Baldwin and Secretary, Department of Health (Social services)

[2020] AATA 1420

Baldwin and Secretary, Department of Health (Social services) [2020] AATA 1420 (22 May 2020)

Division:GENERAL DIVISION

File Number(s): 2019/7453

Re:Elizabeth Baldwin

APPLICANT

AndSecretary, Department of Health

RESPONDENT

DECISION

Tribunal:Member W Frost

Date:22 May 2020

Place:Canberra

The Tribunal affirms the decision under review pursuant to subsection 43(1)(a) of the Administrative Appeals Tribunal Act 1975.

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Member W Frost

Catchwords

SOCIAL SECURITY - assessable assets for aged care fees– whether a correct assessment of assets was made in calculating residential aged care fees - whether the ‘extended land use test’ in subsection 11A (4) of the Social Security Act 1991 applies to the land jointly owned by Applicant - decision under review affirmed

Legislation         

Administrative Appeals Tribunal Act 1975 ss 37, 43
Aged Care Act 1997 ss 44, 96
Social Security Act 1991 ss 11A, 1118
Subsidy Principles 2014 (made under s 96 of Aged Care Act 1997) s 47

REASONS FOR DECISION

Member W Frost

22 May 2020

INTRODUCTION

1. This decision concerns the correct assessment of the ‘assets’ of the Applicant,  Ms Elizabeth Baldwin, for the purposes of her residential aged care fees pursuant to the Aged Care Act 1997 (Act).

2. The decision under review was made by an Authorised Review Officer (ARO) of the Department of Human Services (now Services Australia) on 16 October 2019. The ARO affirmed a decision that the value of property greater than Ms Baldwin’s ‘dwelling-house’ and surrounding 2 hectares should be an assessable asset for the purpose of the Act.

3. Ms Baldwin applied in November 2019 to the Administrative Appeals Tribunal (Tribunal) for review of this decision and a hearing was held by telephone on 11 May 2020. The Tribunal has considered all documents in the bundle of documents filed in this proceeding on 3 March 2020, pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (AAT Act), together with the submissions made by the parties at the hearing. The Tribunal has decided to affirm the decision under review. That is, Ms Baldwin’s application is unsuccessful. The reasons for the Tribunal’s decision are set out as follows.

   ISSUE

4. The issue for the Tribunal was to decide what is the correct assessment of Ms Baldwin’s assets for the purposes of the calculation of her aged care fees. This required the Tribunal to decide whether the ‘extended land use test’ in subsection 11A(4) of the Social Security Act 1991 (Social Security Act) applies to the land jointly owned by Ms Baldwin.

   BACKGROUND

5. Ms Baldwin is 81 years old and has resided in residential aged care since March 2018.[1] Ms Baldwin’s husband, Mr Barry Baldwin, is her power of attorney and nominee and represented Ms Baldwin at the Tribunal hearing.

   [1] T1, 1.

6. Ms Baldwin and her husband jointly own several assets.[2] Relevantly, Ms Baldwin and her husband are joint owners of a 56.40-hectare property named ‘Myall’, located in Gunnedah, New South Wales.[3]

   [2] T4, 35; T11, 90.

   [3] T4, 41.

7. In August 2018, the Department of Human Services (now Services Australia) determined that Ms Baldwin’s total assessable assets for the purposes of the Act were $941,559.50, including real estate interests of $62,500, which did not include the value of Ms Baldwin’s principal home.[4] As a result, Ms Baldwin’s residential aged care fees were set to include a means tested daily fee of $36.62, in addition to the basic daily fee of $50.16. In total, this amounted to a daily fee of $86.78.[5] In September 2018, the total daily fee was set at $86.57.[6]

   [4] T8, 82.

   [5] T9, 86.

   [6] T10, 87.

8. From 1 July 2019, following an Aged Care Means Test Assessment, the value of Ms Baldwin’s total assessable assets was reduced to $881,778, which relevantly included an amount of $52,000 for the area of ‘Myall’ outside of that property’s residence and surrounding 2 hectares.[7] The assessment of the land value was not in dispute between the parties.

   [7] T2, 13.

9. On 16 October 2019, following a request for review of the 1 July 2019 assessment, an ARO of the Department of Human Services affirmed the decision to include the area of ‘Myall’ outside of the residence and surrounding 2 hectares as an assessable asset for the purposes of the Act.[8]

   [8] T2, 12.

10. On 5 November 2019, Ms Baldwin applied to the Tribunal for review of the ARO’s decision.[9]

    LEGISLATIVE INSTRUMENTS

    [9] T1, 1.

    The Aged Care Act

11. The Act sets out the required calculation of the residential care subsidy payable to an approved provider in respect of a residential care service.[10] This process necessitates the calculation of a ‘means tested amount’, which may reduce the amount of residential care subsidy payable by the government, thereby increasing the residential care fees payable by the person receiving the residential care service.

    [10] Division 44 of the Act.

12. Section 44.22 of the Act sets out the method for calculating the ‘means tested amount’; this includes a requirement to work out ‘the value of the care recipient’s assets’.

13. Section 44.26A(1) of the Act provides that the value of a person’s assets for the purposes of section 44.22 is to be worked out in accordance with the ‘Subsidy Principles’.

    The Subsidy Principles

14. Section 47 of the Subsidy Principles 2014[11] relevantly states that the value of a person’s assets is the value worked out in accordance with Division 1 of Part 3.12 of the Social Security Act.

    [11] Made under section 96-1 of the Act and registered on 16 January 2019.

