Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and Wilson

[2011] AATA 554

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 554

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  2010/2612

GENERAL ADMINISTRATIVE DIVISION		)
Re		Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

Applicant

And Donald Wilson

Respondent

DECISION

Tribunal Mark Hyman, Member

Date12 August 2011

PlaceCanberra

Decision

The Tribunal sets aside the decision under review and in its place substitutes a decision that:

(a)  the respondent is a member of a couple for the purposes of the Social Security Act 1991 (Cth); and

(b)  this decision is to take effect from the date of decision.

....................[sgd]..........................

Mark Hyman, Member

CATCHWORDS

SOCIAL SECURITY – special reason to be treated as not being a member of a couple – inability to pool resources with partner – financial hardship – respondent’s precarious health contributing to financial hardship – case for exercise of discretion not made out

Administrative Appeals Tribunal Act 1975 (Cth) s 37

Same-Sex Relationships (Equal Treatment in Commonwealth Laws – General Law Reform) Act 2008 (Cth)

Social Security Act 1991 (Cth) ss 4, 14A, 19C, 24, 1064

Guide to Social Security Law

Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531

Cocks v Centrelink [2000] FCA 1248

Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 41 FLR 338

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409

Re Chaplin and Secretary, Department of Employment and Workplace Relations [2007] AATA 1371

Re Harding and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 231

Re Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143

Re Malajew and Secretary To the Department of Social Security (AAT 4493, 19 July 1988)

Re XBCZ and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 826

Shi v Migration Agents Registration Authority (2008) 235 CLR 286

REASONS FOR DECISION

12 August 2011  Mark Hyman, Member       

1.      Mr Donald Wilson, the respondent, suffers from a number of ailments of varying degrees of seriousness. Taken together, they render his health extremely frail. He has received a disability support pension (DSP) under the Social Security Act 1991 (Cth) (the Act) since 1993. Since turning 65 in March 2011 he has received the age pension.

2.      Mr Wilson has been partnered with Mr Rod Freyer for 28 years. Until July 2009 the Act did not recognise same-sex partners as couples for the purposes of determining pension entitlements. Once that provision was amended to remove the discrimination against same-sex partners, the Act required that Mr Freyer’s income be taken into account in deciding whether Mr Wilson was entitled to DSP, and if so at what rate. As a result, Mr Wilson’s pension was stopped from 12 July 2009. Mr Wilson sought a review of that decision. An authorised review officer (ARO) of Centrelink affirmed the decision. Mr Wilson then sought review by the Social Security Appeals Tribunal (SSAT). The SSAT set aside the ARO’s decision and decided that the special reason provisions in the Act, which allow a member of a couple to be treated as single under certain circumstances, should apply to Mr Wilson; and that his DSP should therefore be calculated at the single rather than the partnered rate. The Secretary has sought review of that decision in this Tribunal.

The Issue

3.      The only issue before the Tribunal is whether there is a special reason under the Act to treat Mr Wilson as not a member of a couple, so that he would receive DSP at the single rather than the partnered rate.

The Hearing

4.      Mr Wilson was represented by Mr Derek Emerson-Elliott of the Welfare Rights and Legal Centre. The Secretary was represented by Ms Jennifer Maclean, a Centrelink advocate.

5.      Mr Wilson appeared and gave oral evidence to the Tribunal, as did Mr Freyer, his partner. A financial counsellor from Care Financial Counselling Service, Ms Leasa Mayes, also gave evidence.

6. The Tribunal had before it the documents submitted under section 37 of the Administrative Appeals Tribunal Act 1975 (Cth), which were admitted into evidence, and a number of additional documents, comprising:

(a)Exhibit A1 – record of expenditure by Mr Wilson and Mr Freyer relating to Medicare and the Prescription Benefits Scheme 

(b)Exhibit R1 – medical certificate by Dr Ann Richardson in respect of Mr Wilson

(c)Exhibit R2 – affidavit of Mr Freyer, with attachments

(d)Exhibit R3 – statutory declaration by Mr Freyer, with attachments

(e)Exhibit R4 – fortnightly budget for Mr Wilson and Mr Freyer, prepared by Ms Leasa Mayes.

The Facts

7.      The facts of the matter are not in dispute. Mr Wilson and Mr Freyer have been partners for some 28 years. Mr Wilson received DSP at the single rate from 1993 until July 2009. The passage of the Same-Sex Relationships (Equal Treatment in Commonwealth Laws – General Law Reform) Act 2008 (Cth) (the Same-Sex Relationships Act) amended the Act so as to treat same-sex couples on the same basis as other couples. The relevant provisions came into effect on 1 July 2009. As a result, Mr Wilson’s relationship became relevant to his social security benefit. He informed Centrelink of his relationship with Mr Freyer on 1 July 2009 (T5).

8.      On 13 July 2009 Centrelink determined that Mr Freyer’s income exceeded the cut-off amount for payment of DSP, and Mr Wilson’s DSP payments were reduced to nil from 12 July 2009 for 12 weeks (T6).

9.      Following complaints and queries about the decision by Mr Wilson, the original decision-maker affirmed the decision on 14 September 2009 (T10) and advised Mr Wilson (T11). On 13 October 2009 Centrelink cancelled Mr Wilson’s DSP (T13).

