Leung; Secretary, Department of Family and Community Services

[2003] AATA 796

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 796

ADMINISTRATIVE APPEALS TRIBUNAL      )

)      No.  N2002/1961

GENERAL ADMINISTRATIVE DIVISION )

Re SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And KAM BUN LEUNG

Respondent

DECISION

Tribunal Senior Member M D Allen

Date21 July 2003

PlaceSydney

ADMINISTRATIVE APPEALS TRIBUNAL   )         No   N2002/1961
  )  
GENERAL ADMINISTRATIVE DIVISION     )

Re:         SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And:       KAM BUN LEUNG

Respondent

DECISION

Tribunal              Senior Member M D Allen

Date  21 July 2003

Place                   Sydney

DecisionFOR the reasons given orally at the conclusion of the hearing in this matter, the decision under review is SET ASIDE and this matter is REMITTED to the Applicant with the direction that the flat premises at 2/5 Constitution Rd are an asset for the purposes of the Social Security Act 1991 in the possession of the Respondent KAM LEUNG,

BUT THAT the valuation of the said assets is to be ascertained after full inspection and assessment by the Australian Valuation Office.

(Sgd) M D ALLEN

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

Senior Member

CATCHWORDS

SOCIAL SECURITY – valuation of assets - dwelling house with flat premises attached - flat let to a tenant at commercial rent -  flat not part of the Respondent’s principal home and to be valued as an asset in his hands.

Social Security Act 1991 – s.11(1), s.11(5), s.1118(1), s.1121(4)

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

Secretary, Department of Family and Community Services and Kulshrestha [2003] AATA 227

Bowden v. Repatriation Commission  (1992) 15 AAR 325

REASONS FOR DECISION

Senior Member M D Allen

1. At the conclusion of the hearing of the above matter the terms of the decision intended to be made and the reasons therefor were stated orally. After service upon the Respondent of a copy of the decision that was in fact made, the Respondent pursuant to Sub‑section 43(2A) of the Administrative Appeals Tribunal Act1975 requested the Tribunal to furnish to the Respondent a statement in writing of the reasons of the Tribunal for its decision.

2.      The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service.  Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.

3.        The said transcript is annexed hereunto and furnished to the Respondent and to the Applicant as it is the reasons for the Tribunal's decision.

I certify that this and the preceding page are a true copy of the decision and reasons for decision herein of:

Senior Member M D Allen

Signed:         (Kwai-Ling Wong)
           ....................................................................................…

Associate

Date of Hearing  21 July 2003

Date of Decision  21 July 2003

Representative for Applicant     Hannelore Schuster

Representative for Respondent Ms Jackie Finlay, Welfare Rights Centre

O/N 5816

DRAFT DECISION
ADMINISTRATIVE APPEALS TRIBUNAL
Matter N2002/1961
By MR D. ALLEN, Senior Member

SECRETARY, DEPARTMENT OF FAMILY

AND COMMUNITY SERVICES and LEUNG
SYDNEY, 21 JULY 2003

MR ALLEN: By application dated the 18th day of December 2002 the applicant, who is the secretary to the Department of Family and Community Services, sought review of a decision by a Social Security Appeals Tribunal made the 6th day of November 2002 which set aside a decision by an authorised officer and remitted the matter to Centrelink with directions that no asset value be placed on a self-contained unit at the respondent's address, which is 5 Constitution Road, Wentworthville.

In passing I notice that at various times there seems to be an interchangeability between Constitution Road and Constitution Drive, but the rates notice which is contained at document T17 of the documents prepared for the Tribunal, pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, refers to the premises being at 5 Constitution Road.

The premises at 5 Constitution Road consist of a three-bedroomed house and a self-contained flat. Exhibit R2 in these proceedings is a plan of the said structure produced by the respondent and further diagrams can be found at document T13, which is a sewerage service diagram, and I refer also to the document at T18, the rates notice. The rates notice, and it is not controverted in these proceedings, show that the property, 5 Constitution Road, is on the one Certificate of Title having the real property description of lot 104 on plan 808166. It is important to note for these proceedings that the structure, that is to say the three‑bedroomed house and the self-contained flat have only the one Certificate of Title.

The flat itself is now let at a commercial rent and is subject to a tenancy agreement.  The premises have been valued by the Australian Valuation Office, being a roadside valuation but with the use of comparable sales, the valuation is at document T19, and I will say now that questions have arisen regarding the valuation and it is conceded, indeed by the valuer who gave evidence in this matter, that that valuation may well be revised upon a more

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detailed valuation in which the whole of the premises are inspected.  In his evidence however the valuer did say that the flat building appeared to have been purpose-built.

Subsection (1) of section 11 of the Social Security Act 1991 defines asset as meaning property or money, including property or money outside Australia. Exempt assets means assets described in any of paragraphs 1118 subsections (1) paragraphs (a) to (s). Subsection (5) of section 11 reads as follows:

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 private land adjacent to the dwelling house to the extent that the private land together with the area of the ground floor of the dwelling house does not exceed two hectares 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.

Paragraph (d) of subsection (1) of section 1118 reads inter alia:

In calculating the value of a person's assets for the purpose of this Act disregard the following:  if the person is a member of a couple the value of any right or interest of the person in one residence that is the principal home of the person, of the person's partner or both of them.

Although not applicable in these proceedings as such, subsection (4) of section 1121 of the Act provides that any encumbrance over the assets is deducted, in this case I understand there is a mortgage and there has been due allowance for that.

