Robert Phillip and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
[2013] AATA 135
[2013] AATA 135
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/5524
Re
Robert Phillip
APPLICANT
And
Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 14 March 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 a member of a couple – whether any special reason applicant should not be treated as a member of a couple – decision under review affirmed
LEGISLATION
Social Security Act 1991 ss 4 and 24(2)
CASES
Craddock George Adams and Repatriation Commission (1994) 37 ALD 312
Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143
In Marriage of Todd (No 2) (1976) 25 FLR 260
Kazmierczak and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084
Secretary, Department of Family and Community Services and “VBH” and Another (2006) 89 ALD 293Staunton-Smith v Secretary, Department of Social Security (1991) 32 FCR 164
REASONS FOR DECISION
Senior Member J F Toohey
14 March 2013
BACKGROUND
Mr Robert Phillip is aged 71. He 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 Phillip has lived with Ms Christine Price since 2007. They are not married. They consider themselves to be a couple, and their families and friends recognise them as a couple. However, other than sharing household expenses equally, they are financially independent of each other.
On 19 June 2012, Mr Phillip applied for an age pension. In his application, he identified Ms Price as his partner, and provided information about their respective financial affairs including Ms Price’s income.
Centrelink determined that Mr Phillip was a member of a couple with Ms Price, and took into account their combined income in calculating the rate of his age pension. Their combined income was taken to include Ms Price’s gross income from her employment as a school assistant and rental income from a unit she owns. As Mr Phillip’s and Ms Price’s combined income was greater than the allowable fortnightly limit, Centrelink determined that Mr Phillip was not entitled to any age pension. In October 2012, the Social Security Appeals Tribunal (SSAT) affirmed that decision.
Mr Phillip says he and Ms Price are not financial partners, 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 formulae 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).
By s 24(2) of the Act, 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.
These provisions apply equally to determinations by the Tribunal.
THE ISSUE
I have to decide whether Mr Phillip is a member of a couple for the purposes of assessing his entitlement to the age pension. If I decide that he is, I then have to decide whether there is any special reason he should not be treated as a member of a couple.
IS MR PHILLIP A MEMBER OF A COUPLE?
There is no dispute about the facts. There is no question that Mr Phillip and Ms Price have been entirely open and frank about all aspects of their relationship. The question is whether it is properly characterised as a de facto relationship for the purposes of the Act.
Mr Phillip and Ms Price were both married previously, and each has two children. They have lived together since 2007. Mr Phillip is still legally married. Ms Price divorced in about 2004 and later finalised a property settlement. They regard themselves as a couple, and their families and friends recognise them as a couple. Mr Phillip refers to Ms Price as his partner. They share household chores, although each does their own washing and ironing. They prepare and eat their meals together. They socialise together. They have a sexual relationship.
Mr Phillip does not dispute that, in most respects, his relationship with Ms Price is like that of any other couple. Financially, however, he says they are not a couple and he should not be treated as such for the purposes of the age pension.
Mr Phillip and Ms Price have kept their financial affairs separate from the start of their relationship. There has never been any expectation that either would support the other financially; it was always understood they would remain financially independent while living together. They maintain separate bank accounts, and have no joint accounts. They have no joint investments. They contribute equally to living expenses such as rent, food and utility bills. They maintain meticulous records of all household expenses, which they share equally, as well as costs of holidays and going out. Their telephone account is in joint names only so that each can speak to their service provider; other utilities accounts are in one or other’s name. They pay their own mobile phone costs.
Ms Price earns approximately $50,000 a year plus superannuation from a teaching position. She owns a unit which she bought in 2008 with the proceeds of a property settlement with her former husband. One of her sons lives in the unit and pays rent to her. Ms Price regards the unit as part of her own financial security, and there is no suggestion that Mr Phillip has, or would ever make, any claim to it. Neither has provided for the other in their will.
When Mr Phillip and Ms Price moved in together, he had no thoughts of applying for an age pension. He had a healthy superannuation fund from which he expected to support himself. Since then, the Global Financial Crisis has seen his self-managed superannuation fund reduced to virtually nothing. He has debts on credit cards and to the Australian Taxation Office. He owns no real estate.
The decision of the SSAT shows that Mr Phillip said at that time that, without the age pension, he could not afford his share of the rent, and he did not wish to live off Ms Price; he would leave the home if he could not pay his share. Ms Price told the Tribunal she was committed to their relationship but she would not place herself in a situation that would leave her financially disadvantaged should the relationship end.
