RAYMOND BOYD and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

[2010] AATA 737

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 737

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/1552

GENERAL ADMINISTRATIVE  DIVISION		)
Re		RAYMOND BOYD

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Dr P McDermott, RFD, Senior Member

Date28 September 2010

PlaceBrisbane

Decision The Tribunal affirms the decision under review.

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

Senior Member

CATCHWORDS

SOCIAL SECURITY – Disability support pension and age pension – If properties owned by applicant are to be assessed as assets – Properties considered assessable - Financial hardship provisions cannot apply – Decision under review affirmed.

Family Law Act 1975 (Cth)

Social Security Act 1991 (Cth) ss 11, 1121, 1129

Re Henderson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 468

REASONS FOR DECISION

28 September 2010 Dr P McDermott, RFD, Senior Member  

INTRODUCTION

1.      I have to decide whether certain properties owned by Mr Raymond Boyd (“the applicant”) are to be assessed as assets for the purposes of assessing his entitlement to disability support pension and age pension.

HISTORY OF THE MATTER

2.      The applicant was in receipt of disability support pension from 26 April 2007 until 22 April 2010 when he became entitled to age pension.

3.      At all material times, the applicant has been the registered owner of two properties, namely a property situated on Macleay Island and a property located at Wilkesdale.  On 4 October 2002, an application was filed in the Family Court of Australia concerning both properties.  On 7 November 2003, an Order was made by the Deputy Registrar of the Family Court of Australia that all issues be removed from the Pending Cases List with liberty to apply on the giving of 14 days notice.  This matter has now been transferred to the Federal Magistrates Court of Australia.

4.      On 28 January 2009, the Australian Valuation Office (“AVO”) valued the property at Macleay Island at $220,000.  On 31 January 2009, the AVO valued the property at Wilkesdale at $120,000. 

5.      On 8 June 2009, Mr Boyd completed a claim for consideration under hardship[1].  In that claim, he stated that he thought that “all” of his assets should be disregarded as there was “no title”.  He also advised that he was unable to sell the assets and unable to borrow against the assets because the matter was “before the Court no title”.

[1] T5/27.

6.      On 21 July 2009, a Centrelink Complex Assessment Officer (“CAO”) noted the representations of the applicant.  The applicant had advised that the Macleay Island and the Wilkesdale properties were subject to a property settlement application from his former wife who is residing in the United Kingdom.  That officer was advised that both properties were exclusively owned by the applicant and that neither property was subject to a mortgage or listed for sale.  The applicant stated that he had been unable to obtain legal advice as to whether he could sell the properties or not.  Mr Boyd advised that he had applied to the Family Court for a Final Order.

7.      The Centrelink CAO decided that the properties were to be included as assessable assets for pension purposes and gave her reasons as:

·     The applicant had not provided adequate evidence that the properties cannot be sold;

·     It was reasonable to expect him to sell those assets;

·     Alternatively, the applicant could borrow against those assets and had not made adequate efforts to seek out possible financing options.

8.      On 22 September 2009, a Centrelink authorised review officer affirmed the decision under review.  That officer made a notation as to the residence of the applicant noting that the applicant was the transferee on a property information (transfer) document and the transfer was pursuant to a Family Court Order dated 7 November 2003.  However, in these proceedings I am not concerned with the residence of the applicant.

9.      On 2 February 2010, the Social Security Appeals Tribunal affirmed the decision under review.

LEGISLATION

10.     The relevant legislation is contained in the Social Security Act 1991 (Cth) (“the Act”).

11. To gain access to the financial hardship rules contained in s 1129 of the Act a person must have an unrealisable asset.

12. Section 1129 provides as follows:

Section 1129(1) 

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

(b)      either:

(i)sections 1108 and 1109 (disposal of income) and 1124A, 1125, 1125A, 1126, 1126AA, 1126AB, 1126AC and 1126AD and 1126E (so far as section 1126E relates to sections 1126AA, 1126AB, 1126AC and 1126AD) (disposal of assets) do not apply to the person; or

(ii)the Secretary determines that the application of those sections to the person should, for the purposes of this section, be disregarded; 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.

