Leybourne-Ward and Repatriation Commission - [2001] AATA 640

DECISION AND REASONS FOR DECISION [2001] AATA 640

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2000/1108

VETERANS' AFFAIRS DIVISION         )
           Re      NEVILLE LEYBOURNE-WARD
  Applicant
           And    REPATRIATION COMMISSION
  Respondent

DECISION

Tribunal Mr. I.R. Way, Member

Date10 July 2001
PlaceBrisbane

Decision The Tribunal sets aside the decision under review and in substitution therefor determines that the applicant qualifies for payment of age service pension, under the financial hardship provisions of section 52Y of the Veterans' Entitlements Act 1986, for the period 21 March 2000 to 28 August 2000.

................(Signed)......................
I.R. WAY
MEMBER

CATCHWORDS
VETERANS' AFFAIRS – Assets Test – financial hardship rules – unrealisable assets – whether properties cannot be sold - whether properties could be used as security for borrowing
Veterans' Entitlements Act 1986: ss 5L (1), (2), (3), (11) and (12); 52C and 52Y
Wootton and Secretary, Department of Social Security (1994) AAT 9378
Re Farrow and Secretary, Department of Social Security (1986) 5 AAR 1
Re Poidevin and Repatriation Commission (1994) AAT 9905
Re Reynolds and Secretary, Department of Social Security (1986) 4 AAR 478
Re McCormack and Secretary, Department of Social Security (1997) 2(12) SSR 167

REASONS FOR DECISION

Mr. I.R. Way, Member

This is an application by Neville Leybourne-Ward (the applicant) for review of a decision of a service pension review officer dated 1 September 2000 affirming a decision of a delegate of the Repatriation Commission (the respondent) rejecting the applicant's claim for service pension under the financial hardship provisions of the Veterans' Entitlements Act 1986 (the Act) from 21 March 2000 to 28 August 2000.
The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (T1-T6) and documents admitted into evidence as set out below.
For the Applicant:

Summary of applicant's contentions dated 7 May 2001 (Exhibit A1)
Bundle of documents submitted by the applicant post the hearing under covering letter dated 15 May 2001 (Exhibit A2)
Letter from applicant entitled "Subject self employed" received on 21 May 2001 post the hearing (Exhibit A3)

For the Respondent

DVA facts IS 117 re Financial Hardship (Exhibit R1)
Letter dated 4 March 2001 from the applicant to Barnes Mortgage Management (Exhibit R2)
Letter from Surfside Properties to Mr. Leybourne-Ward, dated 24 January 2001 (Exhibit R3)
Letter to the applicant dated 1 February 2001 from The Professionals at Batemans Bay (Exhibit R4)
Two letters from Credit Union Canberra to the applicant dated respectively 16 June and 14 August 2000 (Exhibit R5)
Computer generated advice re service pension – with effect 28 August 2000 to 28 September 2000 (Exhibit R6)

Mr. Leybourne-Ward was self-represented and gave oral evidence.
BACKGROUND

The applicant was born on 9 May 1925 and is a veteran receiving service pension pursuant to the Act.
The applicant's service pension was reduced by the respondent from 21 March 2000 to 28 August 2000 based on the level of his assets, which came to the notice of the respondent in February 2000, as a result of a letter the applicant sent to the Minister (T14/15).
In particular, information was received about two blocks of land the applicant owned during the relevant period (21 March 2000 to 28 August 2000), namely:

Lot 7 Sanctuary Place, Batemans Bay, NSW, which the applicant valued at $63,000.
57 Kurrawa Drive, Merry Beach, NSW, valued at $68,000 by the applicant.

