McDonald and Secretary, Department of Family and Community Services
[2004] AATA 1354
•15 December 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1354
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2001/328
GENERAL ADMINISTRATIVE DIVISION ) Re KANE McDONALD Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mr M J Allen, Member Date15 December 2004
PlacePerth
Held (1) The decision of the Social Security Appeals Tribunal made on 25 June 2001 is set aside and the matter is remitted to the respondent for reconsideration of the applicant’s eligibility for New Start Allowance in accordance with the following directions:
(a) the date upon which the applicant became unemployed was the last day of the school year in December 2000 (“the date of unemployment”);
(b) the applicant was disqualified from receiving New Start Allowance for a period of 14 weeks from the date of unemployment by virtue of a liquid assets waiting period of 13 weeks and an ordinary waiting period of 1 week;
(c) an income maintenance period commenced on the date of unemployment and continued for the period the applicant received annual leave payments, ending in approximately the first week of February 2001;
(d) for the purpose of determining her eligibility for New Start Allowance in the period February to September 2001 the applicant is taken to be a homeowner for asset testing purposes;
(e) the value of the applicant’s half share of the home and surrounding land up to an area of 2 hectares at Lot 10 Redgate Road, Witchcliffe is to be disregarded for asset testing purposes, but the value of the applicant’s half share of that land in excess of an area of 2 hectares is an asset for asset testing purposes.
(f)((2) Leave is granted to both parties to apply to the Tribunal in the present proceedings should there be any dispute concerning the determination of the dates or periods referred to in (1)(a),(b), or (c) above or the determination of the values referred to in (1)(e) above.
.............(sgd M J Allen)........................
Member
CATCHWORDS
Social Security – Newstart allowance – applicant temporarily vacated former matrimonial home, living temporarily in other accommodation – former matrimonial home remained her principal residence – applicant was a homeowner throughout the relevant period – value of applicant’s half share in the former matrimonial home and curtilage up to 2 hectares to be disregarded for asset testing purposes – value of half interest in the balance of the land an asset of the applicant – applicant subject to a liquid assets waiting period of 13 weeks from date on which she became unemployed and an ordinary waiting period of one week – applicant became unemployed at the end of the school year when her fixed term appointment ended although she received annual leave payments during the subsequent school holidays – income maintenance period applied during the holiday period and applied during the liquid asset and ordinary waiting periods – liquid asset and ordinary waiting periods can be self-served between date of unemployment and date of application for a benefit – decision set aside – matter remitted for reconsideration in accordance with directions of the Tribunal
Social Security Act 1991 ss 11, 598, 611, 620, 621, 1068, 1068-G7AH, 1068-G7AK, 1068-G7AKC, 1118, 1131, 1132
Secretary, Department of Education Training & Youth Affairs v Ovari [2000] FCA 323
Re Secretary, Department of Family & Community Services and Kulshrestha [2003] AATA 227
Re Kirkwood and Secretary, Department of Family & Community Services [2003] AATA 1143
REASONS FOR DECISION
15 December 2004 Mr M J Allen, Member 1. On 25 June 2001 the Social Security Appeals Tribunal (“the SSAT”) affirmed the decision of a delegate of the respondent made on 27 February 2001 to reject an application for Newstart Allowance (NSA) made by Mrs Kane Donald. Mrs McDonald (“the applicant”) has applied to this Tribunal for a review of the SSAT decision.
2. The matter was heard on several occasions between February 2003 and May 2004, with Mrs McDonald participating by telephone and representing herself. The respondent was initially represented by Mr Ellis and subsequently by Mr Ward, both from Centrelink’s Advocacy and Administrative Law Team. The Tribunal received into evidence the documents filed pursuant to s37 of the Administrative Appeals Tribunal Act 1975 (T1 – T10). Oral evidence was given by the applicant and the Tribunal received into evidence other documents that were tendered by the parties (Exhibits A1 and R1-R2].
