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

[2017] AATA 2278

Hirst and Secretary, Department of Social Services (Social services second review) [2017] AATA 2278 (13 October 2017)

Division:GENERAL DIVISION

File Number:           2017/2377

Re:Peter Hirst

APPLICANT

AndSecretary, Department of Social Services

RESPONDENT

DECISION

Tribunal:Senior Member R W Dunne

Date:13 October 2017

Date of written reasons:        17 November 2017

Place:Adelaide

The Tribunal sets aside the decision under review.

........................................................................

Senior Member R W Dunne

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – age pension – whether the applicant is a member of a couple – payment of age pension to applicant at single rate – exercise of discretion to treat applicant as a single person – whether there is a special reason for applicant not to be treated as a member of a couple – for special reason to apply, applicant should not be treated as a member of a couple – decision under review set aside.

LEGISLATION

Social Security Act 1991 (Cth), ss 24(1), 55 and 1064-A2

Social Security (Administration) Act 1999 (Cth)

CASES

Boscolo v Secretary, Department of Social Security (1999) FCA 106

Cocks v Centrelink [2000] FCA 1248
Re Purdie and Secretary, Department of Social Services [2013] AATA 743

Re Liang and Secretary, Department of Social Services [2015] AATA 275

SECONDARY MATERIALS

Guide to Social Security Law

REASONS FOR DECISION

Senior Member R W Dunne

1717 November 2017

INTRODUCTION

1. The applicant in this case is Peter Hirst.  He married Ms Lee on 20 March 2011.  Mr Hirst was granted age pension on 4 May 2012.  He resides in Australia and Ms Lee resides in South Korea.

2. Mr Hirst has been paid age pension at the partnered rate since the date of grant, taking into account both his and his wife’s income and assets. When he asked Centrelink to pay him age pension at the single rate, this was refused. He was treated as a member of a couple for the calculation of his age pension and Centrelink refused to apply s 24 of the Social Security Act 1991 (“the Act”) in his case.

3. When the applicant applied for review of the Centrelink refusal, the AAT 1 also found that s 24 of the Act should not be applied in calculating his rate of age pension. The applicant then applied to this Tribunal (AAT2) for further review.

   THE HEARING

4. At the hearing, Mr Hirst represented himself. Centrelink was represented by Mr C Visser (from the Department of Human Services). I admitted into evidence the T Documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975.[1]

   [1] Exhibit R1.

   Issue for the Tribunal

5. The issue for this Tribunal is to determine the rate at which the applicant’s age pension is payable and whether the discretion to treat the applicant as a single person should be exercised in the applicant’s favour.

   LEGISLATION

6. The legislation relevant in this case is set out in the Act and the Social Security (Administration) Act 1999 (“Administration Act”).

7. Section 55 of the Act provides that a person’s age pension rate is worked out using Pension Rate Calculator A at the end of s 1064 (in Part 3.2). Section 1064-A2 is set out under Pension Rate Calculator A. Section 1064-A2 is a deeming provision which provides that, where two people are members of a couple, they will be treated as pooling their income and assets and sharing them on a 50/50 basis.

8. Section 24 of the Act relevantly reads as follows:

   “Person may be treated as not being a member of a couple (subsection 4(2))

   (1)  Where:

   (a)a person is legally married to another person; and

   (b)the person is not living separately and apart from the other person on a permanent of indefinite basis; and

   (c)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;

   the Secretary may determine, in writing, that the person is not to be treated as a member of a couple for the purposes of this Act.

   …”

   BACKGROUND

9. The following background and findings are based largely on the Secretary’s statement of facts, issues and contentions.  However, I am satisfied of the material facts on the balance of probabilities and the findings are set out to the extent they are, in my opinion, relevant. 

10. In late 2015, Mr Hirst requested a review of his rate of age pension as his rate of payment had reduced following an income and assets review in October 2015.  As part of this review, it appears that Ms Lee’s salary had been incorrectly coded and was subsequently corrected.  The correction was applied and this reduced the applicant’s age pension payment and he was informed that Ms Lee’s correct income would be taken into account in the ongoing calculation of his age pension rate.  On 28 April 2016 when Ms Lee’s salary was corrected and the change was applied with effect from 21 October 2015, this reduced the applicant’s age pension payment.  He asked for a review and an authorised review officer affirmed the calculations.  On seeking further clarification he was advised that Ms Lee’s income would continue to be taken into account in calculating his rate of age pension, unless a decision was made that he was not a member of a couple. 

11. On 31 May 2016, the applicant applied to be paid the single rate of age pension because of special reasons in his case.  However, a decision was made by Centrelink that he was entitled to the partnered rate of age pension, only.  He had asked for his pension rate not to be reduced.  This was on the basis that he and Ms Lee were not able to pool their financial resources because she resided overseas.  The matter was referred to another authorised review officer who affirmed the decision to pay him the partnered rate of age pension as it did not cause him to be in financial hardship. 

