Lindsay Robert Charlish and and Secretary, Department of Social Services
[2014] AATA 652
[2014] AATA 652
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2012/4913
Re
Lindsay Robert Charlish
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
File Number(s) 2012/4932 Re
Alison Estelle Charlish
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr P Wulf, Member
Date 8 September 2014 Place Brisbane The Tribunal affirms the decision under review.
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Mr P Wulf, Member
CATCHWORDS
HEALTH AND AGEING – Rent assistance - retirement village residents – ingoing/entry contribution – whether homeowners – not homeowners – yearly payment – whether rent – not rent due to infrequency of payment – decision affirmed.
LEGISLATION
Social Security Act 1991 (Cth) ss 11, 12, 12C, 13, 55, 1064, 1147, 1151
Social Security and Veteran’s Affairs Legislation Amendment (Family and Other Measures) Bill 1997
CASES
Charlish and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 434
Department of Social Security v Knight [1996] FCA 1177; 72 FCR 115
Secretary, Department of Social Services v Lindsay Robert Charlish [2014] FCA 279
SECONDARY MATERIALS
Explanatory Memorandum to the Social Security and Veteran’s Affairs Legislation Amendment (Family and Other Measures) Bill 1997
REASONS FOR DECISION
Mr P Wulf, Member
8 September 2014
INTRODUCTION
This is a re-hearing following an appeal to the Federal Court.[1] The matter was originally heard in 9 April 2013 with a decision handed down on 26 June 2013.[2] It is not necessary to repeat the factual basis of the matter here. On 21 May 2004, The Federal Court ordered that the Tribunal should take into account, the possible application of s 13(3AA) of the Social Security Act 1991 (Cth) (“the Act”) to the facts.
[1] Secretary, Department of Social Services v Charlish [2014] FCA 279.
[2] Charlish and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 434.
For the reasons that follow, the Tribunal finds that Mr and Mrs Charlish
(“the applicants”) are not homeowners of residence in a retirement village
(“care facility”), but are not able to claim rent assistance due to the time when payment is made. Accordingly, the Tribunal affirms the decision under review.
LEGISLATION
The rate of a person’s aged pension is determined by s 55 of the Act which states that if the person is not permanently blind, Pension Rate Calculator A contained within s 1064 should be used.
Section 12 of the Act sets out the definitions of a retirement village which is where
Mr and Mrs Charlish reside. Section 12 states:(1) In this Act:
“actual value” has the meaning given by subsection (5).
“retirement village” has the meaning given by subsections (3) and (4).
“retirement village resident” has the meaning given by subsection (5).
(2) A person is a member of an ordinary couple with different principal homes if:
(a) the person is a member of a couple; and
(b)the person does not share the person’s principal home with the person’s partner; and
(c) the person is not a member of an illness separated couple.
(3) Premises constitute a retirement village for the purposes of this Act if:
(a) the premises are residential premises; and
(b)accommodation in the premises is primarily intended for persons who are at least 55 years old; and
(c) the premises consist of:
(i) one or more of the following kinds of accommodation:
(A) self‑care units;
(B) serviced units;
(C) hostel units; and
(ii)communal facilities for use by occupants of the units referred to in subparagraph (i).
There is no dispute that Mr and Mrs Charlish reside in a retirement village.
Section 12C of the Act provides definitions as to a residence and a special resident by prescribing that:
(2) A residence is a special residence if the residence is:
(a) in a retirement village; or
(b) a granny flat; or
(c) a sale leaseback home.
(3) A person is a special resident if the person is:
(a) a retirement village resident; or
(b) a granny flat resident; or
(c) a sale leaseback resident.
(4)In Division 5 of Part 3.12 (sections 1145A to 1157), a reference to the actual value of the assets of a member of a couple is a reference to the value of the assets that are actually assets of the person rather than the person’s partner, that is, the value that would be the value of the person’s assets apart from the couple’s assets deeming provisions.
There is again no dispute that Mr and Mrs Charlish are special residents.
