OKON and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 900

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 900

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/1881

GENERAL ADMINISTRATIVE DIVISION		)
Re		IAN OKON

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Ms G Ettinger, Senior Member

Date16 November 2010

PlaceSydney

Decision The Tribunal affirms that part of the decision of the SSAT which holds that Mr Ian Okon’s assets should include only one half of the value of the family home, being $100,000. It varies the decision under review in regard to rent assistance, as follows, deciding that Centrelink must pay Mr Ian Okon arrears of rent assistance for the period 1 March 2008 to 19 March 2008.

....................[sgd]..........................

Ms G Ettinger
  Senior Member

CATCHWORDS

SOCIAL SECURITY – Age Pension and Rent assistance – Applicant resident in retirement village – has sole full legal title of his house now occupied by wife and son – role of assets and income affecting his pension entitlements – decision under review affirmed in regard to the finding that the Applicant’s assets should include half the value of the house – decision varied to reflect entitlement to some arrears of rent assistance as agreed by the Respondent.

Social Security Act 1991 ss 1064, 1070A

Social Security (Administration) Act 1999 s 109, 237

REASONS FOR DECISION

16 November 2010    Ms G Ettinger, Senior Member

SUMMARY

1.      Mr Okon has been concerned regarding the amount of rent assistance he receives since he moved into a retirement villa in 1997. He had to pay a bond of $50,000 in order to move in. His wife and son continue to live in the family home which is divided into two residences. Mr Okon has also been concerned that the value of the family home may impact upon his pension and rent assistance entitlements. At a hearing of the Social Security Appeals Tribunal (SSAT) which preceded the appeal to this Tribunal, that Tribunal decided that from 16 February 2009, Mr Okon’s assets should include only one half of the value of the family home, being $100,000.

2.      He has appealed the decision to this Tribunal, and considers there are arrears of rent assistance owing to him for the period 2003 to 2009. The Respondent has agreed that Mr Okon is entitled to be paid certain additional arrears of rent assistance, but only for the period 1 March 2008 – 19 March 2008, and I have agreed to vary the decision of the SSAT accordingly. I have affirmed the rest of the decision relating to the asset value of the house. My reasons follow.

ISSUES BEFORE THE TRIBUNAL

3.      The issues I have to decide are:

·Whether Mr Okon’s assets should include 50% of the value of the family home, being $100,000;

·Whether Mr Okon was paid the correct amount of rent assistance between 23 October 2003 and March 2009;

·Whether Mr Okon requested a review of his rate of payment notice of 16 February 2009 within 13 weeks of being sent the notice by Centrelink.

RELEVANT LEGISLATION

4.      The legislation which governs this matter is the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act). The relevant sections are discussed in the paragraphs which follow.

BACKGROUND

5.      Mr Okon, who is 86 years old, separated from his wife in May 1984. They have not divorced, and the reasons he has given for moving out of their home to a retirement villa in 1997 include considerations of health. Mrs Okon and their son continue to reside at the family home which is divided into two residences. Mr Okon remains the sole registered owner of this property. However, on 13 April 2010, the SSAT decided that from 16 February 2009, Mr Okon’s assets should include only one half of the value of the family home, being $100,000. The full value of the house, has been set at $200,000 since it was revalued by the AVO in December 2009, and had been held by Centrelink to be his asset in full.

6.      Mr Okon is a very meticulous person, and had records of pension payments made to him, and other documentation, which he submitted to the Tribunal. The Respondent included many of those documents in the T-documents which were also before me.

7.      The documentation shows that Mr Okon has been paid age pension since 1 December 1994. Since he has been at the retirement villa he has received rent assistance as part of his pension entitlement. The rent at the retirement villa, which he initially said was to be a temporary residence, was $50 a week, then changed to $65 a week from 1 March 2008, and $66 a week, from 1 September 2009.

8. Centrelink sent Mr Okon notices telling him about his rate of payment and providing him with information about the income and assets used to calculate his age pension on a number of occasions. Section 237 of the Administration Act provides that if Centrelink notifies a person by sending a letter by prepaid post to the person’s last known postal address, notice of the decision is taken, for the purposes of social security law, to have been given to the person, for example when changes in rates of pension occur, as they did, from time to time, in Mr Okon’s case.

9.      On 3 December 2008 Mr Okon asked that Centrelink’s decision to consider the complete value of his family home as an assessable asset be reconsidered. Centrelink records that Mr Okon withdrew his appeal when an officer of Centrelink explained that his age pension was being calculated under the income test, and that the value of the property was therefore not affecting the rate at which he was paid. Mr Okon told me that he disagrees he withdrew his appeal.

