Keating and Secretary, Department of Health and Aged Care (Social services)
[2024] AATA 64
•25 January 2024
Keating and Secretary, Department of Health and Aged Care (Social services) [2024] AATA 64 (25 January 2024)
Division:GENERAL DIVISION
File Number: 2023/5385
Re:Mr William Keating
APPLICANT
AndSecretary, Department of Health and Aged Care
RESPONDENT
DECISION
Tribunal:Ms A E Burke AO, Member
Date:25 January 2024
Place:Melbourne
The Tribunal affirms the decision under review.
.............................[sgd]...........................................
Ms A E Burke AO, Member
Catchwords
SOCIAL SECURITY – residential aged care – basic daily fee – other supplements – whether eligible for hardship supplement – previously in receipt of hardship supplement on basis of covid exemption – subsidy principles – whether commercial property is unrealisable assets – determination of hardship not made – decision under review affirmed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Aged Care Act 1997 (Cth)
Fees and Payments Principles 2014 (Cth)
Power of Attorney Act 2014 (Vic)
Social Security Act 1991 (Cth)Subsidy Principles 2014 (Cth)
Cases
Librizzi and Secretary, Department of Health (Social services) [2018] AATA 2278
Reed and Secretary to the Department for Health and Ageing [2004] AATA 1029
Repatriation Commission v Harry Stewart Hall and Joan Evelyn Hall, Re [1988] FCA 89
Rossow and Secretary, Department of Health [2018] AATA 1275
Shi v Migration Agents Registration Authority (2008) CLR 286
Simunovic and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs, Re [2012] AATA 421Winch and Secretary, Department of Social Services (Social services second review) [2016] AATA 286
Secondary Materials
Australian Government, MyAgedCare < (September 2023)
Department of Social Services, Social Security Guide (Guides to Social Policy Law, version 1.314, 2 January 2024)
REASONS FOR DECISION
Ms A E Burke AO, Member
25 January 2024
Mr William Keating is seeking a review of a decision made by Services Australia on behalf of the Secretary, Department of Health and Aged Care (the Respondent) to refuse to grant him financial hardship supplement for aged care, pursuant to section 44.30 of the Aged Care Act 1997 (Cth) (the Act).
Mr Keating is 88 years of age and has been in receipt of the age pension since 17 May 2000. On 23 March 2021 Mr Keating permanently entered residential aged care. On 16 September 2021 Mr Keating was granted financial hardship assistance which was backdated to the day he entered permanent care. On 15 September 2022 Mr Keating’s financial hardship assistance payments ceased.
Mr Keating’s daughter Mrs Sharyn Martinussen is his nominee and has acted for her father in all his interactions with Centrelink.
Mr Keating lodged a claim for hardship supplement on 13 October 2022. On 9 November 2022, Centrelink rejected Mr Keating’s claim for hardship supplement, as his total current assets were more than the financial hardship assistance assets threshold of $40,033.50. Centrelink advised this assessment included the money in his bank accounts, his personal effects, and his commercial property. His former principal home was considered an unrealisable asset and its value had not been included in this hardship assessment.
On 28 November 2022 Mrs Martinussen requested a review of the decision to reject her father’s claim for hardship supplement.
On 7 July 2023, a departmental Authorised Review Officer (ARO) affirmed the earlier Centrelink finding on internal review, determining that Mr Keating did not meet the requirements for hardship supplement as the value of his commercial premises must be included as part of his assets when assessing his eligibility to receive financial hardship assistance. The ARO advised:
As at 13 October 2022, when an application for financial hardship assistance was made, your total annual Pension was $26,689. This amount multiplied by 1.5 equals $40,033.50.
The Property you solely own is valued at $200,000. Your assessable assets exceed the upper threshold of $40,033.50. This means that your application for financial hardship assistance in Residential Aged Care cannot be approved.
Your nominee has asked that the value of the Property be disregarded when assessing your eligibility to financial hardship assistance on grounds that it would be unreasonable for you to sell or borrow against the Property.
Your nominee also advised me during our discussion on 7 July 2023, that she was not aware that the Property was included in the means test when assessing your application for financial hardship assistance. She went onto say that the Property was disregarded in the previous applications.
It is acknowledged that the value of the Property was disregarded in your previous applications for financial hardship assistance. This was because special provisions were temporarily introduced due to COVID 19. These special provisions are no longer available and the value of the Property can no longer be disregarded.
I do not accept that your nominee was not aware that the value of Property had been included in the means test when assessing your application for financial hardship assistance for Aged Care submitted on 13 October 2022 …
On 20 July 2023, Mr Keating’s daughter applied to the Tribunal for review of the internal review decision, stating:
The continuation of hardship provision for my father's aged care facility has been rejected. My father is in severe financial hardship and he has been able to draw any financial help from the property in question to contribute towards his costs for staying in an aged care facility. It is also unreasonable to expect him as a pensioner to be able to sell or borrow against this asset.
The application was heard via video on 1 December 2023. Mr Keating was represented by his daughter Mrs Martinussen and Mr Matt Gauci, solicitor at Hunt & Hunt Lawyers, appeared for the Respondent.
LEGISLATION
The Australian Government website, MyAgedCare, provides the following advice in respect of financial hardship assistance:
Financial hardship assistance can help you, if for reasons beyond your control, you can’t afford your aged care costs.
Each case is assessed on an individual basis. If you are eligible, the Australian Government will pay some, or all, of your fees and charges – helping you to get the care you need.
Financial hardship assistance can help you with different types of fees and charges. It depends on the type of care you are receiving.
Aged care homes
If you entered an aged care home for permanent care on or after 1 July 2014, you may be eligible for help with your basic daily fee, means tested care fee, and/or accommodation costs.
Who is eligible for financial hardship assistance?
To be eligible for financial hardship assistance, you must meet certain criteria. You will not be eligible if you:
·have not completed an aged care means assessment (a calculation of your cost of care)
·have assets valued at more than $42,771.30 (excluding unrealisable assets)
·have gifted:
o more than $10,000 in the previous 12 months
or
o more than $30,000 in the previous 5 years.
What are unrealisable assets?
An asset may be considered unrealisable if you cannot sell it or borrow against it.
This may include:
·a house that you own that has been on the market for six months or more
·jointly owned property
·gifting – where the decision to gift was made by a Power of Attorney or when the person was incapacitated
·frozen assets.
It does not include:
·properties that you own and rent out
·private trusts and private companies
·lump sums you have paid for accommodation in an aged care home.
You may be able to apply for an asset to be assessed as unrealisable when you apply for financial hardship assistance. If an asset is considered unrealisable, it will not count towards your hardship asset threshold.
Section 44.2 of the Act establishes the amount of residential care subsidy payable to an aged care provider which can include other supplements, such as hardship supplement:
(1) The amount of * residential care subsidy payable to an approved provider for a residential care service in respect of a * payment period is the amount worked out by adding together the amounts of residential care subsidy for each care recipient:
(a) to whom the approved provider provided residential care through the residential care service during the period; and
(b) in respect of whom the approved provider was eligible for residential care subsidy during the period.
