Greenway and Repatriation Commission

[2008] AATA 815

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 815

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/0809

VETERANS’       APPEALS        DIVISION  )		)
Re		NORMA MAY GREENWAY

Applicant

And REPATRIATION COMMISSION

Respondent

DECISION

Tribunal Mr Egon Fice, Member

Date12 September 2008

PlaceMelbourne

Decision The decision under review is affirmed.

(sgd) Egon Fice

Member

VETERANS’ ENTITLEMENTS – widow – service pension – cancellation – assets exceed allowable limit – expiration of exemption for the principal home

Veterans’ Entitlements Act 1986 ss 5L, 5LA, 36N, 52(1)(a), 57, 57B, 175(2) and Schedule 6

Repatriation Commission v Smith (1987) 15 FCR 327

REASONS FOR DECISION

12 September 2008   Mr Egon Fice, Member

1. Mrs Norma May Greenway, the widow of a veteran, was receiving the service pension until she was notified by a delegate of the Repatriation Commission (the Commission) in August 2007 that her pension payments would cease because her assets exceeded the allowable limit for payment of the pension. Mrs Shirley Bucci, Mrs Greenway’s daughter who holds her power of attorney, objected to the decision made by the Commission’s delegate seeking a review of the decision under s 57 of the Veterans’ Entitlements Act 1986 (the VE Act).

2. Following the review by a service pension review officer, the Commission decided under s 57B of the VE Act that the original decision was correct and should be affirmed. Mrs Greenway then lodged an application for review with the Tribunal pursuant to s 175(2) of the VE Act.

3.      The only issue for me to determine is whether Mrs Greenway’s service pension should have been cancelled in August 2007 because she exceeded the allowable asset limit for the receipt of that pension.

Relevant Background

4.      Prior to Mr Greenway’s death and Mrs Greenway’s entry into an aged care facility, they both lived in the rear dwelling situated on the property at 69 Middleborough Road.  On either 24 December 2004 or 1 February 2005, depending on which documents are accurate, Mrs Greenway moved to an aged care facility known as Rosden Private Nursing Home where she received high level care.  Mr Greenway continued to live at 69 Middleborough Road until his death on 18 June 2005. 

5.      Mrs Bucci notified the Commission on 7 January 2008 that the dwelling at the front of 69 Middleborough Road was being rented for $866 per month commencing 1 December 2007.  The dwelling at the rear of the property remained vacant.  Mrs Greenway is not liable to pay an accommodation bond or to make an accommodation payment in respect of her accommodation at the Rosden Private Nursing Home. 

6.      The Commission decided that after two years following the death of Mr Greenway on 18 June 2005, it was necessary to determine whether Mrs Greenway remained eligible to claim the exemption from the assets test in respect of her principal place of residence.  The Commission decided she was not eligible and therefore, on 29 August 2007, a delegate of the Commission advised Mrs Greenway that her pension payments would cease because the value of her assets exceeded the maximum permissible for payment of the pension.  The Commission had the property at 69 Middleborough Road valued by the Australian Valuation Office which determined that its value, including both dwellings, was $650,000.  The Commission assessed Mrs Greenway’s total assets as at 11 September 2007 to be $536,411, and $701,411 with effect from 20 November 2007.  The assets threshold at which the service pension ceased to be payable was $343,750 on 11 September 2007, and $529,250 on 20 November 2007. 

The Legislative Scheme

7.      The standard of proof which applies when determining the assessment or reassessment of the rate of the pension granted under Part II or Part IV is the reasonable satisfaction of the Commission.  In Repatriation Commission v Smith (1987) 15 FCR 327, the Full Court of the Federal Court said at page 335:

Even if the Tribunal is not bound by the traditional evidentiary principles, s 120(4) [of the VE Act] constitutes a clear direction to the Tribunal that it must be reasonably satisfied before it makes any decision. In my opinion, this could only have been intended to introduce the standard of proof required in civil litigation.

This means that I am required to decide the question of assets value on the balance of probabilities.

8. Section 36N of the VE Act provides that the veteran’s aged service pension rate is worked out in accordance with the Rate Calculator. The Rate Calculator is set out in Schedule 6 of the VE Act. The rate of income support for a person who is not permanently blind and is a war widow is worked out in accordance with Method Statement 3. The first step in that method statement requires a person’s rate of service pension to be worked out in accordance with Method Statement 1 which establishes the provisional rate. Method Statement 1 requires the application of the assets test using Module F to work out the reduction for assets.

9. Section 5L(1) of the VE Act defines the word asset to mean property or money (including property or money outside Australia).  Although property is not defined in the Act, the term property owner is. Section 5L(4) provides that a person who is not a member of a couple is a property owner if the person has a right or interest in the person’s principal home and the person’s right or interest in that home gives the person reasonable security of tenure in the home.

10. Some assets are expressly excluded when calculating the value of a person’s assets. Section 52(1)(a) provides that if a person is not a member of a couple, when calculating the value of that person’s assets for the purposes of the VE Act, the person’s right or interest in their principal home must be disregarded.

