Agami and Secretary, Department of Family and Community Services
[2003] AATA 718
•31 July 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 718
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2002/1752
GENERAL ADMINISTRATIVE DIVISION
)
Re JOSEPH AGAMI Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Ms J A Shead, Member Date31 July 2002
PlaceSydney
Decision The decision under review is affirmed.
[Sgd] J A Shead
Member
CATCHWORDS
SOCIAL SECURITY – disability support pension – severe financial hardship – whether applicant would suffer severe financial hardship if section 1129(1) did not apply – decision affirmed.
LEGISLATION
Social Security Act 1991 sections 11(12), 11(13), 19C(2) and 1129(1).
CASE LAW
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 12 ALD 416
Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82
REASONS FOR DECISION
31 July 2003 Ms JA Shead, Member 1. This is an application for review to the Administrative Appeals Tribunal (“the Tribunal”) by Mr. Joseph Agami (“the Applicant”) of a decision of the Social Security Appeals Tribunal ("the SSAT") dated 14 November 2002. The SSAT affirmed a decision made by a Centrelink delegate of the Secretary of the Department of Family and Community Services (“the Respondent”) on 18 July 2002 to reduce the rate at which the Applicant may be paid a disability support pension (“DSP”). This earlier decision was reviewed and affirmed by an Authorised Review Officer (“ARO”) on 11 September 2002.
2. The Applicant gave oral evidence to the Tribunal. A departmental advocate, Mr John Kenny, represented the Respondent.
3. The Tribunal took into evidence documents submitted pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the T documents”). Mr Kenny provided the Tribunal with the Respondent’s Statement of Facts and Contentions dated 28 April 2003. The following exhibits were also tendered to the Tribunal:
Exhibit
Description
Date
A1
Financial Agreement (in blank) proposed between the Applicant and his former wife
A2
List of Mr the Applicant weekly expenses
.
4. By way of background, the Tribunal extracts the findings of fact of the matter from the SSAT decision (T2, p6):
“12. It is not in dispute that Mr Agami jointly owns 55 Haig St Maroubra with his former wife. Based on his evidence to the tribunal, the tribunal finds that he owns this property with his former wife as joint tenants. There is no dispute that the total value of the property is $600,000 and that there is no mortgage of the property.”
13. There is also no dispute that Mr Agami’s former wife and three of their children currently reside at the Haig St property. The tribunal accepts Mr Agami’s evidence that his former wife and children have lived at the property, which was their former matrimonial home, for 16 years.
14. The tribunal finds that Mr Agami’s former wife objects to the sale of the property. The finding is based on her letter of 25 September 2002 to Centrelink.
15. The Tribunal also accepts Mr Agami’s evidence that he lodged a form requesting to be paid a disability support pension under the hardship provisions some time between June and September 2002. At the time he lodged that claim Mr Agami had about $11,000 in readily accessible bank savings, as well as about $2000 invested in Telstra and NRMA shares. This finding is consistent with the Centrelink records that note that Mr Agami had claimed under the hardship provisions.
16. At present Mr Agami has about $10,000 in savings, as well as the $2000 in shares. He has no expense, other than normal living expenses and regular medical expenses, likely to become due in the near future.
5. The SSAT did not alter that decision, for the reasons set out in paragraphs 20 to 26 of its decision (T2, p8):
“20 As found by the tribunal Mr Agami owns 44 Haig St Maroubra with his former wife as joint tenants. His former wife resides in the property with three of their children. They have resided there for the last 16 years. Mr Agami’s former wife also objects to the sale of the property. It is apparent therefore that Mr Agami’s circumstances fit with some of the circumstances described in the Government policy placed on his file papers. Specifically, he jointly owns the property with his former wife who objects to the sale of the property, and consequently he fits with one of the policy descriptions as to when a person would be unable to sell an asset, or borrow against the asset. In addition the property is occupied by Mr Agami’s children who have resided there for at least 10 years. Accordingly, Mr Agami’s circumstances also match one of the policy descriptions as to when it is to be accepted that is unreasonable for a person to sell an asset
21. Having regard to all the circumstances relating to Mr Agami’s interest in 44 Haig St Maroubra, the tribunal decided that Mr Agami is unable to sell that property or use that property as security for borrowing within the meaning of section 11(12). It is also not reasonable to expect that Mr Agami sell that property or use that property as security for borrowing within the meaning of section 11(13). Consequently the tribunal decided that Mr Agami’s interest in 44 Haig St Maroubra is an unrealisable asset within the meaning of section 1129(1)(c).
