Gibson and Repatriation Commission

[2008] AATA 431

Administrative Appeals Tribunal

DECISION AND WRITTEN REASONS FOR ORAL DECISION [2008] AATA 431

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/1947

VETERANS' AFFAIRS DIVISION		)
Re		DOUGLAS GIBSON

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal   Senior Member, Mrs Josephine Kelly

Date of decision                11 April 2008  

Date of written reasons   27 May 2008

Place  Sydney

Decision   The reviewable decision is affirmed.

.......................[sgd].......................

Senior Member
  Mrs Josephine Kelly

CATCHWORDS

VETERANS’ AFFAIRS - pension loans scheme – pensioner concession card – assets test – charge or encumbrance – loan secured over principal home  not charge or encumbrance –  assets exceed limit – pension not a service pension – no entitlement to pension concession card - reviewable decision affirmed

Administrative Appeals Tribunal Act 1975, s 43

Veterans’ Entitlements Act 1986, ss 52, 52C, 52ZB, 53A

WRITTEN REASONS FOR ORAL DECISION

27 May 2008 Senior Member, Mrs Josephine Kelly     

1. At the conclusion of the hearing of this matter in Sydney, the terms of the decision were made and a summary of the reasons for that decision were stated orally. The Applicant requested the Tribunal to furnish a statement in writing of the reasons for its decision pursuant to section 43(2A) of the Administrative Appeals Tribunal Act 1975.

2.      Mr Douglas Gibson is 90 years old.  He served during World War II.   He receives a pension because he participates in the Pension Loan Scheme. He seeks the review of a decision made by a delegate of the Repatriation Commission dated 26 March 2007 affirming a decision to reduce the value of a property at Neutral Bay owned by Mr Gibson, from $590,000 to $550,000 with effect from 1 July 2005.   

3.      The original decision also stated that a person's principal home, in Mr Gibson's case, his Strathfield home, is exempt from the assets test and consequently the Pension Loans Scheme debt secured against that property cannot be deducted for the purpose of assessing the value of Mr Gibson's assets.   

4.      The third element of the decision was that concession cards are linked to service pension payability, and the payment Mr Gibson receives under the Pension Loans Scheme is not a service pension and therefore Mr Gibson is not eligible to receive the Pensioner Concession Card.

5. At the hearing, I understood Mr Gibson to take issue only with the inability to deduct the value of the loan secured over his Strathfield property from his assets. In the event that I misunderstood his position, I find that eligibility for the Pensioner Concession Card and Telephone Allowance depends on the receipt of a service pension. While Mr Gibson's assets preclude him from receiving a nominal rate of service pension, he is not entitled to the Pensioner Concession Card and Telephone Allowance. His pension paid pursuant to the Pensions Loan Scheme is not a service pension. That is the effect of ss 52ZB and 53A of the Veterans' Entitlements Act 1986 (the Act).

6. I now address the issue of deductibility of the loan secured over the Strathfield property. Section 52 of the Act provides that the value of a person's principal home is disregarded when determining the value of their assets. In this case, there is no dispute that Mr Gibson's principal home is at Strathfield.

7.      Mr Gibson's wife died in 2005.  She owned a property at Neutral Bay which is now an asset of Mr Gibson.  Over the years, the Australian Valuation Office has ascribed various values ranging from $590,000, $550,000 and most recently  $527,000.   His loan through the Pensions Loan Scheme is currently $130,000.  The security for that loan is his Strathfield home.

8.      An encumbrance over an asset which is considered for the purposes of the assets test is taken into account for the purposes of valuing that asset.  If the loan was secured over the Neutral Bay property, the value of that asset would be reduced by the amount of the loan. However, an encumbrance on the principal place of residence is not taken into account to reduce the value of his assets (s 52C(3)).

9.      Mr Gibson does not wish to use the Neutral Bay property as security because in about 2000 or 2001 he and his wife had discussed which property they would use as security for the loan.  His wife said that she did not want her property mortgaged.  The Strathfield property was therefore used as security for the loan.

10.     Mr Gibson also said that he owes his family about $20,000 for which he has kept records.

11.     As I understand the evidence, Mr Gibson was told when he first took out the loan that the security could only be placed on the Strathfield property, and he was only told about the possibility of having the security over the Neutral Bay property in correspondence he had received prior to the hearing in these proceedings.  I infer that when he first took out the loan, he owned the Strathfield property but not the Neutral Bay property, and therefore the loan had to be secured over the Strathfield property.  The recent correspondence indicated that if the security were transferred to the Neutral Bay property he would be entitled to a part pension and consequently a pensioner card. I understood Mr Gibson to say that he has been receiving a pensioner card from another department of the Repatriation Commission annually but has not used it since payments of his service pension stopped.

12.     By the end of the hearing, it was apparent that Mr Gibson could transfer the security to the Neutral Bay property so that the value of the loan could be deducted from the value of that property.  Mr Bunn, who appeared for the Repatriation Commission, advised that the cost of such a transfer would be $404, which could be added to Mr Gibson's loan. 

13.     Another possibility was that the Repatriation Commission could consider undertaking another valuation of the Neutral Bay property to see if its value had fallen.  Mr Gibson was adamant that the valuations had mostly been kerb-side or roadside valuations and not a considered valuation following an inspection of the property.  A third possibility was that the legislation might be altered by parliament, and Mr Gibson could pursue that course as well.

14.     In relation to the debts Mr Gibson said he owed his family, he also said that the family members believe that they have given him the money.  He says they will be repaid out of his estate.  It is a matter for Mr Gibson to establish if he does have debts which may be taken into account for the purpose of the assets test. 

15.     In my view the legislation is quite clear.  The loan secured over Mr Gibson's Strathfield home cannot be taken into account to determine the value of his assets.  If it were secured over the Neutral Bay property, it would be taken into account.    As I emphasised to Mr Gibson, I have no choice in this matter.

16.     I affirm the decision under review, and note that the most recent valuation of the Neutral Bay property on 2 August 2007 was $527,000, which has reduced the difference between Mr Gibson's assets and the applicable limit under the assets test of $529,500.

I certify that the 16 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member,
Mrs Josephine Kelly.

Signed: ………[sgd]…..……

Steven Mulipola, Associate

Date of hearing:  11 April 2008

Date of decision:  11 April 2008

Date of written reasons:  27 May 2008

Representative for the Applicant:             Self-represented

Representative for the Respondent:       Advocacy, Department of Veterans’ Affairs