(2) This is how to work out the amount of * residential care subsidy for a care recipient in respect of the * payment period.
Residential care subsidy calculator
Step 1. Work out the basic subsidy amount using Subdivision 44-B.
Step 2. Add to this amount the amounts of any primary supplements worked out using Subdivision 44-C.
Step 3. Subtract the amounts of any reductions in subsidy worked out using Subdivision 44-D.
Step 4. Add the amounts of any other supplements worked out using Subdivision 44-F.
The result is the amount of residential care subsidy for the care recipient in respect of the payment period.
Section 44.30 of the Act establishes the hardship supplement:
(1) The hardship supplement for the care recipient in respect of the * payment period is the sum of all the hardship supplements for the days during the period on which:
(a) the care recipient was provided with residential care through the residential care service in question; and
(b) the care recipient was eligible for a hardship supplement.
(2) The care recipient is eligible for a hardship supplement on a particular day if:
(a) the Subsidy Principles specify one or more classes of care recipients to be care recipients for whom paying a daily amount of resident fees of more than the amount specified in the Principles would cause financial hardship; and
(b) on that day, the care recipient is included in such a class.
The specified amount may be nil.
(3) The care recipient is also eligible for a hardship supplement on a particular day if a determination is in force under section 44-31 in relation to the care recipient.
Section 44.31 of the Act provides for determining cases of financial hardship:
(1) The Secretary may, in accordance with the Subsidy Principles, determine that the care recipient is eligible for a hardship supplement if the Secretary is satisfied that paying a daily amount of resident fees of more than the amount specified in the determination would cause the care recipient financial hardship.
Note: Refusals to make determinations are reviewable under Part 6.1.
(2) In deciding whether to make a determination under this section, and in determining the specified amount, the Secretary must have regard to the matters (if any) specified in the Subsidy Principles. The specified amount may be nil.
(3) A determination under this section ceases to be in force at the end of a specified period, or on the occurrence of a specified event, if the determination so provides.
Note: Decisions to specify periods or events are reviewable under Part 6.1.
(4) Application may be made to the Secretary, in the form approved by the Secretary, for a determination under this section. The application may be made by:
(a) the care recipient; or
(b) an approved provider who is providing, or is to provide, residential care to the care recipient.
(5) If the Secretary needs further information to determine the application, the Secretary may give to the applicant a notice requesting the applicant to give the further information:
(a) within 28 days after receiving the notice; or
(b) within such other period as is specified in the notice.
(6) The application is taken to have been withdrawn if the information is not given within whichever of those periods applies. The notice must contain a statement setting out the effect of this subsection.
Note: The period for giving the further information can be extended—see section 96-7.
(7) The Secretary must notify the care recipient and the approved provider, in writing, of the Secretary’s decision on whether to make the determination. The notice must be given:
(a) within 28 days after receiving the application; or
(b) if the Secretary has requested further information under subsection (5) –within 28 days after receiving the information.
(8) If the Secretary makes the determination, the notice must set out:
(a) any period at the end of which; or
(b) any event on the occurrence of which;
the determination will cease to be in force.
(9) A determination under subsection (1) is not a legislative instrument.
Section 60 of the Subsidy Principles 2014 (the Subsidy Principles) establishes the eligibility for hardship supplement – determination by Secretary:
(1) For subsection 44.31(2) of the Act, this section sets out the matters the Secretary must have regard to in deciding whether to determine that a care recipient is eligible for a hardship supplement.
(2) The Secretary must not determine that a care recipient is eligible for a hardship supplement if:
(a) the care recipient’s means have not been assessed in accordance with the Act; or
(b) the value of the care recipient’s assets (worked out under section 44.26A of the Act and section 47 of these principles) is more than 1.5 times the sum of the annual amount of the following (worked out under the Social Security Act):
i) the basic age pension amount;
(ii) the pension supplement amount;
(iii) the clean energy supplement amount; or
(c) the care recipient has gifted:
(i) more than $10 000 in the previous 12 months; or
(ii) more than $30 000 in the previous 5 years.
Note: Basic age pension amount is defined in clause 1 of Schedule 1 to the Act.
(3) For paragraph (2)(b), in determining the value of the care recipient’s assets for this section, unrealisable assets are not to be included.
Note: Unrealisable asset is defined in section 4.
(4) In deciding whether to determine that a care recipient is eligible for a hardship supplement, the Secretary may have regard to the following matters:
(a) the care recipients’ total assessable income (worked out under section 44.24 of the Act and section 41 of these principles);
(b) whether the amount of income available to the care recipient after expenditure on essential expenses is less than 15% of the basic age pension amount;
(c) the financial arrangements of the care recipient;
(d) the care recipients’ entitlement to income support:
(i) under the Social Security Act; or
(ii) under the Veterans Entitlements Act; or
(iii) from any other source;
(e) whether the care recipient has taken steps to obtain information about his or her entitlement to pension, benefit or other income support payments;
(f) whether the care recipient has access to financial assistance:
(i) under section 1129 of the Social Security Act (relating to access to financial hardship rules for pensions);
or
(ii) under the pension loans scheme under Division 4 of Part 3.12 of the Social Security Act; or
(iii) from any other source;
(g) whether any income of the care recipient is income that he or she does not reasonably have access to;
(h) whether there is a charge on the care recipient’s income over which the payment of resident fees cannot practically take precedence;
(i) whether the care recipient is in Australia on a temporary basis;
(j) any other matters the Secretary considers relevant.
Section 61 of the Subsidy Principles defines the meaning of essential expenses for a recipient of residential care:
(1) Essential expenses, for a recipient of residential care, include expenditure on any of the following:
(a) resident fees;
(b) if the partner or a dependent child of the care recipient lives in the care recipient’s principal home—rent or mortgage for the principal home;
(c) private health insurance;
(d) ambulance cover;
(e) medical expenses, including expenses incurred under a health professional’s direction;
(f) transport costs to attend medical appointments;
(g) dental care;
(h) prescription glasses (one pair per year) or contact lenses;
(i) artificial limbs, eyes or hearing aids for amounts that are not already covered by other government schemes or programs;
(j) wheelchair and mobility aids;
(k) if the care recipient is paying a funeral plan on a periodic basis. the funeral plan.
(2) However, essential expenses, for a recipient of residential care, do not include expenditure on any of the following:
(a) extra service fees for a place in a residential care service that has extra service status;
(b) amounts paid for additional care and services agreed as mentioned in paragraph 56.1(e) of the Act;
(c) amounts spent by a person, authorised to act on the care recipient’s behalf, other than for the benefit of the care recipient.
Subsections 11(12) and (13) of the Social Security Act 1991 (Cth) (the Social Security Act) sets out the definition of an unrealisable asset:
(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.
(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.