10.     On 14 December 2009 Mr Wilson sought review by an ARO of the 13 July 2009 decision to reduce his DSP to nil (T15). Mr Wilson made a submission in support of his application for review on 17 December 2009, attaching a fortnightly budget in support of his case (T17). On 2 February 2010 an ARO decided the original decision was correct (T19). Centrelink records show that Mr Wilson sought review of the decision by the SSAT on 20 April 2010 (T21). He made a submission in support of his application on 18 May 2010 (T22). That submission also included a fortnightly budget in support.

11. The SSAT decided that there were special reasons under section 24 of the Act for treating Mr Wilson as not a member of a couple, and that he should receive DSP at the single rate (T2). The Secretary sought review of that decision in this Tribunal (T1).

The Statutory Context

12. The Same-Sex Relationships Act amended the Act, relevantly in this instance the definitions in section 4, so that same-sex couples were no longer distinguished from other kinds of couples. It was this change which meant that from 1 July 2009 the rate at which Mr Wilson was paid DSP was dependent on the income received by Mr Freyer.

13. Section 1064 of the Act sets out the basis on which a number of benefits, including DSP and age pension, are calculated. Subsection 1064-A1 outlines how the daily rate of pension is to be calculated. Steps 5 and 8 in the calculator provide a method by which a person’s pension may be reduced because of their income. Step 11 provides that a reduction according to the value of a person’s assets or of a person’s income should be applied, whichever is the greater. Subsection 1064-A2 provides that for the purposes of determining the rate of a person’s pension, members of a couple will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis; they will also be treated as sharing expenses.

14. The relevant subsection of Section 24 of the Act provides as follows:

(2)  Where:

(a)  a person has a relationship with another person, whether of the same sex or a different sex (the partner ); and

(b)  the person is not legally married to the partner; and

(c)  the relationship between the person and the partner is a de facto relationship; and

(d)  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.

15. There is no dispute over the status of Mr Wilson and Mr Freyer as a couple, or over the application of the calculator in section 1064. The only issue concerns the exercise of the discretion in section 24 of the Act, that is, whether there is a special reason, in this particular case, not to treat Mr Wilson and Mr Freyer as a couple. If Mr Wilson is treated as single, then Mr Freyer’s income will not be taken into account in determining the rate of his pension.

The Arguments of the Parties

16.     Mr Wilson’s case comprises four separate lines of argument. The first is that he and Mr Freyer are unable to pool their resources because Mr Wilson, while he is not receiving DSP, has no resources to contribute to the pool.

17. The remaining lines of argument all derive from Mr Wilson’s frail physical and psychological health, and each puts forward a reason for the exercise of the discretion relating to a ‘special reason’ under section 24 of the Act:

(a)First, Mr Emerson-Elliott argues that Mr Wilson’s medical condition and the cost of his treatment themselves constitute a ‘special reason’;

(b)Second, he argues that a decision not to exercise the discretion would have a ‘devastating’ impact on Mr Freyer (physically, emotionally and financially), and this in turn would impact on Mr Wilson; and

(c)Third, a decision not to exercise the discretion would make Mr Wilson totally dependent on Mr Freyer, and that would have serious psychological effects on Mr Wilson’s well-being because of his past psychological history.

18.     With regard to the pooling argument, Mr Emerson-Elliott initiallyargued that there is nothing in the statute or the case law to suggest that an inability by the partner to pool should be distinguished from an inability by the claimant to pool. Subsequently, he accepted that the SSAT’s understanding of the case law had been mistaken, and that there was no legitimate application of the pooling argument to Mr Wilson.

19. The Secretary’s case is simply that the circumstances of Mr Wilson do not constitute a ‘special reason’ for the exercise of the section 24 discretion. The argument with regard to pooling of resources applies only where a claimant’s partner cannot contribute to the pool, not, as here, where it is the claimant who cannot contribute. None of the other circumstances are sufficiently out of the ordinary to constitute a special reason, nor is the financial situation of Mr Wilson and Mr Freyer sufficiently severe to justify the exercise of the discretion.

Evidence

20.     Mr Wilson’s health is plainly precarious. He suffers from a long list of ailments and conditions, of varying degrees of seriousness, but all of them contributing to a markedly impaired capacity to live a normal life. He takes an extensive array of medications on a daily basis to treat these various ailments. Mr Wilson’s general practitioner says that his medical condition is severe (T12). Ms Maclean has not contested the extent of Mr Wilson’s health problems.

21.     Evidence was tendered in the form of a written medical opinion from Dr Ian D Brown, Mr Freyer’s general practitioner, that Mr Freyer also suffers from a number of medical conditions, including in particular, depression and associated anxiety disorder (T14). Dr Brown believes that withdrawal of Mr Wilson’s DSP would cause ‘spiralling deterioration of [Mr Freyer’s] medical condition such that he may be both unable to maintain his role in the work place and also unable to maintain his carer role with respect to Don.’

22.     The evidence of Ms Mayes was helpful in identifying the parameters of a fortnightly budget for Mr Wilson and Mr Freyer (Exhibit R4). I understand the budget she presented as a best estimate of how their funds are actually used, and were most probably used in the period relating to the decision. The fortnightly budget is a useful test of whether Mr Freyer and Mr Wilson are facing financial hardship at a level that would warrant the exercise of the discretion. Most of the hearing was taken up with this issue.