Background and Evidence
3. Much of the evidence in the matter was not in dispute and the following findings of fact can be made. The applicant left her former matrimonial home in August 2000 with her two children after a difficult period with her former partner that had involved court procedures and at least one restraining order. On 22 February 2001 she applied to Centrelink for NSA payments – but on 27 February 2001 that application was rejected because she was treated by Centrelink as a “non homeowner” and she had assets valued at approximately $270,000 (including the value of her half share in the former matrimonial home and two bank accounts totalling approximately $22,000), which exceeded the assets value limit for a single non homeowner at that time of $228,750. That decision was affirmed on internal review by an authorised review officer (ARO) on 18 April 2001 and by the SSAT as mentioned above.
4. The applicant subsequently returned to the matrimonial home in September 2001, but lived separately and apart from her former partner. She applied for and was granted NSA from 17 September 2001 because she was now considered to be a home owner and the value of her interest in the matrimonial home was no longer taken into account.
5. At the time of her NSA application the applicant was a schoolteacher but was not in full-time employment, although she was seeking full-time work. She was employed at schools in the area in which she lived as a relief teacher and was averaging about one day’s work a week, earning approximately $175.00 per week before tax. That was her only income at the time.
6. Throughout the period of her absence from the matrimonial home the applicant lived in a number of different and temporary places, including a shed on a farm, housesitting for several families and for several months in a caravan on a friend's property. The two children spent half the time with her and half the time with their father, who had remained in the matrimonial home. During the time that she lived in the caravan she and the children (when they were with her) were essentially reliant upon the applicant’s friend – who provided not only the accommodation but also all the family's food requirements. The applicant did not pay her friend any money, but contributed to the living arrangements by doing work around the house such as cleaning, cooking, gardening etc.
The Issues
7. Because the applicant received NSA from September 2001 I am only concerned with the period from February to September 2001 when she was not receiving those benefits. The case was presented to, and considered by, the SSAT as involving two issues. The first was whether the application made in February 2001 was properly rejected because the applicant had assets valued in excess of the allowed limit. The second was whether, at the time of rejecting that application, the respondent should have exercised the power available under s 1131 of the Social Security Act 1991 (the Act) to determine that the financial hardship provisions applicable under that section should apply to the applicant – the consequence of which would have been that under s 1132 of the Act the value of any unrealisable assets (including the value of her interest in the former matrimonial home) would have been disregarded in the assessment of the value of her assets for assets tests purposes.
8. The case was originally presented to this Tribunal on the basis that it raised the same two issues, both of which were dealt with on the basis of an assumption that the applicant was to be considered a non-homeowner. However, during the course of the proceedings I raised with the parties whether that assumption was correct – and indicated that I intended to regard the case as also raising the issue of whether the applicant should have been considered as a homeowner or not. Late in the proceedings Mr Ward also raised the issue of whether, if the applicant were to be regarded as eligible for NSA in the relevant period, whether she would have been subject to a “liquid assets waiting period” or other waiting period.
Consideration
9. Section 611(1) of the Act provides that NSA is not payable to a person if the value of the person's assets exceed the person's assets value limit. Section 611(2) sets out how to calculate a person's assets value limit and contains a table which sets out various asset value limits for various categories of person – based on whether or not the person (or the person’s partner) is a homeowner.
10. For a person who is not a member of a couple (as was the case for the applicant) and who is not a homeowner, the assets value limit at the relevant time was $228,750.00. For a person who is not a member of a couple and who is a homeowner the limit was $133,250.00.
11. On the assumption that the applicant was not a homeowner at the relevant time there was no dispute between the parties that the value of her assets at that time (approximately $22,000.00 in two bank accounts, the value of her interest in the former matrimonial home of about $245,000.00 plus some other assets of low value) exceeded her assets value limit and no NSA would have been payable to her.