Instruction 4.6.7.50 of the Social Security Guide (the Guide) provides:
Unable to sell or borrow against an asset
Accept that a person is unable to sell or borrow against an asset if:
·the asset is on the market but cannot attract a buyer and the asking price is no higher than 10% above the assessed assets test value, or
·the person has been found eligible for Farm Household Allowance, or
·there is a legal restriction or court order which prevents the asset being sold or borrowed against, or the asset is subject to a pending property settlement, or
·the asset is a jointly owned home and the person has fled the home as a result of domestic violence, or
·the asset is owned jointly with another person and this person refuses to consent to the sale of the asset, or
·the asset is owned as a tenant in common and the practical effect of this form of ownership is that the asset would be unsaleable.
Person in temporary hardship expected to borrow
A person who is in temporary hardship (1.1.P.205) and who is not expected to sell an asset may be able to borrow against their assets to alleviate hardship.
Example: A person who owns substantial business assets and who is experiencing temporary hardship is expected to attempt to borrow by offering their business assets as security.
Unreasonable to sell or borrow against an asset
The assets hardship rules for pensioners include a test of whether it would be unreasonable to expect the pensioner to sell or borrow against an asset.
For pensioners accept that it would be unreasonable for them to sell or borrow against an asset if:
·the asset is a property and the pensioner has lived there for at least 20 years and the property cannot be subdivided to allow the pensioner to retain the portion their home is on, or
·the asset is a farm and the pensioner has been a farmer for at least 20 years (not necessarily on this farm) and the pensioner is working the farm and they could not sell some of the land without affecting the viability of the farm and/or significantly affecting their income from the farm (see exception), or
·the asset is a farm and a family member is working the farm to capacity and has been working the farm for at least 10 years (a slightly shorter period can be accepted if the family member has worked the property continuously since leaving school) and the farm is the main source of the family member's livelihood (see explanation and example), or
·the asset is a farm or some other business and there is a temporary but substantial reduction in income from the business due to factors outside the pensioner's control, or
·the asset is a house occupied by a near relative and the near relative has lived in the house for at least 10 years or the near relative has previously provided care for the pensioner in the house (which was formerly the pensioner's home) or the near relative is a handicapped child of the pensioner and the pensioner is providing the house to promote the child's independent living or the near relative has dependent children and the family income of the near relative does not exceed the FTB income ceiling, or
·the asset is the person's principal home, the person is temporarily overseas, and the person has been unable to return to Australia for reasons beyond their control.
ISSUE
The issue which the Tribunal has to determine is whether Mr Keating was entitled to financial hardship supplement assistance for aged care.
CONTENTIONS
Mr Keating
Mrs Martinussen contended on behalf of her father that he qualified and has continued to qualify for financial hardship as he is in severe financial hardship.
Mrs Martinussen submitted:
·Whilst she does not dispute the valuation of the commercial property at $200,000, Centrelink had not factored in that the property will be subject to significant capital gains tax when sold as the property was bought in 1982 for $72,000.
·The claim made on 13 October 2022 for financial hardship assistance for residential aged care was in fact a re-application where she completed an extremely lengthy application. Her father had previously been granted financial hardship in September 2021 which had been backdated to the date he entered aged care permanently.
·She waited from September 2022 for a reply and heard nothing from Services Australia until November 2022. She had no reason in that time to believe that the claim would not be granted as none of her father’s circumstances had changed, since he had to go into a nursing home.
·She called Centrelink multiple times to check the progress of the application and was told initially her father was granted the hardship as he had approximately $20,000 in savings when he went into the nursing home.
·Her father has been a carer for over 10 years for his severely mentally dysfunctional son who had been living in the family home.
·She was never advised that her father was only granted financial hardship in special circumstances because of COVID-19, so of course was led to believe that her father was granted financial hardship because:
a)he had no savings;
b)he was unable to sell the family home due to his son being a protected person who could not cope with living in another residence;
c)the commercial property could not draw an income, be sold or be borrowed against. Post-COVID-19, the commercial property has continued to be a drain on finances, there had been no change to his financial situation or the commercial property market.
·Therefore, she was convinced that the decision to discontinue her father’s financial hardship was a mistake as none of her father’s circumstances from when he was granted the hardship had since changed.
·It was only after she appealed the decision discontinuing the financial hardship payments, was she advised her father only received financial hardship as a special provision because of COVID-19.
·Payment of the hardship supplement ceased on 15 September 2022 but she did not receive notification of the determination until several months later, and this has caused her father considerable financial distress.
·Previously his aged care fees, which are $4,000 a month, have been covered by all of his age pension and the financial hardship supplement. Suddenly there was an invoice for $7,000 which his aged care facility took out of his account by direct debit, leaving him with $0 in his account so he had no money to pay for ongoing medications, specialist appointments and other life necessities.
·Her father had been admitted to hospital with a heart attack recently which they believe had been contributed to by the stress of being in debt (never having owed anybody anything all of his life) then the backdated, unexpected withdrawal of hardship became a debt of $29,000, and of course continues to grow.
·As they were never told that her father was granted financial hardship because of COVID-19, they had taken no action to put his commercial property on the market, nevertheless she believed it was evident that it would not have sold and would have satisfied Services Australia’s criteria.
·The evidence from Nichols Crowder Property Solutions clearly demonstrated they have done everything possible to try to rent the property out and it has always been open to offers, however there is no market for commercial properties in that area and that market has actually declined since COVID-19.
·Her father’s commercial property had not been taken into account as an asset during COVID-19 as it was not possible to rent it then, draw an income nor sell as an asset and nothing had changed. No income had been derived from the property.
·The previous tenant at the commercial property had not paid the rent for a considerable period of time and in August 2021 vacated the premises, returning the keys without paying the many thousands they owed in back rent.
·Her father’s commercial property has produced no income since 2019, could not be rented and in fact was a drain on his pension. As such it cannot be considered an asset as there is only a negative dollar value.
·Her father’s son was living in the family home as a protected person as he has severe mental health issues which are progressively worsening especially since her father has gone into aged care.
·In October 2023 she sold her father’s former home as the 2-year exemption period from the asset test had expired. As a result, her father was no longer in receipt of the age pension and his aged care facility has suspended payment of his fees until final settlement of the property. She will need to utilise some funds from the sale to find accommodation for her father’s severely disabled son. She had sold the former home and not the commercial property as she knew it would sell, produce a greater return and was exempt from capital gains tax.
·She had secured tenants for the commercial property around August 2023 by offering them the first 3 months’ rent-free which ended in November 2023, but to date had not received any rental income and was most concerned they would behave like the last tenants and simply not pay. She had advised Services Australia the property had been leased and Services Australia had calculated that after costs were taken out her father would receive about $14,000 per year from the property.
·Her father had managed all his own finances until he went into aged care, which he was extremely reluctant to do but numerous falls meant he was no longer safe at home. Because of his decline in capacity, she has had to take over all his financial dealings which has been very complicated, stressful and beyond her comfort zone.
