Rahman and Secretary, Department of Employment and Workplace Relations

[2006] AATA 960

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 960

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N2006/756

GENERAL ADMINISTRATIVE DIVISION		)
Re		MOHAMMAD RAHMAN

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT & WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Ms N Isenberg, Senior Member

Date13 November 2006

PlaceSydney

Decision The decision under review is affirmed

..............................................

Ms N Isenberg
  Senior Member

SOCIAL SECURITY - parenting payment (single) – assets test – valuation of investment property- best available evidence of market value of property- decision under review affirmed

Social Security Act 1991, s500Q
Administrative Appeals Tribunal Act 1975, s32
Social Security (Administration) Act 1999, s126

Kirkovski v SDFaCS [2004] FCA 790 (8 June 2004)

REASONS FOR DECISION

13 November 2006 Ms N Isenberg, Member

BACKGROUND

1.      Mr Rahman is a single parent with two children.  In addition to his own (unencumbered) home he owns another property at Lae St, Holsworthy ("the property") which was valued by Mr Rahman at $345,000.  

2.      He was paid a Parenting Payment (Single) (“PPS”) until Centrelink cancelled his payments on 16 December 2004 on the basis that his assets exceeded the assets value limit applicable at that time: $153,000.  That cancellation decision was ultimately set aside by Senior Member Kelly, Administrative Appeals Tribunal (“AAT”) on 16 January 2006 as his assets were found to be valued at $151,026 as at the date of cancellation.  The Tribunal found the property to be valued at $330,000.

3.      Mr Rahman’s PPS was again cancelled by Centrelink from 10 February 2006 on the basis of his assets being worth $179,458 which was in excess of the then allowable limit of $157,000.  This decision relied on a new Australian Valuation Office (“AVO”) valuation of $350,000 dated 31 January 2006.  On review by Centrelink, the cancellation was affirmed but the decision was varied, finding that the property was valued at $340,000 and Mr Rahman’s total assets value was $169,780.

4.      The Social Security Appeals Tribunal (“SSAT”) affirmed the decision on 2 June 2006.  That Tribunal varied the decision insofar as it accepted Mr Rahman’s lower valuations for his car ($2,000), household and contents ($2,000) and cash on hand ($6.67).  The total value of assets was determined to be $165,242.50.

ISSUE BEFORE THIS TRIBUNAL

5. Whether Mr Rahman’s total assets at 10 February 2006 exceeded the assets value limit for the purpose of section 500Q of the Social Security Act 1991 (“the Act”).

CONSIDERATION OF THE EVIDENCE

6.      In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.

7.      Firstly, Mr Rahman took issue with the fact that Centrelink was represented by Ms Schuster. Section 32 of the Administrative Appeals Tribunal Act 1975 was pointed out to Mr Rahman. That section entitles a party before the Tribunal to appear in person or to be represented by some other person.

8.      Secondly, Mr Rahman took issue with Centrelink's decision to cancel his PPS notwithstanding the decision of the Tribunal on 16 January 2006.  He asserted that there was a conspiracy within Centrelink to cancel his PPS when it was ascertained that that Tribunal's decision was unappealable because it contained no error of law. 

9.      I observe that in that decision the Tribunal made no findings as to the value of Mr Rahman’s property as at the date of the hearing and confined itself to the value of the property as at the date of cancellation:

“34. After a detailed discussion with both Mr. Carter and Mr. Rahman and accepting the figures that have been recorded above, I conclude that as of 16 December 2004, the value of Mr. Rahman’s assets was $151,026 which falls below the asset value limit.

35. The decision under review is set aside. Substituted for it is the decision that Mr. Mohammad Rahman’s assets do not exceed the asset value limit and therefore he is entitled to the Parenting Payment Single from 16 December 2004.” (emphasis added)

10.     Nothing in the social security law or the Administrative Appeals Tribunal Act 1975 prevents Centrelink from making fresh decisions about ongoing entitlement to social security payments. In fact, it is the responsibility of Centrelink to monitor and review entitlements from time to time to ensure pensions are paid appropriately.