22. The tribunal next considered if Mr Agami would suffer “severe financial hardship” if the value of his interest in 44 Haig St Maroubra was not to be disregarded in calculating his rate of disability support pension. “Severe financial hardship” for the purposes of section 1129(1)(e) is not defined in the Act. The Act does however include a definition of severe financial hardship in relation to other matters, such as the liquid assets waiting test for new claimants of certain benefits. The definition, which is at section 19C(2) of the Act, is as follows:
19C(2) A person…is in severe financial hardship if the value of the person’s liquid assets
(within the meaning of subsection 14A(1)) is less than the fortnightly amount at the maximum payment rate of the payment or allowance that would be payable to the person:
(f)if the person’s claims were granted; and
(g)in the case of a person to whom an income maintenance period applies, if that period did not apply.
23. The meaning of the term “severe financial hardship” has in other cases been considered by higher Courts and Tribunals. In Re Lumsden and SDSS (1986) the Administrative Appeals Tribunal said:
The expression “severe financial hardship” is not defined. In its relevant sense “severe” means “hard to sustain or endure; arduous”: The Shorter Oxford Dictionary 1973, pp 1957-8. “Financial” means “of or pertaining to finance or money matters”: ibid p752. “Hardship” includes severe suffering; extreme privation: ibid p926. “Severe financial hardship” is the equivalent of “arduous financial suffering”.. The meaning of the words is not in doubt: they are a clear direction by the legislature that the section is only to be applicable when the requisite severity of financial hardship is present. (at 10 ALN 227)
In Repatriation Commission v Hall (1998), the Federal Court said that severe financial hardship does not require proof of destitution, rather regard should be had to the context in which the term appears. In Re Sottosanti and SDSS (1999) the Administrative Appeals Tribunal said that severe financial hardship is not assessed by some fixed objective standard, but rather has to have regard to the pensioner’s particular situation. It will for example depend upon:
i)the current level of the pensioner’s (and spouse’s) income. If their joint income already exceeds the maximum pension payable, they will generally not be seen to be suffering “severe financial hardship”.
ii)whether they have other cash assets they can call upon
24. The tribunal also had regard to the Government policy as to when a person would experience severe financial hardship if the value of an asset were not to be disregarded. Essentially that policy states that if a single person has readily available funds, which includes money in readily accessible bank accounts and shares, of more than $6000, then that person is not to be accepted as being in severe financial hardship.
25. The tribunal has found that Mr Agami had, at the time he requested to have his interest in 44 Haig St Maroubra disregarded, some $11,000 in readily accessible bank savings, as well as about $2000 invested in Telstra and NRMA shares. At the time of the hearing, these funds had been reduced by about $1000. The tribunal was also satisfied that Mr Agami has no expense, other than normal living expenses and regular medical expenses, likely to become due in the near future. It can be seen therefore that Mr Agami would not be accepted as being in “severe financial hardship” within the meaning of the relevant Government policy. Having regard to Mr Agami’s circumstances and the case law summarised by the tribunal above as to the meaning of “severe financial hardship”, the tribunal could see no significant reasons why that Government policy should not be applied in Mr Agami’s case. Accordingly the tribunal decided that as Mr Agami’s readily available funds exceed $6000 he would not experience “severe financial hardship” within the meaning of section 1129(1)(e) if the value of his interest in the property was not disregarded.