These valuations were taken into consideration in the calculation of the applicant's assets, together with approximately $25,000 in other assets, in assessing the rate of service pension payable to the applicant.
The Tribunal notes that the Valuer General valued the land at Sanctuary Place at $63,000 as at 1 July 1999, and the land at Merry Beach at $68,000 as at the same date (T4/14).
ISSUES
The principle issue in this matter is whether or not during the relevant period the applicant qualifies for maximum rate of service pension pursuant to the financial hardship provisions of the Act. In particular, whether one or both the blocks of land owned by the applicant in New South Wales were, pursuant to the Act, unrealisable assets. A secondary issue is the value that should be ascribed to the blocks of land should they be not unrealisable assets.
LEGISLATIVE FRAMEWORK
The relevant provisions of the Act are as set out below:
"5L Assets test definitions [see Note 3]
(1)In this Act, unless the contrary intention appears:
………
asset means property or money (including property or money outside Australia).
…..
principal home has the meaning given by subsections (5) to (7).
property owner has the meaning given by subsection (4).
unrealisable asset has the meaning given by subsections (11) and (12).
value has the meaning given by subsections (2), (3) and (3A).
Note:see also sections 52 (certain assets to be disregarded in calculating the value of a person's assets), 52C (effect of charge or encumbrance on value of property) and 52KA-52X (special residences).
(2)A reference in this Act to the value of a particular asset of a person is, if the asset is owned by the person jointly or in common with another person or persons, a reference to the value of the person's interest in the asset.
(3)A reference in this Act to the value of a charge or encumbrance on an asset of a person is, if the asset is owned by the person jointly or in common with another person or persons, a reference to the value of that charge or encumbrance in so far as it relates to the person's interest in the asset.
Unrealisable asset
(11)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.
(12) For the purposes of the application of this Act to a service pension or an income support supplement, 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
52C Effect of charge or encumbrance on value of assets
(1)Where there is a charge or encumbrance over particular assets of the person, the value of the assets, for the purposes of calculating the value of the person's assets for the purposes of this Act (other than sections 52G and 52H), is to be reduced by the value of that charge or encumbrance.
Note:this section does not apply to an asset to which section 52CA (primary production assets) applies.
(2)Subsection (1) does not apply to a charge or encumbrance over an asset of a person to the extent that:
(a)the charge or encumbrance is a collateral security; or
(b)the charge or encumbrance was given for the benefit of a person other than the person or the person's partner.
(3)Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 52.
(4)Where:
(a)there is a charge or encumbrance over assets; and
(b)the charge does not arise under section 52ZF; and
(c)the assets consist of assets whose value is to be disregarded under section 52 and other assets;
the amount to be deducted under subsection (1) is:
Value of the charge or encumbrance x Value of the other assets
Value of all the assets
52Y Access to financial hardship rules
(1)Where:
(a)either:
(i)a service pension or income support supplement is not payable to a person because of the application of an assets test; or
(ii)a person's service pension rate or income support supplement rate is determined by the application of an assets test; and
(b)either:
(i)sections 48B and 48C (disposal of income) and 52G and 52H (disposal of assets) do not apply to the person; or
(ii)the Commission determines in writing that the application of those sections to the person should, for the purposes of this section, be disregarded; and
(c)the person, or the person's partner, has an unrealisable asset; and
(d)the person lodges at an office of the Department in Australia a written request that this section apply to the person; and
(e)the Commission is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;
the Commission must determine in writing that this section applies to the person.
Note:for unrealisable asset see subsections 5L(11) and (12).
(2)If a request is lodged under paragraph (1)(d), the Secretary:
(a)must investigate the matters that the request relates to; and
(b)must, when the investigation is complete, submit to the Commission for its consideration:
(i)the request; and
(ii)the evidence that the person who made the request provided in support of the request; and
(iii)any documents that are relevant to the request and are under the Department's control (including any evidence or documents relevant to the request that are obtained in the course of the investigation).
(3)A determination under subsection (1) takes effect:
(a)on the day on which the request under paragraph (1)(d) was lodged; or
(b)if the Commission so determines in the special circumstances of the case—on a day not more than 6 months before the day referred to in paragraph (a)."

