Social Security Act 1991 s1223, s1224

London and North Eastern Railway Company v Berriman (1946) AC 278

Secretary, Department of Social Security and Doravelu (Decison No 7952, 13 May 1992, unreported)

Wan and Secretary, Department of Social Security (Decision No 8402, 1 December 1992, unreported)

(Departmental advocate)

Counsel for the Respondent: Mr S. Langman (ACT Welfare Rights)

The Tribunal affirms the decision under review in relation to the eriods 30 March 1989 to 30 December 1990; and 1 July 1991 to 5 December 1991.

In accordance with s42C(3) of the Administrative Appeals Tribunal Act 1975 the parties have reached agreement as to the terms of a decision of the Tribunal, in relation to a part of the proceeding, that is acceptable to the parties; and

The terms of the agreement have been reduced to writing, signed by or on behalf of the parties and lodged with the Tribunal; and

The Tribunal is satisfied that a decision in those terms are within the powers of the Tribunal.

The Tribunal varies the decision of the Social Security Appeals Tribunal in relation to the period 1 January 1991 to 30 June 1991 and decides that:

The amount of widows pension paid to the respondent during the period 1 January 1991 to 30 June 1991, totalling $4, 841.20, is a debt due to the Commonwealth of which $320.00 had been refunded. The outstanding debt is to be recovered by means of refunds of $30.00 per fortnight commencing on 1 March 1994, the amount of such refunds to be reviewed three months after that date.

JUSTICE D.F. O'CONNOR, M. ALLEN AND H. JULIAN The applicant seeks revi ew of a decision of the Social Security Appeals Tribunal (SSAT) setting aside the applicant's original decision to raise and recover a debt against the respondent under ss246(1) and 245B of the Social Security Act 1947 ("the 1947 Act") and ss1223 and 1224 of the Social Security Act 1991 ("the 1991 Act").

2. At the hearing, the applicant was represented by Ms H Wallis-Dunn of the Department of Social Security ("the Department") and the respondent was represented by Mr S Langman of ACT Welfare Rights. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975, documents relating to the Department's s163 notice, information regarding the delivery of the s163 notice, an agreed statement of facts and documents relating to the respondent's financial position (exhibits A to S).

3. For convenience, the SSAT divided the time period under review into three discrete periods, determined by the effective dates of operation of the 1947 and 1991 Acts and their transition provisions. These periods are: 30 March 1989 to 30 December 1990, which is governed by s246 of the 1947 Act; 1 January 1991 to 30 June 1991, when s245B was inserted into the 1947 Act in addition to s246; and 1 July 1991 to 5 December 1991, when the 1991 Act came into operation. During the course of the proceedings, the parties reached agreement in relation to the period 1 January 1991 to 30 June 1991 and the operation of s245B. That agreed decision is given effect pursuant to s42C(3) of the Administrative Appeals Tribunal Act 1975.

4. On 4 August 1988, Ms Carruthers was transferred from the Supporting Parents Pension to a Widows Pension by the Department. She commenced working at the Airport International Motor Inn on 18 February 1989 and on 16 December 1991 the Department informed her that she had been overpaid by virtue of her failure to advise the Department of her employment.

5. There is no dispute that Ms Carruthers received an overpayment from the applicant totalling $24,360.70 during the period March 1989 to December 1991. The issue before the Tribunal is whether the notice issued under s163 of the 1947 Act, advising the respondent of her notification obligations, was a valid notice. The SSAT found that the notice was invalid and thus void and this is an appeal from that decision.

6. The significance of s163 lies in its relationship to s246 of the 1947 Act which allows for recovery of over payments. It is convenient to set out the legislative scheme in so far as it is relevant to the present case.

"Notification and review

163(1) The Secretary may give, personally or by post, to any person

to whom or on behalf of whom a pension, benefit or allowance is being

paid under this Act a notice requiring that person, if an event or

change of circumstances specified in the notice occurs or if that

person is aware that an event or change of circumstances specified in

the notice is likely to occur, to notify the Department or to notify

the officer specified in the notice, within the period and in the

manner specified in the notice, of the occurrence or likely occurrence

of that event or that change of circumstances.

(2) ...

(3) ...

(4) The period for compliance specified in a notice given under

this section shall be --

(a) in the case of a notice given under subsection (1) --

(i) where the notice relates to the payment of a benefit under Part

XIII -- immediately; or

(ii) in any other case -- not less that 14 days; or

(b) ...

(5) A person shall not --

(a) refuse or fail to comply with a notice under sub-section (1) or (2)

to the extent that the person is capable of complying with it; or

(b) in purported compliance with such a notice, knowingly or recklessly

furnish information that is false or misleading in a material

particular.

Penalty for any contravention of this sub-section:

(c) in the case of a natural person -- $1,000 or imprisonment for 6

months, or both; or

(d) in the case of a body corporate -- $5,000.

7. Section 246 allows the Commonwealth to raise a debt with regard to overpayments in certain circumstances and relevantly states:

"Recovery of overpayments

246(1) Where, in consequence of a false statement or representation, or

in consequence of a failure or omission to comply with any provision of

this Act, an amount has been paid by way of pension, allowance or

benefit under this Act which would not have been paid but for the false

statement or representation, failure or omission, the amount so paid is

a debt due to the Commonwealth."

