Pietsch and Secretary, Department of Social Services (Social services second review)
[2024] AATA 2678
•31 July 2024
Pietsch and Secretary, Department of Social Services (Social services second review) [2024] AATA 2678 (31 July 2024)
Division:GENERAL DIVISION
File Number: 2023/0133
Re:Russell Pietsch
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member A. Nikolic, AM CSC
Date:31 July 2024
Place:Melbourne
The Tribunal affirms the reviewable decision.
....................[sgd]....................................................
Senior Member A. Nikolic, AM CSC
CATCHWORDS
SOCIAL SECURITY – age pension – whether Applicant is a member of a couple for purpose of
calculating rate of age pension – whether special reason not to treat Applicant as member of a
couple – claims of discriminatory application of the pension income test – claims of financial
difficulty – reviewable decision affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth)
Social Security Act 1991 (Cth)
Social Security (Administration) Act 1999 (Cth)
Social Security (Attribution of Income – Ineligible Deductions) Determination 2017 (Cth)
CASES
Ahamed v Secretary, Department of Social Services [2020] FCCA 1245
Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531
BQG21 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCA 865
Pelka v Secretary, Department of Family & Community Services (2006) 151 FCR 546
Secretary Department of Social Services v Garvey (1989) 22 FCR 132
SZOXP v Minister for Immigration and Border Protection and Another (2015) 231 FCR 1
SECONDARY MATERIALS
Department of Social Services, Guides to Social Policy Law: Social Security Guide (version
1.318, 1 July 2024)
REASONS FOR DECISION
Senior Member A. Nikolic, AM CSC
31 July 2024
INTRODUCTION
The Applicant, Mr Russell Pietsch, appeals from a decision by the Respondent not to apply the special circumstances provision at s 24 of the Social Security Act 1991 (Cth) (“the Act”). As a result, he has been paid age pension at the partnered rate since commencing a relationship with Ms Tresha Montecalvo on 27 October 2020.
The hearing was held by video at the Tribunal’s Melbourne Registry on 3 April 2024. Mr Pietsch was self-represented. The Respondent was represented by Mr Tim Noonan, a solicitor from Services Australia.
For the following reasons the Tribunal affirms the reviewable decision.
BACKGROUND FACTS
Mr Pietsch is 75 years old and has received age pension at the single rate since May 2014. He met Ms Montecalvo online when she was 18 and living in the Philippines.[1] They commenced a de facto relationship on 27 October 2020 and Mr Pietsch advised the Respondent about this on 5 November 2020.[2]
[1] Exhibit A9.
[2] Exhibit R1, 122.
On 1 April 2022, the Respondent wrote to Mr Pietsch to advise he was ineligible to be paid age pension at the single rate (“reviewable decision”):
‘Dear Mr Pietsch
We are writing to you about your Age pension . We have assessed your current circumstances to check if you are eligible to be paid as a single person under section 24 of the Social security ACT 1991, even though you have a partner. We have decided that you cannot be paid as a single person because you and your partner have not shown that there are special reasons for you to be paid this rate.
The subclass 820 that your partner holds allows her to work and stay in Australia, and one of the conditions for these Visas to be granted is for the person to have a sponsor. The Sponsor's obligation is to agree to support the Visa holder. You have also failed to respond to the letter sent in regards to this assessment. After carefully considering your circumstance we have decided that We will treat you as a couple’.
…[3]
(Errors in original)
[3] Ibid 55-6.
On 19 April 2022, Mr Pietsch asked for this decision to be internally reviewed.[4]
[4] Ibid 94-102.
On 8 June 2022, an Authorised Review Officer (“ARO”) of the Respondent affirmed the reviewable decision.[5]
[5] Ibid 103-5.
Mr Pietsch and Ms Montecalvo married on 15 October 2022.[6]
[6] Ibid 23.
On 7 December 2022, the Social Services & Child Support Division of the Administrative Appeals Tribunal (“AAT1”) affirmed the ARO decision.[7]
[7] Ibid 5-9.
On 4 January 2023, Mr Pietsch asked the General Division of this Tribunal to review the AAT1 decision.[8]
[8] Ibid 1-4.
ISSUE TO BE DECIDED
The issues to be decided are:
(a)whether Mr Pietsch and Ms Montecalvo are members of a couple pursuant to the criteria at s 4(3) of the Act; and
(b)whether, for a special reason, a determination should be made to treat Mr Pietsch as not being a member of a couple from 27 October 2020.