Financial Hardship Provisions
12. It is convenient to deal first with the issue of whether the financial hardship provisions contained in s 1131 and s 1132 of the Act should have been invoked by the respondent in relation to the applicant’s interest in the former matrimonial home. It is not necessary to set out the terms of these sections, but I note that the respondent (and hence this Tribunal) has the discretion in certain specified circumstances to disregard the value of assets that are considered to be “unrealisable”.
13. The applicant contended that the delegate either did not consider these provisions of the Act or, if they were considered, must have wrongly decided not to apply them in her favour. It was contended on behalf of the respondent that no decision was made in relation to the hardship provisions at the time of the applicant’s application for NSA because she had not, as required by ss 1131(1)(f), lodged in a form approved by the respondent, a request that s 1131 apply to her. Accordingly, it was not open to the respondent to have made any decision about those provisions. Because no such decision had been made, there was no decision that this Tribunal could review concerning the applicability or otherwise of the hardship provisions to the applicant.
14. In support of the contention by the respondent that no decision had been made in relation to the financial hardship provision at the time of the applicant’s NSA application, I was referred to the following paragraph in the letter written by the ARO to the applicant dated 18 April 2001 (T10):
“There are provisions in the Social Security Act 1991 which allow people who can’t be paid new start allowance because of their assets to be paid under financial hardship rules. While I did not make a decision or review a decision about this in your case, I consider that it is unlikely you could be paid new start allowance under the benefit asset hardship rules because among other things, you have bank balances of more than $6,000.00. The benefits assets hardship provisions do not generally apply to single people who have readily realisable assets worth more than $6,000.00. If you want more information about the assets hardship rules, you should contact Centrelink Bunbury.”
15. In response to the above the applicant said that she recalled phoning the Centrelink office in Bunbury but the person to whom she spoke knew nothing about the proper form to be used for making such an application. Accordingly, she took no action at that time.
16. I was also referred to the following passage in the SSAT decision:
“22.In this case Mrs McDonald has not lodged with the Department, in a form approved by the Secretary, a request that s 1131 apply to her. That section therefore cannot be applied to Mrs McDonald by this Tribunal. She must first put in an application and have that tested. …
23.The Tribunal can only suggest that Mrs McDonald make an application to Centrelink to have s 1131 apply to her.”
17. In fact it was not until October 2002 that the applicant applied to have the hardship provisions apply to her. By letter dated 20 December 2002 a delegate informed the applicant that her application had not been successful because it could only be applied at the time of the original NSA application and in October 2002 she was already in receipt of a social security benefit. That letter went on to remind the applicant of what the ARO had advised her in the letter of 18 April 2001 and of what the SSAT had said in its Reasons for Decision. However the letter went on as follows:
“Hardship payments would also have been considered at the time of the original rejection of your claim on 27/2/01 but again, due to the funds in your bank account, your claim would not have succeeded. Centrelink rules state a customer can be considered to be in hardship if their available money is less than $6,000 for a single person. As your available funds at that time were more than that amount, you were not eligible for payment.”
18. Because of the view that I have taken in relation to the question of whether the applicant should have been treated as a homeowner at the time of her original application, it has not been necessary for me to determine whether it would now be open to me, were I so minded, to retrospectively apply the financial hardship provisions to Mrs McDonald and make a decision about whether her interest in the former matrimonial home should be treated as an unrealisable asset for the purposes of those provisions.
Was Mrs McDonald a Homeowner
19. Section 11(4)(a) of the Act relevantly provides that “a person who is not a member of a couple is a homeowner if:
(i)the person has a right or interest in the person’s principal home; and
(ii)the person’s right or interest in the home gives the person reasonable security of tenure in the home;”
20. Sub-sections 11(5) and 11(6) of the Act, taken together, relevantly provide that the term “principal home” includes, where it is a dwelling house, the private land adjacent to the dwelling-house that is used primarily for private or domestic purposes with that dwelling-house to the extent that the private land, together with the area of the ground floor of the dwelling-house, does not exceed 2 hectares.
