Secretary, Dept. of Social Security v Temmen, E

[1993] FCA 299

Re: SECRETARY, DEPARTMENT OF SOCIAL SECURITY
And: EVELYN TEMMEN
No. WAG163 of 1992
FED No. 299
Number of pages - 10
Administrative Law
(1993) ASSC 92-128
(1993) 17 AAR 349
(1993) 30 ALD 485

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Sweeney J(1)

CATCHWORDS

Administrative Law - Appeal from Administrative Appeals Tribunal - whether finding that transfer of equity in a house was a "maintenance agreement" for the purposes of s.10(1) of the Social Security Act 1991 involved an error of law - whether finding that s.10(1) of the Social Security Act be read subject to the terms of s.87A of the Family Law Act 1975 involved an error of law.

Social Security Act 1991 (Cth) ss.10(1), (3), (4), 252(1).

Family Law Act 1975 (Cth) s.87A(2)

HEARING

MELBOURNE, 19 April 1993

#DATE 13:5:1993

Counsel for the Applicant: Mr W.S. Martin QC

Solicitors for the Applicant: Australian Government

Solicitor

Counsel for the Respondent: Mr M.L. Barker

Solicitor for the Respondent: Mr S.A. Walker

ORDER

The court orders:

1. that the appeal be allowed

2. that the decision of the Tribunal of 21 August 1992 be set aside

3. that the decision of the Social Security Appeals Tribunal of 14 October 1991 be affirmed

4. that, if necessary, the costs of the respondent of and incidental to the appeal be taxed.

Mpte: Settlement and entry of orders is dealt with in O.36 of the Federal Court Rules.

JUDGE1

SWEENEY J This is an appeal by the Secretary, Department of Social Security, from a decision of the General Administrative Division of the Administrative Appeals Tribunal constituted by Deputy President P.W. Johnston given on 21 August 1992.

1. The Tribunal's "Plain English Summary of Decision" reads as follows:
   

"Mrs Temmen had been receiving Sole Parent Pension at the rate of $363.60 each fortnight. The Department of Social Security cancelled that pension on the ground that an agreement under the Family Law Act she had entered into with her former husband did not produce enough maintenance for her children. The Department considered it would be reasonable for her to take action under the Child Support (Assessment) Act to obtain more. When she appealed to the Social Security Appeals Tribunal, it decided the pension should not have been cancelled because the Department should have taken into account the value of her husband's half interest in the family home, which he had transferred to her, when deciding if her efforts to obtain maintenance were reasonable. The Department then recalculated the amount of pension due to the applicant. It included the value of the half interest in the house. The amount of pension was substantially reduced. Mrs Temmen appealed to the Administrative Appeals Tribunal claiming the transfer of the share in the house was a property settlement and should not be treated as maintenance. She also claimed that her efforts to obtain maintenance were reasonable in any event. This was because her husband had indicated he would go overseas in his employment if she went beyond the Family Law agreement. DECIDED:

(1) Legally, the transfer of the husband's interest in the home was a property settlement and should not be included as maintenance when assessing the rate of pension.

(2) On the facts according to the evidence, the agreement represented 'reasonable action' to obtain maintenance for herself and her children in the circumstances. To require her to pursue a greater amount under the Child Support Scheme was likely to leave her and the children in a worse situation."

1. The history of the matter was set out by the AAT as follows:
   

"Factual Background

6. The basic facts in this matter are not in dispute and are as follows. Mrs Temmen separated from her husband on 26 March 1990. She had sole custody of the two children, Michaela (born 15 January 1977) and Nardia (born 13 February 1982). On 27 March 1990 the applicant and her husband entered into an agreement pursuant to s.86 of the Family Law Act ('the Agreement') to finalise maintenance and property matters. Mrs Temmen had the benefit of legal advice in conducting those arrangements. Clauses 2-4 of the agreement relevantly provide:

'2. The husband shall transfer to the wife all his right title and interest in the former matrimonial home and the wife undertakes to place the home on the market for sale forthwith and that on the sale thereof the wife is to retain the net proceeds.

3. That until the date of the sale of the former matrimonial home the husband shall pay to the wife the sum of $536.00 per month being in respect of the monthly repayments of the mortgage registered over the former matrimonial home.

4. After the date of the sale of the former matrimonial home the husband shall pay to the wife the sum of $500.00 per month as and by way of maintenance for the two said children apportioned equally between them.'

7. The home in question is subject to a secured loan of approximately $36,000.00 and the value of the equity transferred to the applicant was estimated to be $42,500.00.

8. Though the agreement contemplated that the premises would be sold shortly after the agreement came into effect, the parties subsequently agreed that, given the unfavourable state of the market, the sale of the home should be deferred until the youngest child completes her primary schooling. Until that time Mr Temmen is to continue to pay the sum of $536 per month. No formal document evidencing the decision not to sell immediately was provided to the Tribunal. To date, according to Mrs Temmen's evidence, Mr Temmen has complied with the agreement."

