DAVID CRAMOND and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2009] AATA 793

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 793

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/3136

GENERAL ADMINISTRATIVE DIVISION		)
Re		DAVID CRAMOND

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr G. D. Friedman, Senior Member

Date1 October 2009

PlaceMelbourne

Decision For reasons given orally at the hearing the Tribunal affirms the decision under review.

....................[signed].............

Senior Member

ADMINISTRATIVE

APPEALS TRIBUNAL

MR. G.D. FRIEDMAN

No. 2009/3136

CRAMOND

and

SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

EXTRACT OF TRANSCRIPT OF PROCEEDINGS

MELBOURNE

THURSDAY, 1 OCTOBER 2009

MR D. CRAMOND appears in person
MS P. HEFFERNAN appears for the respondent

EXTRACT OF TRANSCRIPT OF PROCEEDINGS

MR FRIEDMAN:  In this matter the facts are not in dispute, and they are that the applicant, Mr Cramond, is currently residing at rented accommodation in Elwood, in Melbourne, and he owns a property in Red Hill South and has owned that property since 1983 and his mother currently lives in that house and does not pay any rent.  And Mr Cramond told me that for personal and business reasons he prefers to reside in the city and has never lived in the house and has no current intention of living in the house in Red Hill South.  He said that although his mother lives on her own, there is some possibility, because of her failing health, that other arrangements may need to be made in the future regarding where she lives and the circumstances in which she lives, although one of those options would not include living with him in Elwood.

There is no dispute also that at the time of the application for a Newstart allowance that Mr Cramond owned contents and personal effects valued at around $25,000. He owned the motor vehicle valued at $3000 and that he had bank balances, one account was around $5020 and the other account was just over $2000. At 31 December 2008 the mortgage on the Red Hill property was around $39,000, but because he had drawn down on the mortgage as a consequence of his employment being terminated in January 2008, the mortgage as at 13 February 2008 was nearly $69,000. There is no dispute that the total value of Mr Cramond’s assets, that is his bank account and motor vehicle and the net value of the property at Red Hill South, which was valued by the Mornington Peninsula Shire for the year ending June 2009, at $346,000 … that with the mortgage around $69,000 being deducted from that, then the net value of his assets exceeded the limit of $296,250 as at 10 March 2009, which was the amount that was the amount which could not be exceeded for qualification for a Newstart allowance under section 611 of the Social Security Act 1991 [“the Act”]. 

The only matter in dispute is whether the house in Red Hill South is the principal residence for the purposes of the Act.  Section 1118, subsection (1), of the Act lists assets that are to be disregarded when calculating the value of a person’s assets.  And if Mr Cramond’s argument was to be accepted then the value of the Red Hill South property would be disregarded for the purposes of Newstart allowance.

Ms Heffernan, on behalf of the respondent, submitted that Mr Cramond does not live in the Red Hill house therefore that is not his principal residence, therefore, its value should be taken into account for the purposes of eligibility for Newstart allowance.  Mr Cramond’s argument is principally that while he does not live in the Red Hill South house it is the family home because that is the only one that he owns, and he has a close family member, being his mother, living in it and the reasons he doesn’t live in it are for personal and business reasons and, therefore, that home should be considered to be his family residence.

When it was put to him that on that argument other properties that may be owned by a person with a family member living in there, might also be taken to be classified in the same manner, and Mr Cramond’s response was that because he only owned one property then that argument wouldn’t apply in any case, because any other property could be considered to be an investment property or for other purposes.  Whereas a single property in which a family member lives should be considered his family home and, therefore, his principal residence.

Now on the question of whether the Red Hill South property is the principal home, I have been referred to the Tribunal’s decision, Samek v Secretary Department of Social Security [1988] AATA 684 in which the Tribunal stated:

The Act contains no definition of “the principal home” ...  The concept of “the principal home” assumes, however, that there is more than one property which is used as a home.  If one moves from home to home, then the home in which one spends most time would, logically, be the principal home.

It goes on to say:

… [T]he [respective] “homes” must be “property” which can be valued for the purposes of the Act.  Thus, as between the city house and the holiday house owned by a retired couple … .the city house would remain their principal home for as long as they spent the bulk of their time there.  But once they spent the bulk of their time in their holiday house it would become their principal home.

The concept of having a holiday home is certainly not in issue here.  There is no suggestion that the Red Hill South property is a holiday home, and in fact Mr Cramond said that he may visit there regularly to see his mother, but he certainly has not resided there.