21. Sub-section 11(7) provides that: “a residence of a person is to be taken to continue to be the person’s principal home during any period (not exceeding 12 months) during which the person is temporarily absent from the residence”. Sub-section 11(8) is also relevant – and provides that: “If a person has a right or interest in the person’s principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.”
22. It is apparent that the original decision maker considered that the applicant was not a homeowner at the time of her application but the reasons for so considering are not apparent from the documentation concerning the original application, nor was the original decision maker called to give evidence. The ARO took the view that the applicant was a non-homeowner because she was not living at the former matrimonial home at the time of her application, had not done so since August 2000, and had no intention at the time of returning to the former matrimonial home while her former partner lived there.
23. The SSAT made a finding that the applicant was not living in the former matrimonial home (para 18 of its decision) and noted that she was not a homeowner with the following observation (at paragraph 20 of its decision):
“Mrs McDonald comes within [the category of non home owner] because a ‘home owner’ is defined in section 11(4) to (a) as a person who is not a member of a couple, as a person who has a right or interest in the person’s principal home and the person’s right or interest in the home gives the person reasonable security of tenure in the home.”
The SSAT appears to have given no consideration to whether or not at the time of her application the former matrimonial home remained the applicant’s principal home, notwithstanding that she had been absent from it for approximately six months at that time.
24. The applicant would be a homeowner if at the relevant time she had a right or interest in her principal home, and that right or interest gave her reasonable security of tenure in the home. That issue requires consideration first of the question of what was the applicant’s principal home at the relevant time.
25. In Re Secretary, Department of Family and Community Services and Kulshrestha [2003] AATA 227 Deputy President Forgie and Member Eriksen reviewed a number of authorities concerning the meaning to be given to the expression “principal home”. After referring to a decision of the Full Federal Court in Secretary, Department of Employment Education Training and Youth Affairs v Ovari [2000] FCA 323, including the note that “the adjective ‘principal’ is directed to exclude holiday homes and the like” the Tribunal at [24] said:
“24. The Full Court did not explain the meaning of a ‘principal home’. Some assistance as to the meaning of the expression a ‘principal home’ is available from the dictionary definitions. The word ‘home’ has a number of meanings, but in the 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 a household …’ (the Macquarie Dictionary, 3rd Edition, 1997). The meanings ascribed to the word ‘principal’ include ‘first’ or highest in rank, importance, value, etc; foremost. Taken together, a person’s principal home is the place of residence that is his or her chief or first and foremost residence.”
26. The applicant’s evidence, which was not disputed by the respondent, was that the former matrimonial home had been the home of the family for some 16 years prior to the separation. When difficulties arose between the applicant and her former partner she had obtained a restraining order that had required him to vacate the property. When that order was set aside he had returned to the matrimonial home against her wishes and she found it necessary to leave with the two children. Then followed the period in which she had lived temporarily in a number of places, but at all times she regarded them as nothing more than temporary and that her “home” was the former matrimonial home – even though she knew that there would have to be some form of resolution between herself and her former partner before she could return to it. At all times she maintained a post office box address for her mail. While she was away from the former matrimonial home she had attempted on many occasions to get her former partner to vacate so that she could return with the children. In the end, after the death of her father and the assistance of her former partner’s parents, it had been agreed that she and the children would return but that she and her former partner would live separately and apart at the former matrimonial home.
27. I accept that evidence and, bearing in mind that s 11(7) of the Act provides that a residence is to be taken to continue to be a person’s principal home during any absence not exceeding 12 months during which the person is temporarily absent from the residence, I conclude that the former matrimonial home remained the applicant’s principal home throughout the period of her absence.
