Davies and Secretary, Department of Social Services (Social services second review)
[2015] AATA 819
•4 September 2015
Davies and Secretary, Department of Social Services (Social services second review) [2015] AATA 819 (4 September 2015)
Division
GENERAL DIVISION
File Numbers
2014/1795; 2014/1889
Re
Lionel Davies
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Deputy President S E Frost
Mr N Gaudion, MemberDate 4 September 2015 Date of written reasons 23 October 2015 Place Sydney The Tribunal sets aside the decision under review and substitutes a decision that the applicant has been overpaid to the extent of $1,237.50 in respect of Newstart Allowance and $97,380.54 in respect of the Age Pension.
........................[sgd]................................................
Deputy President S E Frost
CATCHWORDS
SOCIAL SECURITY – debt – overpayment of Newstart Allowance and Age Pension – failure to disclose ownership of assets – valuation of property – amount of overpayment – decision set aside
LEGISLATION
Social Security Act 1991 (Cth) ss 1236, 1237A, 1237AAD
REASONS FOR DECISION
Deputy President S E Frost
Mr N Gaudion, Member23 October 2015
INTRODUCTION
On 4 September 2015, at the conclusion of the hearing in this matter, the Tribunal made its decision and gave oral reasons for the decision. The applicant has since asked for a statement in writing of the reasons for the decision. This is that statement.
BACKGROUND
The dispute between the parties arose because of the applicant’s failure to disclose to Centrelink his ownership of two investment properties in Braidwood – one in Lascelles Street and one in Wallace Street. As a result of the applicant’s failure to disclose his ownership of those properties, Centrelink thought the applicant’s asset holdings were much less than they really were, and so after the applicant applied for Newstart Allowance in 2003, Centrelink ended up overpaying him $1,237.50 over a six-week period in October and November in that year.
The applicant concedes that he was overpaid that amount and he has since paid it back to Centrelink.
In late 2003 the applicant applied for the Age Pension. In ignorance of his ownership of the investment properties, Centrelink paid him a pension for more than eight years, from November 2003 to February 2012.
The applicant also concedes that during that period he received more pension than he was entitled to. The issue for determination by the Tribunal is how much was the applicant overpaid. That depends on how much the properties were worth at different times during the overpayment period.
Originally, the overpayment amount in respect of the Age Pension was calculated by Centrelink as $107,840.36, and the applicant has since repaid that amount. In arriving at that overpayment amount, Centrelink relied on valuations of the Braidwood properties carried out by the Australian Valuation Office (AVO). More recent valuations undertaken by Mr Colin Davies, a registered valuer who practises in the Australian Capital Territory, suggest that the original AVO valuations may have overstated the market value of the properties at the relevant dates. The Secretary has recalculated the overpayment amount based on Mr Colin Davies’ valuations, and if those valuations are accepted, then Centrelink will need to repay some money to the applicant.
Our understanding is that the applicant does not challenge Centrelink’s assessment of the value of his other assets, and that is the reason why we have only focused on the value of the properties at different dates across a period.
Centrelink provided a recalculation of the overpayment amount based on the values assessed by Mr Colin Davies, being that the applicant was overpaid to the extent of $1,237.50 in respect of Newstart Allowance and $97,380.54 in respect of the Age Pension. We also understand that the applicant does not challenge Centrelink’s calculation of the overpayment based on the values assessed by Mr Davies in the event that those values were accepted.
CONSIDERATION
The Secretary’s representative indicated to us that what is required is for us to determine the value of the Braidwood properties at different dates across a five-year period. The dates are 9 October 2003, 1 July 2004, 1 July 2005, 1 July 2006, 1 July 2007, 1 July 2008 and 2 December 2008. Determining value at those dates will provide Centrelink with sufficient information to confirm or recalculate the applicant’s entitlement, if any, to the Age Pension, and the amount, if any, that Centrelink needs to repay to him.
The applicant received an inheritance in 2008, and because of the magnitude of that inheritance, we do not need to give any consideration to the value of the properties after 2 December 2008.
We now turn to Mr Colin Davies’ valuations. He is a registered valuer. He is well qualified to undertake the task that he was asked to undertake, and he did it in accordance with what we would regard as normal valuation principles. In his reports, he said that he used the International Valuation Standard definition of market value which he described as:
The estimated amount for which an asset would exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
We think that is the proper definition of market value for a valuer to use in an exercise such as this.
The methodology that he used was a methodology that he described as the comparison of sales methodology, which involves the comparison of sold properties with the subject property with adjustments made for various factors such as locality, nature of the improvements, quality of the improvements and the grounds, zoning, services and the like. We also think that that is an appropriate methodology in these circumstances.
Mr Colin Davies carried out his valuations in late 2014 and early and mid-2015, but he performed them by reference to valuation dates that correspond to the dates mentioned earlier. In his methodology he took into account the various factors just mentioned, and he also had available to him the earlier AVO valuations and additional information in relation to a market appraisal that had been undertaken by a Mr Mark Trew, which we will deal with shortly.
Mr Colin Davies provided a second report, dated May 2015, in respect of the Lascelles Street property. The conclusions as to value that Mr Colin Davies reached were set out in his reports.
