Bornecrantz and Secretary, Department of Social Services (Social services second review)

This matter concerned an appeal by Mr Bornecrantz against a decision by the Secretary of the Department of Social Services to reduce his age pension. The dispute centred on the valuation of assets for the purposes of the assets test, specifically concerning his interests in two companies, Hanbury Investments Pty Ltd and Hasso Pty Limited, and outstanding loans to these companies. The case was heard by Deputy President B W Rayment.

The primary legal issues before the court were how to assess the value of Mr Bornecrantz's assets for the age pension assets test, particularly in light of outstanding company loans and the sale of properties. This involved determining whether loans made by Mr Bornecrantz and his wife to Hanbury Investments should be recognised as liabilities, thereby reducing the company's asset value, and how the proceeds from the sale of properties held by the company should be treated. The court also considered the application of section 1208E of the Social Security Act 1991, which allows for the discretionary reduction of an asset's value by the amount of a loan.

Deputy President Rayment reasoned that the discretion under section 1208E of the Act should be exercised to reduce the value of Hanbury Investments and Hasso Pty Ltd by the amounts of the loans made by Mr and Mrs Bornecrantz and Ms Hughes. This was consistent with previous decisions in the matter. The Deputy President accepted Mr Bornecrantz's evidence that the proceeds from the sale of their former New South Wales residence had been used, along with other funds, to purchase their current home in East Sussex. The court found that the loans made by Mr and Mrs Bornecrantz to the company were largely unrealisable assets, and that the East Sussex property, purchased with company funds, would not be treated as an asset of Hanbury Investments. The Deputy President noted that the possibility of applying the income test, rather than the assets test, might be appropriate if Mr Bornecrantz was receiving payments from a UK pension credit scheme.

The Deputy President remitted the matter to the Tribunal to be dealt with afresh, taking into account the updated evidence and the application of the discretion under section 1208E.