The essential question in the matter before me today was what constitutes the principal home of the respondent. For the applicant it was contended that the flat building did not form part of the applicant's principal home and was therefore an unexempted asset in his hands. For his part the respondent submitted that the whole of the structure at 5 Constitution Road was his principal home, in doing so placed reliance upon the decision of the Full Court of the Federal Court in Secretary, Department of Employment, Education, Training and Youth Affairs v Ovari 98 FCR 140.

Ovari upheld the decision at first instance of his Honour Giles J which is reported as Ovari and Another v Secretary, Department of Employment, Education, Training and Youth Affairs 30 AAR 476.

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Reverting back to Ovari on appeal, it is to be noted that the Full Court said at page 143 paragraph 15:

There was no evidence nor did the AAT find that the market value of the Monash property was increased or decreased by the fact that it was partly used for business purposes.  Given the nature of the property such a variation seems inherently unlikely, nor was there any evidence or finding that some physical part of the property was exclusively used for business purposes.

Now it seems to me that that is where Ovari can be distinguished in this particular case as it was in the decision of Deputy President Forgie in Secretary, Department of Family and Community Services v Kulshrestha (2003) AATA 227. At paragraph 24 of her decision the learned Deputy President said, referring to Ovari:

The Full Court did not explain the meaning of a principal home.  Some assistance as to the meaning of the expression "principal home" is available from the dictionary definitions.  The word "home" has a number of meanings but in context in which it appears in the Act it means (1) a house or other shelter that is the fixed residence of a person, a family or household -

citing the Macquarie Dictionary Third Edition 1997.  She continued:

The meanings ascribed to the word "principal" include first or highest in rank, importance, value, etcetera, chief or foremost.  Taken together a person's principal home is the place of residence that is his or her chief or first and foremost residence.

At paragraph 26 Deputy President Forgie continued:

Having regard to the principles in the authorities and to the ordinary meaning of the expression what is Dr Kulshrestha's principal home?  The place in which Dr Kulshrestha resides is 47 Braeside Avenue, it is the place where he cooks, eats, sleeps, washes himself and his clothes and generally lives.  It is the place where he usually resides and it is the place that he regards as home.

At para 27:

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47 Braeside Avenue is part of a larger building comprising both it and 47A Braeside Avenue.  At one time when he and his family lived together he and they resided in the whole of the building.  The whole of the building could then be regarded as his home.  We are not satisfied that he has resided in the whole building at the relevant times.  Indeed, we are satisfied on the basis of his evidence and of the plan that the building is capable of being divided into two residences but may also be used as one.  On the basis of the tenancy agreement we are satisfied that it has been divided into two and that his tenants have exclusive possession of 47A Braeside Avenue.  Dr Kulshrestha is not entitled to enter that part of the building at will.  He may only enter in accordance with the terms of the lease and insofar as the law permits him to do so.  He may not carry out the activities of daily living in 47A Braeside Avenue or indeed any of them.  In relation to 47A Braeside Avenue Dr Kulshrestha is a landlord and his tenants, rather than Dr Kulshrestha are the people for whom it is home.  It is not Dr Kulshrestha's home and therefore we are satisfied that it is not part of his principal home.  We find that his principal home is limited to 47 Braeside Avenue and does not encompass the whole of the building.

In my opinion the present case cannot be distinguished from the decision in re Kulshrestha Supra. If re Hewitt v Secretary, Department of Family and Community Services 68 ALD 552 is to the contrary then with respect as re Kulshrestha Supra is a later case and a decision of a Deputy President, I should, unless convinced it is wrong, follow that decision. In that regard I would refer to the very pertinent remarks of Deputy President Todd in re Ganchov v Comcare 19 ALD 541 at 542 paragraph 41, where the learned Deputy President stressed the requirement of members of the Tribunal to follow decisions of presidential members.

The respondent's second argument was that the asset had no value as it could not be realised.  Certainly there is support for that submission in the applicant's own guidelines.  Attached as annexure B to exhibit R1, the respondent's statement of facts and contentions, is an extract from guidelines applied by the appellant department, and it is clearly stated there under the heading of general provisions for valuation of assets, that:

Assets are generally assessed at their net market value.

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The net market value is the amount you would expect to receive if you sold the asset on the open market less any valid debts or encumbrances. Prima facie this would indicate that as in this particular case the asset cannot be separately sold, its value on an open market being nil, then it has no value in the hands of the respondent. Without authority I would have accepted that submission. However, in re Bowden v Repatriation Commission 15 AAR 325 at 326/7 Senior Member Blow, as he then was, now his Honour Blow J, said:

These provisions add weight to the interpretation that I have placed on the definition of "principal home".  In the light of those provisions it seems clear Parliament intended not only that a principal home could constitute only a part of an unsubdivided property but also that any separately let part of a property would not constitute part of a dwelling house.  These provisions were enacted against a background of many cases in which it had been held that part of a residential building can constitute an entire dwelling or dwelling house.

And the learned senior member, as he then was, went on to cite various authorities.  He continued:

The fact that the leased flat was and is an unrealisable asset may only be taken into account pursuant to the hardship provisions of the Act -

and continued -

In view of the provisions in the Act that I have referred to above I must conclude that the leased flat does not constitute part of the applicant's principal home, and that it was properly taken into account in applying the asset test provisions of the Act.

The ratio of that case applies here. As stated earlier the value attributed by the Australian Valuation Office could be revised upon a full inspection. Because of the authorities I have cited I am satisfied that the decision under review should be set aside. The decision of the Tribunal will therefore be that the decision under review is set aside and this matter remitted to the respondent with the direction that the flat premises at 2/5 Constitution Road, Wentworthville are an asset for the purposes of the Social Security Act 1991 in the possession of the respondent, Cam Leung, but that the valuation of the said assets is to be ascertained after full inspection and assessment by the Australian Valuation Office.

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