Haldas and Secretary, Department of Family and Community Services
[2004] AATA 910
•30 August 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 910
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V2004/481
GENERAL ADMINISTRATIVE DIVISION ) Re Spiros Haldas Applicant
And
Secretary, Department of Family and Community Services
Respondent
DECISION
Tribunal Senior Member Joan Dwyer Date30 August 2004
PlaceMelbourne
Decision 1. The Tribunal affirms the decision to cancel Mr Haldas’ carer payment, because of the application of the assets test.
2. The Tribunal sets aside the decision to reject Mr Haldas’ request to have the hardship provisions in s 1129 of the Social Security Act 1991 (“the Act”) applied for his benefit. In substitution, the Tribunal determines that s 1129 of the Act applies to Mr Haldas.
[sgd] Joan Dwyer
Senior Member
CATCHWORDS
SOCIAL SECURITY – application for review of decision to cancel carer payment after application of asset test – applicant owns property at Phillip Island – respondent provided only valuation by qualified valuer – property correctly valued at $1 million – whether property should be disregarded under s 1118 of the Social Security Act 1991 – finding that property was not an investment in a superannuation fund – finding that applicant’s assets were above allowable limits – decision under review affirmed.
Application for review of decision not to grant carer payment based on hardship provisions – whether property an “unrealisable asset” for the purposes of s 1129 of the Social Security Act 1991 – applicant able to sell the property – whether applicant could not reasonably be expected to sell or realise the property – relevance of whole of applicant’s circumstances including personal considerations – evidence of applicant’s strong emotional attachment to the property – applicant has held property for 16 years – plan to develop property by building 6 home units – plan to live in one unit and sell 5 to provide for retirement – uncertain duration of payment of carer payment – evidence that applicant cares for 93 year old mother as she is not suitable for nursing home care – relevance of public interest considerations – public interest in mother’s welfare – in preserving superannuation arrangements – in lower cost of carer payment relative to funding of public nursing care – in keeping mother out of nursing home because of shortage of nursing home beds – finding that applicant could not reasonably be expected to sell the property – decision under review set aside.
Social Security Act 1947
Social Security Act 1991, ss 11, 1064, 1129, 1130.Social Security (Administration) Act 1999
Farrow and SDSS (1986) 5 AAR 1
Green v Daniels (1977) 13 ALR 1
Repatriation Commission v Hall (1988) 15 ALD 84SDSS v Copping (1987) 12 ALD 634
REASONS FOR DECISION
30 August 2004
Senior Member Joan Dwyer 1. This is an application under s 179 of the Social Security (Administration) Act 1999 (“the Administration Act”) for review of two decisions made by Centrelink and affirmed by the Social Security Appeals Tribunal (“the SSAT”) on 18 March 2004. The issue is whether Mr Haldas is qualified for and entitled to payment of carer payment under ss 198, 1129 and 1130 of the Social Security Act 1991 (“the Act”). Mr Haldas provides constant care for his mother in a private residence. There is no dispute about the fact that Mrs Haldas is a disabled adult in need of constant care, nor that Mr Haldas provides constant care for her in their home. The issues arise because of the value of his assets. At the hearing Mr Haldas accepted that his assets disqualify him under the assets test in s 1064 of the Act, but he sought to take advantage of the hardship rules in s 1129 of the Act. He asked the Tribunal to find that a block of land he owns at Cowes on Phillip Island is an “unrealisable asset” under s 11(13) of the Act in that he could not reasonably be expected to sell or realise that asset.
2. Mr Haldas appeared and gave evidence at the hearing. Ms Paul, an advocate with the Centrelink Service Recovery Team, appeared for the Secretary. The Tribunal had before it the documents (“the T documents”) filed pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”), and the material taken into evidence as exhibits during the hearing. Mr Haldas was given leave to file further material after the hearing. He lodged the additional material with a letter dated 9 August 2004 containing his submissions in relation to the material. Some of the additional material became relevant because Ms Paul in cross-examination raised questions as to whether it was necessary or appropriate for Mr Haldas to provide constant care for his mother in their home. Other material was provided by him to support statements he had made in his evidence and submissions. The additional material provided by Mr Haldas was copied by the Tribunal and sent to Ms Paul, and taken into evidence as applicant’s exhibits as follows:
A3 Report of Dr M Bramante dated 12 July 2004
A4 Report of Dr D Mouratides dated 30 July 2004
A5 Newspaper advertisement, Herald Sun, Saturday 17 July 2004.
