BURNS and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2010] AATA 863
•4 November 2010
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2010] AATA 863
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2010/2082
GENERAL ADMINISTRATIVE DIVISION ) Re MAVIS BURNS Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Dr P McDermott, RFD, Senior Member Date4 November 2010
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
..................[Sgd]............................
Senior Member
CATCHWORDS
SOCIAL SECURITY – Age pension – Applicant’s assets said to exceed the allowable limit – Regardless of the applicant’s son’s equitable interest in the land the applicant still maintains enough assets to exceed the allowable limit – Decision under review affirmed.
Social Security Act 1991 (Cth) ss 11, 11A, 44, 1064, 1118
Social Security (Administration) Act 1999 (Cth) ss 80
REASONS FOR DECISION
3 November 2010 Dr P McDermott, RFD, Senior Member INTRODUCTION
1. Mrs Mavis Burns (the applicant) has sought review of the decision of Centrelink to cancel her age pension with effect from 22 October 2009. This decision was made on the basis that her assets exceeded the then allowable limit. For the reasons which follow, I consider that the decision under review must be affirmed.
BACKGROUND
2. The applicant is the registered owner of two properties, each on a separate registered title:
(a)276 Atkinson Dam Road, Coominya (“276”) being 23.31 hectares in size; and,
(b)242 Atkinson Dam Road, Coominya (“242”) being 64.35 hectares in size.
3. The Applicant’s principal home is on 276. The value of this property is exempted from the assets test due to the extended curtilage provisions.
4. When the applicant was granted age pension in 2007, Centrelink gave the applicant an exemption to include 242, the effect of which was that the value of this property was also exempted from the assets test.
5. In October 2009, Centrelink determined that the exemption extended to 242 no longer applied to this property.
6. The Australian Valuation Office (“AVO”) undertook an inspection of 242 on 15 December 2009 and provided a market valuation of that property. That report concluded that the value of 242 as at 22 October 2009 was $770,000.
PRIOR DECISIONS
7. It appears from the telephone call records of Centrelink that a decision was made on 28 October 2009 to cancel the age pension of the applicant with effect from 22 October 2009. The decision was made on the basis that the applicant’s assets exceeded the allowable limit. This decision was affirmed by the original decision maker on 11 January 2010. On 23 February 2010, the Authorised Review Officer (“ARO”) affirmed the decision.
8. On 13 April 2010, the Social Security Appeals Tribunal (“SSAT”) affirmed the decision to cancel the age pension of the applicant with effect from 22 October 2009. In doing so, the SSAT reduced the value of 242 by $80,000 which was said to be the value of the equitable interest of the applicant’s son, Brian, in the dam which is located on 242. The SSAT assessed the interest of the applicant in 242 as $690,000. The applicant sought review of that decision by this Tribunal.
ISSUES
9. The respondent’s statement of facts and contentions states:
The issue for the Tribunal’s determination is whether the decision to cancel the Applicant’s AP [Age Pension] with effect from 22 October 2010 was correct. This will necessarily require consideration of the value of the Applicant’s assets at that date.
10. The application necessarily requires me to consider the total value of the assets of the applicant. In particular, I should consider whether the total value of those assets (with the exception of the principal home) exceeds the applicable asset limit of $626,000.
11. At the hearing, I outlined to the parties that I considered that I have to decide the following issues in relation to 242:
(1) The value of the interest of the applicant in 242;
(2)Whether 242 should be treated for the purpose of s 11A(1)(a)(i) of the Social Security Act 1991 (Cth) (”the Act”), as if it were held on the same title document as 276. This could be done if this Tribunal exercised the discretion under s 11A(2)(c) of the Act.
(3)Whether this Tribunal can, under s 11A of the Act, apply the extended land use test to 242.
RELEVANT LEGISLATION
12. The legislation which is relevant to the determination of this application is the Act and the Social Security (Administration) Act 1999 (Cth) (”the Administration Act”).
13. Section 1064(1) of the Act provides that a person’s rate of age pension is to be calculated by reference to the rate calculator in that section. Section 1064-G1 provides a method statement for calculating the effect of a person’s assets on their maximum entitlements.
14. Section 1064-G3 of the Act provides the assets value limit which on 22 October 2009 was $178,000 for a single homeowner. Section 1064-G4 provides the reduction of the maximum rate under the assets test. The effect of s 1064‑G4 as at 22 October 2009 was that if the value of a person’s assets exceeded $626,000 no pension was payable.
