Smedley and Secretary, Department of Education, Employment & Workplace Relations and Beveridge

[2010] AATA 292

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 292

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/5633

GENERAL ADMINISTRATIVE  DIVISION		)
Re		JANINE VALENCIA MARY SMEDLEY

Applicant

And SECRETARY, DEPARTMENT  OF EDUCATION,   EMPLOYMENT   & WORKPLACE  RELATIONS

Respondent

And          NIGEL ROBERT BEVERIDGE

Added Party

DECISION

Tribunal The Hon C R Wright QC (Deputy President)

Date23 April 2010

PlaceHobart

Decision Decision under review is set aside.  The determination of Centrelink of 23 July 2008 cancelling the applicant's Parenting Payment Single benefit is also set aside. 

[Sgd:  Hon C R Wright QC]

Deputy President

CATCHWORDS

SOCIAL SECURITY - pensions, benefits and allowances - Parenting Payment Single - separated parents with equal shared care of child - financial considerations - Policy guidelines - male parent's income earning potential not fully utilised - female parent having regular but low income - comparison of assets - female parent determined to be "principal carer"

Social Security Act 1991 - ss. 5(18) and (19), 500, 500D(2)

Guide to Social Security Law

Vickers v Secretary, Department of Education, Employment and Workplace Relations and Anor [2009] AATA 534

Filippidis v Secretary, Department of Education, Employment and Workplace Relations and Anor [2009] AATA 625

REASONS FOR DECISION

23 April 2010   The Hon C R Wright QC (Deputy President)     

1.      This is a review of a determination by the Social Security Appeals Tribunal (SSAT) affirming a Centrelink decision declaring the former de facto husband of the applicant, Nigel Beveridge to be the "principal carer" of their youngest child, within the meaning of the Social Security Act 1991, section 5, and as such, entitled to payment of a Parenting Payment Single benefit (PPS) under sections 500 and 500D of the Act. A benefit of this kind is means tested and classified as an income support payment. In a qualifying case a substantial benefit of $546.80 per fortnight may be payable to a successful applicant. However in the case of separated parents enjoying shared custody of the relevant child, each of whom may be prima facie entitled to such a payment, the legislation clearly provides that only one such payment is to be made. Contrary to the intuitive presumption that in such circumstances a payment should be divided between the parents proportionately and on the same basis as the care and control of the child has been specified in the relevant shared care arrangement or order (as the case may be) if any, the Act is quite clear in providing that only one parent may be recognised as "the principal carer" of the child, and thus entitled to a PPS payment. (See section 5(18) of the Act).

2. It is provided in section 5(19) that:

"If the Secretary is satisfied that, but for subsection 18, 2 or more adult persons would be principal carers of the same child, the Secretary must:

(a)  make a written determination specifying one of the adults as the principal carer of the child".

It is common ground between the parties that this is a case in which section 5(19) applies. In other words both the applicant and her former de facto husband could, apart from section 5(18), be assessed as the "principal carer" for the child. The Act itself contains no provision or directions as to what, if any, principles or issues must be considered or applied by the Secretary in discharging the obligations cast upon him or her in arriving at the written determination required by section 5(19).

3.      However governmental policy has been specified in the Guide to Social Security Law in point 1.1P.416.  These guidelines are as follows:

"Equal care

If the difference in the level of care provided by the 2 carers is less than 10%, care is considered to be shared equally.

Example: Where care is shared 54/46% or 50/50%.

In situations of equal care where only one of the carers is claiming or receiving income support, that person should be determined as the principal carer. If both carers are claiming or receiving income support, the carer who is most in need of a favourable determination should be deemed principal carer.

A decision maker MUST take into account the following factors when deciding which carer is in most need of a favourable determination:

·whether one carer already qualifies as principal carer of another child (see below for further detail on determinations involving more than one child),

·whether only one carer would be eligible for PP,

·which carer would receive the higher rate of payment,

·any other sources of income the carers may have, whether actual or potential, including both employment and investment income,

Note: If either carer has income that fluctuates, the assessment officer may need              to look at average income levels over an extended period of time, such as 12            weeks, and

·the asset levels of each carer.

