QX06/9 and Secretary, Department of Employment and Workplace Relations

[2006] AATA 871

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA  871

ADMINISTRATIVE APPEALS TRIBUNAL      )           
  )           No Q2005/186
GENERAL ADMINISTRATIVE DIVISION        )

Re QX06/9

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date11 October 2006

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

.........[Sgd].........

R G Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – Newstart allowance – assets test – disputed valuation of residential property - disputed valuation of curtilage – disputed valuation of house contents, personal effects and motor vehicle - use of Guide to Social Security Law – value of assets above allowable limit – newstart allowance not payable to applicant – decision affirmed

Social Security Act 1991 ss 11, 611, 1118

Kirkovski v Secretary, Department of Family and Community Services [2004] FCA 790

Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Spencer v the Commonwealth of Australia (1907) 5 CLR 418
Reynolds and Secretary, Department of Social Security (1986) 11 ALN N193;
Re Di Primo and Secretary, Department of Social Security (1993) 31 ALD 233
Re Secretary, Department of Social Security and Langton (1993) 31 ALD 579
Campbell v the Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 49 Ardoch Pty Ltd v Valuer-General (No 2) [2006] SASC 217

REASONS FOR DECISION

11 October 2006 Mr R G Kenny, Member

The Application

1.      On 7 September 2004, the applicant applied for newstart allowance which is a form of income support payable in accordance with the Social Security Act 1991 (the Act).  On 23 September 2004, a Centrelink officer, as delegate for the Secretary, Department of Family and Community Services (the respondent), rejected the application.  That decision was affirmed on 26 November 2004 by an authorised review officer and, in turn on 16 February 2005, by the Social Security Appeals Tribunal.  On 24 March 2005, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal).

Appearances

2. The documents before the Tribunal included those prepared in accordance with section 37 of the Administrative Appeals Tribunal Act1975 (the T documents and supplementary S documents). The applicant attended the hearing. He was not represented. Mr M Black appeared on behalf of the respondent.

Background and issues for determination

3.      In accordance with subsection 611(1) of the Act, newstart allowance is not payable to a person if the value of his assets is more than his assets value limit which is set out in the table accompanying subsection 611(2) of the Act.  At the time of his claim, the applicant was not married and the assets value limit applicable to him was $153,000.  The rejection by the respondent of the applicant's claim was on the basis that the value of his assets exceeded that amount.

4.      In an “Income and Assets” form completed by the applicant on 3 September 2004, he listed the following assets and corresponding values:

item	$ value
household contents and personal effects	15,000
1978 Ford Fairlane	2000
savings in Suncorp account	85,000
savings in Heritage Building Society	5
real estate (7.3754hectares)	300,000

5.      Subsequently, the applicant revised the valuations that he ascribed to household contents and personal effects and to his vehicle.  On 30 September 2004, he advised that these were valued at $5,000 and $800, respectively.  (Exhibit 1, T13 folio 43).  On 1 November 2004, he further reduced the valuation of his household and personal effects to $2000 (Exhibit 1, T16, folio 47). 

6.      The real estate which the applicant nominated is owned jointly by himself and his former wife.  He resides in a house which is erected on the property and his former wife also resides thereon in separate premises which the applicant described as a "flat".  In accordance with subsection 11(2) of the Act, the value of a particular asset of a person, if the asset is owned by the person jointly or in common with another person or persons, is a reference to the value of the person's interest in the asset.  It is not disputed and I am satisfied that the applicant and his former wife jointly own the property on which they live and that each of them has 50% interest in it.  Paragraph 1118(1)(a) of the Act provides that the value of a person's interest in his or her principal home is to be disregarded when calculating the value of assets.  However, the definition of principal home in subsection 11(5) of the Act limits the area of such disregarded land to a curtilage of 2 hectares.