Mrs Martinussen contended the evidence from Nichols Crowder Property Solutions clearly demonstrated the property was an unrealisable asset. Mrs Martinussen contended the market, location and condition of the commercial property made it impossible to either sell or lease. Mrs Martinussen contended that she had not placed the property on the market as the cost to her father would have been greater than his limited financial resources and assessed it was wiser to preserve his meagre funds than proceed on a fruitless exercise to advertise the property for sale. Mrs Martinussen relied on the following letters from Ms Linda Ellis, Commercial Sales & Leasing Executive at Nichols Crowder Property Solutions, whom she had engaged to deal with the property once her father was no longer able:
(a)Letter of 28 November 2022:
We are writing to you in relation to the above mentioned commercial office which Is vacant and owned by William Wright Keating.
Our company have been actively promoting the office for lease on the open commercial market. The promotions commenced on 14 October 2021. There is a large for lease board at the front of the office building, plus since 14 October 2021 the office has been listed and remains live on the following web sites:
Over that period we have received a total of 35 enquiries from the listings and sign board, plus have also given the details to potential tenants we have contacted direct. Approximately 15 personal inspections have been carried out, none of which have resulted in an offer to lease being received.
The market for leasing first floor office space in Mount Eliza is very quiet. That is mainly due to waning business confidence as a result of the challenges the pandemic has brought to business owners. Unfortunately, it is ongoing. Plus over the time trying to lease the office, we have had two elections (Federal and State) which have also dampened business enthusiasm.
The office is on the first floor of the building, and is accessed via stairs. Due to not having access for disabled people, some businesses particularly health related or professional services will not consider leasing an office on the first floor of a building without a lift.
In the building next door at [redacted] there is another similar size vacant office available on the first floor which is brand new. That building also doesn't have a lift. We listed that office for lease in February 2020.
I wish I could guarantee a new tenant will occupy the office soon, however that is impossible in this depressed leasing climate.
I wouldn't even recommend you consider selling the property at the moment. Commercial properties which are part of an Owners Corporation are not sought after by investors or owner occupiers. As an example, we have a retail shop listed in Mount Eliza, which has been on the market for the past ten months. Feedback from enquirers focuses on the fact that it is not a freehold title. It is part of an Owners Corporation complex, and that is the reason it hasn't sold.
Unfortunately, the current market conditions are not conducive to selling.
(b)Letter of 20 September 2023:
To provide more detail in relation to our endeavours to lease the property, I advise as follows:
1. The Owner's POA engaged our company to act on his behalf, on a written leasing authority dated 12 October 2021.
2. On or about 18 October 2021 the For Lease board was erected at the front of the property, and a For Lease poster was erected in the office window. (see photo A attached).
3. On 18 October 2021 the property listings were live on four internet sites:
a. (see listing B attached)
b. During the time the property was being promoted ie until being removed as Leased on 25 July 2023, we received numerous enquiries, being by email or by telephone. An idea of the number of enquiries include:
a. realcommercial - 74 enquiries logged (see C attached Campaign Report)
b. commercialrealestate - 48 enquiries (see D attached Performance Report)
c. Agent Box (our internal system) - 53 enquiries (see E attached Activity Report)
5. Other enquiries such as phone calls after seeing the for lease board are not logged in the above reports.
We conducted at least 20 personal inspections during the promotions. In that time, there were only two more serious potential tenants. Unfortunately neither chose to submit an offer to lease in order to take up a lease of the premises.
The commercial leasing market changed dramatically after the pandemic started. Enquiry seemed to remain reasonably good, however there were very few leasing taking place due to the lack of confidence arising from the pandemic. Then, to make it worse, having a Federal and State election in 2022, added to the angst of anyone considering moving their business or starting one up.
To my knowledge, there was just one other vacant office premises in Mount Eliza.at that time. That office is also on the first floor in the neighbouring building at [redacted]. It was listed for lease in February 2020, was fully promoted, and finally leased in March 2023. It also has access via stairs (same as Mr Keating's premises). Access via stairs only suits a limited number of potential tenants. Any business who has elderly or infirmed clients will not occupy a first floor office without lift access.
To conclude the leasing aspect, we would love to have leased the premises much sooner than we did, however the market conditions and particularly the lack of market confidence was prohibitive.
Selling
During the time the property was being promoted for Lease, Sharyn Martinussen, Mr. Keating's POA and I had more than one conversation about the prospect of selling it. Our company are the most active selling agents in Mount Eliza, plus (for the records) we manage over 64 Mount Eliza commercial properties. We therefore have very good knowledge of the market in both selling and leasing. When we discussed the possible sale of the property, I advised her that there were a few reasons not to sell on such a depressed market.
The first being that the property was vacant, and would not appeal to investors. The second being that it is part of an Owners Corporation and not a freehold Title, and the last being that purchaser confidence had dropped away markedly just like the prospective tenant confidence had, and for mainly the same reasons.
Fundamentally Mrs Martinussen’s evidence was that there was no point in attempting to sell the commercial property. She advised in oral evidence at the hearing:
Being in charge of my father's finances has been extremely difficult as I have been watching the bank balance get lower and lower to what he had when he first went in there – so I wasn’t inclined to set up the commercial property for sale, knowing that it wouldn't sell because the real estate agent I’ve got – I had trust in her and her knowledge of the area – she’s told me it’s not going to sell – she’s got other properties in the area that have been for sale during that time that are almost identical to my dad’s – one of the reasons she says is there are no tenants so no one is going to buy it for that reason given the climate – she’s able to prove that as she had similar properties for sale for a long time and also not sold. For me to list it knowing it wouldn’t sell meant I would have had to use my father's finances for advertising – which would have been thousands of dollars that he didn’t have to spare he had to keep to continue to pay the aged care facility. I was under the impression if he couldn't pay his fees then he couldn't stay there. I wasn’t prepared to spend some of money that he really didn’t have to advertise a property that I knew wasn’t going to sell. If it did sell, it wasn't enough to pay for his rates anyway. I called the tax department and I would be up for capital gains tax that would be 50% of the difference between what he bought it for and what its value was – selling it would leave virtually nothing and a really silly thing to do financially and wouldn't have paid for his DAP – he still would have struggled financially.
….
R: Do you agree you could have put the property on the market to test whether it would sell?
A: No - there wasn't the funds available, it would have taken away funds from my father's aged care facility – he has to have that level of care, he is confined to a princess chair – I couldn't risk using thousands of his dollars that would have lasted a couple more months.
Mrs Martinussen contended she was prohibited by law from borrowing against the commercial property and referred the Tribunal to her emails to the Respondent:
I went to the CBA, Mentone branch, that afternoon to seek more evidence to that stated namely that they had said they would not provide a loan. As in borrowing against Dad’s real estate. I spoke with the manager. She explained that the bank could not provide hard copy evidence of their inability to provide a loan borrowing against property. She said this was not a branch decision but a CBA policy. However she said it’s readily available on the website. The fact being that the law prohibits people with full POA (as I am as my father no longer has capacity) from putting the person they have POA for into debt. Therefore they would never allow a loan against his asset.
