Watts and Secretary, Department of Family and Community Services
[2005] AATA 503
•1 June 2005
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2005] AATA 503
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/5
GENERAL ADMINISTRATIVE DIVISION )
Re ARTHUR WATTS Applicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Mr RG Kenny, Member Date1 June 2005
PlaceBrisbane
Decision The Tribunal affirms the decision under review that Mr and Mrs Watts are members of a couple for the purposes of the Social Security Act 1991 and, in particular, for the purposes of determining the extent to which age pension is payable to Mr Watts. The matter is remitted to the respondent for that determination to be made.
..................[Sgd].......................
RG Kenny
Member
CATCHWORDS
SOCIAL SECURITY – benefits and entitlements – age pension – applicant a member of a couple at relevant time – application of income and asset test
Social Security Act 1991 s 4, 43, 44, 55, 1064
REASONS FOR DECISION
1 June 2005 Mr RG Kenny, Member Background
1. Arthur Watts (the applicant) was born on 25 March 1922. He has been married to Jacqueline Watts since 10 June 1977. On 26 February 2004, he lodged a claim for payment of age pension, a form of income support which is payable in accordance with the terms of the Social Security Act 1991 (the Act). On 15 March 2004, a customer services officer with Centrelink, a statutory authority within the portfolio of the Department of Family and Community Services (the respondent), made a decision that the age pension was not payable to him because he was a member of a couple with his wife and because the combined value of their assets exceeded the limit beyond which the pension was payable. That decision was affirmed by an authorised review officer with Centrelink on 20 August 2004.
2. On 13 September 2004, the Social Security Appeals Tribunal affirmed the decision that Mr and Mrs Watts were members of a couple. It remitted the matter to the respondent to determine whether the age pension was, nevertheless, payable to Mr Watts. This was done because the Social Security Appeals Tribunal was concerned that the assets of Mr and Mrs Watts had not been correctly identified or valued. On 6 January 2005, an application for review of that decision was received by the Administrative Appeals Tribunal (the Tribunal).
Hearing
3. Mr Watts did not attend the hearing but he was represented by Mrs Watts. Mr James Howard, from Centrelink’s Service Recovery Team, appeared on behalf of the respondent.
4. The following material was taken into evidence:
exhibit 1:the “T” Documents (T1 – T65) prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975;
exhibits 2 and 3: medical reports, dated 7 March 2005 and 2 April 2005, respectively, from Dr Allan Deed.
Issues and Legislation
5. The qualifications for age pension are set out in section 43 of the Act. It is not disputed in this case that Mr Watts meets the requirements of that provision. However, even though a person is qualified to receive the age pension, it is not payable if the appropriate rate of pension is nil. This is provided for in section 44 of the Act. In accordance with section 55 of the Act, a person’s age pension rate is worked out by using the pension rate calculator A at the end of section 1064 of the Act. In accordance with subsection 1064(4) of the Act, where an applicant for age pension is living as a member of a couple, the person’s pension rate is not to exceed the rate at which it would be payable to the person if the other person were the person’s partner. This means that the value of combined assets of the two persons must be taken into account in determining whether the age pension is payable.
6. In this case, Mr and Mrs Watts were treated as being members of a couple and their total combined assets were taken into account in determining whether age pension was payable to Mr Watts. Their combined asset value was determined to be in excess of $596,000 and, at that level, age pension was not payable to Mr Watts. As noted above, some concern was expressed by the Social Security Appeals Tribunal as to the value of their assets and the matter was remitted to enable a further analysis of that asset value to be undertaken by the respondent. In this case, it was contended by Mr Howard that no further evidence of asset value had been provided by Mr or Mrs Watts and, indeed, during the hearing, Mrs Watts stated that she would not be giving any further information about her assets.
