FEDERAL COURT OF AUSTRALIA Burgess v Secretary of the Department of Family and Community Services [2004] FCA 136 SOCIAL SECURITY – Claim made for unemployment benefits – No claim originally made for disability support pension ('DSP') – Power of Administrative Appeals Tribunal to backdate DSP to date of claim for unemployment benefits. Social Security (Administration) Act 1999 (Cth) ss 11, 12, 13(1), 15, Schedule 2 (cl 3(1)) DARREN BURGESS v SECRETARY OF THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES N 1654 of 2003 WILCOX J 26 MARCH 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1654 of 2003 BETWEEN: DARREN JOHN BURGESS APPLICANT AND: SECRETARY OF THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES RESPONDENT JUDGE: WILCOX J DATE OF ORDER: 26 MARCH 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The notice of motion of the respondent, dated 12 December 2003, be dismissed. 2. The appeal be allowed. 3. The decision of the Administrative Appeals Tribunal made on 7 October 2003 be set aside and the matter be remitted to that Tribunal for further hearing and determination according to law. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1654 of 2003 BETWEEN: DARREN JOHN BURGESS APPLICANT AND: SECRETARY OF THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES RESPONDENT JUDGE: WILCOX J DATE: 26 MARCH 2004 PLACE: SYDNEY REASONS FOR JUDGMENT WILCOX J: 1 On 24 October 2003, the applicant, Darren John Burgess, filed in this Court a notice of appeal. By that notice, he sought to challenge a decision of Senior Member Ettinger of the Administrative Appeals Tribunal ('the AAT') to affirm a decision of the Social Security Appeals Tribunal ('the SSAT'). Mr Burgess named as respondent to his appeal the Secretary of the Department of Family and Community Services ('the Secretary'). 2 On 12 December 2003, the Secretary filed a notice of motion seeking an order for dismissal of the notice of appeal on the basis that it failed to disclose a reasonable cause of action (Order 20 rule 2(1)(a) of the Federal Court Rules) or, alternatively, was frivolous (Order 20 rule 2(1)(b)). The motion came before me for directions on 19 December 2003. Mr Burgess represented himself by telephone. Mr G Peek appeared for the Secretary. 3 During the course of discussion, I pointed out to Mr Burgess that the right of appeal to this Court from a decision of the AAT was limited to appeal on a matter of law: see s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth). However, Mr Burgess contended the AAT had erred in holding that it had no power to backdate the commencement of a disability support pension ('DSP') beyond the date of his first application for that pension. As this contention obviously raised an issue of law, I indicated I would not accede to the motion for summary dismissal but, rather, would list the matter for final hearing at an early date. With the concurrence of both Mr Burgess and Mr Peek, I fixed 4 February 2004 for that purpose. 4 On 4 February 2004, Mr Burgess again appeared by telephone. Mr Peek read an affidavit made by Andrew John Crockett annexing a copy of Ms Ettinger's reasons for decision. These reasons state that, at the hearing, Mr Burgess had produced a letter from a psychologist that referred to Mr Burgess having been hospitalised from 19 June 1992 to 13 July 1992 with a diagnosis of paranoid schizophrenia. 5 It further appears from the reasons that Mr Burgess had produced a letter from Bruce Price, Centrelink psychologist at Grafton (where Mr Burgess now lives), stating he had interviewed Mr Burgess on 16 April 2002. DSP was granted to Mr Burgess from that date. Apparently, Mr Burgess' formal application for DSP was lodged on the following day, 17 April 2002, but the Department took the view that this degree of backdating was permissible under s 13(1) of the Social Security (Administration) Act 1999 (Cth) ('the Act'). That subsection reads: 'For the purposes of the social security law, if: (a) the Department is contacted by or on behalf of a person in relation to a claim for a social security payment; and (b) the person is, on the day on which the Department is contacted, qualified for the social security payment; and (c) the Secretary gives the person a written notice acknowledging that the Department has been contacted in relation to the making of the claim; and (d) the person lodges a claim for the social security payment within 14 days after the Department is contacted; the person is taken to have made a claim for the social security payment on the day on which the Department was contacted.' 6 Ms Ettinger's reasons referred to the fact that, in evidence, Mr Burgess mentioned having received unemployment benefits (later called Newstart Allowance) between April 1992 and April 2002. It is not clear whether he received these benefits continuously throughout this period. However, it seems that the value of DSP exceeds that of unemployment benefits. Mr Burgess' point, before both the SSAT and the AAT, was that, having been diagnosed as suffering from paranoid schizophrenia in 1992, the same disability for which he was later held to be entitled to DSP, the grant of DSP should have been backdated to 1992. 