Pek and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2011] AATA 598 (29 August 2011)

Last Updated: 29 August 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 598

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/5824

GENERAL ADMINISTRATIVE DIVISION		)
	Re		JAMES PEK

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

The Hon R J Groom AO (Deputy President)

Date 29 August 2011

Place Hobart

Decision

The decision of the Social Security Appeals Tribunal of 23 October 2009 is set aside. The decision made by a Centrelink review officer to cancel the age pension from 5 January 2004 is affirmed.

[Sgd Hon R J Groom]
Deputy President

CATCHWORDS

SOCIAL SECURITY - age pension – whether pension claim valid – whether Australian resident when pension claim lodged – at relevant time place of residence was in Hungary – age pension claim not valid – administrative error – whether doctrine of estoppel applicable in the circumstances – estoppel not applicable – SSAT decision set aside – decision of Centrelink review officer to cancel age pension affirmed

Social Security Act 1991, ss 7(3), 1217(1)

Social Security (Administration) Act 1999, ss 29(1) (a) and (b), 29(2)

R v Moodie, ex parte Mithen (1977) 17 ALR 219

Re Nicholls and Secretary, Department of Primary Industry [1988] AATA 88; (1988) 22 ALD 596

Re Maha Hafza v Director-General of Social Security [1985] FCA 164; (1985) 60 ALR 674

Formosa v Secretary, Department of Social Security (1988) 15 ALD 659

Re Roberts and Repatriation Commission [1992] AATA 76; (1992) 15 AAR 192

REASONS FOR DECISION

29 August 2011

The Hon R J Groom AO (Deputy President)

INTRODUCTION

1. The applicant seeks a review of a decision of the Social Security Appeals Tribunal (“SSAT”) made on 20 October 2010.
2. In that decision the SSAT set aside the decision made by a review officer of Centrelink to cancel Mr Pek’s age pension and remitted the matter to Centrelink with a direction that it reconsider the decision to cancel the applicant’s age pension but also an earlier associated decision to cancel Mr Pek’s disability support pension (“DSP”).
3. In accordance with the SSAT direction, Centrelink subsequently reconsidered the decisions relating to both the age pension and the DSP and affirmed those decisions.
4. At paragraph 37 of the respondent’s Statement of Facts and Contentions the Secretary purports to concede that the Tribunal has jurisdiction to review both the age pension and DSP decisions. That concession by the respondent is in the following terms:

“37. The Secretary concedes that the tribunal has jurisdiction to review the decision to cancel age pension in 2008 (from date of claim in 2004) and the decision to cancel dsp in 2002. Even more so is this the case given that the latter decision is a critical element in the correctness of the former decision”.

5. It is noted that in a later written submission of 1 August 2011 the respondent said at paragraph 65:

“... the Secretary maintains the contention that the evidence is that the applicant cannot be said to have appealed the DSP cancellation decision, either at the time it was cancelled, or at any later time”.

6. It is trite law that any question of jurisdiction cannot be decided solely on the basis of a concession by a party. It is for the Tribunal itself to consider and determine such an issue. (See R v Moodie, ex parte Mithen (1977) 17 ALR 219 at 225 and Re Nicholls and Secretary, Department of Primary Industry [1988] AATA 88; (1988) 22 ALD 596 at 602).
7. The material before the Tribunal clearly establishes that Mr Pek did not pursue a reconsideration of, or appeal from, the 2003 DSP decision. That particular decision was therefore not formally before the SSAT. The only question properly before the SSAT was the reconsidered decision to cancel Mr Pek’s age pension. It follows that the age pension cancellation decision is the only matter now formally before this Tribunal.
8. Although the DSP cancellation decision is not now being formally reviewed by this Tribunal, in considering the age pension cancellation it is also necessary to give consideration to the earlier DSP decision. This is because had Mr Pek continued to receive the DSP and was still receiving the DSP on the day before he turned age pension age he would then be entitled to transfer to the age pension without the need for a claim. In such a case section 29 of the Social Security (Administration) Act would not apply.

THE ISSUES

A. The principal issue to be determined by the Tribunal is whether Mr Pek was an Australian resident on the day he lodged his claim for the age pension as required by section 29(1)(a) and (b) of the Social Security (Administration) Act 1999.

B. An incidental matter to be considered is whether the cancellation of Mr Pek’s DSP in 2003 was in accordance with the portability provisions of the Social Security Act 1991 (“the Act”).

