Hughes and Secretary, Department of Health and Ageing

[2007] AATA 1558

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1558

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2006/1400

GENERAL ADMINISTRATIVE DIVISION        )

Re             Louisa Margaret HUGHES

Applicant

AndSecretary, Department of Health and Ageing

Respondent

DECISION

TribunalProfessor GD Walker, Deputy President

Date18 July 2007

PlaceSydney

DecisionThe decision under review is affirmed.

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

Professor GD Walker
  Deputy President

CATCHWORDS…meaning of concessional or assisted resident – relevant date in this case is the time at which the applicant entered the residential care service – occupation of a home is predominantly a physical fact – applicant’s home was not found to be occupied by her daughter – decision under review affirmed.

RELEVANT ACTS:

Aged Care Act 1997 (Cth): ss 41-11, 44-7, 44-8, 57-12, 57A-6, 85-5, 96-1

Residential Care Subsidy Principles 1997: para 21.15

…

CITATIONS

Gosford RSL Club Co-Op Ltd v Commissioner of Land Tax (NSW) (1981) 11 ATR 805

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REASONS FOR DECISION

18 July 2007	Professor GD Walker, Deputy President
Summary

1.      The applicant seeks a review of a decision by the respondent that she is not eligible to be classified as a concessional or assisted resident within the meaning of the Aged Care Act 1997(Cth).

2.      At the hearing, the applicant was assisted by her daughter Mrs Colleen Follent and son-in-law Mr Robert Follent, and the respondent was represented by Mr Robert Douglass, an officer of the Department of Veterans’ Affairs, Victorian State Office. The documents before the tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T documents), taken into evidence as Exhibit R1, together with the other documents tendered by the parties at the hearing. No oral evidence was given.

Applicable law

…

44-7Meaning of concessional resident

If the applicable time is before 1 July 2005

(1)A person is a concessional resident if the person is being provided with residential care (other than "'respite care) through a residential care service, the applicable time under subsection (2) is before 1 July 2005 and, at the applicable time:

(a)the person was receiving an *income support payment; and

(b)the person had not been a *homeowner for 2 years or more, or owned a home that was occupied by:

(i)     the *Partner or a *dependent child of the person; or

(ii)     a carer of the person who had occupied the home for the past 2 years and, at the entry time, was eligible to receive an income support payment; or

(iii)     a *close relation of the person who had occupied the home for the past 5 years and, at the entry time, was eligible to receive an income support payment; and

(c)the value of the person's assets was less than:

(i)     the amount obtained by rounding to the nearest $500.00 (rounding $250.00 upwards) an amount equal to 2.5 times the *basic age pension amount at the time in question; or

(ii) such other amount as is specified in, or worked out in accordance with, the Residential Care Subsidy Principles.

Note:A *concessional resident cannot be required to pay an "'accommodation bond or an "'accommodation charge-see sections 57-12 and 57A-6.

If the applicable time is on or after 1 July 2005

(lA)A person is also a concessional resident if the person is being provided with residential care (other than "'respite care) through a residential care service, the applicable time under subsection (2) is on or after 1 July 2005 and there is in force a determination covered by subsection (lB) or (1C).

(lB)This subsection covers a determination, made under section 44-8AA before the person *entered the residential care service, that the conditions in paragraphs (l)(a), (b) and (c) would have been met for the person at the time specified in the determination if the references in subparagraphs (1)(b)(ii) and (iii) to the entry time had been references to the time specified in the determination.

(1C)This subsection covers a determination, made under section 44-8AA when or after the person *entered the residential care service, that the conditions in paragraphs (1)(a), (b) and (c) were met at the applicable time under subsection (2).

What is the applicable time?

(2)The applicable time is:

(a)if:

(i)     the person had, within 28 days prior to *entry to the residential care service, been provided with residential care through another residential care service; and

(ii)     the person had paid an *accommodation bond for entry to that other service;

the time that was, under this subsection, the applicable time in respect of that other service; or

(b)in any other case – the time at which the person entered the residential care service.

If there is financial hardship (whatever the applicable time)

(3)A person is also a concessional resident if a determination is in force under section 57-14 or section 57A-9 in respect of the person.