The critical matters that must be assessed are whether Mr and Mrs Charlish are homeowners and what their entry contribution was. Once this can be determined, the Tribunal must then assess whether the yearly payment they make is rent for the purposes of the Act.
When assessing whether a person is a homeowner, two sections are relevant. The respondent has conceded that the Mr and Mrs Charlish are not homeowners under s 11(4) of the Act; however the respondent suggests that they are homeowners under s 1151 of the Act. Section 1151 states
(1) This section applies to a special resident if:
(a) the resident is a member of a couple; and
(b)the resident shares the resident’s principal home with the resident’s partner.
(2) If:
(a) this section applies to a special resident; and
(b)the resident’s entry contribution was more than the extra allowable amount;
the resident is to be taken, for the purposes of this Act, to be a homeowner.
(3) If:
(a) this section applies to a special resident; and
(b)the resident’s entry contribution was equal to or less than the extra allowable amount;
then, for the purposes of this Act:
(c)the resident is to be taken not to have a right or interest in relation to the resident’s principal home; and
(d)the resident’s assets are to be taken to include an asset the value of which is equal to the amount of the resident’s entry contribution; and
(e)sections 198K and 198L, subsection 1118(1) and section 1126 do not apply to the asset that the resident is, because of paragraph (d) of this subsection, to be taken to have.
(4) Subsection (3) applies:
(a)whether or not the resident actually has any right or interest in the resident’s principal home; and
(b)whatever the value of any right or interest that the resident does have in the resident’s principal home.
As to an entry contribution when living within a retirement village, s 1147 of the Act defines that as being:
(1) A special resident’s entry contribution is:
(a)if the resident is not a member of a couple - the resident’s individual residence contribution; or
(b)if the resident is a member of a couple, shares the resident’s principal home with the resident’s partner and is not a member of an illness separated couple—an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution; or
(c)if the resident is a member of an illness separated couple—the resident’s individual residence contribution; or
(d) if:
(i)the resident is a member of an ordinary couple with different principal homes; and
(ii)the principal home of the resident’s partner is not a special residence;
the resident’s individual residence contribution; or
(e) if:
(i)the resident is a member of an ordinary couple with different principal homes; and
(ii)the principal home of the resident’s partner is also a special residence;
an amount equal to 50% of the resident’s individual residence contribution and of the partner’s individual residence contribution.
(1A)A special resident’s entry contribution is the resident’s individual residence contribution plus the amount paid, or agreed to be paid, for the resident’s current right (if any) to share the resident’s principal home with a partner if:
(a)the resident was a member of a couple at the time when the resident took up residence in the retirement village or granny flat; and
(b) the resident has ceased to be a member of a couple.
(1B) A special resident’s entry contribution is the resident’s individual residence contribution if:
(a)the resident was a member of a couple at the time when the sale leaseback agreement was entered into; and
(b) the resident has ceased to be a member of a couple.
(1C)For the purposes of this Division, the individual residence contribution is:
(a)for a retirement village resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the retirement village; and
(b)for a granny flat resident—the total amount paid, or agreed to be paid, for the resident’s current right to live in the granny flat; and
(c) for a sale leaseback resident—the deferred payment amount.
(1D) For the purposes of paragraph (1C)(b):
(a)the total amount paid to obtain for a person his or her current right to live in a granny flat is the amount equal to the value of the person’s granny flat interest; and
(b) the value of a person’s granny flat interest is:
(i)unless subparagraph (ii) applies—the amount paid, or agreed to be paid, for the interest; or
(ii)if the Secretary considers that, for any special reason in any particular case, that value should be another amount—that other amount.
(2)An amount that is rent for the purposes of this Act is to be disregarded in applying subsections (1), (1A) and (1B).
