Federal Court of Australia Repatriation Commission v Fill [2020] FCA 1812 Appeal from: Administrative Appeals Tribunal decision delivered on 24 June 2020 by Senior Member Katter File number: QUD 221 of 2020 Judgment of: RANGIAH J Date of judgment: 18 December 2020 Catchwords: ADMINISTRATIVE LAW – appeal against decision of Administrative Appeals Tribunal to set aside decision of Repatriation Commission affirming decision that respondents were ineligible for service pension – whether Tribunal made errors of law in assessing rate of service pension under Veterans' Entitlement Act 1986 (Cth) –appeal allowed – matter remitted to be heard and determined according to law Legislation: Veterans' Entitlements Act 1986 (Cth) ss 36A, 37A and Sch 6 Federal Court Rules 2011 (Cth) rr 33.20 and 33.21 Division: General Division Registry: Queensland National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 25 Date of hearing: 8 December 2020 Counsel for the Applicant: Mr G del Villar QC Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondents: The Respondents appeared in person ORDERS QUD 221 of 2020 BETWEEN: REPATRIATION COMMISSION Applicant AND: GRAHAM FILL First Respondent MARILYN FILL Second Respondent AND BETWEEN: GRAHAM FILL (and another named in the Schedule) First Cross-Appellant AND: REPATRIATION COMMISSION Cross-Respondent order made by: RANGIAH J DATE OF ORDER: 18 DECEMBER 2020 THE COURT ORDERS THAT: 1. The decision of the Administrative Appeals Tribunal made on 24 June 2020 is set aside. 2. The matter is remitted to the Administrative Appeals Tribunal to be heard and determined according to law. 3. There be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT RANGIAH J: 1 The applicant appeals against a decision of the Administrative Appeals Tribunal (the Tribunal) given on 24 June 2020 by which the Tribunal decided: The decision under review is set aside and the matter is remitted to the Respondent for reconsideration in accordance with the recommendation that the First Applicant's pension rate not be nil in accordance with the Rate Calculator, further to sections 36A(2) and/or 37A(2) of the Veterans' Entitlements Act 1986. 2 The respondents have filed a notice of cross-appeal. The applicant has filed a notice of objection to competency of the cross-appeal on the basis that the cross-appeal does not raise any question of law. There may also be a question of whether a notice of contention under r 33.21 of the Federal Court Rules 2011 (Cth), rather than a notice of cross-appeal under r 33.20, is the appropriate mechanism for agitation of the issues sought to be raised by the respondents. 3 In any event, I consider that it is unnecessary to determine the notice of objection to competency or the notice of cross-appeal, since the appeal should be allowed upon the first three grounds of the amended notice of appeal. 4 The first three grounds of appeal are as follows: 1. With respect to the first question of law, the Tribunal failed to apply the correct test for determining the service pension rate set out in the Rate Calculator in Part 2, Schedule 6 to the VEA, in that: (a) the Tribunal accepted that method statement 1 in Module A of the Rate Calculator was to be used to calculate the rate of the First and Second Respondents' service pension; (b) method statement 1 sets out 11 steps, including: (i) using Module F to work out the reduction for a person's assets (step 7); and (ii) taking the reduction for assets away from the maximum payment rate (step 8); (c) the Tribunal did not apply steps 1 to 6 of method statement 1; (d) the Tribunal did not apply steps 8 to 11 of method statement 1; and (e) the Tribunal purported to apply only steps 1 and 2 of Module F. 2. With respect to the second question of law, the Tribunal misconstrued Module A and Module F of the Rate Calculator as permitting the Tribunal to: (a) apply point SCH6-F2 so as to halve the value of the assets of the Respondents; (b) not apply points SCH6-F3 and SCH6-F4; and (c) not make any reduction for assets from the maximum payment rate. 3. With respect to the third question of law, the Tribunal erred by identifying the 'assets value limit' for the Respondents as $821,500 in circumstances where: (a) the term 'assets value limit' is defined in point SCH6-F3 of the Rate Calculator; and (b) the 'assets value limit' identified by the Tribunal did not correspond to the definition in point SCH6-F3 of the Rate Calculator. … 5 I will proceed by describing the issues before the Tribunal and the relevant parts of the Tribunal's decision before considering the parties' submissions. The issues before the Tribunal and the Tribunal's decision 6 The Veterans' Entitlements Act 1986 (Cth) (the Act) provides for the grant of service pensions to certain veterans and their spouses or partners. 7 The first respondent had operational service in Vietnam in 1967. On 4 April 2017, the first respondent, and his wife, the second respondent, applied for service pensions. 