23.     I inferred from the remarks of counsel that some effort had been put into this aspect during the conferencing stage, but that it had proven difficult if not impossible to arrive at a reliable budget for the period in question, as records for that period were incomplete. As a result, a budget for the current period was prepared on the basis that a much more complete account of expenditures and incomes was possible, and that the various circumstances concerning Mr Wilson’s health, Mr Freyer’s indebtedness and other relevant matters have not changed materially since the original decision in July 2009. Both parties accept that information about current income and expenditures can serve as a proxy. From a survey of the extensive credit card and bank details submitted in evidence (especially at ST33 and ST34), it appears to me that the expenditure patterns of Mr Freyer and Mr Wilson have not fundamentally changed over the past two years; and while there are differences between the budgets submitted for the ARO review (T17) and the SSAT review (T22) and each is different from that now put forward, I am not persuaded that the expenditure data I have to work from will result in some materially inaccurate picture of the financial situation of Mr Freyer and Mr Wilson. I infer from the statement of Mr Wilson’s general practitioner (Exhibit R1) that in general terms his medical condition is similar to that at the time of the decision.

24.     The budget prepared by Ms Mayes and given below shows that even with Mr Wilson’s DSP Mr Freyer and Mr Wilson are spending more than they earn, drawing down on any capital reserves and making it more difficult over time to pay off the debt that has accumulated on their credit cards. That suggests Mr Freyer and Mr Wilson face a budgeting difficulty regardless of the decision in this matter.

25.     Also relevant here are the concessions that Mr Wilson has access to as a pensioner, and whether those would still be available to him if his pension were withdrawn. Some of these concessions are accessed on the basis of age or a disability, but others appear to be linked to whether or not the person receives a pension. Some come from the ACT Government, others from the Commonwealth. The parties provided submissions following the hearing to enable me to take these matters into account.

26.     If his pension is withdrawn, Mr Wilson would continue to receive health-related concessions through the Commonwealth Seniors Health Card. It appears that he would also continue to receive half-price taxi vouchers from the ACT Government and an electricity rebate on his use of an oxygen concentrator. He seems likely to lose access to subsidised services in the dental and audiology areas, and may or may not be able to access subsidised ambulance services.

Consideration

The application of Section 24 of the Act

27.     The phrase ‘special reason’ is clearly of potentially wide application, and the Federal Court and this Tribunal have given some guidance on how it is to be understood. Boscolo v Secretary, Department of Social Security[1] (‘Boscolo’) is generally regarded as authority on the broad application of the phrase. In that case French J noted that the phrase is a ‘direction to the decision-maker that the discretion it constrains is not lightly to be enlivened’[2]; but that circumstances or reasons will not necessarily be other than ‘special’ because they fall within a class which is widely defined, or because they are foreseeable.[3] ‘The core of the requirement for “special circumstances”…is that there be something unusual or different to take the matter of the subject of the discretion out of the ordinary course’. He also noted that it is not necessary that the case be extremely unusual.[4]

[1] (1999) 90 FCR 531.

[2] Ibid, 535.

[3] Ibid, 536.

[4] Ibid, 536.

28.     French J also pointed out that the wording of the section requires the decision-maker to focus on the position of the claimant, that is, the person in relation to whom the discretion is exercised,[5] although the wider circumstances, including the circumstances of the claimant’s partner, could be taken into account so far as they affected the claimant.[6]

[5] Ibid.

[6] Ibid, 537.

29.     Over time a number of particular circumstances have been identified that provide a basis for deciding that the ‘special reason’ discretion should be applied. These are set out in the Guide to Social Security Law (the Guide) which provides policy guidance to Centrelink officers in the interpretation of the Social Security Law. The two defined situations in which the ‘special reason’ discretion has been exercised are:

(a)where the claimant is unable to pool resources with his or her partner, and secure the benefits – the economies of scale – of living as a couple; and

(b)where, either in concert with the pooling issue in (a) above or separately, the couple find themselves in financial hardship.[7]

[7] Guide to Social Security Law (Version 1.178 – Released 1 July 2011) at section 2.2.5.50.

30.     Because the ‘special reason’ discretion is very generally worded, there is necessarily a residual discretion to recognise some other special reason or reasons in the particular case; that is also recognised in the Guide. One example is where trustees for the partner may control the partner’s funds and limit access to funds by the claimant.[8]

[8] Re Chaplin and Secretary, Department of Employment and Workplace Relations [2007] AATA 1371.

Does Mr Wilson’s inability to pool provide a basis for the exercise of the discretion?

31.     Applying the approach set out by French J in Boscolo, it is necessary to look at the issue from Mr Wilson’s perspective, although the circumstances of Mr Freyer may be taken into account to the extent they affect Mr Wilson. Where both partners in a relationship earn income (whether by employment or otherwise), there are benefits to be obtained by the pooling of resources. These economies of scale are the rationale for having different rates and arrangements for single people and couples. But where a claimant finds that the expected benefits of pooling cannot be realised the courts have on occasion agreed that a case exists for the exercise of the discretion in section 24 of the Act.

