Re Gordon and Secretary, Department of Employment and Workplace Relations
[2006] AATA 792
•15 September 2006
[2015] AATA 279
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/3363
Re
Giuseppe Fuda
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr P W Taylor, SC, Senior Member
Date 30 April 2015 Place Sydney The decision under review is affirmed.
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Mr P W Taylor, SC, Senior Member
CATCHWORDS
SOCIAL SECURITY – age pension – rate – member of a couple – separation in marital home – partially separate finances – discretion to treat as not a member of a couple – no special reason – discretion not enlivened – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth) ss 4, 6, 24, 1064
CASES
Re Spencer and Secretary, Department of Social Security (1987) 13 ALD 497
Lynam v Director-General of Social Security (1983) 52 ALR 128
Jess v Scott (1986) 12 FCR 187
Hawkins and Secretary, Department of Social Security (1996) 24 AAR 153
Boscolo v Secretary, Department of Social Security (1999) FCA 106;
(1999) 90 FCR 531; (1999) 53 ALD 277; (1999) 29 AAR 120Gordon and Secretary, Department of Employment and Workplace Relations
[2006] AATA 792Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143
REASONS FOR DECISION
Mr P W Taylor, SC, Senior Member
Mr Fuda is a 75-year-old age pension recipient.
A person’s age pension payment rate is determined by the rate calculator in section 1064 of the Social Security Act 1991 (Cth) (“SSA 1991”). The rate calculator involves both an income test and an assets test. If the person is a “member of a couple” those tests will be applied by treating the members of the couple as having pooled their resources and equally shared both income and expenses.[1] As a consequence of that treatment, the “member of a couple” pension rate is less than the single person rate.
[1] Social Security Act 1991 (Cth) ss 1064-A2, 1064-E2, 1064-G2.
Mr Fuda lives, and intends to continue to live, with his 72-year-old wife in the four bedroom suburban Sydney home which they have jointly owned for 45 years. Primarily because of those facts, for many years (and despite a suggestion to the contrary in the Respondent’s written statement of contentions) Mr Fuda’s age pension amount has been paid at the “member of a couple” rate.
In mid January 2014 Mr Fuda provided Centrelink with a completed “relationship details” form in which, despite acknowledging that they both continued to live at the same address, and that neither had commenced divorce proceedings, he claimed to have separated from his wife.
After considering the additional relationship information Mr Fuda had provided in his completed form, on 30 January 2014 the Secretary determined that Mr Fuda was a member of the couple and that his age pension should continue to be calculated on that basis. The decision under review, a 6 June 2014 decision of the Social Security Appeals Tribunal (“SSAT”), affirmed the Secretary’s decision.
THE “MEMBER OF A COUPLE” CRITERION
A person’s characterisation as a “member of a couple” depends on assessing the person’s circumstances against SSA 1991’s defined meaning of the expression. That defined meaning is set out in SSA 1991 ss 4(1)-(3A), (6). The relevant provisions in s 4(1) to 4(3) (so far as relevant) are in the following terms:
4 Family relationships definitions—couples
(1)In this Act, unless the contrary intention appears:
….
member of a couple has the meaning given by subsections (2), (3), (3A) …
….(2) Subject to subsection (3), a person is a member of a couple for the purposes of this Act if:
(a) the person is legally married to another person and is not, in the Secretary’s opinion (formed as mentioned in subsection (3)), living separately and apart from the other person on a permanent or indefinite basis; or
…
Member of a couple—criteria for forming opinion about relationship
(3)In forming an opinion about the relationship between 2 people for the purposes of paragraph (2)(a), subparagraph (2)(aa)(ii) or subparagraph (2)(b)(iii), the Secretary is to have regard to all the circumstances of the relationship including, in particular, the following matters:
(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 mandatory considerations detailed in SSA 1991 s 4(3) apply to the assessment of three different kinds of relationship - marriage, registered relationships and de facto relationships. But in all cases the required assessment is as to whether or not the parties to the relationship are “living separately and apart … on a permanent or indefinite basis”. Even where that criterion is not satisfied the Secretary has a general discretion under SSA 1991 s 24(1)-(3) to treat a person as not being a member of a couple. The only condition for the exercise of the discretion is the Secretary’s satisfaction that there is “a special reason in the particular case”.
CHARACTERISATION OF THE RELATIONSHIP
The mandatorily relevant considerations in SSA 1991 s 4(3), are neither exhaustive nor have any relative priority. Although they are described merely as particular aspects of “all the circumstances of the relationship”, they substantially cover the broad range of the ordinarily encountered aspects of “couple” relationships. They are conveniently summarised as requiring consideration of five broad topics:
(a)the financial aspects of the relationship;
(b)the nature of the household;
(c)social aspects of the relationship;
(d)physical intimacy;
(e)the nature and extent of any commitment to the relationship.