7. The matter of determining the value of the assets is not something that is specifically before the Tribunal. Rather, its task is to determine whether or not Mr and Mrs Watts have been properly assessed as having been, at the date of Mr Watts’ claim for age pension, members of a couple in the sense that they were not living separately and apart. Relevant to that determination are the following provisions of the Act:
“Member of a couple—general
4.(2) Subject to subsection (3), a person is a member of a couple for the purposes of this Act if:
(a)the person is legally married to another person and is not, in the Secretary's opinion (formed as mentioned in subsection (3)), living separately and apart from the other person on a permanent or indefinite basis; or
(b) ……………
Member of a couple—criteria for forming opinion about relationship
4.(3) In forming an opinion about the relationship between 2 people for the purposes of paragraph (2)(a) ……………., the Secretary is to have regard to all the circumstances of the relationship including, in particular, the following matters:
(a) the financial aspects of the relationship, including:
(i)any joint ownership of real estate or other major assets and any joint liabilities; and
(ii)any significant pooling of financial resources especially in relation to major financial commitments; and
(iii)any legal obligations owed by one person in respect of the other person; and
(iv) the basis of any sharing of day-to-day household expenses;
(b) the nature of the household, including:
(i) any joint responsibility for providing care or support of children; and
(ii) the living arrangements of the people; and
(iii) the basis on which responsibility for housework is distributed;
(c) the social aspects of the relationship, including:
(i) whether the people hold themselves out as married to each other; and
(ii)the assessment of friends and regular associates of the people about the nature of their relationship; and
(iii)the basis on which the people make plans for, or engage in, joint social activities;
(d) any sexual relationship between the people;
(e) the nature of the people's commitment to each other, including:
(i) the length of the relationship; and
(ii)the nature of any companionship and emotional support that the people provide to each other; and
(iii)whether the people consider that the relationship is likely to continue indefinitely; and
(iv)whether the people see their relationship as a marriage-like relationship”.
Applicant’s Case
8. Mr Watts suffers from Alzheimer’s disease. Dr Allan Deed, in his report of 7 March 2005 (exhibit 2), described him as suffering from dementia and said that he was not capable of making decisions, of understanding instructions or of caring for himself. Mrs Watts said that the symptoms began to manifest themselves from around 2001 when he was noted to be erratic in the driving of his motor vehicle. She said that he had deteriorated significantly since that time and that, in 2004, he was not able to care for himself. She said that he had been hospitalised a few days before the hearing and that he was unlikely to return to their home. She said that she intended visiting him in the hospital after the hearing.
9. When first married, Mr and Mr Watts lived in Sydney but, in 1981, they moved to the Gold Coast where a house was purchased in Mr Watts’ name. This was subsequently converted to a joint tenancy. Mrs Watts made some contribution to the deposit but most of the funds were provided by Mr Watts. Mrs Watts described her husband as being incapable of managing finances effectively and said that, whenever it was necessary through their marriage, she would make payments for utility services such as electricity supply and for rates when they were overdue. No records were kept of the extent to which either she or Mr Watts made contributions of this financial nature. She said that, during the marriage, she purchased food and consumables for household use although she and her husband had lived, to a large extent, separate lives. Mr Watts would frequently eat away from the home and she described their house as being one which enabled them to be quarantined into their own bedroom and bathroom areas although there was a common kitchen and living area. Mr Watts was responsible for looking after his own areas of the home although Mrs Watts took responsibility for the common areas.
10. Mrs Watts said that she and her husband had discussed divorce proceedings some 15 years prior to his age pension application. However, she said that this had never come to fruition and that, as his dementia worsened, she was forced to take an increasing role in looking after him because there was no-one else to do it. She said that he had not been able to look after himself for the last few years and that she, of necessity, had stepped in to do so. She said that she would drive him, over the years, in her car when he needed to have medical attention. She also said that the Alzheimer’s Association had been transporting him to and from daily functions over the last few years.
11. Mrs Watts said that, throughout the marriage, she had worked for some six to seven days per week in the real estate industry and that all of her social activities were aligned with people in that industry. She said that it was convenient for her to live in the home owned by her and Mr Watts even though it was not always enjoyable doing so. She was not prepared to walk away from the house because she had invested money in it.
12. Mrs Watts submitted that, while she was formally married to Mr Watts, there was really no relationship between them which could be described as marriage-like. She said that this had been the case for many years although she conceded that she had been required, since the increasing effects upon him of his Alzheimer’s disease, to spend greater periods of time in caring for him. However, she said there had been no caring relationship between them prior to this and that they had lived their separate lives.
13. Mrs Watts now has full responsibility for his financial affairs and she said that the only monies that Mr Watts had were in a bank account and that these amounted to approximately $6,500. She makes withdrawals from his account for expenses such as medical and hospital bills. Mrs Watts refused to provide any evidence of what her own assets were worth but said that she had investments and that she met her daily needs from the interest earned therefrom.
14. Mrs Watts referred to letters written on her behalf by a friend, Kay Meanwell, dated 21 January 2005, and Mr Watts’ sister, Alice Boyce, dated 7 December 2004. Ms Meanwell wrote that she had known Mr and Mrs Watts for fifteen years and said that, during that time, they had lived completely separate lives. She noted that there was an age difference between Mr and Mrs Watts of some twenty-five years and she said that she did not consider them to be a married couple.
15. Ms Boyce wrote:
“To the best of my knowledge, my brother Arthur Christopher Watts and his wife Jacqueline Watts have been estranged for many years.
