Chaplyn and Secretary, Department of Social Services (Social services second review)
[2018] AATA 673
•22 March 2018
Chaplyn and Secretary, Department of Social Services (Social services second review) [2018] AATA 673 (22 March 2018)
Division:GENERAL DIVISION
File Number: 2017/3691
Re:Glenda Chaplyn
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Member D K Grigg
Date:22 March 2018
Place:Brisbane
The decision under review is set aside and remitted for recalculation in accordance with these reasons.
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Member D K Grigg
CATCHWORDS
SOCIAL SECURITY – age pension – whether certain asset to be disregarded in calculating rate of age pension – decision under review set aside and remitted
LEGISLATION
Administrative Appeals Tribunal Act 1975
Social Security Act 1991
Social Security (Administration) Act 1999
CASES
Re Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58
Re Matula And Secretary, Department of Families, Housing, Community Services And Indigenous Affairs (2009) 115 ALD 45
Re Secretary, Department of Family and Community Services and Kulshrestha (2003) 73 ALD 438; [2003] AATA 227
SECONDARY MATERIALS
Guide to Social Security Law (2017, Cth)
REASONS FOR DECISION
Member D K Grigg
22 March 2018
INTRODUCTION AND CLAIM HISTORY
Ms Chaplyn made an application for the Age Pension on 20 May 2016.[1] The rates at which people (who are not permanently blind) are paid an age pension is determined using the Pension Rate Calculator A at the end of section 1064 of the Social Security Act 1991 (Cth) (“Act”) and is affected by, among other things, a person’s income and the value of their assets.[2] The maximum basic rate payable varies depending upon a person’s family situation.[3]
[1] Exhibit 1, T Documents, T7, pages 47-61, Claim for Age Pension dated 20 May 2016.
[2] Section 55(a), Act.
[3] Section 1064-B1, Act.
As part of her claim for the Age Pension Ms Chaplyn completed an Income and Assets form which indicated that she:[4]
(a)owned a car worth $3,000;
(b)had personal effects worth $200;
(c)had savings of $7,375;
(d)superannuation of approximately $452,000;
(e)had a 50% share in a property at Oberon worth $300,000 which was encumbered by a mortgage totalling $43,917 (“Oberon Property”)[5]; and
(f)had a 50% share in a property at Yagoona worth $450,000 (“Yagoona”).
[4] Exhibit 1, T Documents, T8, pages 62-76, Income and Assets form dated 20 May 2016
[5] At the hearing Ms Chaplyn told the Tribunal that she alone had been paying the mortgage payments.
On 18 April 2016 consent orders were made by the Federal Circuit Court concerning the distribution of Ms Chaplyn’s matrimonial assets. Pursuant to those orders Ms Chaplyn and Mr Chaplyn agreed, for the purpose of resolving their property settlement, that (“Consent Orders”):[6]
(a)they separated on 4 January 2015 after being married for 44 years;
(b)the Yagoona Property was owned jointly and had a market value of $775,000;
(c)Mr Chaplyn would pay Ms Chaplyn $450,000 (“Settlement Sum”) for her share in the Yagoona Property failing which it would be sold; and
(d)the parties would list the Oberon Property for sale with the balance of the proceeds of sale to be paid to Ms Chaplyn.
[6] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, Attachment B,
Consent Orders dated 18 April 2016.
On 7 July 2016, pursuant to the Consent Orders:
(a)Ms Chaplyn transferred her share in the Yagoona Property to John Chaplyn, in return for the Settlement Sum;[7] and
(b)the Oberon Property was sold for $300,000 consideration.[8]
[7] Exhibit 1, T Documents, T11, page 91, Transfer of Title dated 13 July 2016.
[8] Exhibit 1, T Documents, T12, page 97, Transfer of Title; page 100, Sales Advice Note dated 7 July 2016.
On 18 July 2016 Ms Chaplyn directed that the net proceeds of sale of the Oberon Property be transferred to Mr Chaplyn.[9]
[9] Exhibit 1, T Documents, T12, page 99, Authority and direction dated 18 July 2016.
On 28 July 2016 Ms Chaplyn received the Settlement Sum.[10] Centrelink included the Settlement Sum as an assessable asset in calculating Ms Chaplyn’s entitlement to the Age Pension.[11]
[10] Exhibit 1, T Documents, T15, page 126, Bank statement.
[11] Exhibit 1, T Documents, T16, pages 128-130, Centrelink notice dated 19 December 2016.