PROCEDURAL HISTORY
During the hearing, the Respondent accepted that Mr Pietsch’s trust income had not been fully updated since 30 June 2021. After hearing from both parties, the Tribunal decided to remit the matter to the Respondent under s 42D of the Administrative Appeals Tribunal Act 1975 (Cth) for reconsideration. Directions were issued by consent of the parties for the Respondent to state in writing what financial information is sought from Mr Pietsch to update his trust income, which Mr Pietsch undertook to provide after consulting with his accountant by no later than 10 May 2024. The following then occurred:
(a)Mr Noonan wrote to Mr Pietsch on 4 April 2024 and 18 April 2024 requesting Profit and Loss (“P&L”) statements for financial years (“FY”) ending on 30 June 2022 and 2023, for the four sources of income referred to in Mr Pietsch’s discretionary trust (“The Prairie Trust”).[9] Specific information requirements for each FY were referred to in dot point form. Mr Noonan also sought tax returns and a Depreciation Schedule for The Prairie Trust during the 2022 and 2023 financial years, and the personal tax returns of Mr Pietsch and Ms Montecalvo. Mr Noonan also referred in his correspondence to the following:
[9] Referencing pages 235-267 of the Tribunal documents (Exhibit R1). The sources of income referred to are Happy Helper Cleaning Services, Collective Succulent Sales, a business earning consulting fees, and another business earning ‘sales-network commission’.
(i)Section 1208B of the Act as it relates to permissible reductions regarding business and investment income;
(ii)Topic 4.12.7.20 of the Social Security Guide as it relates to allowable and non-allowable deductions for controlled private trusts and controlled private companies;
(iii)Chadbourne and Commissioner of Taxation [2020] AATA 2441, which reviewed authorities relating to permissible business deductions; and
(iv)A willingness to discuss the contents of his correspondence with Mr Pietsch’s accountant if required.
(b)On 26 April 2024, a lawyer from Victoria Legal Aid (“VLA”) contacted the Tribunal to request hearing documents ahead of an advice appointment with Mr Pietsch on 1 May 2024. These were sent to VLA on 29 April 2024. No further correspondence was received from VLA and Mr Pietsch remained self-represented.
(c)On 8 May 2024, Mr Pietsch contacted Mr Noonan to state, among other things, that the cost of providing the requested financial information was prohibitive, that he had provided ‘financial statements prepared by accountants to Centrelink every year’, and that the Respondent’s request seemed ‘out of the ordinary’. He sought ‘direction on this matter from the AAT’.
(d)On 21 May 2024, Mr Noonan responded to the Applicant (copying in the Tribunal), that a proper assessment of his net income for each business in The Prairie Trust could not be made without the information requested. In response to Mr Pietsch’s reference to the cost of his accountant providing this material, Mr Noonan suggested the Applicant ‘might consider preparing the statements [him]self’.
(e)On 22 May 2024, Mr Pietsch responded by email that he is ‘unable to meet [the Respondent’s] request’.
(f)A telephone directions hearing was conducted on 7 June 2024. Mr Noonan submitted that deciding whether s 24 of the Act should be applied required an assessment about whether Mr Pietsch is in financial difficulty, which turns on his assessable income as derived from the P&L statements for each business in the Prairie Trust. Mr Noonan said that based on currently available material, the Respondent maintained its position on Mr Pietsch’s application.[10] Mr Pietsch submitted that The Prairie Trust is treated as one business for accounting, reporting, and taxation purposes and he would not submit any further materials. Both parties agreed that a resumed hearing would not yield further probative information and it was agreed the Tribunal should decide the application on the evidence then available and written closing submissions. The Tribunal issued orders to this effect.
(g)Despite his earlier position, Mr Pietsch sent the Respondent and Tribunal a document on 9 July 2024 containing two brief extracts titled: ‘The Prairie Trust Depreciation Schedule 2022’ and ‘The Prairie Trust Depreciation Schedule 2023’. The document referred to two claims made by Mr Pietsch for depreciation deductions relating to a Kia vehicle acquired in late 2021 and six breeding dogs acquired in late 2022. Mr Noonan responded by email that this document did not advance an assessment about whether Mr Pietsch was in financial difficulties in 2022 and 2023, such as to enliven s 24 of the Act.
