Chowhan and Secretary, Department of Family and Community Services

[2004] AATA 1236

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1236

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2004/250

GENERAL ADMINISTRATIVE DIVISION		)
Re		SHASHIKANT CHOWHAN

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Dr EK Christie, Member

Date25 November 2004  

PlaceBrisbane

Decision The decision under review is set aside and in substitution therefor the Tribunal decides that Mr Chowhan was entitled to Parenting Payment (Single) at the time his claim was lodged on 23 July 2003.  This means Mr Chowhan’s application for review is successful.  

.....................[Sgd]......................

EK Christie
  Member

CATCHWORDS

SOCIAL SECURITY – Parenting Payment (Single) – assets test – homeowner – asset value of home – meaning of “principal home”

Social Security Act 1991 s11
Domestic Building Contracts Act (2000) ss85,86

Re Kirkman and Secretary, Department of Social Security (1990) 20 ALD 400
Farrow and Secretary, Department of Social Security (1986) 10 ALN N151

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316
Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511
Jebb v Repatriation Commission (1988) 80 ALR 329
Koitaki Para Rubber Estates Ltd v The Federal Commissioner of Taxation (1941) 64 CLR 241
Re Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58

REASONS FOR DECISION

25 November 2004   Dr EK Christie, Member

1.      This is an application by Shashikant Chowhan to review a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 5 March 2004 that decided that Mr Chowhan was not entitled to Parenting Payment (Single) [“PPS”] following a claim being lodged on 23 July 2003.

2.      In reaching its decision the SSAT concluded:

“14.Section 500Q of the Act provides that parenting payment (single) is not payable to a person if the value of their assets exceeds the asset value limit. ….the value of assets over which no parenting payment (single) was payable at the time of Mr Chowhan’s claim was [$275,500 at time of application] for a non homeowner. …. If the value of Mr Chowhan’s house and land is included in the value of his assets the value of his assets exceeds the [threshold] he is precluded from being paid parenting payment (single) and his claim has been correctly rejected.

15.Can the value of the house and land at the time of claim be excluded from the value of Mr Chowhan’s assets?  Mr Chowhan is the legal owner of the land at Criterion Close.  The building contract gives the builder no more than a licence to occupy the land.  That licence is restricted in time and purpose.  It is for the duration of the contract and for the purpose of constructing the house.  Mr Chowhan remains the legal owner of the land.  He is also the legal owner of the house constructed on the land although a dispute remains to be resolved regarding its finishing.

16.In addition the contract which Mr Chowhan signed with Coral Homes is subject to the Domestic Building Contracts Act 2000 (Queensland), (the DBC Act).  That Act provides in clause 86 that:

A domestic building contract does not give the building contractor a greater right to occupy a building site than that of a contractual licensee.

17.The contract that Mr Chowhan signed is a domestic building contract in that it relates to domestic building work which in turn means the erection or construction of a detached dwelling (sections 7 and 8 of the DBC Act) so that clause 86 of the DBC Act applies to Mr Chowhan’s contract. This means that Coral Homes has only a licence to go on the site resulting from the contract with Mr Chowhan for the purpose of building a house. The contract does not give Coral Homes ownership of the land nor any other proprietary interest in the land which remains Mr Chowhan’s. It is therefore appropriate that the value of this property at the time of claim be included in Mr Chowhan’s assets for the purpose of determining his claim under the asset test in section 500Q of the Act.

18.While there is no definition of value in the Act it has been determined in previous cases that the value to be assigned to a person’s assets for the purpose of the Act is their market value. That is the amount the asset might be expected to realise on the open market after negotiations between a willing seller and willing buyer. It seemed to the Tribunal that the method adopted by Mr Chowhan to arrive at the value of his house, having regard to the circumstances in which he finds himself is not an unreasonable one and accepts the amount of $195000 as a realistic indication of the market value of the property at Criterion Close as at the time of claim.