A6Extract from Centrelink News for Seniors, Winter 2004 Issue, showing an increase in average annual payment for each nursing home resident, to $35,380 by 2007-08, and investment in building better aged care homes.
A7Extract from guide to self-managed superannuation funds.
A8Extracts from Hospital files of Northern Hospital and Broadmeadows Health Service.
3. An issue raised by Mr Haldas during the hearing was the cost to the Commonwealth, on the one hand, of providing a bed in a nursing home for his mother, and on the other hand of paying him carer payment under the Act. The Tribunal asked Ms Paul if she could provide a figure as to the cost of provision of a place in a nursing home. She advised that she had difficulty obtaining this information. The Tribunal therefore, using its power under s 33(1)(c) of the AAT Act, obtained a copy of a report of the Victorian Auditor-General’s Office, entitled Aged Care, Special Report 25, as at 1999. The parties were given the opportunity to make submissions in relation to that report under s 39 of the AAT Act. Mr Haldas made a submission. No submission was received on behalf of the Secretary. The report was taken into evidence as a Tribunal exhibit (T1).
BACKGROUND FACTS
4. Mr Haldas provides full-time care for his 93 year-old mother, Mrs Aura Haldas, in their home. Mrs Haldas has been assessed by Aged Care Assessment Services as requiring “high level” care for her conditions of cardiac failure, hypothyroidism, osteoarthritis, osteoporosis with fractures, dementia and, at times, paranoid psychosis (A3, A4). She is unable to bathe herself, groom herself, dress herself, or go to the toilet unaided, and there is no dispute that she requires constant care and supervision.
5. Mr Haldas has provided constant care for his mother full-time since he sold his shop, so that he was free to do so, in July 2001. Mrs Haldas was discharged from hospital into his sister’s care on a temporary basis to give him time to sell the shop. That was not successful and she returned to live with Mr Haldas after one week (A8). Mr Haldas received carer payment from 1 July 2001 until it was cancelled on 1 January 2002, when his assets were assessed as being above the asset limit for carer payment, due to amendments to the relevant legislation which changed the way that private companies and trusts were treated under the income and assets test provisions of the Act.
6. Mr Haldas was again granted carer payment from 29 May 2002. The payment was calculated on the basis that the only remaining asset taken into account for the assets test was a property on the Esplanade at Cowes, valued at $220,000. Mr Haldas owns one third of that property and Haldas Pty Ltd as a trustee of the Haldas & Fotinatos Family Trust (“the Trust”) owns the other two thirds (T23, p85-88). Mr Haldas has full control of the trust.
7. The first decision under review cancelled Mr Haldas’ carer payment due to the value of his assets. It was made on 3 September 2003 and affirmed by an authorised review officer (“ARO”) on 1 December 2003. That decision followed an income and assets review as part of which Centrelink obtained an on-line valuation of $1 million for the property at Cowes from the Australian Valuation Office (“the AVO”) (T14, pp42-43). As a result of that valuation Mr Haldas’ assets were found to be over the allowable assets test limit, and his carer payment was cancelled (T18, p61). The AVO on-line valuation was confirmed in a full valuation report (T23, pp80-84).
8. On 18 December 2003, Mr Haldas lodged a claim for consideration under the assets test hardship provisions in ss 1129 and 1130 of the Act. The claim was rejected on 31 December 2003 on the basis that the property at Cowes was not “an unrealisable asset“ under s 11(12) or s 11(13) of the Act (T32 & 33, pp120-137). The decision to reject Mr Haldas’ claim under the hardship provisions was affirmed by an ARO on 22 January 2003 (T38, pp158-161).
CANCELLATION OF CARER PAYMENT DUE TO APPLICATION OF THE ASSETS TEST
9. The first issue for determination is whether the value of Mr Haldas’ assets exceeds the allowable limit, so that he has no entitlement to payment of carer payment under the Pension Rate Calculator in s 1064 of the Act. Section 23(1) of the Act provides that the term “social security pension” includes a carer payment.
10. Under s 1064-A1, the rate of a person’s carer payment is calculated by applying the “income test” and the “assets test” to the person’s maximum payment rate. The lower of the two rates becomes the person’s provisional annual payment rate.
11. The assets test in s 1064-G3 and 4 of the Act takes into account the “assets” held by a person, with the exception of any assets that are to be disregarded under s 1118(1) of the Act. “Asset” is defined in s 11 of the Act as follows:
asset means property (including property outside Australia).