(h)Mr Pietsch was given until 22 July 2024 to provide any final submissions. On 22 July 2024 he submitted a seven-page document titled ‘Applicant Submissions’, after which the Tribunal reserved its decision.
[10] Subsequently formalised by letter dated 17 June 2024.
RELEVANT LEGISLATION AND POLICY
Age pension is a means-tested benefit determined using a pension rate calculator.[11] An ordinary income and assets test is applied, the lower of which prevails. The single rate of age pension is higher than if a person is a member of a couple because of the halving methodology at s 1064-E2 of the Act. Section 1064-A2 of the Act explains why:
‘Where 2 people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis (see points 1064-E2 and 1064-G2 below). They will also be treated as sharing expenses (e.g. for rent) on a 50/50 basis (see section 1070V)’.
[11] Section 55(a) read in conjunction with s 1064 of the Act.
Section 4(11) of the Act provides that a person is ‘partnered’ if they are a member of a couple. This includes a couple in a de facto relationship or who are legally married and not living separately and apart from the other person on a permanent or indefinite basis: ss 4(2)(a)-(b) of the Act.
Section 4(3) of the Act provides that in forming an opinion about the relationship between two people, the Secretary is to have regard to all the circumstances of the relationship. This includes particularly, but not exhaustively,[12] the following matters:
[12] Pelka v Secretary, Department of Social Security (2006) 151 FCR 546, 555 [46].
(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; and
(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.
Section 24 of the Act relevantly provides:
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 or 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 Guide
The Respondent referred to the Guide to Social Security Law (“the Guide”)[13] as supporting decision-makers who exercise powers and discharge functions under the Act. Although such policy is not binding on the Tribunal,[14] decision-makers undertaking merits review should generally apply it unless it is unlawful or ‘there are cogent reasons to the contrary.’[15] The Tribunal is mindful, however, of the need to consider the exercise of delegated powers based on the Act and the specific circumstances of each case. Having considered those aspects of the Guide relating to the income test and exercise of discretion under s 24 of the Act, the Tribunal sees no cogent reason to disregard this information, which can assist in promoting greater consistency in decision-making.
[13] Department of Social Services, Guides to Social Policy Law: Social Security Guide (version 1.318, 1 July 2024) < BQG21 v Minister for Immigration, Citizenship and Multicultural Affairs [2023] FCA 865, [11] (Mortimer CJ).
[15] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, 645.
Paragraph 2.2.5.40 of the Guide relates to the discretion to treat a person as not being a member of a couple for a special reason. It provides inter alia that all relevant circumstances must be considered. The Guide states it would not be appropriate to apply s 24 of the Act in circumstances where the couple can pool resources but choose not to, or if one or both members of the couple has access to other sources of support and has either not explored nor realised the support or chooses not to access it.
Paragraph 4.2.1.10 of the Guide reflects a five-step process in applying the pension income test, which encompasses any income earned, derived, or received by any means or from any source whether within or outside Australia, including from a spouse.[16]
[16] Pursuant to ss 8(1)-(2) of the Act.
EVIDENCE
Documentary evidence
The Tribunal has considered the documentary submissions of both parties.[17] The following was taken into evidence:
[17] Including the Respondent’s Statement of Facts, Issues, and Contentions dated 4 October 2023.
(a)Documents lodged by the Respondent numbering 344 pages;[18]
[18] Exhibit R1.
(b)Eight-page document from the Applicant dated 5 June 2023;[19]
[19] Exhibit A1.
(c)Six-page document from the Applicant dated 20 July 2023;[20]
[20] Exhibit A2.
