Davis and Secretary, Department of Family and Community Services

[2005] AATA 114

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 114

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2004/581

GENERAL ADMINISTRATIVE DIVISION		)
Re		ARLENE DAVIS

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member Peter M McDermott

Date8 February 2005  

PlaceBrisbane

Decision The Tribunal remits the matter to the respondent with the direction that the block of land at 47 Elliot Street, Clayfield was part of the applicant’s principal home until it was sold in January 2004.   

....................[Sgd].....................

PM McDermott
  Member

CATCHWORDS

REAL PROPERTY – Partition of Land – Definition of “Principal Home” - determined that both blocks were used primarily for private or domestic purposes and therefore were within the definition of a “Prinicipal Home” – decision set aside.

CONVEYANCING – Mortgages, Charges, and Encumberances – whether expenditure was a charge or encumberance over a property – neither, as expenditure was on an unsecured liability.

SOCIAL SECURITY (ASSETS) - Applicant owner of two adjacent and subdivided areas of land - house erected on one lot - adjacent property placed on market -  whether adjacent land used primarily for private or domestic purposes in association with home lot - decision set aside - whether Commonwealth Government right to recover all or part of the debt should be waived – debt waived

Social Security Act 1991 ss 11, 1118, 1121

Reid and Department of Family and Community Services [2000] AATA 59
Re Earlam and Secretary, Department of Social Security (1991) 24 ALD 606
Radanovic and Secretary, Department of Family and Community Services (2001) 61 ALD 530

REASONS FOR DECISION

8 February 2005   Senior Member Peter M McDermott

1.      Since July 2002 the applicant has been in receipt of the age pension. 

2.      The relevant property in this case is two 17 perch allotments of land at Clayfield.  Until 20 March 2003 both blocks were registered under one certificate of title.  After 20 March 2003 each block was registered under separate title references.  However, the evidence before the Tribunal was even though each block was registered under separate title references, no certificate of title was then issued in respect of each block (see pp.  69-70).

3.      The applicant gave evidence that her home is on one block at 7 Nellie Street, Clayfield and the adjacent block is at 47 Elliot Street, Clayfield.  Before March 2003 the relevant property was on the market.  After March 2003 she was prepared to sell the block at 47 Elliot Street, Clayfield.  The reason for this was that she wanted to have a residence.  The block at 47 Elliot Street, Clayfield was sold in January 2004.

4.      After the applicant sold the block at 47 Elliot Street, Clayfield she gave her brother $130,000 of which $30,000 was to repay the money her had lent her and $100,000 which she regarded as his inheritance.  At the outset I wish to state that it has not been established that this latter sum was the subject of any constructive trust.

5.      The issues in this case are:-

(A)      whether an adjacent property was part of the principal home;

(B)      whether certain expenditure is a charge or encumbrance;

(C)whether the Commonwealth’s right to recover all or part of the debt should be waived. 

(A)      Whether an Adjacent Property was Part of the Principal Home

6.      After each block was registered under separate title references Centrelink treated the block at 47 Elliot Street, Clayfield as a separate asset which was not part of her principal home.  Centrelink sent the applicant a letter on 2 December 2003 in which she was advised:

“Your block of land was an exempt asset whilst it was used primarily for private or domestic purposes with the dwelling house, even though it was on a separate title deed.  When you listed this land for sale, it ceased to be used for domestic purposes with the dwelling house, and become an assessable asset”. (see p. 97)

7.      On 2 April 2004 the Authorised Review Officer of Centerlink stated:

“from 20 March 2003.  The property became a commercial property and had a buyer become interested on that day or shortly afterwards, there would be nothing to stop a contract of sale being drawn up, for settlement at a later date subject to the rates notice being issued and paid; for this reason this property is considered an asset from 20 March 2003”  (see p. 135)

8.      Centrelink later sent the applicant a letter on 4 March 2004 in which she was advised:

“The total value of the property is an asset from 20/3/03 when subdivision completed & property [placed] on the market”: see p.  148. 