APPLICANT'S EVIDENCE

It was the applicant's evidence that he had purchased the land at Sanctuary Place for $60,000 in July 1998. The land was a housing block on a sloping site and the applicant said he purchased the land with a view to building and occupying a new home. However, this did not eventuate because of disagreements the applicant had with the local Council with respect to building approvals. The applicant told the Tribunal he decided to sell the land and start again elsewhere. He put the land on the market through four real estate agents, initially at $65,000 early in 1999 (T111), and that it was still on the market at an asking price of $69,000. The Tribunal notes that First National Real Estate, Batemans Bay, advised the applicant on 1 May 2000 that sales in Sanctuary Place had dropped away, but that there should be a swing back to land in July/August.
In April 1999 he purchased another block of land, a Merry Beach property in Shoalhaven, for $75,000. Again he had significant disagreements with the local Council with respect to building approvals and in September 1999 he decided to move to Mount Tamborine in Queensland where he purchased a home for $135,000, taking out a loan for $102,600. It was the applicant's evidence that this loan was sufficient to raise the mortgage on his home and provide funds to meet interest payments on his mortgage for the first year or so, during which time he hoped to sell his properties in New South Wales. He put the land at Merry Beach on the market in October 1999, firstly through private advertisements and the internet and then in March 2000 through real estate agents (T112). The property was finally sold by a real estate agent for $75,000 with settlement on 15 August 2000. The proceeds of that sale were used to reduce the mortgage on his home at Mount Tamborine and as a result his pension was restored to full value because of the reduced level of his assets.
The Tribunal notes that the period of time during which the applicant's pension was reduced is relatively short and that the total amount of reduction in pension is between $500 and $600. The Tribunal also notes that the respondent stated that during this period the applicant's value of assets was approximately $20,000 above the limit provided for in the assets test.
In cross-examination, the applicant told the Tribunal that he had owned his own home and a unit in South Australia, both of which he sold when he moved to New South Wales with a view to building a new home on the south coast. During this period in New South Wales he rented accommodation for about two years but did not tell the respondent about his changed circumstances. The applicant told the Tribunal forcefully that his purchase of the two blocks of land was in no way an attempt or intent to enter into complicated financial arrangements to maximise his rate of pension. The applicant provided substantial documentation with respect to his allegation that he was the victim of circumstances not of his own making in that he had suffered professional denigration by the relevant Shire Councils requiring certification by an engineer of the applicant's design. The applicant stated that he is a qualified and an experienced chartered architect (New South Wales) and non-acceptance of his design denigrated his competence. The applicant's disagreement with one of the Shire Councils was further exacerbated by that Council incorrectly referring to repealed legislation in the issue of consent conditions.
With respect to the financial arrangements for the purchase of his home at Mount Tamborine he said that he had obtained a "no document loan" with his property at Mount Tamborine as security. Insofar as the value of his assets is concerned the applicant said he had been instructed by the respondent to raise $20,000 against his properties in New South Wales which he should use to offset his mortgage thereby reducing his overall asset level such that his full pension would be restored.
When asked what he had done about his efforts to raise $20,000, the applicant said he had tried his Credit Union but had been rejected twice. When it was put to the applicant that he knew his Credit Union would not allow borrowing against assets he said he did not know this. The Tribunal notes that the Credit Union of Canberra has written to the applicant (Exhibit R5) in June and August 2000 stating that his loan application was not within their guidelines. The applicant was referred to his facsimile signed on 6 September 1999 where he stated that he had discovered the new credit rules limited him to just 10% of his pension and said "once it was possible to borrow against assets – no longer". He said he had forgotten about this. When asked if he had made any other attempts to raise the $20,000 he said he had not done so. The applicant also said it would be stupid in his straitened financial circumstances to consider borrowing at a high rate to invest at a low rate and that the respondent's suggestion of borrowing $20,000 against the land he owned was also illogical and perverse. In his written request for review by this Tribunal T3 (E/F), the applicant stated that to obtain a mortgage loan on his home at Mount Tamborine he "had to provide details of the land assets – a condition of the loan". In a letter to the Minister for Veterans' Affairs dated 30 May 2000 the applicant also referred to his approach to Westpac for a $20,000 loan secured by the south coast land. He also told the Minister T4/126 "I had provided the mortgage broker with the details and valuations of the land anticipating they would be used as security however, he used Barnes Mortgage Management in Brisbane who arranged the loan with Perpetual Trustees Victoria Limited. I was not told until the eleventh hour that the mortgagee had nominated 29 Forsythia Drive (the Mount Tamborine property) as security. I suppose that this is because it can seize the property, no trouble, in the event of default." At T4/138 and T4/126 the applicant informed the respondent on 15 August 2000 of an unsuccessful attempt to obtain a Westpac loan for $20,000. At T4/162 the applicant in answer to a question about attempts to secure a loan stated:
"Telephone contact with Westpac call centre 132558 Lisa Rowe – advice to get conveyancers to contact consent area GPO Box 2755 Adelaide 5001." I wrote to the real estate agent First National Batemans Bay PO Box 20 Batemans Bay 2536 telephone 02 44725566 fax 02 44725781 on 6 June 2000. I quote: section 5L 11B and 5L 12B must now be complied with. It has taken two months of intense correspondence with DVA to get such a ruling…. there is one course of action with two possible outcomes. I need to borrow $20,000 against the asset or else receive a document that says that such an application is refused. Please ask the conveyancer to expedite. The conveyancer the agent contacted is Ennis a Batemans Bay solicitor. Since there was no acknowledgment or action I contact the Credit Union of Canberra Batemans Bay branch.
Now there you are: you have the contacts cited so it is for you to get your interrogators to do the follow up checking."

