Kin Keung LAI and Secretary, Department of Employment

[2015] AATA 373

[2015] AATA  373

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2015/0325
Re	Kin Keung LAI
APPLICANT
And	Secretary, Department of Employment
RESPONDENT

Decision

Tribunal	Mr P W Taylor, SC, Senior Member
Date	27 May 2015
Date of written reasons	28 May 2015
Place	Sydney

For the reasons given orally at the conclusion of the hearing of this matter, the written reasons for which are attached, the decision under review is affirmed.

........................................................................

Mr P W Taylor, SC, Senior Member

Catchwords

SOCIAL SECURITY – allowances – newstart allowance – value of assets exceeds asset value limit – mortgage debt secured over multiple properties – mortgage debt to be apportioned – determination of asset values – decision affirmed

Legislation

Social Security Act 1991 (Cth) ss 611, 1121(4)

REASONS FOR DECISION

Mr P W Taylor, SC, Senior Member

1. Mr Lai unsuccessfully applied for newstart on in May 2014.  Centrelink rejected his claim because Mr Lai jointly owns two properties, and their relevant combined value exceeds the asset value limit provided for in Social Security Act 1991 (SSA 1991) s 611.  The Social Security Appeals Tribunal (SSAT) affirmed Centrelink’s decision on 12 January 2015.

2. Mr Lai asks the Tribunal to review the SSAT’s decision.  But there are no grounds that would justify the Tribunal arriving at a different conclusion.

3. One of the properties Mr Lai jointly owns with his wife is their home at Castle Hill.  Mr Lai estimated its value at $730,000.  A valuation obtained by the Secretary suggests its value, relevant to the timing of Mr Lai’s application, was $840,000.

4. The other property Mr Lai jointly owns with his wife is a unit at Parramatta.  Mr Lai estimated its value at $430,000.  The Secretary’s valuation is $500,000.

5. Mr Lai acquired the Parramatta unit in 2011.  He borrowed about $410,000, virtually the whole of the purchase price, in order to do so.  That loan was secured by a mortgage over both of the Castle Hill and Parramatta properties.  As at May 2014, the date of Mr Lai’s newstart application, the outstanding loan balance was about $347,000.

6. Mr Lai’s essential point is that he falls within the SSA 1991 asset value limit because (i) his Castle Hill home is exempt from the assets test and (ii) the net value of the Parramatta unit (ie market value less mortgage debt) is only a little over $50,000 and well below the relevant asset value limit ($279,000 as at 8 May 2014 and $285,000 as at 1 July 2014).

7. The Lai’s point is probably valid as an arithmetical assessment of the two properties from his ownership perspective.  But that perspective is subsidiary to the requirements of SSA 1991 s 1121(4).  That section governs the determination of asset values where, as in Mr Lai’s case, a mortgage debt is secured over multiple properties and some of them are assets (such as a person’s home) whose values are disregarded for the purposes of the assets test.  In such a case SSA 1991 s 1121(4) requires the mortgage debt to be apportioned rateably between the disregarded asset (in Mr Lai’s case, the Castle Hill home) and the other assets.  Only the proportion of the mortgage debt that applies to the “other assets” is deducted from the value of those assets.

8. Unfortunately for Mr Lai, when the mortgage apportionment exercise required by SSA 1991 s 1121(4) is carried out, the resultant value of his assets, for the purposes of SSA 1991 s 611, exceeds the asset value limit.  It exceeds the limit irrespective of whether or not:

   (a)the individual values ascribed to the properties are those proffered by Mr Lai in May 2014, the altered values he indicated today, or those asserted by the Secretary as a result of independent valuations in April 2015.

   (b)the relevant asset value limit is either of the values indicated in paragraph 6 above.

9. The validity of the views expressed in the previous paragraph is illustrated by the analysis set out in the accompanying Table.

10. In these circumstances the decision under review must be affirmed.

    Decision

11. The decision under review is affirmed.

I certify that the preceding 11 (eleven) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor, SC, Senior Member

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

Associate

Dated 28 May 2015

Date(s) of hearing	27 May 2015
Applicant	In person
Solicitors for the Respondent	Ms H Schuster, Dept of Human Services