They have been living under the same roof, however leading very separate lives for about 20 years. This includes having separate assets, income and bank accounts. Prior to Arthur being diagnosed with Alzheimer’s Disease he did everything for himself including shopping, cooking his own meals, washing, ironing and earning his own income.
A number of years ago Arthur wanted to divorce Jacqueline. He started talking with family and lawyers. He also wanted to leave Jacqueline and move to Melbourne and live with me. However, he was diagnosed with Alzheimer’s and then did not have the funds to proceed.
Arthur now does not have any income or assets (except an interest in the family home, which Jacqueline does not wish to sell) to draw upon. Jacqueline’s assets are her own (not Arthur’s). She has been supporting him, paying all his expenses and nursing him which I believe has become a full-time commitment on her behalf since he was diagnosed with Alzheimer’s.
Times have now changed and Jacqueline can no longer physically, financially nor mentally cope with Arthur any longer, nor does she wish to.
Unfortunately, neither myself nor my family are in a position to assist him financially, nor to assist with his day to day care.
Without a pension it is impossible for Arthur to be accepted in a Nursing Home. His physical and mental health has deteriorated rapidly over the past 2 years and he is now in urgent need of care.
The situation has become quite drastic. Without a pension Arthur will be destitute and without any means of support.”
Respondent’s Submission
16. Mr Howard submitted that it was significant that Mr and Mrs Watts were married to each other and had been for almost thirty years. He said that they should be treated as members of a couple and, in that regard, he referred to their jointly owned home which had been purchased in 1981 and to Mrs Watts’ role in managing her husband’s finances. He submitted that this had been the case in February 2004 when the claim for age pension had been made. Mr Howard referred to the living arrangements in the matrimonial home and submitted that, whilst there was separation in terms of bedroom, bathroom and study areas, there was a communality of living in the common areas of the house. He also submitted that, in assessing their relationship, it was significant that Mrs Watts played such an important role in tending generally to him since Alzheimer’s disease became manifest.
17. Mr Howard submitted that, whilst there had been a minimum of any social relationship between Mr and Mrs Watts and other persons, this was not necessarily inconsistent with the continuation of their relationship. He conceded that the evidence was that there was no sexual relationship but, again, he submitted that this was not a determinative indicator of a marriage. Mr Howard submitted that Mrs Watts had demonstrated a strong commitment to Mr Watts in the period since his Alzheimer’s disease had deteriorated. Again, he submitted that this was indicative of the existence of their relationship as at the date of claim by Mr Watts.
18. Mr Howard conceded that, if Mr Watts were currently required to live away from the matrimonial home because of his condition, a different view was taken of the nature of their relationship. However, he contended that this was not the case as at the date of claim.
Consideration
19. In determining whether or not Mr and Mrs Watts were living separately and apart at the time of Mr Watts’ claim, all of the circumstances of their relationship must be considered. These include the matters referred to in subsection 4(3) of the Act which is set out above.
20. In relation to their financial circumstances, Mr and Mrs Watts have the joint ownership of their home. This has been the case for many years and, further, there has been a sharing of the obligations in relation to costs associated with the home and their living expenses. This has been the case throughout their marriage and no attempt has been made to keep any records of the respective expenditures incurred by either of them. In an Assessment of Living Arrangements form which was completed by each of them in 1998 in respect of an earlier claim for age pension, Mr Watts described a joint debt in relation to a credit card and to a jointly held insurance policy. These were not described by Mrs Watts but each of them referred to the sharing of expenditure for rates and for utility costs such as telephone and electricity. A further Assessment of Living Arrangements form was completed in 2004. However, it was completed by Mrs Watts on her husband’s behalf. In that document, only the house and contents were referred to as being jointly owned. By then, Mrs Watts had assumed responsibility for the payment of household bills and most of the household items. Also, by that time, she had the responsibility of looking after Mr Watts’ bank account. These circumstances, particularly the absence of any accounting for their respective contributions to financial outlays, reflect an absence of separation in financial matters between Mr and Mrs Watts.
21. The nature of the Watts’ household has been characterised by separation of some aspects of daily living. Mr and Mrs Watts have each had separate bedroom and bathroom facilities. In the assessment form in 1998, Mr Watts described a separation of functions and referred to himself as undertaking menial tasks such as cleaning and the garbage chores as well as some heavy gardening, pool cleaning and looking after the house and the pets. He described Mrs Watts as attending to gardening, light household cleaning and some limited cooking activities. Mr Watts wrote that, generally, he prepared his own food at that stage although, from time to time, particularly on Sunday evenings, they would sit together and enjoy and evening meal that had been prepared by Mrs Watts. In the 2004 assessment form, the majority of household tasks were said to be completed by Mrs Watts although, by then, Mr Watts was experiencing the effects of his medical condition. The degree of separation of living arrangements described above is not one which would be unexpected in the households of many married couples particularly with the passage of time and where there is, as here, a difference in age of more than 20 years.