44-8Meaning of assisted resident

If the applicable time is before 1 July 2005

(1)A person is an assisted resident if the person is being provided with residential care (other than *respite care) through a residential care service, the applicable time under subsection (2) is before I July 2005 and, at the applicable time:

(a)     the person was receiving an *income support payment; and

(b)     the person had not been a *homeowner for 2 years or more, or owned a home that was occupied by:

(i)the *partner or a *dependent child of the person; or

(ii)a carer of the person who had occupied the home for the past 2 years and, at the entry time, was eligible to receive an income support payment; or

(iii)a *close relation of the person who had occupied the home for the past 5 years and, at the entry time, was eligible to receive an income support payment; and

(c)     the value of the person's assets was less than:

(i)the amount obtained by rounding to the nearest $500.00 (rounding $250.00 upwards) an amount equal to 4 times the *basic age pension amount at the time in question; or

(ii)such other amount as is specified in, or worked out in accordance with, the Residential Care Subsidy Principles;

but more than:

(iii)the amount obtained by rounding to the nearest $500.00 (rounding $250.00 upwards) an amount equal to 2.5 times the *basic age pension amount at the time in question; or

(iv)such other amount as is specified in, or worked out in accordance with, the Residential Care Subsidy Principles.

Note:An *assisted resident may be required to pay an *accommodation bond or an *accommodation charge.

If the applicable time is on or after 1 July 2005

(lA)A person is also an assisted resident if the person is being provided with residential care (other than *respite care) through a residential care service, the applicable time under subsection (2) is on or after 1 July 2005 and there is in force a determination covered by subsection (lB) or (1C).

(lB)This subsection covers a determination, made under section 44-8AA before the person *entered the residential care service, that the conditions in paragraphs (l)(a), (b) and (c) would have been met for the person at the time specified in the determination if the references in subparagraphs (l)(b)(ii) and (iii) to the entry time had been references to the time specified in the determination.

(1C)This subsection covers a determination, made under section 44-8AA when or after the person *entered the residential care service, that the conditions in paragraphs (l)(a), (b) and (c) were met at the applicable time under subsection (2).

What is the applicable time?

(2)The applicable time is:

(a)     if:

(i)the person had, within 28 days prior to *entry to the residential care service, been provided with residential care through another residential care service; and

(ii)the person had paid an *accommodation bond for entry to that other service;

the time that was, under this subsection, the applicable time in respect of that other service; or

(b)     in any other case- the time at which the person entered the residential care service.

44-8AADeterminations for sections 44-7 and 44-8

Making determinations

(1)The Secretary may make a determination (the resident status determination) described in section 44-7 or 44-8 if:

(a)     the person mentioned in that section has applied, in a form approved by the Secretary, for the resident status determination; and

(b)     the Secretary has made a determination (the asset value determination) under section 44-8AB of the value of the person's assets at the time that is specified in the resident status determination; and

(c)     the Secretary is satisfied of the matters relating to the person that are to be set out in the resident status determination.

Note:  The time specified in a determination covered by subsection 44-7(1C) or 44-8(1C) is the applicable time under subsection 44-7(2) or 44-8(2).

Giving notice of decision on resident status determination

(2)Within 14 days after deciding whether or not to grant the application, the Secretary must notify the person in writing of:

(a)     the decision; and

(b)     if the Secretary made the resident status determination – the content of the determination.

When the resident status determination comes into force

(3)The resident status determination comes into force on the day it is made or an earlier day stated in the determination to be the day on which the determination comes into force.

(4)However, if the determination is made after the person *enters the residential care service mentioned in subsection 44-7(IA) or 44-8(1 A), the day stated must not be before the day the determination is made, unless the Secretary is satisfied that exceptional circumstances justify the determination coming into force on the day stated.

When the resident status determination ceases to be in force

(5)The resident status determination ceases to be in force when the asset value determination ceases to be in force, if:

(a)     the person was not being provided with residential care (other than *respite care) through a residential care service when the resident status determination came into force; and

(b)     the person has not been provided with such care between:

(i)the time the resident status determination came into force; and

(ii)the time the asset value determination ceases to be in force.