12. On 21 December 2016 the applicant applied to the AAT1, a hearing was held on 28 March 2017 and he attended the hearing by conference telephone from South Korea. Following the hearing, the AAT1 concluded that the applicant’s circumstances were not unusual or uncommon so as to constitute a special reason sufficient to warrant the exercise of the discretion conferred by s 24 of the Act. The AAT1 member found that the applicant’s rate of age pension was correctly assessed on the basis that he is a member of a couple with Ms Lee and as such is only entitled to the partnered rate of age pension.

13. On 25 April 2017, the applicant requested a review of the decision of the AAT1 by this Tribunal.  In his application for review, the applicant contended that:

    (a)the original Centrelink decision was wrong because it was based on expectations and precedents, rather than specific circumstances and actualities;

    (b)the subsequent review by the AAT1 affirmed the Centrelink decision by using the same flawed approach; and

    (c)precedent can never “rest upon its laurels” – precedent is only a guide.

    EVIDENCE

    Evidence of Mr Hirst

14. In giving his evidence, the applicant disagreed with the decision of the AAT1.  When asked whether there is (or was) a special reason for him not being treated as a member of a couple, he said there were a number of inadequacies or mistakes in the material before the Tribunal.  He said that the rate of his age pension had not been reduced in late 2015 and no reduction had in fact taken place until late in April 2016.

15. In addressing the question of special reasons, the applicant said that his wife did not contribute funds to his general living in Australia.  He said his wife was to come and live in Australia.  When they married in 2011 her mother was alive, but in January 2012 she died.  He said it was then possible to start pursuing his wife coming to live in Australia, which she always declared she wanted to do.  She is a high school teacher in South Korea.  In 2012 she was committed until the end of February 2013 to her role at the high school.  However, in December 2012 the applicant said he had what was described as a mild stroke.  In March 2013 another mild stroke occurred.  The mild strokes both occurred in South Korea and at that stage steps were under way to apply for Ms Lee to eventually become an Australian citizen – to come to live here on a permanent visa and gain Australian citizenship.

16. The applicant said that his wife was no longer as sure about his health and she started to back away.  Since that time, he had experienced a mild heart attack that occurred in England in November 2013 or 2014.  Then, when he arrived back in Adelaide on 9 June this year from South Korea, he had an incident at the airport and he left there in an ambulance and spent the rest of the day at the old Royal Adelaide Hospital.  He said that because he went in an ambulance from the airport his wife is less inclined to come and she is less inclined to send any of her money to this country. 

17. But, in the meantime, he would visit her in South Korea and try to maintain their marriage.  His wife is 17 years his junior, but the likelihood of getting any funds from her to enable him to continue to live in this country, as he does now, is very remote.  His wife will not help.  He said his wife effectively stated that she would get no social security when she came to live here.  She would have to give up everything in South Korea and had not been able to determine how much pension she would get if she resigned early or retired early from her long-term career as a high school teacher.  She had become obsessed with making provision for her retirement, and as a result of that, she was disenchanted with Australia.  He said at the moment, it is unlikely she will ever come to live in Australia, before 2023.

18. The applicant said his wife was recently in this country on a holiday.  But the cost of that holiday, not just the cost here in Australia but also the air ticket, the applicant had paid for.  He said he also pays for at least one return air ticket every year and he does that and has done so for many years by purchasing it as a London to Korea to Australia and then, return.  He said all of those air fares are paid for by him.  He has family and friends in England and usually stays there for a short period of time.  The reason for doing this is because the fare is significantly better value and also adds to the frequent flyer points.  As a result of living this way, his funds are gradually diminishing and as a result of having his Australian pension reduced still further, that rate of decline has increased.  He said he is not in financial difficulties but, with the rate of decline in his funds now increasing the more his resources will diminish and the more likely his wife will put off coming to Australia, and she will eventually say, no.  He then said that what has transpired, particularly in the last 18 months to two years, is that his marriage is under a lot of stress and it is on the point of failing.  He said he was never able to take advantage of a superannuation pot.  Now, effectively his savings are a poor equivalent of such a pot.  His wife will not top the pot up.  There are certain family circumstances in South Korea that she explained to him.  Some members of her family are wonderful, but others are disgraceful. 

19. In cross-examination by Mr Visser, the applicant said he owned his home in Adelaide out right.  At the time of the AAT1 hearing, he had close to a $100,000 in assets.  However, he said that that is no longer true.  The real figure is now somewhere around $78,000.  He said his house property is not included in that amount.  He said he has a small UK pension of about £80.00 and a small annuity from Canadian Life.

    CONSIDERATION

    What is the rate at which the applicant’s age pension should be payable, and should the discretion in section 24 of the Act, to treat the applicant as a single person, be exercised in his favour?

