JEAN BIGNALL and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2009] AATA 691

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 691

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/1344

GENERAL ADMINISTRATIVE DIVISION		)
Re		JEAN BIGNALL

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr K S Levy, RFD, Senior Member

Date10 September 2009

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

Senior Member

CATCHWORDS

SOCIAL SECURITY – Age pension – Assets test – Meaning of “principal home” – Reasonable security of tenure – Predominant legal interests in a property – Former residence is still applicant’s principal home – Applicant in aged care for over two years – Principal home not exempt from assets test – Assets exceed assets value limit – Age pension not payable – Decision affirmed.

Administrative Appeals Tribunal Act 1975 (Cth), s 34J

Aged Care Act 1997 (Cth)

Social Security Act 1991 (Cth), ss 11A, 1064, 1118(1)

Lot and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 794

Re Helsham and Repatriation Commission [1986] AATA 2741

Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295

Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari (2000) 98 FCR 140

REASONS FOR DECISION

10 September 2009 Dr K S Levy, RFD, Senior Member          

INTRODUCTION

1.      The applicant, Mrs Jean Bignall, resides in a nursing home and her affairs are administered under power of attorney granted to her two sons, Philip and Glen Bignall.  Mrs Bignall became a resident of a nursing home on 28 September 2006.  On 30 October 2008, Centrelink determined that her home at Clara Street, Wynnum, was no longer exempt from the assets test and so her age pension was cancelled from that date.  This decision was based on her assets exceeding the allowable limit, which they did once the house was counted as one of her assets.

2.      Mrs Bignall’s sons requested a review of that decision on 10 November 2008.  The original decision maker reviewed the decision and affirmed it on 18 November 2008.  It was subsequently reviewed and affirmed by an authorised review officer on 17 December 2008.  The decision was then appealed to the Social Security Appeals Tribunal (“the SSAT”) which, on 25 February 2009, also affirmed the original decision.  On 31 March 2009, Mrs Bignall’s sons applied to this Tribunal for a further review of the decision. 

3. A merits review of this decision is being undertaken under s 34J of the Administrative Appeals Tribunal Act 1975.  That section provides that where the Tribunal is satisfied that it can adequately determine an application without a hearing, it may do so, provided the parties consent.  Those conditions are satisfied in this case.

ISSUES

4.Three issues are submitted for the Tribunal’s determination:

(1)Is the property at Clara Street, Wynnum, Mrs Bignall’s “principal home”?

(2)Is that property exempted from the assets test when determining Mrs Bignall’s age pension entitlement?

(3)Is Mrs Bignall entitled to the payment of age pension for the period under review?

EVIDENCE

5.      The facts are clear and not disputed by the parties.  Mrs Bignall was first granted the age pension on 8 December 1988.  She had lived in her home at Clara Street for a very long time.  However, it became necessary for Mrs Bignall to move to the Moreton Bay Nursing Care Unit from 28 September 2006. 

6.      Since being in the Nursing Care Unit, Mrs Bignall has signed terms of a residential care agreement between herself and the state of Queensland.  Although she signed that agreement on 12 October 2006, it has an effective commencement date of 28 September 2006.  Consistently with Queensland Health policy, she is not charged an accommodation bond or accommodation charge whilst residing in the Nursing Care Unit.  A letter of 2 July 2008 evidences that situation. 

7.      On 13 October 2008, Mrs Bignall’s sons estimated the value of the Clara Street house at $700,000.  Centrelink subsequently assessed her overall assets at $818,394.  At that time, a single non‑homeowner was entitled to be paid age pension only if their assets were below the allowable asset limit of $675,000.  Assets above that limit disentitled a person to the age pension. 

CONSIDERATION

8.      The Social Security Act 1991 (“the Act”) is relevant in determining the questions submitted for decision.

9. Section 1064 of the Act deals with the method of working out a person’s maximum pension rate. Module G of that section provides a method statement for assessing a person’s entitlement based on their assets.

10.Section 1118(1) of the Act provides that:

“Certain assets to be disregarded in calculating the value of a person's assets

(1) In calculating the value of a person's assets for the purposes of this Act … disregard the following:

(a)  if the person is not a member of a couple—the value of any right or interest of the person in the person's principal home that is a right or interest that gives the person reasonable security of tenure in the home …”

11. Circumstances pertinent to Mrs Bignall’s case are now provided for by specific provisions of the Act, including s 11A which provides as follows:

“Principal home definition for the purpose of the assets test

Principal home

(1)  A reference in this Act to the principal home of a person includes a reference to:

(a)  if the principal home is a dwelling‑house—the land adjacent to the dwelling‑house to the extent that:

(i)  the land is held under the same title document as the land on which the dwelling‑house is located; and

(ii)  the private land use test in subsection (3) is satisfied in relation to the land or, if the person is one to whom the extended land use test applies in relation to the land, the extended land use test in subsection (6) is satisfied in relation to the land; or

(b)  if the principal home is a flat or home unit--a garage or storeroom that is used primarily for private or domestic purposes in association with the flat or home unit.

…

Private land use test

(3)  The private land use test is satisfied in relation to land if:

(a)  the area of the land, together with the area of the ground floor of the dwelling‑house, is not more than 2 hectares; and

(b)  the land is used primarily for private or domestic purposes in association with the dwelling‑house.

