Re Secretary, Department of Social Security v Noga Sevel and Brenda Dorothy O'Connell [1992] FCA 559; (1992) 110 ALR 627 (1992) Assc 92-127 (1992) 16 Aar 466 (1992) 38 FCR 540 (1992) 28 ALD 626 (20 November 1992)

FEDERAL COURT OF AUSTRALIA

Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: NOGA SEVEL and BRENDA DOROTHY O'CONNELL
Nos. 65 and 66 of 1992
FED No. 854
Number of pages - 29
Social Security
[1992] FCA 559; (1992) 110 ALR 627
(1992) ASSC 92-127
(1992) 16 AAR 466
(1992) 38 FCR 540
(1992) 28 ALD 626

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Wilcox(1), French(1) and Lee(1) JJ.

CATCHWORDS

Social Security - Family allowance - Payment of benefits cancelled because of non-return of income information form - Application for recommencement of benefits granted - Claim for payment of "arrears" of benefits falling due whilst benefits were cancelled - Decision of Administrative Appeals Tribunal setting aside decision to cancel payment of benefits - Whether Tribunal had power to direct payment of arrears.

Social Security Act 1947, ss.93, 158, 163, 168 and 183.

Acts Interpretation Act 1901, ss.28A and 29.

HEARING

PERTH
20:11:1992

Counsel for the Applicant: J S Hilton

Solicitors for the Applicant: Australian Government

Solicitor

Counsel for the Respondent: Dr J T Schoombee

Solicitors for the Respondent: Stanley Kawalsky

ORDER

The Court orders that:
1. The appeal be dismissed.

2. The appellant pay to the respondent her costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

WILCOX, FRENCH AND LEE JJ. On their face these two appeals, heard together by consent, involve trivial amounts of money; amounts which would not have justified a succession of appeals. Directly at issue in each case is the obligation of the Secretary of the Department of Social Security to pay to the respondent some eight months "arrears" of family allowance. But we were informed by counsel for the Secretary that the situation arising in these two cases is replicated in many thousands of other cases. It was suggested that some millions of dollars are at stake. No doubt this explains the Secretary's appeals from decisions of the Administrative Appeals Tribunal ("the AAT") to a Judge of this Court (Jenkinson J.) and from his Honour's decision to the Full Court.

2. Before referring to the facts of the cases, we mention that the statute under which the cases arise, the Social Security Act 1947, was repealed with effect from 1 July 1991: see s.3 of the Social Security (Rewrite) Transition Act 1991. However, it is common ground between the parties that the substantive law governing the appeals continues to be that which was contained in the repealed Act. We think this is correct, because the Tribunal's decisions were made before the repeal took effect.

3. The critical facts are within a narrow compass. Until October 1987 the payment of family allowance was not subject to any income test. When this test was introduced, the Department of Social Security sent notices to all recipients of family allowance, other than those receiving other payments under the Act, requiring those whose income was above a certain level to complete and return an income information form. Recipients of the allowance whose income was below the stated level were not required to return the form.

4. In the following year, again in October, a similar course was taken. Once again, those whose income was below a certain level did not have to return the form.

5. The evidence does not disclose whether the respondents to these appeals, Brenda Dorothy O'Connell and Noga Sevel, both of whom were then family allowance beneficiaries, received either of these notices or, if so, what action they took in response.

6. In 1989 a different procedure was adopted. On 16 October notices were sent to family allowance beneficiaries in certain categories requiring them to complete and return a financial information form. The form was partly set out as a letter in which it was stated:

"If you do not return this letter with the questions
answered we cannot continue to pay you after 28 December 1989".

7. Surprisingly, no copy of the letter was provided to the addressee for retention as a record of the receipt of, and response to, the request for information.

8. Both the respondents were in a selected category. According to evidence accepted by the AAT, 25,085 forms were sent to family allowance beneficiaries in Western Australia. The Tribunal accepted that forms were despatched to both the respondents. But, unfortunately, the address of each respondent, as shown on the Department's computer record, was an old address. Each respondent had moved and, as the AAT found, did not receive the notice.

9. Some 19,000 Western Australian beneficiaries returned their forms by the due date. On 29 December a list was prepared of those who had not. This list was attached to a formal decision made by a delegate of the Secretary and dated 8 January 1990. The decision was in these terms:

"As delegate of the Secretary of the Department of Social
Security, I hereby determine that payment of family
allowance to the above persons is cancelled pursuant to
Section 168 of the Social Security Act on the basis that it
is considered that by non-return of the request for combined
taxable income of the 1988/89 financial year each client has
indicated that their income exceeds the limit at which
family allowance entitlement to those persons is payable in
accordance with Section 85 of the Social Security Act 1947".

