Windram and Secretary, Department of Social Services (Social services second review)
[2017] AATA 804
•5 June 2017
Windram and Secretary, Department of Social Services (Social services second review) [2017] AATA 804 (5 June 2017)
Division:GENERAL DIVISION
File Number(s): 2017/1664
Re:Lidia Windram
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member K. Parker
Date:5 June 2017
Place:Melbourne
The application for an extension of time under s 29(7) of the Administrative Appeals Tribunal Act 1975 is refused.
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Member K. Parker
EXTENSION OF TIME APPLICATION – whether reasonable in all the circumstances to grant the extension of time - explanation for the delay – merits of the substantive application - eligibility for Newstart Allowance – whether total asset limit exceeded – assets held in family trust – controlled private trust - appropriate asset attribution percentage
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) – s 29
Social Security Act 1991 (Cth) (the Act) – s 1207V, s 1207X, s 1207PSocial Security (Administration) Act 1999 (Cth) (the Administration Act)
Cases
Commissioner of Taxation v Brown [1999] FCA 1198; (1999) 99 ATC 4852; (1999) 42 ATR 672
Hunter Valley Developments Pty Ltd and Others v Cohen [1984] FCA 186; (1984) 3 FCR 344; (1984) 58 ALR 305
Re Clinic Tavern Pty Ltd and ACT Liquor Licensing Board (1993) 32 ALD 381
Re Grafton and Commonwealth (1988) 16 ALD 533
Re Romeo and Secretary, Department of Social Security (1992) 26 ALD 248
Spencer and Commissioner of Taxation [2007] AATA 1194; (2007) 100 ALD 389REASONS FOR DECISION
Member K Parker
5 June 2017
On 28 January 2016, Lidia Windram (Ms Windram) lodged a claim for Newstart Allowance. This claim was rejected on 4 May 2016. On 24 May 2016 an authorised review officer of the Department of Human Resources (ARO) affirmed the decision to reject Ms Windram’s claim.
Ms Windram applied to the Administrative Appeals Tribunal (Social Services and Child Support Division) (AAT1) for a review of this decision. On 17 January 2017, the AAT1 affirmed the decision to reject Ms Windram’s claim.
On 24 March 2017, Ms Windram lodged an application with the Administrative Appeals Tribunal (General & Other Division) for a review of the AAT1 decision. Ms Windram also sought an extension of time to file her application for review, as the prescribed 28-day statutory time limit for her to apply for review under s 29(2) of the AAT Act had expired. Documents provided under s 37 of the AAT Act were lodged with the Tribunal by the Secretary of the Department of Social Services (the Secretary) on 28 March 2017 (T- Documents).
In consideration of the submissions made by both parties, including those made at an interlocutory hearing which took place by telephone on 19 April 2017, the Tribunal is not satisfied that it is reasonable in all of the circumstances to grant an extension of time. Accordingly, Ms Windram’s applications for an extension of time, and substantive application for second review, both lodged on 24 March 2017, are dismissed.
BACKGROUND
Ms Windram is 47 years old and lives with her 18 year old daughter in a home that Ms Windram owns in Keilor East, Victoria.
Ms Windram was last employed at Integra in Thomastown. She commenced employment at Integra on 12 October 2015 and ceased on 12 January 2016 for the stated reason of her “unsuitability for this type of work – skillset to be improved”.[1] She is presently unemployed.
[1] Refer T-Documents T4/12.
Ms Windram has described her relationship status as separated. She also stated she was involved in a private trust and owned real estate in addition to the home that she lived in.[2]
[2] Refer T-Documents T3.
Ms Windram is a beneficiary of the Celi Family Trust CRN: 505 420 247T (the Trust) of which GELD Investments Pty is the Trustee. She holds 12 out of 48 (25%) of the ordinary shares. The other beneficiaries of the Trust are Ms Windram’s three sisters. Ms Windram previously held a directorship in the Trustee company, but has since resigned.
