Pullicin and Secretary, Department of Social Services (Social services second review)
[2023] AATA 865
•24 April 2023
Pullicin and Secretary, Department of Social Services (Social services second review) [2023] AATA 865 (24 April 2023)
Division:GENERAL DIVISION
File Number(s): 2022/1350
Re:Danny Charles Pullicin
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member G Lazanas
Date:24 April 2023
Place:Sydney
The decision under review is affirmed.
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Senior Member G Lazanas
CATCHWORDS
SOCIAL SECURITY – rate of age pension – whether excess curtilage around principal home is unrealisable asset – whether financial hardship provisions apply – decision under review affirmed
LEGISLATION
SOCIAL SECURITY ACT 1991 (CTH) SS 11, 11A, 1129, 1130CASES
SPENCER V COMMONWEALTH [1907] HCA 82
BROWNSEY AND SECRETARY, DEPARTMENT OF SOCIAL SERVICES [2015] AATA 660SECONDARY MATERIALS
AUSTRALIAN GOVERNMENT, SOCIAL SECURITY GUIDE, 2020.REASONS FOR DECISION
Senior Member G Lazanas
24 April 2023
INTRODUCTION
On 8 February 2022, Mr Danny Pullicin, the Applicant, applied to this Tribunal, the General Division of the Administrative Appeals Tribunal, for a second-tier review of a decision by the Social Services & Child Support Division of the Tribunal (the AAT1). The AAT1’s decision on 27 January 2022 was in relation to the rate of age pension payable to Mr Pullicin. Specifically, the AAT1 affirmed a decision of an authorised review officer (ARO) of Services Australia (the Agency) to reject Mr Pullicin’s claim for consideration under the asset hardship rules for social security purposes (the Reviewable Decision).
It is important to observe at the outset that the Reviewable Decision relates to Mr Pullicin’s age pension for the period from 17 August 2021 until around September 2022 and, therefore, whether Mr Pullicin is entitled to receive any increased age pension arrears. This is because Mr Pullicin lodged another claim with the Agency and was partially successful in obtaining an increased rate of age pension following his later claim in September 2022.
As the reasons explain below, I have decided to affirm the Reviewable Decision.
THE ISSUES
The issues to be determined are, firstly, whether the excess curtilage around Mr Pullicin’s residence is an ‘unrealisable asset’ for the purposes of the social security laws and, secondly, whether Mr Pullicin would suffer severe financial hardship.
THE FACTUAL BACKGROUND AND EVIDENCE
The following facts are based on the documents before the Tribunal, including the T-Documents filed and served by the Respondent, as well as the evidence given by Mr Pullicin including his written statements and oral evidence. Mr Pullicin was extensively cross-examined.
On 17 May 2021, Mr Pullicin lodged a claim for an age pension. On 7 July 2021, Mr Pullicin’s claim was granted at a reduced ongoing fortnightly rate. On 17 August 2021, Mr Pullicin lodged a claim for consideration under the relevant financial hardship rules. He also requested that the excess curtilage of his residence be disregarded as an asset in the calculation of his assets on the basis that it was an ‘unrealisable asset’. In August 2021, the Agency decided that the excess curtilage was not an unrealisable asset.
On 23 September 2021, Mr Pullicin’s claim for consideration under the financial hardship rules was rejected by the Agency.
On 17 November 2021, Mr Pullicin submitted to the Agency a letter from his partner, from whom he is separated but not divorced, which stated that she was a joint owner on the title of Mr Pullicin’s residence, and she refused to let Mr Pullicin sell the residence.
On 30 November 2021, the ARO affirmed the Agency’s decision. The ARO determined that the excess curtilage could not be disregarded under the asset hardship rules because Mr Pullicin had readily available funds of $89,448.00 (by reference to his other assets including cash at bank) and was not in severe financial hardship.
On 27 January 2022, the AAT1 affirmed the Agency’s decision. As stated above, on 8 February 2022, Mr Pullicin applied to this Tribunal for a review of the AAT1’s decision.
LEGISLATION AND POLICY
The relevant law is contained in the Social Security Act 1991(Cth) (the Act).
Broadly, the determination of the rate of age pension is subject to an assets test. If assets owned by the claimant are above a certain level the rate of payment is reduced. The assets test does not include a person’s principal place of residence. However, if the residence is on land greater than 2 hectares, the value of the excess curtilage is generally not exempt from the calculation. But, if a person on an age pension is affected by the assets test, they may apply to have the financial hardship provisions in the Act apply. The person must have an ‘unrealisable asset’ and it must be found that the person would suffer severe financial hardship if the unrealisable asset is not disregarded for the assets test.