And in Re Robert Dickeson v Secretary, Department of Social Security [1989] AATA 190, the Tribunal there said that:

In assessing the criteria of what constitutes a “home” a substantial degree of occupation is persuasive … whereas conversely occupation by occasional visiting is not … and living away from the family home in other premises causes the family home to no longer be their principal home ...

And that is cited at Samek that I have referred to.  The Tribunal also went on to say:

It is a concept in nature and, “it is a place where the centre of gravity of one’s domestic life is to be found” …

And that was a quote from the judgment, Geothermal Energy N. Z. v Commissioner of Inland Revenue (1979) 2 NZLR 324.

Now, I accept Mr Cramond’s evidence that he has not lived there, that he does not live there, and I can understand his reasoning that it is the only home he owns and, therefore, to penalise him because his mother is living there, albeit rent free, is unfair.  I can understand the argument, but I do not accept the argument.  In my view the definition of principal home, from the decisions I have given, and also a large number of other decisions by this Tribunal and other Courts and Tribunals, is very clear that the main criterion is where you live, and in this case Mr Cramond lives in Elwood in a rented property and, therefore, the exemption for the assets are to be disregarded under section 1118 of sub-section (1) and cannot apply to the home in Red Hill South.

If he lived there it would be different, but in my view the action by Centrelink in refusing to disregard the value of the Red Hill South property was the correct one.  And consequently, given there is no dispute of the combined value of his assets, including Red Hill South, exceeded the limit for eligibility for Newstart I find that he was ineligible for Newstart by reason of that exceeding the allowable limit was the correct one and correct and preferable decision.

On the question of whether the hardship provisions apply, although there has been no separate application, the Social Security Appeals Tribunal did refer to the provisions under section 1131 of the Act that allow a person who satisfies the hardship provisions of the Act to, nevertheless, qualify for an allowance such as Newstart allowance.

And section 1131 contains a number of provisions which all need to be satisfied before the assets test provision can apply.  Subsection (e) of section 1131 of the Act states that:

[T]he person, or person’s partner, has an unrealisable asset …

Mr Cramond submitted that the property at Red Hill South is unrealisable for a couple of reasons.  The first one is that his mother is living there and she is in poor health and she should remain there, and it is certainly his intention that she should remain there until she is no longer in a position to remain there, but that at present that situation has not arisen.  So as at March 2009, when he applied for Newstart allowance his argument is that the property is unrealisable because she is there and should remain there.  He also argued that the process of selling a property takes a number of months, therefore, at that date the property is unrealisable because it would have taken a number of months and, therefore, it was unrealisable at the time he made his application for Newstart allowance.

I do not accept his argument.  There is no dispute and no reason for the Tribunal to suggest that his mother should be evicted from the house or removed against her will, or taken away from the property until such time as a decision is made by Mr Cramond, or in fact his mother, that she should no longer remain in the property.  However, in my view, that is a decision that Mr Cramond and his mother have made and will make in the future, and there is no legal impediment to Mr Cramond realising his asset by selling it.  Similarly, yes, there is going to be time in any property transaction a time between selling the contract and receiving the proceeds of sale and moving out, but even if I were to find that it does take time, then selling the property can be done, the contract of sale can be signed on the day and the property for all intents and purposes might be considered to be sold, whether the processes have been gone through in terms of settlement and all the other things that go with the sale of property.  So I do not accept that argument either.

In my view the property is realisable, and I understand why Mr Cramond is not selling it, but in my view it is a property that can be sold if he chose to do so.  That being the case, there is no need for me to consider subsection (g) where the Secretary is satisfied the person would suffer severe financial hardship if this section did not apply to the person, simply because if the property was realisable then that is an asset of the person.  In any event, the terms, severe financial hardship, although it has not been defined, it has been the subject of a number of decisions.  I have been referred to Daly v Secretary, Department of Employment and Workplace Relations [2007] AAT 1881 and also as in Bruhns v Secretary, Department of Family and Community Services and Indigenous Affairs [2007] AATA 1060 where the Tribunal said:

It is not for the Tribunal to determine whether this sum is or is not reasonable.  The issue … is whether Mr Bruhns will be in severe financial hardship if he did not receive age pension during the relevant period.

And then it goes on to say that he had saleable shares and the decision was that he was not in severe financial hardship. 

In my view, given the value of the bank balances at the relevant time and other assets held by Mr Cramond, in my view it is clear that for the purposes of the Act he was not in severe financial hardship.  So even if I were to find in his favour in respect of unrealisable assets, I would not accept that he satisfied subsection (g) of section 1131 of the Act.  And, therefore, he would not qualify for Centrelink benefits under the hardship provisions of the Act. 

In all the circumstances I affirm the decision under review.

END OF EXTRACT