11. In addition, Centrelink also has broad powers to review a decision on its own motion pursuant to section 126 of the Social Security (Administration) Act 1999, which allows for review of a decision at any time, provided there is sufficient reason to do so. 

12.     In this case, Mr Rahman had provided a new ‘valuation’ of the property as at November 2005: $300,000.  To address this submission by Mr Rahman Centrelink requested confirmation of the value through an AVO valuer, who valued the property at $350,000. 

13.     The reassessment of Mr Rahman’s assets (and thereby his continuing entitlement to PPS) was therefore reasonable, having been initiated by Mr Rahman himself by the production of a new valuation.  

14.     Next, Mr Rahman told me that he also believed that there was a conspiracy between Centrelink and the AVO to overvalue the property.  There was no evidence whatever to substantiate this contention.

15.     For ease of reference I set out the several valuations of the property:

Valued As At	Date of Report	Amount	Source
November 2002	-	$349,000	Purchase Price
November 2004	14 November 2005	$330,000	Professionals Hammondville
December 2004	-	$345,000	Mr Rahman
January 2005	6 January 2005	$360,000	AVO
November 2005	14 November 2005	$300,000	Professionals Hammondville
January 2006	31 January 2006	$350,000	AVO
February 2006	23 March 2006 & 18 April 2006	$340,000	AVO
April 2006	5 April 2006	$315,000	Coldwell Banker
May 2006	24 May 2006	$310,000- $320, 000	Prestige Professionals

16.     Some comments need to be made about the reliability of these valuations. 

Valuations Provided By Mr Rahman

17.     Firstly, there is no dispute in relation to the purchase price of $349,000 in November 2002. 

18.     Then, while Mr Rahman thought the property was worth $345,000 in late 2004 the local real estate agent Mr McAllister, Assistant Property Consultant of Professionals Hammondville valued the property at $330,000.  There is no indication of the expertise of Mr McAllister, and no indication whether the property was in fact inspected.  It is stated to be a “market appraisal”.  

19.     The property was assessed by Mr Dabbagh, Residential Manager of Coldwell Banker Real Estate on 5 April 2006.  No details of Mr Dabbagh’s qualifications or expertise were provided.  The valuation is qualified as follows:

“The information provided should be used as a guide only and not relied upon for any purpose whatsoever. ... If a market appraisal is required, then a Registered Valuer should me (sic) engaged for that purpose.”

20.     On 24 May 2006 the property was valued at $310,000 to $320,000 by Mr Summers, Licensee of Prestige Professionals.  Some comparative sales values are provided, however the valuation did not include an internal inspection.  Again, this valuation contains a disclaimer:

“Please regard this as an appraisal only, as distinct from a formal valuation. If a formal valuation is required, then the services of a Registered Valuer should be engaged.”

21.     Mr Rahman also showed me newspaper reports of as to the falling property market.

22.     Centrelink contended that the AVO valuations should be preferred to Mr Rahman’s real estate agents’ valuations.

AVO Valuations

23.     In January 2005, the first AVO valuation was made at $360,000.  I pause at this point to comment about this and the AVO reports of January and March 2006.  Each of those reports is a very perfunctory valuation of the property.  There is no indication as to basis on which they are undertaken.  It was not until the report of 18 April 2006 that a full valuation report, as at 27 February 2006, was provided.  I make this observation because of Centrelink’s criticisms of Mr Rahman’s real estate agents’ valuations.

24.     Mr Lewis, the AVO officer who prepared the April report, is a registered valuer.  His report is detailed and clearly establishes the basis on which the value was arrived at.  His report shows he has considered the size, location and zoning, all improvements on the property and their condition, as well as comparable sales in the area. 

25.     Senior Member Kelly, at the hearing on 16 January 2006, had accepted the valuation of Mr McAllister of Professionals Hammondville who thought the property was worth only $330,000 at November 2004.  It appears that at that time the only information the Senior Member could have had available to her was Mr Rahman's evidence of the purchase price in November 2002 ($349,000) and valuation of December 2004 ($345,000), the basic AVO valuation of 6 January 2005 ($360,000), and the November 2005 report of Professionals Hammondville ($300,000 at November 2005 & $330,000 at November 2004). Of these the Senior Member referred only to the report of Professionals Hammondville.  The full AVO report of 18 April 2006 was obviously was not yet to hand. 

