Editors --- "Age pension: meaning of decision; date favourable determination takes effect" [2010] SocSecRpr 20; (2010) 12(2) Social Security Reporter, Article 6

• SECRETARY TO THE FAHCSIA and BENSTED
• Background
• Facts
• Issues
• The legislation
• Consideration of the issues
• Formal decision

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Age pension: meaning of decision; date favourable determination takes effect

SECRETARY TO THE FAHCSIA and BENSTED

(2009/395)

Decided: 27th May 2010 by K.S. Levy

Background

Bensted applied for and was granted age pension from 23 December 2008, the day he turned 65. He accurately declared his assets but subsequently discovered that Centrelink had used an incorrect figure for his assets as the basis for calculating the rate of age pension. He applied for a review of the decision that determined the amount paid. An authorised review officer (ARO) determined that he was entitled to be paid arrears from 18 June 2009. He sought further review from the Social Security Appeals Tribunal (SSAT) which set aside the original decision and determined that he was entitled to arrears from 23 December 2008. The Secretary lodged an appeal against the SSAT decision.

Facts

On 22 December 2008, Centrelink created a summary of assets and income which did not accurately reflect Bensted’s assets and which was used to calculate the amount of pension payable to him. The summary was not provided to him but eighteen advice letters were sent to him between 22 December 2008 and 11 September 2009. Those letters indicated that the rate of pension paid was based on his income and assets. They were computer generated and had some standard text which stated that if he did not agree with the decision regarding the rate of pension payable he should contact Centrelink and request a reconsideration.

The Tribunal found that the letters did not contain information that would have alerted Bensted to the fact Centrelink had calculated his rate of payment based on incorrect asset information. Centrelink sent two other letters to Bensted dated 25 March 2009 and 1 July 2009. They were ‘Account Statements’ and showed pension and allowances paid and included income and asset details. Bensted wrote to Centrelink on 7 August 2009 seeking a review of the rate of pension on the basis that the assets taken into account in calculating his pension were not correct. He received no response to that letter. On 11 September 2009 he went to Centrelink in person to request a review. In response to this request Centrelink decided to pay him the correct rate of pension from 11 September 2009. The basis for the ARO’s decision to pay arrears from 18 June 2009 was that this was 13 weeks prior to his request for review. The period in dispute before the Tribunal was the period from 23 December 2008 to 17 June 2009 and involved an amount of about $1000.

Issues

The Tribunal identified 2 issues:

(a) Did the SSAT err in finding s.110 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) could apply to grant decisions?

(b) Was Bensted entitled to arrears under s.109 of the Administration Act from the date of the original decision, or was his entitlement limited to 13 weeks prior to the date of a ‘request’ for review?

The legislation

The Tribunal noted that the relevant legislative provisions were:

• section 23 of the Social Security Act Cth 1991 (the Act) which provides that ‘decision’ has the same meaning as in ss.3(3) of the Administrative Appeals Tribunal Act 1975 and which relevantly included the making of an order or determination;

• section 78 of the Administration Act which 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 by social security law, the Secretary must determine that the rate is to be increased to the rate provided for by the social security law;

• section 109 of the Administration Act which provides for the date on which a favourable determination takes effect where a person has sought a review of a decision;

• subsection 110(1 ) of the Administration Act which provides that if a favourable determination is made following a person having informed the Department of the occurrence of an event or change of circumstances, the determination takes effect on the day on which the person so informed the Department; or on the day on which the event or change occurred; whichever is the later; and

• paragraph 129(1) (a) of th e Administration Act which provides that a person affected by a decision of an officer under the social security law may apply to the Secretary for review of the decision.

Consideration of the issues

The Tribunal first considered whether s.110 of the Administration Act could apply to a decision to grant the pension. The Secretary submitted that using the value of Bensted’s assets could not be a ‘decision’. The Tribunal noted that s.129 of the Administration Act provided that an appeal lies against a decision of an officer under Social Security law, and a person affected may apply to the Secretary for review of that decision. The Tribunal stated that a decision is intended to mean a final or ultimate decision rather than an intermediate decision and concluded that the decision to grant the age pension in this case was a decision which could not be made without information about income and assets. Because the ultimate decision would be flawed if the value of assets was not correct the Tribunal stated that it was necessary to take a ‘comprehensive or horizontal’ view of the decision, as the components in such a decision are integral to the ultimate decision.