7.      The respondent requested the Australian Valuation Office (AVO) to complete a valuation of the applicant's property and this was done by Ian Collingwood on 21 September 2004.  He valued the whole of the property at $630,000 and the house and curtilage at $480,000.  In a subsequent report completed on 3 November 2004, Mr. Collingwood reassessed the value of the property at $620,000 and the house and curtilage at $460,000 (Exhibit 1, T18, folio 56).  The respondent then determined that the value of the applicant’s assets was made up in the following way:

item	$ value
household contents and personal effects	2,000
1978 Ford Fairlane	800
savings in Suncorp account	85,000
savings in Heritage Building Society	5
real estate (5.3754hectares)	80,000
total	167,805

8.      The valuation of the real estate was based on the difference of $160,000 in the value of the whole property and that of the house and curtilage as assessed by Mr. Collingwood.  This was apportioned equally between the applicant and his wife as joint owners.  This meant that the respondent concluded that the value of all the applicant's assets was $167,805.  This exceeded the assets value limit and precluded payment of newstart allowance. 

9.      The issue for the Tribunal to determine is whether or not the value of the applicant’s assets exceeded the assets value limit when he claimed newstart allowance in September 2004.

Contentions

10.    Mr Black submitted that the valuation provided by Mr Collingwood should be relied upon in assessing the value of the applicant’s interest in the 5.375 hectares of land which is not included in the home and curtilage. He also submitted that the applicant’s household contents and personal effects had been undervalued by him and that the more realistic valuation was $10,000 or, at least, the $5,000 which constituted the applicant's second estimate of their value. The respondent also submitted that a more appropriate valuation for the applicant's vehicle was $2000 rather than the $800 contended by him. 

11.    The applicant provided the Tribunal with a detailed written submission.  He also addressed the Tribunal and, in summary, made the following points.  He submitted that the value of his assets was below the threshold of $153,000; that the respondent had underestimated the extent to which his property was prone to flooding; had inappropriately compared the value of his land with those of other recent land sales in the area; had incorrectly omitted some of the structures on his property from the house and curtilage; had undervalued some of the structures on the house and curtilage; and had overvalued the contents of his house and his motor vehicle.  In relation to his land, the applicant relied upon a valuation report provided by Mr Savas Varitimos in which the value of the land without the house and curtilage, ie the 5.375 hectares, was assessed at $55,000.  He submitted that his house and contents were valued at no more than $2,000 and that his car was valued at no more than $400.

Mr Collingwood’s Evidence

12.    The applicant’s written submission contained many criticisms of Mr Collingwood in both a personal and professional capacity.  I have had the advantage of reading Mr Collingwood’s detailed and reasoned reports.  I have also observed him as he gave evidence and responded to the applicant’s questions during a long and, at times, rigorous cross-examination.  From those observations, I do not accept the applicant’s criticisms of him.  Mr Collingwood completed a five-year course to become a registered valuer in 1979 and has practised since then in real estate valuation.  He is currently employed by the Australian Valuation Office.  I am satisfied that he is well qualified to conduct the valuation exercise in respect of the applicant’s property by virtue of his training and experience.  I am also satisfied that he undertook that exercise in an objective, independent and professional manner.  He gave his evidence in a forthright manner and clearly explained aspects of his report which were raised by the applicant. 

Valuation Method

13.    The Act provides no general guidance on the way in which valuations are to be carried out or the way in which respective valuations are to be compared.  For real estate, the appropriate approach is to determine the net market value based on comparable sales and the “best use” to which the asset could be put: see Kirkovski v Secretary, Department of Family and Community Services [2004] FCA 790 at para 17. Extracts from the Guide to Social Security Law (the Guide), which is published by the respondent to provide assistance to those who administer the Act, were tendered as evidence (Exhibit 1, T3, folio 19). The Guide also provides guidance in determining what is meant by market value and the procedures to be applied in assessing the value of personal effects, household contents and vehicles.  The Tribunal, whilst not bound to apply policy guidelines of the kind referred to in the Guide may do so and, indeed, will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645. No such reasons arise in this case.

14.    Paragraph 1.1.M.35 of the Guide provides a definition of market value.  It provides that the “market value is the point at which a willing purchaser and a willing, but not anxious vendor, would reach agreement”: see also Spencer v The Commonwealth of Australia(1907) 5 CLR 418 at 432. Both Mr Collingwood and Mr Varitimos advised that they each utilised a meaning of the term which was similar to that noted above. Both valuers identified properties which they considered to have a broad equivalence to that of the applicant and then compared the applicant’s property with them.

