C14/1999 QUALIFYING SERVICE: RESCINDING INCORRECT DETERMINATIONS

Amended by DI No.

C19/2012

Introduction

Recent cases in several State Offices have highlighted the need to provide definitive and consistent advice to all State Offices, regarding the correct course of action to take when it is discovered that an incorrect:

• QS determination under section 35H VEA has been made; or

• QS determination under section 7A(1) has been made in respect of Gold Card eligibility; or

• SP determination under sections 36, 37 or 38 VEA has been made.

Purpose of instruction

In relation to Qualifying Service (QS) determinations that are later found to be incorrect, this Departmental Instruction (DI) provides:

• legal; and

• policy and procedural advice.

Application of instruction

This DI applies where a QS determination has been found to be not lawfully based.

Authorised by

PETER REECE

DIVISION HEAD

COMPENSATION and SUPPORT

Section 35J

Located in Part III VEA, section 35J is reproduced below:

Determination of qualifying service to be proof of qualifying service

35J.  A determination by the Commission that a veteran has rendered qualifying service is proof, for all purposes of this Act, that the veteran has rendered qualifying service.

Note:this provision also applies to a decision of the Administrative Appeals Tribunal that a person has rendered qualifying service. This is because subsection 43 (6) of the  Administrative Appeals Tribunal Act 1975 provides that the Tribunal's decision is taken to be the decision of the original decision-maker (in this case, the Commission).

Incorrect interpretation

One interpretation of section 35J has meant that if it was discovered that a QS determination had been made in error, the determination was not rescinded (i.e. revoked).  This long standing DVA practice regarding QS determinations has been based on a misinterpretation of section 35J and in the view of Legal Services Group, cannot be legally supported.

Correct interpretation

Section 35J should be interpreted as providing protection to a person who obtains a lawful determination, from being disadvantaged at a later date.  That is, if they are lawfully eligible when the determination is issued, then, unless specific legislation is enacted to the contrary, they are protected against any later changes that may render them ineligible.  This is because “determination”, as used in section 35J, refers to a determination made in accordance with the statutory criteria.

Acts Interpretation Act 1901

Subsection 15AA(1) of the Acts Interpretation Act 1901 notes the following with regard to the interpretation of a provision of an Act.

Regard to be had to purpose or object of Act

15AA.(1)  In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote that purpose or object.

Purpose of VEA

It is clearly not the purpose of the VEA to grant Service Pension or a Gold Card to veterans who do not have any entitlement to QS.  Therefore, the use of section 35J, incorrectly interpreted as above, does not promote the purpose of the VEA.

Legislative authority

How do we address the question that if an incorrect QS determination has been made, where is the legislative authority to rescind the Delegate's determination?

Unlawful determination

Simply answered, if a person has no lawful entitlement to be granted QS, an entitlement cannot be created by a Delegate making a mistake (i.e. an incorrect determination).  If a determination is made in error (i.e. not made in accordance with the statutory criteria), it is unlawful, and therefore no legislative authority is required to be able to rescind that determination.

Standard letter 1

A standard letter has been prepared for use where it is found that QS has been granted in error, and where Service Pension has not been granted and is not being claimed. It is attached at the end of this DI (Standard Letter 1- Rescinding a QS decision refers).

Fact vs opinion

In some cases the decision to determine QS eligibility is not clear cut and relies on the Delegate reaching a view of the law that is reasonable. The advice provided in this DI is not intended to override any such power that a Delegate has exercised.  Section 34A of the Acts Interpretation Act 1901 below refers.

Exercise of certain powers and functions by a delegate

34A.  Where, under any Act, the exercise of a power or function by a person is dependent upon the opinion, belief or state of mind of that person in relation to a matter and that power or function has been delegated in pursuance of that or any other Act, that power or function may be exercised by the delegate upon the opinion, belief or state of mind of the delegate in relation to that matter.