10. This decision was anticipated by a letter, dated 1 January 1990, intended to be sent to each of the cancelled beneficiaries. The letter was apparently sent to the two respondents but, once again, at their previous addresses. The letter referred to the October notice and stated that "our records show that you have not yet returned the letter". It went on:

"... Your family allowance payments have therefore been
cancelled under Section 168 of the Social Security Act 1947.
If you have simply overlooked returning the letter you
should now do so as soon as possible. If you return it
within three months of the date of this letter you will be
backpaid any family allowance you have missed out on. If
you return it after that date you will need to reapply and
you will only be paid from the payday on or after you lodge
your claim. The back of this letter has some further
information about your right to appeal against the decision
to cancel your payment.
If you have any enquiries about this letter, please ring the
Department on the telephone number shown at the top of this
page."

11. Neither of the respondents received this letter. In both cases, their allowance had been paid into a bank account. This method of payment was then actively promoted by the Department. It is now mandatory. It seems that each respondent received a bank statement at infrequent intervals. It was some months before either respondent learned of the non-receipt of her family allowance. When she realised the position each respondent contacted the Department and was informed of the cancellation. Each was told that she would need to make a fresh application for the allowance. Each did so by lodging a new claim form. In each case the allowance was reinstated; but only from the date of reinstatement.

12. Each respondent then sought payment of "arrears", that is the allowance that would have been payable from 28 December 1989 to the date of recommencement. (It seems that this was 28 August 1990 in the case of Mrs O'Connell and 14 August 1990 in the case of Mrs Sevel). There was no doubt that each respondent was qualified to receive the allowance during the intervening period. Each complied with all the requirements of the Act, including the income test. But the Department refused to pay the "arrears", claiming that it lacked the legal power to do so.

13. Each respondent contested this refusal. Each made application for review of the decision by the Social Security Appeals Tribunal ("the SSAT"). Having regard to one aspect of the present appellant's argument, it is important to note the terms of these applications. In the case of Mrs O'Connell, the appeal took the form of a letter to the Chairman of the SSAT dated 31 August 1990. It opened in this way:

"I have not received Family Allowance since 28th Dec. 89 and
I have been notified that it will recommence from 28th Aug.
'90. I appeal through your Tribunal to be paid for the
eight months between those dates."

14. Mrs O'Connell went on to discuss the facts of her case.

15. Mrs Sevel initiated her appeal, on 3 September 1990, by completing an appeal form issued by the Department. She identified the challenged decision in this way:

"We would like to appeal against the decision by the Dept.
of not paying the family allowance dated from 28 December
1989 to the 17 August 1990."

16. The two appeals went to differently constituted SSAT boards. Each appeal failed. Each board accepted the Department's argument that it had no power to pay the claimed "arrears".

17. In October 1990 Mrs O'Connell and Mrs Sevel each lodged an application for further review, this time by the AAT. Both appeals came before Deputy President P W Johnston. In May 1991 the learned Deputy President delivered separate reasons in each case. But his reasons in Mrs Sevel's case relied extensively on his findings and reasoning in Mrs O'Connell's case. Mr Johnston held, in each case, that, although the appeals merely called in question the Department's failure to pay the arrears, that question necessarily required him to consider the validity of the cancellation decision of 8 January 1990. So he analysed the evidence concerning that decision. The Deputy President dealt with a claim by Mr O'Connell, that he had notified the Department of his wife's change of address, by saying that, although he had no doubt that Mr O'Connell honestly believed he had given notice:

"on the balance of probabilities it is more likely than not
that in the circumstances Mr O'Connell did not send the
letter notifying the change of address".

No similar claim was made by or on behalf of Mrs Sevel, although there was evidence to explain why no notice of change of address had been given.

18. Mr Johnston noted s.163(2) of the Social Security Act, which empowered the Secretary of the Department to give a person a notice requiring the provision of information on a matter that might affect the payment to that person of a pension, benefit or allowance. He held that the notices of 16 October 1989 fell within this category and that the posting of a notice to the last recorded address of the recipient constituted a proper addressing of the notice in terms of the Act, read with s.29 of the Acts Interpretation Act 1901. But Mr Johnston thought that this was not the critical issue; the important question was the validity of the cancellation decision of 8 January 1990. As he put the matter in his O'Connell reasons:

"Even accepting that in the present circumstances the
conditions were fulfilled which would provide a basis for
the respondent cancelling family allowance, the question
remains whether in the instance in question the correct and
preferable decision required such cancellation."