11. The principal home definition for the purposes of the asset test is set out in s 5LA of the VE Act. Of particular importance to the decision in this case are the extended definitions of a person’s principal home where a person ceases to reside there. Sections 5LA(8) and (9) provide:

(8)     A residence of a person is taken to be the person’s principal home during:

(a)if the Commission is satisfied that the residence was previously the person’s principal home but that the person left it for the purpose of going into a care situation or becoming an aged care resident—any period during which:

(i)     the person is accruing a liability to pay an accommodation charge (or would be accruing such a liability, assuming that no sanctions under Part 4.4 of the Aged Care Act 1997 were currently being imposed on the provider of the care concerned); and

(ii)     the person, or the person’s partner, is earning, deriving or receiving rent for the residence from another person; and

(b)if the Commission is satisfied that the residence was previously the person’s principal home but that the person left it for the purpose of going into a care situation or becoming an aged care resident—any period during which:

(i)     the person is liable to pay all or some of an accommodation bond by periodic payments (or would be liable to do so, assuming that no sanctions under Part 4.4 of the Aged Care Act 1997 were currently being imposed on the provider of the care concerned); and

(ii)     the person, or the person’s partner, is earning, deriving or receiving rent for the residence from another person; and

(c)any period during which the residence is, because of paragraph (a) or (b), the principal home of the person’s partner.

(9)A residence of a person is to be taken to continue to be the person’s principal home during:

(a)any period (not exceeding 12 months or any longer period determined under subsection (9A)) during which the person is temporarily absent from the residence; and

(b)if the person is in a care situation or is an aged care resident—the period of 2 years beginning when the person started to be in a care situation or an aged care resident; and

(c)any period during which:

(i)     the person is in a care situation or is an aged care resident; and

(ii)     the residence is, or because of paragraph (a) or (b) continues to be, the principal home of the person’s partner or non-illness separated spouse; and

(d)if:

(i)     the person is in a care situation or is an aged care resident; and

(ii)     while paragraph (c) applies, the person’s partner or non-illness separated spouse dies while in a care situation or while an aged care resident; and

(iii)     the person’s partner or non-illness separated spouse had been in a care situation or an aged care resident for less than 2 years;

the period of 2 years beginning at the time the person’s partner or non-illness separated spouse started to be in a care situation or an aged care resident; and

(e)where:

(i)     the person is in a care situation or is an aged care resident; and

(ii)     while paragraph (c) applies, the person’s partner or non-illness separated spouse dies (but not while in a care situation or while an aged care resident);

the period of 2 years from that death; and

(f)any period of up to 2 years while the person is absent from the residence and is personally providing community-based care for another person.

Extensions Of Time For Principal Home Exemption

12. The extension of the exemption period for the principal home was applied by the Commission under s 5LA(9) of the VE Act. The Commission continued to grant an exemption for Mrs Greenway’s principal home, the property at 69 Middleborough Road, while Mr Greenway was still alive, in accordance with s 5LA(9)(c). However, upon Mr Greenway’s death, the Commission applied s 5LA(9)(e)(i) and (ii) which provides that the exemption continues only for a period of two years after the death of the non illness separated spouse. At the expiry of a period of two years from the death of the partner, the person who is in aged care residence ceases to be eligible for the principal home exemption when determining the maximum value of that person’s assets.

13. Despite what is set out in s 5LA(9) of the VE Act, Mrs Bucci contended that had she known of the provisions in s 5LA(8) of the VE Act, she would have ensured that one of the dwellings at the principal residence was rented out, resulting in the exemption continuing despite the death of Mr Greenway. Her main complaint, as I understood it, was that she was not made aware of the extended exemption provisions set out in s 5LA(8).

14. The Commission contended that Mrs Bucci was informed of the extended exemption provisions in s 5LA(8) in a letter sent to Mrs Greenway on 11 September 2005. Included with that letter was a booklet setting out details of veterans’ pensions including the extensions available for principal residence exemption. The second point made by the Commission was that in any event, Mrs Greenway was not paying an accommodation charge or an accommodation bond. That is also a prerequisite to satisfy the exemption provisions set out in s 5LA(8)(b). Therefore, she would not, in any event, have been eligible for the extended exemption period. The third possibility canvassed by the Commission was that even if an exemption was available, it would only apply to the rear dwelling on the property at 69 Middleborough Road because this was Mrs Greenway’s former principal home. The valuation ascribed by the Australian Valuation Office to the front dwelling was $300,000 and that would remain an asset for service pension purposes. I must say I have some difficulty with this view given that both dwellings are on a single title. There are not two properties involved here but rather one, comprising two dwellings. However, there is no need for me to further explore this point because, in my view, the Commission was clearly correct in its application of s 5LA(9) of the VE Act. Mrs Greenway was not required to pay an accommodation charge or an accommodation bond and therefore she could not, even if one of the dwellings had been rented to a third party, have satisfied the exemption provisions set out in s 5LA(8).

Conclusion

15.     It is clear from the facts of this case, which are not in dispute, that the time for exemption of Mrs Greenway’s principal home from the assets test could not be extended beyond two years after her husband’s death.  For that reason, the decision made by the service pension review officer on 17 December 2007 was clearly correct and must be affirmed. 

I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision herein of

Mr Egon Fice, Member

(sgd) Mara Putnis
  Clerk             

Date of Hearing  15 July 2008

Date of Decision  12 September 2008

Representative for the Applicant          Mr C Bucci

Solicitor for the Respondent                 Mr R Douglass, Department of Veterans’    Affairs