Bertoni and Department of Family and Community Services

[2002] AATA 591

DECISION AND REASONS FOR DECISION [2002] AATA 591

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2002/270
GENERAL ADMINISTRATIVE  DIVISION
  Re:         LILIANA BERTONI
  Applicant
  And:       SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES
  Respondent

DECISION

Tribunal:       M.J. Carstairs, Member
Date:             27 June 2002
Place:            Melbourne

Decision:For reasons given orally at the hearing, the Tribunal affirms the decisions under review.

(sgd) M.J. Carstairs
  Member
SOCIAL SECURITY – disability support pension – cancellation – whether single non-home-owner – assets limit – whether hardship provisions apply – unrealisable assets – whether severe financial hardship
Social Security Act 1991 ss11, 98(1), 1118, 1121(1), 1129
Re Fuller v Repatriation Commission (1987) 14 ALD 220

REASONS FOR DECISION

27 June 2002  M.J. Carstairs, Member

1. This is a hearing of an application by Liliana Bertoni (the applicant) for review of decisions of the Social Security Appeals Tribunal (the SSAT) dated 6 February 2002.  The SSAT affirmed two decisions of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the respondent); firstly, to cancel the disability support pension (DSP) on the basis that the applicant's assets exceeded the limit at which DSP could be paid; and secondly, that the hardship provisions in the Social Security Act 1991 (the Act) did not apply.

2. At the hearing the applicant represented herself and Ms P. D'Cunha, an advocate with Centrelink, represented the respondent.

3. The Tribunal had before it the documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975 as well as exhibits marked A1 to A4 for the applicant and R1 to R3 for the respondent.
   Background

4. The applicant lives with her parents at 42B Bolingbroke Street, Pascoe Vale. She owns properties at 24 McKeon Avenue, Pascoe Vale and 5 Bolingbroke Street, Pascoe Vale. At the time the reviewable decision was made there was a mortgage of $16,279.08 on the property at 5 Bolingbroke Street.

5. The applicant received DSP until 22 August 2001, at which time a decision was made by a Centrelink delegate to cancel DSP (T20).  On 3 September 2001 the applicant lodged a claim for consideration under the hardship provisions (T21) and on 14 September 2001 this claim was rejected on the basis that the applicant had realisable assets (T39).  The applicant then sought review of both decisions.  On 29 October 2001 an authorised review officer affirmed the decisions to cancel DSP and to reject the claim under the hardship provisions, as did the SSAT.  An application was then lodged with this Tribunal on 19 March 2002.
   Evidence

6. The applicant gave evidence at the hearing that she had lived with her parents at 42B Bolingbroke Street since 1998 as this provides them with a supportive and congenial environment in which their complex health needs can be met.  However, she said that she regards 24 McKeon Avenue as her home, although she does not live there.

7. The applicant accepted the valuation on the property at McKeon Avenue of $300,000.00, which was the initial value ascribed to it by Centrelink.  She took issue with the valuation process in her case, and the variations in values given to the properties.  The applicant said that she currently receives rental income for the two properties totalling $1,634.00 monthly.  However, she considered that the income from McKeon Avenue should be disregarded, as it is in fact her principal home.

8. The applicant submitted that in terms of the hardship provisions, account should be taken of issues of fairness and she submitted that the Act unfairly discriminates against real property holders as against superannuants.  In order to comply with the legislative provisions, she said that she would be forced to sell and put her investments into less secure investments.  She submitted that hardship would be established in her case, provided that only the income from her Bolingbroke Street property was taken into account.

9. The Tribunal had before it the initial valuations by a certified practising valuer Mr M. Trevethick dated 17 August 2001 (T18) and 21 August 2001 (T17), giving a valuation of $250,000.00 for the Bolingbroke Street property and $300,000.00 for the McKeon Avenue property, with an overall valuation of $550,000.00.  Following an internal inspection, Mr Trevethick provided further valuations dated 21 December 2001 (T53 and T54).  The valuation of the property at Bolingbroke Street was reduced to $225,000.00 because its interior was of a lesser state than expected and the value of the McKeon Avenue property was increased to $325,000.00.

