Attard and Department of Family and Community Services - [2000] AATA 1020

DECISION AND REASONS FOR DECISION [2000] AATA 1020

ADMINISTRATIVE APPEALS TRIBUNAL ) No N1999/1373

) N1999/1630

GENERAL ADMINISTRATIVE DIVISION          )
           Re      VINCENT ATTARD
  First Applicant
   And  IRIS ATTARD

Second Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION

Tribunal Dr J D Campbell

Date22 November 2000
PlaceSydney

Decision Both decisions under review are affirmed.

[Sgd] J D Campbell
Member
CATCHWORDS
SOCIAL SECURITY - age pension - intention to travel overseas for a period in excess of 12 months - asset reassessment after 12 months - absence - principal home - exclusion for 12 months in assets test - pension rate reduction
Social Security Act 1991, sections 11,1064, 1118 and Module G
Department of Employment, Education and Youth Affairs v Ferguson (1997) 48 ALD 593
Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295

REASONS FOR DECISION

Dr J D Campbell, Member

Mr Vincent Attard ("the first Applicant") and Mrs Iris Attard ("the second Applicant") in these two matters seek a review of the decisions of the Social Security Appeals Tribunal ("the SSAT") dated 29 June 1999, both of which affirmed the decisions of the Centrelink manager, being a delegate of the Secretary of the Department of Family and Community Services ("the Respondent") dated 3 February 1999. In these two decisions the Respondent reduced the amount of age pension paid to both Applicants because of an increase in the combined value of assets held by both Applicants. Both decisions were reviewed and affirmed in decisions made by an authorised review officer dated 26 March 1999.
A hearing was held on 24 July 2000 at which the Applicants were represented by Ms Koller, a solicitor from the Welfare Rights Centre. The Respondent was represented by Ms Mantaring, an advocate from the Advocacy and Administrative Law section of Centrelink.
The following written material was placed in evidence before the Tribunal:

Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975. T1-T15 pp1-73
Applicant's statement of facts and contentions dated 22 November 1999.   Exhibit A1
Application to continue payment of pension/allowance during an absence overseas, undated           Exhibit A2
Copy of letter to Mr Attard from Centrelink dated 12 November 1997.         Exhibit A3
Respondent's statement of facts and contentions dated 25 November 1999.         Exhibit R1
Respondent's submission dated 21 July 2000   Exhibit R2

Issues:

The relevant issue in these matters is whether the decision to assess the Applicants' principal home, from which they were absent for a period of longer than 12 months, as part of their combined assets for the purposes of calculating the rate of age pension is correct.
Legislation
The relevant legislation is the Social Security Act 1991 ("the Act") and in particular sections 11, 1118, 1064 and Module C.
Background
On 12 November 1997 a computer record from Centrelink notes that the first Applicant informed the Respondent that he and his wife intended to travel overseas on 8 February 1998 and that they would be absent for a period of time in excess of 12 months, but that they did intend to return (T3, p24). In letters to the Applicants dated 12 November 1997, a delegate of the Secretary of the Department of Social Security made the following statements:
"I am writing to you about your Age Pension.
You have told me that you are thinking about going overseas soon. I have considered the information you gave me during your recent pre-departure interview.
The information you have me shows that your Age Pension can be paid to you while you are overseas indefinitely. If you stay overseas for over 12 months and cannot prove that you lived in Australia for more than 25 years your rate of Age Pension will be reduced. If you can prove that you have lived in Australia for 25 years your rate of Age Pension will not change. Please note that the final decision on whether your rate of pension will be reduced will be made by the International Operations Branch in Hobart.
…" (Exhibit A3, T3 p31C)