10.     On 14 May 2009 Mr Okon wrote to Centrelink questioning information contained in a letter sent to him on 11 May 2009, and asked that the matter be referred to an authorised review officer. He wrote a number of times regarding his rent assistance, which he considered was underpaid. An authorised review officer reviewed and affirmed Centrelink’s earlier decision. However, the value of Mr Okon’s home was reduced from $230,000 to $200,000. Mr Okon then appealed to the SSAT, and finally to this Tribunal.

11.     I turned then to consider the issues before this Tribunal.

WHETHER MR OKON’S ASSETS SHOULD INCLUDE 50 PERCENT OF THE VALUE OF THE FAMILY HOME, BEING $100,000

12.     I have noted above that the Respondent held that 100 percent of the value of Mr Okon’s home should be attributed to his assets, because he holds sole legal title over the property. This was changed by the SSAT, which decided that from 16 February 2009, Mr Okon’s assets should include only one half of the value of the family home, being $100,000. The Respondent does not quibble with that decision, and considers itself bound by it unless this Tribunal finds otherwise.

13.     I have read the detailed analysis the SSAT made in coming to its decision, in particular paragraphs 43 to 58 inclusive which are at T2 in the T-documents, and I adopt that reasoning. I accept the evidence that Mrs Okon bears part of the expenses for the property, and has contributed financially and non-financially to the acquisition and maintenance of the property since its purchase, shortly after her marriage to Mr Okon in 1954. I agree with the SSAT that notwithstanding Mr Okon holds sole legal title to the property, it is owned beneficially by both Mr and Mrs Okon. The SSAT stated that it accepted Mr Okon’s evidence that he has left one half share of the property to his wife in his will, and one half share to his children.  By way of completeness, but without further comment, I note that Mr Okon gave me a copy of a recent will at the hearing, dated 29 September 2010, in which he bequeaths the whole of his estate to his children.

14.     During some parts of the hearing, Mr Okon asked me to make a decision that no part of the property should be considered in the calculation of his assets. At another point he said that having half the house counted is fair enough. He did emphasise in that connection that he had had to pay $50,000 to secure the retirement villa. I drew to Mr Okon’s attention that in a letter to the SSAT dated 9 February 2010 which is at T52/196, he wrote asking for a number of considerations including: (c) Declare that my principal residence; is 50% owned by myself and 50% owned by my ex-wife Pat nee Kelty.

15.     I have considered all the circumstances of Mr Okon’s legal ownership, and Mrs Okon’s interest in the property, and I do not accept that it can be held that no part of the property should be considered in the calculation of Mr Okon’s assets. Mr Okon holds sole legal title, and attributing 50 percent to his assets is reasonable, and I so find.

16.     My understanding is that Mr Okon’s concern regarding his asset levels arises out of a worry that his pension and rent assistance entitlements may decrease if his asset levels are taken into account. I can understand his concern, and I have therefore referred to the relevant sections of the legislation in the paragraphs below.  

17. I am mindful that section 1064 of the Act sets out how to calculate the rate of age pension. This rate may be subject to an income and/or an assets test. Module E contains the income test for age pension, and Module G contains the assets test. The test that applies is the one that results in the lower rate of age pension (see step 11 of point 1064-A1 – T3/27).

18. Sections 1064-A1 and 1070A of the Act provide for rent assistance to be paid as a component of a person’s age pension. Rent assistance is not a separate social security payment; it is a component of a person’s maximum payment rate of pension (Secretary, Department of Family and Community Services v Laurent (2003) 132 FCR 211). Sections 1070B and 1070C of the Act contain the qualification requirements for rent assistance.

19.     My understanding is that at present Mr Okon’s pension is calculated on the basis of his income, rather than his assets, and that unless the value of the family home increases dramatically, his pension will continue to be calculated on the basis of his income. I am satisfied that Mr Okon’s assets should include only one half of the value of the family home, being $100,000.

20.     Resulting from the recalculation of Mr Okon’s assets to include only half the value of the family home, changes were to be made to his entitlements to age pension and rent assistance. The SSAT accordingly remitted the matter to Centrelink for the relevant calculations to be made. I noted that on 16 May 2010 Centrelink implemented the decision of the Social Security Appeals Tribunal by paying Mr Okon arrears of $132.67, being age pension arrears for the period 1 April 2009 to 15 September 2009, and rent assistance arrears of $30.91 for the period 16 February 2009 to 31 March 2009.

