Pantis and Repatriation Commission

[2005] AATA 614

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 614

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2005/181

VETERANS'      APPEALS      DIVISION

Re:         IOANNIS PANTIS

Applicant

And:         REPATRIATION COMMISSION

Respondent

DECISION

Tribunal:       Mr E. Fice, Member

Date:             29 June 2005

Place:            Melbourne

Decision:The Tribunal sets aside the decision of the Repatriation Commission dated 8 February 2005 and varies the decision under review so that the applicant's share in the Beach Street property is valued at $200.000 for asset test purposes.

(sgd) Egon Fice

Member

VETERANS' AFFAIRS – service pension – assets test – value of second residence – assets exceeded allowable limit - whether property properly valued –value of second property - reduction in service pension -

Veterans' Entitlements Act 1986

REASONS FOR DECISION

29 June 2005  Mr E. Fice, Member

1.        Mr Pantis, who receives a service pension, completed an Income Support Review form on or about 8 August 2004.   On 25 August 2004, the Repatriation Commission (“the Commission”) made a decision that a property which was partly owned by Mr Pantis was valued at $425,000; and accordingly, that Mr Pantis’ share in the property was worth $212,500.   This resulted in a substantial reduction in the rate of service pension payable to him.  On 8 February 2005, a senior delegate of the Commission set aside the decision of the Commission made on 25 August 2004 and determined that Mr Pantis’ share in the property was valued at $210,000.  Mr Pantis now seeks a review of the senior delegate’s decision.

2. At the hearing of this matter the applicant was represented by his daughter, Ms Kappadais and son-in-law, Mr Svigos. The respondent was represented by Mr Gerry Purcell of counsel. The Tribunal had before it the documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T‑documents).

BACKGROUND

3.        Mr Pantis, who apparently is an allied veteran, received a service pension at the maximum rate.  In early August 2004 the Commission provided Mr Pantis with an Income Support Review form, which he duly completed and returned to the Commission.  One of the assets which Mr Pantis disclosed was a holiday home situated at 6 Beach Street, Queenscliff, Victoria (“the Beach Street property”), in which he held a 50 per cent share.  He did not complete the section which sought disclosure of the value of that property. 

4.        The Commission conducted a Compliance Review and obtained a valuation of the Beach Street property from the Australian Valuation Office (“AVO”), which valued the property at $425,000.  By a letter dated 25 August 2004, the Commission informed Mr Pantis that, due to the increase of his property asset value, in future his pension would move from being assessed under the income test to being assessed under the assets test.  The Commission gave Mr Pantis notice that the assessment would be deferred for up to three months to allow him to make alternative arrangements for financial support.  He was informed that if he continued to own the property after the three‑month period had expired, the revised value of the Beach Street property would be included in his assessment and that the rate of his service pension, payable from 26 November 2004, would be $220.45. 

5.        Following receipt of the notice from the Commission, Mr Pantis wrote to the Commission informing it that the Borough of Queenscliff, in its valuation and rate notice for 2004/2005, rated the capital improved value of the Beach Street property at $408,000.  He also said he had approached Kerley’s Real Estate to inspect the property and to provide an independent valuation.  By letter dated 29 October 2004, Kerley’s Real Estate wrote to Mr Svigos stating:  “This in our opinion, if the property were offered for sale under current market conditions we would anticipate a sale price in the range of $360,000 - $390,000”.  The letter contained no supporting documentation nor did it set out any reasons why that value range was given to Mr Pantis.  Due to Mr Pantis’ objection regarding the value of the Beach Street property, the Commission arranged for Mr A. McDonald, a valuer employed by the AVO, to conduct a full valuation.  A valuation report prepared by Mr McDonald dated 23 August 2004 was in evidence.  The report is detailed, being some 15 pages in length including annexures.  It takes into account the Borough of Queenscliff's capital improved value and the demands for properties in what is known as the Wharf Precinct or Fisherman's Flat and also the most recent sales in that area.  In fact, the report compares the sale of 5 properties which are said to be representative of the values of properties such as the Beach Street property.  The sale price of those properties varied from a low of $385,000 to a high of $442,000.  All of those properties had built on them un‑renovated dwellings of a similar construction to the Beach Street property.  In fact, as Mr McDonald pointed out in evidence given by telephone at the hearing, Mr Pantis’ dwelling was of a more recent construction and with an attached two bedroom sleep out.  In his view, that added to the value of that particular property.  Mr McDonald also emphasised that the property’s location at Queenscliff was unique being some 300 to 500 metres walk from the commercial centre and close to the wharf area, which, in his opinion, would be highly sought after following the planned $20 million redevelopment of that area.  Mr McDonald valued the property at $420,000.

