FEDERAL COURT OF AUSTRALIA

Kazmierczak v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] FCA 1084

REASONS FOR JUDGMENT

appeal against aat decision

1                                             By a notice of appeal dated 19 May 2010, the applicant seeks to appeal from a decision of the Administrative Appeals Tribunal (AAT or Tribunal) made on 22 April 2010.  The Tribunal affirmed a decision of the Social Security Appeals Tribunal (SSAT) made on 7 August 2009 affirming the assessment of the applicant's rate of disability support pension to take account of the employment income of his wife.

outline of facts

2                                             Centrelink records indicate that the applicant and his wife have been married since 1 July 1991.  In fact they were married on 11 April 1987.

3                                             On 30 March 1993, the applicant was injured in a motor vehicle accident for which he received a compensation payment, although he now questions its adequacy.

4                                             On 16 June 1994, the applicant was granted a disability support pension under the Social Security Act 1991 (Cth) (the Act), and his wife was granted a wife pension. 

5                                             Centrelink subsequently reduced the applicant's rate of disability support pension by taking into account his wife's income from her employment. 

6                                             On 21 August 2007, the applicant requested an internal review of the decision to reduce his disability support pension, and of his obligation to report his wife's fortnightly employment income.

7                                             On 12 September 2007, upon review, Centrelink decided that the rate of disability support pension received by the applicant was correctly reduced by taking into account his wife's income.

8                                             On 30 March 2009, the applicant requested Centrelink to review the decision to reduce his rate of pension.

9                                             On 8 June 2009, a Centrelink authorised review officer affirmed the decision under review.

10                                          On 9 June 2009, the applicant applied to the SSAT for a review of the decision made by the Centrelink authorised review officer.

11                                          On 7 August 2009, the SSAT affirmed the decision under review.

12                                          On 4 September 2009, the applicant applied to the AAT for a review of the decision made by the SSAT.

13                                          On 22 April 2010, the AAT affirmed the decision of the SSAT under review and on 28 May 2010, the AAT published its written reasons for decision.

question of law

14                                          This appeal is made under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) which relevantly provides that:

A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.

15                                          It is now well‑established that only a question of law may be considered on an appeal.  See Comcare v Etheridge [2006] FCAFC 27; (2006) 149 FCR 522, [13] – [16].

16                                          Indeed, the notice of appeal must, in conformity with O 53 of the Federal Court Rules,state the question of law.

17                                          In this appeal, the applicant is self‑represented.  Nonetheless, the applicant has endeavoured to state the question of law by stating, in the paragraph of the notice of appeal dealing with orders sought, the following:

The reason for the failure may be rendered ‘special’ by the particular circumstances, for example, if it is not reasonable for that other member to provide such support.

This is intended to be a reference to the failure of the Tribunal to be satisfied, for the purposes of s 24(1) of the Act, that the applicant should, for a special reason in this particular case, not be treated as a member of a couple.

18                                          The respondent submits that the grounds of appeal do not raise any questions of law, but contain mere statements of grievances or disagreement by the applicant with the AAT’s decision.

19                                          The respondent submits that the appeal should be dismissed with costs as the notice of appeal does not disclose a question of law arising in relation to the Tribunal’s decision, as required under s 44(1) of the AAT Act.

20                                          Further, and in any event, the respondent submits that the Tribunal did not commit any error of law in the making of its decision.

the aat’s decision

21                                          The AAT noted the following provisions of the Act as relevant.

22                                          Section 117(a) of the Act which provides that the rate of disability support pension for a person who is not permanently blind, and has not turned 21 years of age, is worked out using the Pension Rate Calculator A at the end of s 1064 of the Act.

23                                          Section 1064-A1 of the Act, which provides a Method Statement for working out a person's maximum payment rate, and under it:

·                    Step 5 provides that Module E is to be used in applying the ordinary income test to work out the income reduction; and

·                    Step 11 requires that a person is to be paid the lower of the income reduced rate and the asset reduced rate;

24                                          Section 1064-A2 of the Act, which provides that:

Where 2 people are members of a couple, they 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 … on a 50/50 basis…

25                                          Module E which is contained under s 1064-E1 of the Act and provides a Method Statement to work out the effect of a person's ordinary income on the person's maximum payment rate, as follows:

1064-E1. This is how to work out the effect of a person's ordinary income on the person's maximum payment rate

Method statement

Step 1.    Work out the amount of the person’s ordinary income on a yearly basis.

Note:      For the treatment of the ordinary income of members of a couple see point 1064 E2.

Step 2.    Work out the person’s ordinary income free area (see point 1064 E4 to 1064-E9 below).

Note:      a person’s ordinary income free area is the amount of ordinary income that the person can have without any deduction being made from the person’s maximum payment rate.

Step 3.    Work out whether the person’s ordinary income exceeds the person’s ordinary income free area.

