Bonica and Secretary, Department of Family and Community Services

[2003] AATA 1290

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 1290

ADMINISTRATIVE APPEALS TRIBUNAL               N° V2003/925

GENERAL  ADMINISTRATIVE DIVISION

Re:            ANTHONY BONICA

Applicant

And:SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Mr W.G. McLean, Member

Date:             17 December 2003

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) W.G. McLean

Member

SOCIAL SECURITY ‑ cancellation of age pension ‑ valuation of investment property ‑ decision affirmed

Social Security Act 1991

REASONS FOR DECISION

17 December 2003  Mr W.G. McLean, Member

1. The Tribunal considered an application from Mr Anthony Bonica (the applicant) for review of a decision of the Secretary, Department of Family and Community Services (the respondent) made on 4 March 2003, to place a valuation of $225,000 on the applicant's investment property situated at 5 Bevis Street, Mulgrave, Victoria (the investment property).  The Social Security Appeals Tribunal (SSAT) affirmed the respondent's decision on 1 August 2003.

2. The Tribunal received into evidence the documents (the T‑documents) lodged pursuant to s37 of the Administrative Appeals Tribunal Act 1975 and also Exhibit A1 and Exhibit A2 which were tendered by the applicant.

3. The applicant was self‑represented at the hearing and was supported by his son, Mr Sergio Bonica.  The respondent was represented by Mr Sean Meehan, an advocate from the Service Recovery Team of Centrelink.  Ms Vanessa Mallard a Certified Practising Valuer from the Australian Valuation Office (the AVO) gave sworn oral evidence.

4. The applicant, who is widowed, resides at 4 Bevis Street Mulgrave, Victoria, and is receiving an age pension.  On 13 November 2002 he completed a form entitled Income and Assets Review, which he lodged on 22 November 2002 at the Glen Waverley office of Centrelink.  The form disclosed that, amongst other personal assets, the applicant owned the investment property for which he receives a rental from his tenant of $197.00 per week.  The applicant declared the value of the investment property to be $150,000.

5. On 23 December 2002 Ms Mallard of the AVO advised the respondent that she had valued the investment property at $240,000.  At the request of the applicant, the property was revalued by the AVO at $225,000 in a valuation report received by the respondent attached to a letter dated 27 February 2003 from Mr P.G. Veale AAPI, the Regional Manager of the AVO.  On 4 March 2003 the respondent wrote to the applicant advising him that:-

   The Australian Valuation Office has re valued your property at 5 Bevis Street Mulgrave.  The valuation is now $225000.  Asset limit for a single home owner for the Age Pension is $290500.  Your assets are still over the limit and total $300862.

Therefore, the decision of the respondent on 22 January 2003 to cancel the applicant's age pension was not affected by the reduced valuation of the investment property, from $240,000 to $225,000 by the AVO.  The applicant re‑claimed an age pension, which was re‑granted from 11 April 2003, at $4..55 per fortnight, plus a pharmaceutical allowance of $5.80.  At that time, the total value of the applicant 's assets was assessed by the respondent to be $290,656, inclusive of an amount in respect of the investment property of $225,000.  The asset cut‑off limit was $294,000.

1. The decision of the respondent on 4 March 2003 to adopt the valuation of $225,000 for the investment property made by the AVO was affirmed by an authorised review officer of Centrelink on 19 June 2003.  The SSAT affirmed the decision on 1 August 2003.  The parties informed the Tribunal that the only issue in dispute between them and requiring review, is the appropriateness of the $225,000 valuation for the investment property.  The applicant did not dispute or produce any evidence disputing any other matter associated with the respondent's decision to cancel his age pension on 4 March 2003.

2. The applicant's case has not varied in any material way from the following evidence provided to the SSAT on 1 August 2003 (T2 p5):-

   §The property in question was built in 1960 and is exactly the same.  There have been no renovations done, including the kitchen and carpet.  It needs a lot of work.

   §Some of the properties used by the Australian Valuation Office for comparison have been renovated and have had extensions.

   §He is unable to afford a sworn valuation.  One would cost about $3,000.

   §The increase in the value of the property is unfair, from $125,000 to $245,000 in one hit.  He came to the Social Security Appeals Tribunal two years ago about the same thing and the property was revalued at that time.

   §The valuation by Monash City Council shows the capital improved value at $190,000.

   §They think that $200,000 is probably a more fair price for the house.

   §A local real estate agent, Roger Davis has told them that they can't get more than about $190.00 per week because it is a tired property.  They think a more realistic value would be $200,000, but won't know for sure until it goes on the market.  The current rental is $196.00 per week.  It is a Catch 22, they can't get a higher rental until they spend money on it to improve it, but they can't spend money on repairs, as he needs income to live.

   §It is a nice quiet street, with one school close by, a Catholic primary school.  The high school is a fair way away.

   §He is 83 years of age, this is the second time he has had to go through this kind of thing.  He would be happy with a value of $200,000 or $205,000, but a higher value is unfair.  This has been a trauma, which he does not need.

   §The tenant has been there a couple of years.

   §The Australian Valuation Office have not considered the age and state of the property and haven't fairly compared it to other properties in the area.  The properties that they compared it to have had physical extensions and are in better conditions or have new roofs.

3. The applicant provided the Tribunal with the following written submission in support of his case (Exhibit A1):-

   The reasons and evidence for my reconsideration are as follows

   1.The S.A.T. in their decision of 14 August 2003 states "council valuations are mass valuations and are not specific to individual properties.  They are deemed to be "generally true and correct."

   In this regard I submit proof of two identical properties facing each other ‑ 4 and 5 Bevis St Mulgrave.