The following factors MAY be taken into consideration by the decision maker, if further information is required to make the determination:

·the expenses of each carer,

Example: Rent, child care,

·workforce experience, education levels and future employment prospects of each carer,

·the duration that each carer has been on income support and their principal carer status during this time. If there are no substantial differences between the parties, then generally the determination should be favoured which maintains the 'status quo', and

·any other factors considered relevant by the decision maker".

4.      These guidelines must be considered in the present case because the applicant and Mr Beveridge each have 50% care and control of their child.  Before examining the scope and effect of the guidelines I think it necessary to refer to the penultimate dot point in the passage from the guidelines quoted above.  This was referred to in the Statement of Agreed Facts (Exhibit 14) filed with the Tribunal by the parties legal representatives in the following terms::

"The Guide to the Act at 1.1.P.416 does provide guidance

o   The guiding principle is that payment goes to the carer with the greater need

·         However, if there is no substantial difference between the parties then      the status quo should be maintained".

This is part of an addendum to the Agreed Facts, titled "Synopsis of Issue" (and is plainly a contention as to the meaning of the guidelines rather than an "agreed fact").  However in my opinion, as a matter of construction, it is not correct.

5.      The second sentence in the penultimate dot point of the guidelines only qualifies the preceding factor set out in the dot point viz. "the duration that each carer has been on income support and their principal carer status during this time".  If the sentence "If there are no substantial differences between the parties, then generally the determination should be favoured which maintains the status quo", were intended to apply generally it would not have been placed where it is, but would have been placed after the final dot point ("any other factors considered relevant by the decision maker").  A contrary view based perhaps upon the confused and confusing ("Example:  Mary and John ...") following the final dot point, in my opinion would be untenable.   

6.      The central requirement of the "Equal Care" guidelines in situations such as the present (where both the applicant and Mr Beveridge have claimed income support) is that "the carer who is most in need of a favourable determination should be deemed principal carer".  Counsel put it a little more succinctly in Exhibit 14:  "The guiding principle is that payment goes to the carer with the greater need", but the precise meaning of the requirement as so stated is not free of ambiguity. It is a bit like section 92 of the Constitution providing that trade commence and intercourse between the States shall be "free". However, in context, the following conclusion is inescapable I think. Within the statutory scheme and the present policy the relevant "need" relates to the financial capacity of the relevant parent to cope with the costs, both direct and indirect of providing food, clothing and shelter and the mental, physical, social and cultural nourishment of the relevant child within the family environment in which that child finds itself during its period(s) of care by that parent. Accordingly it is plain that a determination in this case must depend upon factors and considerations over and above a simple assessment of which of the competing parties has the higher and more dependable source of income or assets of the greater value.

7.      The complexity of relevant issues was highlighted in two recent cases, Vickers and Secretary, Department of Education, Employment and Workplace Relations and Anor [2009] AATA 534 and Filippidis and Secretary, Department of Education, Employment and Workplace Relations and Anor [2009] AATA 625. Also highlighted in each case was the difficulty, and in many ways unsatisfactory, burden placed upon the determining authority in deciding which of the two claimants, otherwise entitled by their individual circumstances to a PPS payment, should receive the sole payment provided for in the legislation.

8.      In Vickers  at paragraphs 49 and 50 Senior Member Hastwell has this to say:

"It is unfortunate that despite the frequency with which shared care arrangements are now put in place and the amendments to the Family Law Act 1975 that effectively promote shared care of children, only one of the two parents can be entitled to Parenting Payment Single. It is surprising that there is not a provision for this payment to be split equally between the parents when they provide equal care. This is a matter for legislative amendment and the Tribunal is left to make a choice between two parents who both clearly have a commitment to do the best for their son.

It is also regrettable that this legislation can have the effect of putting parents into conflict which can only be detrimental to the wellbeing of the child whose care they are sharing".

I fully endorse these comments.  In Filippidis Deputy President Hotop said at paragraph 21:

"In Secretary, Department of Family and Community Services v Holmes [2000] FCA 513; (2000) 98 FCR 461 Gyles J (referring to former comparable provisions of the Act regarding sole parent pension) commented on the function of the decision-maker in determining which of 2 parents is qualified for sole parent pension, where the relevant child is a dependent child of each parent, as follows (at 467):

“... In those circumstances, the Secretary, and the Tribunals on appeal, have the invidious task of choosing between those persons in circumstances where the legislation does not provide a criterion or criteria.