28. By virtue of s 11(8) of the Act the right or interest that the applicant had in the principal home (ie. as a joint tenant owner thereof) is taken to be a right or interest that gives her reasonable security of tenure - unless the Secretary is satisfied that the right or interest does not give her reasonable security of tenure. At no time did the Secretary or any delegate consider the point. In any event, and notwithstanding that the applicant felt obliged to leave the matrimonial home for a period, I am satisfied that throughout the period in question she retained a right to reside in the property, and as such had reasonable security of tenure, even though as a matter of fact she chose to temporarily live elsewhere because of the relationship difficulties. I note that, in final written submissions the respondent accepted that it “is not unreasonable that [the applicant] be considered a ‘homeowner’”.
29. In my opinion the applicant was a homeowner in the period between February and September 2001. The applicant’s evidence was that the former matrimonial home is situated on three hectares of land. By virtue of s 11(5) the house and adjacent land up to a total area of two hectares is to be taken as her principal home. Section 1118(1) of the Act provides that, for the purposes of calculating the value of a person’s assets, where the person is not a member of a couple, the value of any right or interest of the person in the person’s principal house is to be disregarded. Accordingly, the value of the applicant’s interest in the former matrimonial home with the adjacent two hectares of land is to be disregarded for the purposes of asset testing.
30. Exhibit R1 is a valuation of the property obtained in October 2001 by Centrelink from the Australian Valuation Office (AVO), which Mr Ward informed me Centrelink would accept as being applicable in February 2001 for the purposes of the NSA application. The AVO valued the “whole property” at $390,000 with a figure of $360,000 allocated as “only for the house, curtilage not included.” I take this to mean that the AVO did not attempt to distinguish between the value of the house and adjacent two hectares and that of the remaining one hectare. Having regard to the decision that I propose to make in the matter it is not necessary for me to attempt to determine the value of the applicant’s interest in the remaining one hectare of land, but the respondent will need to do so.
Liquid Assets Waiting Period
31. Late in the proceedings the question arose as to whether or not, even if the applicant were to be treated as a homeowner and eligible for NSA, she would have been subject to a “liquid assets waiting period” (“LAWP”) in relation to her NSA benefit by virtue of s 598 of the Act. In February 2001 that section relevantly provided that a person is not qualified for NSA in a period unless the person has served the LAWP that is calculated in accordance with a formula contained in that section before the beginning of that period. The LAWP is calculated (for a person with a dependent child) by deducting the amount of $5,000 from the value of the person’s liquid assets and dividing the resulting sum by $1,000. The product of such a calculation is the number of weeks for which the LAWP will run – but with a maximum of 13 weeks. The LAWP in relation to a claim for NSA starts on the day on which the person became unemployed.
32. At the time the applicant’s liquid assets (money in the bank) amounted to approximately $22,300 and the calculation described above (although not actually done by Centrelink) would have resulted in a LAWP of 13 weeks. The question that must then be determined is when that period commenced – which requires a determination of the day on which the applicant became unemployed.
33. In addition to the LAWP, all NSA applicants (except those specified in s 620 of the Act) are subject to what s 620 describes as an “ordinary waiting period” (“OWP”) of 7 days. Section 621(3) provides that where a person is subject to both an OWP and a LAWP then the OWP commences on the day after the end of the LAWP. The net impact of these provisions on the applicant is that she was subject to a waiting period of 14 weeks from the date on which she became unemployed. If that date was before the date of her NSA application then the waiting period could be served, in whole or in part, before the date of application: see Re Kirkwood and Secretary, Department of Family and Community Services [2003] AATA 1143 per S M Lindsay.
34. The applicant gave evidence that as a qualified teacher she was originally employed on a full-time basis by the Education Department of Western Australia. She had taken maternity leave in the late 1980’s but had retained her “attachment” to a particular school in her area. In 1993 she had lost her attachment to that school and thereafter, if she wanted to work, she had to apply for teaching positions as they became available. Up until the end of the year 2000 she had been successful in gaining yearly appointments. This involved applying for a vacancy and being notified, in January of each year that she would be employed at a particular school for a nominated period. The letter of appointment would nominate the first day of first term as the start of the period and the last day of fourth term as the end of the period of employment (if it was a full-year appointment). However, if (as had always been the case) she worked all four terms of a year then she would become eligible to be paid “annual leave pay” over the summer school vacation. This was paid fortnightly at the same rate of pay as she had been paid during the school year.
