Gerald Elkan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2013] AATA 462
[2013] AATA 462
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/4654
Re
Gerald Elkan
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 5 July 2013 Place Sydney The Tribunal affirms the decision under review.
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Senior Member J F Toohey
CATCHWORDS
SOCIAL SECURITY – age pension – whether applicant a member of a couple – applicant and partner financially independent – Tribunal satisfied applicant was a member of a couple –
whether any special reason why applicant should not be treated as a member of a couple – Tribunal not satisfied special reason existed – decision under review affirmed
LEGISLATION
Social Security Act 1991 ss 4, 24
CASES
Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143
Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546
Re Burkett and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) 126 ALD 151
Re Croy and Secretary, Department of Social Security (1996) 42 ALD 792
Re Hawkins and Secretary, Department of Social Security (1996) 44 ALD 651Re Secretary, Department of Family and Community Services and VBH and Another (2006) 89 ALD 293
SECONDARY MATERIALS
Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991
Guide to Social Security Law
REASONS FOR DECISION
Senior Member J F Toohey
5 July 2013
BACKGROUND
Mr Gerald Elkan seeks review of a decision that he is not entitled to the age pension because he is a member of a couple whose income exceeds the allowable fortnightly limit.
Mr Elkan and Ms Fay Cochran have been partners for nearly 20 years. They are not married. Mr Elkan has two adult children and Ms Cochran has three. Their family and friends regard them as a couple. They have lived together since September 2002. For reasons which are discussed later, they have always kept their financial affairs separate.
On 8 November 2011, Mr Elkan claimed an age pension and pension bonus. He identified Ms Cochran as his partner. In December 2011, Centrelink determined that Mr Elkan was a member of a couple with Ms Cochran and, taking into account their combined income, he did not qualify for the age pension.
In September 2012, the Social Security Appeals Tribunal (SSAT) affirmed Centrelink’s decision and also decided there was no special reason Mr Elkan should not to be treated as a member of a couple for the purposes of the age pension.
Mr Elkan contends that he and Ms Cochran are financially independent and he should be not regarded as a member of a couple for the purposes of the age pension.
RELEVANT LEGISLATION
The rate at which a person is paid a social security payment is calculated according to provisions in the Social Security Act1991 (the Act). A person who is a member of a couple is paid less than if she or he were single, the rationale being that a couple can pool resources and live more cheaply than if each were single.
By s 4(2) of the Act, a person is a member of a couple if he or she has a relationship with another person (the partner) to whom he or she is not legally married, and their relationship is, in the Secretary's opinion, a de facto relationship.
Section 4(3) of the Act provides that, in forming an opinion about the relationship between two people, the Secretary must have regard to all the circumstances of the relationship including, in particular:
(a)the financial aspects of the relationship, including:
(i) any joint ownership of real estate or other major assets and any joint liabilities; and
(ii) any significant pooling of financial resources especially in relation to major financial commitments; and
(iii) any legal obligations owed by one person in respect of the other person; and
(iv) the basis of any sharing of day‑to‑day household expenses;
(b)the nature of the household, including:
(i) any joint responsibility for providing care or support of children; and
(ii) the living arrangements of the people; and
(iii) the basis on which responsibility for housework is distributed;
(c)the social aspects of the relationship, including:
(i) whether the people hold themselves out as married to, or in a de facto relationship with, each other; and
(ii) the assessment of friends and regular associates of the people about the nature of their relationship; and
(iii) the basis on which the people make plans for, or engage in, joint social activities;
(d)any sexual relationship between the people;
(e)the nature of the people's commitment to each other, including:
(i) the length of the relationship; and
(ii) the nature of any companionship and emotional support that the people provide to each other; and
(iii) whether the people consider that the relationship is likely to continue indefinitely; and
(iv) whether the people see their relationship as a marriage‑like relationship or a de facto relationship.
The Secretary must not form the opinion that a person is in a de facto relationship if the person is living separately and apart from his or her partner on a permanent or indefinite basis: s 4(3A).
The Secretary may determine that a person is not to be treated as a member of a couple for the purposes of the Act if satisfied that the person should, for a special reason in the particular case, not be treated as a member of a couple: s 24(2).
These provisions apply equally to determinations by the Tribunal.
THE ISSUE
I have to decide:
(i)whether Mr Elkan was a member of a couple when he applied for the age pension on 8 November 2011;
(ii)if he was, whether there is any special reason he should not be treated as a member of a couple.
There is no dispute about the facts. Mr Elkan and Ms Cochran have been frank about all aspects of their relationship. Ms Cochran does not wish to claim an age pension, and whether she would qualify if she did is not something I have to, or even can, consider here.
IS MR ELKAN A MEMBER OF A COUPLE?
Mr Elkan does not dispute that, in all respects other than financial, his relationship with Ms Cochran is like that of any other de facto couple. His present financial circumstances and his uncertain future cause him a great deal of stress and anxiety, and put some strain on the relationship, but they remain a couple.