26. For the reasons set out above the tribunal decided that Mr Agami would not experience “severe financial hardship” if the value of his interest in 44 Haig St Maroubra was not disregarded. Consequently the tribunal decided that that value, $300,000, must be included in calculating the total value of Mr Agami’s his assets for the purposes of working out his rate of disability support pension. Accordingly the tribunal affirms the decision under review.
6. The Applicant gave no reasons for his application for review of the SSAT decision. (T1, p 1).
7. In his opening remarks and in response to the Tribunal’s question as to why he disagreed with the decision to reduce the rate of his pension the Applicant stated that it was “not fair”.
ISSUES BEFORE THE TRIBUNAL
8. The Respondent submitted that the Applicant would not suffer financial hardship for the purposes of subsection 1129(1) of the Social Security Act 1991 (“the Act”) if the value of his interest in 44 Haig Street Maroubra were not disregarded. It was noted that the Applicant’s relevant circumstances are those applicable at the time of his hardship application of 28 June 2002.
LEGISLATION
9. The legislation relevant to this matter is section 1129(1) of the Act. It relevantly provides:
"1129 Access to financial hardship rules – pensions
1129(1) If:
(a) either:
(i)a social security pension is not payable to a person because of the application of an assets test; or
(ii)a person’s social security pension rate is determined by the application of an assets test; and
(b) either
(i)sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A, 1126, 1126AA, 1126AB, 1126AC, and 1126AD (disposal of assets) do not apply to the person; or
(ii)the Secretary determines that the application of those sections to the person should, for the purposes of this section, be disregarded; and
(c)the person, or the person’s partner, has an unrealisable asset, and
(d)the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and
(e)the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person’
the Secretary must determine that this section applies to the person
10. Sections 11(12) and 11(13) of the Act deal with unrealisable assets and relevantly state:
“11 Assets test definitions
11(12) An asset of a person is an unrealisable asset if:
(a) the person cannot sell or realise the asset; and
(b)the person cannot use the asset as a security for borrowing.
11(13)For the purposes of the application of this Act to a social security pension (other than a pension PP (single)), an asset of a person is also an unrealisable asset if:
(a)the person could not reasonably be expected to sell or realise the asset; and
(b)the person could not reasonably be expected to use the asset as a security for borrowing.
…
EVIDENCE
11. The Applicant did not disagree with the findings of facts in the SSAT decision nor did he dispute matters of facts in the Respondent’s Statement of Facts and Contentions as follows.
1. Though divorced from his former wife, Mr Agami continues to jointly own the former matrimonial home, which has been the principal residence for the past 16 years of the former wife, who is the other joint owner, and 3 of their student children aged 22, 20 and 15 (T2, 4).
2. That the whole home is valued at $600,000 (T6, 15) and unencumbered is undisputed. Both partners are unwilling to sell the property and divide the proceeds. The former wife records her objection to sale at T27, 52. Mr Agami wishes his student children to continue living there. It is still his postal address.
3. Mr Agami has rented residential accommodation elsewhere since 1995 (T3, 11). At the time of the SSAT hearing rent was $90 pw, medication was costing him $14 per month and he was incurring about $150 per month on telecommunications (including mobile) charges (T2, 5).
4. At the time of his hardship application, his readily available assets were said to be approximately $11,000 in the bank (compare $13,000 in income and assets review of 16/8/2002 - T45, 29) and NRMA and Telstra shares worth about $2,000. Mr Agami wishes to preserve this capital against the possibility of needing future surgery (eg hernia or prostate) outside the public hospital system and to travel periodically to visit family overseas (T2, 5).
5. The substantial effect of the June 2002 revaluation of the Maroubra property may be guaged [sic] from the payment summary at T15, 24. The attached PFAR screendumps [sic] (pension - factors affecting rate) show how assets have affected the ongoing assessment.