    The Social Security Act

15. Division 1 of Part 3.12 of the Social Security Act contains section 1118, which relevantly states that ‘the value of any right or interest of the person in one residence that is the principal home of the person’ is to be disregarded when calculating the person’s total assets.

16. Section 11A of the Social Security Act provides that ‘principal home’ is defined in as including a reference to:

    (a) if the principal home is a dwelling-house--the land adjacent to the dwelling-house to the extent that:

    (i) the land is held under the same title document as the land on which the dwelling-house is located; and

    (ii) the private land use test in subsection (3) is satisfied in relation to the land or, if the person is one to whom the extended land use test applies in relation to the land, the extended land use test in subsection (6) is satisfied in relation to the land…

17. The ‘private land use test’, set out in subsection 11A(3) of the Social Security Act, applies to land with a total area size of ‘not more than 2 hectares’.

18. Subsection 11A(4) of the Social Security Act relevantly provides that:

    The extended land use test applies to a person in relation to land adjacent to the dwelling-house if:

    (a) the person has reached pension age; and

    (b) the person is qualified for an age pension or carer payment and that pension or payment is payable to the person; and

    (c) the dwelling-house has been the person's principal home for 20 years or more continuously. [emphasis added]

19. Pursuant to subsection 11A(6) of the Social Security Act, if the ‘extended land use test’ (set out above) applies to a person, that test is satisfied if, among other things, the area of the land is ‘more than 2 hectares’.

    CONSIDERATION

20. An assets assessment determines the level of government assistance available to a person in residential aged care. This, in turn, determines the accommodation fees or accommodation bond which may be payable by the person for residential care.

21. When a person enters an approved residential aged care facility, provided certain conditions are met, the facility is entitled to receive a residential care subsidy payable by the government in respect of the person. Any additional fees above the subsidised amount are payable by the person receiving the residential aged care service.

22. In Ms Baldwin’s case, the property at ‘Myall’ is greater than 2 hectares in area and as such, the total value of that property is not exempt from an assessment of her assets under the ‘private land test’ in the Social Security Act.

23. Accordingly, the total value of ‘Myall’ can only be excluded from the total value of Ms Baldwin’s assessable assets if she is a person to whom the ‘extended land use test’ applies and that test is satisfied. The ‘extended land use test’ applies to a person who, relevantly, has reached pension age, is qualified for an age pension and the ‘dwelling-house’ has been the person’s principal house for 20 continuous years.

24. There is no dispute that Ms Baldwin has reached pension age; she is 81 years old. However, it is also not in dispute that the age pension is not payable to Ms Baldwin because the applicable assets test is not met for that payment and, additionally, the ‘Myall’ property has not been Ms Baldwin’s principal home for 20 years or more. The Baldwins have jointly owned ‘Myall’ since 2006.[12] Therefore, Ms Baldwin is not a person to whom the ‘extended land test’ applies and the total value of ‘Myall’ cannot be excluded from her assessable assets. Accordingly, the value of the land adjacent to the dwelling-house and the surrounding 2 hectares at ‘Myall’ is an assessable asset for the purposes of calculating Ms Baldwin’s residential aged care fees.

    [12] T1, 3.

    CONCLUSION

25. Mr Baldwin made representations on behalf of his wife at the hearing regarding the fairness of the particular provisions of the Act and their applicability in Ms Baldwin’s circumstances. In summary, these circumstances are that Ms Baldwin and her husband are self-funded retirees, they do not receive government benefits in the form of an age pension and the ‘Myall’ property was purchased in 2006 for the Baldwin’s retirement when they sold their farm, but they cannot use that land to generate an income. Mr Baldwin submitted that there should be some ‘compassion’ or discretion when considering a person’s circumstances and assets for the determination of the amount of aged care fees payable by a person to a residential care facility.

26. Unfortunately for Ms Baldwin, there is no discretion in the Act applicable to an assessment of assets for the purposes of her aged care fees. That is, the Tribunal cannot have regard to any matter outside the specific terms of the legislative instruments regarding what constitutes a person’s assessable assets. Relatedly, the Tribunal cannot consider any possible special circumstances in relation to a particular applicant when calculating their assessable assets under the Act.

27. While the Tribunal sympathises with the position the Baldwins encounter as a result of the terms of the Act, including because they have plainly worked hard throughout their working life to fund their retirement, the Tribunal must apply the legislation propounded by the Parliament in reviewing a decision made pursuant to that particular Act. In short, Ms Baldwin does not qualify for the age pension and the dwelling-house at ‘Myall’ has not been her principal home for at least 20 years. Accordingly, the ‘Myall’ property cannot be disregarded in calculating Ms Baldwin’s assets and the land jointly owned by the Baldwins adjacent to their house and surrounding 2 hectares is not exempt from constituting an assessable asset under the Act in order to determine the applicable aged care fees payable to Ms Baldwin’s residential care facility, in addition to the relevant government subsidy. In this regard, and noting that the valuation of the relevant land was not in dispute in this proceeding, the decision under review was correct and Ms Baldwin’s application before the Tribunal is unsuccessful.

    DECISION

28. For the above reasons, the Tribunal affirms the decision under review pursuant to subsection 43(1)(a) of the AAT Act.

I certify that the preceding 28 (twenty-eight) paragraphs are a true copy of the reasons for the decision herein of Member W Frost.

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Associate

Dated: 22 May 2020

Date(s) of hearing:	11 May 2020
Date final submissions received:	15 April 2020
Applicant’s Representative:	Mr Barry Baldwin
Solicitor for the Respondent:	Ms Laura Hinwood, Services Australia