19. After referring to some other matters, Mr Johnston dealt with this issue. He referred to the fact that, in making the decisions:

".......... the delegate did no more than take into account
that the names recorded on the print-out were those of
persons to whom the relevant notice had been sent and who,
for some reason or other, had not responded. Though the
stated 'basis' of the decision was that it was considered
that 'by non-return of the request ... each client has
indicated that their income exceeds the limit at which
family allowance is payable...' there is nothing to suggest
why that assumption was made, nor whether the delegate who
signed the print-out document considered that in fact was a
reasonable inference to draw. It is also evident that ...
in this State alone the number of persons comprised in that
group was in the order of 6,000 and that the applicant was
merely one of such a number. Importantly, no individual
consideration was given to the particular circumstances of
the member of that group."

20. Mr Johnston went on to refer to the background of payment to bank accounts, at the Department's wish. He said that, even conceding that on the balance of probabilities Mr and Mrs O'Connell had failed to notify their change of address, "the question arises as to whether there has been a proper exercise of discretion to cancel the allowance in their case". He said:

"... in reviewing a decision on its merits, this Tribunal
may take the view that where material or information
centrally relevant to the decision is fairly readily
available or relatively easily obtainable, failure to make
an attempt to take reasonable steps to obtain that
information renders the decision open to the charge that it
is not the correct and preferable decision in the
circumstances. Even where the course adopted by a decision-maker
is itself lawful, if the objective pursued by way of
inquiry - in this case knowledge of the applicant's
financial circumstances - could be achieved by an
alternative and simple course of action that without undue
cost avoids an adverse impact on those for whose benefit the
allowance exists, the preferable decision is to take that
course ... In the present circumstances, at the relevant
time, the preferable decision would have been for the
respondent to have suspended payment of the allowance
pursuant to s.168(1) of the Act until satisfied as to the
financial circumstances of the applicant. ... As it is, the
time has passed for taking that course, though setting aside
the decision to cancel payment is still open to the Tribunal."

21. Mr Johnston pointed out that the Department was aware that some people change their addresses without proper notification. He said:

"Given that there were a range of measures quite easily
available to the respondent, though undoubtedly entailing
some cost to the respondent, such as searching electoral
rolls, telephone directories, or, even if such measures were
thought to be impractical given the large number of persons
involved, simply by sending a notice care of the bank into
which payments were being made, it seems that there were
simple steps that could have been taken to provide an
opportunity for persons such as the applicant to bring their
situation up to date with the department before allowance
was cancelled. Such an approach could have been justified
in terms of good governmental practice as both a rational
and proportionate response to the failure to receive a
response to the queries about qualifying income level,
measured against the finality of action to cancel, and even
allowing for the fact that persons like the applicant took
some time to realise the allowance was not being paid. ...
In that way, there would also be a stronger basis for
treating failure to respond as founding an inference that
the qualifying income level for entitlement had been
exceeded. As it was, the mere fact of non-reply, being open
to several equivocal explanations, forms no rational basis
for drawing the conclusion actually stated as the basis of
the decision."

22. Mr Johnston went on to hold that, in all the circumstances, the proper and preferable decision was not made. For similar reasons, he reached a similar conclusion in Mrs Sevel's case. In each case the Deputy President set aside both the decision of the SSAT affirming the decision not to pay the arrears of family allowance and the delegate's decision of 8 January 1990 to cancel payment of the family allowance to the applicant. In each case he substituted a decision that family allowance was payable in respect of the relevant period and remitted the matter to the Department for assessment and payment of the appropriate amount.

23. As earlier mentioned, the Secretary appealed these decisions. The matters came before Jenkinson J. Counsel for the Secretary did not dispute the Tribunal's power to set aside the cancellation of the allowance or the Tribunal's finding that each applicant was qualified to receive the allowance between 28 December 1989 and the date of recommencement of payments. But he argued that the Tribunal had erred in law in the way it approached the matter of cancellation, a submission not repeated before us. Counsel also put arguments similar to those put to us on behalf of the Secretary, to which we will refer. In a single judgment dealing with both matters, Jenkinson J. rejected the Secretary's attack on the Tribunal's decisions. He did not find it necessary to express a concluded opinion about the submissions concerning the Acts Interpretation Act. Otherwise his stated reasons accord generally with our own reasons, as set out below. We will refer to aspects of his Honour's reasoning in due course.