Should the Tribunal find that Mr and Mrs Charlish are not homeowners, it is then necessary to assess whether they can claim rent assistance. Rent is defined in s 13(2) of the Act and is important insofar as it defines rent to be:
(2) Amounts are rent in relation to the person if:
(a) the amounts are payable by the person:
(i)as a condition of occupancy of premises, or of a part of premises, occupied by the person as the person’s principal home; or
(ia) as a condition of occupancy of premises, or of a part of premises, occupied by the person to allow him or her to provide personally a substantial level of care in a private residence for another person who needs, or in the Secretary’s opinion is likely to need, that level of care in a private residence for at least 14 consecutive days; or
(ii)for services provided in a retirement village that is the person’s principal home; or
(iii)if the person is in a care situation and the place where the person receives the care is the person’s principal home or would be the person’s principal home apart from subsection 11A(8) or (9)—for accommodation in the place where the person receives care; or
(iv) for lodging in premises that are the person’s principal home; or
for the use of a site for:
(A) a caravan or other vehicle; or
(B) a structure;
occupied by the person as the person’s principal home; or
(vi)for the right to moor a vessel that is occupied by the person as the person’s principal home; and
(b) either:
(i) the amounts are payable every 3 months or more frequently; or
(ii)the amounts are payable at regular intervals (greater than 3 months) and the Secretary is satisfied that the amounts should be treated as rent for the purposes of this Act.
When assessing the definition of rent is, in relation to a special resident and retirement villages, s 13(3AA) of the Act is important insofar as it states:
(3AA) To avoid doubt, an amount that is paid or becomes payable by a person is not rent in relation to the person (either at the time when it is paid or becomes payable or at any later time) if the amount is, or forms part of, a special resident’s entry contribution in relation to the person in respect of a retirement village under section 1147, whether the amount is paid or payable (whether wholly or partly) in a lump sum, by instalments or otherwise.
LEGISLATIVE ANALYSIS
This appeal relates to the application of the relevant legislation and importantly, s 13(3AA) in relation to Mr and Mrs Charlish.
The first critical matter that must be assessed is whether Mr and Mrs Charlish are homeowners. The respondent concedes that Mr and Mrs Charlish are not homeowners under s 11(4) of the Act; however, the respondent argues that they are homeowners under s 1151 of the Act. Secondly, it is necessary to analyse what their entry contribution actually was as defined under s 1147 of the Act. If it is found that Mr and Mrs Charlish are not homeowners, then it is necessary to assess the implications of s 13(2) and specifically s 13(3AA) of the Act.
An analysis of s 1151 requires that Mr and Mrs Charlish have made an entry contribution greater than allowable amount as defined within s 1147 of the Act. The allowable amount is $135,000 per person as a 50% share. While Mr and Mrs Charlish have not actually made an entry contribution of $279,000 in monetary terms, the agreement which they have signed stipulates that an entry contribution of $279,000 has been made.
It is clear on the Tribunal’s reading that Mr and Mrs Charlish fulfil the requirements of s 1151(1) in that they are a member of a couple and the property is their principal home. However, to be homeowners, it is then necessary to analyse the matters within either s 1151(2) or depending on their position, s 1151(3). This is critical in that s 1151(2) requires that the resident’s entry contribution was more than the extra allowable amount. If the Tribunal was to find that this was the case, then the resident is to be taken, for the purposes of this Act, to be a homeowner.
The parties were at odds as to whether the Tribunal should read the documents as one or as an either/or approach consistent with s 1147. The two approaches were as follows. The respondent contented that Mr and Mrs Charlish made an entry contribution of $279,000 irrespective of the amount they actually paid. In the alternative, Counsel for
Mr and Mrs Charlish submitted that the Tribunal should read the matter as they could have either made an entry contribution of $279,000 or, as they did, they entered into a pay as you go option which therefore on their submission, did not mean that they made the entry contribution of $279,000.
When undertaking an assessment of this, it is necessary to assess whether
Mr and Mrs Charlish, if their version is to be accepted, have agreed to pay $279,000 as required under ss 1147(1A) and 1147(1C)(a) of the Act.
