Rahman and Secretary, Department of Employment and Workplace Relations

[2006] AATA 120

Administrative

Appeals

Tribunal

 

WRITTEN REASONS FOR ORAL DECISION [2006] AATA 120

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2005/715

GENERAL ADMINISTRATIVE  DIVISION		)
Re		MOHAMMAD RAHMAN

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal   Senior Member, Mrs Josephine Kelly

Date  16 January 2006

Date of Written Reasons                  14 February 2006

Place  Sydney

Decision 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.

[sgd]  Senior Member, Mrs Josephine Kelly

CATCHWORDS

SOCIAL SECURITY – parenting payment (single) – assets test – investment property - encumbrance or charge – effect of charge or encumberance on value of assets - decision set aside

LEGISLATION

Social Security Act 1991 (Cth) sections 11, 500Q, 1118 and 1121

WRITTEN REASONS

At the conclusion of the hearing of this matter, the terms of the decision were made and summary reasons for that decision were stated orally. The Respondent requested the Tribunal to furnish a statement in writing of the reasons for its decision pursuant to sub‑section 43(2A) of the Administrative Appeals Tribunal Act 1975.

WRITTEN REASONS FOR ORAL DECISION

Senior Member, Mrs Josephine Kelly       

Proceedings

1.      On 16 December 2004, a Centrelink delegate decided that Mr. Rahman was not entitled to be paid parenting payment for his two children because the value of Mr. Rahman’s assets exceeded the amount that would allow a person to be paid a parenting payment. When reviewing this decision I must determine what Mr. Rahman’s assets were on 16 December 2004. The Social Security Appeals Tribunal (“SSAT”) on 11 May 2005 affirmed the decision to cancel Mr. Rahman’s payment of parenting payment because of the value of his assets. 

Issues

2.      The issue in these proceedings is whether the value of Mr. Rahman’s assets exceeds the amount that would allow him to be paid a parenting payment.

Evidence

3.      Mr. Rahman’s primary residence is at Troopers Road, Holsworthy (“the primary residence”) and his investment property is at 30 Lae Road, Holsworthy (“the investment property”). He also owns a car and household goods. Mr. Rahman is the sole owner of the investment property. Tragically, his wife was killed in a car accident in 2002, and for the purposes of the relevant legislation he is not a member of a couple.

4.      At the hearing on 16 January 2006, Mr. Rahman gave the following values for his assets. As at December 2004 his car was valued at $3,500 and his household assets at $5,000.

5.      This hearing was the first occasion that Mr Rahman disclosed to the Respondent that he owned shares. Mr. Rahman gave evidence that he has NRMA shares. On the day of hearing he contacted the NRMA and was informed that the value of his shares in December 2004 was $1,220.

6.      On 8 July 2002 (T5) Mr. Rahman valued his car at $4,500 and his household assets at $10,000.

7.      On 2 January 2003 (T8) Mr. Rahman valued his car at $5,000 and his household assets at $5,000.

8.      On 7 July 2003 (T10) Mr. Rahman valued his car at $6,000 and his household assets as $15,000.

9.      On 7 July 2003, after completing a claim form for parenting payment (T10), he began to receive the parenting payment single.

10.     At the hearing on 10 November 2005 Mr. Rahman stated that he has sold a lot of his household assets but there value was approximately $5,000 which is down from $15,000. The value of his car had decreased from $6,000 to $2,000 on that day.

11.     On 31 May 2004, Mr. Rahman had approximately $300 in his bank account. Exhibit A4 indicates that on 15 January 2006 that Mr Rahman had a bank balance of $23.38.

12.     On 17 December 2004 (T14), Mr. Rahman stated that the value of the investment property was $345,000.  

13.     The Professionals Hammondville, real estate agents, provided a market appraisal of the investment property (Exhibit A2). The market vaue was assessed as $300,000 on 14 November 2005. That assessment noted:  “Please be advised that this time last year the above property should have been worth $330,000.”

14.     On 11 December 2004, Mr. Rahman completed a form setting out real estate details.  In relation to the investment property he stated that  Commonwealth Bank owns 60% of the property and that he owns 40% (T14). Mr. Rahman also stated that the property is mortgaged and that he has secured the mortgage with the “equity of principal home”.

15.     Exhibit A2 is a Consumer Credit Contract Schedule or his loan agreement. It states that on 1 November 2002 he borrowed $200,000 which was secured over the investment property.  There was no security over the primary residence

16.     At the hearing, Mr. Luke Carter agreed that Exhibit A2 is evidence that the mortgage is secured by the investment property and not by the primary residence.

The Law

17. Parenting payment (single) is subject to an asset value limit. As at December 2004 the limit for parenting payment (single) for a single person who also owned, or was paying off, their home was $153,000. If the value of a person’s assets was above $153,000 as at December 2004 (the figure is adjusted by the CPI Index), then that person cannot be paid a parenting payment (single). The relevant legislation is set out at sections 500Q(1) and (2) of the Social Security Act 1991 (“the Act”). In order to continue to be paid parenting payment (single) as at December 2004, the value of Mr. Rahman’s assets could not exceed $153,000 .

