Bruhns and Secretary, Department of Family, Community Services and Indigenous Affairs

[2007] AATA 1060

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1060

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/1103

GENERAL ADMINISTRATIVE DIVISION		)
Re		NEVILLE BRUHNS

Applicant

And SECRETARY, DEPARTMENT OF FAMILY, COMMUNITY SERVICES & INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms N. Isenberg, Senior Member

Date15 February 2007

PlaceSydney

Decision The decision under review is affirmed.

……….........[sgd].....................

N. Isenberg,
  Senior Member

CATCHWORDS

SOCIAL SECURITY – cancellation of age pension – assets test – no severe financial hardship – decision under review is affirmed

Social Security Act 1991 sections 11(12), 11(13), 1129

Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 6 AAR 259

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409

Freeman v Secretary, Department of Social Security (1998) 87 ALR 506

Re Lumsden (1986) 10 ALN N225

Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82

REASONS FOR DECISION

15 February 2007 Ms N Isenberg, Senior Member

DECISION UNDER REVIEW

1.      On 23 September 2005 Centrelink made the decision that Mr Bruhns did not satisfy the definition of being in ‘severe financial hardship’ for the purposes of social security law during the period of 22 April 2004 through to 25 November 2004. Consequently, he was not entitled to a payment in arrears of the age pension for that period. This decision was affirmed by a Centrelink authorised review officer (‘ARO’) and by a decision of the Social Security Appeals Tribunal (‘SSAT’), published on 10 August 2006.

BACKGROUND

2.      Mr Bruhns owns the home in which he lives at Kareela which is exempt from pension asset testing.  Mr Bruhns also jointly owns another property at Oyster Bay with his estranged wife.  His half share of that property was valued at $400,000.  His interest in that property is affected by asset testing. 

3.       During the relevant period, his other main assessable assets were:

Ÿshares in Apollo Gold Mining Limited (‘Apollo’); and

Ÿmoney in two Teachers Credit Union accounts

4.       Mr Bruhns also had some liabilities:

Ÿ$10,000 borrowed from his son;

Ÿ$80,000 borrowed from Lo Doc on 5/11/04 and secured on his own home; and

Ÿthe HSBC Equity Credit loan secured on the Oyster Bay house

5.      Centrelink calculated the value of Mr Bruhns’ assets as exceeding the disqualifying limit applicable to single pensioners, which at that time was $6000.

6.      Mr Bruhns applied for consideration under the pension asset hardship provisions.

ISSUE BEFORE THE TRIBUNAL

7.      The issues before the Tribunal are:

Ÿwhether the value of Mr Bruhns’ assets is sufficient to preclude him from receipt of the age pension; and

Ÿif so, was Mr Bruhns otherwise entitled to the age pension because he would otherwise suffer severe financial hardship

EVIDENCE, CONSIDERATION OF ISSUES and FINDINGS

8.      In addition to giving evidence Mr Bruhns supplied voluminous material which I took into account.

Issue 1 – Whether the value of Mr Bruhns’ assets preclude the receipt of the age pension

9.      Throughout the relevant period, the totality of Mr Bruhns’ assets (including his share in the Oyster Bay house) exceeded the disqualifying limit for age pension.

10.     Normally, age pension would not be payable to the applicant because of the application of the assets test.  Centrelink conceded that the Oyster Bay house is an unrealisable asset, that is, one which Mr Bruhns could not be reasonable expected to sell.

11.     I turn then to consider the value of Mr Bruhns’ assets excluding the Oyster Bay property.

Apollo shares

12.     During the relevant period Mr Bruhns had a total of 49,412 shares in Apollo.  These shares had been acquired at different times:  first 20,000 in about 1994, then a second parcel of 29,412 on 22 April 2004.

13.     In the Centrelink systems record (which apparently relied on information from early 2004) these were valued at 17 cents per share.  They were reassessed from 12 October 2004 at 13 cents per share.  This resulted in a calculation of the value of Mr Bruhns’ Apollo shares ranging from $8,400.04 to $6,423.56 respectively.

14.     The trading figures supplied by Mr Bruhns for the relevant period, however, shows that the total value of the shares ranged between $4,941.20 (@ 10 cents) and $7,411.80 (@ 15 cents).  Mr Bruhns sold his Apollo shares on 26 November 2004 when, according to Mr Bruhns’ information, the closing price was 15 cents.  From the proceeds he repaid $5,000 previously borrowed from a family member to purchase the second parcel and was left with a “residue of $2,603.86” (T16, 72).

15.     Centrelink calculated that the value of the Apollo shareholding went below $6,000 whenever the closing share price was lower than 12.143 cents.  According to T74, this happened on approximately 65 days between June and November 2004.

