Dillon and Repatriation Commission
[2000] AATA 120
•18 February 2000
DECISION AND REASONS FOR DECISION [2000] AATA 120
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q1999/674
VETERANS' APPEALS DIVISION )
Re ROBERT GEORGE DILLON
Applicant
And REPATRIATION COMMISSION
Respondent
DECISION
Tribunal Mr. D.W. Muller, Senior Member
Date18 February 2000
PlaceBrisbane
Decision The Tribunal affirms the decisions under review.
..............(Signed)................................
D.W. MULLER
SENIOR MEMBER
CATCHWORDS
VETERANS' AFFAIRS – Service Pension – Asset Test – Valuation of Property – Disposal of assets – bank guarantee – right to enforce debt – irrecoverable loan
REASONS FOR DECISION
18 February 2000 Mr. D.W. Muller, Senior Member
The applicant, Robert George Dillon, seeks review of three decisions, namely:
(i)A payment of $23,874 by the applicant to the National Australia Bank (NAB), to discharge a loan made by the NAB to the applicant's son, was a deprivation of the applicant's assets of $13,874 ($23,874 less $10,000), with effect from 12 October 1994.
(ii)The amount of the said deprived asset was classified as an irrecoverable loan on 3 June 1999 and deleted from the applicant's assessment of age service pension with effect from 25 March 1999.
(iii)Vacant land at Kowrowa was valued at $75,000 for the purpose of the service pension assets test, with effect from 25 March 1999.
The applicant claims that he was put into a position of having to pay out his son's loan so that he could retrieve the title deeds to his land at Kowrowa. He had acted as guarantor for his son's loan and the bank held the title deeds as security. It was never his intention to deprive himself of an asset.
The applicant is satisfied with the general thrust of the decisions set out in paragraph 1(ii) and 1 (iii) above but contends that the date of effect should have been made retrospective to an earlier date.
The applicant has been in receipt of Service Pension since 1992, except for a period from 12 October 1995 to 15 August 1996 when it was determined that his assets were in excess of the allowable maximum.
The relevant history of the matter is as follows:
(i)In 1967 the applicant came into possession of six blocks of land at Railway Street, Kowrowa. The blocks have been designated L 401, L 501, L 502, L 503, L 506 and L 507.
(ii)At some time prior to 1986, the applicant signed a guarantee with the NAB for a loan by that bank of $50,000 to his son. The bank held the title deeds to the Kowrowa land as security for the guarantee.
(iii)In the years immediately prior to 1990, the applicant and his wife lived at 21 Palmerston Drive, Innisfail.
(iv)In 1989, the applicant built a house on leasehold land (with an option for conversion to freehold by 2016) at Flying Fish Point Road, Innisfail. To complete the construction of the house, he borrowed $25,000 from the Defence Service Homes Department and obtained a bridging loan from Westpac. He moved into his new home on 11 January 1990.
(v)The applicant put his house at Palmerston Drive on the market. He sold it in October 1991 for $71,000.
(vi)In or about 1991, the applicant applied for a Service Pension. His application was rejected on the grounds that his assets exceeded the maximum allowable for a pension to be paid.
(vii)On 14 February 1992, the applicant again applied for the Service Pension. He was granted a pension at a reduced rate, due to his assets which included Suncorp rollover investments, plus the land at Kowrowa, which the applicant stated was worth a total of $116,500.
(viii)In 1993, the applicant informed the Department that his lease had increased from $840 per annum to $3,000 per annum and that the cost to convert his land to freehold would be $90,000. He claimed that his assets should be reduced by $90,000 so that he could be put on the same footing as pensioners who owned their own homes. He also submitted that his $3,000 per annum rent should be subtracted from his income and assets for the same reason. He further claimed that the guarantee of $50,000 for his son's loan was hanging over his head and should be subtracted from his assets. These claims were all rejected.
(ix)In October 1994, the applicant went ahead with his plan to convert the lease on the property at Flying Fish Point Road, to freehold. To do so he needed to sell some of the land at Kowrowa. This necessitated the removal of the guarantee at the NAB so that he could obtain the title deeds to the land prior to sale.
(x)On 11 October 1994, the applicant sold L 503 for $57,000. The NAB took the money owing to it for the guarantee, released the title deeds and the applicant received the balance. An NAB document dated 12 October 1994 records the following:
Amount received at settlement $54,951.89
Amount used to pay out son's loan $20,134.04
(Various fees) $ 240.00
Bank Cheque in favour of
Robert George Dillon $34,577.85
$54,951.89
(xi)The applicant wrote to the Department on 13 December 1994, to inform them that he had been forced to pay out the NAB because of the guarantee, to enable him to obtain the title deeds. The amount required to discharge his son's loan was $23,874.
(xii) The applicant was thereby deemed to have, in effect, given his son $23,874 and was therefore assessed as having deprived himself of an asset of $23,874 as at October 1994. He was permitted under the legislation to deprive himself of $10,000 for the year without affecting his pension. Hence he was assessed as having deprived himself of $13,874. The provisions of the Veterans' Entitlements Act 1986 provide for a transaction such as this to have an effect on the rate of pension for the five years following the transaction as well as the year in which the transaction took place.
(xiii)On 29 September 1995, the applicant was assessed as having total gross assets of about $360,000. His pension was cancelled because his assets exceeded the limit allowable for payment of pension.
(xiv)In October 1996, the applicant re-applied for service pension. He objected to the Australian Valuation Office (AVO) valuation of the land at Kowrowa at $186,000 (the land was for sale for an asking price of $200,000). He also objected to the continuation of the taking into account of the deemed gift to his son of $13,874.
(xv)On 19 February 1997 service pension was granted as from 18 October 1996. The pension was below the maximum payable because of the applicant's assets.
(xvi)On 9 March 1999, a Delegate of the Repatriation Commission assessed the remaining vacant land at Kowrowa at a value of $100,000 and held the amount of $13,874 as a deprived asset. The date of effect was 25 March 1999.
(xvii)On 3 June 1999 a Senior Delegate varied the decision and determined that the deprived asset of $13,874 was to be considered as an irrecoverable loan and removed it from the assessment of 25 March 1999. The Senior Delegate also reduced the value of the remaining land at Kowrowa to $75,000 for the purpose of the assets test.
It may well be that in 1994, the applicant had little choice but to pay out his son's debt to the NAB to retrieve his title deeds. Nevertheless, he did pay out his son's loan and thus deprived himself of $23,874. The applicant could have treated the sum as one of his assets because the money was then owed to him by his son. He chose not to take that course.
The Senior Delegate made a concession on 3 June 1999 by not only treating the sum as a loan to his son but treating it as an irrecoverable loan. This was probably a generous concession under the circumstances.
As for the valuation of assets at $75,000 as from 25 March 1999, there is no evidence before the Tribunal that the valuation was not correct. The applicant complains about the date of effect. If the applicant had been unhappy with earlier valuations of his assets he should have applied to the Administrative Appeals Tribunal for review at the time of his dissatisfaction. The relevant legislation sets time limits within which applications for review must be made. It is not possible to apply in 1999 for a review of all of the valuations back to 1994.
The decisions under review will be affirmed.
I certify that the 9 preceding paragraphs are a true copy of the reasons for the decision herein of Mr. D.W. Muller, Senior Member
Signed: .....................................................................................
R. Hayes, AssociateDate/s of Hearing 1 November 1999
Date of Decision 18 February 2000
Applicant Mr. Dillon, himself
Counsel for the Respondent Mr. Morison, departmental advocate
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