Gold Card issued

A situation may arise where it is found that a Gold Card has been issued in error, either because:

• QS has been incorrectly granted; or

• QS has not been granted, but card has been issued incorrectly

Procedure

As there is no lawful entitlement, eligibility for the Gold Card cannot be created by a Delegate making an incorrect determination (i.e. a determination that is not in accordance with the statutory criteria); nor by the Department issuing a card in error. The paragraphs below detail the procedures to follow when recalling a Gold Card.

Contact client personally

Where a Gold Card has been issued in error and needs to be recalled, it is imperative that the request is made personally in the first instance– i.e. the client contacted by phone, a home visit, or invited into the Department for an interview.

During the discussion, the Departmental officer must:

• clearly state the reason for requesting the return of the card;

• offer apologies on behalf of the Department for any inconvenience caused to the client because of the error;

• raise the issue of any financial disadvantage caused by the error – eg has the person given up Private Health Insurance based on our incorrect advice/issue of card;

• if so, advise that the Department will compensate them for any treatment undertaken up to period of 6 weeks, and over a discussion of long term repercussions.

Standard letters 2 and 3

Follow-up face to face discussion with a formal advice. Standard letters have been prepared for use where a Gold Card has been issued due to:

• incorrect QS decision – standard letter 2; or

• Departmental error – standard letter 3.

SP in payment

A situation may arise where it is found that QS has been granted in error and Service Pension is already in payment.

Procedure

As there is no lawful entitlement, entitlement for Service Pension cannot be created by a Delegate making an incorrect determination (i.e. a determination that is not in accordance with the statutory criteria).  The table below shows the procedures to follow when Service Pension is already in payment.

Step

Action

1

Cancel Service Pension

2

Consider waiver of overpayment under paragraph 206(1)(b)

3

Send standard letter (4, 5 or 6) advising client of decision

4

Investigate client's eligibility for payment of Social Security Age Pension through DVA, and if eligible arrange for transfer of payment from Service to Age Pension.

5

If client ineligible for payment of Age Pension through DVA, assist client with Centrelink liaison if the client so wishes.

Legislative authority to cancel SP

Discontinuing payment of Service Pension where an unlawful determination has been made is supported legislatively by section 35A VEA.

Interpretation of 35A

Section 35A basically says that a person has to be both eligible and payable before Service Pension can be paid.  So where a person is receiving Service Pension based on incorrectly determined QS, payment of Service Pension cannot be continued, as the person is not eligible.

Recoverable overpayment

A payment of Service Pension resulting from an unlawful determination is a recoverable overpayment.

Legislative Ref: paragraph 205(1)(c).

Waiver

If financial hardship would result from recovery of the overpayment, it is recommended that the Delegate give consideration to exercising the waiver provisions of the VEA under paragraph 206(1)(b).

Standard letter 4

A standard letter has been prepared for use where QS has been granted in error and where Service Pension is not yet in payment, but a claim for Service Pension has been lodged.  It is attached at the end of this DI (Standard Letter 4- Rescinding a QS Decision (SP not yet in payment) refers).

Standard letter 5

A standard letter has been prepared for use where it is found that QS has been granted in error and where Service Pension is already in payment. It is attached at the end of this DI (Standard Letter 5- Cancelling Service Pension- Incorrect QS determination refers).

DVA age pension

If the pensioner is of Age Pension age and receiving Disability Pension, they may be eligible for payment of a Social Security Age pension through DVA.

All steps should be taken to assist the client in the completion of the relevant application forms.  Cancellation of Service Pension/grant of Age Pension should be synchronized, to ensure that the transfer does not financially disadvantage the client.

More information: For more information about grant of Age Pension by DVA, please refer to Section D of departmental instruction C32/97; plus  “Ongoing Transfers”, of departmental instruction C11/98 .

Centrelink assistance

Where the client is ineligible for payment of Age Pension through DVA, they should be assisted with their transition to Centrelink.  Rather than direct SOs into a blanket course of action, each case should be assessed on its merits and the best approach adopted.