   N°5 is valued at $190,000-00

   N°4 is valued at $202,000-00.

   The only difference is fancy slate stone surrounding the garden and the driveway.  Please see attached notices and photos.

   2.The system of comparison, to me, is unfair and unjust.  Each property has its own value, according to many facts, state of repair, internal and external conditions.  For example, to renew a kitchen costs about $10,000-00.  The same amount ($10,000-00) for a bathroom.  Carpet replacement would be about $2,000-00 as the property is 45 years old and still in the original condition ‑ these repairs should be done.

   The concrete driveway, path and porch front & rear are crumbling (as per photo) I have attached a quotation to replace concrete the quote is for $6,622‑00.

   The R side fence needs replacement (as per photo) and the quote is for $1,057-00 payable by each side ‑ the quotation is also attached.

   The roof ‑ concrete tiles ‑ need to be repaired and restored and the quotation is for $1,980‑00 (also attached).

   As a comparison, a property, namely 13 Carson St which is just around the corner, sold for $225,000‑ which is the same value as mine at N°.. 5.  However, the attached photographs will show that there is no comparison as 13 Carson St is in excellent condition.  It has expensive slate work in a landscaped garden and driveway surround.  It has perfect concrete in the driveway.  It has a double garage and carport.  The roof has been restored.  It has excellent presentation.  Therefore it is a superior property.

   In view of all the above, I sincerely and honestly believe all the evidence should be taken into consideration and, to put an end to this saga and avoid further confrontations I would request that the total amount of the three quotations ‑ about $10,000-00 ‑ for repairs ‑ to bring my property at N°.5. near the same condition as 13 Carson St. should be deducted from the valuation of $225‑000.

   Trusting in a fair and just reconsideration
   I respectfully thank you.
   Hoping this letter, statements and photos are satisfactory to your request
   Thank you once again
   Yours sincerely

   (sgd) Anthony Bonica

4. Mr Sergio Bonica provided the Tribunal and the respondent with a written opinion dated 26 August 2003 that he had obtained from Nicholas J. O'Brien and Associates Pty Ltd Valuers and Property Consultants (O'Brien) regarding the value of the investment property (Exhibit A2).  The opinion is written by Mr Aldo Galante AAPI, who has considered the sale price obtained for the following comparable properties located in Mulgrave, in forming his opinion:-

   ADDRESS OF PROPERTY           SALE DATE  SALE PRICE
              8 Bevis Street, Mulgrave                 November 2002                $242.000
              17 Carson Street, Mulgrave           October 2002  $243,000
              29 Vincent Street, Mulgrave           November 2002                $260,000
              8 Carson Street, Mulgrave              August 2003  $316,000

   44 Glencairn Street, Mulgrave       October 2000  $275,000

Mr Galante opined the following "Preliminary Valuation" in respect of the investment property:-

…

Based upon the market evidence we are of the opinion that the market value of the subject property would be in the vicinity of $215,000 to $220,000..  Our assessment reflects the condition of the property.  We are of the opinion that a higher price could be achieved if the property was cosmetically upgraded.

1. Ms Mallard gave sworn oral evidence by telephone.  Ms Mallard has a Bachelor of Business (Properties) qualification and is employed as a Certified Practising Valuer with the AVO.  Ms Mallard initially valued the investment property at $240,000 after completing a "Roadside Valuation" on 19 December 2002.  This means that she did not enter the property at the time.  On 7 February 2003 Ms Mallard completed a full inspection of the property where she entered the property accompanied by the tenant.  This subsequent full inspection resulted in a reduction in her initial valuation of $240,000, to $225,000.

2. Ms Mallard wrote a letter to the respondent dated 7 October 2003 to provide additional information addressing certain issues raised by the applicant concerning the overall condition of the investment property.  She stated in her letter that the AVO agrees with the applicant that the property is in original condition, un‑renovated and in need of repair.  Her letter asserts that these factors were taken into consideration when determining her valuation of the property.  Her letter also refers to the prices obtained for certain other, comparable properties sold in the Mulgrave area.

3. Ms Mallard said that she considered that her valuation of $225,000 for the investment property was conservative in December 2002.  She is also of the opinion that the property may have possibly increased in value, above $225,000, since the date of her last valuation, due to the general rise in the prices received by vendors of urban residential properties in Victoria over the past 12 months.

4. The Social Security Act 1991 establishes the law that determines entitlement to Social Security payments.  The rate of age pension payable to a recipient of the pension is subject to an assets test.  The applicant does not dispute that the respondent has correctly assessed the value of his assets for the purpose of determining the correct amount of his age pension entitlement, except for the value of $225,000 assessed in respect of the investment property.

5. The Tribunal has taken into consideration the opinion expressed by O'Brien in their letter to Mr Sergio Bonica dated 26 August 2003, that they consider the market value of the investment property to be in the vicinity of $215,000 to $220,000, based upon the condition of the property.  The Tribunal is mindful that the maximum valuation of $220,000 by O'Brien is very close to the valuation of $225,000 placed upon this property by the AVO; and that both of these valuations had regard to past sale prices of comparable properties.  The Tribunal prefers and accepts the valuation of the AVO, and therefore finds that the value of the investment property was correctly assessed by the respondent at $225,000, for the purpose of determining the applicant's total assets at 4 March 2003.

6. The decision under review is affirmed.

I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision herein of 

Mr W.G. McLean, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of Hearing:  28 November 2003

Date of Decision:  17 December 2003
Advocate for the applicant:          Self‑represented

Advocate for the respondent:       Mr S. Meehan