And on 26 September 2023:
I went to a different branch this time Bentleigh CBA and spoke to a senior manager in his office, I explained what I had been asked to provide. He said that they could not and do not provide anything in writing pertaining to the fact that I would not be able to borrow against the property. I asked if I could go through the process formally and then provide a print out of that. He said the rejection would most likely affect my credit rating. But most importantly that I could not even apply formally as I would not be eligible the reason being, as I explained from my last meeting with the Mentone branch of CBA, that a POA is not allowed (by law) to put the person that they are acting for into debt. Also it would never be looked at because my father would never be able to service the loan, given he is 88, has severe medical issues and has developing dementia.
Mrs Martinussen contended her father was in financial hardship and needed assistance to meet his daily costs of living and to deal with the debt created by backdating the rejection of his hardship claim.
The Secretary, Department of Health and Aged Care
The Respondent contended that for Mr Keating to be eligible for the hardship supplement under subsection 44.31(2) of the Act and section 60 of the Subsidy Principles, the value of his assets must not be more than 1.5 times the sum of the annual amount of age pension, pension supplement and clean energy supplement amount. The Respondent submitted as at 13 October 2022, 1.5 times the annual pension, including the pension and clean energy supplements, was $40,033.50.
The Respondent contended Mr Keating’s assets, specifically his commercial property valued at $200,000, is over that threshold limit.
The Respondent submitted the purpose of financial hardship payments was outlined in the matter of Reed and Secretary to the Department for Health and Ageing [2004] AATA 1029 (‘Reed’) where Member Isenberg noted:
…the Act recognises that some individuals may experience financial hardship in paying basic daily care fees, income-tested fees, or an accommodation payment. The intent of the individual hardship provisions in the Act is to ensure that access to aged care under the Act is based on need, rather than on ability to pay. The hardship provisions are designed to assist people who, because of factors outside their control, are experiencing genuine and severe financial hardship and are therefore finding it difficult to contribute to the cost of their care.
The Respondent submitted section 4 of the Subsidy Principles provides that an ‘unrealisable asset’ of a care recipient has the meaning given by subsections 11(12) and (13) of the Social Security Act.
The Respondent submitted that the commercial property was not an unrealisable asset and cannot be disregarded as an asset for the following reasons:
(a)In order for Mr Keating to argue that the commercial property is unrealisable, he must establish that he cannot sell the property and that he cannot use it as security for borrowing, or that he cannot reasonably be expected to do either.
(b)There is no evidence that the commercial property cannot be sold or realised or that Mr Keating could not reasonably be expected to do so. Mr Keating has no legal or practical impediment to selling the property and is at liberty to do so. However, he has not exercised the right of sale and has never put the property on the market to be tested for sale.
(c)In this regard, Instruction 4.6.7.50 of the Guide states that ‘accept that a person is unable to sell or borrow against an asset if: the asset is on the market but cannot attract a buyer and the asking price is no higher than 10% above the assessed assets test value’.
(d)Further, in the matter of Winch and Secretary, Department of Social Services (Social services second review) [2016] AATA 286, the Tribunal held:
Based on this evidence, whilst acknowledging that the three Gingin farm properties may be difficult to sell (primarily because they are owned by multiple parties), the Tribunal finds that they are not “unrealisable assets” as defined in s 11(1) of the SSA. More specifically, the Tribunal finds that Mr and Mrs Finch’s SMSF’s one-third share in the three farm properties are not “unrealisable assets” as defined in s 11(1) of the SSA. The main reason for this is that the sale of the three farm properties has, to date, not yet been fully tested as they have not been listed for sale at their current market values. If the three properties were to be sold at or around their current market values, Mr and Mrs Finch would receive sale proceeds of approximately $480,000, after allowing for agents fees. Mrs Finch told the Tribunal that if they could obtain even $400,000 from the sale of their SMSF’s one-third interest in the three farm properties that, “in her mind”, would be sufficient to enable her and her husband “to live a comfortable life”. This evidence weighs against a finding of “severe financial hardship”.
(e)The letter by real estate agent Ms Ellis of Nichols Crowder Property Solutions dated 20 September 2023 is not evidence that the commercial property cannot be sold in that:
(i)In the letter, Ms Ellis does not state or predict that the property cannot be sold for market value. Instead, she notes reasons for her advice not to sell in such a depressed market.
(ii)However, the test for unrealisability is whether the property can be sold as at the current market. There is no requirement to wait for the ideal market conditions before selling. If Mr Keating chose not to sell at a depressed market, it is a choice rather than an inability to sell.
(iii)In Re Simunovic and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] AATA 421, the Tribunal found that the homeowner had not made a serious endeavour to sell her home because she had put it on the market at a price that was unlikely to attract a purchaser:
[32] Whilst the Tribunal understands Mrs Simunovic’s desire to maximise her return on the property purchased for investment purposes as is evidenced by the prices for which the property has been advertised for sale in recent years, as stated in the Guide at 4.6.7.10 “a customer is expected to re-arrange their financial affairs before calling on the community for income support through the social security system”.
[33] There was no evidence of a legal impediment to selling the property or that a UPU agreement with council would not be forthcoming at some stage. On the available evidence the Tribunal is satisfied that the land was realisable in the absence of a finalised UPU for a price less than that for which it has been marketed from time to time. Mrs Simunovic has been trying to sell the property in the absence of a finalised UPU and there has been interest by prospective purchasers but not at the advertised price.
[34] The Tribunal agrees with the submission advanced on behalf of the respondent that it is an inappropriate application of the social security legislation for a person to rely on the social security system for support while developing an asset for better return. At the relevant time the property was being marketed for 230 euro per m² which if sold, would have grossed an amount of 4 million euro in excess of the original purchase price.
[35] The Tribunal concludes that the property could be sold albeit at a more realistic price and it was not unreasonable for Mrs Simunovic to be expected to sell the property…
(iv)Whilst the commercial property has been on the market for lease with no success, the inability to lease a property is not in itself evidence that it cannot be sold.
(f)Currently, it is mere speculation on the part of Mr Keating and Ms Ellis of Nichols Crowder Property Solutions that the property will not sell and does not form a reasonable basis to conclude that the property is unrealisable. Until the property is put on the market and tested for sale, the prospect of its sale is unknown.
(g)Even if the Tribunal were to accept Mr Keating’s argument that the commercial property cannot be sold (which is not conceded), there is no corroborating evidence that it cannot be used as security for borrowing against. Mr Keating has not submitted any independent evidence that he has enquired with a bank or a lender as to borrowing against the property.
(h)None of the other circumstances listed in Instruction 4.6.7.50 of the Guide applies to make the commercial property unrealisable.
(i)In accordance with numerous decisions of AAT2 and the Federal Court, the intent of the hardship provisions is to assist people who are experiencing genuine and severe financial hardship due to circumstances outside of their control. This is consistent with public expectation that people with the means to contribute towards the cost of aged care should do so.
(j)The commercial property was presumably purchased to generate income. In the circumstance where Mr Keating has a property that he can use to support himself which he has not attempted to sell or to borrow against, it should not be considered unrealisable.