24. In order to put counsel's submissions into context it is desirable to refer to some provisions of the Act.

25. The Social Security Act provided for the payment on behalf of the Commonwealth of a variety of pensions, benefits and allowances. The family allowance, provided under Part X of the Act, was one of them. In interpreting the legislation, it is important to note the social purpose which underlay the family allowance. It would go too far to regard the allowance as having been intended totally to defray the expense of caring for a child. But it would also be erroneous to regard the allowance as an unfettered gift to persons having custody of children. Section 93 of the Act required recipients of the allowance to apply it "to the maintenance, training and advancement of the child in respect of whom it is granted". Although guardians of children could forfeit their entitlement to family allowance under some circumstances, in theory this always was (and, in practice, usually was) a disadvantage to the child. Given the evident Parliamentary intention to protect the interests of dependent children, an interpretation of the Act leading to a loss of allowance by qualified people should be adopted only in the clearest of cases.

26. Part XVIII of the Act was entitled "Claims, Payment, Notification, Review, Cancellation and Related Matters". It commenced with s.158 which relevantly provided:

"158(1) The grant or payment of -
(a) a pension under Part IV or V;
(b) a benefit under Part VI or VIII;
(c) an allowance under Part IX or X;
(d) a double orphan's pension under Part XI;
(e) a child disability allowance under Part XII;
(f) a benefit under Part XIII; or
(g) a mobility allowance under Part XV,
shall not be made except upon the making of a claim
for that pension, benefit or allowance.
(2) ...
(3) ...
(4) The Secretary shall, subject to this Act, determine claims."

27. Section 159 dealt with the making and lodgment of claims, including claims for family allowance. Section 160 related to payment and calculating certain payments; s.161, to the manner of payment and s.162 to the recovery of money in relation to pensions. Section 163 dealt with changing circumstances. It included subs.(2) enabling the Secretary to require the provision of information. Sections 164, 165 and 166 were also concerned with information. Section 167 dealt with the payment of persons during imprisonment.

28. Section 168, on which critical importance is placed by the present appellant, was entitled: "Cancellation, suspension or variation of pension etc". Subsection (1) empowered the Secretary, by determination, to -

"cancel or suspend, or decrease the rate of, the
pension, benefit or allowance with effect from the date
of the determination or such later date as is specified
in the determination".

Subsection (2) provided power to suspend from an earlier date, under some circumstances. Then followed subss. (3) and (4):

"(3) If, having regard to any matter that affects the granting of a
claim for, or the payment of, a pension, benefit or allowance
under this Act, the Secretary decides that the claim should be
granted, a payment of the pension, benefit or allowance should be
made or the rate of the pension, benefit or allowance is less than
it should be, the Secretary may, by determination, grant that
claim, direct the making of that payment or increase that rate, as
the case may be.
(4) A determination under subsection (3) takes effect:
(a) if the determination is made following a person having
applied to the Secretary under subsection 173(1) for review
of a previous decision where:
(i) a notice was given to the person to whom
the relevant pension, benefit or allowance
was or could have been payable advising
the person of the making of the previous
decision and the review was sought, or the
appeal made, within 3 months after that
notice was given; or
(ii) no notice was given to the person referred
to in subparagraph (i) advising the person
of the making of the previous decision;
on the day on which the previous decision took effect;
(b) if subparagraph (a)(i) would apply but for
the person concerned having sought the
review or made the appeal outside the
period of 3 months referred to in that
subparagraph - on the day on which the
person sought the review or made the appeal:
(c) if the determination is made following a
person having advised the Department of a
change in circumstances (other than a
change consisting of a decrease in the
rate of the person's maintenance income) -
on the day on which that advice was
received or on the day on which that
change occurred, whichever is the later;
(ca) in the case of a determination granting a claim
where none of the preceding paragraphs applies -
on the day on which the determination was made
or on such later day or earlier day as is
specified in the determination; or
(d) in any other case - on the day on which the
determination was made or on such later day or
earlier day (not being a day more than 3 months
before the determination was made) as is
specified in the determination."