BACKGROUND FACTS

9. Mr Pek was born in Hungary on 18 June 1938. He immigrated to Australia in 1957 at the age of 19 years. He then lived and worked in Australia for a period in excess of 40 years. Mr Pek paid Australian taxes throughout that period. He became an Australian citizen in 1971.
10. In later life Mr Pek suffered serious health problems. He applied for a DSP which was granted on the 11 June 1998. At about this time Mr Pek decided to return to live in Hungary in order to take advantage of the thermal baths there. He considered that the baths helped to relieve the pain caused by his various medical conditions including a serious back injury.
11. Mr Pek was absent from Australia for the following periods:

17 October 1998 to 12 March 1999 29 May 1999 to 12 November 1999

4 November 2000 to 17 March 2001

28 March 2001 to 25 February 2002

16 March 2002 to 29 December 2003

3 February 2004 onwards

12. In these proceedings Mr Pek has not submitted that the cancellation of his DSP or his age pension did not accord with the requirements of the relevant legislation. He points out that he lived and worked in Australia for many years and paid taxes throughout that period. Mr Pek says that as he is now suffering serious ill-health and has no income he deserves to receive a pension from Centrelink. In a letter dated 27 November 2009 Mr Pek said as follows:

“Dear Sir/Madam,
All my working life I spend and work in Australia I pay my taxes plus my wades 1 or 2% medicare and old pension fund. And the end I have nothing, because I am not living in Australia. The decision made by Centrelink and SSAT agree to this decision and send back to Centrelink. And lived up to Centrelink to make a decision. I ask this TRIBUNA what can I do? In 2009 January I suffer a stroke what live me with speech and walking problem. I can not have free medical trietnment because I am not working in Hungary. I left Hungary after trade school and emigrated to Australia and I spend all my working life in Australia. I think I deserve some help after 43 years work in Australia specialy my condition.
Last year I wanted to go back to Australia I renew my passport last year, but last in January I got a stroke and what I save money for a fare I spended for a medical bills.
I ask the TRIBUNA to help me please.
Yours sincerely
James Pek” (sic)

DISABILITY SUPPORT PENSION

13. On 26 February 2002 Mr Pek returned to Australia but then departed Australia again on 16 March 2002 without advising Centrelink as he was required to do. His DSP was portable for only 26 weeks at the time. (See section 1217(1) of the Act) Correspondence from Centrelink to his Australian address was returned and so his DSP payment ceased on 4 June 2003. That date was well beyond the permitted portability period of 26 weeks from the date of his departure from Australia.
14. The Tribunal notes that section 1217(1) and Column 5 of the Table (at the end of that section) provides that the DSP is portable for an “unlimited period” if the person “... was a severely disabled person”.
15. As some of the evidence, in particular Attachment 7 to the respondent’s Statement of Facts and Contentions, raised, in the Tribunal’s view, the possibility that Mr Pek may have been “severely disabled” in 1998, it requested the respondent’s solicitor Mr Sparkes to provide a written submission on that particular issue.
16. A detailed written submission dated 1 August 2011 was subsequently provided.
17. In that written submission the following points were made:

“26. When the applicant was medically examined in 1998 it was to determine DSP qualification and no more.
27. The medical examination was to determine whether the applicant could do 30 hours of work a week in his usual occupation, or in any other work. Attachment 3
28. The medical officer says that the applicant suffered from chronic neck and back pain due to multi-level degeneration which had become severe since looking after his wife. He is also reported to have symptoms of cervical nerve root involvement.
29. The medical officer says that “all treatment and pain management has not been effective.
30. The medical officer opines that the applicant was medically unfit for FULL-TIME work in the next two years.
31. Page 2 of the report is headed “Part 5B – Capacity for OTHER WORK at 30 hours per week”. The medical officer has ticked the yes box in answer to the question “is the person unfit for all work”.
32. All this evidence is that the medical officer had considered the applicant’s capacity for “Other Work at 30 hours per week” and concluded that there is no work of 30 hours a week that the applicant could do in the next two years. That was the test for DSP qualification. It was not the test for severe disability.
33. The medical officer was not asked whether the applicant could do no work – as required be taken to indicate that this was the case. There was no requirement that severe disability be considered, and it clearly was not”.

18. The Tribunal accepts the explanation provided in that written submission and is satisfied that when Mr Pek departed from Australia on 16 March 2002 he was not then severely disabled within the meaning of that term in the Act. The Tribunal finds that the applicable portability period was 26 weeks. The DSP was cancelled after that period had expired.
19. As Mr Pek had been absent from Australia for a period in excess of 26 weeks when his DSP was cancelled, the cancellation decision was in accordance with the relevant provisions of the Act.