Subsection 11(1) of the Act relevantly defines ‘asset’ to mean property or money. Under paragraph 1118(1)(a) of the Act, Mr Pullicin’s principal home, as defined in s 11A of the Act, is exempt from the asset test. ‘Principal home’ is relevantly defined in subsection 11A(1) of the Act, as follows:
(1) A reference in this Act to the principal home of a person includes a reference to:
(a)if the principal home is a dwelling-house--the land adjacent to the dwelling-house to the extent that:
(i) the land is held under the same title document as the land on which the dwelling-house is located; and
(ii) the private land use test in subsection (3) is satisfied in relation to the land …
…
Subsection 11A(3) of the Act provides that the ‘private land use test’ is satisfied in relation to land, if:
(a)the area of the land, together with the area of the ground floor of the dwelling-house, is not more than 2 hectares; and
(b)the land is used primarily for private or domestic purposes in association with the dwelling-house.
As Mr Pullicin’s residence is located on 41.58 hectares, any adjacent area that does not satisfy the ‘private land use test’, namely, the excess curtilage, is not exempt from being assessed as part of Mr Pullicin’s assets.
The cumulative effect of the relevant provisions in the Act is that the value of Mr Pullicin’s assets must be applied to the assets test to determine his rate of age pension. While the Act does not specify how assets are to be valued for the assets test, there are numerous Court and Tribunal decisions which establish the law regarding valuation of real property. Broadly, the market value of real property is to be determined based on comparable sales and the best use of the property. See, for example, Spencer v Commonwealth [1907] HCA 82 and Brownsey and Secretary, Department of Social Services [2015] AATA 660.
A market value assessment of Mr Pullicin’s property undertaken by the independent valuation firm, Jones Lang Lasalle, valued the property on which his residence was located as $3.5 million as of 18 August 2021. The value of the residence and curtilage was $2.5 million. Therefore, the value of the excess curtilage (the area more than 2 hectares) was $1 million. As the property is jointly owned by Mr Pullicin and his partner, Mr Pullicin’s share of the value of the excess curtilage was $0.5 million. Mr Pullicin did not dispute the valuation at the hearing, but he argued that the excess curtilage should be treated as an unrealisable asset. (The Respondent had accepted that the excess curtilage is an unrealisable asset in determining his later claim made in or about September 2022, following the receipt of the letter from his partner referred to at [8] above.)
IS THE EXCESS CURTILAGE AN UNREALISABLE ASSET?
Mr Pullicin gave evidence that his residence has 4 bedrooms and 3 bathrooms and is situated on approximately 42 hectares of land (the Property). He stated that it was a working farm in the past and there are also horse stables but he does not have any horses. Mr Pullicin stated that the residence had been modified for him to live there with extensive rails and handles. He stated he suffered from a disability being a traumatic brain injury.
It emerged from questioning Mr Pullicin about the Property that there is also a cottage located in the excess curtilage which has 1 bedroom and kitchen and bathroom facilities. Mr Pullicin stated that his partner stays there when she visits and so do his children and grandchildren, as well as friends.
The Respondent referred Mr Pullicin to documents before the Tribunal, including extracts from Trip Advisor which suggested the cottage is advertised for short-term holiday stays for approximately $310 per night. Also, he and his partner have an active trading name. Mr Pullicin stated that his partner had operated the farm stay cottage business even though the business name ‘Lago Estate Fitzroy Falls’ was in both their names as a family partnership on the ABN Register. Mr Pullicin further stated that it had been operational in 2018 and 2019 but that when the COVID-19 lockdowns happened, the business did not get much trade. He added that the cottage had hardly been rented out and, in any event, it was his partner’s business, not his, and he could no longer attend to cleaning it.
When it was specifically put to Mr Pullicin that there were customer reviews on accommodation websites of people having stayed there as recently as September and October 2022, Mr Pullicin stated that they were the last people that stayed, and any income earned from the stays was his partner’s income in respect of which she paid tax.
Mr Pullicin was asked by the Respondent’s legal representative whether he had ever declared that business to Centrelink. Mr Pullicin stated that he never did, as it was his partner’s business. Mr Pullicin’s evidence in relation to the Property was problematic in circumstances where the Real Estate Details form completed by him as part of his claim for the age pension dated on or about 17 May 2021 asked, as follows:
36. Do you (and/or your partner) receive any rental income from the lease of the property? …
38. Do you (and/or your partner) receive any non-rental income from the property?
Mr Pullicin had ticked the “no” box to each of the questions (T4, 89-90). In other parts of that same form, Mr Pullicin acknowledged that he owned 50% of a property and his partner owned 50%. Mr Pullicin had signed the form and declared that the information provided is complete and correct which, as set out above, was not the case.
Notwithstanding the above shortcomings, and accepting the statement given by Mr Pullicin’s partner in her letter referred to at [8] above, I am of the view that the excess curtilage is an ‘unrealisable asset’ for the purposes of the Act. It is not reasonable to expect Mr Pullicin to engage in legal proceedings to require the sale of the Property where his estranged partner refuses to sell. This is particularly the case where Mr Pullicin suffers from a disability and the home has been modified to address his medical conditions. As stated above, the Respondent had decided in relation to Mr Pullicin’s later claim for an increased rate of age pension (see [2] above) that the Property was an ‘unrealisable asset’.
