Phan and Repatriation Commission

[2005] AATA 950

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 950

ADMINISTRATIVE APPEALS TRIBUNAL          Nº V2004/655

VETERANS'     APPEALS       DIVISION

Re:           VAN DANG PHAN

Applicant

And:         REPATRIATION COMMISSION

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             29 September 2005

Place             Melbourne

Decision:The Tribunal varies the decision under review and decides that the value of the deprived asset is $175,000.

(Sgd) Regina Perton

Member

VETERANS' AFFAIRS - recipient of veteran's pension - disposal of assets – deprived asset - consequential reduction in pension rate - lack of discretion – date of valuation - respondent’s request for reduction of asset value - decision under review varied.

Veterans’ Entitlements Act 1986 ss 5J(2B), 52E, 52G.

REASONS FOR DECISION

29 September 2005  Regina Perton, Member

1.      Van Dang Phan, an Australian citizen now 70 years old, arrived in Australia in 1981 as a refugee.  He had served with the South Vietnamese army and consequently qualified for an Australian service pension.  Mr Phan was married in 1979.  His wife, Thi Kim Hoang Nguyen, accompanied him to Australia.  They have three adult children.  On 12 January 2002, Mr Phan and his wife separated.  On 28 February 2002, ownership of the jointly owned marital home in Richmond was transferred to Ms Nguyen.   Ms Nguyen did not pay anything to Mr Phan for his half-share.  The transfer of land document indicates that the consideration was love and compassion.  Mr Phan and two of the children moved out of the marital home and they now live in a Ministry of Housing flat in the same street. Mr Phan and Ms Nguyen were reconciled for a three month period in mid-2004 but the relationship is now over.

2.      A person’s assets and income impact on the rate of service pension.  When assessing a person’s assets, it is not only his currently held assets that are considered but also the assets he may have disposed of in recent years.  Assets that are gifted are deemed to provide income to the donor for a period of years after the gift was made.   That deemed income is then taken into account in determining the rate of pension.  The calculations of deemed income contained in the legislation are complex.  

3.      On 20 March 2004, a delegated officer of the Repatriation Commission reduced the rate of Mr Phan’s service pension.  The reason for the reduction was that Mr Phan was deemed to be receiving income from a deprived asset, namely his half-share of the marital home which he had transferred to his wife without receiving any money in return.    The Repatriation Commission attributed a value of $190,000 to Mr Phan’s half-share of the house.    This was based on a valuation of $400,000 by the Australian Valuation Office (AVO) on 4 October 2002.

4.      On 15 April 2004, the Repatriation Commission received a letter from Mr Phan in which he described his difficult financial circumstances and asked that the decision to reduce his pension be reversed.  He stated that he does not own a home or car and had only $20 in the bank.  He set out his rent, utility and other expenses and stated that he relies on charity for clothing.   He stated that his two children were students who lived with and relied on him.  On 24 May 2004, a senior delegate of the Repatriation Commission affirmed the original decision.   On 31 May 2004, Mr Phan applied for review to this Tribunal. 

5.      The issue before the Tribunal is whether Mr Phan’s service pension should have been reduced because of the deemed income from the half-share of the marital home he gifted to his estranged wife.

EVIDENCE

6.      Mr Phan described the financial difficulties he has experienced since he and his wife split up.  He indicated that he had borrowed money as he could not manage on the amount he now received as pension.  He said that he did not own half the house and therefore it should not be taken into account in calculating his pension.  He said that he takes care of his two sons, who are tertiary students in their early twenties..  

7.      Mr Phan said that he and his wife are officially separated but they have not divorced.  He said that he had lodged the relevant papers with the Family Court in August 2004 but his children were upset about it and he withdrew the application.  Mr Phan said that he has not lodged a further divorce application.  He also said that there were no Family Court orders regarding the property.  When asked why he had given his share of  the house to his estranged wife for no financial consideration, Mr Phan said that she wanted to keep the house for the children. Mr Phan said that his wife saw a solicitor before the transfer but that he had not sought independent legal or agency advice at that time on the impact of a transfer on his service pension. 

8.      Documentary evidence before the Tribunal included a statutory declaration from Tan Hai Nguyen, solicitor, dated 9 August 2004 in which he stated that Ms Nguyen’s instructions in February 2004 were that her husband had agreed to move out of the matrimonial property and was free to live by his own ways and in return, would transfer his half share of the property to her without any payment. 

CONSIDERATION OF THE ISSUES

9.      Mr Purcell indicated to the Tribunal that while the Repatriation Commission is sympathetic to Mr Phan’s plight, the relevant provisions of the Veterans’ Entitlements Act 1986 (the Act) do not allow the Commission to exercise discretion to ameliorate his situation.  He explained that had the transfer of the marital home to Ms Nguyen been in compliance with a court order, there would have been a monetary value given to Mr Phan’s half-share and Mr Phan would have been in a different position under the legislation. 

10. Section 52E of the Act concerns disposal of assets.

(1)          For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person's assets and:

(a)the person receives no consideration in money or money's worth for the diminution in the value of the person's assets; or… The motivation for the disposal is not relevant in determining if an asset is disposed of.  Mr Phan’s evidence as well as the documentary evidence is clear that Mr Phan did not receiving any money in return for the transfer of his share in the property to his estranged wife.  The Tribunal finds that Mr Phan disposed of an asset, namely a property in which he had a half share, on 28 February 2002.

11. Section 52G of the Act comes into operation when a person, who is not a member of a couple, disposes of assets. If a person in Mr Phan’s situation, who is already receiving a service pension, disposes of an asset worth more than $10,000 for no monetary consideration, then the value of the asset is taken into account for the following five years in calculating the pension rate. In Mr Phan’s case, the value of his half-share of the house has to be taken into account until 28 February 2007.

(1)          Subject to subs(2) where on or after 1 March 1986 and before 1 July 2002:

(a)a person who is not a member of a couple has, during a pension year of the person, disposed of assets of the person; and

(b)the amount of that disposition of assets, or the sum of that amount and of the amounts (if any) of other dispositions of assets previously made by the person during that pension year, exceeds the disposal limit;

then, for the purposes of this Act, there is to be included in the value of the person's assets for the period of 5 years that starts on the day on which the disposition takes place:…

12. Section 5J(2B) of the Act describes assets that a person has disposed of, in the way that Mr Phan had, as deprived assets.  The deprived asset is deemed to earn a certain level of income.  The  formula is a complex one that the Tribunal is of the view it need not explore.  It is sufficient to say that the Tribunal has no discretion about employing it.

13.     The Repatriation Commission has asked the Tribunal to make an order varying the value attributed to the property.  The Commission indicated that the previous valuation was based on an AVO valuation dated 4 October 2002.  However, the property was transferred on 28 February 2002.  The Commission has suggested the appropriate value of the asset to be attributed to Mr Phan should be $175,000.  This is based on a property value of $370,000.  Halving that amount and taking off the $10,000 allowance brings the value of the asset down to $175,000.  The Tribunal is happy to accept that recommendation.  The change in value will result in a recalculation of Mr Phan’s entitlements.  It is not likely to have a huge impact on his entitlements; but  any additional amount will clearly be welcome. 

14.     It is unfortunate that Mr Phan has found himself in this difficult situation.  Had he sought the Commission’s advice or that of an independent solicitor, he may well have avoided the five year impact of the property transfer. 

DECISION

15.     The Tribunal varies the decision under review and decides that the value of the deprived asset is $175,000.

I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  11 April 2005

Date of decision:  29 September 2005
Applicant:  Self-represented
Advocate for respondent:            Mr G Purcell of Counsel