AGE PENSION

20. Mr Pek returned to Australia from Hungary on 29 December 2003. He claimed the age pension on 6 January 2004. His claim was successful and he then departed Australia on 3 February 2004. Mr Pek has not returned to Australia since that date.
21. The age pension continued to be paid to Mr Pek until 2008. Centrelink then determined that the age pension should never have been granted. A debt of $54,545.00 was raised but was later wholly waived.
22. Mr Pek satisfies all the prerequisites for an Australian age pension except that it is alleged that at the time he made his claim for the age pension he was not then resident in Australia.
23. Section 29(1) of the Social Security (Administration) Act 1999 provides as follows::

“(1) Subject to sections 30, 30A, 31, 31A and 32, a claim for a social security payment or a concession card may only be made by a person who:
(a) is an Australian resident; and
(b) is in Australia”.

Section 29(2) states as follows:

“(2) Subject to sections 30, 30A, 31, 31A and 32, a claim made at a time when the claimant is not an Australian resident or is not in Australia is taken not to have been made”.

24. Section 7(3) of the Act sets out a range of matter to which regard must be had in determining whether a person “resides in Australia”.

Section 7(3) is in the following terms:

"7(3) In deciding for the purposes of this Act whether or not a person is residing in Australia, regard must be had to:
(a) the nature of the accommodation used by the person in Australia; and
(b) the nature and extent of the family relationships the person has in Australia; and
(c) the nature and extent of the person’s employment, business or financial ties with Australia; and
(d) the nature and extent of the person’s assets located in Australia; and
(e) the frequency and duration of the person’s travel outside Australia; and
(f) any other matter relevant to determining whether the person intends to remain permanently in Australia".

25. Wilcox J in Re Maha Hafza v Director-General of Social Security [1985] FCA 164; (1985) 60 ALR 674 at 680 explained "residence" as follows:

"There is a plethora of decisions, arising in various contexts but predominantly matrimonial causes and revenue cases, relating to the legal concept of residence. As a general concept residence includes two elements: physical presence in a particular place and the intention to treat that place as home; at least for the time being, not necessarily forever. The concept was explained in a taxation case, Koitaki Para Rubber Estates Limited v The Federal Commissioner of Taxation [1941] HCA 13; (1941) 64 C.L.R. 241 at p.249, by Williams J.:

"The place of residence of an individual is determined, not by the situation of some business or property which he is carrying on or owns, but by reference to where he eats and sleeps and has his settled or usual abode. If he maintains a home or homes he resides in the locality or localities where it or they are situate, but he may also reside where he habitually lives even if this is in hotels or on a yacht or some other abode".

His Honour later added:

"The test is whether the person has retained a continuity of association with the place -- Levene v. Inland Revenue Commissioners [1928] UKHL 1; (1928) AC 217 at p 225 and Judd v. Judd (1957) 75 WN (N.S.W.) 147 at p 149 -- together with an intention to return to that place and an attitude that that place remains "home"".

26. The Tribunal has had regard to each of the matters set out in section 7(3) above. Mr Pek has resided in Hungary since at least 2000. There is no evidence of any accommodation in Australia since that date which could be said to be his usual place of abode. At the relevant time he had no family members residing in Australia. Since 2000 Mr Pek has had no employment business or financial ties in Australia of any relevance nor has he had any assets in Australia since that time. Mr Pek’s infrequent and relatively brief visits to Australia since he moved back to Hungary clearly indicate that he has settled in Hungary and has intended to treat Hungary as his home country. The evidence establishes to the Tribunal’s satisfaction that Mr Pek’s main or primary residence has been in Hungary certainly since 2000 and probably earlier than that time.
27. It follows that the Tribunal concludes on the material before it that Mr Pek was not “an Australian resident” at the time he made his claim for an Australian age pension on 6 January 2004. It finds that although on that date he was present in Australia he was not then “an Australian resident” within the proper meaning of that term in the Act.
28. It is noted that there is presently no international agreement in existence between Australia and Hungary pursuant to the Social Security (International Agreements) Act 1999. If such an agreement was in existence then Mr Pek would be exempt from the residential requirements in section 29(1) of the Act. Mr Sparkes has informed the Tribunal that such an agreement between Australia and Hungary is in prospect and will commence operating on 1 July 2012. On and from that date it will be open to Mr Pek to again claim an Australian age pension. The Tribunal understands that he is likely to succeed so long as he actually lodges a new claim for an age pension.
29. The Tribunal notes that when Mr Pek lodged his claim for the age pension on 6 January 2004 the Centrelink officer who had received the claim asked Mr Pek to provide a statement of where he intended to live. On 19 January 2004 Centrelink received a written statement from Mr Pek explaining that he “... would like to reside in Hungary for the mineral baths (thermal baths) which is the only relief I find for my back injury ...” He then specified his intended address in Hungary and also his phone number. (T12 page 78).
30. Mr Pek openly and frankly informed Centrelink that he intended residing in Hungary. Despite the fact that Mr Pek made it perfectly clear to Centrelink that he intended to reside in Hungary he was still paid the age pension and continued to be paid the pension until 2008.
31. In deciding to waive the debt of $54,545.81 the Centrelink delegate stated:

