Dorrian and Secretary, Department of Family and Community Services [2000] AATA 89 (10 February 2000)

Last Updated: 15 February 2000

DECISION AND REASONS FOR DECISION [2000] AATA 89

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N1999/1068

GENERAL ADMINISTRATIVE DIVISION )

Re JOHN MICHAEL DORRIAN

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Associate Professor S D Hotop, Senior Member

Date 10 February 2000

Place Sydney

Decision The decision under review is affirmed.

..............................................

SD Hotop

Senior Member

CATCHWORDS

SOCIAL SECURITY - disability support pension (DSP) - applicant received lump sum compensation payment - applicant subject to a preclusion period from 21 December 1989 to 6 May 1998 - applicant's DSP payments ceased on 30 August 1993 - applicant lodged new claim for DSP on 10 December 1998 - applicant received DSP payments from 10 December 1998 - whether DSP payable to applicant for period 7 May 1998 to 9 December 1998 - whether applicant's DSP cancelled or suspended on 30 August 1993.

Social Security Act 1991, ss 41, 42, 98, 99, 100(1), 118, 119(1), 146

Freeman v Secretary, Department of Social Security (1988) 19 FCR 342

REASONS FOR DECISION

10 February 2000 Associate Professor S D Hotop, Senior Member

1. This is an application by John Michael Dorrian ("the applicant") for review of a decision of the Social Security Appeals Tribunal ("the SSAT"), dated 1 June 1999. In that decision the SSAT affirmed a decision of an Authorised Review Officer ("ARO") within Centrelink, dated 19 February 1999, that Disability Support Pension ("DSP") was not payable to the applicant for the period from 7 May 1998 to 9 December 1998.

2. At the hearing the applicant appeared in person, without representation, and the Secretary to the Department of Family and Community Services ("the respondent") was represented by Mr A Cox, an advocate with the Administrative Law Section, Centrelink. The Tribunal had before it the documents ("T documents") lodged by the respondent pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 and a copy of a Department of Social Security ("DSS") "Disability Support Pension Review" form in relation to the applicant, tendered on behalf of respondent (Exhibit R1). The applicant gave oral evidence. There were no other witnesses.

The Factual Background

3. The relevant background facts, about which there is no dispute between the parties and as found by the Tribunal on the basis of the T documents, are as follows.

4. On 21 December 1989 the applicant was seriously injured in a motor vehicle accident and thereafter claimed and received payments of, initially, Invalid Pension and, subsequently, DSP.

5. On 21 July 1993, the applicant was awarded a sum of $535,000.00 in settlement of his claim for third party damages arising out of the abovementioned motor vehicle accident and, on 8 August 1993, he received the relevant lump sum compensation payment.

6. In late August 1993 the DSS issued a Recovery Notice, pursuant to the "compensation recovery" provisions of the Social Security Act1991 ("the Act"), and recovered the amount of $33,262.35 already paid to the applicant by way of Invalid Pension and DSP. The DSS also notified the applicant that, by reason of his lump sum compensation payment, a "preclusion period" from 21 December 1989 to 6 May 1998, during which social security would not be payable, was applicable in his case.

7. By letter dated 30 August 1993 (T5) a DSS officer informed the applicant as follows:

"Your Disability Support Pension will stop after 6 May 1998. You will not get any more payments after this date. This is because your compensation claim has now been settled. The way it was settled means you can't get pension until 6 May 1998. If you need help from us after that date please give us a new claim for pension then."

8. In the meantime, on 17 August 1993 a DSS "Disability Support Pension Review" form (Exhibit R1) was sent to the Ryde office of the DSS for the purpose of conducting a review of the applicant's entitlement to DSP. On 1 September 1993, however, a DSS Field Assessor wrote a brief report on the abovementioned form in the following terms:

"No need to visit client. He is now cancelled on DSP (405). Compensation settlement - preclusion".

