Darrell Stafford and Secretary, Department of Social Services
[2014] AATA 404
•24 June 2014
[2014] AATA 404
Division GENERAL ADMINISTRATIVE DIVISION File Number
2013/0932
Re
Darrell Stafford
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Ms N Bell, Senior Member
Date 24 June 2014 Place Sydney The Tribunal affirms the decision under review.
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Ms N Bell, Senior Member
CATCHWORDS
AGED CARE - aged care provider - asset assessment - aged care assessment - accommodation bond - financial hardship - whether financial hardship determination should be made - decision under review affirmed
LEGISLATION
Aged Care Act 1997 (Cth) ss, 57-14
User Rights Principles 1997, ss 23
CASES
Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634
SECONDARY MATERIALS
Residential Aged Care Financial Hardship Assistance Guidelines
REASONS FOR DECISION
Ms N Bell, Senior Member
24 June 2014
On 13 March 2012 Darryl Stafford made an application for a financial hardship assistance determination in respect of an accommodation bond pursuant to s 57-14 of the Aged Care Act 1997. In July 2012, a decision was made to refuse a determination on the basis that Mr Stafford chose to deplete his assets by loaning his partner’s daughter an amount of money that impacted on his financial circumstances. This decision was affirmed on further review in December 2012. Mr Stafford seeks a review of that decision by this Tribunal.
An accommodation bond is paid under a contract between an aged care recipient and an aged care provider. An aged care provider may ask a care recipient who is seeking low-level care and who has sufficient assets on entry into care to pay an ‘accommodation bond’ to the provider.
A person can be asked to pay an accommodation bond under the Act if the person’s assets are valued at more than the minimum set amount on their date of entry to a certified aged care provider. The minimum set amount is worked out pursuant to s 57-12. Relevantly to Mr Stafford, this amount is $43,000. When a person applies to go into aged care, an asset assessment is made to determine how much a bond will be.
Section 57-14(1)(a) provides that the Secretary may determine that a person not be charged an accommodation bond because payment of an accommodation bond would cause the person financial hardship. Section 57-14(1)(b) provides that the Secretary may determine that a person must not be charged an accommodation bond of more than a specified maximum amount because payment of more than that amount would cause the person financial hardship.
SHOULD A DETERMINATION OF FINANCIAL HARDSHIP BE MADE FOR MR STAFFORD?
Mr Stafford has had numerous Aged Care Assessment Team (ACAT) assessments. At the time that Mr Stafford applied for a financial hardship determination, he had an ACAT assessment for ‘low level residential care’. He had a similar assessment at the time that he applied for a review by this Tribunal. An accommodation bond is only paid under an assessment made for ‘low level residential care’. An ACAT assessment ceases to be effective after 12 months. The ACAT assessments made at the time of Mr Stafford’s application for a financial hardship determination and at the time he applied for review by this Tribunal expired on 25 June 2012 and 16 August 2013 respectively.
Two further ACAT assessments were made – one in November 2013 which did not approve Mr Stafford for residential care and instead approved him for ‘residential respite care’ with a ‘home care package’; and a further assessment made in February 2014 which did not approve Mr Stafford for residential care. As noted above, an accommodation bond is only paid under an assessment for ‘low level residential care’.
These matters make this present review redundant, but I consider it may be of some benefit to Mr Stafford to have a decision on the question of a financial hardship determination. It may assist him with further planning for his future.
A financial hardship determination can only be made if the care recipient’s assets have been assessed. Centrelink issued an asset assessment for Mr Stafford on 18 November 2013 which valued Mr Stafford’s assets for accommodation bond purposes at $120,208. That assessment expired on 18 March 2014. Because the assessment was well over the minimum set amount of $43,000, Mr Stafford was required to pay a bond to the aged care provider.
Section 57-14 of the Act provides:
(1) The Secretary may determine, in accordance with the User Rights Principles, that a person:
(a) must not be charged an * accommodation bond because payment of an accommodation bond would cause the person financial hardship; or
(b) must not be charged an accommodation bond of more than a specified maximum amount because payment of more than that amount would cause the person financial hardship.
[Note omitted]
As the section provides, financial hardship determinations must be made in accordance with the User Rights Principles (s 57-14(1)). The Principles are made under s 96-1(1) of the Aged Care Act.
Section 23.56 of the Principles addresses the constituents of financial hardship:
23.56 Circumstances constituting financial hardship
(1) In this section:
unrealisable asset has the meaning given by subsections 11(12) and (13) of the Social Security Act 1991.
(2) Payment of an accommodation bond or payment of a specified maximum amount of accommodation bond would cause a person financial hardship if, for example:
(a) the payment would cause hardship to the person’s partner or a dependent child of the person; or
(b) the value of the person’s assets, other than unrealisable assets, is less than the minimum permissible asset value.
(3) In making a determination under paragraph 57‑14(1)(a) or (b) of the Act, the Secretary may consider any of the following matters:
(a) the person’s financial arrangements;
(b) whether any assets of the person are assets to which he or she does not reasonably have access;
(c) if the person has significant assets—whether the assets are unrealisable assets;
(d) whether the person has recently gifted any assets;
(e) any other matter that the Secretary considers relevant.