32.     The main ways in which the benefits of pooling have been seen not to arise are where either the claimant and partner have been compelled to live separately (but remain members of a couple), or where the partner of the claimant is unable to contribute to the pooled resources, or both.[9] In either case, there is no benefit to the claimant from being a member of a couple, and as a result the discretion has been exercised to treat the claimant as single for the purposes of determining social security benefits.

[9] See eg Boscolo v Secretary, Department of Social Security [1999] 90 FCR 531; Cocks v Centrelink [2000] FCA 1248; Re Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143.

33. In Mr Wilson’s case while a recipient of DSP he clearly received the normal benefits of pooling his income with Mr Freyer. Once his DSP was withdrawn, he could no longer contribute to the pool, but he still benefited from being a member of the couple, because he was able to rely on Mr Freyer’s income. The ‘inability to pool’ argument does not apply to Mr Wilson, and is not a basis for him to receive the benefit of the section 24 discretion.

34. The SSAT came to the opposite conclusion. It was common ground between the parties that this was an error, and Mr Emerson-Elliott invited me to make ‘trenchant’ comments on the point. Ms Maclean pointed out that if the SSAT’s reasoning were followed, any person who was a member of a couple and denied a benefit because of a partner’s assets or income could seek the exercise of the section 24 discretion on the basis of not contributing to a pooling of resources. That seems unlikely to have been the intention of the legislature in providing this discretion. The Tribunal’s decision in this matter is a fresh one, not a revisiting of the SSAT’s decision to see if any error was made; but perhaps it is worth remarking that the SSAT’s decision is supported neither by a logical reading of the statute nor by the case law.

Do the impacts on Mr Freyer provide a basis for the exercise of the discretion?

35.     Mr Emerson-Elliott also put the argument that the consequences for Mr Freyer if Mr Wilson’s DSP were withdrawn would be ‘devastating’; and that these consequences would reflect back onto Mr Wilson as a diminution of care and a series of psychological impacts. Clearly Mr Emerson-Elliott had clearly in mind the remarks of French J in Boscolo that the focus of the question regarding the basis for exercise of the discretion needs to be on the claimant, but that the partner’s circumstances could be taken into account so far as they affect the claimant.

36.     I have no reason to doubt the evidence regarding Mr Freyer’s health and his physical and psychological ailments. It is also likely that the withdrawal of the age pension from Mr Wilson would have a very significant impact on Mr Freyer, and that that impact would extend to Mr Wilson and the life of the two of them together. The question for me, however, is not the existence or extent of that impact of itself, but whether that impact takes this matter out of the usual run of cases so that there can be said to be a ‘special reason’ for treating the case differently from the usual run and exercising the discretion. I am not persuaded by this argument that there is. Many couples go through challenges and reverses, suffer the impacts of unwelcome and unfortunate events, and support each other through difficulties of various kinds. These reverses do not have the effect of singling them out for purposes such as those currently before me unless they are quite different and go distinctly beyond the usual. I cannot see that the frailty of Mr Freyer is so singular that it should trigger the exercise of the discretion.

Does Mr Wilson’s loss of autonomy provide a basis for the exercise of the discretion?

37.     Similarly, it might be unfortunate, for Mr Wilson and Mr Freyer, if Mr Wilson were denied DSP and Mr Wilson were to become entirely dependent on Mr Freyer, but it would not meet the criteria for the exercise of the discretion. There is nothing about such a situation that takes it out of the usual run of cases, or makes it abnormal and unusual. It is to be expected that any couple, after years of enjoying two incomes, would be significantly discommoded by being reduced to one.

38.     Mr Emerson-Elliott advanced evidence that Mr Wilson is especially vulnerable because of a history of having been bullied by his sisters, and having once been deprived by an abusive partner of all his possessions, including his dog. Mr Wilson and Mr Freyer, however, have been in a stable relationship for 28 years. In recent years Mr Wilson’s health has deteriorated to the point that in a number of areas of his life he is already dependent on Mr Freyer, on his own evidence. The loss of financial independence, while clearly of profound importance to both men, cannot, on the evidence before me, assume the importance and uniqueness required to found the exercise of the discretion.

39.     Mr Emerson-Elliott argues that a same-sex relationship differs from other relationships, where historically a wife might have accepted a degree of dependence on a husband, and that such dependence is essentially foreign, by contrast, to a same-sex relationship. I cannot agree with that argument. First it assumes that in an opposite-sex relationship the claimant who loses a benefit is always the woman, who is then dependent on her partner, when the reverse might just as easily be true. Second, social attitudes change over time, and even if the historical picture painted by Mr Emerson-Elliott is accurate – which might itself be contested - there are doubtless a great many women at the present time who would resent the kind of dependence in contemplation in this matter just as much as would Mr Wilson. Third, the legislature’s removal of discrimination against same-sex relationships is surely designed, as a matter of both law and policy, to exclude or discourage distinctions of the kind Mr Emerson-Elliott is now trying to draw.

Does the couple’s financial hardship provide a basis for the exercise of the discretion?

40.     Financial hardship has sometimes operated as a contributing factor where the pooling of resources has also been prevented, but it has rarely been held to warrant the exercise of the discretion on its own.[10] In Re Malajew and Secretary To the Department of Social Security,[11] the Tribunal suggested that normal financial hardship, of itself, would be unlikely to be sufficient for the discretion to be exercised: ‘In order for financial hardship to be "special", it must be more severe than in the usual sort of case considered under the Act.’[12]

[10] See eg Re Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143.