Mr Elkan and Ms Cochran have always kept their financial affairs separate and private. In 2002, they sold their separate homes in order to buy a home and move in together. Because Mr Elkan did not have sufficient proceeds from the sale of his property, Ms Cochran bought the unit in which they currently live in her name only. It was subject to a mortgage which she paid. They have always shared the outgoings and household expenses. Mr Elkan estimates his contribution to be around $18,100 each year.
Mr Elkan’s assets
Mr Elkan invested the proceeds of his sale but, over time, particularly during the Global Financial Crisis, the value of his assets has dwindled. His only income is from his investments which he has continued to draw down to meet his expenses. At the time he claimed the age pension, he had shares valued at $156,930, a car and a small amount in a bank account.
By the time of the SSAT hearing in September 2012, the value of Mr Elkan’s shares had reduced considerably. Since then, he has continued to sell shares in order to live and the total value of his assets is now around $90,000. Based on his current income and assets, he would qualify for the age pension if not treated as a member of a couple.
Deed entered into by Mr Elkan and Ms Cochran
In 2002, Mr Elkan and Ms Cochran signed a Deed which was subsequently approved by the Supreme Court of New South Wales. It acknowledged that neither expected to receive a share or interest from the other’s estate or be provided for in the other’s will. It released each other and each other’s children, from all rights or claims if they separated, or after the other’s death, in order to “promote harmony between themselves and to reduce the possibility of resorting to litigation, including any litigation relating to the estate of either of them”.
Although the decision of the SSAT describes the purpose of the Deed as being to secure the respective inheritances of their children, Mr Elkan gave evidence that its principal purpose was to preserve each other’s financial independence and prevent the kind of conflict that can happen between families. This is borne out by the fact that the Deed provides for the possibility Mr Elkan’s and Ms Cochran’s separation as well as their deaths.
Ms Cochran’s assets
Ms Cochran’s assets include a pension plan, a share portfolio, a property at Hawk’s Nest and bank accounts. She was widowed when she was young and worked hard to raise three children on her own. Her financial independence is important to her. She has made it clear to Mr Elkan that she will not support him once his money runs out and, when that happens, that he may have to move out. Ms Cochran confirmed this in a recent letter to this tribunal, and the SSAT decision records that she told the SSAT it is more important to her to maintain her financial independence than to continue with the relationship. Mr Elkan accepts and respects her stance but it places him in a precarious position.
Consideration
The factors in s 4(3) are not exhaustive, and nor is one any more important than any other. What comprises a marital relationship will vary for each couple.
In Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546, French J considered a number of authorities on the meaning of the term “marriage-like relationship” and said, at 555:
Having regard to the current provisions of s 4(3) and the approaches discussed in the earlier authorities mentioned, a decision-maker concerned with whether an unmarried person is in a marriage-like relationship with another person of the opposite sex:
1Must have regard to their interpersonal relationship as a whole not limited by the factors listed in s 4(3).
2Must have regard to each of:
(a)the financial aspects of the relationship;
(b)the nature of the household;
(c)the social aspects of the relationship;
(d)any sexual relationship between the people;
(e)the nature of the people’s commitment to each other.
3In having regard to the preceding five matters, must have regard to all factors relevant to each and, in particular, must have regard to the factors listed under each heading in s 4(3).
4Must specifically consider the total picture of the relationship created by all of these factors bearing in mind that consideration must be given to those which weigh against a marriage-like relationship and those which weigh in favour of it.
5Must undertake the preceding consideration bearing in mind that a marriage-like relationship is not disclosed solely by any one of the following matters:
(a)financial cooperation;
(b)cohabitation;
(c)a sexual relationship;
(d)cooperative household arrangements;
(e)mutual commitment.
His Honour noted, at 556:
The judgment to be made is difficult and, once out of the range of obvious cases falling within the core concept of ‘marriage-like’, will be attended by a degree of uncertainty. Indeed, it may be that different decision-makers on the same facts could quite reasonably come up with different answers.
In Re Secretary, Department of Family and Community Services and VBH and Another (2006) 89 ALD 293, the Tribunal observed that criteria in s 4(3) have some subjective components but are overwhelmingly objective in nature and construct:
Additionally, the opinion formed about the relationship is not that of the parties to it, but the regard the Secretary is to have to its circumstances, including the criteria [at s 4(3)]. The opinion will be based on the whole of the circumstances of the relationship, viewed objectively.
Considered as a whole, everything about the relationship between Mr Elkan and Ms Cochran points to their being members of a couple. Their financial independence does not outweigh the combined weight of all the other factors. As with any relationship, things have changed over time and I accept that Mr Elkan’s current financial circumstances puts a strain on him as an individual and on them as a couple but I am not satisfied that the essential nature of their relationship has changed.
The fact that Ms Cochran says it is more important to her to maintain her financial independence than to continue with the relationship with Mr Elkan raises the question of the nature of her commitment to him. But they remain living together and, even if her commitment is tested in time, that was not the case when he applied for the age pension.