6.        Apparently the AVO conducted a further valuation of the Beach Street property on 26 April 2005.  The valuer was a Mr Philip McKenzie, but his valuation report was not in evidence, nor did Mr McKenzie give oral evidence at the hearing.  His valuation was $400,000.  Mr McDonald was asked why the value had apparently declined between his assessment and Mr McKenzie’s assessment and he explained that the property market had softened slightly since 2004. 

7.        Mr Pantis’ representatives produced a facsimile transmission from Venizelkos Lawyers and Notaries dated 14 December 2004.  In that facsimile transmission the lawyers note that the State Revenue Office, having taken into account the Kerley’s Real Estate valuation set out in their letter of 29 October 2004, valued the property at $375,000 for the purposes of stamp duty.   Mr Pantis obtained this valuation because he planned to transfer his remaining half share in the property to his children and near relatives.  This in fact did take place on 24 November 2004.

CONSIDERATIONS

8.        The only full valuation in evidence before me was that provided by Mr McDonald.  He was also the only valuer who was called to give evidence and his curriculum vitae disclosed that he is a very experienced valuer.  His report is substantial and is clearly based on significant research into the value of properties and proposed developments for the Queenscliff area.  Also, that valuation is far closer to the figure provided by the Borough of Queenscliff in its capital improved value of $408,000.  The Kerley’s Real Estate valuation, which is simply a single page comprising of only one sentence dealing with the valuation,  does not provide me with any confidence in its accuracy.  The State Revenue Office’s assessment of the value of the property at $375,000 for stamp duty purposes is based on the Kerley’s Real Estate valuation and therefore its assessment cannot inspire any confidence either.

9.        Clearly, the weight of the evidence is in favour of the valuation performed by Mr McDonald of the AVO.  However, given that Mr Philip McKenzie of the AVO conducted a further valuation in March 2005 which resulted in a valuation of $400,000, in my opinion, that is the appropriate value to be used in the re‑assessment of Mr Pantis’ service pension.

10.      Mr Svigos and Ms Kappadais urged me to consider the fact that at the time Mr McDonald conducted his valuation, Mr Pantis only held a half share in the property.  Therefore, so it was argued, Mr Pantis could not sell his half share in the property to anybody as there were no buyers for that share.  Mr Svigos and Ms Kappadais submitted that it was not possible to place any value upon Mr Pantis’ share if it were not a share which was readily marketable.  In fact, they suggested that it would work an injustice to Mr Pantis if he were assessed for the full value of his share in an asset which could not be realised for value.  However, I cannot agree with those submissions.  The fact is that Mr Pantis has been able to dispose of his interests in the Beach Street property and he had completely disposed of them by 24 November 2004.  Although that disposal involved creating some six tenants-in-common with a one-sixth share each in the property, I was told that Mr Pantis had received no money in return for the disposition of those interests.  Of course, had Mr Pantis disposed of those interests at market value, as was his right in law to do, then the arguments about Mr Pantis being left without sufficient means to live out the rest of his life with some degree of comfort would carry no weight at all.  It was up to Mr Pantis as to whether he received any and what payment on the disposal of his interest.

11.      For the sake of completeness, in the course of the hearing I also raised a question regarding the disposition of Mr Pantis’ interest on 24 November 2004.  For the benefit of Mr Svigos and Ms Kappadais, the dispositions of Mr Pantis’ interest in the Beach Street property do not assist him when it comes to the assessment of his service pension.  Section 52G of the Veterans Entitlement Act 1986 (“the Act”) provides, in essence, that where a person disposes of an asset at the time when he or she is receiving a pension, if the amount of the disposition of the assets exceeds $10,000, then there is to be included in the veteran’s assets the value of the disposition less $10,000 for a period of five years starting on the day on which the disposition takes place.  Also, s 52F of the Act provides that if the veteran receives no money whatsoever on the disposition of an asset, the amount of the disposition is deemed to be an amount by which the value of the asset has been reduced in the hands of the veteran.  Therefore, even though Mr Pantis has now disposed of his entire interests in the Beach Street property, for a period of five years commencing on 24 November 2004, his pension will be assessed on the basis that he continues to have his previous interest, i.e. 50 per cent, in the Beach Street property.

CONCLUSION

12.      In my opinion, the appropriate valuation for the Beach Street property is $400,000, as provided by Mr P. McKenzie on 26 April 2005.

13.      Therefore, the decision of the senior delegate of the Commission made on 8 February 2005 should be set aside; and the value of Mr Pantis’s share in the Beach Street property should be set at $200,000 for asset test purposes.

I certify that the thirteen [13] preceding paragraphs are a true copy of the reasons for the decision herein of

Mr E. Fice, Member

(sgd)     Olympia Sarrinikolaou

Clerk

Date of Hearing:                   07 June 2005

Date of Decision:                  29 June 2005

Advocates for the applicant:   Ms Kappadais, applicant's daughter

Mr Svigos, applicant's son‑in‑law

Counsel for the applicant:      Mr G. Purcell

Solicitor for respondent:        Advocacy Section, Department of Veterans’ Affairs