Danica Plavan and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2012] AATA 671

[2012] AATA  671

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/2527
Re	Danica Plavan
APPLICANT
And	Secretary, Department of Families, Housing, Community Services and Indigenous Affairs
RESPONDENT

DECISION

Tribunal	Senior Member J F Toohey
Date	3 October 2012
Place	Sydney

The Tribunal affirms the decision under review.

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

Senior Member J F Toohey

CATCHWORDS

SOCIAL SECURITY – age pension – assets test – whether applicant’s assets exceeded assets limit – valuation of properties disputed – assets exceeded assets limit on any valuation – whether hardship provisions applicable – decision under review affirmed

LEGISLATION

Social Security Act 1991 ss 11, 1064, 1064-A1, 1064-A2, 1064-G2, 1118, 1121, 1129

CASES

Kirkovski and Secretary, Department of Family and Community Services [2004] FCA 790

Re Juhan Torv and Secretary, Department of Social Security (1992) AATA 185
Re Secretary, Department of Social Security and Langton (1993) 31 ALD 579

Re Woodhouse and Department of Social Security (1987) 12 ALD 474

SECONDARY MATERIALS

Guide to Social Security Law

REASONS FOR DECISION

Senior Member J F Toohey

3 October 2012

1. Shortly after she turned 65 in September 2011, Mrs Danica Plavan applied for an age pension.  Centrelink decided that the combined value of her and her husband’s assets exceeded the allowable limit and that she did not qualify for the pension.

2. In May 2012, the Social Security Appeals Tribunal (SSAT) agreed with Centrelink’s decision.

3. At a hearing on 3 October 2012, I gave oral reasons for affirming the decision of the SSAT.  These written reasons reflect those given orally at the hearing.

   BACKGROUND

4. Mrs Plavan came to Australia from Croatia in about 1960.  She worked as a process worker for 28 years until she was made redundant.  She found herself another job but within several months learned she had breast cancer.  After undergoing treatment, she found another job but more recently has learned she has bone cancer.  Her husband worked until 15 years ago when he suffered a back injury. 

5. Mrs Plavan and her husband have evidently worked hard all their lives and have acquired considerable assets.  In November 2011, when she applied for the age pension, Centrelink valued their combined assets as follows:

Real estate	$2,646,656
Financial assets (savings, managed investments, shares)	$175,996
Other assets (household effects, vehicles)	$14,600
Total	$2,837,252

1. Mrs Plavan disputes the value assigned to her assets by Centrelink.  However, as will be seen, even by her valuation, her assets exceeded the allowable limit.

   THE LEGISLATION

2. The relevant legislation is in the Social Security Act1991 (the Act).

3. The rate at which a person is paid the age pension is determined by applying the calculator in s 1064 of the Act.  Calculations are made of a person’s income and assets, and whichever results in the lower rate of reduced pension is applied: s 1064-A1.  In Mrs Plavan’s case, the assets test was applied. 

4. An asset means money or property: s 11 of the Act.  For the purposes of the assets test, certain assets, including a person’s principal residence, are disregarded: s 1118.

5. If a person is a member of a couple, the combined value of the couple’s assets is used in determining whether the assets limit is exceeded: s 1064-A2 and 1064-G2.

6. The value of an asset is reduced by the value of any charge or encumbrance over it: s 1121.

7. At the time Mrs Plavan applied of the age pension, the allowable assets limit for a person who was a homeowner and a member of a couple was $265,000.  Up to that amount, a person could qualify for a full pension.  For every $1000 over that amount, the rate of pension was reduced by $1.50.  The effect was that, once the value of her assets reached $1,018,000, Mrs Plavan no longer qualified at all.

   WHAT WAS THE VALUE OF MRS PLAVAN’S ASSETS WHEN SHE APPLIED FOR THE AGE PENSION?

8. The Act does not specify how a person’s assets are to be valued but, generally, assets are valued according to their market value: see the Guide to Social Security Law at 4.6.6.10; Re Woodhouse and Department of Social Security (1987) 12 ALD 474; Re Juhan Torv and Secretary, Department of Social Security (1992) AATA 185; Re Secretary, Department of Social Security and Langton (1993) 31 ALD 579 and Kirkovski and Secretary, Department of Family and Community Services [2004] FCA 790.

9. In December 2011, the Australian Valuation Office (AVO) valued Mr and Mrs Plavan’s real estate.  Taking into account the AVO’s valuations and the mortgages over several of the properties, Centrelink calculated the value of the properties as follows:

Address	AVO Valuation	Loan
15 Thomas St, Fairfield	$390,000	$101,997
15A Thomas St, Fairfield	$390,000	$101,997
The Entrance	$960,000	$316,810
94 Harris St, Fairfield	$390,000	$0
94A Harris St, Fairfield	$390,000	$0
96 Harris St, Fairfield	$450,000	$117,452
96A Harris St, Fairfield	$420,000	$105,088
Totals	$3,390,000	$743,344
Net real estate assets	$2,646,656

1. Mr and Mrs Plavan dispute the AVO’s valuation.  They also dispute the value assigned by Centrelink to their financial and other assets.  They say the true value of their properties at the time would not have exceeded $2,270,000 after the mortgages were deducted.  They have not provided proof of their estimates but, even if they are correct, the value of their properties still exceeded the allowable limit.  Even if Centrelink overestimated the value of their other assets, the value of the properties alone exceeded the allowable limit.

   IS THERE ANY DISCRETION?

2. Mrs Plavan asks that regard be had to her poor health and the fact that she has paid taxes for many years. 

3. Section 1129 of the Act allows for the value of assets to be excluded, and a pension to be paid, where an asset is unrealisable and a person would otherwise suffer severe financial hardship.  There is no discretion to pay a pension on the ground of poor health.

4. I appreciate that Mrs Plavan does not wish to sell her real estate but it cannot be said it is unrealisable.  I understand that at least one property would sell at a loss but two of the properties are unencumbered.  Nor can it be said that Mrs Plavan would suffer severe financial hardship without the pension.  She and her husband derive income from their properties and have other financial assets in addition to their principal residence.

   CONCLUSION

5. The value of Mrs Plavan’s assets exceeded the allowable limit when she applied for the age pension, and still do.  There is no discretion by which she might be paid the pension.

6. I affirm the decision under review.

I certify that the preceding 20 (twenty) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey.

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

Associate

Dated  3 October 2012

Date(s) of hearing	3 October 2012
Applicant	In person
Solicitors for the Respondent	Mr J Larcombe, DHS Program Litigation and Review Branch