The assets of the Trust are valued at $2,423,121 in total, comprising five properties in Torquay, one property in St Albans, funds in a cheque account and further funds in a MISA account. The liabilities of the Trust total $478,213 comprising beneficiary loans, mortgages and other creditors. Accordingly, the net assets of the Trust are $1,944,908.
It is contended by the Secretary that Ms Windram held further assets at the time of her claim including a beneficiary loan to the Trust totalling $47,606 and as disclosed by Ms Windram, household and personal effects valued at $4,000.
When Ms Windram claimed the Newstart Allowance, the total asset limit applicable to a single homeowner was $202,000.[3]
[3] Refer T-Documents T31/121-123.
On 4 May 2016, Centrelink issued Ms Windram with a notice which stated:
…Rejection of your claim for Newstart Allowance…We cannot pay you Newstart Allowance because the value of your assets are above the allowable limit…[4]
[4] Refer T-Documents T7.
On 24 May 2016 the ARO affirmed this decision to reject Ms Windram’s claim for Newstart Allowance. It was explained to Ms Windram at this time that even if the beneficiary loan were put to one side, her attributable assets from the Trust (taken as 25% which is equivalent to the extent of her beneficiary shareholding)[5] was in excess of the total asset limit applicable to Ms Windram.
[5] Refer T-Documents T10/47 (mid-way down the page) Ms Windram stated: “…My assets are held in a family trust and I am 25% shareholder as are my 3 sisters, we all have equal shares, and we all must agree on all decisions…”.
Ms Windram expressed her concern to the ARO about not being able to sell the properties owned by the Trust to access her share, as her sisters were not prepared to sell. At this time, Ms Windram was informed that she could test her eligibility for Newstart Allowance under the assets hardship provisions by lodging a ‘Claim for consideration under hardship’.[6] This claim was lodged by Ms Windram and subsequently rejected on 5 August 2016 on the basis that Ms Windram’s income derived from the Trust (based on the Trust tax return for the 2013/2014 financial year) was higher than the maximum rate of Newstart Allowance and as such, she was not considered to be in “severe financial hardship”. Ms Windram’s right to seek a review of that decision if she did not agree with it, was set out on the second page of the letter of rejection dated 5 August 2016.
[6] Refer T-Documents T8 and T9.
Ms Windram applied to the AAT1 for a review of the ARO’s decision on 24 May 2016 to reject her claim for Newstart Allowance. This application was heard on 17 January 2017 and for reasons given orally the AAT1 affirmed this decision.
On 27 March 2017, Ms Windram lodged an application for second review and a corresponding extension of time application with this Tribunal. In the application forms, Ms Windram stated as follows:
(a)As to her reasons for applying for an extension of time, including why she did not apply within the time limit:
As my accountant has just had a chance to look at the paperwork from Centrelink and the AAT, he noticed that the extra $6440 (depreciation of shops) allocated to my income by Centrelink should of(sic) been divided by 4, as there are four directors and everything is divided equally. This was the reason I came to the AAT as I did not agree with the income centrelink claim I receive from the trust.
Centrelink are aware there are four directors and I also spoke to a member from the AAT and they were also aware.
(b)As to why she wanted to have the AAT1 decision reviewed and why she claimed the decision was wrong:
I believe the decision is wrong as the $6444 allocated to me, should of(sic) been divided by 4, and only $1611 should of(sic) been allocated to my income, not the whole amount.
CONSIDERATION
Section 29(2) of the AAT Act provides that an application for review must be lodged with the Tribunal within 28 days from the date that the notice of reviewable decision was given to the applicant.
