Martin and Secretary, Department of Family, Community Services and Indigenous Affairs
[2007] AATA 2051
•13 December 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 2051
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2007/2697
| GENERAL ADMINISTRATIVE DIVISION | ) | ||
| Re | TERRENCE MARTIN & CLARE MARTIN | ||
Applicants
| And | SECRETARY, DEPARTMENT OF FAMILY, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS |
Respondent
DECISION
| Tribunal | Senior Member, Naida Isenberg |
Date13 December 2007
PlaceCoffs Harbour
| Decision | The decision under review is set aside. The Tribunal decides that the Applicants’ principal home and the Snows Road property are exempt from inclusion in the value of the combined assets for the purpose of calculating the rate of age pension under section 1118 of the Social Security Act 1991. The matter is remitted to the Respondent for calculation of the Applicants’ age pension in accordance with this decision. |
………………SGD……………………………
Naida Isenberg
Senior Member
CATCHWORDS
SOCIAL SECURITY – reduction of age pension due to value of assets under Applicants’ control – what assets are exempted under the assets test assessment – combined assets − rate of age pension − principal home − the decision under review is set aside.
Social Security Act 1991− Section 11A, 1064, 1118
REASONS FOR DECISION
| 13 December 2007 | Senior Member, Naida Isenberg |
| Decision Under Review |
Mr and Mrs Martin (“the Applicants”) are seeking a review of a decision made by the Social Security Appeals Tribunal (“SSAT”) dated 6 June 2007. The SSAT had affirmed a decision made by a Centrelink authorised review officer (“ARO”) on 16 April 2007 to reduce the amount of age pension payable to the Applicants due to the value of their assets.
Issue
What of the Applicants’ assets are exempted under the assets test for the purpose of calculating the rate of their age pensions by applying the modules in section 1064 of the Social Security Act1991 (“the Act”).
Background
The Applicants each claimed age pension on 17 January 2007. On 14 February 2007 Centrelink granted the claims and based the rate of pension on total combined assets of $506,602. The Applicants’ are the registered proprietors of a farm of 121.09 hectares in size, located about 5 kilometres west of Dorrigo. The farm is on five Certificates of Titles.
Calculation of the rate of age pension is carried out by applying the modules in section 1064 of the Act. Module A requires the value of the combined assets of a couple to be taken into account when calculating the rate of payment. The Applicants have assets including shares, money in bank and building society accounts, livestock, a motor vehicle and the farm. Of these, the farm is the major asset by far, having been valued at an estimated value of $800,000.
CONSIDERATION OF THE EVIDENCE
What property is exempt from inclusion in the Applicants’ assets?
Under section 1118 of the Act, the Applicants’ principal home is exempt from inclusion in the value of the combined assets for the purpose of calculating the rate of age pension.
There was no dispute that the Applicants’ home is situated on lot 2 on DP 752830, whereas the remainder of the farm is on four other titles, namely: lot 1 on DP 752830, lot 255 on DP 752830, lot 2 on DP 824501 and lot 3 on DP 824501. Lot 3 on DP 824501 is Snows Road, (“the Snows Road Property”).
The Secretary contended that as the Applicants’ home is situated on a separate title document from the balance of the farm property, only the value of the land described as lot 2 on DP 752830 can be disregarded and that the balance of the value of the farm property must be included in the combined assets of the Applicants.
The Act is clear. Under section 11A(1) of the Act the land adjacent to the dwelling-house is also exempt, but only if the land is on the same title document as the home. The title document is the certificate of title for the land where land title is registered under a Torrens system of registration: section 11A(11).
The Applicants, however, contended that the whole of the farm should be disregarded as an asset. It was noted that for the purposes of the local council the five properties are rated as one.
Oral evidence was given by Mr Brian Pitt, Contract Valuer of the Australian Valuation Office (AVO). Mr Pitt described the farm as comprising of three large blocks and two roads. Some parts of the blocks were very steep and are land-locked. He said he had taken that into account in making his valuation. Mr Pitt confirmed the assertion by the Applicants that the house could not be reached by road other than by Snows Road.
I discussed with the Respondent’s representative, Mr Larcombe, the following provision and note under section 11A(2)(c) of the Act:
11A(2) The Secretary may determine that land is to be treated, for the purpose of subparagraph (1)(a)(i), as if it were held on the same title document as other land if any of the following apply:
(a) …
(b)…
(c) the alienation of one of the blocks of land without the other would seriously undermine the function of the house as a dwelling.
Note: A mere loss of amenity, such as the loss of a swimming pool, garden, tennis court or view, would not seriously undermine the function of a house as a dwelling.
The Respondent conceded, and I accept, that the alienation of Snows Road would seriously undermine the function of the house as a dwelling and, for that reason, should be included as if part of the land of the principal home under section 11A(2)(c) of the Act.
What is the value of the property and the part of the property which is to be exempted?
Mr Pitt, in his report, valued the whole of the property at the market value of $800,000. He described his methodology in reaching the valuation and stated that he had considered comparable properties in the area and assessed points of differentiation between them and the subject property. He had taken the size of the house into account and its state of repair. He considered the replacement cost of the house to be about $180,000 to $200,000. Mr Pitt said he discussed his valuation with Mr Martin who had seemed to be in broad agreement with a valuation of $800,000 for the whole farm, but thought the valuation of $350,000 for the house was undervalued. Mr Martin thought it should be valued at $385,000 but did not provide any valuation to that effect.
Mr Pitt, in his report had come to his view using the following calculations:
Market Value:
The Whole Property Value has been calculated as follows:
Land Value
121.09ha @ $5,800/ha (rounded to) $700,000
Residence and Ancillary Improvements $85,000
Plus Farm Structures $15,000
Total Assessed Value $800,000
The Extended House and Curtilage Value has been calculated as follows:
Land Value (Lot 2 DP 752830)
47.15ha @ $7,950/ha (rounded to) $375,000
Residence and Ancillary Improvements $ 85,000
Total Assessed Value $460,000
Balance of land $340,000
Whole Value $800,000
In the absence of other evidence of valuation, I accept that the method of valuation used in the report of the AVO is the most appropriate method of determining the value of the farm as a whole, and the value of the home and the land on the same title.
Following the Secretary’s concession to include the Snows Road property under section 11A(2)(c) of the Act, Mr Pitt agreed that the Snows Road property, totalling 2.54 ha should be valued at the same rate as the house property;
The calculations therefore are as follows:
47.15+2.54 ha = 49.69ha @ $7,950/ha = $395,035
Residence and Ancillary Improvements = $ 85,000
Total $480,035
In conclusion, I find that the value of the Applicants’ whole farm property is $800,000 and that the value of the house and its property (Lot 2 in DP 752830) and Snows Road property (Lot 3 in DP 824501), which are to be exempted from consideration as assets, is $480,035.
There was also a concession by the Secretary that the original assessment of the assets of the Applicants included an asset value for a NAB business account of $7,654.46. This bank account was erroneously included in the asset calculation twice.
DECISION
For the reasons I have given, the decision under review is set aside. The Tribunal decides that the Applicants’ principal home and the Snows Road property are exempt from inclusion in the value of the combined assets for the purpose of calculating the rate of age pension under section 1118 of the Act. The matter is remitted to the Respondent for calculation of the Applicants’ age pension in accordance with this decision.
I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Naida Isenberg.
Signed: ...................................................................................
Associate: Felicia Daniele
Date of Hearing: 19 November
Date of Decision: 12 December 2007
Solicitor for the Applicant: Self-Represented
Solicitor for the Respondent: James Larcombe, Centrelink Legal Services Branch.
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