10. Mr Trevethick also gave evidence to the Tribunal.  He said that the reason for increasing the value of the McKeon Street property was that upon internal inspection the condition of its interior was far superior to what he had appreciated on a kerbside valuation.  He described it as being like a new house.  He gave evidence that he was satisfied that his two later valuations were correct and were based on comparable sales and were in line with valuation practice.
    Consideration of Issues

11. A person who applies for a pension or benefit under the Act will be subject to both income and assets testing in accordance with s1064 and the test that produces the lower rate of payment is the one that is then applied. Section 1118 of the Act sets out the assets that are to be disregarded when applying the assets test to a person and none of these exceptions apply in this case.

12. The question of assets testing turns upon the definition of a home-owner, as provisions are different for those who are home-owners as against those who are not home-owners. Section 11(4) sets out the definition of a home-owner:

    11(4)       For the purposes of this Act:
    (a)      a person who is not a member of a couple is a homeowner if:

    (i)        the person has a right or interest in the person's principal home; and

    (ii)the person's right or interest in the home gives the person reasonable security of tenure in the home;

For the purposes of the Act, the applicant is not a home-owner and the assets limit for a single, non home-owner was $381,000.00 at the date of the reviewable decision.

1. The Tribunal is satisfied that the valuations accorded to each of the properties in the Australian Valuation Office assessment are correct and accepts the valuation of $225,000.00 for 5 Bolingbroke Street and $325,000.00 for 24 McKeon Avenue. When calculating the value of the applicant's assets, s1121(1) of the Act also applies, as it deals with the effect of a charge or encumbrance on the value of assets. A mortgage valued at $16,279.08 encumbered the property at 5 Bolingbroke Street at the date of the reviewable decision.

2. The applicant also gave evidence that the mortgage had increased in April/May by another $20,000.00 and this is relevant when assessing assets at a later date, after the decision under review.  It is useful to note that this increase in the mortgage will need to be taken into account in future valuations, should they ever need to be done. 

3. Section 1129 allows a person who has been refused a social security pension or benefit because of the application of the assets test to make an application for consideration under the hardship provisions:

   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 and 1126 (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.

Section 1129(1)(c) poses an obstacle to the applicant as it provides that the person must have an unrealisable asset. An unrealisable asset is defined in ss11(12) and 11(13) of the Act:

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.

Taking into account the applicant's submissions, the Tribunal cannot accept that the property at McKeon Avenue should be considered her principal place of residence and her home.  The Tribunal also considers that neither the property at McKeon Avenue, nor the property at Bolingbroke Street, are unrealisable assets.

1. The applicant also fails to satisfy s1129(1)(e). That section provides that the Secretary must be satisfied that the person will suffer severe financial hardship. Tribunal decisions in this area have set out that where the hardship provisions are in consideration, the person's particular circumstances must be taken into account. For instance, in Re Fuller v Repatriation Commission (1987) 14ALD 220, the Tribunal found that, if the current level of income is exceeding the maximum rate of pension payable, then the persons applying under these provisions will not be in severe financial hardship. In the present case, the Tribunal cannot accept the applicant's submission that the rental income from the property at McKeon Avenue should be disregarded. Furthermore, with the combined rental income from the two properties, the applicant's income exceeds the maximum rate of pension that would be payable.

2. The Tribunal is mindful of the submissions that were made in regard to fairness and equity, but these are not matters that arise for consideration under s1129 of the Act. The test is one that looks particularly to the realisation of assets before the person can apply for alleviation under the financial hardship provisions. The Tribunal finds that the applicant's assets do not meet the definition of unrealisable assets in accordance with s11(12), thus that the person cannot sell or realise the asset or cannot use it as security for borrowing.

3. Section 98(1) of the Act provides that DSP is not payable to a person if the person's DSP rate would be nil and that would be the effect in the present case where the assets test is applied to the two properties. Hence, the decision to cancel DSP was the correct decision. The Tribunal is also satisfied that this is not a case in which the financial hardship provisions under s1129 apply.
   Decision

4. For these reasons, the Tribunal affirms the decisions under review.

   I certify that the nineteen [19] preceding paragraphs are a true copy of the reasons for the decision herein of 
   M.J. Carstairs, Member

   (sgd)       Olympia Sarrinikolaou
                 Clerk

   Date of Hearing:  27 June 2002
   Date of Decision:  27 June 2002

   Solicitor for the Applicant:           Nil – self-represented

   Solicitor for the Respondent:        Nil — Ms P. D'Cunha, Advocate with Centrelink