19.In the Tribunal’s view the amount of $195000 was properly included in Mr Chowhan’s assets at the time of his claim exceeded the curt off point after which no parenting payment (single) was payable to him.  His rate of parenting payment (single) is nil and no parenting payment (single) is payable to him.  His claim was correctly rejected.”  (T2, Folio 8,9)

3.      At the hearing Mr Chowhan represented himself with assistance from his son, Bhavesh Chowhan.  The respondent was represented by Mr James Howard, a Departmental Advocate.  Neither side called any witnesses.

4. The Tribunal had in evidence before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the “T” Documents) and the various documents lodged by the parties.

Issues Before The Tribunal

5.      The only issue for the Tribunal to decide was whether Mr Chowhan was eligible for PPS entitlement based on the amount of his assets when his claim was lodged on 23 July 2003.

Facts

6.      On the basis of the evidence before it, the SSAT made the following findings of fact:

“(i)       Mr Chowhan claimed parenting payment (single) on 23 July 2003.

(ii)On that date Mr Chowhan was the owner of property described as lot 48 on SP 148185 situated at Criterion Close Bald Hills.

(iii)On that date a house on that property had been finished to practical completion in the builder’s view under the terms of the building contract dated 29 June 2002.

(iv)On that date the value of the house and land was $195000.

(v)Apart from the property at Criterion Close Bald Hills Mr Chowhan’s assets at time of his claim for parenting payment (single) consisted of cash $46,797;  shares $52,044;  an interest in a company $41,438 and other assets of $17,500.”  (T2, Folio 8)

Statutory Requirements and Case Law

7.      The relevant provisions of the Social Security Act 1991 (“the Act”) which have application to the determination of the disputed issues are prescribed in the following sections:

“11.(4)  For the purposes of this Act:

(a)       a person who is not a member of a couple is a homeowner if:

(i)        the person has a right or interest in the person's principal home; and

(ii)the person's right or interest in the home gives the person reasonable security of tenure in the home; and [Emphasis added]

…..

11.(5)  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 private land adjacent to the dwelling-house to the extent that the private land, together with the area of the ground floor of the dwelling-house, does not exceed 2 hectares; or

…..

11.(6)  A reference in subsection (5) to private land adjacent to a dwelling-house is a reference to land that is adjacent to the dwelling-house and that is used primarily for private or domestic purposes in association with that dwelling-house.

….

11.(7)  A residence of a person is to be taken to continue to be the person's principal home during:

(a)any period (not exceeding 12 months) during which the person is temporarily absent from the residence; and

…..”

8. Section 500I and Section 500Q of the Act contain provisions relevant to entitlement to PPS in Mr Chowhan’s factual circumstances.

“Subdivision B--General principles relating to payability

500I Parenting payment not payable if payment rate nil

500I(1) Subject to subsection (2), a parenting payment is not payable to a person if the person's parenting payment rate would be nil.

500I(2) Subsection (1) does not apply to a person if the person's rate would be nil merely because an advance pharmaceutical allowance has been paid to the person under:

(a)       the social security law; or

(b) Division 2 of Part VIIA of the Veterans’ Entitlements Act.

…..

500Q  Assets test for person not member of a couple – payment not payable if assets value limit exceeded

500Q(1) Parenting payment is not payable to a person if the value of the person's assets exceeds the person's assets value limit.

500Q(2) The assets value limit of a person who is not a member of a couple is worked out using the following table:

Assets Value Limit Table
Column 1 Item	Column 2 Person’s situation	Column 3 Assets value limit
1	Person is a homeowner	$125,750 [1]
2	Person is not a homeowner	$215,750 [2]

[1]        At date of his claim, “Assets Value Limit” was $149,500

[2]        At date of his claim, “Assets Value Limit” was $257,500

Note 1:     For homeowner see section 11.

Note 2:     The assets value limit in Column 3 of Item 1 is indexed annually in line with CPI increases (see sections 1190 to 1194).

Note 3:     The assets value limit in Column 3 of Item 2 is adjusted annually (see subsection 1204(1)).

Note 4:     If parenting payment is not payable to a person because of the value of the person’s assets, the person may be able to take advantage of provisions dealing with financial hardship (see sections 1130B and 1130C).”