15. Section 44 of the Act provides that age pension is not payable to a person if their rate of age pension would be “nil”.
16. Section 80 of the Administration Act provides the Secretary with the power to cancel a person’s payment, including age pension, where such payment is not payable.
17. Section 11 of the Act defines “assets” to mean “property or money”.
18. Section 1118(1)(a) of the Act exempts the value of a person’s principal home from the calculation of the person’s assets.
19. Section 11A of the Act defines “principal home”. This section of the Act was amended on 1 January 2007 and now provides:
(1)A reference in this Act to the principal home of a person includes 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; or
(b)if the principal home is a flat or home unit--a garage or storeroom that is used primarily for private or domestic purposes in association with the flat or home unit.
(2)The Secretary may determine that land is to be treated, for the purpose of subparagraph (1)(a)(i), as if it were held on the same title document as other land if any of the following apply:
(a) the dwelling‑house is located on both blocks of land;
(b)the dwelling‑house is located on one of the blocks of land but that block and the other block, taken together, are a place, or are part of a place, that is protected under a law of the Commonwealth, or of a State or Territory, because of its natural, historic or indigenous heritage;
(c)the alienation of one of the blocks of land without the other would seriously undermine the function of the house as a dwelling.
…
(4)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.
VALUE OF INTEREST OF APPLICANT IN 242
20. One issue that has to be determined is the value of 242.
21. The applicant in her sworn evidence has stated that the property is worth $400,000.
22. On 27 April 2010, N & J Realty provided an Estimate of Selling Price for 242 as $643,500. The applicant stated that the real estate agent who provided that estimate has recently informed her that the price of that property has decreased since he provided that estimate. However, I have to determine the value of the property as at 22 October 2009, the fact that there has been a recent decrease in the value of the property is not material to my investigation.
23. The Estimate of Selling Price provided by N & J Realty includes a disclaimer which states:
This Estimate of Selling Price has been prepared solely for the information of the requesting party only. It is not intended to be used by any third party. This estimate as to the value of the property is an opinion only given in good faith and based on our experience of the market and comparable sales. We are not licensed valuers.
24. I appreciate that the Estimate of Selling Price provided by N & J Realty has been provided in good faith but I cannot give great weight to that estimate. The reason for this is that the document does not contain any reasons why N & J Realty came to the conclusion that 242 should be valued at $643,500. The document also does not give a valuation of 242 as at 22 October 2009.
25. I should record that the fact that the Estimate of Selling Price provided by N & J Realty contains the disclaimer is not decisive of the issues that I have to consider. There may certainly be an instance where a properly reasoned estimate by a real estate agent may be preferred to that of a registered valuer. I appreciate that a valuation by a registered valuer is only often provided for a commission of the valuation and, many recipients of social security benefits would not have the resources to fund such an exercise.
26. Mr John Telford of the AVO undertook an inspection of 242 on 15 December 2009 and provided a market valuation. That report concluded that the value of 242 as at 22 October 2009 was $770,000. During the inspection on 15 December 2009, it was noted that the property has no road access. Access is through the home block, 276, where the applicant resides. Mr Telford noted that there is an access culvert which was built by the applicant’s son over Buaraba Creek, which allows for access via a continuation of Boyces Road. The customer pays rates for this access, which is held on a road licence at $82 per annum. I accept the evidence of the applicant that the access culvert is constructed on property owned by the applicant and is not on property owned by the Crown.
27. I have given weight to the report of Mr Telford for a number of reasons. He has, in my view, given much thought to providing a fair valuation of the property. Apart from the initial online valuation that was provided on 8 January 2010, he has prepared two sets of documents more recently in September 2010 being his statement together with a fully documented report. He has, in my view, appreciated the difficulties of valuing a landlocked property. However, he has realised that there is road access to the northern end of 242. I accept the applicant’s statement that the local authority has not maintained the road access to the northern end of 242. Mr Telford believes that it may be possible for a person to clear that access. In any event, there is no clear evidence before me that indicates that the access could not be cleared if a purchaser was to acquire 242 or that access is not available if works were constructed over the creek at the southern end of 242. . Mr Telford has also had regard to a number of identified comparable properties which he discusses.
