Cleary and Secretary, Department of Family and Community Services
[2004] AATA 1125
•29 October 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1125
ADMINISTRATIVE APPEALS TRIBUNAL )
) Nos Q2004/455, Q2004/479
GENERAL ADMINISTRATIVE DIVISION )
Re BRUCE CLEARY and
NATALY CLEARYApplicant
And
SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICESRespondent
DECISION
Tribunal Ms MJ Carstairs, Member Date29 October 2004
PlaceBrisbane
Decision The Tribunal:
(a) finds that the value of the applicant’s and his wife’s assets, at the relevant time, was $273,050;
(b) in relation to application Q2004/479, affirms the decision under review; and
(c) in relation to application Q2004/455 remits the matter to the respondent for reconsideration in accordance with the Tribunal’s reasons for decision.
...................[Sgd]......................
MJ Carstairs
Member
CATCHWORDS
SOCIAL SECURITY – benefits and entitlements – eligibility – assets – value of applicants’ assets – homeowners – owners of investment property - value of assets exceeds threshold limit – parenting payment not payable – reduced rate of disability pension payable
Social Security Act 1991
Re Di Primio and Secretary Department of Social Security (1993) 31 ALD 233
Re Langton and Secretary Department of Social Security (1993) 31 ALD 579
Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474REASONS FOR DECISION
29 October 2004 Ms MJ Carstairs, Member 1. This is an application by Bruce Cleary (the applicant) on behalf of himself and his wife Nataly Cleary for review of a decision made by the Social Security Appeals Tribunal (SSAT) on 18 May 2004, varying a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services (the respondent) but nevertheless agreeing with the substance of the delegate’s decision that the applicant’s and his wife’s assets exceeded the level at which they could be paid disability support pension and parenting payment under the Social Security Act 1991 (the Act).
2. The applicant represented himself and his wife at the hearing. Mr J Howard, an advocate with Centrelink, represented the respondent.
3. The Tribunal had before it the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975, as well as documents marked A1-A4 for the applicant and R1-R2 for the respondent.
BACKGROUND
4. In the past the applicant and his wife resided at North Avoca in New South Wales and this was their principal place of residence. At the same time they owned a 17 hectare property, Borra Creek Road in Dorrigo (the Borra Creek Rd property). They sold their residence at North Avoca in 2002 because their son was having trouble with asthma. The family moved to the Borra Creek Rd property which became their principal place of residence. In late 2002 they also purchased an 85 hectare property at Prices Road, Dorrigo (the Prices Rd property) for $220,000 which they intended would become their principal place of residence once a home was built and any other necessary improvements to the block of land were undertaken.
5. At all relevant times the applicant and his wife received payments of disability support pension and parenting payment, respectively, from Centrelink. They went to Centrelink and discussed their plans for the two blocks and were given information from which they understood there was no bar to their proceeding with the overall plan.
6. In early 2004 Centrelink made a decision that the applicant’s and his wife’s assets totalled $292,174 taking into account part of the value of the Borra Creek Rd property, all the value of the Prices Rd property and other assets such as livestock, vehicles and personal effects. As the applicant’s wife’s parenting payment has an assets test that precludes payment to her if assets exceeded $106,250, her parenting payment was cancelled. The applicant’s disability support pension continued to be paid as it has a less severe assets test applied to it, but it was paid at a reduced rate. The applicant and his wife appealed the decision and the SSAT reduced the assets to a figure totalling $278,824.
7. The applicant and his wife applied to this Tribunal on 17 and 25 June respectively. The applicant stated in his application to the Tribunal that Centrelink was negligent in withholding relevant information from them which resulted in his disability support pension being reduced and his wife’s parenting payment cancelled. The issue for the Tribunal is to determine the correct value of the applicant’s and his wife’s assets for purposes of their social security payments.
EVIDENCE
8. The applicant said that they had owned the Borra Creek Rd property for a number of years at the same time as their principal place of residence was the home at North Avoca. He pointed out that this created no problems under the assets test then.