A notable feature of the required considerations is the reference to “legal obligations”, “responsibilities” and “commitment”.[2] But “social” and “emotional” connections are also to be considered.[3] These features suggest that either indefinite mutual commitment and responsibility or emotional and social connections, may be a telling feature in favour of a particular characterisation of the relationship: see Re Spencer and Secretary, Department of Social Security (1987) 13 ALD 497. On the other hand, because the characterisation must be made with regard to the totality of the relationship, none of its individual aspects is necessarily a determinative consideration. In a somewhat different, but still relevant, statutory context in Lynam v Director-General of Social Security (1983) 52 ALR 128 Fitzgerald J said:
Each element of a relationship draws its colour and its significance from the other elements, some of which may point in one direction and some in the other. What must be looked at is the composite picture. Any attempt to isolate individual factors and to attribute to them relative degrees of materiality or importance involves a denial of common experience and will almost inevitably be productive of error. The endless scope for differences in human attitudes and activities means that there will be an almost infinite variety of combinations of circumstances which may fall for consideration. In any particular case, it will be a question of fact and degree, a jury question, whether a relationship … meets the statutory test.[4]
[2] Social Security Act 1991 (Cth) ss 4(3)(a)(iii), (b)(i), (iii), (e).
[3] Ibid ss 4(3)(c), (d), (e)(ii).
[4] Lynam v Director-General of Social Security (1983) 52 ALR 128, 131.
THE FINANCIAL ASPECTS OF THE RELATIONSHIP
Mr and Mrs Fuda jointly own, and still live in, their family home of over 40 years. Apart from the house and the household furniture, Mr and Mrs Fuda have some separately owned appliances, cars and personal effects. There is no evidence that they have any other jointly owned assets or any other significant individual assets. Nevertheless, they have both made wills, and are each beneficiaries under the other’s will.
Mr and Mrs Fuda have a joint loan account with the Commonwealth Bank. The house is security for a “line of credit” and is subject to a “reverse mortgage”. Mr Fuda thinks that this was taken out at about the time of his hip operation in 2010. Features of this type of “line of credit” arrangement are that, subject to complying with a stipulated maximum amount (i) the loan can be progressively drawn down, (ii) typically does not require any periodic repayments of principal, (iii) permits (but does not require) the capitalisation of interest, and (iv) is repayable in full only when the mortgagors either die or sell the property.
Mr and Mrs Fuda’s “reverse mortgage” loan balance increased by approximately $9,000 (from about $158,000 to $167,000) between 5 July and 4 October 2013. In that period the only significant deposits to the mortgage bank account were (a) age pension payments for both Mr and Mrs Fuda, and (b) Medicare reimbursement of medical expenses. In the same period amounts totalling $17,884 were debited to the account. Those debits took the form of (i) cheques (about 45) drawn on the account and honoured by the bank, (ii) automatic payments (about 6) made under standing authorities from
Mr and Mrs Fuda, (iii) loan service fees, (iv) loan interest (approximately $1,000 per month) and (v) various ATM withdrawals. The ATM withdrawals ranged in amount from $250 to approximately $500. Most commonly they occurred at least once a week. Sometimes they were more often.
The “line of credit” bank account was Mr and Mrs Fuda’s only bank account until February 2014. Mr Fuda then started his own account, had his pension payments made to it, and used the account in connection with a debit card. Mr Fuda said that Mrs Fuda also has her own debit card. Since those developments Mr and Mrs Fuda have an arrangement whereby about $500 from their pension payments is either left in, or transferred to the joint account and they allocate the balance, perhaps between $100 and $150, for their individual use.
The arrangement is that whatever money is in the joint account is for their joint expenses, and whatever money is left in his separate account, Mr Fuda is free to do with as he pleases. Consequently the joint account continues to be used for their shared expenses. Mrs Fuda organises the payment of household bills. She keeps the cheque book for the account and writes all the cheques drawn on it. Mr Fuda does not keep a separate record of what money is spent from the joint account. The expenses paid from the joint bank account include at least the following expenses, all of which relate to joint accounts or, in the case of the Council rates, are a consequence of their joint ownership.
(a)home and contents insurance;
(b)Council rates;
(c)electricity;
(d)telephone expenses;
(e)water rates;
(f)medical insurance.
THE NATURE OF THE HOUSEHOLD & LIVING ARRANGEMENTS:
Mr and Mrs Fuda have three adult daughters, but are themselves the only members of their present household. Mr Fuda described the physical arrangements at their home as involving them using separate bedrooms, bathrooms, lounge areas, refrigerators and food. They also have separate cars. They share the use of a kitchen and laundry, but attend individually to their own shopping, cooking and washing.