This is a discretion constrained only by the purposes of the Act and the provisions of it relating to Sole Parent Pensions: O'Sullivan v Farrer [1989] HCA 61; (1989) 168 CLR 210 at 216. The section does not oblige the decision-maker to take any particular matter into account, and only prohibits taking into account those matters which are not relevant to the purposes of the Act. Within those very broad limits, it is a matter for the exercise of discretion by the decision-maker which cannot be controlled by a court dealing with errors of law: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39-42 per Mason J. Thus it is that one decision-maker might prefer the apparent objectivity of deciding on the basis of hours of custody, another might also take into account qualitative factors and yet another might also take into account the financial circumstances of the parties. If there is any relevant government policy guidance, then appropriate regard should be paid to it. It is, in circumstances such as the present, a matter for decision by the Administrative Appeals Tribunal, as it has the ultimate say on the merits of the decision...".

9.      Whilst it is plain that this Tribunal must give proper consideration to perceived government policy, it is nonetheless appropriate to express the hope that the present situation may receive critical consideration by policy makers and/or the legislature in the not too distant future.    I turn now to the evidence before me in the present matter.  Very helpfully and, I find, consistently with the documentary material and the oral evidence of the only viva voce witness, the applicant, counsel for the parties have submitted a Statement of Agreed Facts which was taken into evidence as Exhibit 14.  I have already referred to the concluding part of that document.  That Statement of Agreed Facts paragraphs 1.1 to 1.23 is set out below:

"1.1      Ms Smedley and Mr Nigel Beveridge are the parents of Joel Beveridge (DOB      25 July 1992) and Lewis Beveridge (DOB 11 May 1995). Ms Smedley also          has another child Dwayne Douglas (DOB 28 February 1987) who left her care in 2003.

1.2       Ms Smedley was granted PPS from 19 February 2002. At that stage she had      100% care of Joel and Lewis.

1.3       From 25 October 2004 Ms Smedley and Mr Beveridge started a shared care        arrangement for both Joel and Lewis whereby each had 50% care of both         children.

1.4      Ms Smedley continued to receive PPS.

1.5      Briefly for the period 2 June 2005 to 8 November 2005 Mr Beveridge had 80% care of Lewis. Mr Beveridge claimed, and was granted PPS. 

1.6      Ms Smedley continued receiving PPS.

1.7      From 9 November 2005 the shared care arrangement for Lewis reverted to         50% care.  Both Ms Smedley and Mr Beveridge continued to receive PPS.

1.8      On 23 July 2008 Centrelink made the decision to cancel Ms Smedley’s PPS        from 25 July 2008, the date Joel turned 16. The explanation given was that       Ms Smedley was not the primary carer of her youngest son Lewis and he was           therefore not a parenting payment child in relation to Ms Smedley. (T15)

1.9      On 7 August 2008 Ms Smedley appealed the cancellation. (T16/88)

1.10     On 5 September 2008 the authorised review officer (ARO) affirmed the      cancellation of PPS (T17). Mr Beveridge was also notified of the ARO’s decision.

1.11     On 21 October 2008 the SSAT also affirmed the decision. (T2) 

1.12     Ms Smedley applied to the AAT on 28 November 2008. (T1)

1.13     Ms Smedley’s income in the 2008/09 financial year for the purposes of this         appeal was that as shown on the 2009 Tax Notice of Assessment - $28,406

1.14     Mr Beveridge received $14,712 in parenting payments for the same period.         No other income is recorded. (See attachment A).

1.15     Ms Smedley was paying or had a liability of $150 per month child support to         Mr Beveridge at the time of the decision. 

1.16     As at 29 April 2008 Mr Beveridge had a bank balance of $23,055.00 and that       as at 5 March 2009 that balance was $16,202.00.  (See attachment B).

1.17     Mr Beveridge had a net rent liability of $244.14 per fortnight at 25/7/08      ($370.00 rent less $125.86 rent assistance per fortnight).  (See attachment      C).