The Tribunal is mindful that at T4/63 a delegate of the respondent on 12 April 2000 in determining that the applicant is not eligible to have his service pension paid under the financial hardship provisions, said "There is no real impediment to the sale of the blocks of land in New South Wales, ie it is not an unrealisable asset as the veteran is actively trying to sell the land. Due to his financial commitments it might be unlikely that he could use the asset as security, however the veteran has not provided evidence of any attempts."
With respect to financial hardship the applicant said he was in financial hardship at the relevant time as he only received a reduced pension out of which he had to meet house maintenance costs, mortgage repayment costs, food, electricity, gas and professional association fees. The Tribunal notes that at T4/11 the applicant on 12 January 2000 was advised that a new interest rate of 8.75% applied to his home loan with minimum monthly repayments of $673.89.
The Tribunal notes that when the applicant was applying for his loan for his home at Mount Tamborine he was "required" to complete a statement saying he was self-employed to "add comfort" to the proposed lender (T4/51). When asked to explain this the applicant said it was his intention to be self-employed and he provided details of the projects which he intended to undertake (Exhibit A3). He had earlier told the Tribunal that he had retired in 1993, received no income apart from his pension but he was working on engineering heritage papers in an honorary capacity.
The applicant stated that his health deteriorated in 1999 including three attacks of gout, high blood pressure, irritable bowel and that prostate cancer was diagnosed early in November 1999 which he attributed to the stress arising from his dealing with the Shire Councils. He said the protracted fight with the respondent exacerbated his health problems and in a letter to the Department dated 20 April 2000 about hardship said: "BUT YOU DON'T CARE – YOU DON'T EVEN ALLOW A LITTLE RELIEF UNDER THE HARDSHIP RULES. A niggardly, petty miserable attitude. I suppose that you take a malevolent delight in making pensioners wretched and distressed (male pensioners)." (T4/82)
In cross-examination the applicant was referred to the DVA Facts Sheet IS-117 – Financial Hardship. Both parties agreed that these were to be seen as guidelines. The applicant's attention was directed to that part of the Facts Sheet where the importance of seeking written confirmation of oral information or advice before making any major decisions on that information. The Tribunal notes that the Facts Sheet was sent to the applicant in late March 2000, at which stage he had already embarked on the financial course of action which led to the difficulties he had in satisfying the assets test.

CONTENTIONS

In summary the applicant contends that the respondent was wrong in determining he did not qualify under the financial hardship provisions of the Act. He submitted that he meets the financial hardship provisions of the Act in relation to the two New South Wales properties being unrealisable assets; that he is suffering financial hardship and that in the absence of buyers for his two properties there was no other course of action which he could reasonably be expected to take to reduce the level of assets. It was also the applicant's contention that the respondent consistently ignored section 52C(4) of the Act whereby the value of assets should take into account charges and encumbrances in arriving at a net value. With respect to charges and encumbrances the applicant referred the Tribunal to various law publications and legal definitions (Exhibit A2) to support his contention that costs such as Council rates, conveyancing fees, realtor fees, GST and disbursements should be included as charges or encumbrances when determining the correct value of assets.

The respondent on the other hand submitted that the applicant does not qualify for payment of age service pension at the maximum rate and under the financial hardship provisions of the Act. In particular, it was contended for the respondent that the applicant had not made a reasonable attempt to sell his properties and that in any event being difficult to sell was not sufficient cause to meet the definition of an unrealisable asset. The applicant had not reduced his asking prices nor had he attempted to auction the land and as such, both assets were not unrealisable assets as defined in the Act. In support of this, the respondent submitted that as soon as the block of land at Merry Beach was put in the hands of a real estate agent, it sold. The Tribunal was referred to Wootton and Secretary, Department of Social Security (1994) AAT 9378 where the Tribunal considered inability to sell properties. With respect to the applicant borrowing against the blocks of land as security the respondent contended that the applicant had made no reasonable attempts to do so.
The respondent submitted that an encumbrance must be a claim or mortgage on property before it can be considered and in this case there were no such legitimate claims and the full value of the properties as determined by the Australian Valuation Office should be used.
Finally, the respondent submitted that the applicant's financial difficulties were of his own doing and that the applicant had ignored the Department's advice to seek written confirmation of oral information or advice before making any major decisions based on that information.
CONSIDERATION
Financial hardship rules apply only where the applicant is being asset tested. As noted in Re Farrow and Secretary, Department of Social Security (1986) 5 AAR 1, the Minister for Health in introducing the relevant legislation expressed the following view:
"Special provision is made to ensure that people affected by the assets test are not placed in severe financial hardship. In keeping with the intention of the asset test, these provisions will generally apply only where it would be unreasonable or impossible to sell or raise money on an asset and that as a result of not exempting all or part of the asset the pensioner would have insufficient income."