In a further letter to the first Applicant on 12 November 1997, the same delegate acknowledged that the Department had been notified of the Applicants' proposed departure and that the pension would be reviewed six months after departure and at other times during their absence. The first Applicant was also advised to notify the Respondent within 28 days if particular events were to occur. A similar letter was forwarded to the second Applicant on the same day (T3, pp28, 30).
A letter to the first Applicant on 24 February 1998 detailed his four weekly amount of pension and again nominated that he notify the Respondent if particular events were to occur (T4, p32). A further questionnaire was forwarded to the first Applicant by the Respondent on 24 February 1998 regarding the Applicant's property at 50 Elizabeth St Artarmon (T5). This form was completed on 16 March 1998 by the first Applicant (T5, pp36-39).
On 8 February 1999, the first Applicant was advised by the Respondent that his rate of pension had been reduced to $66.40 per fortnight because the combined value of the Applicants' assets had increased (T6, p40). Following a request for review by the first Applicant, an authorised review officer affirmed the earlier decisions and advised the Applicants of the decision on 26 March 1999 (T11). Following a further review, both decisions were affirmed by the SSAT in their decisions of 29 June 1999 (T2).
Evidence: The first Applicant
The first Applicant stated that he and his wife had been deliberate in planning their arrangements for an extended visit to relations in Malta and that well prior to their departure the Department was informed of their intention to stay longer than 12 months. During their absence a daughter, who normally lived with them, would continue to reside in the Artarmon residence, with all outgoings for the house being attended to before departure. The daughter was to meet the costs of electricity and telephone. About a year later another daughter, with four children, moved into the residence.
The first Applicant stated that they only took clothes to Malta, and that when they arrived they moved into accommodation arranged by his brother, the agreement being that they would stay there until their return to Australia, with rent being 25 Maltese pounds per week (approx $100).
The first Applicant further stated that when the pension rate was cut in February 1999, the Applicants found that they were no longer able to afford the accommodation and left on 1 March 1999, whereupon they moved to rent free accommodation at his sister-in-law's house. He stated that the Applicants were aged 73 and 65 respectively at the time and that both suffered from numerous medical conditions including diabetes, ischaemic heart disease and cancer.
The first Applicant stated that he had an investment account with St George Bank with a balance of $70,000, but as he had made no prior arrangements, he was unable to draw money from the account. He stated that instead of using this account, $800 were forwarded to Malta every four weeks from his daughter. As a consequence he still owes money to both his sister-in-law in Malta and his daughter.
The first Applicant stated that because of their intention to stay longer than twelve months, single fares were purchased both ways as opposed to a cheaper return fare. Further, if they had been aware of the issues surrounding their home in Artarmon, they would have left later to encompass activities associated with their son within a 12 month time frame.
In response to questions in cross examination the first Applicant stated that:

no rent was paid by his younger daughter or his older daughter during their tenancy at Artarmon;
money is owing to his younger daughter ($5,000+) and to his sister-in-law ($3,000+);
the investment account at St George had a balance of $70,000 during the period in question; and
a part pension was received and was being banked at the Midland Bank during the period in question (£8 per week).