[11] AAT 4493, 19 July 1988.

[12] Re Malajew and Secretary To the Department of Social Security (AAT 4493, 19 July 1988).

41. Mr Emerson-Elliott has not sought to argue that Mr Wilson should secure the exercise of the section 24 discretion based solely on the fragility of his health. It is to be expected that a person in receipt of DSP for seventeen years or more would have significant health challenges, so those do not of themselves make the case sufficiently unusual or abnormal that the ‘special reason’ test is met. Nevertheless, Mr Wilson’s health issues are so extensive and varied that they contribute very substantially to the financial problems he and Mr Freyer face, and Mr Emerson-Elliott argues that the discretion should be exercised on the basis that withdrawal of Mr Wilson’s DSP would cause financial hardship. While the exercise of the discretion must be based on Mr Wilson’s circumstances, financial hardship for each member of the couple is the same, as their financial resources are shared. In what follows, therefore, the income and expenditure of both is taken into account.

42. I note that for various other purposes the Act defines ‘severe financial hardship’. Section 19C provides that a person claiming various kinds of benefit who is a member of a couple is in severe financial hardship where the person’s liquid assets are less than twice the maximum rate of the benefit sought. Under section 14A, liquid assets consist of salary and related benefits, funds held in bank accounts, and shares and debentures in public companies. I am not persuaded, however, that the tests set up elsewhere in the Act for other purposes are suitable for current purposes: section 24 makes no reference to financial hardship, which is a notion that appears, in this context, in the Guide and the case law. I note that earlier in this process the issue of financial hardship was addressed briefly by the ARO, and dismissed (T20). The ARO noted that Mr Freyer’s income is well above the $1200 per fortnight which is the maximum combined income of a couple where one member is receiving DSP and the other Carer Payment because they are caring for their partner and unable to work. I do not believe that is a satisfactory test in the current situation: Mr Freyer is working full-time and has expenses as a result that would not occur if he was not working, for example union fees, professional association fees, and costs associated with transport and clothing.

43. Nevertheless, the principle being applied here – that a benefit should not be lightly granted, but only after the need for it has been properly tested – is consistently applied throughout the Act. Section 19C(4) sets out a test of what is to be regarded as ‘unavoidable or reasonable expenditure’ for various purposes. It includes reasonable costs of living, repairs to a home, vehicle and property, essential medical expenses, insurance premiums and vehicle registration. ‘Reasonable costs of living’ in turn includes mortgage payments, rates, utilities and petrol. Other reasonable expenses may be included at the Secretary’s discretion. This list is a suitable starting point for testing whether Mr Freyer and Mr Wilson are suffering financial hardship.

44.     Mr Emerson-Elliott advanced the argument that although the decision under review was made in July 2009, I am obliged, in accordance with the Tribunal’s legislation and its practice to ‘step into the shoes of the original decision-maker as of now, as of today’. Mr Emerson-Elliott took the view, if I understand him correctly, that this means that I should decide whether Mr Wilson and Mr Freyer would suffer financial hardship now if his pension were withdrawn, using the most recent budgetary information relating to Mr Wilson’s and Mr Freyer’s circumstances rather than material relating to the earlier date, when the decision under review was taken. I assume he was driven by the reasoning of cases such as Shi v Migration Agents Registration Authority (‘Shi’),[13] Drake v Minister for Immigration and Ethnic Affairs (‘Drake’)[14] and Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (‘Brian Lawlor’).[15] The early cases Drake and Brian Lawlor established that the Tribunal, as an administrative decision-maker, does not fulfil its functions by deciding whether the decision under review is in error, but comes afresh to the ‘correct or preferable’ decision. In Brian Lawlor  Smithers J puts that role as follows:

... the Tribunal is an instrument of government administration and designed to act where decisions have been made in the course of government administration but which are in the view of the Tribunal not acceptable when tested against the requirements of good government.[16]

[13] (2008) 235 CLR 286.

[14] (1979) 46 FLR 409.

[15] (1979) 41 FLR 338.

[16] Ibid, 368.

45.     In taking its decisions, the Tribunal must, in keeping with good administrative practice, base its decisions on the best available information. In Drake, Bowen CJ and Deane J said:

The question for the determination of the Tribunal is not whether the decision which the decision-maker made was the correct or preferable one on the material before him. The question for the determination of the Tribunal is whether that decision was the correct or preferable one on the material before the Tribunal.[17]

[17] Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409, 419.