9. By letter dated 19 March 1997 (T6) a DSS Financial Information Service Officer wrote to the applicant to inform him about a "free and confidential" financial management and investment advice service offered by the DSS to customers who are subject to a preclusion period by reason of having received a compensation payment.

10. On 10 December 1998 the applicant completed and lodged with Centrelink a claim form for DSP (T7).

11. By letter dated 29 December 1998 (T11) a Centrelink officer informed the applicant that his claim for DSP had been granted and that his DSP "starts from pension payday 10 December 1998".

12. On 9 February 1999 the applicant requested an internal review of the decision to commence payment of DSP to him on 10 December 1998. On 10 February 1999, the original decision maker affirmed that decision (T15).

13. On 19 February 1999 an ARO within Centrelink affirmed the original decision. In his "Case Report" relating to the review, the ARO stated (T17, pp90-91):

"I have carefully reviewed all the evidence and whilst I have empathy with Mr Dorrian's situation, the legislation does not allow arrears to be paid. I noted the cancellation letter that was issued on 30 August 1993 is barely adequate, but it is sufficiently clear as to make it a valid notice. It makes it clear that payments have stopped and if Mr Dorrian required more assistance at the end of the preclusion period he had to lodge a new claim.

It is not the usual practice or a legislative requirement that we should invite a new claim at the end of the preclusion period. In a case like this one, perhaps there should be some sort of reminder issued. One would expect that this situation would not arise very often, but a simple reminder letter would have prompted Mr Dorrian to reclaim. This in the circumstances would have been a just result. As it is there is nothing in the legislation which allows me to pay arrears...".

14. By letter dated 22 February 1999 (T17, pp92-94) the ARO notified the applicant that he had decided to affirm the decision to grant him DSP from 10 December 1998 and not to pay arrears.

15. On 1 June 1999 the SSAT affirmed the ARO's decision of 19 February 1999 (T2).

16. On 13 July 1999 the applicant lodged with this Tribunal an application for review of the SSAT's decision of 1 June 1999 (T1).

The Applicant's Evidence and Submissions

17. The applicant acknowledged that he had inadvertently overlooked the fact that his preclusion period ended on 6 May 1998 and had thus failed to lodge a new claim for DSP at that time. He explained that the reason he had overlooked the end of the preclusion period was because he was wholly preoccupied with coping with the aftermath of the serious injuries (including a head injury) he suffered in the motor vehicle accident of December 1989, together with the effects of a serious assault on him in October 1997 (involving another head injury). He said that, following that assault, he was determined that the offender be brought to justice and he had to undertake substantial efforts (including making a complaint to the State Ombudsman) before the offender was eventually charged and brought to trial.

18. The applicant confirmed that he did not contact Centrelink regarding the restoration of his DSP payments until 1 December 1998 when he made a telephone inquiry. He subsequently completed and lodged a DSP claim form with Centrelink on 10 December 1998.

19. The applicant queried whether his DSP had been cancelled, or merely suspended, on 30 August 1993. He submitted that the letter of 30 August 1993 (T5, see paragraph 7 above) was confused in relation to the status of his DSP entitlements. The applicant also submitted that, in the event that his DSP had been correctly cancelled on 30 August 1993 and that he was not thereafter legally entitled to DSP until he made the claim in December 1998, he should, having regard to all the circumstances of his case, be granted an ex gratia payment of the total amount of DSP that would have been payable to him for the period from 7 May 1998 to 9 December 1998 had he lodged a claim for DSP on 7 May 1998 - that is, immediately after the expiration of the preclusion period. In support of that submission the applicant pointed out that at all relevant times he remained qualified for DSP - a matter which was not disputed by the respondent - and that his failure to make a fresh claim until 10 December 1998 was due to his very adverse personal circumstances resulting from his motor vehicle accident and his subsequently being assaulted.