15.    Mr. Black submitted that the correct approach to determining the market value of real estate was to adopt a three step procedure: assess the market value of the whole property, assess the market value of the home and curtilage and then subtract the latter from the former to obtain the value of the remaining portion, in the applicant's case, of 5.375 hectares.  This was the approach adopted by Mr Collingwood and I accept Mr Black’s contention that this is the preferred approach to be utilised under the Act: see Reynolds and Secretary, Department of Social Security (1986) 11 ALN N193; Re Di Primo and Secretary, Department of Social Security (1993) 31 ALD 233 and ReSecretary, Department of Social Security and Langtonand Another (1993) 31 ALD 579. This is not to say that other methods could not be used in appropriate cases.

16.    Two reports were provided by Mr Varitimos who described himself as a certified practicing valuer with Foster McNabb and Associates.  His reports are dated 2 February 2005 and 15 March 2005.  In the first of those reports, he stated that his instructions were to assess the unimproved value of the rear portion of the applicant's land.  He did this by treating the 5.375 hectares of land as a separate entity and valued it at $55,000.  In his second report, he stated that his instructions were “to assess the market value for curtilage purposes” of the applicant’s land.  He valued the whole property at $550,000 and apportioned it in the following way:

Curtilage

Land

Improvements

$145,000

$300,000

Balance Area

Land

Improvements

$80,000

$25,000

TOTAL

$550,000

17.    A difficulty in this matter was that Mr Varitimos did not give evidence and, accordingly, was not able to further explain the methodology he adopted. Clearly, he was not able to be cross-examined on the content of his reports.  There were other concerns with the reports of Mr Varitimos when compared with that of Mr Collingwood.  Mr Varitimos makes reference to the curtilage on the property but, apart from allowing for a full 2 hectares, does not indicate its orientation or shape whereas the report of Mr Collingwood advised that he was also allowing the full 2 hectares and indicated the improvements which were contained within it, its location on the whole block and its orientation in relation to the river frontage.    The methodology adopted by Mr Collingwood was that all land was valued at what he described as a "treated, fenced and watered" basis.  He explained that this enabled him to compare “like with like” in assessing relative values.  The reports of Mr Varitimos did not demonstrate that this was done and, as noted above, he was not available to give evidence or to be cross-examined on the approach that he adopted.  His report also contains an apparent inconsistency in that, in the first report, comparative sale number 1 is described as being "superior" to the applicant's property.  In the second report, this is identified as comparative sale number 4 and is described as “inferior” to the applicant's property. 

18.    To the extent that there are variations in the reports of Mr Collingwood and Mr Varitimos, I preferred the former.  Mr Collingwood utilised the three step procedure noted above and maintained the opinions and views he expressed in his reports during the applicant’s cross-examination of him.

Flooding On Applicant’s Land

19.     One of the criticisms made by the applicant of Mr Collingwood’s report was that it did not take into account the full extent to which his property is subject to flooding from the river which borders it.  Mr Collingwood consulted Shire Council flood maps, data from the Bureau of Meteorology and Department of Natural Resources as well as a decision of the Land Court concerning an appeal by the applicant against the annual valuation of his land by the Shire Council.  That decision is dated 31 May 1996.  Mr Collingwood concluded that the 1974 flood line on the applicant's property was at 25.0 metres reduced level (RL).  Of particular significance in determining flood levels was a coloured aerial photograph of the applicant's property and surrounding properties which is superimposed with contour lines.  This clearly indicates that a 25.0 metre RL runs through the applicant’s property and that a 30 metre RL touches the perimeter of his property at the highest level.

20.    Mr Collingwood reported that, if the 25 metre RL was adopted, this would mean that 1.2 hectares of the applicant's property was above flood levels.  However, the applicant advised Mr Collingwood at the time when the property was inspected that the flood line was more likely to be on the 27.5 or 27.8 metre RL.  Clearly, this would increase the extent to which his property was flood affected.  Mr Collingwood said that, in order to resolve doubts in the applicant’s favour, he had accepted those figures and based his valuation comparisons with recent sales in the area on them. 

