Messina and Secretary, Department of Family and Community Services

[2000] AATA 223

DECISION AND REASONS FOR DECISION [2000] AATA 223

ADMINISTRATIVE APPEALS TRIBUNAL      )

)     No N1999/1088

General Administrative Division           )          

Re      CARMELA MESSINA        

Applicant

And    SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES  

Respondent

DECISION

Tribunal       J P BARBER, Member       

Date22 March 2000

PlaceSydney

Decision      The Tribunal affirms the decision under review
  (Sgd) J P Barber
  ..............................................
  Member
CATCHWORDS
SOCIAL SECURITY – Age Pension – The value of the Applicant's assets for the purposes of calculating the rate of age pension – The appropriate method of calculating the rate of pension payable to the applicant
Social Security Act 1991 - ss 11(4); (5); (6), 1118(1); 1064 Modules A; Division 3 of Part 3.12

REASONS FOR DECISION

J P BARBER, Member                   

1. This is an application by Mrs Carmela Messina for review of a decision of the Social Security Appeals Tribunal ("the SSAT") of 29 June 1999 (T2), which affirmed a decision of an Authorised Review Officer of 24 March 1998 (T20).  The original decision, which is the subject of the appeal, was made by the Department of Social Security (DSS) (now the Department of Family and Community Services) on 27 August 1997 (T17). This decision resulted in a reduction in the rate of pension payable to Mrs Messina due to a re-evaluation of the value of her assessable assets.

2. Mrs Messina was self represented and attended the Tribunal hearing with her daughter. The Respondent, the Department of Family and Community Services was represented by Ms Angela Smith, advocate.

3. The Administrative Appeals Tribunal ("the Tribunal") had before it the documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (the Tribunal documents).
   EVIDENCE BEFORE THE TRIBUNAL

4. Mrs Messina gave oral evidence at the hearing.

5. Mrs Messina owns a half share of Lots 31-34 Devonshire Road, Kemps Creek, the other half being owned by her brother and sister-in-law. The properties were purchased in 1966 with her husband in order to establish and run market garden.

6. In 1982, Mrs Messina's husband passed away and she subsequently applied for, and was granted, an age pension.

7. Mrs Messina told the Tribunal that following the introduction of the assets test in 1985, her pension was reduced to a figure of around ninety dollars per week. Mrs Messina told the Tribunal that in order to survive during that period she had to rely upon her children, Maria, Sebastian and Joseph, to assist her with bills and the cost of living.

8. Mrs Messina told the Tribunal that she was advised to try and sell the property. However, she reported that her brother did not wish to sell his half of the property. Consequently Mrs Messina approached real estate agents to attempt to sell her half share of the properties. She reported that she had no success in this regard and subsequently, with the assistance of a welfare agency, was able to have her full rate pension restored under the hardship provisions of the income and assets tests.

9. The Tribunal documents indicate that on 8 August 1997 the Australian Valuation Office ("AVO") undertook a valuation of Mrs Messina's properties and valued them at $870,000. Following this valuation, Mrs Messina's rate of pension was reduced to $246 per fortnight.

10. Mrs Messina told the Tribunal that this was not enough to live on. She stated that she had to bear significant costs in having white ants treated in her home and a number of other repairs including the replacement of the facia boards on her house. On top of this she said that she had to pay rates and insurance. She told the Tribunal that in the last two years she was unable to make these payments and had to rely upon her children. Mrs Messina indicated that she had borrowed on other occasions from her children but that she felt that they were not in a position to assist her any longer because of obligations with their own families.

11. Mrs Messina told the Tribunal that on a number of occasions she has asked her brother to agree to the sale of the properties as she has had no success in attempting to sell her half share alone. However, she told the Tribunal her relationship with her brother has deteriorated to the extent that they no longer speak to each other, and that he has made it quite clear that he has no intention of selling.