The Respondent submitted the issue of whether an asset is unrealisable has been considered in a number of AAT2 and Federal Court decisions and took the Tribunal to the following matters:
(i)In Re Repatriation Commission v Harry Stewart Hall and Joan Evelyn Hall [1988] FCA 89, the Federal Court set out the following approach to be taken when considering whether a property is unrealisable:
12……. However, having regard to the history of the legislation, and to the introduction of the assets test into both social security and repatriation legislation by the Social Security and Repatriation (Budget Measures and Assets Test) Act 1984, we are satisfied that the provisions in both the Social Securities Act 1947 and in the Veterans' Entitlements Act 1986 with respect to the assets test should be given a like interpretation.
13. Mr Sully submitted that s.53(1) of the Act was concerned only with the personal financial circumstances of the claimant for a pension. He submitted that the test of reasonableness did not take into account matters such as the circumstances of other members of the family who might be living on and deriving income from the farm property. In our opinion, if the legislation had intended to apply a financial test of that restricted character, it would have done so in clear terms. It did not do so. The tests prescribed in ss.53(1) and (3) specifically require that other circumstances shall be taken into account. When s.53 requires that a decision be made as to whether the claimant for a pension could not reasonably be expected to sell or realise an asset, it requires all matters that ought to bear upon the reasonableness of a decision to sell or realise to be taken into account. In doing so, the sub-section provides a separate and distinct test from the test of severe financial hardship which the sub-section also prescribes. Moreover, in Secretary, Department of Social Security v. Copping, the Court rejected a like submission. It is not correct to say, as Mr Sully contended, that the whole emphasis of the legislation is upon the personal financial capacity of the applicant for a pension.
14. In our opinion, the Tribunal was not obliged to characterize the factors which it took into account as personal and social on the one hand, and financial and economic on the other, and exclude the former from consideration. It was called upon to apply a very broad test, namely what the respondents could be reasonably expected to do, and was entitled to have regard to the whole of their circumstances.
(ii)In Rossow and Secretary, Department of Health [2018] AATA 1275, the Tribunal stated:
29. Whether it is reasonable to sell or realise an asset or use it as security for borrowing is an objective test. The Secretary referred the Tribunal to Atkinson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 325 where the Tribunal applied the Full Federal Court's reasoning in Repatriation Commission v Hall (1988) 15 ALD 84 in considering the question of whether an asset was unrealisable and stated:
6 ...an overall aim of social security law was to ensure that persons utilise assets available to them to provide for their financial support rather than rely upon payments under the Act and that exercising a discretion to treat the [Applicant's] property as unrealisable did not give effect to that policy ...
(iii)In Librizzi and Secretary, Department of Health (Social services) [2018] AATA 2278, the Tribunal found that:
Whilst the Tribunal accepts the contention of the Applicant in respect to subsection 11(12)(a) and/or 11(13)(a) of the Social Security Act and supports the proposition that the person cannot sell or realise the asset, it is also mindful of subsections 11(12)(b) and 11(13)(b) of the Social Security Act.
The Tribunal finds there would be an expectation by the public that there should be the contribution of private funds towards aged care, if such funds are available.
The Tribunal therefore finds it is reasonable in this instance for the property to be sold or a loan secured against the property for the age care requirements of the Applicant.
There is no evidence before the Tribunal to suggest such an approach has been considered.
For completeness the Respondent notes the following with respect to the matters under subsection 60(4) of the Subsidy Principles that the Secretary may have regard to:
(a)Mr Keating is currently receiving age pension at the rate of $1,096.70 per fortnight.
(b)The letter by real estate agent Ms Ellis of Nichols Crowder Property Solutions dated 20 September 2023 states that the commercial property was leased on 25 July 2023, therefore Mr Keating is receiving rental income. But the rental income is not known.
(c)As the rental income is unknown, there is insufficient information to ascertain whether Mr Keating’s income after expenses (which the Respondent accepts is essential) is less than 15% of his age pension amount of $140.52.
(d)There is no evidence of any other financial assistance from any other source.
The Respondent contended that Mr Keating’s commercial property is not an unrealisable asset and cannot be disregarded for the purposes of determining his eligibility for hardship supplement under section 60 of the Subsidy Principles and section 44.31 of the Act.
The Respondent accepts that the Tribunal is not restricted to considering Mr Keating’s circumstances as at the date of the original decision and it is open to the Tribunal to consider the impact of changes in Mr Keating’s circumstances in the period subsequent to the date of the original decisions and up to the date of the Tribunal decision. This principle was established by the High Court in Shi v Migration Agents Registration Authority (2008) CLR 286. There is no temporal element in the financial hardship provisions that require a contrary conclusion.
The Respondent contended that as Mr Keating’s commercial property of $200,000 exceeds the maximum of 1.5 times the annual age pension of $40,033.50 as at 13 October 2022, he is not eligible for hardship supplement.
CONSIDERATION
The Tribunal was very sympathetic to Mr Keating’s plight and the difficulties Mrs Martinussen was encountering in managing her father’s affairs. The Tribunal fully appreciates navigating the residential aged care system and its associated charges and benefits is overwhelming. The stress of placing a loved one into a facility when they do not want to go is taxing at the best of times and the added complications for Mrs Martinussen of taking over her father’s finances and dealing with her brother greatly exacerbated this already stressful situation.
The Tribunal found Mrs Martinussen to be a credible witness who provided cogent and reliable evidence.
The Tribunal does not dispute Mrs Martinussen’s primary contention that her father was and continues to be in serious financial stress.
The Tribunal, on the evidence, found Mrs Martinussen had never disputed that her father’s commercial property was included in his assets, as she had at all times disclosed the property and all her father’s assets to Centrelink.
The Tribunal found on the evidence Mrs Martinussen had not been advised by Centrelink that her father had originally been granted the hardship supplement from 23 March 2021 to 15 September 2022 on the basis of the temporary COVID-19 measures which excluded the commercial property from the assessment of the value of his assets being more than 1.5 times the sum of the annual amount of age pension.
The Tribunal on the evidence found Mrs Martinussen was first advised of the temporary COVID-19 measures when Centrelink ceased paying her father the hardship supplement. The Tribunal relied upon the following from Mr Keating’s Centrelink records which indicates what advice had been provided to Mrs Martinussen, noting the information recorded on 21 September 2021 was for internal Centrelink purposes and was not conveyed to Mrs Martinussen.
On 21 August 2021, Centrelink noted the following on Mr Keating’s record of enquiry:
Your former home has not been included in your means test assessment based on a close relative living in your home, however the asset value of the commercial property at [redacted] is included in your total assets. In order for this property to be deemed as unable to be sold or borrowed against it would need to meet the following criteria:
- been marketed for a period of at least 6 months
- an asking price is no higher than 10 per cent above the market value test, and
- had at least one price reduction in a 6 month period
If the above applies to your circumstances please provide the below evidence
- valuation from a real estate agent
- document showing the asking price
- document showing the property has been actively on the market for at least 6 months
- document showing that there has been at least 1 price reduction over a 6 month period.