Note:  Subsections 44-8AB(3) and (4) explain how to work out when the asset value determination ceases to be in force.

(6)The Secretary may by written instrument revoke the resident status determination if he or she ceases to be satisfied of any of the matters relating to the person that are set out in the determination. The determination ceases to be in force on a day specified in the instrument (which may be before the instrument is made).

(7)Within 14 days after revoking the resident status determination, the Secretary must give written notice of the revocation and the day on which the determination ceases being in force to:

(a)     the person; and

(b)     each approved provider (if any) who has provided the person with residential care (other than *respite care) through a residential care service since the determination ceased to be in force.

44-10How to work out the value of a person's assets

(1)Subject to this section, the value of a person's assets for the purposes of section 44-7, 44-8 or 44-8AB is to be worked out in accordance with the Residential Care Subsidy Principles.

(lA)If a person who is receiving an *income support supplement or a *service pension has an income stream (within the meaning of the Veterans' Entitlements Act 1986) that was purchased on or after 20 September 2007, the value of the person's assets:

(a) is taken to include the amount that the Secretary determines to be the value of that income stream that would be included in the value of the person's assets if Subdivision A of Division 11 of Part llIB of the Veterans' Entitlements Act 1986 applied for the purposes of this Act; and

(b) is taken to exclude the amount that the Secretary determines to be the value of that income stream that would not be included in the value of the person's assets if Subdivision A of Division 11 of Part IIIB of the Veterans' Entitlements Act 1986 applied for the purposes of this Act.

(lB)If a person who is not receiving an *income support supplement or a *service pension has an income stream (within the meaning of the Social Security Act 1991) that was purchased on or after 20 September 2007, the value of the person's assets:

(a) is taken to include the amount that the Secretary determines to be the value of that income stream that would be included in the value of the person's assets if Division 1 of Part 3.12 of the Social Security Act 1991 applied for the purposes of this Act; and

(b) is taken to exclude the amount that the Secretary determines to be the value of that income stream that would not be included in the value of the person's assets if Division 1 of Part 3.12 of the Social Security Act 1991 applied for the purposes of this Act.

(1C)The value of a person's assets is taken to include the amount that the Secretary determines to be the amount:

(a) if the person is receiving an *income support supplement or a *service pension-that would be included in the value of the person's assets if Subdivisions B and BB of Division 11 of Part llIB of the Veterans' Entitlements Act 1986 applied for the purposes of this Act; and

(b) otherwise-that would be included in the value of the person's assets if Division 2 of Part 3.12 of the Social Security Act 1991 applied for the purposes of this Act.

Note: Subdivisions B and BB of Division 11 of Part IIIB of the Veterans' Entitlements Act 1986, and Division 2 of Part 3.12 of the Social Security Act 1991, deal with disposal of assets.

(2)In working out the value at a particular time of the assets of a person who is or was a *homeowner then, disregard the value of a home that, at the time, was occupied by:

(a)     the *partner or a *dependent child of the person; or

(b)     a carer of the person who:

(i)had occupied the home for the past 2 years; and

(ii)was eligible to receive an *income support payment at the time; or

(c)     a *close relation of the person who:

(i)had occupied the home for the past 5 years; and

(ii)was eligible to receive an *income support payment at the time.

(3)The value of the assets of a person who is a *member of a couple is taken to be 50% of the sum of:

(a)     the value of the person's assets; and

(b)     the value of the assets of the person's *partner.

(4)A reference to the value of the assets of a person is, in relation to an asset owned by the person jointly or in common with one or more other people, a reference to the value of the person's interest in the asset.

…

Basic facts

3. The facts of this application are not in dispute. Mrs Louisa Margaret Hughes, age 92, is a war widow receiving an income support supplement from the Department of Veterans’ Affairs. Until recently she was receiving residential aged care through the Coolamon Aged Care Centre (Coolamon) at Mullumbimby, New South Wales. She entered that facility on 29 March 2006, and that is the applicable date under ss 44-7(2)(b) and 44-8(2)(b) of the Aged Care Act 1997 (Cth) (the Act).