46.     In Shi the High Court considered (relevantly) whether in taking its fresh decision the Tribunal was obliged to decide a matter on the basis of the facts and circumstances at the time of the original decision, or at the time of its own decision, that is whether it could or should consider supervening events and changes in circumstances since the decision under review. The majority held that in general the Tribunal could and should take its decisions on the basis of facts and circumstances at the time it takes its decision, unless the statute under which the decision was taken implies or specifies otherwise. The judgments of Kirby J, and of Hayne and Heydon JJ each offer eligibility for social security benefits as an example of where the statute implies that the decision should be taken on the facts and circumstances applying at the time of the original decision. Because such decisions are taken on a periodic basis, and eligibility may change as a claimant’s circumstances change (for example if they form or dissolve a marriage-like relationship, or if their assets or income changes), the decision must relate to that time, not to the later date when the Tribunal comes to review the relevant decision. Kirby J put it as follows:

Sometimes, it may be inherent in the nature of a particular decision that review of that decision is confined to identified past events. If, for example, under federal legislation, a pension is payable at fortnightly rests, by reference to particular qualifications that may themselves alter over time, a "review" of an administrative "decision" to grant or refuse such a pension, by reference to statutory qualifications, may necessarily be limited to the facts at the particular time of the decision.[18]

[18] Shi v Migration Agents Registration Authority [2008] 235 CLR 286, 300.

47.     In the present case the decision whether or not to exercise the discretion is one that should be made from time to time as circumstances change. My decision relates to the period around July 2009; I may draw on all information now available to me relating to that period; and the powers I exercise are those that were available to the decision-maker (specifically in this case the SSAT).

48.     The point of departure for testing financial hardship is the budget prepared by Ms Mayes. Ms Maclean presented at her closing submission an alternative budget which I take to be an illustration of how Mr Freyer and Mr Wilson could manage within the reduced resources available to them, if Mr Wilson were no longer to receive the age pension – that is, to illustrate the possibility of their financial survival. Ms Maclean produced this budget by reducing the outgoings in a small number of areas of the budget, but especially by reducing the mortgage payments on the town house Mr Freyer bought for the couple to live in, and by reducing the deduction made each fortnight from Mr Freyer’s salary for superannuation. In most, but not all, other areas Ms Maclean accepted the budgetary figures put forward by Ms Mayes.

49.     These two budgets are presented below together with a third, presented below as the Tribunal’s, not to suggest how Mr Freyer and Mr Wilson ought to use their funds, but purely and simply to provide another and alternative test of whether, realistically, they are going to be faced with financial hardship if the pension is withdrawn from Mr Wilson. The budget has been assembled therefore with Mr Wilson’s pension omitted from consideration, but with Mr Freyer’s carer payment included. As the budget is essentially notional rather than actual, amounts have been rounded up or down to avoid giving the budget a spurious appearance of precision.

50.     The following explains where the budget departs from those of Ms Mayes or Ms Maclean:

(a)Some of the elements in Ms Mayes’ budget have been omitted – Meals on Wheels were not being provided at the time of the decision under review, and I agree with Ms Maclean that setting aside funds for Lotto is not an appropriate provision in a budget designed to test financial hardship;

(b)The level of funds allocated for donations, gifts and hair care has also been reduced from the levels adopted by Ms Mayes. While it may be laudable that Mr Wilson and Mr Freyer have maintained regular donations to charity, such donations are not an essential element when determining financial hardship. Similarly, it is likely to be accepted by others that people formerly receiving but now denied a social security benefit would constrain the amount they spend on gifts. A more modest amount than Mr Freyer normally spends on hair care seems appropriate for present purposes;

(c)Ms Mayes’ figure for supermarket and food expenditure includes an amount of $70 above the average fortnightly expenditure at the supermarket to account for items of a grocery nature bought elsewhere, such as at pharmacies. Ms Maclean omitted anything beyond the actual average expenditure at the supermarket. I see the $70 for fortnightly non-supermarket expenditures included by Ms Mayes as unreasonably high. I have used a figure of $20, giving an overall allocation for this item of $300;

(d)In a number of areas the fortnightly expenditures included by Ms Mayes seem rather generous for a couple faced with a need to constrain their expenditures. I have reduced the allocations for home maintenance and entertainment and recreation. I have also reduced that for gardening. Mr Freyer and Ms Mayes explained that the allocation for gardening reflected current expenditures required under strata title arrangements. Such expenditures seem to me to represent unusually ’lumpy,’ one-off obligations that should not be fully reflected in the budget;

(e)Mr Freyer has been making payments on his two mortgages at levels that allow him to pay off the debts well before their term. If he were to make the minimum repayments he would be well into his 70s by the time the mortgages were paid off. It is not to be expected that at that time he would find it easy to earn enough to continue mortgage payments, and so for that reason he has adopted a repayment rate that would see the mortgages paid off in about six years, when he will be 61. Ms Maclean would set the repayment at the minimum level. I do not see it as unreasonable that a repayment rate should be adopted that allows the repayment of the mortgages during the period when Mr Freyer expects to be working. There are many aspects of government policy and legislation, including through the taxation system, that may be taken as an explicit or tacit encouragement of home ownership, and given the general terms in which the discretion under contemplation in this matter is expressed, I do not see it as inappropriate to recognise the advantages of home ownership in deciding what is a reasonable budget. That said, however, I do not understand why the age of 61 should be adopted as a retirement age for the purpose, when Mr Freyer gave evidence that he plans to work until he is 65. Further, the date for access to the age pension is currently 65 and is to rise to 67 by 2023. A recalculation of the repayment rate is a matter that a bank should undertake, but given that the budget being assembled here is essentially notional, I have adopted a repayment rate fortnightly of $750 for the first mortgage in place of Mr Freyer’s current repayment of $930 or the minimum repayment rate of $566; and $140 for the second mortgage in place of the $170 that Mr Freyer currently repays or the $100 that is the minimum;