WHETHER MR OKON WAS PAID THE CORRECT AMOUNT OF RENT ASSISTANCE BETWEEN 23 OCTOBER & MARCH 2009

21.     Mr Okon has kept detailed figures relating to his pension and rent assistance payments. He is discontented with the fact that his rent assistance appeared to decrease over the years. He indicated that displeasure to me by pointing to T52/200, a table he had compiled. He emphasised in particular, quite a few times, that his rent assistance had decreased to $1.50 per fortnight for the periods 13 November 2008, 11 December 2008 and 19 February 2009. I noted that the SSAT commented adversely on this in paragraph 66 of its decision, and remitted the matter back to the Respondent for recalculation. The result of that is at T59/280, a letter of Centrelink dated 18 May 2010, in which it gives notice of payment of arrears of pension and rent assistance to Mr Okon from 16 February 2009. Those amounts were $30.91 of rent assistance for the period 16 February 2009 to 31 March 2009, and $101.76 for the period 1 April 2009 to 15 September 2009 for age pension.

22.     Ms Harlock, who appeared for the Respondent, explained the formula used for calculating rent assistance. It is calculated, she said, by deducting a rent threshold (the amount below which no rent assistance is paid), from the rent paid by the person each fortnight. The rent assistance paid is 75% of the excess (rent paid, less rent threshold). The rent threshold is indexed to reflect changes in the consumer price index (CPI) on 20 March and 20 September each year. It currently stands at $100.80 per fortnight.

23.     Therefore one would expect the rent assistance component of a person’s age pension to reduce over time if the person continues to pay the same amount of rent, because the rent threshold increases each March and September. The gradual reduction in the amount of rent assistance paid to Mr Okon between 2003 and 2009 and shown in his table, is a reflection of this. Ms Harlock submitted on behalf of the Respondent that Mr Okon was paid the correct rate of rent assistance between 23 October 2003 and 1 March 2008, pointing out Centrelink had provided calculations in the supplementary section 37 documents at ST3/361-376. I accept those submissions.

24.     However I have noted that what occurred was that Mr Okon’s rent increased from the $50 he had been paying for a long time, to $65 per week from 1 March 2008. Centrelink agrees with me that he would have been entitled to an increase in rent assistance from that date if he had told Centrelink straightaway. However it seems that Mr Okon did not tell Centrelink about the increase in his rent until he wrote a year later, on 5 March 2009, informing it that his rent had increased to $65, (T34/140), and again on 13 March 2009.  Mr Okon’s rent assistance was then increased to $24 per fortnight from 19 March 2009. Ms Harlock conceded that Mr Okon should also be paid arrears of rent assistance for the period 1 March 2008 to 19 March 2008, and I have so directed. I noted also that following the decision of the SSAT, Centrelink paid Mr Okon arrears of rent assistance for the period 16 February 2009 to 31 March 2009 amounting to $30.91 (T59/280). However, Ms Harlock stated that pursuant to the legislation, she was unable to concede any further payments.

25. I have noted that section 109(7) of the Administration Act provides that when a person’s rate of payment is changed because of indexation or adjustment under Part 3.16 of the Act, the person is taken to have been given a notice of that decision on the day on which the payment was indexed or adjusted. Section 109 of the Administration Act governs the date of effect of a favourable determination made as a result of review. Section 78 of the Administration Act empowers the Secretary to determine that the rate is to be increased. A rate increase determination is classified as a favourable determination (section 108 of the Administration Act).

26. Section 109 of the Administration Act governs the date of effect of favourable determinations. Relevantly, section 109 covers the following situations:

• When a person is notified of a decision and the person applies for review within 13 weeks of the notice, the favourable determination takes effect from the date the original decision took effect (subsection 109(1)).

• When a person is notified of a decision and the person applies for review more than 13 weeks after the notice, the favourable determination takes effect from the day on which the person applied for review (subsection 109(2)).

• When a person is not notified of a decision and the person applies for review, the favourable determination takes effect on the day on which the determination embodying the original decision took effect (subsection 109(3)).

27.     Mr Okon told Centrelink on 5 March 2009 that his rent had increased to $65, (T34/140). He also informed Centrelink of the increase to his rent by letter dated 13 March 2009 (T55/264). In this letter Mr Okon stated Updated from 01.03.08. Mr Okon’s rent assistance was increased to $24 per fortnight from 19 March 2009 because 13 March 2009 was taken as the date of his notification of the increase in rent he had been paying since 1 March 2008. He had, in any case, failed to notify Centrelink within the 13 week window allowed to have the determination backdated to the date of effect of the rent increase. The notification was in fact just over a year after his rent increase came into effect.

28.     Ms Harlock submitted that if Mr Okon’s rent was $65 per week rent from 1 March 2008, his correct rate of rent assistance from 1 March 2008 would have been $27.15, (not $4.65), the correct rate of rent assistance from 20 March 2008 until 19 September 2008 would have been $25.95 per fortnight, and until January 2009 it would have been $24 per fortnight. However, Mr Okon’s rent assistance was calculated and paid on the basis that his rent was still $50 per week until March 2009, when he notified Centrelink.