35. The applicant said that in the year 2000 her appointment ended on the last day of fourth term in late December 2000. She received the annual leave pay until the end of the school holidays at about the first week of February 2001. However, in January 2001 she had not been offered employment for 2001 by the Department. I accept that evidence.
36. It was contended for the respondent that because the applicant received holiday pay until the beginning of February she was employed until that time and any LAWP would commence at that time.
37. At this point it is necessary to note the provisions of Module G within the “Benefit Rate Calculator B” which forms part of s 1068 of the Act – which provides the means by which the rate of benefits such as NSA are to be calculated. Module G deals with the effect of “ordinary income” on the rate of benefit payable.
38. Sections 1068 – G7AH and 1068 – G7AK relevantly provide that if a person, whose employment has been terminated, receives a leave payment as a lump sum or by periodic payment, then the person is taken to have received ordinary income for a period equal to the period of the leave payments, commencing on the first day of the leave period involved. This period is referred to as an “income maintenance period” (“IMP”).
39. Section 1068 – G7AKC relevantly provides that where a person covered by s 1068 – G7AH is subject to a LAWP then the IMP is taken to have started on the day the LAWP started.
40. On the evidence of the applicant, which I accept, I am satisfied that her employment in 2000 came to an end, or terminated, on the last day of the school year in December 2000. She therefore became unemployed immediately after that date, but received leave payments fortnightly until approximately the first week of February 2001.
41. It is necessary to distinguish between a qualification for NSA in a period and the rate at which NSA is payable for that period. The applicant was disqualified from receiving NSA from the last day of school in December 2000 for a period of 14 weeks because of the LAWP and the OWP. Had she not been so disqualified she would have been entitled to receive NSA at a rate that took into account the ordinary income received by way of leave payments. That income would, presumably, have had the effect of reducing the rate she would have received. However, it is apparent from s 1068 – G7AKC (which is applicable to the applicant) that a LAWP and an IMP can run together and there is no reason to conclude that the applicant became unemployed (for the purpose of commencement of the LAWP) only when the IMP ended.
42. In all the circumstances my decision is that the decision of the SSAT of 25 June 2001, which affirmed the original decision of 27 February 2001 to reject the applicant’s application for NSA, must be set aside. I remit the matter to the respondent for reconsideration of the applicant’s eligibility for NSA in accordance with the following directions:
(a)the date upon which the applicant became unemployed was the last day of the school year in December 2000 (“the date of unemployment”);
(b)the applicant was disqualified from receiving NSA for a period of 14 weeks from the date of unemployment by virtue of a LAWP of 13 weeks and an OWP of 1 week;
(c)an IMP commenced on the date of unemployment and continued for the period the applicant received annual leave payments, ending in approximately the first week of February 2001;
(d)for the purposes of determining her eligibility for NSA in the period February to September 2001 the applicant is taken to be a homeowner for asset testing purposes;
(e)the value of the applicant’s half share of the home and surrounding land up to an area of 2 hectares at Lot 10 Redgate Road, Witchcliffe is to be disregarded for asset testing purposes, but the value of the applicant’s half share of that land in excess of an area of 2 hectares is an asset for asset testing purposes.
43. Both parties should have leave to apply to the Tribunal in the present proceedings should there be any dispute concerning the determination of the dates or periods referred to in para 42(a),(b), or (c) or the determination of the values referred to in para 42(e).
I certify that the 43 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Allen, Member
Signed: .................(sgd V Wong)...............................
AssociateDate/s of Hearing 21 February 2003, 28 February 2003, 14 August 2003, 11 May 2004
Date of Decision 15 December 2004
Solicitor for the Applicant In person
Solicitor for the Respondent Mr S Ellis and Mr C Ward
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