Corstens and Secretary, Department of Social Services (Social services second review)

[2017] AATA 1038

Corstens and Secretary, Department of Social Services (Social services second review) [2017] AATA 1038 (9 June 2017)

Division:GENERAL DIVISION

File Number:           2016/5037

Re:John Corstens

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member Britten-Jones

Date:9 June 2017

Date of written reasons:        5 July 2017

Place:Adelaide

For the reasons given orally at the conclusion of the hearing, the Tribunal affirms the decision under review.

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Senior Member Britten-Jones

CATCHWORDS

SOCIAL SECURITY - Age pension - application to be treated as not being a member of a couple - requirement of special circumstance

LEGISLATION

Legislation

Social Security Act 1991 (Cth) s 24

CASES

Kazmierczak v Secretary Department of Families, Housing Community Services and Indigenous Affairs [2010] FCA 1084

SECONDARY MATERIALS

Secondary Materials

The Guide to Social Security Law Guideline 2.2.5.50

REASONS FOR DECISION

Senior Member Britten-Jones

5 July 2017

1. At the conclusion of the hearing of the above matter, the terms of the decision intended to be made and the reasons therefore were stated orally. After the giving of the oral reasons, the applicant, pursuant to subsection 43(2A) of the Administrative Appeals Tribunal Act 1975, requested the Tribunal to furnish him with a statement in writing of the reasons of the Tribunal for its decision.

2. The oral reasons for decision have been transcribed by DTI Corporation Australia Pty Ltd.  Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reason for the said decision.

3. The said transcript is annexed hereunto and furnished to the applicant and to the respondent as it is the reason for the Tribunal’s decision. 

I certify that the following  paragraphs are a true copy of the reasons for the decision herein of Senior Member Britten-Jones

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Administrative Assistant

Dated: 5 July 2017

Date(s) of hearing:	9 June 2017
Applicant:	In person
Advocate for the Respondent:	Mr C Visser
Solicitors for the Respondent:	Dept of Human Services

EXTRACT OF TRANSCRIPT OF PROCEEDINGS

ORAL DECISION OF SENIOR MEMBER      [3.32 pm]

SENIOR MEMBER:  So what I will do is I will just give you some reasons first and then I will tell you my decision at the conclusion of those reasons.  So just bear with me, it will take about 10 or so minutes for me to deliver those reasons. 

My reasons are as follows.  The applicant, Mr Corstens, is a retired man living with his wife who is a Thai National in Thailand.  He disputes a decision that was made in January 2016 which saw his Age Pension change from a pension paid at a single rate to a pension paid at the rate of a person in a couple.

The relevant legislation is found in section 24(1) of the Social Security Act.  It provides that where a person is legally married to another person and the person is not living separately and apart from the other person on a permanent or indefinite basis, and the Secretary is satisfied that the person should for a “special reason” in the particular case not be treated as a member of a couple, then the Secretary may determine in writing that the person is not to be treated as a member of a couple for the purposes of that Act.

Section 24 is underpinned by the premise that a couple living together are able to pool their resources and achieve economies of scale. Therefore the Age Pension for a person in a couple is less than the Age Pension for a single person. However the Secretary has been given a discretion to treat a member of a couple on a single basis if a special reason can be established. A special reason must be considered in light of the purpose of section 24, which is clearly directed to the savings that are made by a couple who have an ability to pool their resources. If there is some reason why pooling of resources cannot take place then that would commonly be considered to be a special reason which would satisfy section 24(1)(c) of the Act.

In this case it is not in dispute that Mr Corstens is legally married and that he lives together with his wife, such that the first two criteria in section 24(1) are satisfied. The issue in this case is whether there is a special reason for Mr Corstens to not be treated as a member of a couple. If I am satisfied that there is a special reason then the discretion is enlivened to treat Mr Corstens as if he were not a member of a couple, thereby entitling him to the higher Age Pension.

Some of the background facts are as follows.  Mr Corstens met his wife in Thailand about six years ago and married her soon thereafter.  They considered living in Australia, but his wife decided against it after spending three weeks in Australia.  Since September 2016 Mr Corstens has lived full-time in Thailand with his wife and two out of her three children from a previous marriage.  His wife is 49 years old and does not work.  The children are aged 16, 19 and 24. The youngest is still at school.  The second child who is 19 years old is at university and still lives at home.  The 24 year old lives away.