(d)Fourteen-page document from the Applicant dated 11 March 2024;[21]
(e)One-page response from Mr Pietsch to questions from Centrelink dated 12 February 2022, covering two letters from Centrelink dated 28 April 2020 and 24 January 2022;[22]
(f)One-page letter from Mr Pietsch to Centrelink dated 2 May 2020, covering several income statements from Centrelink dated between 5 May 2020 and 16 December 2022;[23]
(g)Undated two-page letter from Mr Pietsch to the surgeons who performed his hernia operation on 8 September 2022. This refers to a medical document dated November 2023 and therefore appears to have been sent after this date;[24]
(h)Letter from general practitioner Dr Catherine Pye dated 7 December 2023;[25]
(i)Letter from Dr Pye dated 19 February 2024, covering several consultation notes;[26]
(j)Two-page letter of the Applicant dated 7 May 2024 titled: ‘For other matters raised by respondent, Tim Noonan 3rd April 2024’;[27]
(k)Five-page letter of the Applicant dated 7 May 2024 titled: ‘For the matter of Section 24 requiring a special reason or circumstance’;[28]
(l)One-page document sent by Mr Pietsch on 9 July 2024, containing two extracts titled: ‘The Prairie Trust Depreciation Schedule 2022’ and ‘The Prairie Trust Depreciation Schedule 2023’;[29] and
(m)Seven-page document titled ‘Applicant’s Submissions’ lodged by Mr Pietsch on 22 July 2024.[30]
[21] Exhibit A3.
[22] Exhibit A4
[23] Exhibit A5.
[24] Exhibit A6.
[25] Exhibit A7.
[26] Exhibit A8.
[27] Exhibit A9.
[28] Exhibit A10
[29] Exhibit A11.
[30] Exhibit A12.
Evidence of Mr Pietsch
Mr Pietsch does not dispute that he and Ms Montecalvo are members of a couple but has previously claimed ‘there has never existed any ability to pool resources’ with Ms Montecalvo.[31] His submissions largely centre on what he believes is the unfair and discriminatory application of the pension income test, which reduces his age pension once Ms Montecalvo earns income above a certain amount.[32] He cites past unhelpful legal advice and the absence of legal representation as inhibiting his ability to respond to the Respondent’s decision.[33]
[31] Exhibit R1, 93.
[32] See, for example, Applicant’s submissions dated 22 July 2024, 1 [3].
[33] Ibid 2 [14]-[15], [18], [20], 5 [28].
Mr Pietsch claims the Respondent has relied on ‘incorrect financial recorded (sic) on Centrelink’s Financial Statements such as listing assets not in existence for over 18 years’,[34] and refers to this as a ‘fictional assessment’.[35] He disputes that some assets in The Prairie Trust are assessable,[36] and cites financial hardship following hernia surgery in September 2022, caring expenses for his 97-year-old mother, impact of the COVID-19 Pandemic, and high inflation as special circumstances justifying his continued receipt of age pension at the single rate. Mr Pietsch contends it is ‘impossible’ for him to provide the information requested by the Respondent, because the cost of an accountant doing so would ‘bankrupt The Prairie Trust’.[37] He further contends it is ‘not correct to assume’ that his pooling of resources with Ms Montecalvo ‘automatically results in no hardship’,[38] and that his ‘circumstances do not match case law even though section 24 was never meant to be defined by case law (sic)’.[39] Mr Pietsch explains his ‘unique’ circumstances as follows:
’34. The applicant’s unique circumstance partnering with a very young woman has big cost benefits for government in ongoing aged care. Having an independence of using The Prairie Trust vehicles and a partner who already drives the applicant to appointments when needed based in this rural area this alone is and will save $1,000’s in aged care transport costs alone.
The unique nature of the applicant’s partnership means his partner is able do much more in helping the pension aged applicant than would be the case if the Applicant’s partner was of pension aged. This is not a common or usual situation. This unique partnership will save the government aged care system more that it would cost to affirm the applicant’s Section 24 application.
35. The Applicant has attempted to explain the nature of his hardship but the discriminatory nature and inequity of his circumstances seems to be conveniently ignored or dismissed...[40]
[34] Ibid 2 [7].
[35] Ibid 3 [23].
[36] Ibid 4 [25].
[37] Ibid 5 [29].
[38] Ibid 5 [31].
[39] Ibid 5 [32].
[40] Ibid 6-7.
Mr Pietsch’s oral testimony is summarised as follows:
(a)He and Ms Montecalvo experience financial hardship and the data being relied upon by Centrelink in setting his age pension is not current.
(b)Mr Pietsch said he has always been a Director and beneficiary of The Prairie Trust since its establishment,[41] and that Ms Montecalvo is now also a Director and beneficiary. Mr Pietsch explained that The Prairie Trust has an entity called Pietsch Nominees, which in turn controls two businesses called Happy Helper Cleaning Services (“cleaning business”) and Collective Succulent Sales (“succulents business”).[42] He contends, however, that these are ‘essentially one entity’. In documentary evidence Mr Pietsch said he was advised by his accountant to ‘avoid normal wage employment by contracting all work to the Prairie Trust business’.[43]
[41] Exhibit R1, 21.