This list of factors is not exhaustive. It is appropriate for me to have regard to the policy contained in the Residential Aged Care Financial Hardship Assistance Guidelines (Re Drake and Minister for Immigration and Ethnic Affairs (No.2) (1979) 2 ALD 634).
The Guidelines provide:
The intent of the financial hardship provisions is to provide assistance where a resident is eligible to pay an accommodation payment but, for reasons beyond their control, is unable to fund all or part of their accommodation bond or charge.
On gifting of assets, the Guidelines provide:
Gifting
As a basic principle, financial hardship assistance is not provided where a resident has chosen to gift assets which could have assisted with his or her care-related expenses.
For residents who enter residential aged care or moved to another aged care home from 1 January 2007, any amount given away from 10 May 2006 over $10,000 in a single financial year, or $30,000 in a five year financial period, will be included in the assets assessment undertaken by Centrelink or the DVA
It should be noted that while gifted amounts under the above thresholds will not affect pension entitlements or be recorded on a Centrelink or DVA assets assessment, they may still be taken into account when assessing applications for financial hardship assistance. Gifting is considered to be a discretionary decision and hardship assistance is generally not available where a resident chooses to place themselves in a position of financial difficulty.
Gifting includes when a resident (or their partner) gifts or disposes of assets, including transferring assets or selling assets for less than their market value, or the resident does not receive adequate consideration for the gift or transfer in the form of money, goods or services
Examples of gifts include:
owhere an asset is sold to a family member for less than market value;
owhere a loan is forgiven;
owhere a family member’s business loan is repaid by a resident as they were a guarantor; or
omoney is put into a family trust that is not controlled by the resident or their partner.
Special Disability Trusts may be exempt from the aged care assets assessment if they comply with the same conditions required for pension exemption purposes. Complying contributions are usually not considered to be gifting for financial hardship purposes.
If a resident gifts more than the allowable limit the asset will be treated as a deprived asset, and income will be deemed on the amount in excess of the allowable limit for a five year period. This assessment may change if a gifted asset is returned.
Consideration may also be given to a resident’s mental health at the time of gifting.
Mr Stafford has loaned a total of $185,000. Of that amount, $85,000 was loaned in April and August 2011 to Mr Cattell, the son of Ms Jennifer Sullivan, who filed for bankruptcy in January 2012. This amount has been deemed unrecoverable by Centrelink.
Mr Stafford loaned Ms Sullivan $100,000 in November 2010 to assist with her mortgage. Ms Sullivan is his partner’s daughter, and now his carer. Mr Stafford was previously Ms Sullivan’s mother’s (his partner’s) carer.
A deed of loan made on 26 November 2010, provided that Ms Sullivan will repay the full amount of the $100,000 plus interest following “the completion by judgment, settlement or otherwise of her claim against the Estate” of her father. The deed also records that Mr Stafford can obtain a mortgage over Ms Sullivan’s home on request.
On 5 January 2013, another deed of loan was signed by Mr Stafford and Ms Sullivan. This deed provided that no interest is payable on the loan and no attempt will be made by Mr Stafford to obtain a mortgage over Ms Sullivan’s property. The Secretary contends that signing this deed was not beyond Mr Stafford’s control and that Mr Stafford chose to change the terms of the dead of loan in a way that is not in his favour.
Ms Sullivan told the Tribunal she is unable to repay the debt at present. She said she will be able to do so on settlement of her claim against her late father’s Estate, or on the settlement of the sale of her home, which is presently on the market and has been for the last two years. Her home is owned by herself and her ex-husband. She said her ex-husband has refused to lower the price. Ms Sullivan said that she has put her home on the market so that she can repay Mr Stafford.
The Secretary contends that the property is not unrealisable as it could be sold with a reduction in the price to suit market conditions and this may result in a sale.
The Secretary also contends that the financial hardship provisions are in place because people’s circumstances change and may be beyond their control, but Mr Stafford chose to make a loan out of his assets to Ms Sullivan and then in 2013, changed the terms of the loan against his favour.
Mr Stafford contends that he offered the money to Ms Sullivan at a time when he did not think he needed to go into permanent residential care. He said that since the loan, his health deteriorated quickly and now he requires care.
By loaning funds to Ms Sullivan and then severely limiting his options for recovery of the loaned sums, Mr Stafford chose to place himself in a position of financial difficulty. I am satisfied after discussion with him at the hearing, that he understood what he was doing when he did it. I understand that he wished to help Ms Sullivan, but by doing so and by limiting his options for recovery he embraced financial difficulty and deprived himself of his asset.
It does not appear to me that all available steps have yet been taken, by Mr Stafford or by Ms Sullivan, to recover the money loaned to Ms Sullivan. I am not satisfied that the loan is as yet unrecoverable, or that, as an asset, it is unrealisable. I do not consider it appropriate to make a financial hardship determination in these circumstances. Depending on future ACAT assessments undertaken by Mr Stafford, he may wish to apply for a financial hardship determination again. In doing so, he should provide further information on the recoverability of the loan.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 25 (twenty -five) paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Senior Member. .........[Sgd]...............................................................
Associate
Dated 24 June 2014
Date of hearing 14 May 2014 Date final submissions received 16 May 20144 Advocate for the Applicant Ms J Sullivan Solicitors for the Respondent Ms K Robbins, Department of Health & Ageing Legal Services Branch
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