12. Section 1118 of the Act sets out the assets which are to be disregarded in applying the assets test. It includes the following relevant exemption:
1118(1) In calculating the value of a person's assets for the purposes of this Act…, disregard the following:
…
(f) the value of the person's investment in:
(i) a superannuation fund; or
(ii)an approved deposit fund; or
(iii)a deferred annuity; or
(iv)an ATO small superannuation account;
until the person:
(v)reaches pension age; or
(vi)starts to receive a pension or annuity out of the fund;
…
13. The respondent submitted that Mr Haldas’ assets have been above allowable limits for all periods since 1 July 2003. The Respondent’s Statement of Facts and Contentions at paragraph 19 set out the cut-off limits as at various relevant dates as follows:
$298,250 for the period 1 July to 19 September 2003
$302,500 for the period 20 September to 31 December 2003
$302,500 for the period 1 January 2004 to 19 March 2004$306,250 for the period 20 March 2004 to 30 June 2004
14. Mr Haldas purchased the property at Cowes in 1988, i.e. 16 years ago, for $130,000. It is vacant land, but Mr Haldas has obtained a planning permit to build six units on it. His intention has always been to build six units, and live in one in his retirement. He intends to sell some units off the plan, and borrow against the property, to finance the building of the units.
15. Mr Haldas did not agree with the AVO valuation of his property at Cowes of $1 million. The AVO took into account the sale on 21 December 2001 of the adjacent property at 20 The Esplanade, Cowes, for $874,000. That property has now been developed. Five townhouses have been built on the site. Mr Haldas’ property is smaller, but he has obtained a permit to build six smaller units on the site. The AVO noted that both properties have unsurpassed sea views and are close to the shops, and that land values have gone up since December 2001 (T23, pp81-4).
16. Mr Haldas pointed out that the neighbouring property was larger than his. He added that the townhouses at 20 The Esplanade are more elaborate than the units he plans to build. He claimed that there were exceptional circumstances concerning the sale of that property, in that the vendor was offered a price he could not refuse (T24, pp91-93). Mr Haldas referred to the council valuations for his property of $220,000 for 2001-2002, and $284,000 for 2003-2004 (T24, p91), but he acknowledged that they were too low. He said at the SSAT hearing that he considered the market value of his property at Cowes to be approximately $600,000. However, he did not provide any valuation of the property, and he did say that he would not sell his block for $1 million.
17. The only valuation before me by a qualified valuer is that of the AVO. I accept that valuation and find that the property is correctly valued at $1 million. If the property is to be treated as an asset for the application of the assets test, then Mr Haldas is not entitled to receive any payment of carer payment under s 1064 of the Act.
18. Mr Haldas submitted that the property at Cowes was his superannuation, and should be treated as an exempt asset under the Act. He said that he bought it in 1988 to be his superannuation, so that he would be able to provide for himself in his old age “without becoming a burden to the government”. Mr Haldas said that he did not know about self-managed superannuation funds at that time. He had now been told that he could not transfer the property to an “official superannuation fund”, because transfers from related parties are not allowed and further, such a transfer would attract capital gains tax and legal fees of over $100,000 which he cannot afford. He produced a publication from the Australian Tax Office on self managed superannuation funds (A7) explaining that, with some irrelevant exceptions, trustees of such funds are prohibited from aquiring assets from a related party of the fund. Mr Haldas submitted that it would be unjust for the arrangements he has made for his superannuation not to be recognised.
19. The property at Cowes is not an investment in a “superannuation fund” under s 1118(1)(f) of the Act. I find that the property at Cowes is not an asset to be disregarded under s 1118 of the Act. I find that at all relevant times, the value of Mr Haldas’ assets was above the allowable limits in s 1064-G3 and 4 of the Act, and that carer payment has not been payable to him because of the application of the assets test. The decision of the SSAT which affirmed the decision to cancel Mr Haldas’ payment of carer payment because of the application of the assets test must be affirmed.
ENTITLEMENT TO CARER PAYMENT UNDER S 1129 OF THE ACT
20. Mr Haldas completed a “Claim for consideration under hardship”, which was received by Centrelink on 18 December 2003 (T30, pp117-118). Sections 1129 and 1130 of the Act provide for situations of financial hardship due to the application of the assets test in relation to social security pensions, as follows:
1129(1) Access to financial hardship rules—pensions
If:
(a) either:(i) a social security pension is not payable to a person because of the application of an assets test; or
(ii) a person's social security pension rate is determined by the application of an assets test; and
(b) either:
(i) sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A, 1126, 1126AA, 1126AB, 1126AC and 1126AD (disposal of assets) do not apply to the person; or
(ii) the Secretary determines that the application of those sections to the person should, for the purposes of this section, be disregarded; and
(c) the person, or the person's partner, has an unrealisable asset; and
(d) the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and
(e) the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;
the Secretary must determine that this section applies to the person.…
1130 Application of financial hardship rules—pensions
Value of unrealisable asset to be disregarded
1130(1) If section 1129 applies to a person, the value of:
(a) any unrealisable asset of the person;
…
is to be disregarded in working out the person's social security pension rate.…
21. Subsections 11(12) and 11(13) define “unrealisable asset” as follows:
Unrealisable asset
11(12) An asset of a person is an unrealisable asset if:
(a) the person cannot sell or realise the asset; and
(b) the person cannot use the asset as a security for borrowing.