9.      In Re Kirkman and Secretary, Department of Social Security (1990) 20 ALD 400, Deputy President Forgie considered the following case law authorities which had considered the meaning of “principal home”:

“The term [principal home] has been considered by this Tribunal in Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295 and Re Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58. In Re Clark and Secretary, Department of Social Security (Mr McMahon (then Senior Member), 4 November 1986, No 2968, unreported) it was said that: ‘A characteristic of a person’s home is that he usually resides there. It is by no means necessary, however, that both go hand in hand.’

In support, he referred to the judgment of Wilcox J in Hafza v Director-General of Social Security (1985) 60 ALR 674;  8 ALN N58 at 680-1 when, in considering what is meant by ‘a person’s usual place of residence’ said:  ‘Physical presence and intention will coincide for most of the time.  But few people are always at home…The test is whether the person has … a continuity of association with the place … together with an intention to return to that place and an attitude that that place remains ‘home’:  see Norman v Norman (1969) 16 FLR 231 at 236.’

Without setting them out, I note that similar views have been expressed by Lord Denning MR in Herbert v Byrne [1964] 1 All ER 802, by the Court of Appeal in Beck v Scholz [1953] 1 All ER 814 and the High Court of Australia in Koitaki Para Rubber Estates Ltd v FCT (1941) 64 CLR 241 at 249.”

Contentions and Submissions of the Parties

10.     Mr Howard submitted that at the time of his claim, Mr Chowhan’s assets consisted of cash in the sum of $46,797, shares in the value of $52,044 , company assets in the sum of $41,438 and a house and land with a value of $195,000.00 [T11, Folio 69].  As Mr Chowhan’s combined assets totalled $335,279, he was precluded from being paid PPS and his claim was correctly rejected.

11.     Mr Howard rebutted Mr Chowhan’s proposition that although he does not presently reside in the house that he owns, he should be regarded as a homeowner for the purpose of his eligibility for PPS.  He referred to a dispute between Mr Chowhan in relation to the construction of a home on Lot 48, Criterion Close, Bald Hills – the matter currently before the Commercial and Consumer Tribunal.

12.     Mr Howard submitted that notwithstanding the contract with Coral Homes, Mr Chowhan remains the legal owner of the land as well as being the legal owner of the house constructed on the land.

13. It was Mr Howard’s contention that as Mr Chowhan signed a domestic building contract, Sections 85 and 86 of the Domestic Building Contracts Act 2000 (Qld) [3] applied in Mr Chowhan’s case, i.e. Coral Homes could only use the site for the purpose of building a house, as per the contract with Mr Chowhan.  The contract did not give Coral Homes ownership of the land nor any other proprietary interest in the land.

[3]        85 Building contractor does not acquire interest in land of resident owner

(1)A domestic building contract does not give the building contractor an interest in land of a resident owner for the Land Title Act 1994, section 122.

…

86.Control of building sites

A domestic building contract does not give the building contractor a greater right to occupy a building side than that of a contractual licensee.

14.     Accordingly, it was Mr Howard’s submission that it was appropriate for the value of the property as it was at the time of the PPS claim to be included in Mr Chowhan’s assets for the purpose of determining his claim.

15.     Mr Howard then raised the alternative proposition made by Mr Chowhan should be regarded as a homeowner for the purpose of assessing his assets as, were it not for the dispute with Coral Homes, he would be residing in the house.  That is, as he fully intended to reside in the house, and as he was not gaining any financial benefit from the current situation (indeed, it was costing him money), Centrelink should treat him as a homeowner.

16.     Mr Howard acknowledged that there was no argument that Mr Chowhan planned to use the dwelling at Criterion Close, Bald Hills as both his and his children’s principal home.  However, he contended that this was not yet the case, as neither Mr Chowhan nor his children had actually commenced to reside in the home.

17. However, it was Mr Howard’s submission that the Act made various allowances for absences from the principal home, during which absences the person may still be regarded as a resident or homeowner. However, Mr Howard contended that Mr Chowhan did not satisfy any of these conditions, as he has not yet commenced to reside in the home, nor had he previously been a homeowner.