If you meet the above criteria to have the commercial property excluded for hardship assistance purposes, the following is a list of essential expenses for which you need to provide evidence to support your financial hardship assistance claim in respect to a basic fee, means tested care fee and accommodation payment reduction:
- resident fees - please provide a copy of the accommodation agreement showing the agreed Refundable Accommodation Deposit (RAD) and equivalent Daily Accommodation Payment (DAP) amounts
- family home - rates notice, latest statement for home/contents insurance showing the name of the policy holder and premium amount
- private health insurance - latest statement showing the name of the policy holder and the premium amount
- medical expenses - receipts for any out of pocket expenses
- dental care - receipts for any out of pocket expenses
- transport costs - evidence of the cost of the transport e.g taxi receipts and verification of the corresponding medical appointments (please note: Transport costs are only allowable if they relate to medical appointments)
- prescription glasses (one pair per year) or contact lenses – receipt
- artificial limbs, eyes or hearing aids for amounts that are not already covered by other government schemes or programs – receipt
- wheelchair and mobility aids - receipts
- non prescription medication - receipts
Txt: Other reasons for asking for more information: Please provide a profit and loss statement or recent tax return to verify that no income is currently being received in regard to the commercial property…
On 21 September 2021 Centrelink noted the following on Mr Keating’s record:
Commercial property at [redacted] is deemed as unreasonable to be sold or borrowed against. The property is a commercial tenancy and customer has received no rental income from the property since entry to care due to the continuing lockdowns in Victoria. Tenant has now returned the keys after paying no rent during the lockdowns and customer is unable to re lease the property due to the current lock down situation. As per OB, a new temporary hardship provision has been added as follows: Step 12
Temporary COVID 19 Policy
Investment property no longer generating income due to COVID-19
Investment properties no longer generating income due to COVID-19 are classed as an asset that cannot be sold or borrowed against because the person is:
• in temporary hardship, and/or
• it is unreasonable to sell the asset
The property meets the above criteria. REBS income has been coded to NIL as per OB 108-04130020
Expenses for which evidence has not been provided have not been included
On 13 October 2022 Centrelink noted the following on Mr Keating’s record of enquiry:
The previous hardship assistance was granted under a temproary (sic) COVID 19 criteria and ceased 15/9/2022. The new evidence provided in regard to a reassessment, a letter from Nichols Crowder Property Solutions, indicated that there had been difficulty in re-leasing the commercial property and that a consideration to selling the property was not recommended at the present time based on current market conditions. Unfortunately, if a choice is made not to list a property for sale, it results in the criteria for hardship not being met. In this instance, there is no reason that prevents the property from being listed for sale. If the property is listed for sale and has been on the market for at least 6 months with at least 1 price reduction, another applciation (sic) can be made for hardship assistance.
On 14 March 2023 Centrelink noted the following on Mr Keating’s record:
Customer entered permanent residential aged care 23/3/2021. Although the customer's former home is exempt for means testing, the customer owns a commercial property from which rental income was previously received. Aged Care financial hardship for fees was granted 16/9/2021 based on the fact that the customer was no longer receiving any rental income for the property during the worst of the COVID 19 pandemic and met the conditions of the Temporary COVID 19 policy. The previous grant ended 15/9/2022 and the customer lodged a new application which was rejected. The customer has now provided additional information (in the scan noted above) from the Real Estate agent handling the re rental of the commercial property. The property agent has not been successful in finding a new tenant as yet and has also indicated that due to the current climate, selling the property is not recommended. The fact that the property is not currently listed for sale would lead me to Item 1 in the resources page re an asset that is unable to be sold or borrowed against in the above OB, however as the Temporary COVID 19 policy is still current in this OB, I am referring as I am unsure if the customer can be deemed to meet the criteria of Item 12 –
…
Thank you for your enquiry.
As per Aged care financial hardship assistance - assessment (dept.local) / Background Tab
Temporary COVID 19 policy about assessment of assets that cannot be sold or borrowed against
Staff must assess an aged care financial hardship claim using the new assets that cannot be sold or borrowed against policy if the applicant advises:
- they have an asset that cannot be sold or borrowed against, and
- are in financial hardship due to COVID-19 restrictions
As there are currently no COVID-19 restrictions in Australia, we cannot grant hardship based on this policy at this time. I will be providing feedback to the OB to have this section reviewed and possibly removed.
In regards to the commercial property meeting other unrealisable asset criteria, choosing not to sell an asset is not beyond a care recipient's control. By not selling a property that is able to be sold, a care recipient is intentionally placing themselves in hardship.
In Aged care financial hardship assistance - assessment (dept.local) / Resource Tab / List of assets that cannot be sold or borrowed against (unrealisable assets), both Item 1 - A property a care recipient can't sell and Item 10 - Rented properties, requires:
- been marketed for a period of at least 6 months
- an asking price is no higher than 10 per cent above the market value test, and
- had at least one price reduction in a 6 month period
Note: 1 price reduction during the initial 6 months is sufficient to meet the criteria
Once the commercial property has been on the market for sale for at least 6 months, with evidence the other criteria has been met, the customer can then again apply for hardship.
The Tribunal considered Mrs Martinussen had mounted a strong case for why she contended her father’s commercial property was an unrealisable asset. The Tribunal in accordance with section 33(1)(c) of the Administrative Appeals Tribunal Act 1975 (Cth) may inform itself on the matters Mrs Martinussen’s contended in such manner as it thinks appropriate.
Claim 1: Advice from Ms Ellis that the current market conditions are not conducive to selling
The information in the public domain certainly reinforces the view of Ms Ellis that the commercial property market in Victoria is very weak.
·Information from the National Australia Bank Commercial Property Survey Q3 2023, paints a bleak picture for anyone seeking to sell commercial property in Victoria:
Overall commercial property market sentiment in Q3 was negative in all states except QLD (+6 pts). It was lowest by a considerable margin (and fell further) in VIC (-38 pts), driven by very weak sentiment for Office (-79 pts) and Retail (-56 pts) property. Short-term confidence was highest in WA (+11 pts), which was also the only state reporting a positive result (and in all sectors). It remained much lower in VIC (-31 pts), particularly for Office (-75 pts) and Retail (-59 pts) property. Longer-term confidence levels printed positive in all states apart from VIC where it fell sharply (-18 pts).
Claim 2: Advice from several Commonwealth Bank of Australia (CBA) branch managers that Mrs Martinussen was prohibited by law, as her father’s power of attorney, from borrowing against the property as it would put her father into debt
The Tribunal could find no evidence to support this claim and found no such information was available on the CBA website. Powers of attorney in Victoria are regulated under the Powers of Attorney Act 2014 (Vic) (the POA Act).
·Section 26 of the POA Act outlines the matters for which power cannot be given under an enduring power of attorney – it does not make reference to not being able to borrow against a principal’s assets:
To avoid doubt, despite section 22, a principal under an enduring power of attorney is not able to authorise an attorney under that power to—
(a) make or revoke a will for the principal; or
(b) make or revoke an enduring power of attorney for the principal; or
(c) vote on the principal's behalf in an election for the State or the Commonwealth or another State or a Territory of the Commonwealth or a local election or a referendum; or
(d) consent to the entering into or dissolution of a marriage of the principal or of a sexual relationship of the principal; or
(e) make or give effect to a decision—
(i) about the care and wellbeing of any child of the principal; or
(ii) about the adoption of a child under 18 years of age of the principal; or
(f) to enter into, or agree to enter into, a surrogacy arrangement, within the meaning of the Assisted Reproductive Treatment Act 2008, on the principal's behalf; or
(g) consent to the making or discharge of a substitute parentage order, within the meaning of the Status of Children Act 1974, on the principal's behalf; or
(h) manage the estate of the principal on the death of the principal; or
(i) consent to an unlawful act.
