7.5.2 Criterion 2: What degree of dependency did the person who meets criterion 1 have on the deceased?

Last amended: 7 April 2016

1. Introductory Remarks

To be a 'dependant' and therefore entitled to compensation, a person who meets criterion 1 (see 7.5.1) must also have a degree of dependency on the deceased immediately prior to death, or for certain partners and children, be deemed to be wholly dependent. There are three degrees of dependency: wholly, mainly, and partly.  If the delegate decides that there is no degree of dependency, then no compensation is payable.  If the delegate determines that there is a degree of dependency, then compensation is payable. The nature and amount of that compensation depends on the degree of dependency. The degree of dependency, in turn, is determined by the nature of the relationship the deceased had with the person prior to death.

2. The Meaning of Dependency

Where person does not fall under the deeming provision of section 17, the degree of dependency is determined as a function not only of the amount of financial assistance provided to the recipient, but also the extent  to which that provision is relied upon to meet the recipient's necessities of life. Each case must be considered in context. Because people have different standards of living, the amount of support in question will vary from case to case. The facts of the case are paramount in determining dependency, and so assessment must proceed on a case-by-case basis.

3. What is the degree of dependency?

There are three degrees of dependency. Which one of these is applicable to the person will determine the nature and amount of the compensation. The three degrees of dependency are:

• Wholly dependent
• Mainly Dependent
• Partly Dependent.

The MRCA defines dependent as “dependent for economic support”. However, case law is clear that the amount of economic support provided to a dependant will not necessarily determine the degree of their dependence.  However, economic considerations must be taken into account as one factor for determining the existence and degree of dependence.

Policy changes resulting from the commencement of the Veterans’ Affairs Legislation Amendment (Mental Health and Other Measures) Act 2014 (VALA) – Schedule 6: Eligible Young Persons wholly dependent on a member

The amendments to the MRCA provided by the VALA expand the circumstances under which an eligible young person (EYP) is taken to be wholly dependent on a member.

Specifically, where a member is liable to provide child support under a Child Support Agency (CSA) arrangement, then the EYP is automatically considered to have been wholly dependent on the member, without the need to further establish a level of dependence.

The amount of compensation available to a dependent continues to be determined on a case by case basis, taking into consideration:

• any financial loss suffered by the dependant as a result of the member’s death (other than compensation paid or payable);

• the degree to which the dependant was dependent on the deceased member; and

• the length of time the dependant would have been dependent on the member.

Where child support is provided other than a CSA arrangement a level of dependency can still be established on a case-by-case basis using the advice below for guidance.

Apart from the circumstances provided for at Schedule 6 of the VALA, there are no necessary or sufficient conditions for determining what will constitute being wholly, mainly or partially dependent. Therefore, outside of satisfying Schedule 6 of the VALA and/or the deeming provision of section 17, the degree to which a person is dependent will be a question of fact rather than law, as illustrated by Aafjes v Kearney [1976] HCA 5:

“In my opinion, the Commission was clearly entitled to hold on the material before it that the respondent was wholly dependent for support upon her father. That material afforded evidence of that fact and no principle of law precluded the conclusion. In that connexion, I would express my dissent from the view that because "the facts are clearly stated" that "the question as to whether on facts found which legal category is the appropriate one is ... a question of law". On the contrary, the conclusion of dependence is one of fact and not the assignment of a situation to a legal category. The view from which I express my dissent would turn every conclusion of dependence into a question of law. But that would clearly be erroneous and contrary to every decision of high authority, including Potts v. Niddrie and Benhar Coal Co. Ltd.”

Despite the lack of legal criterion, it is possible to offer some suggestions that clarify  how to establish 'dependency' through the facts in a helpful manner.

3(a). Evidence for Dependency

There are a number of rules of thumb for ascertaining the degree of dependency in a particular case. A practical approach is to  consider the financial contribution provided consistently over a period of time towards the total cost of the dependant in maintaining the necessities of life at the standard of living enjoyed. The simplest example is where a dependant relied on the deceased person for 100% of their economic support. Whilst not determinative, this will be a persuasive indicator that the dependant was wholly dependent.

Economic considerations are one of many indicators of dependence, and will not constitute conclusive proof.  However, they may be taken into account to assist the decision-maker in obtaining an overall view of a claimant's circumstances and for determining the likelihood and degree of a claimant's dependence.

3(b). Irrelevancies

In assessing the degree of dependency of the person, it is important not to be distracted by certain irrelevancies. For example, the dependent person may be employed but still qualify as wholly, mainly or partly dependent based on how that income was used.  If the dependant's own income was not used for their maintenance or support (i.e. it was disposable income or used merely to improve their quality of life), they are likely to remain wholly or mainly dependent.  The relevant question is whether or not the alternate source of income made the dependant less than wholly dependent.  It is not relevant that the income could have lessened their dependence on the deceased person, as has been established in case law. Take the following statement from Chief Justice Barwick in the Kauri Timber Co (Tas) Pty Ltd v Reeman 128 CLR 177, for example:

"Somewhere between the extremes of the provision of bare necessities and the receipt by the wife of any advantage not provided by her husband there must be a line, no doubt vaguely defined and difficult of precise or even approximate definition or description, which marks off the difference between expenditure which denotes and expenditure which denies dependency."