18. Mr Howard concluded with the submission that the house and land at Criterion Close, Bald Hills had been correctly included as part of Mr Chowhan’s assets in assessing his eligibility for PPS and that as the amount of those assets were above the asset cut-off limit as stipulated in the Act, that Mr Chowhan’s claim for PPS was correctly rejected.

19.     Mr Chowhan submitted that the nature of his predicament was relatively “unique” in that his present situation rendered him helpless due to circumstances that were out of his control.  He had contracted with Coral Homes Pty Ltd to build a house on his land at 48 Criterion Close, Bald Hills on 29 June 2002.  Construction commenced on 8 October 2002 and was scheduled to finish in February 2003.  He said that in the normal course of events he would now be living at the above property.  However, due to circumstances that were exceptional and completely outside his control, this had been prevented, i.e. on account of the builder’s failure to complete the works up to a reasonable standard.  The house was presently the subject of legal proceedings and as a result he was unable to do anything with the property.  He submitted that far from being an “asset”, the property at Lot 48 Criterion Close was nothing more than a liability.

20. Mr Chowhan submitted that the Act was ambiguous when applied to his circumstances. He referred to Section 11 of the Act recognising temporary absences from a “principal home”.  However, a third party had failed to meet their contractual obligations in regard to his matter [that is, Coral Homes had failed to complete his house within the agreed building period] that prevented him from taking up residence at the property.  This issue was beyond his control or influence.

21.     With regard to whether the Tribunal should regard the house and land at Criterion Close, Bald Hills as his “principal home”, Mr Chowhan submitted that he had always intended, and continued to work towards the property at Lot 48 Criterion Close becoming his “principal home”.  However,  circumstances beyond his control,  prevented him living on the property at the time he made his claim for PPS.  This would not have been the case had the construction dispute not arisen.

22.     Mr Chowhan further submitted that despite his “physical” absence from the premises he had maintained “a continuity of association” with the property throughout this entire time (proven by the contract, and by the proceedings that have taken effect in the Commercial and Consumer Tribunal).  He remained undeterred in his resolve to “return to” the property and to call it “home” i.e. pending a resolution to the legal proceedings that had  been initiated elsewhere.

23. Mr Chowhan referred to paragraph (a) of subsection 11(7) of the Act with respect to temporary absences which do not interfere with a person’s association with their principal home; reference was made to certain instances where a person has been required to vacate their “principal home” because of the need for repairs.  He contended his current situation was a continuation of this principle as “building repairs” in his case were the subject of a prolonged building dispute.

24.     Mr Chowhan submitted that he still maintained “a continuity of association” with the property, which deemed him to have both a “right” and “interest” in the premises, to the point of having a “reasonable security of tenure”.  Moreover, the building contract acknowledged him as “an individual who intends to reside in the completed works:  (a)  on practical completion;  or (b)  within six months after practical completion”.

25.     Mr Chowhan then referred to Farrow and Secretary, Department of Social Security (1986) 10 ALN N151 in regard to instances where an asset could be reasonably disregarded:

“….there will be instances where no buyer can be found or there is a legal restriction on the sale of an asset.  Similarly, a person may be unable to borrow against an asset because of his inability to meet periodic repayments or may be unable to obtain a loan which does not require periodic repayment.”

26.     Mr Chowhan concluded by referring the Tribunal to the following monetary values of assets he used – depending on whether he was a homeowner or non-homeowner:

(a)As a “Homeowner”:  Assets would be $140,279, consisting of Cash - $46,797, Shares - $52,044 and Company Assets - $41,438.  This would be below the allowable assets limit of $149,500.

(b)As a “Non-Homeowner”:  Assets would be $205,279, consisting of Cash - $46,797, Shares - $52,044, Company Assets - $41,438 and Land - $65,000.  This would also be based on the constructed home having no monetary value.

Inquisitorial Powers of the Tribunal

27.     At the end of the hearing, and with the consent of the parties, the Tribunal issued a Direction that the market value of the home and land at Lot 48, Criterion Close, Bald Hills be assessed at the time the claim for PPS was lodged (23 July 2003).

28.     The report by the Australian Valuer’s Officer, undertaken by Mr G Townsend and filed with the Tribunal on 5 October 2004, expressed the opinion that the house was essentially worth nothing at present – although a nominal value of $1,000 could be assigned to cover items that could be recovered and sold, were the house to be demolished.