·Section 3 of the POA Act provides the following examples of financial matters a power of attorney may undertake on behalf of the principal, including use of a principal’s assets as security for an obligation:
(a) making money available to the principal for the principal's personal expenditure;
(b) paying expenses for the principal and any dependants of the principal relating to the maintenance and accommodation of the principal and any dependants, including purchasing an interest in, or making a contribution to an establishment to accommodate the principal or any dependants of the principal or otherwise making payments in relation to such property;
(c) paying any debts of the principal, including any fees and expenses to which an attorney is legally entitled;
(d) receiving and recovering money payable to the principal;
(e) carrying on any trade or business of the principal;
(f) performing any contracts entered into by the principal;
(g) discharging any mortgage over the principal's property;
(h) paying rates, taxes and insurance premiums or other outgoings for the principal's property;
(i) insuring the principal or the principal's property;
(j) otherwise preserving or improving the principal's property;
(k) making investments for the principal;
(l) continuing investments of the principal, including taking up rights to issues of new shares, or options for new shares to which the principal becomes entitled by the principal's existing shareholding;
(m) undertaking any real estate transaction for the principal;
(n) dealing with land for the principal;
(o) undertaking a beneficial transaction for the principal involving the use of the principal's property as security for an obligation, including taking out a loan on behalf of the principal or giving a guarantee on behalf of the principal;
(p) withdrawing money from or depositing money into an account of the principal with a financial institution;
Claim 3: Concern the property would be subject to significant capital gains tax (CGT) as it was purchased in 1992
The Tribunal does not dispute the sale of the property would incur CGT, however the impact would not be the loss of half the value of the sale. Information on the Australian Taxation Office website provides:
When you sell an asset for:
·more than it cost you – you have a capital gain
·less than it cost you – you have a capital loss.
You pay tax on your net capital gains. This is:
1.your total capital gains
2.less any capital losses
3.less any discount you are entitled to on your gains.
There is a capital gains tax (CGT) discount of 50% for Australian individuals who own an asset for 12 months or more. This means you pay tax on only half the net capital gain on that asset.
Claim 4: Concern the cost of placing the commercial property on the market would be prohibitive
From a quick Google search on the costs associated with selling commercial property, it looks like it depends greatly on the real estate agent’s advertising fees, commission percentage (which can range from 2-4%) and administration fees associated with selling.
Whilst the Tribunal can appreciate these concerns may have persuaded Mrs Martinussen that attempting to sell her father’s commercial property was futile, there was no legal impediment to selling the property. A choice not to sell the asset does not make it an unrealisable asset. Given the advice from Ms Ellis that the property would not sell the Tribunal considers it would have been highly likely Mrs Martinussen could have demonstrated the property was unrealisable in accordance with Centrelink’s Guide by:
·marketing the property for a period of at least 6 months,
·with an asking price no higher than 10 per cent above the market value test, and
·at least one price reduction in a 6-month period.
The Tribunal considers that as Nichols Crowder Property Solutions were already advertising the property for lease, they could have simply listed the property for sale or lease, which is not an uncommon practice in the commercial property market. The Act does not require individuals to sell properties at a loss, it requires them to attempt to cover their own costs by realising assets they hold. If the property could not be sold within a 10% margin of its valuation it would have been deemed unrealisable. There was no evidence to demonstrate to the Tribunal that the property could not be sold.
There was no evidence before the Tribunal that Mrs Martinussen, as her father’s power of attorney, could not reasonably be expected to use the commercial property as security for borrowing. Whilst Mrs Martinussen’s evidence was that she had spoken to various CBA branch managers about borrowing against the property there was nothing to verify the information she had been given was in fact correct. The Tribunal could find no evidence to support Mrs Martinussen’s claim she was prohibited from borrowing against the property.
The Guide provides the following overarching definition of the Australian Social Security system:
Australia has an income support system that is designed to be a safety net for people unable to support themselves without calling on the resources of the community. The income and assets tests are used to target the system so that it remains sustainable and affordable for Australian taxpayers. The tests help ensure that the funds available for social security expenditure are directed to those in the community most in need. The tests are kept under review to ensure that they are meeting the requirements of the community for well-targeted income support.
The Tribunal concurs with the fundamental tenet that it was not unreasonable for Mr Keating to contribute to the cost of his residential aged care by utilising assets at his disposal. The Tribunal found Mr Keating’s commercial property was not an unrealisable asset as there was no evidence to support there had been any attempt to sell or borrow against the commercial property.
The Tribunal found Mr Keating was not entitled to the hardship supplement as the value of his assets was more than 1.5 times the sum of the annual amount of age pension, pension supplement and clean energy supplement amount.
POSSIBLE RECOURSE FOR THE APPLICANT
The Tribunal was very sympathetic to Mr Keating’s difficult situation, which Mrs Martinussen felt was compounded by her father incurring a significant debt through no action of his own. One avenue of last resort open to Mrs Martinussen to explore on her father’s behalf would be to seek redress by making a claim for compensation under the Scheme for Compensation for Detriment caused by Defective Administration (CDDA Scheme), which is administered by the Department of Finance. Defective Administration is defined as:
· a specific and unreasonable lapse in complying with existing administrative procedures; or
· an unreasonable failure to institute appropriate administrative procedures; or
· an unreasonable failure to give to (or for) an applicant, the proper advice that was within the officer’s power and knowledge to give (or reasonably capable of being obtained by the officer to give); or
· giving advice to (or for) an applicant that was, in all the circumstances, incorrect or ambiguous.
Applications under the CDDA Scheme are discretionary, they are assessed on their individual merits, and a finding that a mistake has been made by an official does not automatically mean compensation is payable. The Tribunal has no jurisdiction in respect of perceived defective administrative matters of the Department of Social Services and has no jurisdiction over the administration of the CDDA Scheme.
Whilst the Tribunal has no way of assessing if Mr Keating’s claims might be successful if he lodged a request, it nevertheless would encourage Mrs Martinussen to lodge an application with the CDDA Scheme on her father’s behalf as it would appear Centrelink had failed to explain the original payment of the hardship supplement was in accordance with the temporary COVID-19 provisions.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 58 (fifty-eight) paragraphs are a true copy of the reasons for the decision herein of Ms A E Burke
..............................[sgd]..........................................
Associate
Dated: 25 January 2024
Date of hearing: 1 December 2023 Applicant: Self-Represented Advocate for the Applicant: Mrs Sharyn Martinussen Advocate for the Respondent: Mr Matt Gauci Solicitors for the Respondent: Hunt & Hunt Lawyers
0
7
0