Note also that the economic link between two individuals must be in the nature of support and must be relied upon by the recipient. It is not sufficient that the deceased employee made sporadic gifts of money (or goods of value) that the recipient did not need for 'support' or were of such an irregular nature that the recipient could not rely on those gifts for continuous sustenance.

4. Wholly Dependent – lives with the member

The most straight forward way for the partner or eligible young person to be wholly dependent is to satisfy the MRCA at section 17; that is, living with the member at the time of death.

“For the purposes of this Act, an eligible young person, or the partner of a member, is taken to be wholly dependent on a member if:

1. the young person or partner lives with the member; or
2. the Commission is of the opinion that the young person or partner would be living with the member but for:

1. a temporary absence of the member, or the young person or partner (as the case requires); or
2. an absence of the member, or the young person or partner (as the case requires), due to illness or infirmity.”

Satisfaction of section 17 is a sufficient condition for being wholly dependent, i.e. satisfaction of it automatically qualifies the person as wholly dependent. It follows that the details of the actual economic relationship between the person and the deceased are irrelevant. If section 17 is satisfied, the following questions are irrelevant and need not be considered:

• If the person receives economic support from the deceased.
• If the person receives economic support from a source independent of the deceased.
• If the person has an independent source of income from the deceased, whether that income exceeds that of the deceased and what each source of income is used for.

4(a). Living together and temporary absence

The term 'lives with' has a relatively broad meaning that goes beyond that of simply residing at the same address at the time of the death. Section 17 also encompasses the following:

• were living with the deceased immediately before the death; or
• were temporarily apart from the deceased either because of the member's or that person's temporary absence; or
• would have been living with the deceased had it not been for an absence of the member, partner or eligible young person because of illness or infirmity

In considering the application of the second and third points above (cf. paragraph (b) of section 17), it is important to note that there must continue to be a relationship between the member and the person in situations of temporary absence or illness separation. That is, the person must continue to be a person included in the list of dependants.  For example, in a situation where a member and person were living separately because of illness, the delegate must consider whether the person continued to be a partner despite the absence.

Paragraph (b) of section 17 covers a wide range of cases. The following are some examples of how the policy around Section 17 is to be applied:

• A child of the deceased who was not living with the member but who was maintained in a boarding school at the member's expense, even if this was for extended periods of time, should be accepted as temporary absence and deemed as satisfying section 17.
• A child living separately from the deceased and living with a former partner, and there is joint custody/access arrangements such that the child spends at least 50% of his/her time with the member should be accepted as living with the member and the time away being temporary absence, therefore, satisfying section 17.
• In relation to 17(b)(i): where ADF members are posted to ships at sea for lengthy periods, deployed overseas or 'in the field' for major exercises, 'unaccompanied' postings to locations within Australia, periods of hospitalisation, gaol terms, vacations, or absences because of bereavement or abuse.

Example;

The deceased member's partner was living separately to the member prior to the member's death due to domestic violence. Whether this is considered a temporary absence or absence due to illness or infirmity depends on the circumstances (i.e. the duration of the separation, the cause of the separation and whether the absence was intended to be permanent).

Evidence to substantiate the separation on the basis of abuse caused by illness would be considered case by case. For example, an Apprehended Violence Order (AVO) may be in place and available, however the evidence in each case will vary and is not prescribed. Other evidence, including but not limited to medical evidence, witness statements or statutory declarations may also be considered.

To consider a separation due to domestic violence as a separation due to illness or infirmity the domestic violience may be linked to the member's mental health condition/illness (this does not have to be an accepted condition).

In cases where this 'residency' matter is in dispute, the delegate should take into consideration whether the ADF had accepted that a 'partner' relationship existed for the purposes of housing arrangements, allowances, leave arrangements etc.

4(b). Wholly dependent – other family situations

It is possible for a person to be wholly dependent despite not satisfying any of the family units described in section 17. The following need to be kept in mind when determining a case of wholly dependent outside of s17:

• There is nothing in MRCA that suggests that satisfaction of section 17 is a necessary condition for being wholly dependent.
• It is important to confirm that the nature of the relationship continues to meet one of those described in the list of dependants section 15(2) of the MRCA. 
• There is some case law (albeit under the NSW Workers Compensation Act 1926) that suggests that it is possible to be wholly dependent apart from satisfying section 17. A good example is Aafjes v Kearney [1976] HCA. If this case were decided under MRCA, the dependant would not have satisfied section 17. The High Court upheld the Workers' Compensation Commission of New South Wales decision that the child was wholly dependent. The basis for the decision seems to have been the fact that the father had a legal obligation to support his child under a Supreme Court of New South Wales maintenance order and was satisfying that order immediately prior to his death.
• In Cook and Thales Australia Limited and Haydn Cook [2012] AATA 222 (17 April 2012), the Tribunal found that the child was only partially dependent on his father, who was paying child support. However, it also observed that it is possible for a minor to be dependent solely on one party even though some support is provided by another.