Before moving to Thailand, but after he was married, Mr Corstens had various jobs in Australia and would travel back and forth between Australia and Thailand.  He retired from full-time work in April 2015.  Soon after their marriage Mr Corstens and his wife moved into a home which was purchased by the wife.  Mr Corstens contributed about 80 per cent of the purchase price and his wife contributed about 20 per cent of the purchase price from savings that she had.

In addition to the matrimonial home his wife owns a country house situated about two hours away.  In the last two years they have spent some time there to get away from the city.  This property was left to the wife when her father died about 10 or 15 years ago.

Mr Corstens’ main issue is that he considers that he does not have sufficient income to support his family.  His pension of $628 a fortnight is the only income that is used to support his wife and the three children.  He is finding it hard to survive on the pension alone.  His wife has not looked for work for some time and receives no benefits from the Thai Government.  His wife has no other significant assets besides the two properties.

Mr Corstens says that his wife does not contribute financially and that he pays all living expenses from his pension.  He has also used up all of his superannuation which was about $107,000 in April 2015. 

Mr Visser for the Secretary says that these circumstances do not amount to a special reason and do not justify treating Mr Corstens as though he were not a member of a couple.  Mr Visser says that despite not contributing income the wife contributes by way of the capital assets, namely the real estate.  The fact that they live in the wife’s house means that they pay no rent.  The house is owned freehold so that there is no mortgage.  Not having to pay rent or a mortgage is a significant saving of what is for most couples a significant expense.  The family also has the benefit of the country house that can be used for holidays.

The Federal Court has considered section 24 of the Social Security Act in the decision of Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, where it was said that the Act focused on a practical ability of the resources of a person’s partner being available for pooling the resources of a person holding the pension.

The relevant passages of that decision are found in paragraphs 40 to 42 where it refers to the practical benefits of enjoying the pooling of resources that usually occurs in a marital relationship, and that a number of decisions of the AAT shows circumstances will arise from time to time as a result of which the special reasons discretion should be exercised in favour of the pension holder on the basis that for practical reasons the income enjoyed by the pension holder’s partner is not available for pooling.

Further in that decision at paragraph 41 it is said that there is a particular focus under section 24 of the Act on the practical ability of the resources of the partner being available for pooling with the resources of the person holding the pension. This derives from another section of the Act which provides that where two people are members of a couple they will be treated as pooling their resources, both income and assets, and sharing them on a 50/50 basis.

Finally at paragraph 42:

It stands to reason that if for some legal or other practical reason the partner member of the couple cannot be treated as sharing income and assets then there is a ground for exercising the discretion under section 24 so as not to treat the holder of the pension as a member of a couple who are capable of sharing resources.

It is my conclusion that there is no reason to exercise the discretion in favour of Mr Corstens, because in this case there is a sharing of assets and a pooling of assets which are used for the welfare of the family.  It is not simply a matter of looking at the income position, but one must also look at the capital position which is relevant in this case because the contribution of the wife comes from the provision of real estate.

Accordingly I consider there is no ground for exercising the discretion under section 24(1) of the Act, and whilst I recognise that things are tight for Mr Corstens and his family in Thailand that is not unusual for people on the Age Pension and is not a reason alone for exercising the discretion. The decision of the Tribunal is affirmed.

Mr Corstens, that means that you have been unsuccessful with respect to your review, but I would like to thank you for your submissions and I would like to wish you well, but unfortunately I wasn’t able to find in your favour today.

MR CORSTENS:  I fully appreciate that.

SENIOR MEMBER:  All right.  Thank you, Mr Corstens.

MR CORSTENS:  Thank you.  Just one correction, you mentioned that my wife was 39 years of age, she’s 49 years of age.

SENIOR MEMBER:  Sorry, I did mean to say 49, so we will correct that in the transcript.  Thank you for the way that you have conducted yourself, Mr Corstens, at this hearing and thank you, Mr Visser, for your assistance, in particular the helpful written submissions.

MR VISSER:  Thank you.

SENIOR MEMBER:  Thank you, this hearing is now concluded.

END OF ORAL DECISION   [3.45 pm]