16.     Mr Bruhns said that he had initially forgotten about the 20,000 shares, being unaware that the company had changed its name.  He thought he had “lost the lot”.  (There are some difficulties with this contention because the company changed its name in June 2004, after he had acquired the second parcel of shares).

17.     He said he had bought the second parcel when he learned the company was proposing to undertake expansion in China, but that had never occurred and the share price did not increase as he had hoped. He conceded this was speculative.

18.     While he had used borrowed money from his son to acquire the second parcel of shares, he had not borrowed the money with that intention, but to ‘keep [him] going’.

19.     Mr Bruhns also contended that it was unreasonable for Centrelink to require him to sell the shares at a loss.

20.     I was referred to a Trading chart for Crescent Gold (ASX) (T40), and two spreadsheet documents, one with the heading entitled ‘Share Trading Apollo Gold Mining’ (T73) and the other with the heading ‘Share Trading Crescent Gold’ (T74). These documents clearly indicate trading in Apollo shares throughout the relevant period.  I agree with Centrelink‘s contention that they were saleable, regardless of market price: between $4,941.20 and $7,411.50.

Teachers Credit Union accounts

21.     There were 2 Teachers Credit Union accounts. An interest-bearing s20 cash management account had a balance of $31,078.20 at 22 April 2004. Mr Bruhns said he was living on those funds. The balance progressively reduced until, on 9 September 2004, the balance of $4,078.02 was paid into an S1 account.  Mr Bruhns said that he had then put the money he had borrowed to finance the mortgage on the Oyster Bay property into the S20 cash management account.  The balance then increased to $80,000 on 5 November 2004, reducing by 25 November 2004, the end of the period under review, to $75,912. (Those funds are now depleted). Therefore, during the period under review Mr Bruhns had available a minimum of $31,078.20.

22.     The money in the Teachers Credit Union S1 savings account held the moneys transferred in September 2004 from the S20 account.  Those funds ran out in early November 2004.  Additional funds were transferred but those monies were exhausted by March 2005.

23.     I therefore find at no time in the relevant period did the value of Mr Bruhn’s assets fall below the $6000 threshold. Therefore at all relevant times Mr Bruhns’ assets exceeded the disqualifying limit for the age pension.

Issue 2 – Would Mr Bruhns suffer severe financial hardship without an entitlement to the age pension?

24. In applying section 1129 of the Social Security Act 1991 (‘the Act’) Mr Bruhns may still receive the age pension for the relevant period if he would suffer financial hardship.

25. The Act does not define severe financial hardship. Nevertheless, government policy, embodied in paragraph 4.6.7.60 of the policy Guide to the Act, provides that a single person who has more than $6,000 of available funds is not to be considered to be in financial hardship. Readily available funds include (among other things) amounts on deposit with a financial institution, shares in public companies and cash on hand (T76, 254-255).

26.     Mr Bruhns contended that the figure of $6000 was unrealistic because it had been set in 1991 and failed to take into account CPI increases since that time. 

27.     Whilst I am not bound to apply policy guidelines of the kind referred to in the Guide (see Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409) I may do so and, indeed, the Tribunal will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethic Affairs (1987) 6 AAR 259 at 267; and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86.

28.     It is not for the Tribunal to determine whether this sum is or is not reasonable.  The issue for me is whether Mr Bruhns would be in severe financial hardship if he did not receive age pension during the relevant period.

29.     Mr Bruhns had readily saleable shares which ranged in value, on his own evidence, between $4,941.20 (@ 10 cents) and $7,411.80 (@ 15 cents).  In addition, during the relevant period he had borrowed funds (up to $80,000) on deposit.  As well as paying the mortgage on the Oyster Bay property he used those funds to live off.

30.     I acknowledge that he had borrowed monies so as to pay the mortgage on the Oyster Bay property and has done so because he chooses not to sell that property due to a commitment to his estranged wife.

31.     Mr Bruhns could not be said to be in severe financial hardship in that at the relevant time he was not in arduous financial suffering: per Re Lumsden (1986) 10 ALN N225.

32.     There is a community expectation that those with assets use those assets to support themselves, and this is what Mr Bruhns has done.

DECISION

33.     The Administrative Appeals Tribunal affirms the decision under review.

I certify that the preceding 33 paragraphs are a true copy of the reasons for the decision herein of N. Isenberg, Senior Member.

Signed:         …….………..……[sgd]………………….

Associate

Date of Hearing  19 January 2007
Date of Decision  15 February 2007
Representative for the Applicant    Self-represented
Advocate for the Respondent        John Kenny, Centrelink Legal Services