11(13) For the purposes of the application of this Act to a social security pension (other than a pension PP (single)), an asset of a person is also an unrealisable asset if:
(a) the person could not reasonably be expected to sell or realise the asset; and
(b) the person could not reasonably be expected to use the asset as a security for borrowing.
22. In respect of his claim to have the financial hardship rules applied to him, Mr Haldas forwarded a letter to Centrelink asking that reference be made to his other letters on file. He summarised the points in those letters. Those points were:
(i)That he had to keep on looking after his mother at home, because of her disabilities and because she developed mental and emotional problems when she was away from him in hospital, and would also do so if she was away from him in a nursing home;
(ii)That he had bought and was holding his block of land to provide for his retirement;
(iii)That he could not borrow against it, as he had no income to make repayments; and
(iv)That the land would be a disregarded asset if it was in a superannuation fund, but he could not transfer it into a self-managed superannuation fund as capital gains tax, and legal and accounting fees on such a transfer would be more than $100,000.
23. At the hearing, Mr Haldas also said that such a transfer is not allowed and, as set out in paragraph 18 of these reasons, he produced documentation (A7) confirming his evidence.
24. The primary decision (T32, p120-130) rejected Mr Haldas’ claim for consideration under the hardship provisions on the ground that he was able to sell the property and that he did not fall within the Guidelines as to when a person “could not reasonably be expected to sell a property” (“the Guidelines”). The Guidelines recognise that a person could not reasonably be expected to sell a property if they have lived there for more than twenty years and the property cannot be subdivided, or if the property is a working farm and the applicant has been a farmer for twenty years, or if the farm has been worked by a family member for ten years or more. The Guidelines also recognise that an asset “could not reasonably be expected to be sold” if the asset is a farm or other business, and there is a temporary but substantial reduction in income from the business due to factors outside the applicant’s control. Other situations are referred to in the Guidelines, but they are not directly relevant to this matter. The full Guidelines are set out at T33, p135-136.
25. Mr Haldas had an interview with a Centrelink Social Worker on 14 November 2003. Her note of that interview includes the following paragraphs (T36, p147):
Mr Haldas explained that he was required to look after his elderly 93 year old mother who does not have any other options than to stay with him. He stated that he had been working and would still have continued had it not been for his mother’s deteriorating condition. According to the medical information provided by Mr Haldas, his mother suffers from early onset of dementia and while it may be an alternative to place his mother in intensive nursing care, this would not be desirable. It appears that his mother is more settled emotionally and copes better functionally in a familiar environment.
Mr Haldas felt aggrieved about the recent reduction of Carer Payments on the basis of his assets, which he accrued as part of his Superannuation portfolio. Mr Haldas perceived his actions as a positive effort in taking responsibility for his self retirement. He feels that his plans have been now jeopardised. He has been advised that his only option in securing an income may be to sell or renegotiate his assets. His aim is however that of preserving his assets for his own self funded retirement in the future, and that this action per se is a cost saving measure for the government. In addition, as he rightly points out, by assuming the caring responsibility for his mother, he is saving public moneys by providing to [sic] the physical as well as welfare needs of his mother.
Mr Haldas considers his caring responsibility as an interim measure while his mother needs him. Ultimately he aims to return back to employment until he is ready for retirement at a later stage.
26. In applying ss 1129 and 1130 in this matter, s 1129(1)(a)(i) is satisfied as carer payment is not payable to Mr Haldas, because of the application of the assets test. Section 1129(1)(b)(i) is also satisfied because none of the disposal of income or disposal of asset provisions apply to Mr Haldas.