Submissions: The Applicants

Ms Koller submitted that the Applicants had prepared for their extended overseas stay with care and precision and had notified and in return received from the Respondent correspondence which clearly indicated that the Applicants' intentions had been registered and had received advice which at best was confusing and at worst misleading. The Applicants implemented their plans and rented accommodation in Malta for at least 12 months. On advice that their pension rates were to be reduced, the Applicants found themselves in a position of financial difficulty. They had to relinquish their accommodation and move to live with relatives, arrange to have money sent from their daughter in Australia and borrow money from relatives to live and return to Australia in September 1999.
Ms Koller submits that the Applicants should have had the benefit of the hardship provisions during this period as they were unable to access their savings in Australia and it was unrealistic for them to sell their home, if indeed they had been correctly advised.
Ms Koller submitted that on the evidence in this matter the home at Artarmon remained at all times during the period in question the Applicants' "principal home", and that a person's principal home is not considered an assessable asset. In so submitting, Ms Koller stated that the words in subsection 11(7)(a) of the Act are presumptive and not necessarily exhaustive. In essence it can be assumed without further enquiry that a person's principal home remains a person's principal home for a period of 12 months, during a period of temporary absence by the person. In furthering the issue, it is argued that as the phrase "is to be taken to continue" is presumptive and not necessarily exhaustive, enquiry into the particular circumstances should be undertaken to establish whether or not the particular residence remains the principal home. In this matter, the Applicant submits, the issue is clearly defined as the Applicants had the clear intention at all times of maintaining the Artarmon property as their "principal home". In making such a submission Ms Koller relied upon the earlier decisions of Department of Employment, Education and Youth Affairs v Ferguson (1997) 48 ALD 593 and Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295.
In a final submission Ms Koller sought Departmental relief by way of compensation for defective administration for the Applicants. It was contended that the Respondent should have made the Applicants aware of their intended course of action in relation to the inclusion of the Artarmon home as an assessable asset, after a period of 12 months absence, rather than the notifications which were forwarded to the Applicants.
The Respondent
The Respondent submits that a person's principal home is an exempt asset for the purposes of the asset test as specified in the Act, and that it continues to be so except within the circumstances nominated under subsection 11(7) of the Act, and that this list of exceptions is both prescriptive and exhaustive. As a consequence it was submitted that the decision to reduce the Applicants' pension rate was correct.
The Respondent further submits that the Applicants had at all times in question a balance of at least $70,000 in their St George account, and that these funds could have been accessed if the Applicants so desired. As such the Respondent contends that it is difficult to understand how it could be considered that the Applicants were in severe financial hardship and that they could have had the benefit of the hardship provisions during the period.
Considerations and findings:
The Tribunal, in noting the particulars of this matter, observes that the Applicants, both aged, did attempt to convey to the Respondent their particular intentions as regards their overseas travel and the length of time they would be absent from Australia. The Tribunal further observes the correspondence to the Applicants prior to their departure, tabled by the Respondent, and notes the absence of any cautionary statements as regards the inclusion of exempt principal home assets being used in assessment for pension rate after a period of 12 months absence. The Tribunal further observes such statements as "your rate of age pension will not change" (Exhibit A3) and concludes that in the light of such advice particular courses of action could be entered into which could cause detriment if the rate were to significantly change. In this matter the rate was reduced without much notice and certain results flowed, as the Applicants sought to address their reduced financial liquidity. The Tribunal, in noting the manner in which the Applicants addressed these issues, and while recognising the age of the Applicants and the difficulties and inconvenience experienced, comments that there were a number of options available to the Applicants (including returning home, accessing the St George account) and they elected to do what they did. In such circumstances, the Tribunal has great difficulty in making a finding of severe financial hardship, particularly where significant funds are not accessed, rent free accommodation is being provided to family members at Artarmon, and a decision to remain in Malta is maintained (all being discretionary decisions). By not making a finding of severe financial hardship, the Tribunal further concludes that the Applicants do not satisfy the requirements that would permit access to the benefits of the hardship provisions during that period. Further the Tribunal, while noting the issue of the Respondent's administration in this matter, clearly states that the Tribunal has no jurisdiction in claims for compensation for defective administration.
In turning to the statutory framework, within which this matter is to be considered, the Tribunal notes that section 1118 of the Act exempts a person's principal home when calculating the value of a person's assets. Further the Tribunal notes sections 11(5), (6), (7) and (8) of the Act:
"Principal home
11(5) A reference in this Act to the principal home of a person includes reference to:
(a) if the principal home is a dwelling-house—the private land adjacent to the dwelling-house to the extent that the private land, together with the area of the ground floor of the dwelling-house, does not exceed 2 hectares; or
(b) if the principal home is a flat or home unit—a garage or storeroom that is used primarily for private or domestic purposes in association with the flat or home unit.
11(6) A reference in subsection (5) to private land adjacent to a dwelling-house is a reference to land that is adjacent to the dwelling-house and that is used primarily for private or domestic purposes in association with that dwelling-house.
11(7) A residence of a person is to be taken to continue to be the person's "principal home" during:
(a) any period (not exceeding 12 months) during which the person is temporarily absent from the residence; and
(b) if the person is in a care situation or residential care the period of 2 years beginning when the person started to be in a care situation or residential care; and
(c) any period during which:
(i) the person is in a care situation or residential care; and
(ii) the residence is, or because of paragraph (a) or (b) continues to be, the principal home of the person's partner; and
(d) if:
(i) the person is in a care situation or residential care and
(ii) the person's partner dies while in a care situation or residential care; and
(iii) the person's partner had been in a care situation or residential care for less than 2 years;
the period of 2 years beginning at the time the person's partner started to be in a care situation or residential care; and
(e) where:
(i) the person is in a care situation or residential care; and
(ii) the person's partner dies while not residing in a nursing home;
the period of 2 years from the partner's death; and
(f) any period of up to 2 years while the person is absent from the residence and is personally providing a substantial level of care in another private residence for another person who needs, or in the Secretary's opinion is likely to need, that level of care in a private residence for at least 14 consecutive days.
11(8) If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person "reasonable security of tenure" in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.
In addressing the submissions in this matter, the Tribunal observes that pursuant to the Act the principal home is an exempt asset when calculating the value of a person's assets for the Act and that there is no definition within the Act of the term "principal home". The Tribunal further observes that the Applicants' home at Artarmon was their "principal home" when they lived in it prior to their extended absence in Malta; that the indicia which created the Artarmon property as their principal home continued during their period of absence, with the exception of the two Applicants being resident, and that upon their return the same indicia continued to apply and the property was characterised as their "principal home".
The Tribunal, in noting both the submissions of the Applicants and the Respondent, concludes that the property at Artarmon was the principal home of the Applicants at all times in this matter pursuant to the Act, except where the Act states that it is not. In turning to subsection 11(7) the Tribunal notes that a residence of a person is to be taken to continue to be the person's principal home during any period (not exceeding 12 months) during which the person is temporarily absent from the residence (subsection (11)(7)(a)). Subsections 11(7)(a) to (f) further define circumstances in which the residence is to be taken to continue to be the person's principal home. In such situations the Tribunal acknowledges that upon the occurrence of the particular nominated events the residence is presumed to be the person's principal home for the period nominated in the particular subsection.
In analysing the intent of subsection 11(7)(a), the Tribunal concludes that when the period exceeds 12 months of temporary absence, the residence of a person, which was previously the principal home of the person, does not continue to be the principal home. Further it would appear to the Tribunal that the particular circumstance nominated (exceeding 12 months) is both definitive and exhaustive, as it is for all the circumstances defined in subsection 11(7) of the Act. A contrary interpretation would in the Tribunal's view create a nonsense, and defeat the intention of subsection 11(7) of the Act to create clearly defined circumstances in which continuance of principal residence exemption status can be maintained despite the absence of residence. Such a contrary interpretation could in the Tribunal's view create a situation in which it would be argued that a person's principal home remains the principal home for this Act no matter how long the person remains non resident in the home, and this could in itself lead to situations which would be obviously inconsistent with the purposes and objectives of the Act.
In turning to the particulars of the matters in issue, the Tribunal finds that for the purposes of the Act, the home at Artarmon no longer enjoyed the character and status of the Applicants' principal home once the Applicants had been absent from residence for a period of 12 months, and that thereafter until their reoccupation, the Artarmon residence, while enjoying the character of a principal home, did not enjoy the status of a principal home within the defined circumstances of the Act. In essence the Tribunal finds that the Artarmon home of the Applicants was deprived of its exempt status as a non assessable asset for the purposes of the Act, once they had been absent for a period of 12 months. As a consequence the Respondent was correct in assessing the asset (the house) in the process of recalculating the Applicants' rate of pension in February 1999.
Determination:

Both decisions under review are affirmed.
I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell.
Signed:         .....................................................................................
  Associate
Date/s of Hearing  24 July 1999
Date of Decision  22 November 2000
Applicant  Ms S Koller
Advocate for the Respondent    Ms S Mantaring