The domestic cleaning arrangements are that Mr Fuda does his own bedroom and bathroom. Mrs Fuda cleans the rest of the house. Mr Fuda is responsible for the gardening and maintenance of the house.
THE SOCIAL ASPECTS OF THE RELATIONSHIP:
Mr and Mrs Fuda are formally married. But in his January 2014 relationship details form Mr Fuda claimed he separated from his wife in September 2010. That was whilst he was convalescing from hip replacement surgery. He said Mrs Fuda did not want to live with him any more, moved out of their bedroom, and subsequently has lived an essentially separate life.
Mr Fuda says they don’t do anything together and rarely communicate. However, I would infer that the lack of communication, and social interaction, between Mr and Mrs Fuda, although a long standing feature of their relationship, is more a matter of different interests and personality than either overt hostility or a material indication that they are living “separately and apart”.
Mrs Fuda told the SSAT that, whilst she regularly goes out with friends and with her daughters, Mr Fuda had always been something of a “stay at home” person, and that they had never really done much together in the past, except shopping.
Mr Fuda largely corroborated this and said that their joint social activities in the past had been limited to about twice a year. If there are family functions, such as birthday celebrations, both of them would be invited, and would attend, but they would typically travel separately to the function
Mr Fuda conceded that Mrs Fuda had regularly complained that he did not go out and do things with her. However he disputed that he had mistreated her or resented her complaints and disputed her complaints were really justified. He saw nothing wrong in his preference to stay simply and quietly at home.
Family members are said to be aware that Mr and Mrs Fuda don’t really get along. But it is not really clear that evident lack of harmony extends widely to an actual portrayal or appreciation of their relationship as “separated”. Mr and Mrs Fuda’s formal status, shared residence and various joint accounts and liabilities contribute to the appearance of a married couple. Their separate debit card bank accounts, and the recent (about February 2014) change from a joint card to separate Medicare cards, do not significantly alter that appearance. Their essentially separate attendance at family functions is a relevant matter, but its ultimate significance to the assessment is clouded by a lack of clarity whether Mr and Mrs Fuda’s asserted estrangement is a matter of general knowledge. The SSAT decision attributes to Mrs Fuda a statement that she has told the daughters, but she also said that Mr Fuda only spoke to one of the girls, and she was unsure whether Mr Fuda had told her about the separation.
One can be confident that at least one of Mr and Mrs Fuda’s daughters is aware of
Mr Fuda’s separation claim. She filled out his January 2014 relationship details form, and subsequently provided a testimonial letter supporting his claim. But as against the potential significance of that matter, Mr Fuda told Centrelink (in January 2014) that only close family and friends were aware of the separation he claimed, and that other people continue to think of them as a married couple. This evident ambivalence about the way that Mr and Mrs Fuda present their relationship is confirmed in Mr Fuda’s daughter’s letter. In it she described her parents as “old-school Italians and Catholics, both of which divorce is frowned upon”. She said that this provided a combination of embarrassment and belief which dissuaded them from pursuing divorce. She added that because of their age and health issues “they don’t have the ability, health, courage or strength to change their lifestyle” – by separating, moving out of the family home and establishing a “new life”.It is reasonably clear, therefore, that Mr and Mrs Fuda retain their formal status as a married couple. Apparently, that retained status is a matter of some importance to
Mrs Fuda and, I infer, it is a preference which Mr Fuda accepts - either out of deference to Mrs Fuda’s preferences, or his own inertia. I would infer also that this deference, or indifference, results in them holding themselves out as married, and that is likely to be the assessment of their general friends, associates and wider family members.COMMITMENT
Mr and Mrs Fuda do not have an intimate physical relationship, nor much social interaction, other than the civility one would expect of people who share a long standing marriage, have children and grandchildren of that union, continue to occupy the home in which they have lived for many years, and co-operate, to the extent necessary, in apportioning household tasks and addressing joint expenses.
Despite the limited element of joint activity that is suggested in Mr Fuda’s description of his relationship with Mrs Fuda, it is apparent that they still interact effectively in maintaining their domestic and financial arrangements. That, in itself demonstrates a significant degree of co-operation, and includes continuing to present the appearance of a married couple. In addition, and despite the degree of separate activity that Mr Fuda described, he also acknowledged that he would expect his wife would continue to support him, by for example, taking him to a medical appointment if he was unwell or incapacitated.