6. Mr Agami requested review of his pension reduction on 19/6/2002 (T10, 19), claimed hardship on 28/6/2002 (T11, 20) and requested review by the ARO on the same day. The hardship claim was rejected on 6/9/2002 (T19, 39) and that rejection and the overall assessment affirmed by an original decision maker on 6/9/2002 (T21, 41 and T23, 46-44).
12. During cross-examination, the Applicant stated he spent $10 a week on medicine. He stated that he purchases special dietary food, which costs $90 a week. The Applicant told the Tribunal of his travel costs related to airfares to Melbourne to visit his daughter. He doubted whether he could economise on weekly expenses of $10 for charity, $12 for Lotto, $10 for presents, $25 for entertainment and $25 for newspapers.
CONTENTIONS
13. The Applicant contended that the Government policy in respect of unrealisable assets is unfair and has been static for many years. He specified that it was unfair to determine that a person is not suffering hardship if their realisable assets exceed $6,000.
14. The Respondent’s Statement of Facts & Contentions contends as follows.
“7. .A pensioner with an unrealisable asset whose payment rate is reduced by the asset test may request that section 1129 of the Social Security Act 1991 apply to him. For this to happen -
· the person must have an unrealisable asset - one that they cannot sell or realise or cannot reasonably be expected to sell or realise and cannot use as a security for borrowing or cannot reasonably be expected to use as a security for borrowing (subsections 11(12) and (13)); and
· the decision maker must be satisfied that the person would suffer severe financial hardship if section 1129 did not apply.
8. The respondent accepts that Mr Agami cannot reasonably be expected to sell or realise his interest in the Maroubra home or to use as a security for borrowing. This reflects government policy a set out at T28 page 54 and referred to by the SSAT at paragraph 20 of its decision.
9. The only issue in this case is whether he would suffer severe financial hardship if section 1129 does not apply. The respondent contends that he would not. The respondent agrees with the conclusions of the SSAT (para 20) which applied the standard of arduous financial suffering enunciated in re Lumsden (1986) 10 ALN N225 at N227. The respondent also accepts that regard is to be had to the pensioner' particular circumstances. Mr Agami has no extraordinary outgoings.. He had readily available funds of at least $13,000 when he requested hardship consideration.
10. There is no cogent reason in the facts of his case to depart from the normal policy (T28, 55) that a single person with at least $6,000 in realisable assets should not normally be considered to be in severe financial hardship. This policy is consistent with paragraph 1129(1)(e) of the Act. (Compare the tribunal's approach to the application of lawful policy in re Drake (No 2) (1979) 2 ALD 634 at 636 - 645.)
11. It is open to Mr Agami to apply afresh if his funds diminish to the degree required by the policy or has imminent expenses which would so diminish his funds.”
CONSIDERATION
15. The Tribunal’s adopts the findings of facts of the SSAT set out earlier and notes the concession made at para 8 of the Respondent’s Statements of Facts and Contentions.
16. The Tribunal considered that the application of the guideline limit of $6,000 is a reasonable one. The Tribunal is not bound to apply policy guidelines of the kind referred to above in the guide (Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60). However, it may do so and, indeed, will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so. (Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 12 ALD 416 and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.) In this case, there is no material before the Tribunal to indicate that the guideline should not be applied. The Tribunal considers the Applicant’s weekly discretionary expenditures indicate he is not in severe financial hardship.
17. Accordingly, in all the circumstances and for the reasons set out above, the Tribunal determines that the decision under review is affirmed. This means that the decision under review is unchanged.
I certify that the 17 preceding paragraphs are a true copy of the reasons for the decision herein of Ms JA Shead, Member.
Signed: A. Krilis
AssociateDate of Hearing 8 May 2003
Date of Decision 31 July 2003Representative for the Applicant Self
Advocate for the Respondent Mr John Kenny
0
2
0