Giving evidence before this Tribunal, Mr Phillip said he has recently obtained casual work which means he can continue to contribute to the rent and household expenses. He wants to keep working and will continue to pay his way for as long as he works. He wants to stay in the relationship but he is not willing to live off Ms Price. When asked whether the relationship would inevitably come to an end if they did not live together, Mr Phillip thought they would probably still have a relationship even if they did not live together.
Consideration
It is trite to say that every relationship is different. In Staunton-Smith v Secretary, Department of Social Security (1991) 32 FCR 164, O’Loughlin J cited the comments of Watson J in In Marriage of Todd (No 2) (1976) 25 FLR 260, at 262-263:
What comprises the marital relationship for each couple will vary. Marriage involves many elements, some or all of which may be present in a particular marriage – elements such a dwelling under the same roof, sexual intercourse, mutual society and protection, recognition of the existence of the marriage by both spouses in public and private relationships.
Staunton-Smith concerned a marriage but the comments apply equally to a de facto relationship.
The factors in s 4(3) are not exhaustive, and nor is one any more important than any other. In Pelka v Secretary, Department of Family and Community Services (2006) 151 FCR 546, French J (as he then was) 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 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, and:
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.
Mr Phillip says a fair evaluation of his case depends on a fair method of weighing his circumstances. It is true that the Tribunal must be fair, but the process of weighing up all of the circumstances that comprise a particular relationship and arriving at a judgment about its nature is not scientific. At some point, the weight of all that is known about a relationship tips one way or the other.
Considered from the outside, the relationship between Mr Phillip and Ms Price has all the appearances of a de facto relationship but, more than that, they regard themselves as a couple (other than financially). The very fact that they came to regard themselves as a couple means that, at some point, their circumstances suggested to them that they fitted that description.
It is possible, although it is not easy to think of an example, that a single aspect could so define a relationship as to outweigh the existence of all others. But I am not satisfied that is the case here. Other than financially, the elements of the relationship between Mr Phillip and Ms Price are clearly strong, and even their strict sharing of expenses evidences a high degree of cooperation. That Mr Phillip believes the relationship would likely endure, and wants it to endure, even if they have to live apart, evidences a high degree of mutual commitment. Their financial independence does not outweigh the combined weight of all the other factors.
For these reasons, I am satisfied that Mr Phillip is in a de facto relationship with Ms Price 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 PHILLIP SHOULD NOT BE TREATED AS A MEMBER OF A COUPLE?
The Act does not describe the circumstances that might amount to special reasons for the purposes of s 24(2).
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.
…
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 is capable of sharing resources.
The fact that members of a couple maintain financial independence does not mean they do not gain some benefit of pooling of resources, because sharing rent and household expenses is a form of pooling of resources. The fact that Mr Phillip and Ms Price do not share income and assets does not mean that he has nothing to pool, or that he obtains no benefit from Ms Price pooling her resources with him to the extent that she does. Nor is he left without any means of supporting himself.
In Craddock George Adams and Repatriation Commission (1994) 37 ALD 312, the Tribunal had to consider the application of s 5R(3) of the Veterans Entitlements Act 1986 which is in terms virtually identical to s 24(2). In that case, the applicant and his wife had an arrangement that his counsel described as “financial apartheid”. Deciding that no special reason existed not to treat the applicant as a member of a couple, the Tribunal said:
There is therefore nothing special about a married couple that decides not to merge their assets and takes steps to ensure that the separation of their financial resources is maintained throughout their marriage. Reasons for such decisions are no doubt many; the reasons in this case of maintaining the separate assets for the benefit of the respective descendants is unexceptional and cannot be said to be somehow unusual or extraordinary so as to justify a finding of special circumstances that would justify a special reason in the terms of the subsection.
It is understandable that Mr Phillip does not want to be a financial burden on Ms Price, and he may have to make a difficult decision if he is without work at some stage. However, I am not satisfied that there is, or has been a special reason in his particular case why 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 36 (thirty -six) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey. ......[sgd]..................................................................
Associate
Dated 14 March 2013
Date(s) of hearing 22 February 2013 Applicant In person Solicitors for the Respondent Department of Human Services, Program Litigation and Review Branch
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