27. The next question is therefore whether Mr Haldas has an unrealisable asset. The term “unrealisable asset” is defined in ss 11(12) and 11(13) of the Act. I find that Mr Haldas’ land at Cowes is not an unrealisable asset under s 11(12). There was no evidence that Mr Haldas “cannot sell or realise” the property at Cowes. He has not offered the property for sale at any time, but he did not suggest that a buyer could not be found at a reasonable price if he were prepared to sell. Mr Haldas frankly said at the hearing that he would never sell it. Thus I find that the property at Cowes is not an “unrealisable asset” under s 11(12) of the Act.
28. However, Mr Haldas submitted that he “could not reasonably be expected to sell or realise” the property because of his great attachment to the land and because he bought it to provide for his retirement, so that he will not be dependent on social security payments in his old age. He was 61 years old at the time of the hearing. He said he had always worked and would still be working running his own shop, had he not had to sell the business in order to look after his mother, who required constant care from him. He said that if circumstances changed so that his mother was no longer in need of care he expected that he would return to the workforce.
29. Mr Haldas explained his great emotional attachment to the property at Cowes. He said that he came to Australia from the Greek island of Stefalonia. He said that he first went to Phillip Island on holiday. While he was there he saw his block for sale. He fell in love with it because it was on the seafront and it reminded him of his home in Greece. He paid the asking price of $130,000.00 which was a lot of money in 1988. He said, “I wanted the block and paid the price”. Mr Haldas’ attachment to the property at Cowes has been longstanding. He said that he “went through a lot to hold on to it”. He explained that he had been obliged to pay high interest rates on the money he had borrowed to make the purchase, but he had done so because he has always planned to live there in his old age. Mr Haldas described his strong emotional attachment to the property at Cowes. He said:
I live for it – it reminds me of my home. It is more than dollars and cents to me. I believe in my responsibility to my mother and I believe in the land. I fell in love with it on a holiday.
30. I accept Mr Haldas’ evidence as to the very stong emotional bond he feels for the particular block of land he owns at Cowes. I find that it is a very important part of his life plan that he live there and finance his retirement by selling five of the six units he plans to build. Mrs Haldas is 93 and in poor health. I find that Mr Haldas has a strong sense of family responsibility. He explained that in his culture he, as her son, is primarily responsible for her welfare. His sisters now have responsibility to their husbands’ families. He said he will care for his mother as long as she can benefit from that care, and as long as he is financially able to do so. Of course no one can know how long that will be. Her health has improved since Mr Haldas gave up his work to care for her full-time, but, at 93, the length of time she will be able to stay at home is uncertain.
31. Mr Haldas gave evidence that his mother is not suitable for nursing home care. That is confirmed by the hospital records he provided after the hearing. Mrs Haldas’ hospital files from Northern Hospital and Broadmeadows Health Service (A8) contain frequent references to Mrs Haldas becoming very distressed and calling for “Spiros” [Mr Haldas], especially at night. The records show that she was screaming at the top of her voice, keeping everyone in the ward awake, on 23 May 2001. There are many other records of Mrs Haldas calling out for her son and insisting that he be telephoned, and then becoming calm when he came to the hospital. In a report dated 30 July 2004, Dr Mouratides’, Mrs Haldas’ psychiatrist, said, “As has been shown in the past, changes in this lady’s mileau precipitate psychiatric episodes. It would be extremely unfair to force this lady to enter a nursing home” (A4,p1). The material before the Tribunal confirms Mr Haldas’ evidence at the hearing, that when his mother was discharged to his sister’s home at Apollo Bay, while he was finalising the sale of his shop, she was homesick and screaming to such an extent that he agreed to take her into the shop with him during the day, so that she could come back from Apollo Bay.
32. The Tribunal in Farrow and SDSS (1986) 5 AAR 1, set out a number of considerations it considered relevant to its consideration of the relevant hardship provisions in the Social Security Act 1947 (“the 1947 Act”). It considered whether it would be reasonable to expect Mr Farrow, who was a farmer, to sell all or part of his farming property in order to qualify for an invalid pension. Deputy President Jennings said, at 4:
In order to answer these questions it is first necessary to consider the whole of the applicant’s circumstances, and then in applying the discretion to have regard also to the objects of the legislature when it enacted the assets test in the framework of a social welfare Act.
Without purporting to state all relevant matters exhaustively, it will be necessary to take account of the following factors:
- the applicant’s age, health and family circumstances, including those which entitle him to welfare benefits;
- the circumstances in which he came to own his present holdings, his employment history and his present capacity for work;
- whether he or his spouse have any actual or potential sources of income apart from present sources;
- the actual size of each holding, its condition and income producing capacity now and in the future;
- whether the applicant might reasonably anticipate future financial advantage by way of income or capital appreciation; and
- whether he is sufficiently established to have reasonable prospects of continuing his present lifestyle by retaining ownership. …
33. Deputy President Jennings continued, at 7:
Mr Thelander for the respondent argued that the applicant’s case evinced no more than “a desire to continue a particular lifestyle and to keep his assets intact”. Therefore it was said he could not have the benefit of s 6AD(1)(c).