The Department of Human Services (“Centrelink”) rejected Ms Chaplyn’s claim for the Age Pension on 27 September 2016 on the grounds that the value of her assets, which was calculated as $1,046,524.50, was above the allowable limit.[12]
[12] Exhibit 1, T Documents, T13, page 111, Rejection of claim for Age Pension dated 27 September 2016.
On 7 October 2016 Centrelink recorded that it had made an error coding Ms Chaplyn’s assets as it had included the Yagoona Property and the proceeds of its sale in Ms Chaplyn’s total assets from 8 July 2016.[13]
[13] Secretary’s Submissions dated 27 February 2018, Attachment, ST2.
On 9 December 2016, Centrelink corrected Ms Chaplyn’s record so that from 18 July 2016 to 27 July 2016, only 50% of the value of the Yagoona Property ($225,000) was included her total assets. From 28 July 2016, the proceeds of sale of the Yagoona Property in the amount of $450,000 was included in Ms Chaplyn’s total assets.[14]
[14] Secretary’s Submissions dated 27 February 2018, Attachment, ST3.
Ms Chaplyn requested a review by an Authorised Review Officer (“ARO”) and contended that the:[15]
(a)Oberon Property should not have been included in the asset valuation because the proceeds of the sale of that property went to her ex-husband; and
(b)Yagoona Property should be exempt because she had an interest in, and a right to occupy, the property while awaiting receipt of the Settlement Sum and therefore it is a residence.
[15] Exhibit 1, T Documents, T14, page 90, Statement of Ms Chaplyn.
The appeal to the ARO was unsuccessful.[16]
[16] Exhibit 1, T Documents, T17, pages 131-136, Authorised Review Officer’s Decisions and Notes dated 21 December 2016.
On 5 January 2017, Ms Chaplyn lodged an application for review with the Social Services and Child Support Division (“SSCSD”) of this Tribunal contending:[17]
(a)the Yagoona Property had been her matrimonial home for 44 years;
(b)her property settlement through the Federal Circuit Court took 18 months to finalise;
(c)she had to move out of the Yagoona Property and away from her husband on 4 January 2015, having taken out an apprehended violence order against him, and as a result she had to live elsewhere and rent for 12 months; and
(d)she is using the Settlement Sum to purchase a principal place of residence.
[17] Exhibit 1, T Documents, T 18, pages 137, Application to SSCSD for review dated 5 January 2017.
On 9 March 2017 Ms Chaplyn purchased a new residence for $375,000.[18]
[18] Exhibit 1, T Documents, T 20, pages 141-186, Contract of Sale and other supporting property purchase
documentation.
The SSCSD affirmed the ARO’s decision on 24 April 2017.[19]
[19] Exhibit 1, T Documents, T2, pages 5 – 10, SSCSD’s Decision and Reasons for Decision dated 24 April 2017.
On 27 April 2017 Ms Chaplyn advised Centrelink that she had received a victim compensation payment under the Victims’ Rights and Support Act 2013 (NSW) of $1,500 in November 2015, as a result of her being subjected to violence.[20]
[20] Exhibit 1, T Documents, T25, pages 192-194, Compensation and damages form dated 27 April 2017.
Ms Chaplyn has sought a review of the SSCSD’s decision by this Tribunal.[21] Ms Chaplyn contends that:
(a)section 1118(2B) of the Act provides for the sale of a person’s home to be disregarded for a period of 24 months where there is a sale and replacement home;
(b)the Settlement Sum received in July 2016 was in transit to purchase a new residence; and
(c)there has been no consideration of the personal circumstances (domestic violence) which resulted in Ms Chaplyn having to vacate her home.
[21] Exhibit 1, T Documents, T1, pages 1 – 4, Application for Second Review of a Decision dated 17 June 2017.
ISSUES FOR DETERMINATION
The Tribunal has to determine whether:
(a)Ms Chaplyn’s Age Pension calculation should have included the proceeds of sale of the Yagoona Property; and, if yes
(b)from what date can it be said that the Yagoona Property ceased to be Ms Chaplyn’s principal home for the purposes of section 11A of the Act.
LEGAL REQUIREMENTS
The rates at which people (who are not permanently blind) are paid an age pension is determined using the Pension Rate Calculator A at the end of section 1064 of the Act and is affected by, among other things, a person’s income and the value of their assets.[22] The maximum basic rate payable varies depending upon a person’s family situation.[23]
[22] Section 55(a), Act.
[23] Section 1064-B1, Act.
If a person’s age pension rate is calculated as nil, no age pension is payable.[24]
[24] Section 44(1), Act
Section 1064-G1 of the Act sets out how to work out the effect of a person's assets on the person's maximum payment rate.