Section 29(7) of the AAT Act gives the Tribunal discretion to extend the 28-day time limit where the extension of time application has been made in writing, which it has in this case, and if the Tribunal if satisfied that it is reasonable in all the circumstances to do so. As a guiding principle, the time limit cannot be ignored unless there is a very good reason to do so. Special circumstances need not be shown, but the decision-making body must not grant the extension unless it is positively satisfied it is proper to do so. The applicant for the extension of time must show an acceptable explanation for the delay and that it is fair and equitable in the circumstances to extend the time – see the Federal Court decision of Hunter Valley Developments Pty Ltd and Others v Cohen [1984] FCA 186; (1984) 3 FCR 344; (1984) 58 ALR 305.
Length of the delay
It was contended by the Secretary and not disputed by Ms Windram that the total period of the delay was at least 32 days. This was confirmed by the Tribunal’s own calculations.
Explanation for the delay
At the hearing of the extension of time application on 19 April 2017, Ms Windram’s written reason for the delay was noted (see paragraph 16(a) above) and Ms Windram was also given a further opportunity to comment about the reason for the delay in lodging her application.
The AAT1 decision was given orally on 17 January 2017 at the AAT1 review hearing. A written notice confirming the decision was posted to Ms Windram on 17 January 2017. Ms Windram’s oral evidence was that she received this notice “within the week” but “didn’t do anything with it” because she “thought the decision was final”. Ms Windram said she spoke to her accountant about “2 or 3 weeks later” and that he told her it was his busiest time of the year because tax returns were due for companies and that she should “lodge it later on in the year”. Ms Windram said she told her accountant that would be fine as she “did not think she had any reason to rush him”. Ms Windram said that she remembered being told she had 28 days to lodge an application for review but “I thought I didn’t have anything to dispute”.
The Tribunal notes that the further financial information eventually provided by Ms Windram’s accountant, as appearing in her application for review and application for an extension of time, unfortunately was irrelevant to the issues about the total value of Ms Windram’s assets at the time she made the claim for Newstart Allowance. The information the accountant provided related only to the value of Ms Windram’s income at that time.
Based on the above, the Tribunal does not consider that the reason proffered by Ms Windram for the delay in making the application for review was an acceptable explanation for the delay. This factor weighs against the Tribunal granting Ms Windram’s extension of time application.
Strength of Ms Windram’s case
The Tribunal proposes to adopt the approach of the Full Federal Court in the Commissioner of Taxation v Brown [1999] FCA 1198; (1999) 99 ATC 4852; (1999) 42 ATR 672 which, in effect, was to take the applicant’s case at its highest and to assess whether it was arguable that the case had merit. This approach was applied by the Tribunal in Re Spencer and Commissioner of Taxation [2007] AATA 1194; (2007) 100 ALD 389.
Based on Ms Windram’s stated reasons for review as set out in paragraph 16(b) above, she asserted that the AAT1’s decision was incorrect because the value of the depreciation for the shops should have been divided by four instead of all of it being allocated to her, when assessing her personal income from the Trust.
The difficulty for Ms Windram is that allocation of depreciation for the shops as between her and her sisters had no bearing whatsoever on the assessment of her total assets which was the basis upon which her Newstart Allowance was rejected. This meant that even if Ms Windram’s case was taken at its highest and it was accepted that there was an error in the figure used for depreciation, this would not enhance her prospects of establishing that the AAT1 decision was incorrect. The reason for this was that it would not impact in any way on the assessment made of the total value of Ms Windram’s assets, which, even if the beneficiary loan which she took issue with was completely disregarded, the total of the remaining balance of her assets clearly exceeded the total asset limit applicable to Ms Windram at the time she made her claim.
Ms Windram did not dispute the use of the council valuations to value each of the properties owned by the Trust. Ms Windram also did not dispute the other financial information provided by the Trust’s own accountants as to the other assets held by way of funds held in bank accounts and liabilities that applied to the Trust at the relevant time.