9.      An earlier internal memorandum of Centrelink dated 14 November 2003 states: “Property subdivided & put on market from 20/3/2003”: see p 144.   According to an internal Centrelink note of 18 May 2004 there is a statement that the customer has subdivided the property: see p.  57. 

10.     However, in a real estate details form that was lodged at Centrelink, Nundah on 12 November 2003 the applicant stated: “Vacant land at 47 Elliot Street, Clayfield  = Lot 11 reconfigerated from Lot 11 & 12 previously 7 Nellie Street, Clayfield.” (see p. 58)

11.     The applicant has taken issue with the Centrelink documentation that describes the relevant property as being subdivided.  In fact it is clear that in 1920 the two blocks were described as “subdivisions 11 and 12” in a certificate of title issued by the Register of Titles in October 1920 (see Exhibit D).  That certificate of title contains a plan of the two blocks.  That certificate of title shows that the parents of the applicant were registered as proprietors of the relevant property on 22 February 1946.  The certificate of title also shows that on 24 February 1983 the applicant was registered as proprietor of the relevant property.

12.     I consider that there was no basis for Centrelink to regard the property at 7 Nellie Street, Clayfield as being “a commercial property” after the block was registered under a separate title reference and listed for sale.  There was no evidence before the Tribunal that there was any change of use of the property after March 2003 until it was sold. 

13.     In these circumstances I find that the block of land at 47 Elliot Street, Clayfield was part of the applicant’s principal home:  Social Security Act 1991 (the Act), ss 11 (5), 1118 (1)(a).  I believe that the central issue in this matter is the use of the block at 47 Elliot Street, Clayfield: s 11 (6) of the Act.  I find that the block was used primarily for private or domestic purposes; this is even though it was put on the market for sale.  The respondent did not place any evidence before the Tribunal as to the use of the premises.

14.     The respondent in an additional submission made reference to Reid and Department of Family and Community Services [2000] AATA 59. However, I consider that the latter case was quite distinguishable from this case. In Reid and Department of Family and Community Services [2000] AATA 59 the applicant had purchased land at Tiaro which was rural acreage for the purpose of subdividing the land. In this case the applicant in acquiring the relevant property was acquiring property that was already subdivided.

15.     I am assisted by the decision of Purvis J (Presidential Member) in Re Earlam and Secretary, Department of Social Security (1991) 24 ALD 606 at 608 where the explanatory memorandum of predecessor legislation to s 11(6) of the Act stated that:

“The rule is of particular importance where a person owns two connecting blocks of land and one block contains the person’s home.  It is not intended that the other block will be treated as part of the curtilage of the home”.

In that case a large allotment of land on a separate title which was adjacent to the principal home was disregarded where it was used as part of the family home.

16.     I might add that I am satisfied that the applicant has made full disclosure to Centrelink of all of the circumstances of the proposed sale and the fact that each block was registered under separate title references.

(B)      Whether certain expenditure is a charge or encumbrance

17.     In view of my finding that the block at 47 Elliot Street, Clayfield is not an asset, it is not necessary for me to consider the application of s 1121 (1) of the Act.  However, I should make some observations on this matter as this was an issue before the Tribunal.

18.     It is not in doubt that the applicant expended considerable funds on the development of the block at 47 Elliot Street, Clayfield.  However, in terms of s 1121 (1) such expenditure was not a charge or encumbrance over the property.  I agree with the conclusion of the Social Security Appeals Tribunal that the case law establishes that these provisions do not generally apply to unsecured liabilities: see Radanovic and Secretary, Department of Family and Community Services (2001) 61 ALD 530.

(C)      Whether the Commonwealth’s right to recover all or part of the debt should be waived

19.     I agree with the conclusion of the Social Security Appeals Tribunal that the necessary circumstances do not warrant waiver of recovery under this provision. 

20.     The decision of the Tribunal is to remit the matter to the respondent with the direction that the block of land at 47 Elliot Street, Clayfield was part of the applicant’s principal home until it was sold in January 2004.

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Peter M McDermott

Signed:     Camille Banks

Associate

Date/s of Hearing  7 December 2004
Date of Decision  8 February 2005
The Applicant appeared in person
For the Respondent                  Ms J Dwyer, Departmental Advocate