In addition, it is readily apparent that Mr Fuda intends that his current relationship with Mrs Fuda will continue indefinitely. The SSAT reasons for decision record that Mr and Mrs Fuda have different views about what should happen with the house. It is located on a 5 acre block. Mrs Fuda told the SSAT that she would like to sell it and move somewhere else. But Mr Fuda disagrees. His view is that there is no point selling the property, because he fears the proceeds of sale would not be enough for them to live comfortably anywhere else. I infer that their current arrangements will continue indefinitely.
RELATIONSHIP ASSESSMENT
28.Mr and Mrs Fuda’s limited social interchanges, and individual preferences and patterns of daily living, suggest that they provide each other with very limited companionship and emotional support. However this seems to be a longstanding characteristic of their relationship – a marriage of over 40 years. And it is also readily apparent that they intend to continue to live together indefinitely, under their current arrangement.
That arrangement is one in which Mr and Mrs Fuda have a significant degree of financial interdependency, and mutual benefit. They jointly own the house which has been their matrimonial home for many years, and in which they live. They have arranged to draw on the value of the house, to their mutual benefit, and they continue to acknowledge and discharge joint liabilities associated with its ownership and occupation. They have worked out a way of living that reconciles their different personal preferences to their financial inter-relationship. As well they have no intention of either altering their current living arrangements or their longstanding marital status.
Substantially for the reasons summarised in the preceding paragraph, I am not of the opinion that Mr Fuda’s personal circumstances establish that he is “living separately and apart” from Mrs Fuda on either a permanent or indefinite basis.
THE SSA 1991 S 24(1) DISCRETION
In order to establish a basis for the exercise of the discretion conferred by SSA 1991 s 24, circumstances may be “special” even if they are not “extremely unusual, uncommon or exceptional”. In Jess v Scott (1986) 12 FCR 187; 70 ALR 185; 14 IR 341, after an extensive review of a range of earlier decisions that displayed marked divergences of opinion the Full Court of the Federal Court (Lockhart, Sheppard and Burchett JJ) said:
… the expression “special reasons” is intended to distinguish the case from the usual course …. But it may be so distinguished (not necessarily will, for the rule gives a discretion) wherever the court sees a ground which does justify departure from the general rule in the particular case. Such a ground is a special reason because it takes the case out of the ordinary. We do not think the use of the expression “for special reasons” implies something narrower than this.
…
It is an expression describing a flexible discretionary power, but one requiring a case to be made upon grounds sufficient to justify a departure, in the particular circumstances, from the ordinary rule ….[5]
[5] Jess v Scott (1986) 12 FCR 187 [12].
That proposition has been generally applied to the exercise of the SSA 1991 s 24 discretion: see Hawkins and Secretary, Department of Social Security (1996) 24 AAR 153 and French J in Boscolo v Secretary, Department of Social Security (1999) FCA 106; (1999) 90 FCR 531; (1999) 53 ALD 277; (1999) 29 AAR 120 at [18]. The latter passage, from the reasons for judgment in Boscolo, has commonly been regarded as providing the most authoritative guidance about the meaning to be accorded to the expression “special circumstances”.
In Gordon and Secretary, Department of Employment and Workplace Relations [2006] AATA 792, DP Groom said that the evident intention of the SSA 1991 s24(1) discretion was “to allow [the] higher payment when the other member of the couple is unable or unwilling adequately to contribute financially to the household”.[6] The same approach was evident again in Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084. In that case Justice Barker referred to a decision of the Tribunal in Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143, and continued on with the following observation:
The case law canvassed by Senior Member Creyke in Holt’s case confirms, in my view correctly, 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. This fundamentally derives from s 1064-A2 of the Act which provides that where two 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.
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 s 24 so as not to treat the holder of the pension as a member of a couple who are capable of sharing resources. In that regard, in effect, the s 1064-A2 expectation that there will be pooling is negatived.[7]
[6] Gordon and Secretary, Department of Employment and Workplace Relations [2006] AATA 792 [47].
[7] Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084 [41]-[42].
Having regard to the findings I have made about Mr and Mrs Fuda’s relationship, and particularly the financial aspects of their relationship, it is very evident that they do contribute substantially towards meeting the expenses associated with ownership and occupation of their jointly owned home. It follows that the kind of absent financial contribution that is commonly regarded as a “special reason” for the purposes of SSA 1991 s 24 does not apply to Mr Fuda’s situation. There is, in fact, no apparent basis on which his circumstances, given the evident financial contribution made by Mrs Fuda, could lead to a proper exercise of the discretion conferred by that provision.
DECISION
The decision under review is affirmed.
I certify that the preceding 35 (thirty -five) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor, SC, Senior Member
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Associate
Dated 30 April 2015
Date of hearing 11 February 2015 Date final submissions received 17 February 2015 Applicant In person Solicitors for the Respondent Department of Human Services
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