20. In the Secretary’s statement of facts, issues and contentions, Mr Visser has referred to Chapter 2.2.5.50 of the Guide to Social Security Law (“Guide”). The Guide provides guidance for decision-makers considering the application of s 24 of the Act. Chapter 2.2.5.50 of the Guide relevantly reads:

    “Section 24 is intended to be the option of last resort, and should only be applied when all other reasonable means of support have been explored and exhausted.

    …

    The discretion to treat a person as NOT being a member of a couple should be exercised ONLY where a full consideration of all the circumstances relevant to the individual’s case would make it unjust or unreasonable not to do so.

    …

    The couple’s circumstances should be compared to a couple in similar circumstances but for whom the special circumstances to apply section 24 do not exist.  There must be some degree to which circumstances are outside the couple’s or individual’s control and cannot be changed.

    …

    This discretion can ONLY be exercised ‘for a special reason in the particular case’. In general, the circumstances must be unusual, uncommon, abnormal or exceptional.  It is the context which generally determines whether the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.

    …

    Members of a couple in ordinary circumstances will pool their resources and share their expenses, making it cheaper for them to live than if they were 2 single people.  A significant body of case law has established that the inability to pool resources for their mutual benefit is a special reason to exercise the discretion in section 24.

    Generally, section 24 would NOT be appropriate where a couple is able to, but chooses not, to pool resources or where one or both members of a couple choose not to access a source of support which they could contribute to the pool.  Consideration should be given to whether either member of the couple has access to any social security or other support that has not been explored or realised.  Generally a person would be expected to claim any benefits to which they are entitled.

    …”

21. As is outlined in the previous paragraph, the Guide provides that s 24 is intended to be the option of last resort and should only be applied when all other reasonable means of support have been explored and exhausted. It identifies three questions for the decision- maker to consider while looking at the full circumstances of the case. These questions are:

    (a)Is there a special reason to be considered in this couple’s circumstances?

    (b)Is there a lack of ability to pool resources for the couple as a result of the circumstances?

    (c)Is there financial difficulty as a result of the couple’s circumstances?

22. There are numerous decisions of tribunals and courts that analyse the meaning of “special reason” in s 24(1)(c) of the Act. The questions that have been identified above have been considered in various cases. In RePurdie and Secretary, Department of Social Services,[2] Deputy President Hack was not persuaded that s 24 gave rise to three questions as part of an assessment of the application of s 24. He thought the section posed only one question and that is whether there is a special reason to treat an applicant as not being a member of couple. He did not consider that the other questions were appropriate or necessary. I agree with the view taken by Deputy President Hack. That view was also agreed to in Re Liang and Secretary, Department of Social Services,[3] where Senior Member Taylor thought that financial hardship was not a necessary pre-condition to satisfaction that the “special reason” criterion has been satisfied in a particular case. 

    [2] [2013] AATA 743.

    [3] [2015] AATA 275.

23. In Boscolo v Secretary, Department of Social Security,[4] the judgement of French J has commonly been regarded as providing the most authoritative guidance about the meaning to be accorded to the expression “special circumstances”.  In Boscolo (supra) the applicant was an age pensioner who ordinarily lived with his second wife in Western Australia. But for a number of months, in order to finalise a custody issue involving a child from his first marriage, he lived alone in Sydney. His second wife, who was receiving Newstart allowance and working part-time, remained in Perth because of her work and study commitments. The respondent refused Mr Boscolo’s application to be paid his age pension on a single basis when he was living in Sydney. The tribunal there affirmed the respondent’s decision, on the basis that Mr Boscolo’s circumstances were not sufficiently uncommon or exceptional to constitute a “special reason” for the purposes of s 24(1) of the Act. In setting aside the tribunal’s decision, French J emphasised that the s 24(1) criterion required regard to the position of the individual benefit or pension recipient, rather than the position of the couple. His Honour considered that the tribunal had erred by focussing attention on either the joint decision of Mr and Mrs Boscolo not to both move to Sydney, or the reason for that decision. The error was that the tribunal had failed to assess Mr Boscolo’s individual circumstances and French J was entirely sympathetic to the view that the “special reason” criterion had been satisfied.

    [4] (1999) FCA 106.