The Secretary informed the Tribunal that for the period 1 July 2016 to 19 September 2016, the asset threshold for a single homeowner was $791,750 and a non-home owner’s threshold was $943,250.[25]
[25] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, para 29; Secretary’s
Submissions dated 27 February 2018, para 7.
Certain assets, set out in section 1118 of the Act, are to be disregarded in calculating the value of a person's assets. Relevantly here, the following assets are to be disregarded (emphasis added):
(1) …
(a) if the person is not a member of a couple--the value of any right or interest of the person in the person's principal home that is a right or interest that gives the person reasonable security of tenure in the home;
….
(r) if the person has sold a residence that was the principal home of the person on terms and has purchased, also on terms, another residence that is the principal home of the person--so much of the balance due to the person in respect of the sale as will be applied by the person in respect of the purchase of the other residence;
Note 2: For principal home see section 11A.
Note 3: For reasonable security of tenure see subsection 11A(10).
Application of proceeds of sale of principal home
(1B) Subsection (2) applies if:
(a) a person sells the person's principal home; and
(b) either:
(i) the person does not have a right or interest in a principal home; or
(ii) the person has a right or interest in a principal home that the Secretary is satisfied does not give the person reasonable security of tenure in the home; and
(c) before the end of 12 months, or any longer period determined under subsection (2B), after the sale, one or more of the following applies:
(i) the person intends to apply the whole or a part of the proceeds of the sale to build, rebuild, repair or renovate another residence that is to be the person's principal home;
(ii) the person applies the whole or a part of the proceeds of the sale to build, rebuild, repair or renovate another residence that is to be the person's principal home;
(iii) the person intends to apply the whole or a part of the proceeds of the sale to purchase another residence that is to be the person's principal home.
…
(2B) For the purposes of subsection (1B), the Secretary may determine, in writing,a period of up to 24 months if:
(a) a person who has sold his or her principal home is making reasonable attempts to purchase, build, repair or renovate another residence; and
(b) the person has been making those attempts within a reasonable period after selling the principal home; and
(c) the person has experienced delays beyond his or her control in purchasing, building, repairing or renovating the other residence.
Section 11A of the Act 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.
As the “principal home” is not defined, the ordinary meaning should be applied to the expression.
In Re Secretary, Department of Family and Community Services and Kulshrestha(2003) 73 ALD 438; [2003] AATA 227 Deputy President Forgie concluded, at [26], that the principal home is the place where a person usually resides and “where he cooks, eats, sleeps, washes himself and his clothes and generally lives”.
The Secretary referred the Tribunal to Re Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58. In that matter Senior Member Handley said, at 59 and 61:
“Principal home” is not defined by the Act nor are the words “principal” or “home”. “Principal” was acknowledged by the representatives of the parties to refer to a situation of ownership or occupation of more than one place of residence and that place where one resides most frequently is the “principal home”. For the purposes of these reasons, because the applicant resides in one place of residence only, reference to “principal” is not relevant.
…
In attempting to reach the “correct and preferable” decision I confess to some difficulty in reaching a conclusion.
The words “home”, “house”, “residence” and “domicile” have all been extensively considered by the courts, but derive their meaning only by reference to a particular subject whether it be taxation, family law, tenancy, customs, probate, or social welfare.
In assessing the criteria of what constitutes a “home” a substantial degree of occupation is persuasive ( Herbert v Byrne [1964] 1 All ER 882 ) whereas conversely occupation by occasional visiting is not ( Beck v Scholz [1953] 1 All ER 814 ), and living away from the family home in other premises causes the family home to no longer be the principal home: Re Samek and Department of Social Security (1988) 16 ALD 295 . A “home” is likely to be a place where persons ordinarily eat, morning and night, and where they sleep, and in the case of adults have the characteristics of permanency: Todd v Nichol [1957] SASR 72 . It is a concept of nature and “it is the place where the centre of gravity of one's domestic life is to be found”: Geothermal Energy NZ Ltd v Commissioner of Inland Revenue [1979] 2 NZLR 324 Where one chooses to live is relevant ( Hyland v Hyland (1971) 18 FLR 461 ) and a reference to a “home” requires an affinity to its location and usage by the occupier: Inland Revenue Commissioners v Lysaght [1928] AC 234 .and Koitaki Para Rubber Estates Ltd v FCT (1941) 64 CLR 241 . A home need not be a structure of four walls and a roof, but may be constituted by a caravan (Helsham v Repatriation Commission (N85/492, No 2741)) or a campervan (Buchanan v Repatriation Commission (V89/50, 14 July 1989) ) or a yacht: Koitaki Para Rubber Estates Ltd, supra .