29.     I accept Centrelink’s submissions on the issue, as the legislation permits a 13 week window to notify Centrelink if you are dissatisfied with the decision, during which period changes can be backdated. Otherwise, the changes must take effect from the date of notification, as in Mr Okon’s case.

30.     Notwithstanding, Centrelink conceded it did not send Mr Okon notices of all its decisions. Therefore, if Mr Okon was not sent a relevant notice, then he is entitled to arrears of rent assistance, such as for the period 1 March 2008 until 19 March 2008 which Centrelink conceded was owed to Mr Okon.

WHETHER MR OKON REQUESTED A REVIEW OF HIS RATE OF PAYMENT WITHIN 13 WEEKS OF BEING SENT THE NOTICE OF CENTRELINK OF 16 FEBRUARY 2009

31.     In deciding whether Mr Okon requested a review within the 13 weeks permitted after being sent the notice of 16 February 2009 by Centrelink, I noted from the documents before me, that Centrelink wrote to Mr Okon several times a year during the time he has been receiving a pension. Those notices told him about his rate of payment, and provided him with information about the income and assets levels used to calculate his rate of age pension. Each of those occasions constituted notices of decisions made in relation to Mr Okon’s age pension. Each notice can be reviewed, and changes can be backdated to the date of the notice if a request is made within 13 weeks. If the request is made any later, then changes cannot be backdated, and can only take place from the date of notification.

32.     The Respondent concedes that Mr Okon was not sent notices of each of their decisions. Therefore, if Mr Okon was not sent a relevant notice at the requisite time, then he is entitled to arrears of rent assistance, such as for the period 1 March 2008 until 19 March 2008.

33.     I am satisfied from the evidence that Mr Okon was paid the correct rate of rent assistance until 1 March 2008. However even though his rent had increased to $65 per week in March 2008, he did not inform Centrelink about that until March 2009, more than a year later, so he was paid less rent assistance than he would have been entitled to during 2008.

34.     On 20 March 2008 the rate of Mr Okon’s age pension changed due to indexation of the rent threshold. The notice to him from Centrelink about that constituted a decision against which he could ask for review, pointing out that his rent had increased to $65 a week. There is however no record of Mr Okon asking for a review of his rate of payment within 13 weeks of 20 March 2008. Therefore the effect of any favourable determination made as a result of an application for review takes effect from the date that the application for review was made.

35. There was also a notice sent to Mr Okon on 16 February 2009, informing him of his rate of pension and other entitlements, such as rent arrears taking effect from 19 February 2009. There was at first some argument about whether Mr Okon’s letter of 14 May 2009 to Centrelink was a request for review of that decision, but the SSAT accepted it was, and the Respondent has agreed. It contends therefore that that was the date on which Mr Okon applied for review, and that section 109(1) was applied in his favour, allowing him to be paid arrears from 16 February 2009. I accept from the evidence that Mr Okon applied for review of the notice of 16 February 2009 with regard to his pension entitlements on 14 May 2009, and that this was within the 13 week window provided for in the legislation.

36.     In addition I noted that the Respondent agrees with Mr Okon that he sought review of the rate of his age pension in December 2008. However, Centrelink contends that he withdrew that application after he was advised that the value of his property was not affecting his rate of pension. Mr Okon disagreed that he had withdrawn the application for review, saying that he preferred everything in writing rather than by telephone because there was then a proper record. I am satisfied with the Respondent’s record of Mr Okon making an application for review in December 2008, but not proceeding with it at that time. I accept he did however write to Centrelink with regard to his pension entitlements on several occasions during 2009.

37.      Although he did not put it in those terms, I understood Mr Okon to raise the issue of whether special circumstances might be taken into account to deal with any applications for arrears which did not come within the statutory 13 week period. I do not know of any special circumstances which may have arisen in his case, and in any case there is no provision for such consideration in this area of social security law.

38.     My decision follows.

DECISION

39.     The Tribunal affirms that part of the decision of the SSAT which holds that Mr Ian Okon’s assets should include only one half of the value of the family home, being $100,000. It varies the decision under review in regard to rent assistance, as follows, deciding that Centrelink must pay Mr Ian Okon arrears of rent assistance for the period 1 March 2008 to 19 March 2008.

I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member

Signed:         .............[sgd]...................................................................
  Associate

Date of Hearing  12 October 2010
Date of Decision  16 November 2010
The Applicant  Self Represented
The Respondent  Ms R Harlock, Centrelink