We also had the opportunity of speaking to Mr Colin Davies by phone. Both parties had the opportunity of asking him questions, and the Tribunal also asked him some questions. One of the things that he confirmed for us was the range of factors that he took into account in undertaking his valuations.
We now turn to Mr Mark Trew. He is an alternative valuer. The applicant had asked Mr Trew to provide a market appraisal of the Lascelles Street property only, and not Wallace Street. Mr Trew’s appraisal of that property is lower than Colin Davies’ valuation of the property. Mr Trew arrived at a value for the Lascelles Street property as at October 2003 of $100,000. That was an appraisal based on an external inspection of the property. We regard that market appraisal as less reliable than Colin Davies’ more detailed valuation reports.
The applicant says that both of Colin Davies’ valuations are too high. In fact, he contends that at all relevant times the properties were worth less than any of the valuations or appraisals provided. The applicant complains that Mr Davies did not pay enough regard to the condition of the properties. In particular that complaint is made in relation to the Lascelles Street property. The applicant makes the same complaint about Mr Trew’s appraisal, and specifically the complaint relates to the condition of the house, particularly the rear of the house where some movement had taken place which made, among other things, the back door difficult to open and close. The applicant, however, has not given us reports from registered valuers that do what he complains these reports do not do.
In any event, we are satisfied that both valuers undertook their task properly. In particular Mr Colin Davies took into account what he should have taken into account in undertaking his valuations. Mr Colin Davies confirmed in oral evidence that when he inspected the inside of the property at Lascelles Street, its general condition was as he expected.
We understand that Mr Trew did not have an opportunity to inspect the inside of the property at Lascelles Street. Mr Trew took into account instructions provided to him by the applicant regarding the condition of the Lascelles Street property. He noted in his report that the dwelling presented in “original/dated condition”, and he had been advised that some work had been completed since 2003 including removal of the chimney, underpinning of the footings and “straightening” of the house.
We are in a position where a registered valuer, Mr Colin Davies, whose reports we accept, has provided very detailed information about the properties in question here, and in particular the property at Lascelles Street; that valuer has taken into account all the factors that we think a valuer should take into account in making a valuation; and in particular, as he confirmed in oral evidence, he took into account the location of the properties, the improvements (if any) on them and the condition of the improvements.
That is exactly what we would expect a registered valuer to do when tasked with an exercise like this.
There was an issue that the applicant raised about the values that had been assessed by the Valuer-General set out in rates notices in relation to the two Braidwood properties. Those values were much lower than the figures arrived at by Mr Colin Davies. We asked Mr Colin Davies about the Valuer-General’s assessed values and he pointed out that the definition of value for rating purposes set out in the Valuation of Land Act is different from the definition of market value that he properly applied in making his valuations of the property.
In summary, we have valuation reports made by Mr Colin Davies, a registered valuer, and we have the applicant’s complaints about those valuations, but no alternative valuations provided by the applicant to address what he says are the shortcomings in Mr Colin Davies’ reports or the shortcomings he complains of in relation to the valuation of Mr Trew’s market appraisal, being an appraisal that the applicant himself obtained. In those circumstances we could hardly do other than accept the values arrived at by Mr Colin Davies. We do accept those values.
Those values, for the Lascelles Street property, at the relevant dates are:
·9 October 2003 – – $120,000
·1 July 2004 – – $130,000
·1 July 2005 – – $160,000
·1 July 2006 – – $180,000
·1 July 2007 – – $200,000
·1 July 2008 – – $210,000
·2 December 2008 – – $210,000
The values for the Wallace Street property at the relevant dates are:
·9 October 2003 – – $45,000
·1 July 2004 – – $55,000
·1 July 2005 – – $70,000
·1 July 2006 – – $80,000
We note that the applicant sold the Lascelles Street property in December 2009 for $220,000, and the Wallace Street property in 2007 for $87,500. We reject the applicant’s contention that at relevant times the properties were worth less than the amounts set out in the relevant valuations and note that whilst the applicant complained of the valuations and appraisal being too high, he did not specify the values that he asserted should be adopted.
The applicant’s case did not include a submission that, if we were to find that he had a debt to the Commonwealth, the debt should be either written off or waived. If it had, we would have decided against the applicant for the following reasons:
·The requirements of s 1236 of the Social Security Act 1991 (write-off) are not satisfied.
·Section 1237A of the Social Security Act (debt solely attributable to administrative error by the Commonwealth) does not apply.
·Section 1237AAD of the Social Security Act (waiver in special circumstances) does not apply since:
othe applicant knowingly made a false statement by failing to declare his ownership of the properties; and
othere are no special circumstances that make it desirable to waive the debt.
DECISION
We set aside the decision under review and substitute a decision that the applicant has been overpaid to the extent of $1,237.50 in respect of Newstart Allowance and $97,380.54 in respect of the Age Pension.
I certify that the preceding 29 (twenty -nine) paragraphs are a true copy of the reasons for the decision herein of Deputy President S E Frost and Mr N Gaudion, Member .............................[sgd]...........................................
Associate
Dated 23 October 2015
Date of hearing 4 September 2015 Applicant In person Solicitors for the Respondent Dr S Thompson, Sparke Helmore
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