For these reasons, I am satisfied that Mr Elkan is in a de facto relationship with Ms Cochran and so is a member of a couple for the purposes of the assessing his entitlement to the age pension.
IS THERE A SPECIAL REASON WHY, IN HIS PARTICULAR CASE, MR ELKAN SHOULD NOT BE TREATED AS A MEMBER OF A COUPLE?
Mr Elkan says there are special reasons why he should not be treated as a member of a couple. He finds his present circumstances very difficult. Previously, he had a successful professional career and his friends are financially secure. He never expected to be in this position, with his assets dwindling and his future uncertain. He has tried, but been unable to find work. He worries about what lies ahead.
Until 2008, Mr Elkan and Ms Cochran would often travel together, each paying their own way. As his financial circumstances changed, Mr Elkan felt unable to join her on any extended travel. In 2010 and 2011, she travelled overseas and he stayed at home. At the end of this year, she will turn 70 and her children have invited him to join them on a holiday to celebrate. He has declined because of his financial situation. He feels he is no longer a member of a couple in the way he used to be.
In 2005, Mr Elkan was diagnosed with a mild cognitive impairment. It affects his memory and his ability to participate in conversations in the way he used to. His symptoms only add to his anxiety but the biggest stressor in his life now is that, if he cannot support himself, he may have to move out of his home. I accept and understand that Mr Elkin’s diagnosis causes him concern but the symptoms he describes are still mild and it is not of itself a special reason not to treat him as a member of a couple.
Consideration
The Act does not describe what circumstances might amount to special reasons for the purposes of s 24(2) but the context and purpose of s 24 was described in the Explanatory Memorandum to the Social Security Legislation Amendment Bill (No. 4) 1991 as follows:
[T]here is justification in paying a higher rate to an unpartnered person than to a member of a couple if both members of the couple are living together. This justification is based on the premise that the unpartnered person does not enjoy the same economies of shared living costs as does the member of a couple in those circumstances. If the economies of scale are not available to the member of a couple because he or she is living apart from his or her partner because, for example, of the illness of one or both members of the couple, then each would face similar living costs as an unpartnered person.
In Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143, the Tribunal identified the question as being whether, for practical reasons, a member of a couple could not reasonably be expected to enjoy the benefit of pooling of resources that usually occurs in marital relationship.
In Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084, the Federal Court agreed, and said the case law confirms that:
… there is a particular focus under 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.
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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 ground for exercising the discretion under s 24 so as not to treat the holder of the pension as a member of a couple who are capable of sharing resources.
An inability to share in income and assets and pool resources might arise, for example, where one member of a couple has a financial manager appointed because of a cognitive impairment and the terms of the appointment in effect preclude a sharing of resources, or where funds are held in trust, or a court has imposed restrictions on how funds may be applied: see the Guide to Social Security Law issued by the Secretary. It might also arise where members of a couple are separated by illness or imprisonment: ReHawkins and Secretary, Department of Social Security (1996) 44 ALD 651.
The Secretary submits that a key feature in the above examples is that the situation giving rise to the exercise of the discretion in s 24 will generally be one which is outside of the control of the people involved. I agree. To the extent that one or both members of the couple have a choice in the matter, it will be less appropriate to exercise the discretion.
In Re Burkett and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs (2012) 126 ALD 151, Ms Burkett and her partner managed their finances separately and agreed that neither was to be held responsible for the other's children. She was refused family tax benefit on the ground that their combined income exceeded the allowable limit. She was considering ending her relationship because of the very difficult financial position she was in. The Tribunal considered both members of the couple had a free choice in their arrangement and declined to exercise the discretion in s 24.
In Re Croy and Secretary, Department of Social Security (1996) 42 ALD 792, the applicant and his wife had entered into a premarital agreement by which they would be financially independent. He was refused an age pension on the basis of the value of his wife's assets. The Deputy President (at para [10]) declined to exercise the discretion in s 24 on the ground that it should only be exercised:
when it is not reasonable for the person in question to be expected to seek the support of the other member of the couple, or when it is not reasonable to expect that other member to give support to the person.
I accept that Mr Elkan's present circumstances are largely out of his control in that he is the one whose resources are being rapidly diminished. However, he still has the benefit of pooling resources with Ms Cochran in that they share a home and expenses.
Although I have not heard from her, I can understand Ms Cochran’s determination to remain financially independent. However, nothing precludes her from supporting Mr Elkan if she chooses to do so. It is not necessary or inevitable that their relationship must end, or that Mr Elkan will have to move out of their home when his own finances are exhausted.
CONCLUSION
I have no doubt that Mr Elkan’s circumstances are very difficult but I am not satisfied that special reasons exist that mean that he should not be treated as a member of a couple. For these reasons, I affirm the decision under review.
I certify that the preceding 40 (forty) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey.
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Associate
Dated 5 July 2013
Date(s) of hearing 3 July 2013 Applicant In person Solicitors for the Respondent Mr C Hutchins, Department of Human Services, Program Litigation and Review Branch
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