18. Asset is defined at section 11(1) of the Act:

asset means property or money (including property or money outside Australia).

19.     Therefore Mr. Rahman’s assets include his investment property, his car, household goods and shares.  

20. Section 1121 provides that in certain circumstances the gross value of a person’s assets may be reduced by a charge or encumbrance.

Effect of charge or encumbrance on value of assets

1121(1) If there is a charge or encumbrance over a particular asset of the person, the value of the asset, for the purposes of calculating the value of the person's assets for the purposes of this Act (other than Division 1B of Part 3.10), is to be reduced by the value of that charge or encumbrance.

Note: this section does not apply to an asset to which section 1121A (primary production assets) applies.

1121(2) Subsection (1) does not apply to a charge or encumbrance over an asset of a person to the extent that:

(a) the charge or encumbrance is a collateral security; or

(b) the charge or encumbrance was given for the benefit of a person other than the person or the person's partner.

1121(3) Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 1118.

1121(3A) Subsection (1) does not apply to an asset that is an asset-tested income stream (long-term).

21. Section 1121(1) allows the value of an encumbrance to be set off against the asset to which it relates. Section 1121(3) provides that if an asset is disregarded under section 1118, an encumbrance over that asset is to be disregarded. The principal home, Is an asset to be disregarded pursuant to s 1118.

Consideration

22. Mr. Rahman is the sole owner of the investment property and therefore his interest in that property, in accordance with section 11(2), is 100%. He is also the sole owner of his car, household goods and the shares.

23.     As mentioned above, at the hearing Mr. Carter accepted that Mr. Rahman’s mortgage was only secured by the investment property as shown by Exhibit A2.

24. I therefore conclude that pursuant to s 1121(1) is the applicable provision. The value of the investment property is to be reduced by the value of the mortgage debt.

25.     I must therefore determine the value of the assets and the value of the charge or encumberance.

26.     The independent valuation by the Professionals at Hammondville assessed the market value of the investment property in December 2004 at $330,000. I find therefore that at the time that the original decision was made the value of the property was $330,000.

27.     The car has been given different valuations from Mr. Rahman over the 2002 to 2003 period. I find that if the value of the car was between $4,000 and $6,000 from July 2002 to July 2003, it would have decreased in value since this time. Mr. Rahman gave evidence that his car was valued at $3,500 in December 2004. I accept this evidence and find that the value of the car was $3,500 in December 2004.

28.     The value of the household assets has been valued by Mr Rahman at $10,000 in July 2002, $5,000 in January 2003 and $15,000 in July 2003. Mr. Rahman in November 2005 stated that his assets have dropped in value to approximately $5,000.  Mr Rahman gave oral evidence that in December 2004 the value of the household assets was $5,000. There is only evidence of what Mr. Rahman believes to be the value of household assets. There is no corroborating evidence. On the basis of the evidence available to me I find that the value of the household assets was $5,000 in December 2004.

29.     In relation to Mr. Rahman’s bank account I find that the value of the bank account is somewhere between $300 and $23 but it is not necessary to make a finding due to the small value of the asset, as it makes no difference to the outcome of the proceedings.

30. I must also determine the value of the mortgage in December 2004. Exhibit A2 shows that the original loan was $200,000 over the investment property. This loan agreement was signed on 1 November 2002. Exhibit A2 also shows that the balance of the mortgage on 22 August 2004 was $188,694. This was the last transaction on the account. Exhibit A2 is a transaction summary until 24 December 2004. If any more transactions had occurred they would be listed. I infer that as no transactions were listed as none occurred. I find that the value of the mortgage debt was $188,694 as at December 2004. Applying s 1121(1), the value of the investment property is therefore:

$330,000 -  $188,694 = $141,306

31.     The value of Mr Rahman’s assets as of December 2004 is therefore:

Investment property            $141,306

Car   $3,500,

Shares    $1,220

Household goods               $5,000

Total:         $151,026

32.     The value of the assets, including the small bank balance, is below the asset limit  of $153,000.

33.     At the hearing on 16 January 2006, Mr. Luke Carter stated:

“All I would say is that Mr Rahman has given the figure as to his various assets in terms of his car and his household goods and his investment property and his NRMA shares, so I have no reason to doubt the veracity of that information, so it's come down to a calculation then the Department would simply have to accept that calculation as being the appropriate one.”

Conclusion

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.

Decision

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.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member, Mrs Josephine Kelly

Signed: Miss Sacha Keady
  Associate

Date/s of Hearing  10 November 2005 and 16 January 2006
Date of Decision  16 January 2006
Date of Written Reasons          14 February 2006
Advocate for the Applicant       Self-Represented
Advocate for the Respondent   Centrelink Legal Services