Whilst it is not necessary for an applicant to show that his case falls within or beyond any particular description in the guidelines, it is useful to consider what is intended by the phrase “continue a particular lifestyle”.
If it is intended to describe a comparatively indulgent lifestyle whereby a wealthy landowner is able to use land to engage in hobbies, sporting activities or the like which produce no income, it can be easily understood as an exemple of a situation which social welfare payments are not expected to support.
If however it is sought to apply that description to the commendable efforts of an aged or invalid person to turn a small holding to its best economic advantage for the benefit of those whom he has a responsibility to support, I would not regard such a situation as being beyond a favourable exercise of the discretion.
The word “lifestyle” itself is capable of a host of meanings and is therefore ambiguous for present purposes and tends to be misleading.
I do not accept that the applicant should be denied the opportunity of continuing his present plans. They are reasonable aspirations having regard to the handicap he suffers and the relatively modest assets he has acquired. They represent at least 20 years hard effort. He has a young family for whom he has obvious responsibilities. He should be permitted to discharge them in accordance with his ability.
If he succeeds, the extent to which he will need to rely on the State will progressively diminish. If he is denied this opportunity and forced to realise his assets he will eventually, but almost certainly, become a greater burden on the State.
34. In SDSS v Copping (1987) 12 ALD 634, the Full Court of the Federal Court considered the relevance of personal and economic factors in deciding whether Mr and Mrs Copping could reasonably be expected to sell or realise their farm property, or to use the property as security to borrow. The relevant hardship provisions were again those in the 1947 Act. Jenkinson J, with whom Forster and Burchett JJ agreed, said at 638 - 639:
I think that the word “reasonably”, in the context which s 6 AD (3) supplies, directs the Secretary’s attention to, inter alia, all the circumstances, including the personal relations of those concerned in the property, which in his judgment might reasonably be taken into account by “the person” or “the person’s spouse”, as the case may be, in deciding how the property was to be exploited to produce income. And he is required, in my opinion, to have regard to the annual rate of income that could reasonably be expected to be derived from, or produced with the use of, that property in all the circumstances, including those circumstances to which I have just referred. The construction suggested does not direct enquiry merely as to the annual rate of income likely in fact to be derived from, or produced with the use of, the property by “the person” or “the person’s spouse”, as the case may be, but rather enquiry as to what annual rate of income the Secretary, or the Administrative Appeals Tribunal on review, considers would be likely to be derived from, or produced with the use of, the property by that person if that person made decisions concerning the exploitation of the property which in all the circumstances, including personal circumstances, the Secretary, or the Tribunal on review, considered reasonable.
35. As was pointed out by the SSAT, in considering Mr Haldas’ appeal, the reasons of the Full Court in Copping were expressly approved by a differently constituted Full Court in Repatriation Commission v Hall (1988) 15 ALD 84. The Full Court in Hall at 85, emphasised the relevance of both personal and social factors on the one hand, and financial and economic factors on the other. The Full Court said that all those factors were relevant and that the Tribunal was “called upon to apply a very broad test”. It explained that the test is objective, but that it takes account of personal circumstances. Their Honours said, at 85-86:
As was said by Jenkinson J in Copping’s case, the decision as to what is or what is not reasonable is one for the Secretary, Department of Social Security, or by the Tribunal on review, though it is to be made after taking all relevant circumstances, including personal circumstances, into account. Among the relevant factors to be considered are the purpose or object of the assets test provisions and the aim of the legislation to ensure that pensions are not paid to those who can afford to maintain themselves. The test of reasonableness takes into account the public or community interest as well as the interests of the claimant for a pension and of other persons with whom the claimant is associated. In Re Williamson [and Repatriation Commission (1986) 10 ALD 19] a Tribunal specifically referred to elements of the public interest, as indeed did a Tribunal in Re Fuller [and Repatriation Commission (1987) 12 ALD 197].
36. The Guidelines are a helpful summary of situations where it is readily accepted that it would be unreasonable to expect a person to sell a property to qualify for a social welfare payment, but they are not an exhaustive list of such situations. Guidelines cannot fetter the statutory criteria (Green v Daniels (1977) 13 ALR 1 at 9). In this matter, the relevant statutory criteria are those set out in s 11(13) of the Act. The purpose or object of the carer provisions is to encourage the caring of people at home, rather than in institutions, and to facilitate that by providing an income for those who are unable to earn an income because they care for another person. That purpose needs to be taken into account as well as the purpose or object of the assets test provisions.