(2) ..."

8. The respondent submitted that the Department's s163 notice failed to specify the manner of notification which it is required to do under the provisions of the section. Under s163, a failure by the recipient to comply with the requirements in the notice may attract criminal penalties. On that basis, the respondent submits, there is an obligation on the Department to issue notices which are in strict compliance with the requirements of s163. Failure to comply strictly, it was submitted, means that the notice is invalid and its provisions void.

9. Ms Wallis-Dunn, for the applicant, submitted that the notice complied with the obligation in that it specified that the recipient was "required to tell the Department" if certain circumstances arose. The words "to tell", she claimed, imported into them a manner of notification.

10. The Tribunal finds that the notice issued under s163 of the 1947 Act is invalid for the purposes of the Act and therefore void in its effect. In so finding, we reject as too broad the applicant's submission that the words "to tell" specify a manner of notifying the Department. The verb "to tell" is synonymous with the verb "to notify", albeit with fewer syllables, and may be regarded as a plainer way of expressing the same obligation. It does not, however, specify a manner of notification, be it by writing, telephoning or visiting, as required by the legislation.

11. In finding the s163 notice invalid, the Tribunal's decision is consistent with other recent Tribunal decisions and the long standing common law principle that statutes are to be construed strictly where penalties apply: London and North Eastern Railway Company v Berriman (1946) AC 278 at 313; Secretary, Department of Social Security and Doravelu (Decision No 7952, 13 May 1992, unreported).

12. In Wan and Secretary, Department of Social Security (Decison No 8402, 1 December 1992, unreported), although there was no statutorily imposed penalty, a failure to notify led to a penalty by way of deferment of Newstart Allowance. That Tribunal said, at page 21:

"In this instance taken in its statutory context the objective is

to ensure that recipients of Newstart Allowance are made aware of their

obligations to take certain courses of action, failure to comply with

those obligations leaving the recipient open to the imposition of a

deferment period. Given that consequence, which is something in the

nature of a penalty, the provision should be construed strictly as

imposing an obligatory requirement on the respondent's delegate (see

Golden-Brown v Hunt (1972) 19 FLR 438, per Fox J at 447, Blackburn and

Connor JJ at 450-451)."

13. The effect of finding the s163 notice invalid is that the respondent has not breached s246(1) of the 1947 Act in terms of "a failure or omission to comply" with the Act and therefore no debt can be raised against her. It was agreed between the parties, and the Tribunal also finds as a matter of law, that the substantive findings under the 1947 Act apply in this instance to the 1991 Act. The s163 notice was issued to the respondent when she initially transferred to the Widows Pension in 1988 and the substantive provisions of s246 are preserved in ss1222A, 1223 and 1224 of the 1991 Act.

14. The Department's advocate also raised a further argument, under s135TE of the 1947 Act, which, she said, overcomes the difficulties of the invalid s163 notice. Section 135TE was operative in 1986 and preceded s163. Although s135TE was couched, at that time, in very similar terms to those subsequently found in s163, it omitted the requirement of the Department to specify the manner of notification in the notice issued.

15. The applicant submitted that in November 1986 and February 1987, Ms Carruthers received valid s135TE notices advising her of the obligation to notify the Department of any change of circumstances. At that time, Ms Carruthers was in receipt of the Supporting Parents Pension (SSP), rather than the Widows Pension. The procedures followed by the Department in relation to each of these pensions differ, in that recipients of the SSP are sent regular notices informing them of their obligation to notify the Department in certain circumstances. Recipients of the Widows Pension, on the other hand, receive such a notice only at the time they are granted the pension. In Ms Carruthers' case, this was the invalid notice issued under s163.

16. Notwithstanding these differences it is immaterial, in the applicant's submission, that the valid notice under s135TE refers specifically to the SSP. It is sufficient, it is said, for the respondent to have received a valid notice at some point during her dealings with the Department. The valid notice continues to operate, the applicant submitted, despite the respondent's transfer to a different type of pension and the subsequent issue of an invalid notice.

17. The Tribunal does not accept this submission as correct. The Department has a variety of pensions, benefits and allowances, all of which have different and specific qualifying criteria as well as different procedural requirements. It is quite unacceptable, in our view, to expect a recipient of one type of pension to look to the procedural requirements of another type of pension to determine her obligations to the Department.

18. During the course of her evidence, Ms Carruthers commented more than once that she was confused about the reasons she was transferred to the Widows Pension since, while she was separated from her husband, he was still alive. Moreover, while receiving the SSP she regularly responded to the s135TE notices by informing the Department of her periods of casual work. Once she was receiving the Widows Pension those regular notices ceased, giving rise to further confusion about her obligations. It would place an onerous burden on pension beneficiaries if a notice issued under one type of pension was held to remain operative despite any new notice that might be issued under a different type of pension. This is particularly so as the Department itself differentiates in terms of its procedures and qualifying criteria.

19. For the reasons stated above, the Tribunal affirms the decision under review.