1. The Tribunal considered the question whether the transfer to the respondent of her husband's equity in the house was a "maintenance agreement" for the purposes of s.10(1) of the Social Security Act 1991 ("the Act") and set out its relevant provisions, as follows:
   

"Maintenance income definitions

10.(1) In this Act, unless the contrary intention appears: 'capitalised maintenance income', in relation to a person, means maintenance income of the person:

(a) that is neither a periodic amount nor a benefit provided on a periodic basis; and

(b) the amount or value of which exceeds $1,500; ...

'cash maintenance', in relation to a person, means maintenance income of the person that consists of the amount of a payment received by the person or by a dependent child of a person; ...

'child support' means financial support under the Child Support

(Assessment) Act 1989 and includes financial support:

(a) by way of lump sum payment; or

(b) by way of transfer or settlement of property; 'maintenance' includes child support;

'maintenance agreement' means a written agreement ... that provides for the maintenance of a person ... 'maintenance income', in relation to a person, means;

(a) child maintenance - that is, the amount of a payment or the value of a benefit that is received by the person for the maintenance of a dependent child of the person and is received from

i. a parent of the child; or

ii. the partner or former partner of a parent of the child; or

(b) partner maintenance - that is, the amount of a payment or the value of a benefit that is received by the person for the person's own maintenance and is received from the person's partner or former partner;

...

'non-cash housing maintenance', in relation to a person means maintenance income of the person that is not cash maintenance and is received in relation to the provision of a residence that is, or is to be, the person's principal home;

'special maintenance income', in relation to a person means:

(a) non-cash maintenance of the person; or

...

(3) For the purposes of the definition of 'maintenance income' in subsection (1):

(a) a payment received under subsection 76(1) of the Child Support (Registration and Collection) Act 1988 in relation to a registered maintenance liability (within the meaning of that Act) is taken to be received from the person who is the payer (within the meaning of that Act) in relation to the liability; and

(b) a reference to a benefit received by a person includes a reference to a benefit received by the person because of a payment made to, or a benefit conferred on, another person (including a payment made or benefit conferred under a liability owed to the other person); and

(c) a reference to a payment or benefit received from a person includes a reference to a payment or benefit received;

(i) directly or indirectly from the person; and

(ii) out of any assets of, under the control of, or held for the benefit of, the person; and

(iii) from the person under or as a result of a court order, a court registered or approved maintenance agreement or otherwise.

(4) For the purposes of the definition of 'non-cash housing maintenance' in subsection (1), maintenance received in relation to the provision of a residence includes maintenance consisting of:

(a) a benefit received because of the transfer or settlement of a right or interest in relation to the residence; and

(b) where there is a secured housing loan on the residence - a benefit received because of:

(i) the payment of interest, charges or other amounts under the loan; or

(ii) the repayment of amounts borrowed under loan;".

1. The Tribunal expressed its findings in relation to the agreement between the respondent and her husband, as follows:
   

"23. The Tribunal accepts that the Agreement, as well as meeting the definition of 'maintenance agreement' within s.4(1) of the Family Law Act (being in writing, between the marriage partners, and dealing with financial matters also), satisfies the definition of a 'maintenance agreement' in s.10(1) of the Act. It is an agreement that in so far as it requires Mr Temmen to pay $536 per month to meet the continuing mortgage repayments provides for the maintenance of Mrs Temmen, at least. (See further discussion at paragraph 28 below). This is so irrespective of whether it is effective in providing maintenance for her children. On the evidence, it could be suggested, however, that the parties have varied the Agreement. Though Clause 2 of the Agreement required the matrimonial home to be placed 'on the market for sale forthwith' such a sale has not been pursued. On one view, the Agreement has thus been varied and that variation, not being in writing, would fall outside the definition of a 'maintenance agreement'. That, in the Tribunal's view, is an unduly narrow construction. Mrs Temmen did in fact comply with the terms of Clause 2 in that she did put the home on the market for sale as soon as she could reasonably do so. The Agreement does not require that the sale itself should take place 'forthwith'. In any event, 'forthwith' is a word of variable connotation, one permissible meaning being as soon as reasonably convenient or as soon as it is reasonably possible to do the act required (Hillingdon London Borough Council v Cutler (1968) 1 QB 124). Given the depressed state of the market it was not unreasonable to withdraw the property from sale. I therefore find that taking account of the flexible terms in Clause 2, the Agreement in its original form still provides the basis for the provision of maintenance to Mrs Temmen. The respondent, in fact, agrees that that is the correct view to take.