There was no objection raised by Ms Windram as to the characterisation of the Trust as a controlled private trust under s 1207V of the Act. The Act provides that a trust is a controlled private trust in relation to an individual if the trust is a designated private trust[7] and the individual passes the control test under s 1207V(2) of the Act. An individual passes the control test if the aggregate of the beneficial interests in the corpus or income of the trust held by the individual or relative of the individual[8] is more than 50%. In this case, the aggregate beneficial interest of Ms Windram and her three sisters (being immediate relatives) was 100%. Finally, Ms Windram did not dispute that the appropriate attribution percentage[9] to be applied to her in respect of the assets of Trust should be anything other than 25%.
[7] Defined in s 1207P of the Act.
[8] Refer s 1207C(1)(e) of the Act.
[9] Refer s 1207X(d) of the Act.
In light of paragraphs 27 and 28 above, even if Ms Windram’s case is taken at its highest, the Tribunal is unable to identify an arguable case on the merits that the total value of her assets, including her share of the Trust net assets, did not exceed the total asset limit applicable to Ms Windram at the time she made her claim for Newstart Allowance. This factor weighs against the Tribunal granting Ms Windram’s extension of time application.
Resting on rights
In previous decisions, the Tribunal has expressed that an applicant cannot simply rest on his or her rights to seek a review, do nothing, and then seek the indulgence of the AAT – see Re Grafton and Commonwealth (1988) 16 ALD 533; Re Romeo and Secretary, Department of Social Security (1992) 26 ALD 248; and Re Clinic Tavern Pty Ltd and ACT Liquor Licensing Board (1993) 32 ALD 381.
It was apparent to the Tribunal from Ms Windram’s evidence at the hearing of the extension of time application that she was aware of her appeal rights at the time she was notified of the AAT1’s decision. Ms Windram, on her own evidence, did not do anything at first and could be said to have rested on her rights. She then took the step of contacting her accountant about it, but not until another two to three weeks had passed. Her accountant explained he could not attend to the matter straight away as it was a busy time of the year for him. Again, Ms Windram accepted this position and said she did not feel she had a reason to rush him. This is a further instance of Ms Windram resting on her rights. Ms Windram did not give evidence that she otherwise contacted the Department to make it clear that she objected to the decision of the AAT1 and was planning to apply for a further review. This factor weighs against granting Ms Windram’s extension the time application.
Prejudice to the respondent
The Secretary contended that the delay in this case did not cause any prejudice. This factor weighs in favour of granting Ms Windram’s extension of time application.
Wider prejudice to the general public in terms of disruption to established practices
The Secretary contended that the public interest and the interests of those applicants who comply with the prescribed time limits are unsettled by perceptions of unfairness and uncertainty, if an extension of time is granted where the justice of the case does not permit that this should occur. While the Tribunal accepts this as a general proposition, this factor did not influence the Tribunal greatly in this application, given that the total period of the delay, whilst not insignificant, was limited to just over one month out of time.
CONCLUSION
The Tribunal is satisfied that Ms Windram did not present to the Tribunal an acceptable explanation for the delay. The Tribunal was unable to identify that Ms Windram had an arguable case on the merits in her substantive application, even when Ms Windram’s evidence was taken at its highest. The Tribunal considered that Ms Windram rested on her review rights after admitting that she was aware of them and the time limits that applied. Even though there was no prejudice caused to the Secretary by the delay, the Tribunal considered that it was not reasonable in the all the circumstances to extend the 28-day statutory time limit under s 29(7) of the AAT Act.
Accordingly, Ms Windram’s application for an extension of time to lodge her substantive application for review of the AAT1’s decision to refuse her claim for Newstart Allowance is refused.
36. I certify that the preceding 35 (thirty-five) paragraphs are a true copy of the reasons for the decision herein of Kim Parker, Member
…..….....................[sgd]..............................
Associate
Dated 5 June 2017
Date of interlocutory hearing 19 April 2017 Applicant By Telephone
Advocate for the Respondent Mark Hester Solicitors for the Respondent Department of Human Services,
Freedom of Information & Litigation Branch
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