22. It is clear that Mr and Mrs Watts have had little in the way of joint social activity, especially in recent years. In the 1998 forms, each of them wrote that, on some occasions, they would be invited out together by friends. The letter of Ms Meanwell indicates that her visits to the home of Mr and Mrs Watts were for the purpose of visiting Mrs Watts and, at times, she was not even aware of whether or not Mr Watts was in the house. The characteristics that make up a marriage differ from one to another and, in this case, Mrs Watts’ evidence was that she had always, during her marriage, concentrated her social commitments on those associated with her work friends rather than with her husband. The continuation of that pattern, therefore, does not support a description of the married couple living separately and apart.
23. Mr and Mrs Watts have not had a sexual relationship for many years. This is not an uncommon feature of many relationships, particularly in the circumstances of age and age differential which apply to the circumstances of Mr and Mrs Watts.
24. A significant feature of the relationship between Mr and Mrs Watts in this case is the nature of the commitment that has been demonstrated by Mrs Watts to her husband, especially in recent years. In the 1998 documents, each of them is described as owning their own vehicle. By 2004, the only vehicle is that which belongs to Mrs Watts and she used this to transport Mr Watts when he needed to be taken to a medical facility. The evidence is that there was a prospect of divorce proceedings at some time. The divorce did not eventuate. No reasons for this were given. Ms Boyce’s statement would suggest that it was because of the deteriorating health of Mr Watts. However, Mrs Watts described the divorce issues as occurring some 15 years before the hearing. On that basis, it was, therefore, about 10 years before Mr Watts began to demonstrate the symptoms associated with his present condition. Accordingly, Mrs Watts’ reasons for persevering with the marriage and remaining in the home are unrelated to Mr Watts’ condition. Since the issue of divorce was raised, they have remained married and have continued to occupy the same premises for at least 15 years. Mrs Watts said that the only reason they were living under the one roof was for convenience. However, in recent times, Mrs Watts has demonstrated commitment to her husband by providing substantial support for him since his Alzheimer’s disease has worsened and her evidence was that she would be attending the hospital to visit him immediately after the Tribunal hearing.
25. The question of whether a man and woman are to be treated as members of a couple differs in accordance with their marital status. If they are not married, the issue is whether there is a marriage-like relationship between them. However, in the case of married persons, the issue is whether they have been living separately and apart. Each marriage has its own characteristics and the factors which characterise a particular marriage relationship are bound to change over time. In this case, Mr and Mrs Watts had been married for more than 26 years when Mr Watts made his current claim for age pension. Their marriage has been characterised over the years as one where each had a significant degree of independence from the other in many aspects of their daily lives. Yet, they remained under the one roof and have done so even after the prospect of divorce arose. Nonetheless, their relationship has remained one characterised by a willingness to stay in the same premises, a willingness to allow aspects of their financial affairs to merge and a willingness by Mrs Watts to demonstrate commitment to Mr Watts since the onset of his Alzheimer’s disease.
26. On the evidence before me in relation to the factors detailed in subsection 4(3) of the Act, I am satisfied that Mr and Mrs Watts were not living separately and apart in 2004 when Mr Watts made his claim for age pension. This means that they were members of a couple and that the assets of both Mr and Mrs Watts need to be taken into account in determining the level of age pension, if any, which may be payable. The respondent has not been advised in recent times of what the asset interests of Mrs Watts are. Until that information is provided, a calculation of Mr Watts’ entitlements to age pension cannot be completed. It was contended by Mr Howard that the decision under review be affirmed in relation to the nature of the relationship between Mr and Mrs Watts and that the matter be remitted to the respondent for calculation of the level of age pension. This was the approach adopted by the Social Security Appeals Tribunal and I am satisfied that the same outcome is appropriate in this case.
Decision
27. The Tribunal affirms the decision under review that Mr and Mrs Watts are members of a couple for the purposes of the Act and, in particular, for the purposes of determining the extent to which age pension is payable to Mr Watts. The matter is remitted to the respondent for that determination to be made.
I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Mr RG Kenny, Member
Signed: Camille Banks
Associate
Date/s of Hearing 4 May 2005
Date of Decision 1 June 2005
The Applicant was represented by his wife, Mrs J Watts
For the Respondent Mr J Howard, Departmental Advocate
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