Hill and Anor and Secretary, Department of Family and Community Services

[2005] AATA 115

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 115

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2004/741, Q2004/742

GENERAL ADMINISTRATIVE DIVISION		)
Re		NEIL HILL and EMILY JOHNSTON

Applicant

And SECRETARY, DEPARTMENT
OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Senior Member Peter M McDermott

Date8 February 2005        

PlaceBrisbane

Decision The Tribunal varies the decision under review by adding the direction that for the purposes of s 1121 of the Social Security Act 1991 the value of the charge or encumbrance over the property at 10 Wattle Street, Cooroy is the total amount of the money that is secured by the mortgage.

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

P M McDermott
  Senior Member

CATCHWORDS

SOCIAL SECURITY – value of assessable asset – value of charge or encumbrance over asset – application of s 1121 (4) and s 1132 of the Social Security Act 1991  – value deemed to be determined by the properties net market value.

Social Security Act 1991 ss 1121, 1132

Social Security and Repatriation (Budget Measures and Assets Test) Act 1984

Smith and Secretary, Department of Family and Community Services [1999] AATA 267

REASONS FOR DECISION

8 February 2005 Senior Member Peter M McDermott   

1.      In this matter the applicants own their home in Emerald Street, Cooroy.

2.      Ms Johnston owns two other properties: a block of land at Bond Court, Doonan and a house at 10 Wattle Street, Cooroy.

3. At the hearing of this matter the respondent conceded that the Bond Court property would be treated as an unrealisable asset under the hardship provisions. That has the consequence that the value of the Bond Court property should be disregarded in accordance with s 1132 of the Social Security Act 1991 (the Act).

4.      This left for consideration what the value of the Wattle Street property would be.

5.      One difficulty at the hearing was that the mortgage over the Wattle Street property was not before the Tribunal.

6.      The respondent has recently obtained a copy of the bill of mortgage over the Wattle Street property from Suncorp Metway. The mortgage is secured over both the Bond Court and Wattle Street properties (see p. 55)

7. The question before me is to ascertain the value of an assessable asset being the Wattle Street property. The value of such an asset is reduced by the value of a charge or encumbrance in accordance with s 1121 of the Act.

8.      The respondent has submitted that to work out the assessable value of an asset is to reduce the value of both assets by the value of the mortgage in shares proportionate to their relative values. That approach has some initial attraction.

9.      However, in the second reading speech on the Social Security and Repatriation (Budget Measures and Assets Test) Act 1984 in the House of Representatives on 21 August 1984, the Minister, Dr Blewett MP, stated (see Parliamentary Debates (Hansard) (House of Representatives), Vol 138 p. 79):

The value of assets to be taken into account will be their net market value. This means the amount of money a person could reasonably expect to receive if the assets were to be sold, less any debts on that asset such as a registered mortgage or a hire purchase debt.

10.     This approach has been applied by this Tribunal in Smith and Secretary, Department of Family and Community Services [1999] AATA 267.

11. I accordingly find that for the purposes of s 1121 of the Act the value of the charge or encumbrance over the property at 10 Wattle Street, Cooroy is the total amount of the money that is secured by the mortgage.

12. I add that, in my opinion, it would not be possible in these circumstances to use the method of calculation specified in s 1121 (4) of the Act. That method of calculation has no application to where the value of an asset is to be disregarded in accordance with s 1132 of the Act. In this matter the operation of s 1121(1) of the Act has not been excluded by s 1121(3) of the Act.

I certify that the 12 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  10 December 2004
Date of Decision  8 February 2005
The Applicants appeared in person
For the Respondent                  Mr J Howard, Departmental Advocate