13.     The term unrealisable asset is defined in subsections 11(12) and 11(13) of the Act which provide as follows:

11(12)  An asset of a person is an unrealisable asset if:

(a)       the person cannot sell or realise the asset; and

(b)       the person cannot use the asset as a security for borrowing.

11(13)  For the purposes of the application of this Act to a social security pension (other than a pension PP (single)), an asset of a person is also an unrealisable asset if:

(a)the person could not reasonably be expected to sell or realise the asset; and

(b)the person could not reasonably be expected to use the asset as a security for borrowing.

CONSIDERATION

14. The issue to be decided in this application is whether the Macleay Island and the Wilkesdale properties are unrealisable assets for the purposes of the Act. The applicant has not shown why those properties cannot be sold or used as security for borrowing. The applicant, in giving evidence, stated that at the time when his former wife made an application under the Family Law Act 1975 (Cth) concerning property of the marriage, he had received advice from his legal advisor not to sell the properties which were the subject of the application. That advice was given to him in 2002. There are certainly no court orders which preclude the sale of the properties. The applicant has been quite honest and proper in giving evidence at the hearing of this application in stating that he was the registered owner of the properties and especially in conveying his hope that he could leave his properties to his children.

15. In the circumstances, I have made an inference that the applicant really intends to hold the Macleay Island and the Wilkesdale properties for the benefit of his children and will not sell or secure the properties. As there is no evidence before me that those properties cannot be sold or used as security for borrowing, I decline to find that the Macleay Island and the Wilkesdale properties are unrealisable assets for the purposes of the Act.

16. Having regard to the terms of s 11(13) of the Act, I also make the observation that there is no evidence upon which I could find that the applicant could not reasonably be expected to sell or realise the Macleay Island and the Wilkesdale properties or the applicant could not reasonably be expected to use those properties as a security.

17. In view of the fact that I have declined to find that the Macleay Island and the Wilkesdale properties are unrealisable assets, the applicant cannot have access to the financial hardship provisions in s 1129(1) of the Act.

18.     The applicant has taken issue with the AVO valuation of the Wilkesdale property.  On 31 January 2009, the AVO valued that property at $120,000.  The applicant states that none of the properties in that area have sold for the amount of the valuation.  However, the valuer from the AVO has listed in his report two sales of vacant land in the locality.  One property of some 277 hectares sold in 2008 for $305,000.  Another property of some 16 hectares sold in 2008 for $75,000.[2]  In evidence the applicant remarked that the Wilkesdale property is a vacant property of some 111 hectares.  The applicant intended to grow wine grapes on the property and so I make the inference that the property is suitable for agriculture.  The valuation of the Wilkesdale property by the AVO appears to be reasonable and has not been contradicted by any evidence submitted by the applicant. 

[2] T6/36-37.

19.     The applicant did not take issue with the AVO valuation of the Macleay Island property stating, if anything, that it was a conservative valuation.  Having reviewed that valuation, I comment that the valuer has relied upon comparable sales evidence.[3]

[3] T6/30-31.

20. For the sake of completeness, I should refer to s 1121(1) of the Act which provides that 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.  There is no evidence before me that there is any charge over the Macleay Island and the Wilkesdale properties.  There is also no evidence that there is an order under the Family Law Act 1975 (Cth) which alters the rights of the applicant over either property.[4]

[4] Cf., Henderson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 468 at [51], [101].

21.     The applicant is a person who is in need of some assistance.  During the hearing I directed that a hearing loop be installed so that the applicant could understand the proceedings.  I recommend that Centrelink should endeavour to provide whatever assistance is available from a social worker.  Living in the country, it would be difficult for the applicant to avail himself of assistance and support that may be more readily available in the city.

DECISION

22.     I affirm the decision under review.

I certify that the 22 preceding paragraphs are a true copy of the reasons for the decision herein of Dr P McDermott, RFD, Senior Member

Signed: ...................[Sgd].....................................................
              Kate Slack, Research Associate

Date/s of Hearing  22 September 2010
Date of Decision  28 September 2010
Applicant was self represented
Solicitor for the Respondent     Helen Wallis-Dunn, departmental advocate