Murphy and Secretary, Department of Family and Community Services

[2005] AATA 451

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 451

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/1348

GENERAL ADMINISTRATIVE DIVISION

Re:         LORRAINE MURPHY

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       G.D. Friedman, Member

Date:             19 May 2005

Place:            Melbourne

Decision:The Tribunal affirms the decision under review. 

(sgd) G.D. Friedman
  Member

SOCIAL SECURITY - reduction in age pension - assets exceeded allowable limit - valuation of rural property 

Social Security Act 1991 s 1064

Re Hills‑Evans and Secretary, Department of Social Security (AAT 8710, 18 May 1993)

REASONS FOR DECISION

19 May 2005  G.D. Friedman, Member

1.      This is an application by Lorraine Murphy (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 29 October 2004.  The SSAT affirmed a decision of an authorised review officer of Centrelink dated 28 July 2004 to reduce the applicant’s age pension on the basis of the valuation of the applicant’s rural property.

2.      At the hearing on 2 May 2005 the applicant attended by telephone and represented herself.  Mr D. Perdon, a Centrelink advocate, represented the Secretary to the Department of Family and Community Services (the respondent). by telephone.

3. The Tribunal received into evidence the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T25), plus one exhibit (Exhibit R1) tendered by the respondent.    

BACKGROUND

4.      The applicant and her husband reside at Glenarthur (the property), a farming property situated in Woodhouse, near Hamilton in Victoria,  and were granted age pension in 1998.

5.      On 20 November 2003 (T9) the Australian Valuation Office (AVO) valued the property at $560,000 and the house and curtilage (the land on which the dwelling is built) at $106,000.  The AVO then inspected the property on 16 December 2003 and provided a reported valuing the whole property at $540,000 and the house and curtilage at $130,000.  Subsequently, the AVO carried out another detailed inspection and in its written report dated 22 March 2005 (Exhibit R1) valued the whole property at $540,000 and the house and curtilage at $130,000.  The applicant’s age pension was reduced from 20 November 2003 because of the value of her assets.

6.      On 28 July 2004 an authorised review officer affirmed the decision.  On 30 August 2004 the applicant sought review by the SSAT, which affirmed Centrelink's decision.   On 8 December 2004 the applicant lodged an application with the Tribunal for review of the SSAT decision.

7.      The issue before the Tribunal is the value of the property and its effect on the applicant’s age pension.

EVIDENCE

8.      In Exhibit R1 Mr I. Stanford, a valuer with AVO, stated that, after the earlier valuation of the property on 16 December 2003, he carried out a detailed inspection.  He considered property sales in the vicinity of the property and concluded:

…

Market analysis usually reveals an underlying sales trend ($/hectare) for properties in the area, notwithstanding that sale prices may reflect particular buyer influences, rationale and/or preferences and resulting in a premium or a lower price being accepted by a vendor.  Some properties are specifically purchased to be non-viable for negative tax gearing purposes while a neighbour may pay a premium price for an adjoining property. 

…

The analysis of these sales indicates that previous AVO valuations were conservative to the benefit of the Customer.  In my opinion, (with the benefit of these comparable property sales), the bare land market value range of the subject property, at December 2003, is between $2350/hectare ($950/acre) to $2600/hectare ($1050/acre) plus value for improvements.

9.      In oral evidence Mr Stanford stated that he has tertiary qualifications in valuation and has been a full-time valuer since 2001, with significant experience in the valuation of farms, land and rural properties.  He said that calculation of the capital improved value of land by Councils was normally carried out on a conservative basis, using an assessment of a number of attributes.  He told the Tribunal that this resulted in valuations that were often less than valuations of market value.

10.     The applicant gave oral evidence that the property is owned by Goltrack Pty Ltd, a company controlled by herself and her husband.  She disputed the AVO valuation and said that comparisons made by the AVO regarding sales in the area were not appropriate.  She said the local Council had placed a value of $276,000 on the property in January 2004.  She told the Tribunal that the property would be worth $900 per acre, including the house and improvements, which totalled about $413,000, while the AVO had used the figure of $900 per acre but had added $130,000 for the house and improvements.  The applicant told the Tribunal that the valuer had been under a misapprehension that neighbouring properties had been cropped, but in fact the land was not able to be cropped.

11.     The applicant stated that sales of properties in her area were not comparable because of differences in size, condition and the type of soil.  She explained that the AVO valuer had not applied the correct test or used the correct criteria in reaching a valuation.  She noted that several properties in the area had been bought by investors at inflated prices, and suggested that the preferred valuation would be the value of the property as used for farming purposes.  The applicant said that, in real terms, her assets had not increased since 1998 when she and her husband were granted age pension, and in fact they were worse off because continuing dry conditions had forced a reduction in the stock of breeding cows to 100.

CONSIDERATION OF THE ISSUES

12. Section 1064 of the Social Security Act 1991 (the Act) provides that the rate of age pension is calculated in accordance with the Rate Calculator in the Act, and takes into account that the assets of a private company are attributable to the persons controlling the company.  

13.     In reaching its decision the Tribunal takes into account the oral evidence and written material, including the submissions made by the parties.

14.     There was no dispute that the only matter for decision was the value of the property.  In Re Hill‑Evans and Secretary, Department of Social Security (AAT 8710, 18 May 1993) the Tribunal stated (at para 7):

It is clear from the decision of the High Court in Spencer v Commonwealth of Australia (1907) 5 CLR 418 and that in R v Brown (1867) 2 LRQB 630 that in assessing the value of property for the purposes of the assets test under the Act, it is necessary both to ascertain the highest and best use of the property and to assess the price that a desirous buyer would pay to a willing but not anxious seller to purchase the property.

15.     The Tribunal accepts that the applicant disagrees with the valuation provided by the AVO.  However, the Tribunal notes that the valuation used by Centrelink resulted from two inspections.  The Tribunal finds that Mr Stanford is an experienced and highly-qualified valuer whose report is objective and comprehensive.  The Tribunal accepts that his analysis using the direct comparison method of valuation was appropriate, and that his conclusion was fair and reasonable.

16.     For these reasons, the Tribunal finds that, at the relevant date, the valuation of the property was $540,000, with house and curtilage valued at $130,000.  Consequently, the decision to reduce the applicant’s age pension based on the assets of a company under her control was correct.

DECISION

17.     The Tribunal affirms the decision under review.

I certify that the seventeen [17] preceding paragraphs are a true copy of the reasons for the decision of:

G.D.Friedman, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:   2 May 2005 
Date of decision:  19 May 2005
Advocate for the applicant:          Self-represented
Advocate for the respondent:       Mr D. Perdon, Centrelink