Severe financial hardship is not defined in the Act and clearly needs to be considered with regard to the particular circumstances in each case.
DVA FACTS IS117 sets out guidelines with respect to financial hardship rules and criteria and relevantly states:
"What are the hardship rules?
The hardship rules can assist people who are in severe financial hardship to receive a pension or increase their rate of pension. The hardship rules apply only to people whose pension is assessed under the assets test.
If your pension is assessed under the assets test and you have substantial assets, you may receive only a small amount of pension or your assets may exceed the asset limit and you do not receive any pension. The hardship rules provide for the value of certain assets to be disregarded and the rate of pension to be calculated to pay a higher rate of pension than would be payable if the usual rules were applied.
What are the criteria?
For the hardship rules to apply to you, you need to meet all of the following criteria:

Your pension is assessed under the assets test
You have not given away income or assets
You or your partner have an asset or assets which you cannot sell or could not reasonably be expected to sell
You are, or could be in, severe financial hardship if the hardship rules are not applied.
In certain circumstances the hardship rules may apply to you even if you have given away income or assets. This includes situations where the financial hardship currently suffered by you is not a direct result of the disposal of the income or asset or where you would have met the hardship criteria even if you had not disposed of the income or asset.
What is severe financial hardship?
To be assessed as being in severe financial hardship, you need to meet all of the following criteria:
The total annual rate of pension which would be paid to you under the assets test plus all income you receive, is less than the maximum annual rate of pension
Your readily available funds do not exceed $6,000 for a single person or $10,000 combined for members of a couple
There is no other course of action which you could reasonably be expected to take to improve your financial position.
Readily available funds are assets which can be readily accessed as cash and include cash on hand, money in bank, credit union or building society accounts, fixed term deposits, bonds and shares. Where the hardship situation is long term or permanent, the surrender value of a life insurance policy and the value of a caravan or second car may also be included.
The term 'income' has a special meaning under the hardship rules. As well as ordinary income it includes:
Disability and war widows pension
Allowances paid by DVA such as clothing allowance and recreation transport allowance
Income which is deemed to be produced by your assets.
Certain assets which are disregarded under the hardship rules are deemed to produce income at the lesser of 2.5% of their value or the commercial lease value. This does not apply to a farm which is being worked to its full capacity by you or your partner. Special provisions may apply when the farm is being worked by a family member.
For more information about what constitutes 'income' under the hardship rules, contact your local DVA office.
When may an asset be disregarded?
An asset may be disregarded under the hardship rules if you are unable to sell an asset or it is unreasonable to expect that you would sell an asset.
In certain circumstances, before an asset is disregarded under the hardship rules, you may be expected to try to borrow money using your assets as security.
Examples where you may be unable to sell an asset
You have tried to sell the asset at a reasonable price and have been unable to attract a buyer
……
Oral advice
While we make every effort to ensure that you are given accurate information, it is important that you seek written confirmation of oral information or advice before making any major decisions based on that information.
We continually strive to improve the level of service you receive and make this request as an added safeguard to you."