[42] These were registered as businesses on 9 June 2021 and 12 November 2021 respectively – see Exhibit R1, 20.
[43] Exhibit R1, 90.
(c)Mr Pietsch was taken by Mr Noonan through the Financial Statements for the Prairie Trust for financial years ending on 30 June 2021, 30 June 2022, and 30 June 2023. This evidence is summarised as follows:
(i)Mr Pietsch agreed that total income in the Prairie Trust for the year ending on 30 June 2021 was $91,678, which included income from his work as a consultant of $71,183, but only resulted in a profit of $13,428.[44] He agreed that he claimed $78,250 in expenses that FY, which included rent of $10,192 for the portion of his residential home used for consultancy work. He also claimed production costs of $33,084. When asked by Mr Noonan what this was for, Mr Pietsch replied: ‘all expenses involved … government fees, accountancy fees, everything attributable to the business … the insurance alone is $4,500’. The Tribunal notes there are multiple entries in the expenses schedule including for Accounting Fees ($1,465), Bookkeeping Fees ($1,950) unspecified Fees and Charges ($1,955), Hire of Plant & Equipment ($2,760), Insurance ($1,494), Telephone ($2,259), Printing & Stationary ($4,824), and Staff Training & Welfare ($8,466).
(ii)Mr Pietsch agreed that total income in the Prairie Trust for the year ending 30 June 2022 was $109,755, consisting of $57,723 from his consultant’s work, $20,350 from the cleaning business, and $30,738 from the succulents business.[45] He also agreed that expenses claimed that year amounted to $108,228, resulting in a loss of $59,563. When asked by Mr Noonan what the depreciation expense of $52,554 was for, Mr Pietsch said it related to a new vehicle purchased at the end of 2021 for business purposes, which was depreciated in its entirety that financial year.
(iii)Mr Pietsch agreed that total income in The Prairie Trust for the year ending on 30 June 2023 was $134,619, which consisted of $73,775 from his consultant’s work, $52,666 from the cleaning business, and $6,756 from the succulents business.[46] He also agreed that expenses claimed that year amounted to $61,087, resulting in a small profit of $2,532. Mr Pietsch said this was not distributed to him or Ms Montecalvo as sole Trust beneficiaries.
(iv)Mr Pietsch estimated his income this financial year will ‘be less’ because of a downturn in the succulents business and reduced consultancy work. He is unable to estimate what this will be but claimed there is a shortfall of approximately $423 per week between his pension income and the actual cost of living expenses he and Ms Montecalvo incur. He agreed this estimate did not include income from businesses in The Prairie Trust.
(d)Mr Pietsch said he continues to experience pain and diminished mobility after a hernia operation two years ago. He referred to undertaking a ‘lot of research’ and having tests scheduled to determine the cause of his symptoms. He said doctors told him his ‘structures are relatively good’ but believes his symptoms are of ‘muscular’ origin where ‘electrical build-up discharges into [his] legs’. He refers to ‘good and bad days’. Mr Pietsch said he last visited a client in February 2024 and spends a lot of time working on a computer. He said there are limits to his sitting tolerance depending on what sort of day he is having. By way of example, he referred to a deep tissue massage the evening prior to the hearing and a ‘long hot bath’ the following morning, such that he is ‘walking around relatively freely’. On other days he said that his mobility can be quite affected, requiring stretching exercises to manage pain. Mr Pietsch said he has not done any work in the cleaning business for 18 months, which is exclusively undertaken by Ms Montecalvo.
(e)Mr Pietsch said it was hard to produce income during the COVID-19 lockdown and high inflation had eroded his purchasing power. He feels that Centrelink is ‘caught up in a lot of rules and regulations’ preventing proper consideration of his financial circumstances. He gave the example of expenses incurred in helping care for his mother. When asked by Mr Noonan what this involves, Mr Pietsch said it was ‘basically travelling costs – fuel costs’ to the care facility she now resides in.
(f)Mr Pietsch contends that Centrelink is basing its decision on the $13,428 profit generated by the Prairie Fund in the 2021 FY but disregards information for the following two financial years. He referred to Ms Montecalvo being 51 years younger than him and the ‘unique situation’ this presents when assessing financial circumstances. He said the current income calculations applied by Centrelink ‘are not conducive to basic living’ and believes he should retain the single rate of pension because of the special circumstances raised by his case.