20. The applicant also submitted that Centrelink was remiss in not sending reminder letters to former customers in his situation - that is, a former customer who had been subjected to a lengthy preclusion period, especially where the customer was suffering from the effects of serious head injuries which substantially impaired their mental faculties. He said that had he received such a letter shortly before the expiration of his preclusion period, he would certainly have lodged a fresh claim for DSP and, accordingly, would not have lost any of his DSP entitlements.

The Legislation

21. The relevant provisions of the Act are as follows:

"41 Before a social security payment is payable to a person under this Act:

(a) the person must be qualified for the social security payment; and

(b) there must be nothing in this Act that makes the social security payment not payable to the person (for example, a waiting period provision, a multiple entitlement exclusion provision or a compensation preclusion provision).

...

42(1) Some payments under this Act are payday-based and others are period-based.

42(2) If a payday-based payment is payable to a person, the person will be paid a full instalment of the payment on each payday during the period during which the payment is payable to the person and will be paid nothing on a payday outside that period.

Note 1: the payday-based payments are the social security pensions, family allowance and parenting payment.

...

42(3) If a period-based payment is payable to a person, the person will be paid only for the particular period (which might be less than a fortnight) in respect of which the payment is payable.

...

98(1) Even though a person is qualified for disability support pension, the pension may not be payable to the person because:

(a) the pension has not commenced to be payable (see sections 99 and 118); or

...

(c) the person or the person's partner is subject to a compensation preclusion period (see Division 3 of Part 3.14); or

...

99 Disability support pension is not payable to a person who is qualified for the pension, before the person's provisional commencement day (identified under section 100).

100(1) Subject to this section, a person's provisional commencement day is the day on which the person claims the disability support pension.

...

118 A disability support pension becomes payable to a person on the first day on which:

(a) the person is qualified for the pension; and

(b) no provision of this Act makes the pension not payable to the person.

Note 1 : for qualification see sections 94 and 95.

Note 2 : for the circumstances in which a disability support pension is

not payable see section 98.

119(1) Subject to section 120, a full instalment of disability support pension is payable to a person each pension payday on which:

(a) the person is qualified for the pension; and

(b) the pension is payable to the person.

...

146 If the Secretary is satisfied that disability support pension is being, or has been, paid to a person to whom it is not, or was not, payable under this Act, the Secretary is to determine that the pension is to be cancelled or suspended."

The Issue

22. The issue in this matter is whether DSP was payable to the applicant for the period from 7 May 1998 to 9 December 1998.

Consideration of Issue

23. There is no dispute that, because the applicant received the lump sum compensation payment referred to in paragraph 5 above, DSP was, pursuant to s1165 of the Act, not payable to him for the "preclusion period" from 21 December 1989 to 6 May 1998. The question arises as to when DSP again became payable to the applicant after 6 May 1998. The answer to that question depends largely on whether the applicant's DSP was cancelled, or merely suspended, following the imposition of the abovementioned preclusion period.

24. Section 146 of the Act obliges the respondent to determine that DSP is to be cancelled or suspended if satisfied that it is being, or has been, paid to a person to whom it is not, or was not, payable under the Act. By virtue of s 1165(1) of the Act, upon receipt by the applicant of the relevant lump sum compensation payment on 8 August 1993, DSP was not payable to him for the "preclusion period" from 21 December 1989 to 6 May 1998. Accordingly, the respondent was then obliged by s 146 of the Act either to cancel or to suspend the applicant's DSP.

25. Did the action taken by the DSS officer, on behalf of the respondent, in relation to the applicant's DSP in late August 1993 constitute a cancellation, or merely a suspension, of his DSP? On the material before it, the Tribunal is satisfied, and finds, that the applicant's DSP was cancelled on or about 30 August 1993 and that such cancellation was valid and appropriate under s146 of the Act. Although the DSS letter of 30 August 1993 (T5 - see paragraph 7 above) was inconsistent in its references to the date on which the applicant's DSP will "stop", it clearly indicated that if the applicant required assistance from the DSS after 6 May 1998 he should then lodge a fresh claim for DSP, thereby necessarily implying that the applicant's existing DSP had been cancelled, rather than merely suspended. Furthermore, the fact that the applicant's DSP had been cancelled is confirmed by the DSS Field Assessor's report on 1 September 1993 in relation to a proposed review of the applicant's entitlement to DSP (see paragraph 8 above).