The Tribunal accepts that the above guidelines are consistent with the relevant provisions of the Act and in plain English set out, in part, how the Department considers claims under the financial hardship provisions of the Act. In consideration of the matter before the Tribunal, the Tribunal adopts these guidelines, however, the Tribunal is mindful that the guidelines are not exhaustive. There is no further explanation in the guidelines of "circumstances" following the statement "In certain circumstances before an asset is disregarded under the hardship rules, you may be expected to try to borrow money using your assets as security.". The question of the effect of charges or encumbrances on the value of assets is not addressed.
In adopting these guidelines the Tribunal notes a similar approach taken in Re Poidevin and Repatriation Commission (1994) AAT 9905.
Turning firstly to the criteria necessary for the financial hardship rules to apply to the applicant. The Tribunal is satisfied and so finds that at the relevant time the applicant was in receipt of pension assessed under the assets test and had not given away income or assets. The Tribunal also finds that the applicant's property assets in New South Wales had no commercial lease value and that the applicant met the income and funds criteria with respect to severe financial hardship.
The questions then to be answered in determining whether the applicant meets all the criteria, are whether or not, at the relevant time, the applicant had assets which he "cannot sell or realise" or "could not be reasonably expected to sell or realise"; and the applicant "cannot use the asset as a security for borrowing" or "could not reasonably be expected to use the asset as a security for borrowing" (Section 5L11 and 12 of the Act); and whether or not there is another course of action he could reasonably be expected to take to improve his financial position.
On the applicant's evidence he was expecting to sell his properties in New South Wales and clearly Section 5L(12) has no application in this case.
With respect to the application of Section 5L(11) the Tribunal adopts the approach taken in Re Reynolds and Secretary, Department of Social Security (1986) 4 AAR 478 and Re McCormack and Secretary, Department of Social Security (1997) 2(12) SSR 167.
In Reynolds the Tribunal stated:
"The words 'cannot sell' must be given their ordinary meaning. 'Can' means 'to be able' or 'to have the power of capacity'. 'Cannot sell' must include the lack of legal capacity to sell but in my opinion there is no justification for excluding the alternative meaning 'is unable to sell' for whatever reason.
Property cannot be sold either because the price sought is too high to attract a buyer or because even at a fair and reasonable market price no buyer is forthcoming."