29. The appellant contends that, in the present case, subss. (3) and (4) preclude the Secretary, and therefore the AAT, from making any payment to the respondents in respect of the period between the cancellation decision and their fresh applications in August 1990. He says this is so notwithstanding the unchallenged decision of the AAT to set aside the cancellation decision.

30. We will return to the appellant's argument in a moment. Reference should first be made to Part XIX of the Act, which dealt with review of decisions. The Part provided, in Division 1, for internal review; that is, review by the Secretary of a decision of an officer, either of the Secretary's own motion (s.172) or upon request by an affected person (s.173). Part XIX also provided (Division 2) for review of decisions by the SSAT. In relation to the present case it is only necessary to note s.183, dealing with the date when a SSAT decision comes into effect. Generally speaking, a decision comes into operation immediately it is given (subs.1); but the Tribunal may specify a later day (subs.2). Subsection (4) provided that, subject to subss. (5) and (6), where the SSAT sets aside the decision, "the new decision has effect, or shall be taken to have had effect, on and from the day on which the decision under review has or had effect". Subsection (5) dealt with a particular case. The appellant says it here applies, so we set out the subsection in full:

"(5) Where:
(a) a person is given written notice of a decision under this Act;
(b) the person applies to the Social Security Appeals Tribunal more
than 3 months after the notice was given, for review of the
decision;
(c) the Tribunal varies the decision or sets the decision aside and
substitutes a new decision; and
(d) the effect of the Tribunal's decision is:
(i) to grant the person's claim for a pension, benefit or
allowance;
(ii) to direct the making of a payment of pension, benefit or
allowance to the person; or
(iii) to increase the rate of the person's pension, benefit or
allowance;
subsections (3) and (4) apply as if references in those subsections to
the day on which the decision under review had effect were references to
the day on which the application was made to the Tribunal for review of
the decision under review."

31. In posing the substantial question for determination in these cases, counsel for the appellant remarked that, before the SSAT, the AAT and Jenkinson J., it was common ground that arrears of allowance were not payable to the respondents unless the January decision was set aside. It may be doubted whether the issues before the SSAT had reached such a state of refinement for this statement then to be true; but this does seem to have been the position before the AAT and Jenkinson J. However, the January decision was set aside and, as already mentioned, the appellant has not challenged this. He could hardly have done so. It may rationally be assumed that some recipients of the 16 October notice decided not to complete and return it because they knew they did not fall within the income limitation. But it was certain that, out of any group of 25,000 social security beneficiaries, some would have changed their addresses without notifying the Department; that others would have been absent from home, ill or otherwise distracted when the Department's notice was delivered; whilst some letters would have gone astray either in the post or on receipt. Under such circumstances the delegate's conclusion, without further inquiry concerning any individual, that, by non-return of the document, "each client has indicated that their income exceeds the (relevant) limit was untenable".

32. As the appellant's counsel recognised, the January decision having been set aside, the critical question is whether there was any impediment to the AAT determining that family allowance was payable in respect of the period from 28 December 1989 to the date of the new claims. There was no reason related to either respondent's qualifications. At all stages of this litigation the Secretary has conceded that both respondents were qualified to receive the allowance. Had they returned their forms in time, or had the omission been discovered within three months of 8 January, they would have been entitled to unbroken benefits. But the appellant contends that their failure to raise the matter for a period exceeding three months is fatal to their claims for arrears.

33. In making this argument, counsel for the appellant places emphasis upon s.168(3). He says that this is a case where "the Secretary decides that ... a payment of the ... allowance should be made". Therefore, by subs.(3), the Secretary may direct the making of that payment; but, if he does so, his determination will take effect according to the prescriptions of subs.(4). Turning to subs.(4), counsel says that the present cases are cases where internal review was initially sought, but outside the period of three months since the original decision was made; accordingly, para.(b) applies, with the effect that the determination (to renew payments) took effect on the day the respondent sought review.

34. It seems to us that there are three answers to this contention. In relation to the first, it is true that claims for the reinstatement of their allowances were made by the two respondents in August and granted by the Secretary. However, the determination to grant reinstatement did not follow internal review - they were granted immediately the necessary information was provided. In relation to those determinations, paras.(a) and (b) were irrelevant, as was para.(c). Paragraph (ca) applied. The determinations to grant the new claims took effect on the day they were made.