The Tribunal noted that the decision in this case was a decision to pay Bensted a lesser rate than that provided for in the Administration Act. The Secretary submitted that s.110 could only apply where there was a rate increase under s.78 which could not occur here as no rate decision was in place. The Tribunal rejected this argument. It said that s.110 was broader than the Secretary suggested. It provides that if a favourable determination is made following a person informing the Department of ‘the occurrence of an event’ or ‘change in circumstances’, the favourable determination takes effect on the later of the day the person informed the Department or the day on which the event or change occurred. Section 78 requires that if the Secretary is satisfied that the rate is less than the rate provided for under the law then the Secretary ‘must’ determine that the rate is to be increased to the rate provided by social security law. Sections 109 and 110 of the Administration Act provide for review in certain circumstances. Section 109 deals with limitations on payment of arrears following a review and specifies the effective date depending on whether a notice has been given to an applicant of the ‘original decision’. The Tribunal was of the view that s.110(1) is of broader application and does not refer to a ‘review’ as described in s.109. However, it clearly involves reconsideration of a decision.

The Tribunal concluded that there was no reason why s.110(1) could not apply in this case. The ‘occurrence of an event’ was the original provision of asset values by Bensted. Therefore, s.110(1)(a) could apply and the determination of the correct rate of payment would have to take effect from the date he informed the Department which was the same date as the date the event occurred i.e. 23 December 2008.

The Tribunal next considered what the effect of s.109 of the Administration Act would have been if s.110 did not apply. If an original decision is made and a notice is given informing the applicant of the decision, then if a request for review is made within 13 weeks of the notice provided by the Secretary, a favourable determination on ‘review’, will take effect on the day that the original decision took effect (s.109(1)). Under s.109(2), if the request for review is made after 13 weeks of the notice being issued, then any favourable determination can take effect only from the date the application for review was made.

The Tribunal repeated that the decision in this case was the decision made on 23 December 2008 to grant age pension using a particular value of assets. The Tribunal did not accept that the eighteen letters sent to Bensted between the date of the decision and the date he first raised the matter with the Department amounted to notice as the letters did not contain any information regarding the (erroneous) nature of the original decision. The Tribunal noted that Bensted first requested a review by letter dated 7 August 2009 but formed the view that this should not be taken to be the date from which arrears should be paid.

It noted that the error (paying Bensted at the wrong rate) was solely caused by the Department failing to use the correct information Bensted provided to them when making the claim for age pension. It continued until Bensted raised it with them and responsibility for the error could not be displaced by ‘some oversight of Bensted in not being aware of that error’.

The Tribunal took the view that Parliament could not have intended that this beneficial legislation could discriminate against someone in Bensted’s position when the error was entirely attributable to the Department. It noted that the purposive approach should be adopted in statutory interpretation and was well established and referred to Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355.

The Tribunal accepted that in the letters of 25 March 2009 and 1 July 2009 there was a reference to the asset position but accepted Bensted’s evidence that he assumed the Department was correct. Based on the contents of these notices the Tribunal found it was understandable that he had not checked the accuracy of the assets details when the income test was said to be the basis of payment of his Age Pension. The Tribunal concluded that the strict approach often adopted in relation to the interpretation of s.109 is only reasonable when the Department has ‘clean hands’ in its handling of the particular case. The Tribunal noted that in the cases of Frost and Secretary, Department of Social Security (1995) AATA 10360 and Kelly and Secretary Department of Social Security (1995) 39 ALD 476, both of which had facts similar to Bensted’s case it was held that the Department could not succeed and that the concept of review under s.109 should not be strictly adopted in such cases.

Formal decision

The Tribunal affirmed the decision under review.

[C.E.]