7 At the AAT hearing, the Department's solicitor, Ms Helen Wallis-Dunn, claimed the Department 'had no idea of Mr Burgess' illness in 1992 and awarded him unemployment benefit at that time which was what he had applied for'. She said Mr Burgess had agreed in 1992 to seek work and had in fact worked part-time. Ms Wallis-Dunn argued that the AAT had no power to backdate DSP before 16 April 2002. She said that 'pursuant to sections 3 and 11 of [the Act], the person's start date for pension provided they were qualified, is the day in which the claim is made'. 8 In stating her conclusions, Ms Ettinger said at pages 5 and 6: 'I have carefully considered Mr Burgess' rights in that regard and noted that on receipt of unemployment benefit in April 1992, he had to undertake to seek work and in fact according to his [sic] did do some part time work. Even though the Respondent was not able to produce Mr Burgess' original application form, I could find no indication that unemployment benefit was not the correct benefit to be paid at that time. There were various certificates in the T documents of course, as Mr Burgess has undertaken and he has a trade qualification in the building industry. I noted from his evidence that Mr Burgess has not consulted doctors or taken medicine since 1992 or 1995 perhaps and does not attend a psychiatrist. He said that he attends at a naturopath and he also takes no traditional medicines. I noted further that notwithstanding his diagnosis of paranoid schizophrenia, Mr Burgess may not have been qualified for DSP in 1992 and even if qualified, he did not apply for it so it was not payable. I noted that section 23 of the Social Security Act 1991 includes the DSP. I then turn to consider sections 11 and 3 of the Social Security Administration Act 1999. Sections 3 and 11 of the Social Security Administration Act 1999 state that disability support pension must be applied for, and if a person is qualified, as Mr Burgess now appears to be, then it can only be payable from the date of application. In fact Mr Burgess did not apply until 17 April 2002 and was granted DSP from 16 April 2002 pursuant to section 13 of the Social Security Administration Act 1999 because he had been in contact with the Department on that day even before he applied for the disability support pension. I noted from section 13 that there is a 14 day window in which that can occur. Unfortunately I do not have any discretion to backdate Mr Burgess' disability support pension and, accordingly, I must affirm the decision of the Department which was affirmed by the Social Security Appeals Tribunal on 6 March 2003 that arrears of DSP are not payable to Mr Burgess.' 9 It seems apparent that the reference to s 3 of the Act is erroneous; the reference ought to have been to cl 3(1) of Sch 2 of that Act. Section 11 of the Act states that a person who wants to be granted a social security payment must make a claim in accordance with Part 3 Division 1 of the Act. Clause 3(1) of Sch 2 provides: 'If: (a) a person makes a claim for a social security payment; and (b) the person is qualified for the payment on the day on which the claim is made; the person's start day in relation to the payment is the day on which the claim is made.' 10 Clause 3(1) of Sch 2 must be read subject to other provisions of the Act. However, Mr Peek argued it otherwise makes a binding rule about the date of commencement of benefits. He said the Department had no power to fix a commencement date earlier than 16 April 2002, nor did the SSAT or the AAT. 11 At the conclusion of oral argument, I reserved my decision. As Mr Burgess had not had the benefit of legal representation, I wished to look carefully at the scheme of the legislation. 12 I think it is clear that the general scheme of the legislation is to fix the commencement date for benefits by reference to the first day on which the Department is contacted by or on behalf of the applicant, provided the person lodges a formal claim within 14 days of that first contact. Mr Burgess accepts that he did not contact the Department about DSP in 1992, or at any date before 16 April 2002; he says that, until that day, he did not know of the existence of DSP. Under these circumstances, the general scheme of the Act is to fix the 'start day', by cl 3(1) of Sch 2 read with s 13(1), at 16 April 2002. 13 I gave consideration to s 15 of the Act. Section 15(1) permits backdating, subject to some qualifications, where a person makes an 'incorrect claim'. Subsections (2), (3) and (4) detail varieties of 'incorrect claim' for the purposes of s 15(1). None of these subsections covers the circumstances of this case. There may be a question whether these subsections exhaustively specify what is meant by the term 'incorrect claim'. If they do not, the question whether or not Mr Burgess made an incorrect claim would be an issue of fact. This factual issue seems to be resolved against Mr Burgess by Ms Ettinger's conclusion that she 'could find no indication that unemployment benefit was not the correct benefit to be paid at that time'. I concluded that s 15 does not assist Mr Burgess. 