Best Evidence Available of Market Value of Property        

26. The Act unfortunately does not define the basis on which assets are to be valued. However, the Federal Court in Kirkovskiv SDFaCS [2004] FCA 790 (8 June 2004), determined that the appropriate method for valuing a person’s real property is by assessing its market value:

“17. Under the Social Security Act 1991 (Cth) there is no statutory provision specifying any method for the valuation of assets. The test which seems to have been applied by the AAT in a majority of cases is a net market value approach based on comparable sales and the ‘best use’ to which the asset could be put (see Fong and Secretary Department of Family and Community Services [2002] AAT 172; Re Emberts and Repatriation Commission (1988) 16 ALD 19). Following the same approach, the AAT accepted Mr Dyson's valuation and made a finding that the value of the property was $220,000. This was a finding of fact and was open to the AAT on the evidence before it.”

27.     I prefer the evidence of the AVO valuation of 18 April 2006 as it is the best available evidence of the market value of the property.  Mr Lewis is a registered valuer, and his report does not contain the qualifications of some of the reports relied on by Mr Rahman.  His report is detailed and clearly establishes the basis on which the value was arrived at.  

Net Value of the Property

28. Pursuant to section 1121 of the Act, the value of a mortgage is deducted from the full market value of a property to reduce the value of that asset for inclusion in the person’s total assets.

29.     Recent Commonwealth Bank statements confirm that the outstanding mortgage balance on 10 February 2006 was $176,797.15.  

30. Accordingly, the value of the property for purposes of the Act as at 10 February 2006 was $163,202.85, that is, $340,000 less $176,797.15.

Value of Mr Rahman’s Other Assets

31.     As to Mr Rahman's other assets I find that his car, now 16 years old, would be unlikely to be able to be sold for more than $2000.  Mr Rahman said all his furniture and household goods were second-hand and I accept, as did the SSAT these to be worth only $2000.  He has shares and cash totalling approximately $1200.

32.     The total of Mr Rahman's assets therefore is $168,402.85.  This exceeds the cut off of $157,000 by $11,402.85.  I note that even had I accepted Mr Rahman's valuations of $330,000 he would still have exceeded the assets value limit.

33.     I note that Centrelink had recently obtained statements from the Commonwealth Bank which showed that in connection with his mortgage account, Mr Rahman also owns a Mortgage Interest Saver Account (MISA).  The MISA is a mortgage off-set account containing savings which are available to be drawn on.  This account was not previously disclosed to Centrelink.  The balance of this account on 10 February 2006 was $142,986.03CR.  Centrelink contended that the MISA is a financial asset which needs to be included in the total value of Mr Rahman’s assets.  

34.     Having come to the view that the property and Mr Rahman's other assets exceeded the assets value limit I do not need to come to a view about this account.  However I make the following observations.  Mr Rahman gave evidence that the amount in the account was money that he had borrowed from family and friends to "save his life and property" after he lost his job in 2003.  About 25 people had contributed between $5,000 and $10,000 each.  Mr Rahman has no documentation specifying who loaned him money and when it was lent to him. He states that he simply remembers who lent him how much money.    He would not provide the names of the people who had lent him the money. 

35.     When shown his MISA statements he was unable to indicate which of the deposits were from Centrelink and which were loan moneys: "How can I remember what they are?" This is inconsistent with his professed ability to recall who had lent him exactly how much money.  The loan moneys were said to be repayable as soon as possible. Notwithstanding that Mr Rahman receives $230 a week from a tenant; he has taken no steps to repay the money at all.  He regards himself as now "saturated" and does not need any more money from family and friends.  In all the circumstances I find his account in relation to the MISA funds, to be unlikely.

DECISION

36.     The decision under review is affirmed.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member

Signed:         ................[Emily Gadsby]....................

Associate

Date of Hearing  25 October 2006
Date of Decision  13 November 2006

Representative for the Applicant              Self Represented
Representative for the Respondent        Hannelore Schuster