The respondent contended that their signing a contract stating an entry contribution of $279,000 was enough for them to fall within the provisions of s 1147(1A) of the Act. With respect to s 1147(1A), the Tribunal is of the opinion that Mr and Mrs Charlish have not agreed to pay $279,000 in full. This determination is made on a number of grounds. Mr and Mrs Charlish have actually agreed to pay as you go, which allows them to terminate at any time, or in the alternative, for the care facility to terminate the applicant’s licence to live in the property. There is nothing in the contract that would indicate that Mr and Mrs Charlish have agreed to pay the whole amount. Further, there is nothing in the agreement that, for example, allows the care facility to make a claim over Mr and Mrs Charlish estate should they pass away and therefore, they have not paid or agreed to pay the entry contribution. Notwithstanding that the document refers to an entry contribution, this in itself is not enough to say they must pay this amount.
Secondly, as discussed during the hearing, should Mr and Mrs Charlish to continue to reside in the retirement village for an extended period, for example 30 years, (in this case, as the amount they were paying yearly would be equated to be 1/20th of the entry contribution) they would continue to make the same payment. If this was the case, they would pay more than the entry contribution which, in the Tribunal’s opinion, is not something that would fall within the criteria defined in s 1147(1A).
Thirdly, as Mr and Mrs Charlish only have a licence which can be terminated as per the contract, the Tribunal also does not consider that they have complied with s 1147(1B) of the Act. They have not agreed to a sale price as they are unable to actually purchase the property in which they reside. All they have is the right to occupy the property while they continue to make the ongoing yearly payments of $13,950.
With respect to s 1147(1C)(a) of the Act, again, Mr and Mrs Charlish have not paid or agreed to pay $279,000.
Based on the above, the Tribunal finds that Mr and Mrs Chalrish are not homeowners as they have not paid or agreed to pay an entry contribution of $279,000. The Tribunal believes that it was an either/or option and that the amount of $279,000 was placed in the contract as a standard provision within the template. Mr and Mrs Charlish have decided to take the pay as you go option rather than one of the other alternative options as suggested by Counsel for Mr and Mrs Charlish.
Finding that they are not homeowners, the Tribunal must assess whether they can be paid rent assistance. As the Tribunal, finding that Mr and Mrs Charlish are not homeowners as they have not agreed to pay $279,000, it must now assess the implications of s 13(2) and s 13(3AA) of the Act. Under s 13(2)(b) of the Act, rent is defined as amounts that
are payable every 3 months or more frequently; or the amounts are payable at regular intervals (greater than 3 months) and the Secretary is satisfied that the amounts should be treated as rent for the purposes of this Act.
Counsel for the respondent contended that the Tribunal should not consider the yearly payments as rent as they were not regular payments (eg more frequently that every three month). The Tribunal is swayed by that submission, particularly considering the statements of Tamberlin J as he was then in Department of Social Security v Knight,[3] the amendments to the Act post that decision including the insertion of s 13(3AA) into the Act and the explanatory memorandum to the Social Security and Veteran’s Affairs Legislation Amendment (Family and Other Measures) Bill 1997.
[3] [1996] FCA 1177; 72 FCR 115; 44 ALD 283.
While the Tribunal does not consider that s 13(3AA) of the Act is directly enlivened as the Tribunal is not of the opinion that Mr and Mrs Charlish are homeowners in this case, it does however provide direct relevance to how one should determine s 13(2) of the Act. It is also relevant for the illustration of the intention of the Parliament in relation to people such as Mr and Mrs Charlish living in retirement villages who are making yearly payments. The Parliament intended to overt a string of cases post the decision of Knight and on this basis, the Tribunal does not find that Mr and Mrs Charlish are paying rent.
DECISION
The Tribunal affirms the decision under review, albeit for different reasons.
I certify that the preceding 27 (twenty -seven) paragraphs are a true copy of the reasons for the decision herein of Mr P Wulf, Member ...........................[Sgd].............................................
Associate
Dated 8 September 2014
Date of hearing 22 August 2014 Advocate for the Applicants Mr Matt Dillon of Counsel instructed by
Mr Andrew Davison, Welfare Rights CentreSolicitors for the Respondent Mr Andrew Dillon of Counsel instructed by
Ms Fiona Dempsey, Australian Government Solicitor
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