8 On 2 May 2017, the respondents' applications were refused on the basis that the combined value of their assets was $1,278,228, whereas the value had to be below $821,500 for them to be eligible for a service pension. The delegate found that their assets included amounts owed to them by the Fill Unit Trust of $858,792 and $302,485, totalling $1,161,277. 9 The respondent sought review of the delegate's decision, but the decision was affirmed upon review. The respondents then applied to the Tribunal for review of the decision affirming the delegate's decision. 10 The Tribunal found that the entirety of the money owed by the Fill Unit Trust to the respondents should be attributed to the respondents as their assets. However, the Tribunal went on to apply the "rate calculator" provided under Sch 6 of the Act, finding that as their combined assets fell below the value of $821,500, their rate of pension would not be nil. The Tribunal set aside the decision to refuse the service pensions and remitted the matter for reconsideration in accordance with a recommendation that the pension rate not be nil. 11 It is unnecessary, for present purposes, to describe the whole of the Tribunal's reasoning. It is sufficient to consider the Tribunal's reasoning concerning the application of Sch 6 of the Act. 12 Section 36A(2) of the Act provides that, "an age service pension is not payable to a veteran if the veteran's age service pension rate would be nil". Section 37A(2) applies in similar terms to an invalidity service pension. 13 Schedule 6 of the Act has the heading, "Calculation of rates of service pension, income support supplement and veteran payment". Part 2 of Sch 6 has the heading "Rate calculator". 14 Within Pt 2, SCH6–A1(2) requires, relevantly, that the rate of service pension be worked out in accordance with Method Statement 1. Method Statement 1 contains the following steps: Step 1. Work out the person's maximum basic rate using MODULE B below. Step 1A. Work out the amount of pension supplement using Module BA below. Step 1B. Work out the amount of energy supplement (if any) using Module BB below. Step 2. Work out the amount per year (if any) by way of rent assistance using MODULE C below. Step 4. Add up the amounts obtained in Steps 1, 1A, 1B and 2: the result is called the maximum payment rate. Note: Section 65A may affect whether the amount obtained in step 1B is added. Step 5. Apply the ordinary/adjusted income test using MODULE E below to work out the reduction for ordinary/adjusted income. Step 6. Take the reduction for ordinary/adjusted income away from the maximum payment rate: the result is called the income reduced rate. Step 7. Apply the assets test using MODULE F below to work out the reduction for assets. Step 8. Take the reduction for assets away from the maximum payment rate: the result is called the assets reduced rate. Step 9. Compare the income reduced rate and the assets reduced rate: the lower of the 2 rates, or the income reduced rate if the rates are equal, is the provisional payment rate. Step 10. Work out the amount per year (if any) payable by way of remote area allowance using MODULE G below. Step 11. Add any amount obtained in Step 10 to the person's provisional payment rate (see Step 9). The result is the person's rate of service pension. 15 It may be seen that Step 7 of Method Statement 1 requires the "assets test", using Module F, to be applied to work out the reduction for assets. SCH6–F1 of Module F provides a Method Statement to work out the effect of a person's assets on the person's maximum payment rate as follows: Step 1. Work out the value of the person's assets. Note 1: For the treatment of the assets of members of a couple see point SCH6-F2. … Step 2. Work out the person's assets value limit (see point SCH6-F3 below). Note: A person's assets value limit is the maximum value of assets the person can have without affecting the person's rate of service pension, income support supplement or veteran payment. Step 3. Work out whether the value of the person's assets exceeds the person's assets value limit. Step 4. If the value of the person's assets does not exceed the person's assets value limit, the person's assets excess is nil. Step 5. If the value of the person's assets exceeds the person's assets value limit, the person's assets excess is the value of the person's assets less the person's assets value limit. Step 6. Use the person's assets excess to work out the person's reduction for assets using point SCH6-F4 below. … 16 SCH6–F2 provides, relevantly: SCH6-F2 For the purposes of this Module: (a) the value of the assets of a member of a couple is taken to be 50% of the sum of: (i) the value of the person's assets; and (ii) the value of the person's partner's assets; and … 17 SCH6–F3 provides: SCH6-F3 A person's assets value limit is worked out using Table F-1. Work out the person's family