21.    Although the applicant advised Mr Collingwood that the flood line was likely to be on the 27.5 or 27.8 metre RL, he submitted at the hearing that the actual flood line was higher and that his land would have been completely inundated in the 1974 flood.  The figures relied upon by Mr Collingwood were those compiled by the Council and State Government Departments.  The applicant suggested in a letter written by him on 29 September 2004 that the data given out by the Council underestimated real flood levels by about 2 metres to enable them to develop flood prone land and increase the rate collections of the Shire.  There was no support for this accusation and I reject it.  In contrast with the data obtained and relied upon by Mr Collingwood, the applicant tendered a map produced in the 1970s which does not display a 30 metre contour line and other exhibits which are not related expressly to flooding but to the Council's strategic plans, from a decade ago, indicating preferred land use.  

22.    I am satisfied that the references to the flood levels on the applicant's property made by Mr Collingwood in his reports and in his evidence for the purposes of drawing comparisons between the value of the applicant's property and those involved in recent sales in the area should be adopted.

Comparative Sales

23.    Mr Collingwood valued the applicant’s property on the basis of the sales of six properties.  Mr Varitimos relied upon the sale of five properties including one which sold on 17 September 2004.  This was prior to the inspection of the applicant’s property by Mr Collingwood on 26 October 2004 but, nonetheless, Mr Collingwood did not refer to that property in his report.  Mr Collingwood’s evidence was that the information pertaining to that sale had not been available in October 2004 when he completed his report, but had been available when searches were conducted by Mr Varitimos’ in January 2005.  Mr Collingwood investigated that property after he completed his report and considered that this property was inferior to the applicant’s, in particular, because it was almost totally inundated by the 1991 flood, whereas a large part of the applicant’s property has not flooded since 1974.  Mr Collingwood spoke to the vendor about the sale price of $60,000 and was told that the vendor had placed that price on it five years earlier and was happy to get rid of it because the annual rates were becoming a burden to him.  In his first report in February 2005, Mr Varitimos described this property as being superior to that of the applicant’s.  In his report of March 2005, he described the same property as being inferior to that of the applicant’s. 

24.    Of the five sales selected by Mr Varitimos, only the one noted above had river frontage.  Mr Collingwood considered that the river frontage of the applicant’s property was a significant feature and he selected three of his six sales because they shared that feature. The remainder shared another feature with the applicant’s land ie flooding.  He noted that market evidence has indicated that a premium is paid for riverfront property, even with the associated flood issues. I accept the opinion of Mr Collingwood that a significant feature of the applicant’s land is its river frontage and that, in this case, the preferred comparisons are with those properties which also have that feature. 

25.    Of the six sales selected by Mr Collingwood, the applicant was particularly critical of the comparisons made between his property and sale No 4.  This had an area of 8.22 hectares and sold on 27 April 2004 for $580,000. Mr Collingwood commented in his report (Exhibit 1, T18, folio 58):

“Improved with lowset timber dwelling, office, carport, pool and old farm sheds.  Land comprises a battleaxe site with cleared gently undulating flood prone ……. River frontage. Greater then 50% of the property is flood free.  The site is encumbered with an easement of the access lane benefiting the adjoining property.  The house is situated on the eastern boundary abutting the adjoining property (Lot 5) which has three large poultry sheds in operation.  Analysed to show $465,000 Treated, Fenced and Watered.  Sale is slightly larger than subject and has a greater area flood free.  However the sale is severely affected by the poultry operation on the adjoining property.

Prior sale of this property on 17/06/02 for $272,000 indicates rise in market this period.

Overall – subject is inferior to sale on a TFW basis.”

26.    As noted, Mr Collingwood applied a TFW (Treated, Fenced and Watered) rate of $465,000 for that property which compared with a TFW rate of $400,000 applied to the applicant’s property.  However, Mr Collingwood, in his written submission prepared on 9 June 2005, made it clear that the a significant impact upon the value of sale no 4 was the presence of poultry sheds in close proximity on the block next door both in relation to the noise and smell associated with them  (Exhibit 3).