24. In order to classify the transactions for the purposes of the Act one must look to how they are categorised in the Agreement: Re Cameron and Secretary, Department of Social Security (1990) 20 ALD 503, per Deputy President McDonald. Turning then to the key elements in the Agreement, I find that the undertaking by Mr Temmen to transfer his interest in the family house to the applicant is essentially a property settlement. Mrs Temmen is, to that extent, right in so contending. That, however, is not the end of the matter. The word 'maintenance' is a term of very wide scope (A Dickey Family Law (2nd ed.) (Sydney Law Book Company; 1990) p 416 citing Lumsden v Lumsden (1963) 5 FLR 388 at 394). Subject to what is said in the next paragraph about the effect of s.87A of the Family Law Act, the transfer could also, as I see it, be characterised as a form of spousal or partner maintenance, at least until the house is sold pursuant to the Agreement."

1. The Tribunal then set out certain provisions of the Family Law Act 1975, in particular s.87A(2) which read as follows:
   

"87A(2) Where a maintenance agreement of a kind referred to in paragraph (1)(a):

(a) does not state that the agreement is an agreement to which this section applies; or

(b) states that the agreement is an agreement to which this section applies, but does not comply with paragraph (1)(d); any payment, transfer or settlement of a kind referred to in paragraph (1)(a), that the agreement has the effect of requiring, shall be taken not to make provision for the maintenance of a party to the relevant marriage or of a child of the relevant marriage.'

(emphasis added)"

1. In para. 27 the Tribunal said:
   

"27. But for s.87A of the Family Law Act the transfer by Mr Temmen, pursuant to Clause 2 of the Agreement, of his interest in the family home would fall within the definition of 'non-cash housing maintenance' in s.10(1) as being maintenance that is not cash maintenance and is 'received in relation to the provision of a residence that is, or is to be, the person's principal home'. That view would find further support in the expanded definition of that phrase in s.10(4)(a) which contemplates the transfer of an interest in a residence. As such, the transfer would bear the character of 'special maintenance income' within the meaning of the Act, since the definition of the former embraces the latter. But as stated above, the effect of s.87A precludes that view."

1. Counsel for the applicant submitted that the Tribunal correctly found that the transfer by the husband amounted to "non-cash housing maintenance" within the meaning of s.10(1) of the Act.

2. In her Notice of Contention the respondent contended that the Tribunal was wrong in law in making this finding. It was open to the Tribunal to make this finding on the facts and in my opinion, it did so without error of law.

3. The applicant submitted, in my opinion correctly, that the Tribunal erred in law in finding that "the effect of s.87A precluded that view". He contended that s.87A was introduced as part of a legislative scheme designed to ensure that agreements between parents made under the Family Law Act did not have the effect of transferring to the State their responsibility to provide for the maintenance of their children, whereas the construction adopted by the Tribunal would have produced the opposite effect. Had the legislature intended that the 1991 provision in the Act be read subject to the terms of s.87A, introduced in 1987, it could have done so quite simply.

4. The applicant conceded, as it had before the Tribunal, that, if its submission that the transfer by the husband was properly characterised as maintenance for the purposes of the Act were accepted, the respondent had taken reasonable steps to obtain maintenance.

5. The applicant did not contend that every transfer of an interest in a house by one spouse to another necessarily amounted to maintenance income, recognising as it did that such transfers might take place, for example, in recognition of a spouse's contributions towards or property rights in the house. It simply submitted, as I think correctly, that it was open to the Tribunal to find on the facts before it, without error of law, that this particular transfer met the tests of s.10 of the Act. I was unable to derive any assistance from the references on behalf of the respondent to decisions under the Family Law Act, Matrimonial Causes Act and the Income Tax Assessment Acts.

6. Ground 3 of the respondent's Notice of Contention read as follows:
   

"3. The AAT was wrong in law in failing to find that the Appellant, in cancelling the Respondent's SPP under Section 252(1) of the Social Security Act, failed to consider what action, if any, the Respondent could take to obtain maintenance, as the Appellant was required to do by that section, and so the Appellant exceeded its powers."

1. I have been unable to discern any such error of law.

2. In my opinion, the Tribunal erred in law in not giving effect to its finding that the transfer by the husband amounted to "non-cash housing maintenance" within the meaning of s.10(1). It is not a case in which the Court has been invited to trespass upon the facts but simply to set aside the Tribunal's decision not to give effect to its own finding, which I am satisfied that it should do.

3. Accordingly it is ordered:
   

1. that the appeal be allowed

2. that the decision of the Tribunal of 21 August 1992 be set aside

3. that the decision of the Social Security Appeals Tribunal of 14 October 1991 be affirmed.

1. As it had been agreed between the parties that the applicant should pay the respondent's costs in any event, the only order in respect of costs is that they be taxed, in case that should become necessary.