Example: Some clients will not want DVA to contact Centrelink on their behalf, and it is not appropriate to make contact without their authority.  If the client agrees, DVA could make arrangements with Centrelink to provide the necessary information to Centrelink to expedite the claim.

Cancellation of SP

Due to no eligibility, there is no legal authority to make the payments of Service Pension.  Cancellation of Service Pension is a mandatory application of the Act.

Where Age Pension cannot be granted through DVA, but the client may be eligible for assistance from Centrelink, Delegates should arrange an appropriate Service Pension cut-off/Centrelink grant date, to avoid any financial hardship that may be caused by cancelling Service Pension before the client is put into payment by Centrelink.

Introduction

In some cases no initial, separate claim for QS has been made.  Therefore, the determination to be rescinded is the Service Pension determination, not the QS determination.

Distinction between determinations

A distinction should be made between the following determinations:

• QS determined under section 35H VEA; and

• Service Pension determined under either sections 36L (age), 37L (invalidity) or 38L (partner).

Standard letter6

Where no separate QS determination has previously been made, a standard letter has been prepared for use. It is attached at the end of this DI (Standard Letter 6- Canceling Service Pension- incorrect SP determination refers).

Overview

This section details under what circumstances the client has a right of review where a QS determination has been found to be not lawfully based, or Gold Card granted in error.

Rescinding  a previous decision

Where a decision is made rescinding an earlier:

• QS determination; or

• SP grant determination; or

• Gold Card eligibility determination

the client has a right of review under s57 against that decision.

Incorrect advice or issue of Gold Card

Where the correct QS, SP or Gold Card decision had been made, but the client:

• has been incorrectly advised; or

• granted SP in error; or

• issued a Gold Card in error

there is no right of review under s57 against the cancellation of pension or the recall of the Gold Card.

Overview

The legislative provisions previously discussed are reproduced here for reference.

Must be eligible for SP

35A

Eligibility for and payability of service pension

35A.  Before a person can be paid a service pension under this Part:

(a)the person must be eligible for the pension; and

(b)there must be nothing in this Act that makes the pension not payable to the person (for example, a dual pension provision): the pension must be "payable to the person" .

QS claim

35H

Duties of Commission in relation to claim

35H.  (1)  When the claim is submitted to the Commission, the Commission must consider all matters that are, in the Commission's opinion, relevant to the claim and must then determine the claim.

(2)  In considering the claim, the Commission must:

(a)satisfy itself with respect to; or

(b)determine;

(as the case requires) all matters relevant to the determination of the claim.

(3)  Without limiting subsection (1), the Commission, in considering the claim, must consider:

(a)the evidence submitted with the claim under section 35G; and

(b)any further evidence subsequently submitted to the Commission in relation to the claim.

Note:a claimant may apply to the Commission for review of a determination made under this section (see Division 16).

SP claim

36L, 37L, 38L

Duties of Commission in relation to claim

36L.  (1)  When the claim is submitted to the Commission, the Commission must consider all matters that are, in the Commission's opinion, relevant to the claim and must then determine the claim.

(2)  In considering the claim, the Commission must:

(a)satisfy itself with respect to; or

(b)determine;

(as the case requires) all matters relevant to the determination of the claim.

(3)  Without limiting subsection (1), the Commission, in considering the claim, must consider:

(a)the evidence submitted with the claim under section 36K; and

(b)any further evidence subsequently submitted to the Commission in relation to the claim.

Note:a claimant may apply to the Commission for review of a determination made under this section (see Division 16).

Recoverable overpayment

205

Recovery of overpayments

205.  (1)  Subject to subsection (1AA), this section applies where:

(c)an amount has purported to have been paid by way of pension, allowance or other pecuniary benefit under this Act, the Social Security Act, the Social Security Act 1947 or the Seamen's War Pensions and Allowances Act 1940 that was not lawfully so payable; or

Waiver of debts

206

Waiver etc. of debts

206.  (1)  The Commission may, on behalf of the Commonwealth, by determination in writing:

(b)waive or defer the right of the Commonwealth:

(i)to recover from a person the whole or a part of a debt that is payable by the person under or as a result of this Act; or

(ii)to recover debts under or as a result of this Act included in a class of debts specified by the Minister by notice in writing published in the Gazette ; or

Legal liability

If a person relies on incorrect advice or decisions given or made by an officer of this Department to the extent that they suffer financial loss, avenues are available for the person to lodge a compensation claim for that loss.