27.    Further in relation to sale No 4, the applicant contended that it had greater value than his property because of the potential for subdivision that it carried.  He referred to examples of other situations in the shire where this had been done.  However, he conceded that, for this to happen, there would need to be an amalgamation of the property with other properties in order to gain relevant council approvals because of current council zoning arrangements.  That was also the opinion of Mr Collingwood who considered that entries in the town plan stood in the way of rezoning being readily obtainable.  In his report of 9 June 2005, Mr Collingwood included an extract - paragraphs 4.10.1 and 4.10.2 - from the town plan.  In his report, he reproduced components (a) and (b) of paragraph 4.10.2 which tended to limit rezoning by referring to the need to preserve good quality agricultural land for primary industry use.  The applicant was critical of Mr Collingwood in that regard because he had not reproduced component (c) which reads:

“The lands designated arable resource areas on the strategic plan map have been included in the rural zone in the town planning scheme.  The zoning of these lands will be maintained by the council.  Applications for rezonings for other than rural purposes will not generally be approved by the council.”

28.    While Mr Collingwood conceded that this had been omitted from his report, he said that there would still need to be amalgamation of properties before that could be done.  As noted above, the applicant agreed with this and I am also satisfied that, as the property at sale No 4 currently stands, it would be speculative to foreshadow any amalgamation of it with any other property or that council approval would be obtained for subdivision and attempt to give that a value. 

29.    The applicant was also critical of the manner in which Mr Collingwood compared his property with that of sale No 6.  This was a property of 2.35 hectares, which was completely flood prone to a severe extent and has no river frontage.  It sold on 12 March 2004 for $75,000.  Mr Collingwood valued it on a TFW basis at $74,500.  A significant element in reaching that valuation was that it was approximately 800 meters, in a direct line, from a poultry business.  The applicant did not consider this to be a serious devaluing feature.  However, I accept as correct the evidence of Mr Collingwood that market values of properties are detrimentally affected by poultry farms located in their proximity.

30.    Other matters that were taken into account by Mr Collingwood in assessing the value of the whole of the applicant’s property were the powerline which traverses it, the smell which comes from a nearby mushroom farm and the need for the applicant to take measures to control noxious weeds thereon.  Taking all of the factors into consideration, I am reasonably satisfied that the comparative analysis made by Mr Collingwood between the applicant’s property and the six sale examples that he used was properly and appropriately done.  I accept his assessment that the market value of the whole of the applicant’s property is $620,000. 

The House and Curtilage

31.    Subsection 1118(1) of the Act provides that, in calculating the value of a person’s assets for the purposes of the Act, the value of any right or interest that the person has in his principal home may be disregarded.  As to the term principal home, subsections 11 (5) and (6), in so far as they are relevant, read:

“11.(5)  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 private land adjacent to the dwelling-house to the extent that the private land, together with the area of the ground floor of the dwelling-house, does not exceed 2 hectares; or

(b) ……..
11.(6)  A reference in subsection (5) to private land adjacent to a dwelling-house is a reference to land that is adjacent to the dwelling-house and that is used primarily for private or domestic purposes in association with that dwelling-house.”

32.    Significant concessions were made by Mr Collingwood in valuing the curtilage.  In his report, he expressed the opinion that the area of private land adjacent to the principal home, used primarily for private or domestic purposes, was actually less than 1 hectare.  Nevertheless, he allowed for a maximum curtilage of 2 hectares.  He also valued the curtilage as river-front land and did so by including some of the lower terrace within the 2 hectares.  His opinion was that this would result in a higher valuation than would result by using only the more elevated land without river frontage.  The report of Mr Varitimos also allocated 2 hectares to the curtilage and he valued it at $145,000.  His report does not explain the orientation, shape or nature of that curtilage area.  As with Mr Collingwood‘s assessment of the value of the whole of the applicant’s property, I am also reasonably satisfied as to the correctness of his assessment of the value of the land component of the curtilage on that property.  This was $280,000 for the full 2 hectares of land as provided for in paragraph 11(5)(a) of the Act. 