4.      On 30 March 2006, Mrs Hughes lodged a request for an assets assessment for the purpose of establishing eligibility for financial assistance towards her residential aged care accommodation (T pp10-41).

5.      On 6 April 2006, a delegate of the Secretary, Department of Health and Ageing, assessed the applicant’s assets at $430,371 and determined that she did not qualify as a concessional resident or assisted resident (T p51).  The applicant requested a review of that decision, and on 26 July 2006 a senior delegate affirmed it pursuant to s 85-5 of the Act (T pp4-9).  The applicant appealed to this tribunal on 10 October 2006 for a review of that decision.

Issues

6.      The issue before the tribunal is whether the tribunal is satisfied that the applicant is a concessional resident within the meaning of s 44-7 of the Act or an assisted resident within the meaning of s 44-8.  That in turn depends on two sub-issues, namely:

§Whether the applicant’s former home, 29A Gordon Street, Mullumbimby, should be disregarded in the calculation of her assets pursuant to s 44-7(1)(c); and

§Whether a loan the applicant obtained to finance her accommodation bond at Coolamon in the amount of $200,000 should be offset against the value of her former home.

Occupation of the house at Mullumbimby – submissions

7.      For the purposes of the application of ss 44-7 and 44-8, the respondent conceded that the applicant is in residential care and had been in receipt of an income support payment at the time of entering residential care.  The respondent also conceded that the applicant’s daughter, Mrs Follent, was a carer within the meaning of the Act and also meets the definition of a “close relation” in s 44-11(1) of the Act, and also that Mrs Follent has been receiving an income support payment for the required period.

8.      The dispute centres on whether Mrs Follent “occupied the home” for the period required by ss 44-7(1)(b) or 44-8(1)(b).

9.      The applicant provided detailed diary notes listing the occasions on which Mrs Follent cared for the applicant at her home (Exhibit A1).  They represent the following yearly totals:

§1996: 28 days

§1997: 109 days

§1999: 120 days

§2000: 30 days

§2001: 122 days

§2002: 37 days

§2003: 104 days

§2004: 137 days

§2005: 76 days

§2006: 98 days, up to the date of Mrs Hughes’s admission to Coolamon.

10.     No oral evidence was adduced at the hearing, the facts not being in dispute.  The applicant, through her son-in-law Mr Follent and her daughter Mrs Follent tendered a statement of facts and contentions (Exhibit A1) that pointed out that Mrs Follent suffered a stroke in 1998 that left her with problems of anxiety and some speech difficulties.  She also spent a prolonged period in St John of God Hospital for stabilisation.

11.     For Mrs Follent to have relocated to Mullumbimby to satisfy the requirements of the Act, it was argued, it would not have been practicable because the specialist medical advice and treatment she needs would not have been available there.

12.     Besides having to meet the needs of the applicant Mrs Hughes (Mrs Follent being her only child), there are demands on Mrs Follent’s time from the fact that her own daughter suffers from multiple sclerosis and her husband has had extensive coronary surgery, back surgery, a stroke and diabetes.

13.     Consequently, Mr Follent said, Mrs Follent was allocating her time and energy between her daughter, her mother and her husband.  She was dividing her time equally between the family home at Gymea and Mrs Hughes’s home in Mullumbimby, at least emotionally.  Mrs Follent also had to drive her mother to medical appointments at Southport and Byron Bay, sometimes having to visit her there every day.

14.     Further, Mrs Follent has power of attorney over the applicant’s affairs for the purpose of administering, taking possession of, maintaining and caring for her financial affairs, assets and welfare.

15.     Mr Follent acknowledged that he could not point to any scope for flexibility in the relevant provisions, but challenged the reliance on the Macquarie Dictionary definition of “occupy” in the delegate’s decision to reject Mrs Hughes’s claim.  In his view, it was a very narrow definition and submitted that preferable definitions were, for example, those contained in Webster’s Dictionary (“a person who lives at a particular place for a prolonged period”), Collins’s Dictionary (“a person who has possession of a property”) or the Cambridge Dictionary (“to use a place for a period of time”).