37. In deciding whether Mr Haldas “could reasonably be expected to sell or realise” the land at Cowes, as Deputy President Jennings explained in Re Farrow, the whole of an applicant’s circumstances should be considered. The Full Court emphasised in Copping and Hall that personal and social factors as well as financial and economic factors are relevant and must be taken into account, together with the public or community interest.
38. In this matter, considering the personal factors specified in Re Farrow, the personal circumstances of Mr Haldas are that he is now 61 years old, single after the break-up of his marriage long ago, and would be working in his own business were it not for his sale of that business in order to look after his mother in the best possible way. I find that he has a very deeply felt sense of responsibility for his mother’s welfare and that even though he has two sisters, he is the child on whom Mrs Haldas depends. He has lived with his parents after his marriage broke up and he helped his mother care for his father in his last illness. Culturally, Mr Haldas has primary responsibility for his mother’s welfare. Mr Haldas is fit and would be able to work were it not for his family responsibility which requires him to look after his 93 year old mother so long as that is necessary. I find that Mr Haldas has a strong emotional attachment to the land he bought at Cowes, because it reminds him of his Greek island home.
39. As to the circumstances in which Mr Haldas bought the land, he was aged in his forties, and bought it with the plan of living there in his retirement. He has worked towards that plan since then. He was able to purchase the land and provide for his own living expenses from the money he earned working in the workforce, where, in later years, he owned shops.
40. Mr Haldas has no potential source of income other than the land in question, so long as he cares for his mother. He has sold the shares he held in 2002 (T10, p31) and owns only the house in which he and his mother and one of his sons live, and the property at Cowes.
41. Mr Haldas can reasonably anticipate future appreciation of the property at Cowes (T23, p82) and also that it will fund his chosen retirement lifestyle. He proposes to sell some units off the plan and also to obtain bank finance for the project. Thus, he can reasonably anticipate future financial advantage by holding onto the property. His past history and present circumstances give no reason to doubt that he has reasonable prospects of developing the Cowes property as he plans, if he can hold on to it. His plan does not involve an extravagant lifestyle, but is a way of allowing him to live by the sea, which he very much wants to do, while using the land to best financial advantage. If he presently had a house on the land and lived there with his mother, it would not be counted as an asset for the assets test. That would be more extravagant than his current proposal.
42. Mr Haldas submitted that the benefits of his continuing to care for his mother “are not only to my mother but also to [the] government and community as a whole” (Applicant’s Statement of Facts an Contentions of 14 June 2004, p2). He said that he is “sacrificing himself financially and emotionally”, and saving taxpayers’ money. He said that there are currently 4000 Victorians on the waiting list for nursing home beds. He tendered a number of newspaper articles which referred to the current shortage of nursing home beds (A1). I find that there is both a personal benefit to Mrs Haldas and a public benefit to the community in her being cared for at home and not taking up one of the scarce nursing home beds.
43. At the hearing, Mr Haldas stated that the cost of his carer payment is much less than the cost to the Federal Government of providing full-time care for his mother if he should be obliged to place her in a nursing home, because he cannot obtain a carer payment. Mr Haldas’ evidence is supported by a report of the Victorian Auditor-General’s Office, entitled Aged Care, Special Report 25 (Tabled September 1993, updated 1999) (T1). It states that, at that time, the average cost of nursing home services in State geriatric centres was $171 per bed day (Part 6, paragraph 6.2). At paragraph 6.38, the report stated that, at that time, the Federal Government provided an average subsidy of $51.50 per occupied bed day for most public nursing home residents based on the number of registered beds. In his written submissions on the report, Mr Haldas pointed out that the report was tabled in 1993, and the cost is likely to be higher today. He lodged an article about the Federal Budget 2004, which refers to annual funding of aged care increasing to an average annual payment for each resident of $35,380 by 2007 – 2008 (A6). Mr Haldas was previously receiving carer payment at the rate of approximately $7,500 annually (T11, p34). That was reduced taking into account, for the assets test, the land at Cowes, valued at $220,000. I do not know precisely what the maximum rate of carer payment would be from 2003. Currently, s 1064-B1 of the Act provides that the maximum basic rate before pharmaceutical and other allowances is $8,114.60 annually. On those figures, the payment to Mr Haldas would be less than the Federal government funding for a public nursing home resident.