…

Effect of absences from principal home

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

(a)  if the Secretary 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--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 Secretary 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--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.

Note: This subsection is not meant to imply that a person may have more than one principal home at the same time.

(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 residential care--the period of 2 years beginning when the person started to be in a care situation or residential care; and

(c)  any period during which:

(i)  the person is in a care situation or residential care; and

(ii)  the residence is, or because of paragraph (a) or (b) continues to be, the principal home of the person's partner;

…

Reasonable security of tenure

(10)  If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.”

Issue 1 – Is the property at Clara Street Mrs Bignall’s “principal home”?

12.     The fact Mrs Bignall is not presently residing in the Clara Street home raised the question whether that property can be still be regarded as her “principal home”.  Determining this question depends on a person’s circumstances and has been regarded as “a matter of fact and degree”: Re Helsham and Repatriation Commission [1986] AATA 2741. In Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295, the Tribunal said the need to determine whether a home is a “principal home” indicates that there is more than one property or residence used by the person. For example, where a person has a usual place of residence and also a holiday house, the “principal home” will be determined by where the person spends the majority of their time. The same test applies even for a person who travels extensively and so lives regularly in hotels instead of the suburban residence which the person owns. If a person has a transient lifestyle and only spends a minimum amount of time in their city home or any other place, their “principal home” may be determined by where the person has their predominant legal interests in a property: see Re Samek (supra) at 296-297. 

13. On the basis of the facts presented in this matter, a preliminary and commonsense view might be taken, which is that Mrs Bignall’s property in Clara Street is her “principal home”. Section 11A(10) of the Act complements that conclusion as security of tenure usually indicates a place will be regarded as a “principal home”.

14. However, that commonsense view is affected by ss 11A(8) and (9) of the Act. Because Mrs Bignall has been in a care situation for more than two years, her Clara Street house will only be considered her “principal home” for the purposes of the Act if she is liable to pay an accommodation charge or accommodation bond: s 11A(8). Those conditions are not satisfied. Therefore, Mrs Bignall’s home in Clara Street is not her “principal home” for the purposes of the Act. I note this also has the effect that Mrs Bignall is not a “homeowner” for the purposes of the Act: s 11(4).

Issue 2 – Is the Clara Street property exempted from the assets test in determining Mrs Bignall’s age pension entitlement?

15. Section 1118(1)(a) of the Act provides the fundamental position that a “principal home” should be disregarded when calculating assets under the Act—subject, of course, to any statutory exception: Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari (2000) 98 FCR 140.

16. As established above, the Clara Street house is not Mrs Bignall’s “principal home” for the purposes of the Act. Because she has been at the nursing home for more than two years, s 11A(9) of the Act no longer assists Mrs Bignall: Lot and Secretary, Department of Education, Employment and Workplace Relations [2008] AATA 794. Equally, s 11A(8) of the Act does not grant relief to Mrs Bignall because she is not paying an accommodation charge or an accommodation bond.

17.     As the SSAT pointed out, the Aged Care Act 1997 provides a capacity for care providers to impose accommodation bonds or accommodation charges, although it is not mandatory to do so. However, where they are imposed, the Act is framed to ensure some degree of equitable treatment. If a person is required to pay accommodation charges or an accommodation bond, they are not penalised by the withdrawal of the age pension. This is because they no longer have the benefit of living in their “principal home”. An adjustment is, however, made in respect of people remaining in a nursing facility for more than two years who are not required to pay accommodation charges or a bond.

18. In the circumstances, because the Clara Street home is not Mrs Bignall’s “principal home” for the purposes of the Act, it is no longer an exempt asset. It ceased to be an exempt asset two years after Mrs Bignall went to the Nursing Care Unit, that is, with effect from 28 September 2008.

Issue 3 – Is Mrs Bignall entitled to the payment of age pension for the period under review?

19. Because the Clara Street home is not Mrs Bignall’s “principal home” under the Act, she is a “non-homeowner” for the purposes of the assets test. This gives her the advantage of a higher assets value limit. The assets limit is contained in the A guide to Australian Government payments of 20 September to 31 December 2008.  It shows that for a “non-homeowner” as at the date of the Centrelink decision on 30 October 2008, the allowable asset limit was $675,000.  At that date, the value of Mrs Bignall’s assets was $818,394.  That amount is based on a valuation of the property being $700,000 in October 2008.  A re-evaluation by the Australian Valuation Office on 18 November 2008 determined that the Clara Street property was worth $800,000.  It is apparent that Mrs Bignall’s total assets at the date Centrelink ceased paying age pension exceeded the threshold of $675,000.  Therefore, Mrs Bignall had no entitlement to age pension and the original determination made was correct according to law.

DECISION

20.Accordingly, the decision under review must be affirmed.

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K S Levy, RFD, Senior Member

Signed:.........................[Sgd].....................................................
  Mátyás Kochárdy, Research Associate

Hearing on the Papers               
Date of Decision  10 September 2009
For the Applicant  Her son, Philip Bignall

For the Respondent                  Jasmine Forsyth, Departmental Advocate