Step 4.    If the person’s ordinary income does not exceed the person’s ordinary income free area, the person’s ordinary income excess is nil.

Step 5.    If the person’s ordinary income exceeds the person’s ordinary income free area, the person’s ordinary income excess is the person’s ordinary income less the person’s ordinary income free area.

Step 6.    Use the person’s ordinary income excess to work out the person’s reduction for ordinary income using points 1064 E10 to 1064 E12 below.

26                                          Section 8(1) of the Act, which defines:

26.1.     the term "ordinary income" by exclusion as not "maintenance income" or an "exempt lump sum"; and

26.2.     the term "income" in relation to a person, as an "income amount earned derived or received by the person for their own use or benefit".

27                                          Section 1072, which provides that:

A reference in this Act to a person's ordinary income for a period is a reference to the person's gross ordinary income from all sources for the period calculated without any reduction, other than a reduction under Division 1A.

(Division 1A is not relevant to this appeal.)

28                                          Section 24(1) of the Act, which provides the Secretary with a degree of discretion as to whether a person is a “member of a couple”, in that it provides:

24 Person may be treated as not being a member of a couple (subsection 4(2))

(1)   Where:

(a)        a person is legally married to another person; and

(b)        the person is not living separately and apart from the other person on        a permanent or indefinite basis; and

(c)        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.

29                                          In considering the apparent discretion under s 24(1) of the Act, the AAT referred to the following passage in Re Lada and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 1496 (Lada) at [18]:

The purposes of the Act must be kept in mind. The purpose of the Age Pension is to provide income support to those people above pension age (who are otherwise qualified) and thereby to enable them to live without great hardship.  The general policy is that when calculating the rate of Age Pension for a member of a couple, the combined ordinary income and assets of both people will be taken into account.  Merely failing to satisfy the expectation underlying the rate calculator (that there will be some pooling of resources between members of a couple) is not a ‘special reason’ to enliven the discretion conferred by s.24.  The reasons for the failure may be rendered ‘special’ by the particular circumstances, for example, if the failure results from something out of the ordinary that is beyond the control of those concerned.  An inability to pool resources, at least, is required.  Without fettering the discretion, it seems to me that it may be appropriately exercised if it is not reasonable for an applicant member of a couple to seek the support of the other, or if it is not reasonable for that other member to provide such support.

30                                          The applicant, though not his wife, gave evidence to the AAT.  The AAT noted that the applicant did not dispute that his wife received an employment income nor the amount of employment income received by her.

31                                          The AAT considered the applicant’s evidence and made the following findings of fact:

·                    the applicant and his wife were legally married;

·                    they were not living separately;

·                    the applicant's wife's income was applied towards the household expenses; and

·                    there was no "inability to pool resources" in their case even though the applicant was reluctant to have his wife contribute.

32                                          On the basis of those findings, the Tribunal decided that:

·                    the applicant's circumstances did not warrant the application of the discretion provided for under s 24(1) to not treat him as a member of a couple for the purposes of calculating the rate of his disability support pension; and

·                    the rate of his disability support pension was correctly calculated by Centrelink in accordance with the relevant provisions of the Act.

33                                          The AAT also commented at [29] that the compensation payment received by the applicant appeared to be “grossly inadequate”, though it also pointed out it was not in possession of all the facts and circumstances.  Accordingly, the AAT did not make any finding in relation to the compensation payment

consideration

34                                          In my view, it was open to the AAT to make these findings and to not be satisfied that the applicant should, for a “special reason”, not be treated as a member of a couple. 

35                                          It is clear enough from the materials in the appeal book, including a transcript of the proceeding in the AAT that the applicant made it clear to the AAT, as he did in his submissions in the course of the appeal in this Court, that he considered his wife to be a “victim of the law”.  By that the applicant meant that because his pension had been reduced on account of his wife’s employment income, he was forced to rely upon her to provide him with the necessary funds to meet expenses connected with his disability and that this was unfair.  Additionally, it was unfair that his wife should be deprived of the opportunity to have a full life and the ability to work full‑time and provide for herself by way of superannuation contributions.  The essence of the applicant’s case was that these factors should constitute “special reasons” why he should not be treated as a member of a couple and why his wife’s income should not be taken into account in assessing his pension.

36                                          These issues are reflected in the notice of appeal where the applicant states the grounds in support of the question raised in the following terms:

·                    He was the insured victim of a car accident in 1993 (for which he had received inadequate compensation).

·                    His wife was not the person responsible for the accident.

·                    He was a married person with chronic and mechanical pain in the lower back (and his wife should not in effect be obliged to compensate for it).

·                    The fortnightly reminder claiming his zero income is a reminder of what had happened to him and after so many years “is not a fair law”.