[44] Exhibit R1, 235-49.
[45] Ibid 250-9.
[46] Ibid 260-7.
CONSIDERATION
Members of a couple?
Mr Pietsch and Ms Montecalvo have been members of a couple since 27 October 2020. They married on 15 October 2022 and have since lived together on a permanent basis. They do not lead separate lives[47] but hold themselves out as married, pool their resources, share expenses, provide each other with mutual support, and have commenced business ventures. There are no discernible practical or legal reasons they cannot share income and assets or benefit from economies derived from common living arrangements.
[47] SZOXP v Minister for Immigration and Border Protection and Another (2015) 231 FCR 1, [46]-[47], [53] (Kenny, McKerracher, and Edelman JJ).
The remaining question is whether, for a special reason within the meaning of the Act, Mr Pietsch should not be treated as a member of a couple from 27 October 2020.
Special reason not be treated as a member of a couple?
Justice French has held that the task of determining the existence of a special reason is ‘to focus on the position of one person, not the couple, and to assess whether that person should for a special reason not be treated as a member of the couple’.[48] His Honour stated:
‘18. The word “special” conditioning “reasons” or “circumstances” guards the entrance to the exercise of many different statutory discretions. It is generally futile to search for its meaning in terms of other words. It is in essence instrumental, a direction to the decision-maker that the discretion it constrains is not lightly to be enlivened. A Full Court has spoken of it as having content which is “...sufficiently understood not to require judicial gloss”… If helpful to speak in terms of its meaning almost all of it comes from context. Thus man may be “special” in relation to animals generally but “...when you are speaking of poets, he may need to be a Milton”… It is an elastic instruction suitable for application across a range of situations … This is just another way of pointing to its instrumental character. That application is not to be confined by precise limits or rules … Circumstances or reasons will not necessarily fall outside the designation of “special” because they fall within a class which is widely defined or because they are circumstances or reasons which can be foreseen before they arise … The core of the requirement for “special circumstances” or “special reasons” is that there be something unusual or different to take the matter the subject of the discretion out of the ordinary course … But that does not require that the case be extremely unusual, uncommon or exceptional … In Beadle (supra) the Full Court, having concluded that the term “special” was sufficiently well understood not to require a judicial gloss said the matter was one for the decision-maker …
19. The decision-making process under s 24 is notionally in two stages. First, is the assessment whether there is a special reason in the particular case for which the Secretary is satisfied that the person the subject of his discretion should not be treated as a member of a couple. There follows the determination that the person is not to be treated as a member of a couple. The latter determination involves the exercise of discretion although as a practical matter assessment and determination will tend to be rolled up as one decision’.[49]
(Citations removed. Emphasis added.)
[48] Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531, 536 [20].
[49] Ibid 535-6 [18]-[19].
In Ahamed, the Federal Circuit Court of Australia undertook a review of several authorities relevant to the phrase ‘a special reason’ or ‘special circumstances’.[50] His Honour concluded at [16] that what emerges from these cases is that:
‘…couples are expected to pool resources. In the ordinary run of cases this presents few difficulties for decision makers, as a spouse will be entitled to half of a couple’s pension unless they have other resources or income (whatever category of benefit or pension one considers). That a couple in this situation have expenses greater than income, or choose lifestyle arrangements that cost more than their income amount, is not generally a special circumstance. Where, however, one member of the couple has no work rights and no assets or pension, the section is usually satisfied. The difficulty arises where the lack of pension or employment is not simply a legal impediment (such as a visa condition) but rather a practical one. In these circumstances careful consideration of the specific circumstances of the couple is required’.
[50] Ahamed v Secretary, Department of Social Services [2020] FCCA 1245, [11]-[15] (“Ahamed”) (Riethmuller J).
Mr Pietsch submitted in a letter dated 7 May 2024 that his special circumstances include beginning ‘a long term relationship with an 18 year old woman [where the] age difference is 51¼ years’. He further submitted:
‘As well as this, the applicant no significant asset, cash funds or superannuation to assist in his aging years and cannot afford reduction or loss to his pension.