1.18     Both Ms Smedley and Mr Beveridge received $241.78 family tax benefit per         fortnight prior to the relevant decision   (See attachment D)

1.19     Following the decision, Mr Beveridge’s rate of FTB changed to $213.66 per         fortnight (See attachment C)

1.20     Following the decision, Ms Smedley’s rate of FTB changed to $143.36 per          fortnight (See attachment E)

1.21     It is agreed that neither would qualify for parenting payment in respect to   another child.

1.22     It is agreed that either of Ms Smedley or Mr Beveridge could be assessed as       the principal carer.

1.23     It is agreed that the Supreme Court of Tasmania Orders 22 December 2006        reflect the property settlement occurring between the parties".

10.     There is no need to set out the attachments referred to, nor is there a need to set out the final part of Exhibit 14 dealing with "Synopsis of Issue" which I have already commented upon above.   The property settlement referred to in paragraph 1.23 relates to a consent order stamped 22 December 2006 (but actually made on 5 January 2007, see Exhibit 16).   Relevantly for present purposes that order provided that Mr Beveridge must transfer his share of their jointly owned real estate at Moriarty to the applicant, that the applicant must secure discharge of the existing mortgage in respect of Mr Beveridge's liability hereunder and that the applicant must pay Mr Beveridge the sum of $33,000.00.   This order was complied with and consequently the applicant became sole owner, subject to mortgage, of the former matrimonial home and Mr Beveridge received $33,000.00 in respect of his relinquished equity therein.  In assessing the relative financial position of each party both at the time of the cancellation of the applicant's PPS on 25 July 2008 and indeed, at the present time, there is some difficulty.  As a person whose interests would possibly be affected by the decision of the SSAT, to which the present applicant applied for review on 9 September 2008,  Mr Beveridge was given notice of that review and was invited to apply to be added as a party.  He declined that invitation.  The invitation was not formally renewed when the present application to review was made to the Administrative Appeals Tribunal but it was arranged by the respondent that Mr Beveridge was to be called as a witness by summons when the hearing commenced in Ulverstone on Tuesday 9 February 2010.  Unfortunately Mr Beveridge failed to appear.   

11.     As a consequence an application was made to me to issue a Witness Summons, requiring Mr Beveridge to appear at the resumed hearing in Hobart on Wednesday 24 February 2010 at 10.00 am. That summons was duly issued and served but again Mr Beveridge failed to attend.  The hearing was further adjourned and concluded in Hobart on Wednesday 31 March 2010.  I have been told that proceedings may be taken against Mr Beveridge for his failure to attend on 24 February 2010.   I have mentioned these matters because they explain, in part, the incomplete evidence before me as to Mr Beveridge's employment and financial situation.  Such evidence as I do have provides the following picture.  He is aged 41 years and is a qualified electrician.  He suffers from a chronic and incurable health condition which causes him to have an incapacity for work in excess of 29 hours per week as a result of intermittent tiredness and fatigue.  He is currently unemployed.  He has on occasions applied for employment but on disclosing his health condition to prospective employers he has been unsuccessful in securing work, due apparently to common perceptions that the condition from which he suffers may be transmissible to fellow employees.   If, on applying for work, he continues to advise potential employers of his condition, he is unlikely to obtain paid employment as an electrician.  There is nothing before me to suggest that he could not seek and obtain part-time work in, for example, domestic installation or repair jobs or in some field of electrical work where he would not be working in direct proximity to others.  According to Departmental records he last worked on 31 December 2007.  It seems that currently his sole source of income is from Commonwealth benefits.  Of course, if deprived of the PPS payment which he is currently receiving, he could apply for, and almost certainly qualify for, New Start or an equivalent benefit.  When he and the applicant entered into the property settlement previously referred to, he received $33,000.00 in cash.  This sum had reduced to about $20,000.00 at the time the decision of Centrelink now in question was made.  He receives a family tax benefit payment of $244.14 per fortnight.  He also receives $150.00 per month compulsory Child Support payments being made by the applicant.  There is no other reliable evidence as to his expenses or assets.   Nor is there any evidence indicating whether or not he has sought or received payment for work or services since July 2008.   Whilst it would be unfair and improper to suggest that by disclosing his health condition to prospective employers he was deliberately seeking to avoid work, he does have a substantial residual work capacity which seems to be completely under utilised at the present time. 