33.    Mr Collingwood assigned a value of $180,000 to the structures on the curtilage.  In his report, dated 9 June 2005, he listed these as comprising:

principal residence	$130,000
detached garage/inground water tank	$35,000
ancillary improvements comprising domestic fencing around house and landscaping	$5,000
shed used for hobby purposes	$10,000

34.    Mr Varitimos valued the improvements at $300,000.  In his report of 17 March 2005, under the heading of “Remarks”, he noted that the dwelling and detached garage were the main structural improvements.  He also referred to an asbestosis cement super six clad and roofed shed.  Earlier in that report, he described two such sheds including one with a granny flat.  It is not clear from that report whether both of those sheds have been included in his valuation.  Further, if only one is included, it is not clear whether this was the one with the granny flat.  However, in his earlier report, dated 2 February 2005, he specifically included the granny flat in that part of the property which did not constitute the curtilage. 

35.    The applicant submitted that this flat should be included in and valued as part of the curtilage.  It is a two-story structure which was occupied by the applicant during the construction of the principal home and which is now occupied by his  former wife.  The ground floor of the flat comprises a laundry which the applicant and his former wife both use.  This was not included by Mr Collingwood in his valuation.  Such a structure has the potential to be included as part of the home and cartilage, but only if it is used primarily for private or domestic purposes in association with the principal home.  As I understand it, the primary purpose of the flat is to provide a residence for the applicant’s former wife.  The primary purpose is not the provision of a laundry facility.  There is no primary use by the applicant of the flat for private or domestic purposes associated with his own residence and I am satisfied that this precludes the value of the flat from being included as part of the home and curtilage. 

36.    Other structures referred to by Mr Varitimos were the roofed sheds (noted above), stables, fencing, landscaping, water tanks and round yard.  However, it is not clear whether or not these are included by him in the valuation of the house and curtilage.  Mr Collingwood identified horse stables, stalls and yards, a hay shed and a store shed.  He also referred to horses and machinery on the property.  Mr Collingwood was advised by the applicant at the time of his inspection that the horse yards were not to be assessed because they were used only by his former wife and that the horses and machinery were owned by his former wife.  These were not included in Mr Collingwood’s valuation of the house and curtilage and I am satisfied that these are not used by the applicant for private or domestic purposes associated with his own residence and that they should not be included in the valuation of the curtilage. 

37.    The applicant considered that some of the structures on his property had been undervalued.  This included the principal home.  He referred to the replacement construction cost as representing the appropriate value.  In particular, he referred to the 15,000 gallons underground concrete and brick water tank which forms part of the principal home.  The applicant provided a document which itemised the costs of constructing this tank (Exhibit 7, folio 48). This was $34,666.  He also referred to the cost of constructing the garage, family room and water tank as being no less than $105,000.  Whilst I accept that this may well be the cost of constructing these items, those replacement costs are not the same as what constitutes market value.  The High Court, in Campbell v the Deputy Federal Commissioner of Land Tax (NSW) (1915) 20 CLR 49 noted at 53 that “the value of improvements may, of course, be greater or less than the cost of making them”: see also Ardoch Pty Ltd v Valuer-General(No 2) [2006] SASC 217 at [66]. The valuation ascribed by Mr Collingwood to the principal home was $130,000. The applicant did not consent to an internal inspection by Mr Collingwood and the valuation was completed by him from the outside and with a description of the interior from the applicant. Mr Varitimos was able to view the interior of the premises but no individual allocation was identified by him for the principal home as it fell within the global assessment of $300,000 for all improvements on the curtilage. In the absence of any other valuation for the principal home, I accept that provided by Mr Collingwood. In doing so, I also note that Mr Collingwood made a further concession to the applicant in the valuation given by him for a shed on the property which the applicant said was used predominantly by his former wife for sewing. However, the applicant also said that he used it for his own hobby and Mr Collingwood attributed the full valuation of $10,000 to him rather than apportion it between him and his former wife.

38.    On all of the material before me, I am reasonably satisfied that the valuation of the house and curtilage of $460,000 provided by Mr Collingwood, should be adopted.

Value of Property Excluding Home and Curtilage

39.    The value of the whole 7.375 hectare property of the applicant is $620,000,  the value of the home and curtilage of 2 hectares is $460,000.  I am satisfied that the remainder of his property comprising 5.735 hectares is valued at $160,000.  It is not disputed that the property is jointly owned by the applicant and his former wife and, accordingly, the value of his share of the property for the purposes of applying the assets test under the Act is $80,000.