37                                          I agree generally with what French J said in Boscolo v Secretary, Department of Social Security [1999] FCA 106; (1999) 90 FCR 531 (Boscolo) at [18], that the core of the requirement for “special reasons” under s 24(1) is that there be something unusual and different to take the matter the subject of the discretion out of the ordinary course.  But that does not require that the case be extremely unusual, uncommon or exceptional.  I also agree with the observation of French J, at [18], that the word “special” is in essence “instrumental”, a direction to the decision‑maker that the discretion it constrains is not lightly to be enlivened.

38                                          The decision of French J in Boscolo was referred to in the decision of the AAT in Lada.  It was also referred to in the recent decision of the AAT in Re Holt and Secretary, Department of Education, Employment and Workplace Relations [2010] AATA 143 (Holt), where the senior member, Professor RM Creyke, was at pains to emphasise that caution must be exercised in the interpretation and application of the “special reasons” discretion.  At [30], the senior member emphasised that particular caution should be taken about importing a requirement mentioned in the Guide to Social Security Law that a “special reason must be outside the couple’s or individual’s control and cannot be changed”.  Senior Member Creyke, at [32], also emphasised that the expression must be interpreted in context consistent with the scope and purpose of the Act and in that regard referred to the statement made in the Explanatory Memorandum to the Social Security Legislation Amendment Bill (No 4) 1991 which states (at 17):

there is justification in paying a higher rate to an unpartnered person than to a member of a couple if both members of the couple are living together. This justification is based on the premise that the unpartnered person does not enjoy the same economies of shared living costs as does the member of a couple in those circumstances. If the economies of scale are not available to the member of the couple because he or she is living apart from his or her partner because, for example, of the illness of one or both members of the couple, then each would face similar living costs as an unpartnered person.

39                                          I generally agree with these further observations of the Senior Member.

40                                          In Holt, Senior Member Creyke went on to consider the relevant provisions of the Guide and the case law that has dealt with the capacity of persons such as the applicant and his wife to pool resources for their mutual benefit.  At [48], the Senior Member identified the issue as being whether, for practical reasons, they could not reasonably be expected to enjoy the pooling of resources that usually occurs in a marital relationship.  A number of decisions of the AAT, including Holt and Lada show that circumstances will arise from time‑to‑time as a result of which the s 24 “special reasons” discretion should be exercised in favour of the pension holder, on the basis that for practical reasons the income enjoyed by the pension holder’s partner is not available for pooling.

41                                          The case law canvassed by Senior Member Creyke in Holt’s case confirms, in my view correctly, that there is a particular focus under the Act on the practical ability of the resources of the partner being available for pooling with the resources of the person holding the pension.  This fundamentally derives from s 1064-A2 of the Act which provides that where two people are members of a couple, they will be treated as pooling their resources (income and assets) and sharing them on a 50/50 basis. 

42                                          It stands to reason that if for some legal or other practical reason the partner member of the couple cannot be treated as sharing income and assets then there is a ground for exercising the discretion under s 24 so as not to treat the holder of the pension as a member of a couple who are capable of sharing resources.  In that regard, in effect, the s 1064-A2 expectation that there will be pooling is negatived.

43                                          In this case, it seems to me that the AAT correctly understood that this was the test to be applied and it was open to the Tribunal to apply it in the way that it did.

44                                          The Tribunal fully explored, for example, the circumstances in which, in the case of Lada, the income of the partner were not treated as available for pooling.  But, having regard to the facts of this case, the AAT came to a different factual conclusion.  At [31], the AAT stated:

It is obvious from Mr Kazmierczak’s evidence he feels reluctant to have his wife contribute out of her earnings for his needs and the family needs and while the Tribunal understands that reluctance, that does not create an inability to pool resources.

45                                          This finding was open to the Tribunal on a proper application of the relevant considerations that bear upon the exercise of the s 24 discretion and consideration of the evidence before the Tribunal. 

46                                          I also agree with the AAT when it indicated, at [32], that the fact that the applicant’s reluctance to have his wife contribute out of her earnings for his needs and the family needs is not itself a special reason, as envisaged by s 24(1), for treating the pension holder as not a member of a couple.  As I have said, the difficulty for the applicant in a case such as the present, is that the pooling rule is a basic rule derived from s 1064-A2. 

47                                          In all these circumstances I do not consider that it can be said that the AAT misunderstood or misconstrued the factors that are relevant to the exercise of the s 24(1) “special reasons” discretion.

48                                          In light of the facts found by the Tribunal in this case, the decision of the Tribunal not to be satisfied that the applicant should not be treated as a member of a couple was open to it.

49                                          In these circumstances, no “question of law” is raised for review in this appeal.  In substance, the applicant seeks to review the failure of the AAT to exercise the s 24 discretion in his favour.  This is not something that falls to the Court to consider. 

CONCLUSIONS and orders

50                                          For these reasons the appeal should be dismissed

51                                          The court makes the following orders:

1.                  The application be dismissed.

2.                  The applicant pay the respondent's costs of the application to be taxed if not agreed.

Associate:

Dated:         5 October 2010