“... the letter is quite clear that he is going, and provided the address in Hungary. The claim should not have been granted and Mr Pek has been quite explicit about his intention. I am satisfied that this debt is solely attributable to administrative error”. (T17 page 87)

32. Had Mr Pek been properly informed at the time he applied for the age pension of details of the residential requirements he may have perhaps made arrangements to reside in Australia for a sufficient period to qualify for an ongoing age pension. The quite explicit letter received on 19 January 2004 should have prompted advice from an officer of Centrelink explaining the residential requirements.
33. Mr Pek was unrepresented in these proceedings. He gave his evidence by telephone from Hungary. It could be argued that the error by Centrelink has caused Mr Pek to believe he could return to live in Hungary without jeopardizing his ongoing pension entitlement. It could be further argued that because of that error Mr Pek took no corrective action and has now suffered a serious detriment. It was noted that Mr Pek’s health has deteriorated significantly since 2004. His poor health now prevents him from returning to Australia which he may have been able to do some years ago. At the hearing the Tribunal therefore questioned whether estoppel by conduct might apply in these circumstances. The respondent subsequently addressed estoppel in some detail in the written submission of 1 August 2011.
34. If wrong or misleading advice or a failure to provide correct advice can give rise to additional rights beyond the rights established by legislation it is not difficult to imagine the complexities of interpretation which might arise for administrators but also the additional cost which the taxpayer may be required to bear.
35. Some of the difficulties involved in applying estoppel to social welfare administrative decisions were considered by the Full Federal Court in Formosa v Secretary, Department of Social Security (1988) 15 ALD 659 (see also the discussion by Professor Dennis Pearce in “Administrative Appeals Tribunal” 1^st Edition page 153-156).
36. If estoppel by conduct was to be applied in this case its effect would be to give Mr Pek an entitlement to an age pension which he would not otherwise qualify for under the applicable statutory provisions.
37. As was said by the then Tribunal President O’Connor J in Re Roberts and Repatriation Commission [1992] AATA 76; (1992) 15 AAR 192 at 202:

“... estoppel cannot be raised to permit the Tribunal, which stands in the shoes of the decision-maker to act in a way contrary to the legislation”

A similar view was expressed by Davies and Gummow JJ in Formosa (above) at page 665 when their Honours said as follows:

“Further, any payment of an age pension to Mrs Formosa in respect of the period in dispute would conflict with the related principle that estoppel does not operate so as to sanction the appropriation of public moneys without the authority of the parliament”.

38. The Tribunal is not satisfied that the facts of this case are sufficient to ground a claim of estoppel by conduct, if indeed estoppel can ever be said to apply to administrative decisions of this kind.
39. In the course of the hearing Mr Sparkes mentioned the scheme under which compensation can be paid where defective administration has caused a detriment to a claimant.
40. As a result of his health problems and financial circumstances Mr Pek is now not able to return to live in Australia. His explanation of his current living conditions and financial circumstances, which the Tribunal accepts as truthful, indicates that he has no income or financial resources and is reliant totally on the very limited assistance provided by friends. His circumstances are dire. This is to be regretted as Mr Pek is an Australian citizen who, as has been said, lived and worked in Australia and paid taxes for a period in excess of 40 years. The fact is that he will become entitled to an Australian age pension, so long as he makes application, on and from 1 July 2012, now less than one year away. The difficulty for Mr Pek is that he must now sustain himself until he commences once again to receive the Australian age pension.
41. The Tribunal recommends that the Secretary gives consideration to making a “Compensation for Detriment caused by Defective Administration” (CDDA) payment to Mr Pek because of the administrative error made in 2004 and also in light of his serious ill health, poor living conditions and straitened financial circumstances.

DECISION

42. The decision of the SSAT of 23 October 2009 is set aside. The decision made by a Centrelink review officer to cancel the age pension from 5 January 2004 is affirmed.

I certify that the 42 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon R J Groom AO (Deputy President)

Signed: R Hunt Associate

Date/s of Hearing 18 July 2011

Date of Decision 29 August 2011

Solicitor for the Applicant Applicant on his own behalf

Solicitor for the Respondent Mr B Sparkes

Program Litigation & Review Branch