35. But there is no issue concerning those determinations. The dispute between the parties stems from the refusal of the Department to make payments in respect of the period during which the allowances were cancelled. The respondents say that, the cancellations having been set aside, their previous entitlement enured between the date of cancellation, 28 December, and the dates of commencement of the new allowances. They say that they have not sought any new determination in relation to that period, but simply a payment to them of what was their due.

36. Counsel for the appellant accepts, as a general proposition of administrative law, that if a statutory decision is set aside ab initio, the parties are placed in the position they would have occupied if the decision had never been made. But he says that this general proposition does not apply to this case because there can be no payment to the respondent in respect of the December - August period unless the Secretary so decides. Counsel says that any such a decision falls within subs.(3), thus triggering the operation of subs.(4).

37. In our opinion, this argument misinterprets subs.(3). In the course of a working day, there were, no doubt, thousands of decisions by officers of the Department that a particular person was entitled to receive a particular sum of money pursuant to the Act, whether by way of a first payment in respect of a particular period or by adjustment of an under-payment. Not all those decisions fell within subs.(3). The subsection referred to decisions creating an entitlement to a pension, benefit or allowance; not accounting or clerical decisions to implement an entitlement. This can be seen by considering the statutory genesis of the trilogy of situations referred to in the subsection. We have already referred to s.158. That section prohibited the "grant or payment" of any one of a number of pensions, benefits and allowances "except upon the making of a claim" for it. The Secretary had to determine such a claim. So the scheme of the Act, in relation to those various pensions, benefits and allowances, was to require a formal claim and a decision to grant that claim before any payment might be made. Once the claim was granted, payment was made in accordance with the ensuing provisions of Part XVIII.

38. Most Parts of the Act used the concept of an entitlement to a pension, benefit or allowance being created by the grant of a claim. But not all did so. An example of a different scheme was provided by Part XIV, relating to sheltered employment allowances. There was no need for a claim for such an allowance. Section 140 provided that, where the Secretary was satisfied of certain things, he "may direct that paid employment provided at those premises by the organisation is for the purposes of this Part, sheltered employment". A person engaged in sheltered employment was qualified to receive a sheltered employment allowance (s.141(1)). Under some circumstances "the Secretary may direct that the person or benefit should be paid" to a person qualified to receive a sheltered employment allowance rather than that it be paid to the organisation (s.141(2)). Similarly, Part XV provided for payment of mobility allowances upon the determination of the Secretary that payment ought to be made, without the prior grant of a claim: see s.148.

39. In the face of these examples, it seems to us clear that the words "Secretary decides that ... a payment of the pension, benefit or allowance should be made" are meaningful without interpreting them as applying to accounting decisions to implement an entitlement. An authorisation before a particular payment is made to an entitled person is not a statutory decision. In most cases the statutory decision underpinning the accounting step is the Secretary's decision to grant the claim. In cases such as those involving sheltered workshop and mobility allowances, where there is no requirement for a claim, there must be a decision to make payment of the pension, benefit or allowance; but the mechanical application of that decision does not fall within subs.(3).

40. Once the cancellation decision was set aside, the respondents had the benefit of extant decisions granting their claim. They were entitled to be paid the moneys attributable to that decision without the necessity of any new s.168(3) decision. As a practical matter it might have been necessary for authorities to be issued, but these were not decisions falling within s.168(3).

41. The reasons just expressed accord with the view of Jenkinson J. In dealing with Mrs O'Connell's case his Honour said at 32-33:

"Once the cancellation effected in January 1990 was set aside the
entitlement which had until cancellation existed would continue after
the date of cancellation ... until some other event or act in the law,
such as another exercise by the applicant of the power conferred by
s.168(1), terminated that entitlement, and payment of the allowance
would be required by law to be made until such an event or act occurred,
without any direction by the Social Security Appeals Tribunal that the
payment should be made. The setting aside of the January decision,
whenever that setting aside occurs, removes the only legal obstacle to
the continued existence of the entitlement to family allowance which the
applicant's original grant of Mrs. O'Connell's claim for that allowance
brought into existence."