Section 11A(9)(a) provides that a residence of a person is to be taken to continue to be their principal home during any period (not exceeding 12 months or any longer period determined under subsection (9A)) (up to 24 months) during which the person is temporarily absent from the residence.
In Re Matula And Secretary, Department Of Families, Housing, Community Services And Indigenous Affairs (2009) 115 ALD 45, Senior Member A K Britton said:
[43] I agree with the argument put for the respondent ary that as a general rule, where a person has more than one home, the place where they spend most of their time should be regarded as their “principal home”. Nonetheless, in my view time spent in a place will not necessarily trump all other considerations. The weight to be given to this factor will depend on the circumstances of the individual case.
[44] Whether Rainville continued to be Mr Matula’s principal home is a question of fact to be objectively assessed having regard to all relevant circumstances.
[45] In my opinion, the following factors support a finding that the Rainville house remained Mr Matula’s principal home throughout the subject period. First, Mr Matula’s move to Sydney was of a temporary nature and for an indeterminate period. This is illustrated by the fact that he left behind all but a few of his personal belongings and maintained Rainville as his address for electoral, licensing, insurance and other purposes. Second, from the outset Mr Matula was intent upon returning to Rainville, his return being contingent upon the finalisation of the Family court proceedings or reaching agreement with his wife. Third, it is plain that he had a strong emotional attachment to the Rainville house and surrounding property — witness his comment — “I was prepared to die for it”. In contrast, he saw the boarding house simply as a place to base himself until the divorce proceedings were finalised. Fourth, he maintained an association with the local community despite the challenges of distance, through his membership of the local brigade of the Rural Fire Service and so forth and visits to the property. Fifth, throughout the subject period he contributed to the upkeep of the property and the house, paying 50% of all expenses. Sixth, his proprietary interest in the house remained unchanged.
[46] Factors that favour a finding that Rainville was not Mr Matula’s principal home include that he was absent from the property for a total period of about 20 months; that throughout that period he was effectively barred from entering the property; and that he spent most of his time during this period in alternative accommodation.
[47] In my view, it would be an overly restrictive to view time spent in a place as determinative in all cases. Such an approach fails to recognise that a “home” or “principal home” is something more than a place where a person spends time. Due weight must also be given to intangible considerations such as continuity of association, emotional attachment, intention to return etc: see Hafza.
[48] I am not persuaded that the boarding house was Mr Matula’s principal home throughout the subject period. While undeniably the place where he spent most of his time the evidence reveals that it was nothing more than a temporary arrangement which provided Mr Matula with a base and shelter while he awaited the outcome of the Family court proceedings. At all times, Mr Matula intended to return to Rainville, retained his association with the community, and had a deep attachment to the house and surrounding property. Having regard to the unique features of this case I am satisfied that the Rainville house continued to be Mr Matula’s principal home throughout the subject period.
[49] I find that as at the date of his original claim for the age pension, Rainville house has been Mr Matula’s principal home for 20 years or more continuously.
[50] For these reasons I have decided to set aside the decision of the Social Security Appeals Tribunal and remit Mr Matula’s claim for an age pension for reconsideration to the respondent in accordance with the following direction:
(i) That the extended land use test under s 11A(4) of the Act applies to Mr Matula in respect of the land adjacent to the Rainville dwelling house.
There is no dispute that Ms Chaplyn’s principal home until at least 4 January 2015 was the Yagoona Property. The Secretary also accepts that when Ms Chaplyn left her home to stay with family that was a temporary absence from her principal home.[26]
[26] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, para 35.
The Secretary submitted that:
(a)the Yagoona Property was not the Applicant's principal home on 18 July 2016 (the age pension qualification date) and must be included in the value of her assets;
(b)The Settlement Sum paid to the Applicant was not proceeds from the sale of her principal home and cannot be disregarded (for 12 months) pursuant to subsection 1118(1B) or 24 months pursuant to subsection 1118 (2B) of the Act.