16.     Although she had not made the Mullumbimby house her “official address”, a more appropriate asset assessment would give greater weight to Mrs Follent’s contribution to the applicant's home and to the substantial expenses they had incurred in flying Mrs Follent to the North Coast and covering her accommodation expenses when she had to visit the applicant at Southport when in hospital there.

17.     Mrs Follent also pointed out that she had installed a telephone at the Mullumbimby house in her own name.

18.     Mr Douglass submitted that Mrs Follent’s intermittent presence at the Mullumbimby house as summarised above did not constitute “occupation” of the applicant’s home within the meaning of the Act.  To satisfy the statutory requirements, she would need to have made the Mullumbimby house her principal place of residence.

19.     The purpose of s 44-7 was to avoid the need for a person on income support to sell his or her house, when it was still being lived in by the person’s carer or a close relative.  Mrs Follent had spent much time at the house, but her presence there still fell short of occupancy, her principal place of residence being the family home at Gymea.

20.     There is no authority on the meaning of “occupied the home” in the relevant provisions, nor is there a statutory definition in the Act.  Dictionary definitions did not take the matter much further, Mr Douglass contended.  More important was that Mrs Follent had no proprietary right, title or interest in the property, and her postal address remained at Gymea.  Her stays at Mullumbimby fell outside the objects of s 44, which was to prevent the sale of a house from under a spouse, a child or carer.  Mrs Follent, on the other hand, has another residence.

Assessment of the applicant’s assets - submissions

21.     It was not disputed that the Mullumbimby house is valued at $350,000 and that Mrs Hughes obtained a loan to finance her accommodation bond at Coolamon, and that the amount of the loan ($200,000) is to be offset against the value of her home.  The Residential Care Subsidy Principles 1997, made under s 96-1(1) of the Act, provide that the value of a person’s assets is the net value of all the person’s property (para 21.15(2)). “Property” includes real estate (para 21.15(3)(i)) and the net value is taken to be its gross value less debts, charges and encumbrances (para 21.15(4)).

22.     The respondent maintains that by reason of ss 44-8A and 44-8B of the Act, the determinations of asset value and residence status are made on the basis of information available at the time the determination is made and remain in effect until the applicant moves to another residential aged care facility.  As the mortgage was registered after the date of the determination, it cannot be taken into account.  Even if it were, deducting the $200,000 mortgage from the total value of assets would still leave the level of the applicant’s assets above the limits prescribed in ss 44-7(1)(c)(i) and 44-8(1)(c)(i).

23.     That however, Mr Follent argued, produced an unfair result.  He provided a chronology of the events surrounding the applicant’s admission to Coolamon (Exhibit A2).  It showed that when Coolamon offered Mrs Hughes accommodation, they had required immediate acceptance, otherwise the vacancy would be offered to another party.  The offer was accepted in consultation with the respondent’s delegate, although at that time no mortgage had been entered into and it was not known with any certainty where the $200,000 accommodation bond money would come from.  Consequently, when Mrs Hughes completed the request for an assets assessment form (T pp10-33), “under duress” as Mr Follent put it, she correctly answered “no” to question G1 concerning whether the property was mortgaged (T p27).

24.     Coolamon offered the vacancy on 24 March 2006 and Mrs Hughes completed the assets assessment form on 27 March.  She was admitted to Coolamon on 29 March.  The bond money was subsequently arranged and paid on 3 April 2006.

25.     Mr Follent conceded that the Act requires assets to be assessed as at the time at which the person entered the residential care service, as Mrs Hughes had not previously been receiving residential care (ss 44-7(2)(b), 44-8(2)(b)).

Other submissions for the applicant

26.     Mr Follent contended that the sum ultimately in issue amounted only to about $2,500 over a full year.  It would be enough to assure Mrs Hughes some small comforts during the closing stages of her life, which would be of particular help to her since the closure of the St Vincent de Paul aged care facility in Mullumbimby.

27.     He also pointed out that Mrs Hughes’s late husband William Hughes served for five years in the air force, including in combat zones, during World War II.  He was granted a TPI pension owing to his service injuries and later received a war service home loan.  The loyalty and patriotism of the Hughes family was exemplified, not only by William Hughes’s record, but by the service of six other men of the family in World War II, two of whom were killed in action.