The applicant’s gene pool for longevity is very good. The grandmother on his father’s side lived to 101 years of age, and his mother is 98¼ and still living. As well as this, the applicant has keen personal interest in health & longevity. His experiences since suffering devastating vehicular injuries in 1984 make the applicant firm with his expectation to live beyond 100+.’
(Errors in original).
Mr Pietsch contends that ‘partnering with a very young woman has big cost benefits for government in ongoing care’. The Tribunal is unpersuaded, however, that the age difference between Mr Pietsch and his spouse, his intention to live beyond 100, and purported future savings for the taxpayer, constitute special reasons within the meaning of s 24 of the Act. Significant age differences between married couples are relatively common. The latter two factors relied upon by Mr Pietsch are aspirational at best.
The Tribunal rejects Mr Pietsch’s contention that the pension income test is applied to him in a discriminatory way.[51] The test is designed to enable recipients to ‘maintain a basic level of income’ when they are ‘unable to receive sufficient income to provide for themselves’.[52] Reduction in pension correlating with a spouse’s earnings is how the Act is intended to operate, and does not constitute a special reason not to treat him as a member of a couple.
[51] Exhibit R1, 16, 59-63.
[52] Secretary Department of Social Services v Garvey (1989) 22 FCR 132, 136.
In terms of Mr Pietsch’s claims regarding financial difficulty, there is no persuasive evidence that his circumstances constitute a special reason within the meaning of the Act. Mr Pietsch and Ms Montecalvo are joint Directors of Pietsch Nominees Pty Ltd, which receives income from four sources – sales-network commissions, Mr Pietsch’s consultancy work, and the cleaning and succulents businesses. Mr Pietsch’s evidence is that he and Ms Montecalvo direct all their income into Pietsch Nominees and claim considerable deductions to offset income earned across each source. Their financial circumstances are distinguishable from other pension recipients who do not have multiple income sources.
Total income before deductions from Mr Pietsch’s consultancy work and businesses in The Prairie Trust increased from $91,678 in the financial year ending on 30 June 2021, to $109,755 in the financial year ending on 30 June 2022, to $134,619, in the financial year ending on 30 June 2023. The 2022 P&L Statement of The Prairie Trust records a loss of $59,563 based on claimed expenses of $108,228. This included an instant write-off depreciation charge of $52,554, which Mr Pietsch attributed to the purchase of a new vehicle. On the information provided by Mr Pietsch, it is not possible to determine whether this is an allowable deduction for the purposes of social security assessments under the Act (rather than for tax purposes), or to accurately compare the expenses claimed against the multiple income sources within the Prairie Trust. On currently available information, however, the Tribunal is not satisfied he is in financial difficulties.
The Tribunal does not accept Mr Pietsch’s contention that the impact of COVID-19 and/or high inflation constitute special reasons within the meaning of s 24 of the Act. Mr Pietsch’s oral evidence is that he gets by on a day-to-day basis but struggles with unexpected expenses. This situation is common to many Australians and is not a special reason to treat him as other than a member of a couple.
Mr Pietsch’s reliance on caring expenses for his mother and continuing symptoms after hernia surgery are unpersuasive as a special reason within the meaning of the Act. In relation to the former, he stated during the hearing that he incurs travel expenses in seeing his mother. This is not unusual nor special and there is no evidence the costs incurred are significant. In relation to the latter, the Tribunal notes Mr Pietsch wrote to the surgeons referring to a ‘very successful hernia operation’, that he is ‘very happy’ with.[53] Any residual symptoms he refers to appear undiagnosed, have not prevented Mr Pietsch from working, and do not constitute a special reason within the meaning of the Act not to treat him as a member of a couple.
[53] Exhibit A6.
DECISION
There are no objectively uncommon, unusual, or exceptional reasons, either in Mr Pietsch’s specific circumstances or in Ms Montecalvo’s as they affect him, to enliven s 24 of the Act. It follows that the Tribunal is not satisfied it should exercise its power under s 24 to treat Mr Pietsch as not being a member of a couple. The reviewable decision is therefore affirmed.
36. I certify that the preceding 35 (thirty-five) paragraphs are a true copy of the reasons for the decision herein of Senior Member A. Nikolic AM CSC
...........................[sgd].........................................
Associate
Dated: 31 July 2024
37. Date of hearing:
38. 3 April 2024
39. Applicant:
40. By video, self-represented
41. Solicitors for the Respondent:
42. Mr Tim Noonan, Services Australia
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