42. We respectfully adopt this statement.

43. Our second reason for thinking s.168(3) inapplicable is that, if, contrary to our view, the decision to pay the arrears was a decision answering one of the descriptions contained within that subsection, it was not one made by the Secretary. It was made by the AAT. Ordinarily, we agree, the AAT stands in the shoes of the primary decision-maker, so that any limitation attaching to the primary decision-maker binds the AAT. But in this case, the AAT stands only indirectly in the primary decision-maker's shoes. The AAT takes the place of the SSAT: see ss.205-215 of the Act and s.43 of the Administrative Appeals Tribunal Act 1975. And s.183 provides its own rules as to the date of effect of a SSAT decision. The primary rule is that the decision comes into effect when made (subs.(1)). In the present cases, that does not invalidate the AAT decision that family allowance was payable in respect of the period between 28 December 1989 and the August applications. It merely means that this decision, once made, had immediate effect; thereby immediately entitling the respondents to payments for that period. Once again we adopt the view of Jenkinson J. At 34 his Honour said:

"What is in my opinion important is to recognise that a decision to set
aside a decision to cancel a family allowance has its effect when it
comes into operation. It makes legally inoperative the decision which
it sets aside when it is made, and once the January decision to cancel
the allowance ceased to have legal effect there was revived Mrs
O'Connell's legal entitlement to receive payment of family allowance
payable on each family allowance pay day falling after the cancellation,
until some disentitling event or act in the law should supervene."

44. In an endeavour to meet this difficulty, counsel for the appellant relied on s.183(5). But that provision is inapplicable to these cases. We set out above the terms of the respondents' applications to the SSAT. The applicants did not seek review of the delegate's decision to cancel the allowance. They sought review of the decisions not to pay arrears. Each of the applications for review was made promptly after the decision to deny arrears, well within the three month period.

45. Counsel for the applicant acknowledges that this analysis is correct in form. But he argues that the substance of the matter is that the respondents were seeking a review of the cancellation decision, without which there could be no entitlement to arrears. We agree that the applications to review the decisions not to pay arrears inevitably raised the validity of the cancellation decision. But that is not the point. Subsection (5) is designed to avoid a situation where a person has notice of an adverse decision but waits for more than three months before challenging it, and then seeks to backdate the benefit of a successful challenge. No doubt the rationale of the provision is that it is in the interest of good administration for any challenge to be made promptly. This object is achieved if there is a prompt application to review the operative decision; notwithstanding that, in the course of the review, it may be necessary to revisit an earlier decision.

46. The third ground for rejecting the appellant's case concerns the application of the Acts Interpretation Act. It will be recalled that s.168(4)(a) makes a determination taken following internal review effective on the day the previous decision took effect where either of two situations applies: the review was sought within three months or no notice of the original decision was given. The appellant's argument is that this is a case of a decision after internal review (the AAT standing ultimately in the Secretary's shoes) and that there was no application for review within three months of the relevant decision (the cancellation decision). But was notice given? The respondents say "no", relying on the findings that the notices of cancellation were not in fact received. The appellant says "yes", relying on ss.28A and 29 of the Acts Interpretation Act.

47. Section 28A of the Acts Interpretation Act provides as follows:

"28A(1) For the purposes of any Act that requires or
permits a document to be served on a person, whether the
expression 'serve', 'give' or 'send' or any other expression
is used, then, unless the contrary intention appears, the
document may be served -
(a) on a natural person -
(i) by delivering it to the person personally; or
(ii) by leaving it at, or by sending it by pre-paid
post to, the address of the place of residence
or business of the person last known to the
person serving the document; or
(b) on a body corporate - by leaving it at, or sending it
by pre-paid post to, the head office, a registered
office or a principal office of the body corporate."

48. Counsel for the appellant does not contend that the Social Security Act required notice of a decision to cancel an allowance to be served upon a beneficiary. But he says that the Act permitted this to be done. Counsel says there was nothing in the Act to prohibit that course and it was one necessary for, or conducive to, the proper administration of the Act. He cites Cookson v Lee (1854) 23 LJCh 473 at 476 and RE Sterling; ex parte Esanda Ltd [1980] FCA 61; (1980) 30 ALR 77 at 83.

49. We accept that the Social Security Act permitted a notice of cancellation to be served on, or given to, a beneficiary. It followed that such a notice might be given by one of the means specified in s.28A. They included sending the notice by pre-paid post to the beneficiary's last known place of residence. However, the questions whether the Secretary was entitled to serve a document, and if so in what manner, are different from the question whether, in these cases, he in fact gave notice of cancellation. In order to bring the case within s.168(4)(a) of the Social Security Act, given the problem that the notices of cancellation were not in fact received by the respondents, counsel relies on s.29 of the Acts Interpretation Act. That section provides:

"29. Where an Act authorizes or requires any document to be served by
post, whether the expression 'serve' or the expression 'give' or 'send'
or any other expression is used, then unless the contrary intention
appears the service shall be deemed to be effected by properly
addressing prepaying and posting the document as a letter, and unless
the contrary is proved to have been effected at the time at which the
letter would be delivered in the ordinary course of post".