Duty of care

Commonwealth Government employees have a duty to the public to perform their duties to a reasonable standard of care.  This duty of care may be breached if negligent advice is given or negligent decisions are made.

Negligence

There may be grounds to claim compensation on the basis of negligence if it can be shown that:

• the duty of care to the standard required has been breached; and

• any financial loss suffered is reasonably connected to that breach.

Claims for negligence

If a veteran or partner claims negligence has occurred, there are avenues available in which to pursue a claim for compensation.  Dealt with in turn below, these include claims made under:

• Chief Executive Instruction 5.11;

• Compensation for Detriment caused by Defective Administration scheme (CDDA);

• Act of Grace payments.

Procedures

There is no prescribed form and a 'claim' of negligence does not have to be expressed in terms that formally seek compensation.  Where oral allegations are made of financial loss due to negligence, the person should be invited to put the allegations in writing.  The table below outlines the procedures to be followed if a claim of negligence is received.

Step

Action

1

Acknowledge the claim for negligence (Standard Letter 7 attached at the end of this DI refers)

2

Refer a copy of the claim to the Legal Services Group

3

Investigate the claim for negligence within the State Office

4

Prepare a report based on the investigation, with recommendations

5

Send the report & recommendations to the Legal Services Group

Claims under Chief Executive Instruction 5.11

Chief Executive Instructions (CEIs) are issued under the authority of the Financial Management and Accountability Act 1997 (FMA).  (CEI 5.11, Claims Against the Commonwealth, was formerly Finance Direction 21/3 issued by the Department of Finance and Administration under the authority of the Audit Act 1901).  The financial loss must generally have resulted from negligent advice or a negligent decision.

More information: CEI 5.11 is located in the Financial Management directory in the Commonwealth Managers' Toolbox.

CDDA

The compensation for detriment caused by defective administration (CDDA) scheme is administered by the Minister, or delegated person.  CDDA payments are generally only made where there is an element of unreasonableness.  The fact that an error was made does not automatically give rise to entitlement to a CDDA payment.  There must be an element of defective administration in addition to an incorrect decision being made.

AOG

Act of grace (AOG) payments are only made where:

• CEI 5.11 is not available; and

• there has been no defective administration.

AOG payments are rare and are only made in cases that involve the consideration of purely moral or humanitarian grounds or questions of legislation producing inequitable or anomalous results in particular cases.

Ex gratia payments not available

Ex gratia payments can be made where the Government makes a special appropriation for a class of people it considers need relief.  An ex gratia payment would not be made in relation to an individual affected by negligence.

Example: the drought relief fund set up to help farmers in financial difficulty.

Letters available

The table below gives an overview of the standard letters available and in what situations they should be used.

Letter name

Use where...

Standard Letter 1

• QS granted in error;

• SP claim not lodged; and

• SP not in payment.

Standard Letter 2

• QS granted in error;

• Claim for Gold Card lodged

• Gold Card granted in error

Standard Letter 3

• QS determination and advice to client correct;

• Gold Card granted in error

Standard Letter 4

• QS granted in error;

• SP claim lodged; and

• SP not in payment.

Standard Letter 5

• QS granted in error; and

• SP in payment.

Standard Letter 6

• SP granted in error;

• QS claim never lodged; and

• SP in payment.

Standard Letter 7

Acknowledgement of

• claim for compensation; or

• allegation of negligence.

Contact officer

Any queries about this DI should be directed to Freda Widawski of the Policy Section, Income Support, either via e-mail, or on telephone (02) 9213 7487.