24. The decision of O’Loughlin J in the Federal Court in Cocks v Centrelink[5] is interesting.  It is mentioned in the Guide, but is not mentioned by Mr Visser in his list of authorities.  In Cocks (supra) the applicant was seventy years old and had been in receipt of an aged pension since 1992. In 1997 he married for a second time. The marriage took place in the Philippines and his wife, Thelma, was a Filipino national. She was some 36 years younger that Mr Cocks. They had a daughter, Christine, who had been earlier born in July 1996. Thelma and Christine continued to live in the Philippines and Mr Cocks visited them, staying up to six months at any one time. He explained that to stay longer would incur substantial costs, which he could not afford, in obtaining extensions to his visa. He therefore returned to Australia, where he resided, free of board, with his sister, at her farm on the west coast of South Australia. Centrelink, upon being informed by Mr Cocks of his marriage to Thelma, decided to treat him as a member of a couple. It reduced his pension entitlement from that applicable to a single person to an amount that represented the married rate. In the hearing before it, the question that had to be answered by the tribunal there was whether Mr Cocks was entitled to the benefit of s 24 of the Act. Strangely, Mr Cocks was partially successful before the tribunal. In its reasons, the tribunal concluded that, whilst Mr Cocks resided in Australia he was to be treated as not being a member of a couple for the purposes of payment of his pension at the single rate. But the tribunal went on to conclude that whilst Mr Cocks was overseas living with his wife in the Philippines he was then to be treated as a member of a couple and payment of the pension was to be at the married rate. Centrelink submitted that the Act provided a comprehensive scheme with reduced social security payments because of the pooling of resources of a married couple. It submitted that s 24 of the Act would only apply in situations where one member of the couple does not and cannot reasonably, and not as a matter of choice, expect to benefit from the pooling of resources that usually occurs in a marital relationship. In the opinion of O’Loughlin J, the tribunal recognised that Mr Cocks would not benefit from a pooling of resources whilst he was in Australia and his wife was in the Philippines, but it failed to recognise that Mr Cocks would likewise not benefit from a pooling of resources during the time as he was residing with his wife and child in the Philippines for she had nothing to contribute to the pool. Having correctly recognised that there existed a special reason in the particular case, he found that the tribunal failed to recognise that this speciality had the potential to exist just as much when Mr Cocks was living with his wife in the Philippines. O’Loughlin J recognised himself that this speciality existed and remitted the matter to the tribunal to be re-determined.

    [5] [2000] FCA 1248.

1. In the present case, I have reviewed the transcript of the hearing and of the evidence of Mr Hirst.  In speaking about his wife, he said:

   “…she has become obsessed with making provision for her retirement.  As a result of that, she is disenchanted with Australia. 

   So, what has transpired, particularly in the last two years – 18 months to two years – is that the marriage is under a lot of stress. … It’s on the point of failing.

   ...

   The essence of it all is that I’ve tried to provide for the long-term needs and the attitude of the Australian Government towards my wife coming to live in this country long-term, basically for the rest of her life and giving up her time in Korea, is in my opinion, not particularly pleasant.  She’s disenchanted with Australia, as a governmental element of Australia.  She is disenchanted with me.  I don’t have enough money for her. 

   …

   I am trying very hard to maintain the marriage, to not only maintain it, to make it thrive.  I phone her virtually every day to make sure that she’s up in time to go to the high school.  There’s a lot of pressure on at the high school.  I try to counteract that by being positive about it.  I am doing the best I can to ensure that the marriage is viable.

   …”

2. I asked the applicant about the land his wife had bought in Korea.  In answering, he said:

   “What she is trying to do is to make sure that when she has to retire she’s going to have some money in the background or a source of money in the background that she may have to utilise to ease the load of a person who moves into retirement funding.  Things are very different in Korea.” 

3. I then asked the applicant more about his wife’s family in Korea.  He said:

   “I learned only a few days ago, and she claims she told me at an earlier time, that she gave the equivalent of about $33,000 to her brother.  And the reason for this is because he’s been very badly treated by Korean society and he found himself literally in penury.  He was very seriously disadvantaged.  I didn’t know it was quite as much as that, but I told her, ‘If young Willy needs help we’d help him’.” 

4. I asked the applicant why he could not pool his resources with his wife.  He said:

   “Because she refuses to pool.  She declines to do so.  She is disenchanted with me because I don’t have as much money as she thought I had.  Despite these, shall we say, this pushing away, I still love the lady and I want the marriage to succeed.”

5. I was impressed with the openness and honesty that Mr Hirst gave in giving his evidence.  He was disturbed by the fact that, in dealing with Centrelink, what he had said had often not been believed.  I was satisfied that his story was truthful and beyond reproach. 

6. Given what he has said, I am satisfied that there is a “special reason” in Mr Hirst’s particular case for not treating him as a member of a couple.  I exercise the discretion to do so to apply from 31 May 2016, which Mr Visser agreed was the date Mr Hirst asked Centrelink to pay him Age Pension without regard to Ms Lee’s income, that is, at the single rate.

   DECISION

7. The decision under review is set aside.  In substitution for that decision, I determine that Mr Hirst should not be treated as a member of a couple from 31 May 2016.

I certify that the preceding 31 (thirty -one) paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne

.......................[Sgd].................................................

Administrative Assistant

Dated: 17 November 2017

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