situation and property ownership situation. The assets value limit is the corresponding amount in column 3. Table F-1—Assets value limit Column 1 Column 2 Column 3 Assets value limit Item Person's family situation Column 3A Column 3B Either person or partner property owner Neither person nor partner property owner $ $ 1. Not member of a couple 250,000 450,000 2. Partnered 187,500 287,500 Note 1: For member of a couple and partnered see section 5E. … 18 SCH6–F4 provides, relevantly: Reduction for assets in excess of assets value limit SCH6-F4(1) A person's reduction for assets is worked out by using the formula: (Assets excess) x 19.5 250 where: assets excess means the value of the person's assets less the person's assets value limit. … 19 It may be seen that Step 1 of the Method Statement under SCH6–F1 requires a decision-maker to work out the value of the person's assets, applying SCH6–F2. Step 2 then requires the decision-maker to work out the person's "assets value limit" applying SCH6–F3. Step 3 requires the decision-maker to work out whether the value of the person's assets exceeds the person's assets value limit. Step 5 requires the decision-maker to work out the value of the person's assets less the person's assets value limit—the difference is called the "assets excess". Step 6 requires the decision-maker to use the person's assets excess to work out the person's reduction for assets using the formula in SCH6–F4. 20 In the present case, the Tribunal purported to apply the "rate calculator" as follows: 71. As referred to above, Schedule 6 Module A of the Act includes "Method Statement 1", which states at step 7: "Apply the assets test using MODULE F below to work out the reduction for assets." For the purposes of Module F therefore the value of the assets of a member of a couple is taken to be 50% of the sum of the value of the First Applicant's assets and the Second Applicant's assets. The Respondent stated the total assets of the Applicants as $1,278,228.00, which included both the 'loans' to the Fill Unit Trust of $1,161,277.00. The rate calculator requires that the value of the assets is taken to be 50% of the sum of the First Applicant's assets and the Second Applicant's assets; therefore being below the asset value limit for a homeowner of $821,500.00. 72. The First Applicant's pension rate would not therefore be nil, further to the rate calculator, in accordance with s 36A(2) and/or s 37A(2). 73. The reviewable decision made by the Respondent dated 23 April 2018, affirming a determination of the Respondent dated 2 May 2017, which declined the Applicants' claims for service pensions is therefore set aside and the matter is remitted to the Respondent for reconsideration in accordance with the decision that the First Applicant's pension rate would not be nil, further to the Rate Calculator, in accordance with s 36A(2) and/or s 37A(2) of the Act. 21 The Tribunal worked out the value of the respondents' assets in accordance with Step 1 of SCH6–F1, taking the value of the assets of each of the respondents to be 50% of their total assets of $1,278,228 under SCH6–F2. The Tribunal then found that this figure was below the, "asset value limit for a homeowner of $821,500", and concluded that the pension rate would therefore not be nil. 22 There were several errors in the Tribunal's application of the Method Statement under SCH6–F1. The Tribunal failed to properly interpret or apply Step 2, which requires SCH6–F3 to be used to work out the person's "assets value limit". SCH6–F3 provides, relevantly, that the "assets value limit" for a member of a couple is $187,500 if either of them is a property owner. Instead, the Tribunal found that the "assets value limit" was $821,500 for reasons that were not explained. Further, the Tribunal failed, at Step 6, to use the "assets excess" to work out the respondents' reduction for assets using the formula set out in SCH6–F4(1). 23 Step 7 of Method Statement 1 required the Tribunal to work through each of Steps 1 to 6 of the Method Statement in SCH-F1 in order to work out the reduction for assets. The Tribunal failed to do so, properly applying the first step but not the remaining steps. The Tribunal made the errors of law described in Grounds 1, 2(b) and 3 of the amended notice of appeal. 24 This conclusion requires that the Tribunal's decision be set aside and the matter be remitted to the Tribunal to hear and determine according to law. As the Tribunal's decision must be set aside, it is unnecessary to determine the remaining grounds of appeal, the notice of cross-appeal and the notice of objection to competency. 25 The applicant indicated that it did not seek costs against the respondents. Accordingly, there will be no order as to costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rangiah. Associate: Dated: 18 December 2020 SCHEDULE OF PARTIES QUD 221 of 2020 Cross-Appellants Second Cross-Appellant: MARILYN FILL