9. At the hearing the applicant said that he understood the Centrelink position about the valuation of the Borra Creek Rd and the Prices Rd properties. However he said that the case that he wished to present was that he and his wife would not have lost their social security payments except for misleading advice given by Centrelink. He said that Centrelink entrapped them by their advice when he and his wife went to discuss their assets, and breached a duty of care to them. The applicant indicated that he will pursue other remedies available to him in regard to those discussions.
10. The Tribunal asked the applicant at the hearing whether he thought the Australian Valuation Office should undertake a further valuation of the Prices Rd property to take into account such matters as access difficulties, and lack of clearing and fencing, which the applicant had mentioned in the course of the review of the decision. The applicant acknowledged that the valuation amount would be likely to remain the same, as some properties had sold for high prices in the area. He said that values in the area have become speculative. He acknowledged also that the Australian Valuation Office adopted the purchase price which he had paid for the Prices Rd property as its value.
11. The applicant said that his objection was to the valuation being undertaken at all, when Centrelink frequently accepts the Valuer-General’s valuation as appears on council rates notices.
12. The applicant said that his intention that the Prices Rd property ultimately will be the family’s principal place of residence requires that they sell the Borra Creek Rd property. The applicant said that they took out a mortgage over the Borra Creek Rd property to carry out improvements and get it ready for sale. The Borra Creek Rd property is on the market for $250,000 but he said that access problems will make it difficult to sell.
13. The applicant said that their cash management account had been closed on 20 November 2003 and they no longer have that liquid asset valued at $5,824.07.
14. The documentary materials included a form, “Real Estate Details” dated 12 January 2000 (T6) in which the applicant stated that the value of the Borra Creek Rd property was $150,000 and that their personal effects totalled $30,000. In a form dated 16 December 2002 (T10) the applicant estimated the market value of the Prices Rd property as $200,000. In a letter dated 13 November 2003 (T21) the applicant stated that the Valuer General’s valuation for the Prices Rd Property was $135,000 and that the value of the Borra Creek Rd property, which had a mortgage of $4,500 over it, was $30,000.
15. On 6 November 2003, the Australian Valuation Office valued the Prices Rd property at $220,000, noting that this was the purchase price of the property on 5 December 2002 (T24). They valued the Borra Creek Rd property at $200,000 however, as the Act allows house and curtilage of the principal place of residence to be exempt from asset testing, the value to be taken into account under the Act was $50,000.
CONSIDERATION OF THE ISSUES
16. The applicant disputes all asset values on the basis that using the Australian Valuation Office’s valuation process departs from Centrelink’s usual practice of adopting the Valuer General’s valuation. The applicant said that the value on the rates notices, as unimproved capital value, must be correct and would usually be accepted by Centrelink without further formal valuation. The applicant also raised issues concerning negligent advice by Centrelink and asserted that Centrelink had breached its duty of care to them, and he asserted that, having obtained information about their property by illegal means, Centrelink was barred from using that information to support the decisions reached.
17. Mr Howard submitted that the valuation for all assets by the SSAT was correct and that taking into account the asset limit for the social security payments was $212,500, the total value of assets being $278,824, meant that the decisions to reduce the applicant’s disability support pension payments and cancel his wife’s parenting payment were correct. Mr Howard noted in regard to the Borra Creek Rd property that the applicant has it on the market for $250,000 and this is an indicator of its value that supports the value ascribed to it by the Australian Valuation Office. Mr Howard submitted that the Tribunal should apply Tribunal cases such as Re Di Primio and Secretary Department of Social Security (1993) 31 ALD 233 and Re Langton and Secretary Department of Social Security (1993) 31 ALD 579 which deal with valuing land and which apply the market value of real estate as the proper basis for ascribing value to land.