28.     He claimed that the applicant was the victim of discrimination against Australian-born veterans.  He did not suggest that any foreign-born veterans or their surviving spouses had received more favourable asset assessments, but expressed general resentment at what he called “unauthorised benefits” being paid to non-English speaking, “unqualified aliens posing as allies” (Exhibit A1).

Consideration

29.     As regards the contention that the value of Mrs Hughes’s Mullumbimby house should have been entirely disregarded, it is common ground that there is no statutory definition of the phrases “the person who had occupied the home” or ”had occupied the home” in the relevant context, nor have there been any court or tribunal decisions that elucidate their meaning.

30.     On general principles, that language would not seem to require continuous residence throughout the year, and it is true that since 1996 Mrs Follent has spent significant amounts of time at the house, although never as much as half a given year, and generally between one and four months.  She arranged for the telephone to be connected or transferred into her own name but did not move her own furniture into the house.  Her postal address remained at Gymea and it is clear that her principal place of residence was the family home in that suburb.  Mr Follent argued that emotionally his wife was dividing her time equally between the two residences, but occupation is predominantly a physical fact (Gosford RSL Club Co-Op Ltd v Commissioner of Land Tax (NSW) (1981) 11 ATR 805, 810). It can be coupled with and reinforced by rights of ownership or possession, but Mrs Follent had no title to the property. Her power of attorney does not alter the situation. In the absence of proprietary rights it would be necessary to show that the house was Mrs Follent’s principal place of residence, but the evidence does not support such a finding.

31.     I therefore find that the house was not “occupied by” Mrs Follent as a carer during the relevant period and consequently, that it cannot be disregarded in the calculation of the applicant's assets.  That interpretation is consistent with the implicit legislative purpose, which is to prevent a situation in which a house could be sold from under a close relative or carer who had been living there and had no other residence to go to.

32.     As regards the date of assessment of the applicant’s assets, the process for making a concessional or assisted resident determination is set out in s 44-8AA of the Act.  The date at which the conditions for a concessional or assisted resident determination must be assessed is specified in ss 44-7(2) and 44-8(2).  Both of those provisions stipulate that the relevant time is “the time at which the person entered the residential care service”.  In this case, Mrs Hughes entered the Coolamon facility on 29 March 2006 and that is the applicable date for assessment.

33.     Mr Follent did not really dispute that 29 March 2006 was the date identified in accordance with the legislation.  His point was really that it produces an arbitrary and unjust result and he plainly feels very strongly about it.

34.     But, as Mr Douglass pointed out, as a concessional or assisted resident cannot be required to pay an accommodation bond or an accommodation charge (ss 57-12, 57A-6), it was necessary that the assessment be made on a once-only basis, otherwise residents would need to keep the respondent informed of changes in their financial situation and there could be a continual churning process as bonds were waived, then levied, then perhaps refunded again.

35.     Sometimes the process worked to the disadvantage of the resident, as in the present case, but in other cases to his or her advantage, as when a resident received an inheritance of funds.  The process adopted is seen as necessary to make the scheme workable.  I do not think one can describe it as “bureaucracy gone mad”, as Mr Follent does.

36.     At all events, there is clearly no provision that would enable the tribunal to consider the value of Mrs Hughes’s assets at any time other than the date on which she entered residential care.

37.     The respondent pointed out that the determination once made remains in effect until the applicant moves to another residential aged care facility.  Mr Follent explained that as Mrs Hughes has now moved from Coolamon to Ferris Care Nursing Home, where she can receive high level care, her bond has been repaid and she will supply a new bond to the new facility.  On that basis Mrs Hughes has applied for a revised asset assessment which is currently pending.

38.     The decision under review is affirmed.

I certify that the 38 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President

Signed:   ..........[sgd]...........................................................
               R. Wallace, Associate

Date/s of Hearing:  18 June 2007
Date of Decision:  18 July 2007
Representative for the Applicant:     Mrs Colleen and Mr Robert Follent
Representative for the Respondent: Mr Robert Douglass, Veterans’ Affairs