WAS MR PULLICIN IN SEVERE FINANCIAL HARDSHIP AT THE TIME OF HIS CLAIM IN AUGUST 2021?
Sub-section 1129(1) of the Act relevantly states that a person is to be given access to the financial hardship rules if:
(a)either:
(i) a social security pension is not payable to a person because of the application of an assets test; or
(ii) a person's social security pension rate is determined by the application of an assets test; and
…
(c)the person, or the person's partner, has an unrealisable asset; and
(d)the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and
(e)the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;
the Secretary must determine that this section applies to the person.
Section 1130 of the Act relevantly states that if a person is given access to the financial hardship rules, then the value of any unrealisable asset is to be disregarded in working out the person's age pension rate.
‘Severe financial hardship’ is not defined in the Act. The Social Security Guide which sets out guidance states at Instruction 1.1.S.120 that a single person is in severe financial hardship if their readily available assets are equal to or less than the annual maximum basic rate of Age Pension, plus Pension Supplement and Energy Supplement that would be payable to a single person. As of 17 August 2021 this amount was $24,770.20.
When Mr Pullicin completed the Income and Assets form on or around 17 May 2021, he stated that he held the following assets (besides the Property):
·$43,000 in a joint bank account with his partner, 50% of which was his (T6,123);
·Household contents and personal effects worth about $10,000, 50% of which was his (T6,124);
·A Land Rover Discovery car valued by him to be worth $2,500 (T6,124); and
·Shares in Telstra valued at $2000 (T6,128).
Mr Pullicin provided further information to the Agency about the following assets (T14,184):
·A Mercedes Benz car purchased on 4 December 2019 for $31,000 – valued by him to be worth $1,000;
·A Tractor purchased on 1 June 2020 for $30,000.00 - valued by him to be worth $6000;
·A Predator Pro lawn mower purchased on 4 December 2019 for $21,000.00 – valued by him to be worth $2,900; and
·A Polaris quad bike estimated (by the Agency) to be worth approximately $3000.
There were several inconsistencies in Mr Pullicin’s evidence about his assets, including who owned them and their values. I set out some of these below as examples of the difficulties in considering the reliability of his evidence. However, regardless of the various positions advanced by Mr Pullicin - even on the most favourable view to him – the conclusion is that Mr Pullicin was not in severe financial hardship in August 2021. This is because his readily available assets were not less than the threshold amount as at that time (see [27] above).
At the hearing, Mr Pullicin stated that about $23,000 in the joint bank account belonged to him, and the balance belonged to his partner. Before the AAT1, Mr Pullicin had stated that the entire amount in this account ($43,000) belonged to him and that his partner had her own finances. At the hearing, Mr Pullicin stated that he owned two cars in August 2021. He stated that the market value of the Land Rover in 2021 was probably $1,000. Mr Pullicin stated the Mercedes was now owned by his son and its market value in August 2021 was approximately $15,000.
Mr Pullicin had stated in an email dated 18 July 2022 (Exhibit A2) that the tractor, quad bike and lawn mower had been taken away by his son and daughter “who now have ownership of them” as they paid for the items. At the hearing, and after being questioned by the Respondent’s legal representative about the respective invoices for these items which were all addressed to Mr Pullicin, he accepted that the quad bike and lawn mower were still owned by him. He suggested, however, that as he could no longer use the tractor, he transferred ownership of it to his son in September 2021. He also suggested the tractor was probably worth around $1,000, but in the abovementioned email dated 18 July 2022 he had valued it at $30,000. At the hearing, Mr Pullicin suggested the value of the quad bike was approximately a couple of hundred dollars, while the lawnmower, which he had purchased in December 2019 for $22,000, was worth about $10,000. Confusingly, in the abovementioned email dated 18 July 2022, Mr Pullicin valued the lawn mower as being worth approximately $29,000 (that is, more than what he had purchased it for at least two years beforehand).
The Respondent contended that Mr Pullicin’s readily available liquid assets along with other assets had a total value of approximately $40,000 in August 2021 and he was, therefore, not in severe financial hardship. Indeed, the threshold was exceeded from adding the cash at the bank ($23,000) and the Telstra shares ($2,000) on their own. Mr Pullicin acknowledged that the sum of $40,000 was accurate but persisted in arguing that he wanted the excess curtilage to be considered an unrealisable asset. He mistakenly believed that success on that aspect alone would lead to a different outcome.
I agree with the Respondent’s contention that Mr Pullicin’s claim for consideration under the financial hardship rules was correctly rejected because Mr Pullicin was not in severe financial hardship in August 2021. Accordingly, the Reviewable Decision is affirmed.
I certify that the preceding 34 (thirty-four) paragraphs are a true copy of the reasons for the decision herein of Senior Member G Lazanas
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Associate
Dated: 24 April 2023
Date of hearing: 25 January 2023 Representative for the Applicant: Self-represented Solicitors for the Respondent: Mr T Chang, Services Australia
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