In McCormack consideration was given to the application of the provisions of Sections 11(12) and 11(13) of the Social Security Act 1991 which have a like interpretation to sections 5L(11) and 5L(12) of the Veterans' Entitlements Act 1986. In McCormack the Tribunal in considering whether reasonableness is to be implied in s.11(12) said:
"It would appear to the Tribunal to be an extraordinarily rare case, given legal capacity to sell, where property – especially real property – could not be sold for any price, no matter how low. The ability to borrow against an asset may more often be lacking depending on the level of the person's ability to service a loan. Nonetheless if some notion of reasonableness were to be implied into sale situations it would logically and similarly be implied into borrowing situations.
The contrast between the words used in sub-ss (12) and (13) is obvious and cannot, as a matter of statutory interpretation, be ignored.
Nonetheless the Tribunal cannot think Parliament intended that a person should sell an asset at any price no matter how low nor that a person should use the asset as security for borrowing no matter, for example, how onerous loan conditions might be.
The Tribunal concludes that the difference between sub-ss (12) and (13) is explicable in that sub-s (13) allows for factors more particular to the person to be taken into account (albeit such factors are to be judged against a test of objective 'reasonableness' whereas sub-s (12) contemplates that only factors relating to the asset itself are to be considered in determining whether the person can sell it or use it as security for borrowing. This would, in the Tribunal's view, not involve saying that a 'person [could] not sell or realise the asset' if it could only be sold under value nor that a 'person [could] not use the asset as a security for borrowing' where available terms might be somewhat more onerous than might otherwise be available. It does however permit an exploration of matters of degree; where the circumstances which pertain are so far beyond what one might reasonably expect when trying to sell the asset or to borrow against it that they can be seen as very unfair to the asset owner or unconscionable so far as the potential purchaser or lender is concerned, it can properly be said, that the asset is 'unrealisable' within sub-s (12)."
With respect to the question as to whether or not, at the relevant time, the applicant was unable to sell his New South Wales properties, the Tribunal notes that the DVA guidelines gives as an example where an applicant may be unable to sell an asset - "You have tried to sell the asset at a reasonable price and have been unable to attract a buyer."
With respect to the applicant's properties at Batemans Bay and Merry Beach, the Tribunal after careful consideration of all of the material before it and the submissions of both parties, is satisfied and finds accordingly that at the relevant time the applicant satisfies the Department's guidelines with respect to being unable to sell these properties, in that he genuinely was trying to sell both properties, that the asking price was commercially sound and reasonable based on current valuations and real estate advice and that until he sold the property at Merry Beach he had been unable to attract a buyer for this property. That he did not put either property to auction; that he initially tried to sell the Merry Beach privately and that the Merry Beach property finally sold through a real estate agent, are not matters which, in the Tribunal's view, stand in the way of the finding it has made.
The respondent referred the Tribunal to Wootton in support of the contention that the applicant did not have assets which he was unable to sell or realise. Mr. Wootton was an experienced property dealer, who over a number of years bought six blocks of land in the Gladstone area on which he erected homes for sale. He had been unable to sell these at what he considered to be realistic prices, because of a downturn in the market. The Tribunal in that matter concluded that listing prices were in excess of current market prices and that "It would be erroneous to treat these assets as objectively being assets which cannot be sold or realised. Such a finding is irreconcilable with the fact that it is only in recent years that an experienced property dealer, Mr. Wootton himself, purchased the blocks of land from earlier owners. At a cost of $60,000 per house he then constructed brick houses on four of the blocks."
The applicant submitted "that Wootton is not relevant as Wootton was a building speculator – caveat emptor applies", whereas "he was the victim of circumstances not of my own making".
The Tribunal finds little assistance from the case of Wootton because the circumstances of the applicant in this case are quite different to the circumstances in the matter of Wootton, particularly with respect to the acquisition of the properties at Merry Beach and Batemans Bay and with respect to the listed price of both of these properties.
Turning to the next question about the use of the two properties as security for borrowing. Whether, pursuant to the second limb of s.5L(11) of the Act, the applicant is unable, for whatever reason, to use the assets as a security for borrowing is a more difficult question.
In considering this question, the Tribunal is of the view that it must take into account all of the circumstances which might reasonably be taken into account (Re McCormack). The Tribunal is mindful that there is a need to assess the applicant's capacity to meet any periodic payments in borrowings as well as the attempts that the applicant made to borrow funds. The applicant's future financial position is also relevant and the applicant's health and state of mind are matters that should be considered.
In this case the assets in question are not income producing, their realisation should assist the applicant in discharging the mortgage on his home and it is unlikely that the applicant would generate future income apart from his pension and some very modest investment income.
The Tribunal is mindful that the applicant initially told the Tribunal that he was unemployed, had ceased work in 1993 and any work he is now doing is in an honorary capacity. Further in his evidence it became apparent that he intended to continue being self-employed but that there is no likelihood of any financial return from these endeavours. It was not to the applicant's credit that in applying for a loan for the purchase of his home at Mount Tamborine, the applicant on advice from his mortgage broker claimed to be self-employed and did not reveal his status as a pensioner. Putting this indiscretion aside, the Tribunal is satisfied that the applicant will continue to suffer financial hardship in future and that at the relevant time he suffered severe financial hardship such that he was daunted by the prospect of servicing any borrowing on his assets. The Tribunal is also of the view that the applicant's poor health contributed significantly to the difficulties he was facing in attempting to satisfactorily resolve his financial position.
The Tribunal notes that the applicant had unsuccessfully made some attempts to satisfy what he saw as unreasonable directions from the Department to borrow against his property assets. However, after careful consideration of all of the material before it, and the submissions of both parties, on balance the Tribunal is satisfied that it would not be fair to expect the applicant to use his property assets in New South Wales as security for borrowing, as such a course of action, given the applicant's circumstances, would be beyond what one might reasonably expect. The Tribunal therefor finds that the applicant, during the relevant period, was unable to use these assets as a security for borrowing.
It follows that the Tribunal finds that the applicant's assets of property at Merry Beach and Batemans Bay are to be treated at the relevant time as unrealisable assets within the provisions of s.5L(11) of the Act. In light of this finding, consideration of the effect of charges or encumbrances on the value of the applicant's assets is not relevant. Further, the Tribunal is satisfied, and finds accordingly, that there is no other course of action the applicant could reasonably have been expected to take to improve his financial position.
The Tribunal is satisfied that the applicant meets all of the necessary criteria to have access to the hardship rules and hence the Tribunal sets aside the decision under review and in substitution therefor determines that the applicant qualifies for payment of an age service pension under the financial hardship provisions of section 52Y of the Veterans' Entitlements Act 1986, for the period 21 March 2000 to 28 August 2000.

I certify that the 47 preceding paragraphs are a true copy of the reasons for the decision herein of Mr. I.R. Way, Member.
Signed:         .....................................................................................
           R. Hayes, Associate
Date/s of Hearing  10 May 2001
Date of Decision  10 July 2001
Applicant  Mr. Leybourne-Ward, himself
Respondent  Mr. J. Kelly, Departmental Advocate