The Contents of Principal Home, Motor Vehicle and Other Assets

40.    The applicant’s initial assessment of the value of his home contents and personal effects, as at September 2004, was $15,000 and he subsequently reduced this estimate to $5,000 and then to $2000.  In his evidence, he said that the initial valuation was based upon the insured value of the contents and that, since then, he had been instructed by a Centrelink officer that such things are valued on a “fire sale” basis and that was how he arrived at the decreased value.  He described his house, at the time of his claim for newstart allowance, as being sparsely furnished and mainly with old items.

41.    His initial assessment of his 1978 Ford Fairlane motor vehicle was $2000 and he subsequently reduced this estimate to $800.  At the hearing, he produced a document from Bryan Byrt Ford which contained the following notation:  “78 ZH  468 FHM  $100 -- $200” (Exhibit 36).

42.    While the Act provides no general guidance on the way in which valuations are to be carried out, subsection 1118(3) thereof provides some assistance when assessing the value of home contents, personal effects and motor vehicles.  It reads, in so far as is relevant:

“1118.(3)  For the purposes of this section, if:

(a) the value of any assets of a person … that consists of the contents of a principal home and of other personal effects that are used primarily within the principal home does not exceed $10,000; and

(b)the assets are used primarily for private or domestic purposes;

the value of the assets is to be taken to be $10,000 unless the person satisfies the Secretary that the value of the assets is less than $10,000.”

43.    The Guide also gives assistance in this matter and paragraph 4.6.5.10 thereof, insofar as relevant, reads:

“Personal effects & household contents

A customer's or couple's personal effects and household contents are assessed as being $10,000, UNLESS the customer advises a different amount.

If the customer advises that the net market value of their personal effects and household contents is less than $10,000:
accept the customer's assessment, UNLESS
there are very strong indications to suggest that the value is significantly understated.

If the customer's valuation appears to be significantly understated, ask how they arrived at the decision, AND explain the meaning of ‘market value'.

A customer is ALWAYS required to declare the value of personal effects and household contents IF that value exceeds $10,000.

Vehicles

A customer's estimate of the market value of their vehicle is accepted UNLESS the valuation is significantly over or understated, AND would affect their payability or rate.”

44.    The applicant has provided some evidence that, as at September 2004, his house was sparsely furnished and that much of this was old.  He provided some photographs of an old television set and a washing machine to support this.  Whilst I have some concerns about his evidence in that regard, I accept that the valuation of his personal effects and the contents of his house is less than the $10,000 referred to in subsection 1118 (3) of the Act but I do not accept that their market value, as the meaning of that term is given above, represents the “fire sale” amount of $2000 which was his final estimate of their value.  Accordingly, I have adopted the intermediate estimate that he made of $5,000.  Neither do I accept the valuation for his vehicle provided at the hearing.  An amount that a motor vehicle dealer would pay for a vehicle off the street also represents something less than market value.  Again, I accept the intermediate valuation which the applicant gave of $800.

45.    The applicant has not disputed his initial estimate of savings of $85,000 in his Suncorp account or of $5 in his Heritage Building Society account.

Decision

46. Having considered all of the material available to me, I am satisfied that the following assets and corresponding valuations are applicable to the applicant as at the date of his claim for a newstart allowance.

item	$ value
household contents and personal effects	5,000
1978 Ford Fairlane	800
savings in Suncorp account	85,000
savings in Heritage Building Society	5
real estate (5.3754hectares)	80,000
total	170,805

47.    At the time of his claim, the applicant was not married and the assets value limit applicable to him was $153,000.  I am satisfied that, at that time, the value of these assets exceeded that assets value.  It was on that basis that the decision under review was made and I affirm that decision.

I certify that the preceding 47 paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member

Signed:         Michelle Brazier

Legal Research Officer

Date of Hearing  5 July 2006, 10 August 2006,
  21 August 2006 & 25 August 2006     
Date of Decision  11 October, 2006
The Applicant was self represented
For the Respondent                  Mr M Black, Departmental Advocate