26. As regards the legal effect of cancellation of a pension, Davies J in Freeman v Secretary, Department of Social Security (1988) 19 FCR 342 said (at p346):

"A decision cancelling a pension or benefit brings to an end the entitlement to a pension or benefit. Entitlement to the pension or benefit only revives on the lodgment of a proper claim for the grant of the pension or benefit."

Although those remarks were made in the context of the Social Security Act 1947 they are equally apposite in the context of the Act in general and, for the purposes of the present case, in the context of Divisions 1 and 2 of Pt 2.3 of the Act regarding DSP, in particular.

27. Accordingly, the Tribunal finds that, following the cancellation of the applicant's DSP on or about 30 August 1993 and after the expiration of the preclusion period on 6 May 1998, the applicant did not become entitled to DSP until he made a proper claim for DSP in December 1998. By s99 of the Act DSP was not payable to the applicant before his "provisional commencement day" which, by s100(1) of the Act, is the day on which he claimed DSP. Mr Cox (for the respondent) conceded that the correct date of such a claim was 1 December 1998 when, according to Centrelink's computer records, the applicant made a telephone contact with Centrelink, rather than 10 December 1998 when the applicant lodged a claim for DSP in proper form with Centrelink. It matters not, however, which of those 2 dates was the date of claim because DSP is, pursuant to s42(2) of the Act, a "payday-based payment" and, in accordance with that subsection and with s119(1) of the Act, the applicant was paid a full instalment of DSP on 10 December 1998 - that date being the first pension payday on which DSP was payable to the applicant after the expiration of the preclusion period.

Conclusion

28. It follows from the above findings and discussion that DSP was not payable under the Act to the applicant for the period from 7 May 1998 to 9 December 1998, and the Tribunal so finds.

29. Before parting with this matter, however, the Tribunal wishes to comment on the submission made by the applicant which was summarised in paragraph 20 above. The Tribunal endorses the remarks of the ARO in his Case Report of 19 February 1999 (T17, pp90-91 - set out in paragraph 13 above) regarding the institution by Centrelink of a practice of sending to customers, upon whom a preclusion period has been imposed pursuant to Pt 3.14 of the Act, a simple reminder letter regarding the expiration of the relevant preclusion period. Although in most cases such a reminder would probably not be necessary, the present matter illustrates that cases can arise where, following the imposition of a lengthy preclusion period, a customer's personal circumstances may be such that, without neglect or culpability on their part, they overlook the expiration of the preclusion period and thereby lose social security benefits which would otherwise have been payable to them. The institution by Centrelink of a practice whereby such a reminder letter is sent to the customer's postal address last known to Centrelink shortly before the date of expiration of the relevant preclusion period would, in the Tribunal's opinion, be a fair and reasonable manner of attempting to prevent or minimise the occurrence of such an unfortunate result. The Tribunal notes and commends Centrelink's practice of sending to customers who are subject to a preclusion period a standard letter - as was sent to the applicant in this case on 19 March 1997 (see paragraph 9 above) - informing them of Centrelink's financial management and investment advice service and inviting them to seek advice regarding the management and investment of their compensation payment in order to provide for themselves financially for the duration of the preclusion period. For the purpose of similarly assisting and promoting the awareness of customers, the Tribunal commends to Centrelink the institution of a practice of sending preclusion period expiry reminder letters to relevant customers as discussed above.

Decision

30. For the above reasons the Tribunal affirms the decision under review.

I certify that the 30 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor SD Hotop, Senior Member

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

Associate

Date/s of Hearing 1 February 2000

Date of Decision 10 February 2000

Counsel for the Applicant self-represented

Counsel for the Respondent Mr A Cox,

Administrative Law Section - Centrelink