The Secretary’s contention is that the Yagoona Property was no longer Ms Chaplyn’s principal home from the date she commenced property settlement proceedings in July 2015 because this “provided a clear indication that she did not intend to resume residence at Cooper Road. This is particularly so in light of the circumstances that ultimately caused the Applicant to leave her home, and the fact of her former partner's continued residence there. In reaching the decision that the Applicant would not return to live at Cooper Road, her absence ceased to be temporary and it ceased to be her principal home”.[27] The Secretary referred the Tribunal to the Guide to Social Security Law, which is used by Centrelink, and sets out in paragraph 4.6.3.20 that where a person is permanently estranged from their partner and is not living in a home they own or partly own, the person is a "single nonhomeowner'' for departmental purposes. The Tribunal is not bound to apply the Guide but it may, and it should apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[28]
[27] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, para 36.
[28] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 645.
When Ms Chaplyn commenced property settlement proceedings she did not know what the outcome would be. During the hearing, she told the Tribunal that if her husband had moved out she would have returned to her home. She said, given the circumstances under which she had to flee the home, that she left it to her lawyer to determine how best to arrive at a property settlement, (particularly given the state she says she was in). Ms Chaplyn said she had not wanted to leave her home but she had to relocate, having obtained an AVO which did not expire until March 2016. She had even lost her job as a result. The Tribunal considers that it is perfectly understandable that it was unclear in the early stages of the family law proceedings whether Ms Chaplyn would ultimately be able to return her home. The issue of who would remain in what property, if any, was not resolved until the day the consent orders were signed on 18 April 2016. It is that date at which Ms Chaplyn resolved not to return to the Yagoona Property as her principal home. As a result the exception at subsection 1118(2) of the Act is enlivened.
The Secretary contended in the alternative that as at 5 January 2016 Ms Chaplyn had been absent from the Yagoona Property for a period in excess of 12 months, and therefore unless any of the exceptions enunciated in subsection 11A(9A) of the Act are met such that the 12 month timeframe can be extended up to 24 months, the Yagoona Property ceased to be her principal home. The Secretary contends that none of the exceptions have application in this matter.[29] However, the exception in section 11(9A)(e) allows for the timeframe to purchase a new principal home to be extended to 24 months where the person has experienced delays beyond their control in selling the property. The Tribunal finds that the circumstances here meet that exception. Ms Chaplyn purchased her new residence within 2 years of the date of absence from the property. Therefore, the Yagoona Property should not have been used in the calculation of the rate of age pension paid to Ms Chaplyn.
[29] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, paras 37-38.
The Secretary submitted that even if the Tribunal were to consider the Yagoona Property was Ms Chaplyn’s principal home and applied subsections 1118 (1B) or 1118 (2B) of the Act from July 2015 (being the date she commenced property settlement proceedings), the Secretary notes that as at January 2016 those provisions can no longer apply because on 21 January 2016, Ms Chaplyn signed a lease for 12 months for another property and this indicates that her intention was clear that she no longer intended to return to the Yagoona Property.[30] However, Ms Chaplyn was essentially forced to flee from her home to escape from violence, and later obtained an apprehended violence order (“AVO”) against her husband which did not expire until March 2016. Further, the property proceedings had not yet settled and a hearing before the Federal Circuit Court to determine the property settlement was not scheduled until November 2016.[31] Ms Chaplyn had to reside somewhere in the meantime.
[30] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, para 39.
[31] Exhibit 2, Secretary’s Statement of Facts, Issues and Contentions dated 27 November 2017, Attachment B,
Consent Orders dated 18 April 2016.
In the circumstances, the Tribunal finds that it was not clear until the consent orders were signed as to whether Ms Chaplyn would be able to return to her home and that until that time the Yagoona Property can be considered Ms Chaplyn’s principal place of residence .
The Secretary submitted that if the Tribunal considers the Yagoona Property remained Ms Chaplyn’s principal home until the date the Consent Orders were signed, thereby enlivening the exception at subsection 1118(2) of the Act, the Settlement Sum paid to Ms Chaplyn is not representative of her share in the Yagoona Property. This was acknowledged by Ms Chaplyn at the hearing, however she indicated that her share in the property should have been more. The Tribunal does not have the necessary information available to it to assess what amount represents Ms Chaplyn’s share. The Tribunal also notes that Ms Chaplyn indicated that the settlement money she received, resulting from the Consent Orders, includes the proceeds of sale of the Oberon Property. As a result the matter needs to be remitted for recalculation.
DECISION
The decision under review is set aside and remitted for recalculation in accordance with the reasons outlined above.
I certify that the preceding 37 (thirty-seven) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg
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Associate
Dated: 22 March 2018
Date of hearing:
Date Final Submission Received:
23 February 2018
5 March 2018
Applicant: By Telephone Advocate for the Respondent: Ms Jasmine Forsyth Solicitors For the Respondent: Department of Human Services
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