14 However, s 12 of the Act seemed more favourable to Mr Burgess. This section relevantly provides as follows: '(1) Subject to subsection (3), if: (a) a person is receiving an income support payment; and (b) while receiving the payment, the person becomes qualified for another income support payment (the other payment); and (c) the Secretary determines that the person is to be transferred to the other payment; the person is taken, for the purposes of the social security law, to have made a claim for the other payment on the day on which the person became qualified for the other payment. … (3) The Secretary may only make a determination under subsection (1) or (2) if the transfer is one that the Secretary could have determined should occur apart from this section.' (Original highlighting) 15 Through my Associate, I invited Mr Peek to make a submission concerning the possible application of this section to Mr Burgess' case. In response, Mr Peek accepted that each of unemployment benefit (Newstart Allowance) and DSP is an 'income support payment' within the meaning of s 12(1)(a) of the Act: see s 23 of the Social Security Act 1991 (Cth) and s 3(2) of the Act. He also accepted that it would have been within the power of the AAT to make a determination under s 12(1)(c) of the Act. Mr Peek commented: 'This provision is intended to allow the Secretary to determine a person can be transferred between "income support payments", and deems that person to have complied with the general requirement to make an application for the new payment without the need to physically make the application. It would appear to be within the scope of the Tribunal's powers under section 43 of the Administrative Appeals Tribunal Act 1975 for the Tribunal to have exercised this power in this matter if applicable.' 16 Section 12(3) of the Act is not easy to understand. Mr Peek submitted: 'Subsection 12(3) confirms that section 12 does not contain a separate power to grant a social security benefit or pension to which a person would not otherwise be qualified for under the various criteria contained elsewhere in the social security law (see for example, subsection 37(1) of the SSAA). The power to cancel the previous payment is another example of a necessary power to give effect to a transfer power which exists outside the provision. Section 12 is thus "procedural" rather than "substantive" in nature. The terms of subsection 12(3) raises some question as to whether the power could be exercised "retrospectively" as would be required for it to be applied to the applicant's circumstances. The respondent submits it would at least have been necessary for the Tribunal to have been able to determine on the evidence before it that the applicant was qualified for disability service [sic] pension in 1992 (under the applicable criteria at the time).' 17 Although his submission is not entirely clear, I read Mr Peek as conceding it would have been possible for the AAT to have backdated Mr Burgess' DSP to the date of his application for unemployment benefits if it had been satisfied, as a matter of fact, that Mr Burgess was entitled to receive DSP continuously from that date. It seems to me this interpretation of the section must be correct, otherwise there would seem to have been no point in enacting s 12. This interpretation is also supported by the Explanatory Memorandum to the Bill for the Act. In relation to the proposed s 12, the Explanatory Memorandum states: 'The general rule is that a person must make a claim for a particular income support payment. This clause provides an exception to that rule. In certain circumstances where the Secretary has determined that a person is to be transferred to another income support payment (the other payment), the person will be taken to have made a claim for the other payment on the day that the person became qualified for the other payment.' 18 However, Mr Peek contends the AAT was not satisfied that Mr Burgess was entitled to DSP before 16 April 2002, so its actual decision was correct. In putting this argument, Mr Peek relied on the statements of Ms Ettinger set out above. Ms Ettinger said she 'could find no indication that unemployment benefit was not the correct benefit to be paid at that time' and also that 'Mr Burgess may not have been qualified for DSP in 1992'. However, I am unable to read either of these statements as a considered factual conclusion that Mr Burgess was not entitled to DSP in 1992 or in subsequent years to 2002. Ms Ettinger believed it was not necessary to reach any definite conclusion about that matter because of her view that, whether or not Mr Burgess had been entitled to DSP between 1992 and 2002, the AAT had no power to order that DSP be paid in respect of a period before 16 April 2002. As is now effectively conceded by Mr Peek, that view was incorrect. 19 Mr Burgess may not be able to demonstrate that he was entitled to DSP before l6 April 2002. However, he is entitled to have that issue determined on its merits, as a matter of fact, free from the error of law that infected Ms Ettinger's decision. Under the circumstances, it is appropriate to set aside the AAT's decision and remit the matter to the AAT for further hearing and determination according to law. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. Associate: Dated: 26 March 2004 The Applicant appeared in person via telephone. Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 4 February 2004 Date of Judgment: 26 March 2004