dated 21 February 2017.
[17] Exhibit 1, T Documents, T2, pages 7 – 9, SSCSD’s Decision and Reasons for Decision dated 18 July 2017.
The Applicants have sought a review of the SSCSD’s decision by this Tribunal.[18]
[18] Exhibit 1, T Documents, T1, pages 1 – 6, Application for Second Review of a Decision dated 24 July 2017.
ISSUES FOR DETERMINATION
The following issues have to be determined:
(a)whether the Applicants requested a review of the relevant decision prior to 12 January 2017;
(b)whether the Applicants can be paid an increased rate of age pension earlier than from 12 January 2017;
(c)if the Applicants did not request a review of the relevant decision prior to 12 January 2017, whether the Tribunal’s discretionary power to otherwise order, contained in section 43(6) of the Administrative Appeals Tribunal Act 1975 (“AAT Act”) permits the Tribunal to backdate the effect of its decision to a date prior to that determined by the date effect provisions contained in the Social Security (Administration) Act 1999 (“Administration Act”); and, if yes
(d)whether the discretionary power should be exercised.
DATE OF EFFECT OF FAVOURABLE DETERMINATION RESULTING FROM REVIEW
Pursuant to section 123(3)(a) the Administration Act, when a determination is made about the rate of a social security payment, such as the age pension, that determination continues in effect until, relevantly here, a further determination is made under section 78. Section 78 provides that if the Secretary is satisfied that the rate at which a social security payment is being, or has been, paid is less than the rate provided for, the Secretary must determine that the rate is to be increased to the rate provided for by the Social Security law and specify the rate in the determination. A determination made under section 78 is referred to in the Administration Act as a “favourable determination”.[19]
[19] Section 108, Administration Act.
Pursuant to section 109(2) of the Administration Act, which is relevant here, favourable determinations take effect on the day on which an application for review of the decision is made 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.

Were the Applicants Given Notice of The Decision Made On 21 September 2015: section 109(2)(b)?

Between 21 September 2015 to 12 January 2017, the Applicants’ rate of age pension increased in March 2016, June 2016, and September 2016.[20] Where the rate of payment has been adjusted in this way, pursuant to subsection 109(7) of the Administration Act, the Applicants are deemed to have been given notice of the determination and the increased rate.
[20] Exhibit 1, T Documents, T16, pages 87-88 and 90-91, Centrelink payment summaries.
Therefore, section 109(2)(b) of the Administration Act is satisfied.
Date the Applicants applied for a review of the decision made on 21 September 2015? section 109(2)(c)?
The Secretary submits the Applicants first requested a review of the decision on 12 January 2017. There is no evidence before the Tribunal that the Applicants requested a review of the decision prior to 12 January 2017.[21]
[21] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 October 2017, para 24.
The Secretary points out that the Applicants submission, dated 21 May 2017, discloses that the Applicants only became aware that they were being incorrectly underpaid their rate of aged pension in early January 2017,[22] therefore, it cannot be argued that they requested a review prior to 12 January 2017. This means that the request for a review of Centrelink’s decision regarding the rate of pay, was 13 weeks after the date the last relevant indexation rate increase took effect on 21 September 2016.[23]
[22] Exhibit 1, T Documents, T14, page 73, Letter from the Applicants to Andrew Laming, Federal Member for Bowman dated 21 May 2017; see also T15, page 70, Letter from Applicants to Registrar, AAT dated 26 June 2017.
[23] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 October 2017, paras 24-25.
This is not disputed by the Applicants. Therefore, section 109(2)(c) of the Act is satisfied.
The Applicants acknowledge that they received the letters on 21 September 2015 but did not understand the letter to mean that rental income was still being taken into account in calculating their rate of aged pension because they had just advised Centrelink they were no longer receiving that income.[24]
[24] Exhibit 1, T Documents, T14, page 74, Letter from the Applicants to Andrew Laming, Federal Member for Bowman dated 21 May 2017.
Conclusion
Therefore, pursuant to section 109(2) of the Administration Act, the decisions made regarding the rate of age pension payable to the Applicants continued in effect under subsection 123(3) of the Administration Act until 12 January 2017, the date the ARO made the favourable determination.
This means that, pursuant to section 109(2)(d) of the Act, subject to the Tribunal’s discretionary power considered below, the Applicants cannot be paid arrears of Age Pension to a date earlier than 12 January 2017.
THE TRIBUNAL’S DISCRETIONARY POWER
The Applicants did notify Centrelink of their change in income in August 2015 and have been paid an incorrect, lower, rate of aged pension than they were entitled to since September 2015. This is not disputed by Centrelink.
However, as outlined above, the unfortunate reality is that the legislation provides that because their request for a review was not made until after 13 weeks of the date the decision was made to pay the Applicants at an incorrect rate, they can only be paid arrears back to the date of their request, which has been determined as 12 January 2017.
The only possible way in which the Applicants can be paid arrears back to September 2015 is if the Tribunal has the power to make a different order under section 43(6) of the AAT Act.
SECTION 43(6) OF THE AAT ACT
Pursuant to section 43(1) of the AAT Act, the AAT has the power to affirm, vary, set aside, make a decision in substitution of, or remit a decision under review. The AAT “stands in the shoes of the decision-maker and, on the material before it, makes the ‘correct or preferable’ decision” see Drakev Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409 at 419 per Bowen CJ and Deane J.
The Full Federal Court in Otter Gold Mines Ltd v Australian Securities Commission (1997) 26 AAR 99 said at 106:
‘When reviewing an administrative decision under s 43(1) the AAT stands in the place, and is empowered to exercise all of the relevant powers and discretions, of the decision-maker in respect of the decision under review. The AAT hears the matter de novo in the light of the evidence placed before it.’ (my emphasis)
Section 43(6) of the AAT Act then goes on to provide for what happens if a decision of a decision-maker is varied or substituted:
(6)A decision of a person as varied by the Tribunal, or a decision made by the Tribunal in substitution for the decision of a person, shall, for all purposes (other than the purposes of applications to the Tribunal for a review or of appeals in accordance with section 44), be deemed to be a decision of that person and, upon the coming into operation of the decision of the Tribunal, unless the Tribunal otherwise orders, has effect, or shall be deemed to have had effect, on and from the day on which the decision under review has or had effect.
(my emphasis)
In these circumstances, under the Administration Act, the effect of the decision to pay the aged pension arrears to the Applicants, can only be dated back to the date they applied for a review of the decision, 12 January 2017. Standing in the “shoes of the decision-maker” the ‘correct or preferable’ decision was made.
Section 43(6) of the Act only applies where the Tribunal is:[25]
(a)varying a decision; or
(b)substituting a decision.
[25] See Thompson and Secretary, Department of Social Services [2017] AATA 1638, at [21]-[22].
As the decision under review was correct under the legislation, there is, in effect, no decision to vary or substitute. Therefore, section 43(6) of the AAT Act does not apply here.
DECISION
The decision under review is affirmed.

I certify that the preceding 37 (thirty-seven) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg

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Associate
Dated: 6 December 2017

Date of hearing: 3 November 2017

Applicant: In person

Advocate for the Respondent:

Solicitors for the Respondent:

Mr Rick McQuinlan, Senior Lawyer

Department of Human Services

[2017] AATA 2557

6 December 2017

Key Legal Topics

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Administrative Law

Statutory Interpretation

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Appeal

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