50. Gummow J. considered this provision, in its present context, in Garratt. He said at 17-18:

"Unlike s.163, sub-s.168(4)(a) does not speak of notice being given
personally or by post. The phrase it employs is 'a notice was given'.
Accordingly, s.168 is quite different in its terms from those of s.42 of
the Hire Purchase Act 1959 (Q) considered in Fancourt v Mercantile
Credits Limited [1983] HCA 25; (1983) 154 CLR 87. In my view, sub-s.168(4) is not a
provision which authorises or requires any document to be served by post
within the meaning of s.29 of the Acts Interpretation Act ...
Paragraphs (a) and (b) of sub-s.168(4) are not directed to any
particular manner of service of notices. They are concerned with the
fixing of a date which is determinative of the right of persons in
relation to pensions, benefits and claims under the Act. The date is
fixed by criteria which operate favourable (sic) or adversely to those
persons by reference to their action or inaction over a particular
period after notice was given. The paragraphs operate after there has
been, upon application by person or persons affected by it, a review by
the Secretary under sub-s.173(1) of the decision of which notice was
given.
In this setting, the rights of persons should not readily be constructed
so as to fix upon something less than the giving of notice and to accept
an imputed notification as sufficient for the operation of the
legislation. The delay which has adverse consequences as specified in
paras.(a) and (b), is delay after notice."

51. We respectfully adopt his Honour's reasoning. In our opinion s.29 does not assist the appellant. The notice of cancellation was not in fact served on the respondent. This affords a third reason why s.168(4)(b) is inapplicable to these cases. If, contrary to our view, s.168(3) applied to the accounting authorization to make the payments missed because of the cancellation decision, the relevant paragraph of s.168(4) would be para.(ca). Under that paragraph the Secretary - and, so, in this case, the AAT - would have had a discretion as to the date from which payments should be resumed. It would have been open to the Secretary, or AAT, to back-date the resumed payments to 28 December 1989 notwithstanding the fact that no request for reinstatement of the allowance was made within three months of the cancellation decision. Whether that course should have been taken would have been a matter for determination in the light of all the relevant circumstances. These would have included not only the demands of administrative efficiency but also the nature and purpose of the allowance (s.93), that the respondents at all times remained qualified to receive the allowance and that they did not in fact receive either the October notice or the notice of cancellation.

52. The conclusion just expressed is consistent with that reached by Gummow J. in Department of Social Security v Garratt (17 July 1992, not reported). His Honour held that s.168(4)(ca) applied to that case, notice of the cancellation not having been received by Mrs Garratt. The reason why s.168(4) arose at all, whereas in our view in these cases it does not, is that in Garratt there was no decision to set aside the cancellation decision; Gummow J. indicated that this had not been sought. Consequently, there was need for more than an accounting authorization. There had to be a decision to grant a new claim: see Freeman v Secretary, Department of Social Security (1988) 19 FCR 342. In Garratt this was the only decision that was made. That decision clearly fell within s.168(3). Therefore s.168(4) came into operation.

53. As we indicated at the outset, counsel told us that thousands of other cases depended on the outcome of these cases. It may assist the consideration of those cases if we summarize the situation by saying that, in our view, in any of those cases in which the cancellation decision has been - or, hereafter, is - set aside, s.168(3) will have no application. Consequently, the limitations imposed by s.168(4) will be irrelevant. If the person receiving the allowance remained otherwise qualified, including in relation to the income test, that person will be entitled to payment of arrears of the allowance to the same extent as if the cancellation decision had never been made. There will be no statutory impediment to the Secretary making that payment. In cases where the cancellation decision has not been - and is not hereafter - set aside, Garratt will apply. If the beneficiary in fact received notice of the cancellation decision, s.168(4)(a) or (b) will apply to the new claim; with the possible result that arrears cannot be paid. If the beneficiary did not receive notice of the cancellation decision, a notice sent to the last-known place of residence not being sufficient to fulfil this condition, s.168(4)(ca) will apply. The Secretary will have a discretion as to the date from which the allowance should resume, the matters mentioned above being all relevant to the exercise of that discretion.

54. The appeals will be dismissed with costs.