MUNDAY and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT & WORKPLACE RELATIONS

[2010] AATA 124

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 124

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/3907

GENERAL ADMINISTRATIVE  DIVISION		)
Re		IAN MUNDAY

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT & WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Dr K S Levy RFD, Senior Member

Date16 February 2010

PlaceBrisbane

Decision The Tribunal affirms the decision under review.  

...............[Sgd]...............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Benefits and Entitlements – Newstart Allowance – Correct interpretation of ss 611, 1118(b), 1121 Social Security Act 1991 (Cth).

Social Security Act 1991 (Cth) ss 611, 1118(b), 1121

Achkar and Department of Family and Community Services [2001] AATA 684

Berry and The Secretary, Department of Social Security [1995] AATA 238

Collins and Repatriation Commission (1980) 32 ALR 581

Mantzios and The Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 892

Repatriation Commission v Harrison (1997) 46 ALD 193

Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876

REASONS FOR DECISION

16 February 2010 Dr K S Levy RFD, Senior Member           

INTRODUCTION

1.      The Applicant, Mr Ian Munday, applied for Newstart Allowance on 2 March 2009.  That application was rejected by Centrelink on 14 April 2009.  He sought review initially from an authorised review officer and then subsequently by the Social Security Appeals Tribunal, both of which upheld the initial decision of Centrelink on 27 May 2009 and 17 July 2009 respectively.

2.The Applicant now appeals to this Tribunal for review of those decisions.

ISSUES

3.      The issues for determination are:

(1)Can the assessment of the ‘assets test’ be reduced by the value of the mortgage on the applicant’s principal place of residence? and,

(2)Whether the correct asset value is in excess of the asset value limit prescribed?

EVIDENCE

4.      Mr Munday and his partner jointly own a home at Waterford West.  He and his partner are also joint owners of a property on Macleay Island. The latter property was intended for investment purposes to cater for their retirement or other future needs.

5.      At the time of the purchase of the Macleay Island property, the bank required a mortgage over the principal place of residence and would not advance money for the purchase solely on the valuation of the Macleay Island property.  As a result, the jointly owned principal place of residence is charged with a mortgage for security over the property at Macleay Island.

6.      The Applicant then became unemployed.  He applied for Newstart Allowance.  He declared his assets to include: the Waterfront West property; the Macleay Island property; $26,454.25 cash at bank; and, miscellaneous assets valued at $23,000.  The Macleay Island property was formally valued by the Australian Valuation Office to be worth $225,000.

7.      The application for Newstart Allowance was rejected based on the assets test under the Social Security Act 1991 (Cth) (“the Act”). While Mr Munday has since been granted Newstart Allowance from the latter part of 2009, he argues that the introduction of this legislation could not have been intended to work adversely against he and his partner in the circumstances described. That is, he argues that he should have an entitlement to Newstart Allowance from the original application date.

CONSIDERATION

8.      The issues to be determined by the Tribunal require the legal interpretation of the relevant provisions of the Social Security Act 1991 (Cth).

9. Section 611 provides that Newstart Allowance is not payable where a person has assets exceeding a specified ‘assets value limit’. In calculating the asset value, s 1118(b) provides that a person who is a member of a couple will not have the value of their principal home included in that asset value. Further, s 1121 provides that where an asset has a charge or encumbrance over it, such as a mortgage, the value of that asset will be reduced by the value of the charge or encumbrance (s 1121(1)), unless s 1118 explicitly bars its application. The benefit in that section is restrictive as it will not apply to a charge or encumbrance over assets which are to be disregarded under s 1118.

10.     The Applicant says a rigid application of the law as previously determined could not have been the intention of Parliament and that if a less rigid application were adopted he would qualify for the Newstart Allowance for the period concerned.