28. I accept the valuation of Mr Telford and find that the value of 242 as at 22 October 2009 was $770,000. I am, however, required to consider the value of the applicant’s interest in 242 as at this date. In this case the Secretary has, quite properly in my view, acknowledged that the “best case” of the applicant is that there should be a discount to acknowledge that the son of the applicant has an equitable interest arising from his contribution to the construction of the dam on the property. In my view, the SSAT had proceeded correctly by valuing the interest of the applicant at $690,000 as at 22 October 2009. I accordingly find that the interest of the applicant in 242 as at 22 October 2009 was $690,000.
VALUE OF ASSETS WITH THE EXCLUSION OF THE PRINCIPAL HOME
29. In undertaking an assessment of the assets of the applicant, s 1118(1)(a) of the Act provides that a person's principal home is exempt from the assets test. It is therefore necessary to consider the other assets of the applicant. On 23 February 2010, the value of these assets was assessed by the ARO as being :
242 $770,000
Household contents $ 3,000
Life insurance $ 26,448
Beef cattle $ 5,400
Nissan Tiida $ 9,000
Savings accounts $ 21,000
Term deposit $ 10,000
Loan to son $ 40,000
30. At the hearing of this application, the applicant agreed with the valuation of her assets by the ARO as at 22 October 2009, with the exception of 242.
31. As I have already found that the interest of the applicant in 242 as at 22 October 2010 was $690,000, I find the total value of the assets of the applicant which I have to consider for the determination of this application was $804,848 as at 22 October 2010. This has the consequence that the assets of the applicant exceed the allowable asset limit of $626,000. Having regard to the operation of s 1064-G4 of the Act, no age pension was payable as at 22 October 2009. Section 44 of the Act provides that age pension is not payable to a person if their rate of age pension would be nil. In the circumstances, the Secretary had authority under s 80 of the Administration Act to cancel the payment of age pension to the applicant.
WHETHER 242 SHOULD BE TREATED AS BEING HELD ON THE SAME TITLE DEED AS 276
32. 242 and 276 are on separate titles. However, under s 11A(2) of the Act, the Secretary may determine that land is to be treated as if it were held on the same title document as other land if certain circumstances apply. The application of this provision would enable 242 to be treated as being held on the same title deed as 276. For the following reasons, I have come to the conclusion that I cannot exercise the discretion which is vested in the Secretary under s 11A(2) of the Act.
33. I consider that s 11A(2)(a) of the Act can have no application as the dwelling house of the applicant is not located on both 276 and 242.
34. I also consider that s 11A(2)(b) of the Act has no application. There is no evidence that 242 and 276, taken together, are a place, or are part of a place, that is protected under a law because of its natural, historic or indigenous heritage.
35. I also consider that s 11A(2)(c) has no application. There is no evidence that the alienation of 242 without 276 would seriously undermine the function of the house (which is located on 276) as a dwelling.
36. I should also mention that Chapter 4.6.8.20 of the Guide to Social Security Law (“the Guide”) provides an explanation of the circumstances in which the discretion in s 11A(2)(c) might be exercised:
This exception means that without considering the other block of land the house would be unable to perform:
· the essential functions that would reasonably be required of a house as a dwelling, such as cooking, cleaning and sleeping, or
· essential housing related infrastructure functions that would reasonably be required for a house, without connection to mains water, power or sewerage services, to function as a dwelling.
Example: If a septic tank or the main supply of water from a bore is (and originally was) located on an adjoining block of land, and it is not reasonable to expect that these functions can be relocated to the dwelling-house block, then the second block can be treated as if it were held on the same title document.
37. There is no evidence of any of these factors which are outlined in the Guide.
EXTENDED LAND USE TEST
38. For the sake of completeness, I have given consideration to whether the extended land use test in s 11A of the Act can be applied for the benefit of the applicant. However, for land adjacent to a dwelling house to fall within the definition of “principal home” that land must be held under the same title document as the land on which the dwelling house stands (s 11A(a)(i)) and the extended land use test as set out in subsection 11A(6) applies (s 11A(l)(a)(ii)). I find that 242 and 276 are held under different title documents. In my view s 11A(1)(a)(i) cannot be satisfied as these properties are not held under the same title document. I have already held that I cannot exercise the discretion under s 11A(2) to treat 242 as if it were held on the same title document of the principal home. In my opinion the extended land use test cannot be applied in this instance.
DECISION
39. I affirm the decision under review.
I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member
Signed: .......................[Sgd]......................................................
Kate Slack, Research AssociateDate/s of Hearing 1 October 2010
Date of Decision 4 November 2010
Applicant was assisted by her daughterSolicitor for the Respondent Ms Suzy Dole, Sparke Helmore
0
0
0