5. Mainly Dependent

This degree of dependency is relevant for eligible young persons, and mainly dependent attracts equivalent benefits as wholly dependent – (see sections 251(a)(ii) and 253(c)(i)). Case law has upheld the plain English meaning of this phrase. It is important to realise that it means something more than partly dependent but less than wholly dependent. According to the clause 15 of the Explanatory Memorandum of Military Rehabilitation and Compensation Bill 2003:

“A person who is partly dependent on a member is someone for whom the member meets some part of his or her economic needs. A mainly dependent person is one for whom most economic needs are met by the member and is therefore partly (sic) dependent on the member.”

The following demonstrate this:

• The Federal Court in Commissioner for Superannuation v Scott (1987), found that in the phrase “wholly or substantially” the word 'substantially' is being contrasted with 'wholly' and so means something less than total dependence. But given the fact that a contrast is being drawn with wholly, it is a mistake to define substantially or mainly in reference to its opposite: 'more than trivial, minimal or nominal'. The mistake here is that dependency can be more than trivial without being 'in the main'. Defining the term in this manner would result in cases that are merely partly dependent being classified as if they were mainly dependent.
• In DSS v Wetter [1993] FCA 17, the Federal Court held that the phrase 'substantially maintained' in the comparable provision of the Social Security Act 1947, could be appropriately paraphrased by the words 'in the main' or 'as to the greater part'. 

This indicates that it may be appropriate to consider if more than half of the economic support that the person received was from the deceased in determining whether they are 'substantially or mainly dependent'.

Where the child of a separated member normally lives apart from the member with the other parent and the member has access time and makes child support payments, requires close examination of the facts of the case to determine if the member was making at least 50% financial contribution to the child's needs. If that is the case, the child should be found to be a mainly dependent eligible young person and therefore eligible for the same compensation as a wholly dependent eligible young person.

The issue of a finding of wholly dependent is of no practical significance for a decision involving an eligible young person as a finding of a degree of mainly dependent provides the same benefits as wholly dependent (see sections 251(a)(ii) and 253 (c)(i)). Given the existence of the category of 'mainly dependent', the delegate does not need to try and classify the person as wholly dependent where it seems appropriate despite the inapplicability of section 17. Provided that a case can be made for the person being mainly dependent, then there will be no adverse consequences for the person in not satisfying section 17.

This is especially important in some circumstances. One such example (which is not without precedent) is where the parent lives with the step-child but not with the natural child. In such a situation, the step-child satisfies section 17 and so is wholly dependent. That there is no guarantee the natural child will be assessed as wholly dependent might seem unjust and inconsistent with community expectations. However, the degree of dependency that the natural child has upon the parent in such a case has to be assessed on the facts of the matter. Where the natural child fails to be assessed as wholly dependent, it still leaves open the possibility that he or she is mainly dependent. In that case, the natural child will receive the same benefits as the step-child.

6. Partly Dependent

From the Aafjes and Kauri Timber Co cases, as well as other Commonwealth legislation, it may be inferred that a person is more likely to be partly dependent if they:

• received an independent income, which was used to support or maintain themselves;
• received substantial maintenance or economic support from a third person or other entity, which was provided for the purpose of supporting/maintaining them;

• where a third person provides support, the decision-maker may have to take the subjective intention of that provider into account;
• however, social security benefits are generally provided for the purpose of supporting/maintaining the recipient.  Where a social security recipient is a dependent, their dependence on another individual  is likely to be partial.

• are an adult, and received a high degree of financial support from a source other than the deceased person.

But, as explained these considerations can only be rules of thumb and the facts of the matter will determine the outcome.

7. Virtual Dependency

There is a state that the person could be in that qualifies them as being a dependant even though they are not actually dependent upon the deceased. Although the legislation does not use this term, such a state might be called virtual dependency. Under subsection 15(1) a person included in a relationship listed in subsection 15(2) can meet the definition of 'dependant' if they were not wholly or partly dependent on the deceased immediately before the death and would have been so dependent, but for an incapacity of the member arising from that person's defence service. Note that this provision is narrower than section 17, in that:

• it applies only to the member's incapacity; and
• if applicable, may lead to the prospective dependant being deemed either wholly or partly dependent, depending on the circumstances.

However it is broader in that it applies to all persons in a relationship with the deceased listed in subsection 15(2), not just to partners and eligible young persons.