(f)I agree with Ms Maclean that a budget to test financial hardship should show some economies in an area like lunches and takeaways, and have adopted a lower figure for that item;

(g)Mr Freyer has been paying into his superannuation fund at 5% of salary, which is above the 2% minimum he must pay; Ms Maclean argues that the budget should be constructed on the basis of Mr Freyer’s minimum contribution to superannuation. Additional contributions to superannuation are a form of saving, and they provide for the future; they are not ‘consumptive’ expenditures. Such contributions are encouraged by legislation through favourable tax treatment. Nevertheless, if there is discretion in such an area that allows outgoings to be aligned with income, I think it should be used;

(h)I have accepted Ms Maclean’s argument that Mr Freyer’s actual tax return for the 2008-09 financial year should be included in the budget;

(i)Ms Maclean raised the possibility of additional private health refunds for some items. It is my understanding from Ms Mayes’ evidence that the figures given are all out-of-pocket expenses; and

(j)The only credit card expenses that could sensibly be included in the budget are interest payments on the accumulated debt (on those cards charging interest at the time, as some of the cards were interest free for a defined period). I note that Mr Freyer gave evidence that he has $11,000 in a term deposit account, the remainder of the $63,000 he inherited on his mother’s death. That would go a long way towards repaying the principal currently on the credit cards, and would allow him to escape the very high interest rates attaching to credit cards. It is not the Tribunal’s role to offer financial advice, but neither is it acceptable to make a finding of financial hardship where a solution, or a partial solution, is within a party’s reach. If he used the funds in this way, Mr Freyer would have less access to funds for repairs to his house, repairs he said were needed. Nevertheless, the couple’s financial position might be more manageable.

51.     The Tribunal’s budget, assembled along the above lines, is set out below, with the budgets put forward by Ms Mayes and Ms Maclean for comparison.

Expenses	$/fortnight (Mayes)	$/fortnight (Maclean)	$/fortnight (Tribunal)
First mortgage	930.00	566.00	750
Second mortgage	170.00	100.00	140
Rates	31.07	31.07	31
Water/sewerage	23.08	23.08	23
Body corporate	43.68	43.68	44
Electricity	36.00	36.00	36
Gas	15.55	15.55	16
Phones/internet	100.00	100.00	100
Insurance (contents/car)	42.17	42.17	42
Gardening	76.92	76.92	25
Domestic assistance	25.00	25.00	25
Meals on Wheels	83.75	0.00	0
Home maintenance	115.38	115.38	80
Funeral insurance	18.13	18.13	18
Union fees	24.55	24.55	25
Professional association	13.96	13.96	14
Food/supermarket	350.00	280.00	300
Lunches/takeaway	130.00	100.00	80
Medication/scripts	49.79	49.79	50
Doctors/specialists	28.84	28.84	29
Special equipment	11.53	11.53	12
Scans/test procedures	19.20	19.20	19
Dental/optical	53.84	53.84	54
Health insurance	127.71	127.71	128
Clothing/shoes	67.30	67.30	67
Trips to visit family	58.00	58.00	58
Subscriptions/magazines	20.00	20.00	20
Lotto	5.00	0.00	0
Entertainment/recreation	100.00	100.00	80
Charities/donations	18.00	0.00	0
Gifts	16.53	10.00	10
Hair care	41.30	20.00	10
Pet needs	53.07	53.07	53
IT costs	15.38	15.38	15
Miscellaneous/stamps	10.00	10.00	10
Car registration	34.89	34.89	35
Fuel/oil	72.00	72.00	72
Roadside assistance	3.68	3.68	4
Repairs/service	24.42	24.42	24
Transport for Don	50.00	50.00	50
ANZ Credit card	90.00	26.93	27
CBA Credit card	50.00	29.57	30
GE interest free a/c 1	67.00	0.00	0
GE interest free a/c 2	67.00	0.00	0
GE interest free a/c 3	67.00	0.00	0
David Jones card	25.00	0.00	0
Subtotal	3,476	2,498	2,591
Income
Mr Freyer’s salary	2,272	2,433	2,433
Carer allowance	110	110
Mr Wilson’s pension	729
Tax refund	68	68
Subtotal	3,001	2,611	2,611
INCOME LESS EXPENSES	-475	113	20

52.     The outcome of the budgeting exercise is that it appears possible, with careful budgeting, for Mr Freyer and Mr Wilson to survive without the age pension that Mr Wilson has been receiving.  I believe it is reasonable to expect the couple to manage by normal careful budgeting. The budget does not, of itself, suggest the significant financial hardship that would warrant the exercise of the discretion. The above budget is not as stringent as suggested by the Guide to Social Security Law, which says that income from all sources should be considered, including accessible superannuation; the implication would be that mortgage repayments, for example, should be reduced to the minimum.