12.     The applicant's income for the year 2008-2009 was about $29,000.00 -$30,000.00.  To receive this income stream she was working in three jobs.  She continues to work full-time to provide a similar level of income.  By no measure can this be regarded as a substantial or generous income.   By community standards I would regard it as low.  She is now the sole owner of the former family home at Moriarty which she estimates is worth about $260,000.00 but it is subject to a mortgage of about $128,000.00.   The house contents have a notional value of $10,000.00.  Her accrued superannuation is about $5,500.00 and she has a car valued at about $2,500.00.  She has fixed expenses each month:

·     Insurances  $ 190

·     Rates  $  80

·     Phones  $ 100

·     Fuel  $ 100

·     Child Support  $ 150

·     Mortgage payments           $ 960

·     Food  $ 800

·     Internet  $  30

·     Debt to lawyers                  $ 200

TOTAL  $2860

13.     Her eldest son pays board of $50 per week and from time to time helps her with expenses in relation to her other two sons.  The middle son has casual work at Coles but also attends school.  She does not charge him board and, in view of his age and circumstances, this is understandable.   The applicant, who gave oral evidence in Ulverstone, impressed me as a hard-working mother dedicated to the welfare of her family of young males and doing her best to provide for their reasonable needs.  When comparing her income to the cost of her maintaining herself and her family it is plain that her outgoings actually exceed her income, even giving full credit for the $50 per week paid by her eldest son.  True it is that by paying off the mortgage on her home she is gradually acquiring a substantial capital asset but it would be completely illusory to regard her monthly payments, at the present stage of her life, as anything other than a substitute for rent.  Allowing for these repayments and the annual rates it doesn't seem to me that she is paying an excessive amount of "rent".  Incidentally it may be noted that she has made no calculations for the cost of maintaining the house in which she and the boys are living.  It would be inappropriate to guess what that cost may be in the absence of evidence.

14.     Government policy enjoins me to consider who has the "greater need" for the PPS payment.  Mr Beveridge has a smaller income but he is plainly not fully utilising his earning potential.  His capital assets are less.  He has money in the bank but has not been shown to own anything else of value.  Judging from the way in which his $33,000.00 cash has shrunk since it was paid to him in July 2008, he may have been using the bank funds to supplement his income needs.  This however is conjecture.  He may have used the money for other purposes.  There is simply no evidence.  What is plain is that the bank funds are a substantial source of liquid assets.  Merely because he receives $150.00 per month from his former partner for Child Support under the mandate of the Child Support Agency does not mean that he has the greater need.  Indeed many people may find it extraordinary that his former partner should be obliged to make this regular payment to him having regard to their relative positions. 

15.     Following the hearing in Hobart on 24 February, counsel for both parties prepared and submitted to me an agreed "summary of rates" relating to the question "which carer would receive the higher rate of payment" which is one of the factors which "must" be taken into account "in deciding which carer is in most (sic) need of a favourable determination" (dot point 3, Guide to Social Security Law, para 1.1.P.416).  I have marked this document Exhibit "X".  On the basis of this material it is evident that Mr Beveridge "would receive the higher rate of payment".  As mandated I have taken this fact into account but I do not regard it as being, either of itself, or in conjunction with other factors, determinative of the relevant issue.  Considering the available evidence I am quite unable to say that Mr Beveridge has the greater need for the PSS payment.

16.     In my opinion the applicant has established that she is "most (sic) in need of a favourable determination" within the considerations specified in the Act, the Guidelines and the other factors I have mentioned.  Accordingly, the decision under review should be set aside.  To this end the decision of the SSAT will be set aside.  This means that the decision of Centrelink of 23 July 2008 cancelling the applicant's PPS from 25 July 2008 can no longer stand and it too must be set aside. 

I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon C R Wright QC (Deputy President)

Signed:  R Hunt
             Administrative Assistant

Date/s of Hearing  9, 24 February 2010 and 31 March 2010
Date of Decision  23 April 2010
Solicitor for the Applicant          Mr C Young, North West Community Legal              Centre
Solicitor for the Respondent     Mr F Aaberg, Centrelink Advocacy Branch