44. There is a public interest in having people of substantial assets maintain themselves from their own assets rather than live on social welfare. But in this matter, as Mr Haldas submitted, and as the social worker recognised (T36, p147), it would in fact be cheaper for the public purse to pay Mr Haldas carer payment while he cares for his mother at home, than to bear the cost of her support as a public nursing home resident. She is an aged pensioner and has no assets from which she could pay for her own nursing home care.
45. I am conscious of the considerable value of the property at Cowes. Mr Haldas, if he sold the property could maintain himself from the proceeds. But, on the other hand, the use to which Mr Haldas intends to put that property is to enable him to live there in retirement and to fund his retirement by the sale of five of the six units he intends to build. That is not an extravagant aim and if successful it will make him a self funded retiree. Although the investment is not an investment in a superannuation fund, and thus not an asset to be disregarded under s 1118(1) of the Act, it is an investment with the same purpose as an investment in a superannuation fund. Mr Haldas was not aware of the role of self-managed superannuation funds when he purchased the property and cannot now transfer it to such a fund. But the public interest in excluding investments in superannuation funds from the application of the asset test is of the same nature as the public interest in allowing Mr Haldas to retain his property, in order to provide him with financial security and independence in his retirement.
46. I consider it appropriate to bear in mind that if Mr Haldas were forced to sell his property at Cowes, thus destroying a dream or lifeplan he has cherished for 16 years, his mother’s health may deteriorate anytime, perhaps even after the signing the contract of sale, but before completion of the sale. It would be very unfortunate if Mr Haldas were then obliged to complete the sale of his cherished asset, even though his mother was no longer able to benefit from the care he is willing to provide. It would be a very great hardship if he then had to cope with the loss of his mother and also the loss of the property to which he is so attached. The Guidelines (T33, p135) at point 4, do recognise that it may be unreasonable to sell an asset if the “customer’s situation of reduced income is temporary and due to factors outside the customer’s control”. In this matter, bearing in mind Mrs Haldas’ age and ill-health, and Mr Haldas’ history of working for his living, I consider it appropriate to characterise Mr Haldas’ dependence on income support as temporary and due to factors outside his control.
47. This is a very unusual case. However, taking into account all the personal and emotional factors relating to Mr Haldas and his mother, and his financial and economic situation and also the public and community interest, I find that, bearing in mind particularly Mrs Haldas’ age and ill-health, the uncertain duration of her need for care, the length of time Mr Haldas has held the land, his great attachment to the land and his proposal to use the land to fund his retirement, Mr Haldas could not reasonably be expected to sell or realise the land at Cowes. Nor could he reasonably be expected to use it as security for borrowing. Mr Haldas explained that he cannot borrow against the property because he has no income. Ms Paul accepted that evidence. I find that Mr Haldas cannot at this time reasonably be expected to use his land as security for borrowing. The position would be different if he currently had the units partly pre-sold and under construction. I find that the land at Cowes is an “unrealisable asset” under s 11(13) of the Act.
48. Returning to s 1129(1)(d) of the Act, Mr Haldas has lodged a request that s 1129 of the Act apply to him.
49. The next question is therefore whether I can be satisfied that Mr Haldas would suffer “severe financial hardship” if s 1129 does not apply to him.
50. Ms Paul cross-examined Mr Haldas as to any potential sources of income he might have. He gave evidence that his sons are both doing apprenticeships. One lives at home but does not pay board as he is in his first year of a late apprenticeship. Sometimes he makes a contribution by buying food for the household. Mr Haldas said that he has sold all of his shares to live on and has now used all the proceeds of the sales. He explained that he and his mother are currently living on his mother’s age pension and his carer allowance of $90 a fortnight. I accept that evidence and find that he is suffering financial hardship and would continue to suffer financial hardship if the provisions of s 1129 do not apply to him.
51. Thus, I must determine that s 1129 applies to Mr Haldas. That means that, under s 1130(1) of the Act, the value of the land at Cowes is to be disregarded in working out Mr Haldas’ social security pension rate.
52. The decision to reject Mr Haldas’ request to have the hardship provisions in s 1129 of the Act applied for his benefit will be set aside. In substitution, I will determine that s 1129 of the Act applies to Mr Haldas.
I certify that the 51 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Joan Dwyer.
Signed: Josephine McKay
AssociateDate/s of Hearing 5 July 2004
Date of Decision 30 August 2004
Applicant’s Representative self
Advocate for the Respondent Ms K Paul
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