12. She also indicated that the land was not suitable for grazing cattle as there wasn't enough grass to support an economic sized herd. She also told the Tribunal that she did not consider that a market garden was an option because the dam, which her husband had constructed to provide water for the original market garden, was breached and would require a large amount of money and work to repair it. Mrs Messina told the Tribunal that attempts had been made to lease the properties without success.

13. Ms Smith for the Respondent told the Tribunal that the Respondent was not disputing that the property is unavailable for sale. She indicated that the issue for the Tribunal to determine was whether the asset hardship rules should be applied.

14. Ms Smith referred to the AVO Report of 16 February 1999 (T27) which, she stated, confirmed the original valuation undertaken by the AVO on 8 August 1997 (T15).

15. Ms Smith told the Tribunal that the Respondent accepts the revised commercial lease value figure of $7,800 per annum which is lower than the value estimated by the AVO in 1997.

16. Mrs Messina questioned the accuracy of the AVO valuation of her properties stating that not all of the properties were suitable for lease. Ms Smith responded by pointing to the AVO Report of 16 February 1999 that discounted Lot 34 entirely and half of Lots 33 and 31 from its calculation for commercial lease value purposes.

17. The main point raised by Mrs Messina did not so much relate to the alternative methods of calculation of her entitlement. Rather, she told the Tribunal that she felt that she needed a higher rate of payment in order to meet the costs of maintaining her property and making ends meet.
    APPLICABLE LEGISLATION AND ISSUES

18. Point 1064-A1 of the Social Security Act 1991 sets out the general provisions for calculating the rate of age pension. Step 11 of Point 1064-A1 states that the lower of the rates produced by applying the income and assets tests is the rate which is applied to a person. The legislation also provides a capacity to offer relief to a pension recipient whose assets produce little or no income. This provision is known as the hardship provision and is contained in Division 3 of Part 3.12 of the Social Security Act 1991. It states in part that:

    "1129(1) If :

    (a)either:

    (i)a social security pension is not payable to a person because if the application of an assets test; or

    (ii)a person's social security pension rate is determined by the application of an assets test; and

    (b)either:

    (i)sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A and 1126 (disposal of assets) do not apply to the person; or

    (ii)the Secretary determines 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 with the Department, in a form approved by the Secretary, a request that this section apply to the person; and

    (e)the Secretary is satisfied that the person could suffer sever financial hardship if this section did not apply to the person;

    The Secretary must determine that this section applies to the person."

1. The written submission before the Tribunal from the Respondent indicates that it is accepted that the Mrs Messina's case meets section 1129(1)(a) to (d) however, the Respondent does not consider that paragraph (e) applies. That is, the Respondent is of the view that Mrs Messina would not suffer severe financial hardship if this section did not apply.

2. Notwithstanding this, the Respondent has set out in the supplementary documentation submitted with the Tribunal documents, evidence that shows that if the hardship provisions were applied to Mrs Messina, she would in fact receive a lower rate of pension than she is entitled to under the normal application of the assets test. This is because the application of the hardship provisions results in a calculation being applied to the assets which are disregarded for the asset test purposes to produce a notional amount of income which is taken into account and deducted from the maximum rate of pension in order to determine the rate to be paid. When this provision is applied, it results in a requirement that $4,000 be deducted from the annual rate of payment which would be paid under the hardship provisions. This would reduce the rate of pension to $199.35 per fortnight. Under the application of the normal assets test, Mrs Messina is entitled to $246 per fortnight. Therefore, to apply the hardship provisions in Mrs Messina's case would leave her with a lower rate of pension than that to which she is entitled under the income and assets test.

3. While Mrs Messina has told the Tribunal that it is her wish that a full rate of pension be paid to her, the Tribunal is bound to apply the legislation which governs the administration of pensions and therefore affirms the decision of the SSAT of 29 June 1999.

   I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of J P BARBER, Member

   Signed:         .....................................................................................
     Associate

   Date/s of Hearing  12 January 2000
   Date of Decision  22 March 2000
   Representative for the Applicant              Self-represented     
   Representative for the Respondent        Angela Smith