29.     The parties were limited to making supplementary submissions in relation to this valuer’s report.

Supplementary Submissions

30.     Supplementary submissions were received from the respondent on 20 October 2004.  Submissions in response were received from the applicant on 21 October 2004.

Consideration of the Issues

31.     The question for determination of the Tribunal when conducting an application for review is whether the decision under review was the correct (i.e. where there is only one decision possible) or preferable one (i.e. where there is more than one decision possible) on the material before the Tribunal:  See Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 [Full Federal Court]. There is only one decision possible in this application for review.

32. The legislation is the only basis for the review of this administrative decision. Administrative decision-makers are not permitted to depart from the law. The Tribunal must make its decision on the merits of the case – but in accordance with the legal requirements imposed by the Act, together with the relevant legal principles that arise from decisions made by our Courts.

33.     Administrative decision-makers are generally required to address the evidence before them and not confine themselves to evidence before a prior decision-maker whose decision is being reviewed unless the relevant legislation requires a decision to be based upon the circumstances at a particular point of time:  see Australian Tea Tree Oil Research Institute v Industry Research and Development Board (2002) 124 FCR 316 at 324-326; Comptroller-General of Customs v Akai Pty Ltd (1994) 50 FCR 511 at 521; Jebb v Repatriation Commission (1988) 80 ALR 329 at 333). In Jebb, at 333, approved by Stone J in Australian Tea Tree Oil at 325, Davies J described decision-making in the Tribunal as generally a “continuum” in which “the tribunal considers the applicant’s entitlement from the date of application, or other proper commencing date, to the date of the tribunal’s decision.”

34.     The central issue to deciding this application for review is whether the house at Criterion Close is the “principal home” of the applicant.

35.     The Tribunal has considered the following common law principles in this regard in terms of their application to the merit issues:

(a)The High Court in Koitaki Para Rubber Estates Ltd v The Federal Commissioner of Taxation (1941) 64 CLR 241 (at 249) acknowledged that a person may maintain a home or homes in which he resides but concluded that “the place of residence of an individual is determined … by reference to where he eats and sleeps and has settled or usual abode;”

(b)The Tribunal in Re Dickeson and Secretary, Department of Social Security (1989) 18 ALD 58 made the following conclusion based on an analysis of case law (at 61):

“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 [1057] 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 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.”

36.     Applying these legal principles to the factual situation of this application for review, the Tribunal can make no other conclusion than to find that the home at Criterion Close, Bald Hills does not constitute the home of Mr Chowhan at the time he lodged his claim for PPS i.e. he is not a homeowner, for the following reasons:

§  there has never been any substantial degree of occupation of this home;

§  Mr Chowhan and his family do not eat and sleep in the home and this home is not his usual or settled abode;

§  this home could not be described as the “centre of gravity” of his domestic life;

§  there is no affinity with this home in terms of its usage by Mr Chowhan; and

§  he lives away from this home.

37.     Given this finding and having regard to the AVO report, Mr Chowhan’s assets at the time of his claim for PPS were as follows:

(a)cash in the sum of $46,797;

(b)shares in the value of $52,044;

(c)company assets in the value of $41,438; and

(d)other assets (such as household effects) of $17,500

for a total of $157,779.

Mr Chowhan also has property in the value of $65,000 (land) and (as per the AVO report) construction items in the value of $1,000.  When added to the previous assets, the total value of all assets was $223,779.

38.     This asset value of $223,779 is less than the threshold limit for non-homeowner assets of $257,000 that must be satisfied to be entitled to PPS.

39.     Based on the above findings the Tribunal decides to set aside the decision under review and in substitution therefor decides that Mr Chowhan was entitled to PPS at the time his claim was lodged on 23 July 2003.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member

Signed:         Camille Banks
  Associate

Dates of Hearing  27 August 2004 and 14 October 2004 
Date of Decision  25 November 2004
Mr Chowhan appeared on his own behalf
For the Respondent                  Mr J Howard, Departmental Advocate