53.     The characteristic of Mr Wilson that sets him apart and might influence a decision whether to exercise the discretion is the health problems he suffers, and the resulting cascade of financial and psychological problems for him, and for him and Mr Freyer as a couple. I note, however, that the total fortnightly out-of-pocket spend on medical and related items, leaving aside private health insurance, is of the order of $164. In a total budget of about $2,500 this does not seem to me to create the unmanageable pressures that would distinguish this matter from the usual run of cases. Even with the additional expenditures that might be necessary if Mr Wilson’s pension were withdrawn, such as higher dental and audiology costs, I am not persuaded that the case meets the requirements for exercise of the discretion. Additional expenditures that may be needed because of Mr Wilson’s frail health – such as a special bed or additional clothing – are already reflected in the budget and, again, do not take the matter sufficiently into the abnormal or unusual that, in my view, the ‘special reason’ threshold is crossed.

54.     Much has been said in the course of the case about the future choices facing Mr Wilson and Mr Freyer if the pension is withdrawn. It has been suggested that the public purse will be worse off because Mr Freyer will be unable to support Mr Wilson, who will be obliged to move into a nursing home, at increased public cost; or that various other choices will be forced on Mr Wilson or Mr Freyer, which will increase the cost to the public. Such choices may indeed confront Mr Wilson and Mr Freyer at some stage, regardless of the decision at hand. Mr Wilson’s dementia, for example, which is currently mild, may worsen to the point where he needs a higher standard of care than at present. These matters are for the future, and Mr Wilson and Mr Freyer must deal with such choices if and when they arise.

55.     I note, too, that the system of social security is expressly designed to cater for the various issues likely to confront people as they age and their health deteriorates. The discretion to treat a member of a couple as single is not intended to be a means of dealing with such issues: the discretion is reserved for those out-of-the-ordinary cases where the system has not provided for the particular circumstances of the claimant. The submissions of counsel make it clear that a number of benefits will continue to be available to Mr Wilson.

56.     The evidence does not persuade me that Mr Freyer and Mr Wilson face the level of financial hardship that warrants the exercise of the discretion.

Is there any other special reason why Mr Wilson should be treated as single rather than a member of a couple?

57. No other special reason has been argued before me, but it may be that the totality of the issues relating to the fragile physical, psychological and financial health of the couple, given their impact on Mr Wilson, taken together, may constitute a special reason under section 24 of the Act. Problems have a natural interaction one with another: Mr Wilson’s fragile health places psychological stress on Mr Freyer, as well as straining his finances; that in turn has a further negative influence on Mr Wilson’s health, setting off a deteriorating downward spiral. The growing dependence of Mr Wilson on Mr Freyer exacerbates the psychological pressures that each is under.

58.     I have no doubt that something along the above lines is occurring, and that Mr Freyer and Mr Wilson face a challenging future on many fronts, not simply in regard to their finances. But the scenario depicted in the previous paragraph is a somewhat fanciful extrapolation of the evidence. Even if it were to be fully substantiated – and I do not regard the evidence before me as a persuasive case – I would not accept that these matters put the respondent into the ‘unusual, uncommon or abnormal’ category necessary for the exercise of the discretion. It is not unusual for couples, as they age, to face these kinds of challenges and pressures.

Conclusion

59.     Mr Wilson is very ill and Mr Freyer is facing increasing challenges in caring for him, including severe financial challenges. These challenges directly affect Mr Wilson but do not constitute in my view a special reason for exercising the discretion to treat Mr Wilson as single rather than a member of a couple. The challenges faced on the financial front are those faced by many people when their circumstances change or the economy worsens or amendments to government legislation have some unlooked-for impact on their entitlements. The respondent has referred me to cases such as Re Holt and Secretary, Department of Education, Employment and Workplace Relations,[19] in which the Tribunal exercised the section 24 discretion. In that case, however, the financial hardship was undeniably extreme, with the couple, on an admittedly remote site, being without a telephone for outbound calls, reliant on firewood for heating, and without savings. They were described by the Tribunal as ‘existing at a subsistence level’.[20] In addition, the claimant’s partner in that case, Mrs Holt, had been unable to contribute to the pooling of funds of the couple. In Re XBCZ and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs[21] the Tribunal declined to exercise the discretion, noting that despite the health and financial problems of the claimant in that case, he had not established that his circumstances were sufficiently out of the ordinary to amount to a special reason enlivening the discretion. In Re Harding and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs,[22] the Tribunal again declined to exercise the discretion, because the applicant and his partner could pool their assets and had not demonstrated that they were suffering financial hardship.

[19] [2010] AATA 143.

[20] Ibid, [55].

[21] [2010] AATA 826.

[22] [2010] AATA 231.

60. None of these cases, in my view, assist Mr Wilson. Mr Wilson and his partner appear to be suffering a significant budgeting challenge, which will require them to moderate their spending and perhaps make some adjustments to how they live; but the degree of financial hardship does not justify the exercise of the section 24 discretion. I do not see it as helpful, in the circumstances, however, that there should be any recovery of payments already made, and my decision should operate prospectively from its date.

Decision

61.     The decision under review is set aside and in its place is substituted a decision that Mr Wilson is a member of a couple for the purposes of the Act.

I certify that the 61 preceding paragraphs are a true copy of the reasons for the decision herein of Mark Hyman, Member

Signed:         ....................[sgd]............................................................
  H. Choi, Associate

Date of Hearing        10 June 2011
Date of Decision        12 August 2011

Solicitor for the Applicant                Mr D Emerson-Elliott, Welfare Rights & Legal Centre

Solicitor for the Respondent  Ms J Maclean, Centrelink Advocacy Branch