11.     The practical effect of the transactions entered into by the Applicant may, from an equitable point of view, anticipate that the ‘net assets’ would be the real issue in assessing entitlement to public moneys through the social security benefits system.  However, that notion has been rejected by the Federal Court of Australia in Repatriation Commission v Harrison (1997) 46 ALD 193. These statutory provisions have been considered in a number of other cases as well. The interpretation by Centrelink in its application to Mr Munday’s circumstances is consistent with those authorities. I have also examined the second reading speech at the time of the enactment of s 1118 Social Security Act 1991 (Cth), and there is no extrinsic evidence which assists in the interpretation opined by the applicant.

12.     I was referred by the Respondent to Achkar and Department of Family and Community Services [2001] AATA 684. That case involved very similar circumstances where a man and his wife had mortgaged their home to facilitate the purchase of a taxi license. The purpose of that transaction was to ensure Mr Achkar’s continued ability to work. However, the Tribunal held that the legislation empowers set off against specific assets and using a ‘net asset’ type basis is inappropriate under these provisions of the Act.

13. I note the Federal Court has recently considered this statutory provision again but the facts there were a novel and more complex arrangement and pertained only to s 1118(b) (see Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876 per Greenwood J).

14.     I note however that similar circumstances to Mr Munday’s case are evident in the more recent decision of this Tribunal in Mantzios and The Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 892.

15.     In Berry and The Secretary, Department of Social Security [1995] AAT 238, the Tribunal commented that these provisions of the legislation may at times seem to produce an unfair result.  Nevertheless, it went on to cite Fisher J in Collins and Repatriation Commission (1980) 32 ALR 581 at 593, where, his Honour said:

In my opinion the undoubted conclusion to be drawn from the above is that the Tribunal has no charter to act in making its decision in accordance with “equity and good conscience”, but is obliged to comply with the provisions of the legislation.

16. I understand that in the circumstances, the applicant may feel that those outcomes are not altogether logical. But the issue for determination is not one of logic but one of correct statutory interpretation. None of the aforementioned Tribunal decisions appear to me to be affected by any imperfection from a legally analytical standpoint. While s 1118 Social Security Act 1991 (Cth) provides that the principal place of residence is to be disregarded in calculating the value of the person’s total assets, other asset values may be reduced by the value of a charge or encumbrance (s 1121(1) of the Social Security Act 1991 (Cth)). Mr Munday’s proposition is that the value of the charge against his principal residence should be deducted from the value of the investment property.

17. Mr Munday’s circumstances for the period under review involve an encumbrance on the principal place of residence (a disregarded asset for the purpose of s 1118). But the encumbrance is not attached to the Macleay Island property, the value of which is taken into account for the purpose of calculating asset values. Had the encumbrance been affixed to that latter asset it could have been deducted from the calculated asset value. The broad interpretation in Mr Munday’s proposition may have more merit but for the express inclusion of s 1121(3) of the Act. If Mr Munday’s proposition was legally correct, s 1121(3) would then be redundant. To suggest that Parliament intended that subsection to be meaningless or of no application, would be contrary to the tenets of statutory interpretation.

18.     I find that the result determined by Centrelink and subsequent review authorities is the correct legal interpretation in this case. Therefore, in respect of Issue 1, the amount of the mortgage cannot reduce the asset value calculated.

19.     In respect of Issue 2, taking account of the finding above in respect of Issue 1, the evidence shows that the applicant and his partner had an asset value of $251,454.25 in respect of the investment property and household assets.  A total of $274,454.25 would be held by the applicant and his partner if the value of other personal effects is included.  Therefore, these total assets exceed the prescribed asset value limit of $243,500.  Consequently, the correct response to Issue 2 is that the original decision correctly calculated the asset value and that it exceeds the asset value limit.

DECISION

20.     The decision under review is affirmed.

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Dr K S Levy RFD, Senior Member

Signed: ..................[Sgd]...........................................................
              Kate Slack, Research Associate

Date/s of Hearing  18 December 2009
Date of Decision  16 February 2010
Applicant was self-represented
Solicitor for the Applicant          Joe Guthrie, Departmental Advocate