18. The Tribunal has noted the applicant’s criticisms of the way that Centrelink handled the matter and his claim that Centrelink had acted improperly. However these are not matters that are within the jurisdiction of this Tribunal. The Tribunal accepts the submission that issues raised about maladministration are not relevant to the question of the proper value of the applicant’s property.
19. The Act requires that assets are valued in order to determine what payments can be made under the Act. Assets are assessed taking into account the person’s interest in property less any charge or encumbrance. The value of the person’s interest in the principal place of residence is disregarded, to the extent represented by a dwelling house and curtilage of 2 hectares around it: s11(5).
20. In regard to the Borra Creek Rd property the Tribunal accepts the Australian Valuation Office’s assessment of the property as $200,000 and accepts that the value of the house and curtilage is $150,000, or in this case ¾ of the value of the whole property. The Tribunal accepts the method of apportioning the mortgage used by the SSAT, as it is in accordance with the Act. The $45,000 mortgage amount is subtracted from the total value of the property. The whole property value was, then, $155,000. Three quarters of this is disregarded, leaving $38,500 to be taken into account for the Borra Creek Rd property in assessing the applicant’s and his wife’s assets under the Act.
21. In relation to the Prices Rd property, the Tribunal accepts the valuation by the Australian Valuation Office of $220,000. Whilst it does not appear that an on-site valuation was conducted it is reasonable in all the circumstances that the purchase price of the property was adopted. The applicant’s evidence suggested that prices in the area had not dropped.
22. The Tribunal did not accept the applicant’s submission that the Valuer General’s valuations should be preferred to that of the Australian Valuation Office. It is well settled by cases in this area of the law that it is market value that is assessed as reflected by what a desirous buyer would pay to a willing but not anxious seller: Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474. The value ascribed by the Valuer General was one used for rating purposes in the shire and was not as recent as the Australian Valuation Office values. It does not represent market value.
23. The Tribunal accepted the applicant’s evidence that the cash management account had been closed in November 2003 and that the applicant and his wife had no liquid assets at the time of the decision under review, that is, in January 2003. The applicant’s wife had provided the value of the cars in November 2003 as $5,000 for a Hilux and $2,000 for a Subaru. The applicant now asserts that the respective values are $2,000 and $1,000 (exhibit A4). There is no detail about the age of the cars or any basis to consider what the proper valuation of them is. In the circumstances the Tribunal prefers the earlier values of $5,000 and $2,000. They are estimates of the value of the cars that are given close to the relevant time, that is, January 2004, and there is no reason to assume that they were not a correct estimate at the time they were given. If the applicant and his wife have a basis to substantiate the reduced valuations now provided, that information can be provided to Centrelink.
24. The Tribunal finds that the applicant’s and his wife’s assets to be taken into account under the Act at the time of the decisions under review were as follows:
Borra Creek Rd property $38,750
Prices Rd property $220,000
Stock $2,300Cars and personal effects $12,000
25. The applicant’s and his wife’s total assets at the time of the decisions under review were $273,050. This amount exceeds the amount of assets at which the applicant’s wife could be paid parenting payment and so the decision to cancel her payment was correct.
26. The applicant’s rate of disability support pension had to be calculated taking into account those assets. As the total value of the assets is varied from the total as found by the SSAT, Centrelink will need to recalculate the rate of the applicant’s disability support pension payments taking into account the findings of the Tribunal.
DECISION
27. The Tribunal:
(a) finds that the value of the applicant’s and his wife’s assets, at the relevant time, was $273,050;
(b) in relation to application Q2004/479, affirms the decision under review; and
(c) in relation to application Q2004/455 remits the matter to the respondent for reconsideration in accordance with the Tribunal’s reasons for decision.
I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Ms MJ Carstairs, Member
Signed: Sarah Oliver
AssociateDate of Hearing 24 September 2004 (at Grafton)
Date of Decision 29 October 2004
For the Applicants Mr Cleary
For the Respondent Mr Howard, Departmental Advocate
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