Re Achkar And Secretary To the Department Of Family and Community Services - [2001] AATA 684

DECISION AND REASONS FOR DECISION [2001] AATA 684

ADMINISTRATIVE APPEALS TRIBUNAL)

Nº V01/236

GENERAL ADMINISTRATIVE DIVISION)
Re: AMINEH ACHKAR

Applicant

And: SECRETARY TO THE DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal: M.J.Carstairs, Member

Date:1 August 2001
Place:Melbourne

Decision: The Tribunal affirms the decision under review.

(sgd) M.J. Carstairs
Member
SOCIAL SECURITY — parenting payment — assets test — whether loan against principal home can be off-set against value of assets
Social Security Act 1991 ss.1118(1), 1121
Re Berry and Secretary, Department of Social Security (AAT 10378, 28 August 1995)
Repatriation Commission v Harrison (1997) 46 ALD 193

REASONS FOR DECISION

1 August 2001 M.J.Carstairs, Member

This is an application by Amineh Achkar for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 19 February 2001 which affirmed a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services ("the respondent") rejecting her claim for parenting payment on the basis that the assets of Amineh and her husband, Ghassan Achkar, were too high for the payment to be paid.
Mrs Achkar was unable to attend the hearing for health reasons but her husband attended and represented her, assisted by an interpreter in Arabic, Mr Nabil Chehata. Pat D'Cunha of Centrelink represented the respondent. The evidence before the Tribunal comprised the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975.
Background
The facts in this matter were not in dispute between the parties. In April 1999, Amineh and Ghassan Achkar took out a mortgage on their home at 44 Barrow Street, East Coburg in order to fund the purchase of their nephew's half share in a taxi licence. The taxi licence was jointly owned by Ghassan Achkar and his nephew, Yassine Merhi, who together had purchased the licence in 1996 and had operated a taxi business thereafter. By agreement dated 29 April 1999 Mr Achkar bought out the half share in the licence and he bought out also Mr Merhi's half share in the taxi vehicle.
Mr and Mrs Achkar purchased their home at Barrow Street in 1986 for $75,000 and it was fully owned by them by 1991. Mr Achkar had approached the bank three times to see if he could borrow the money to buy out is nephew's half share, using the licence itself as security. The bank refused this and insisted that the house be the security for the loan. The amount borrowed was $124,000.
On 12 November 2000 the applicant and her husband filled out a claim for parenting payment. (T3). Mr Achkar told the Tribunal that he and his wife have ten children, all of whom live at home. In filling out the claim to Centrelink, Mr and Mrs Achkar gave the value of the taxi plate as $240,000. (T3). This was confirmed by the balance sheet for the taxi service where the taxi licence at cost was shown as $240,000 (T6). Mr Achkar told the Tribunal that he had established the licence value through the taxi depot, as they knew the market value from time to time. The taxi vehicle was valued at $9,850.
On 14 November 2001, a decision was made by Centrelink to reject the claim for parenting payment because the combined assets exceeded the allowable assets level (T14). That decision was affirmed on internal review on 7 December 2000.
Mr Achkar emphasised that his purpose in taking out the loan was to ensure his continued ability to work and provide for his family. He stressed that he would rather work than be unemployed. He said that in 2000, things were not as good as they had been in other years in the taxi business due to the GST and rising taxi fares. It was for this reason that his wife had claimed parenting payment. He wanted to get justice in the circumstances as the loan was taken out in relation to the taxi licence and not in relation to the house though it was secured against it.
Mr Achkar told the Tribunal that in April 2001 he had an accident at work and has been receiving compensation since then. He made a decision to sell the taxi licence on 22 April 2001 and must now wait to see if he recovers fully to return to work or resume in business. He sold the taxi vehicle and has paid out the ANZ loan.
Consideration of the Issues
As stated above, the material facts in this matter are not in dispute. The issue in dispute is whether the ANZ loan can be offset against the applicant's assets in calculating the value of those assets for the purpose of determining eligibility for parenting payment. For parenting payment, the asset limit where a person is a homeowner and is partnered is $189,500 (section 500Q(3) of the Social Security Act 1991 ("the Act")). Parenting payment is not payable to a person if the value of the person's assets exceeded the asset value limit, which in Mrs Achkar's case was $189,500 as she was both partnered and a home owner. The Act requires that assets of both partners be taken into account (section 500Q(4)).
The other relevant provisions of the Act in working out the value of the assets are as follows:
1118.(1)   In calculating the value of a person's assets for the purposes of this Act (other than sections 198J and 198L, subparagraph 501E(1)(d)(iv) and sections 1125, 1126, 1133 and 1135A), disregard the following:
(a). . .
(b)if the person is a member of a couple — the value of any right or interest of the person in one residence that is the principal home of the person, of the person's partner or of both of them that:
is a right or interest that gives the person or the person's partner reasonable security of tenure in the home;
. . .
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, is to be reduced by the value of that charge or encumbrance.
(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.
(3)         Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 1118.
These provisions have been considered by the Tribunal in a number of cases, most comprehensively in Re Berry and Secretary, Department of Social Security (AAT 10378, 28 August 1995). In Re Berry the Tribunal stated at para. 10:
. . . the only realistic and workable interpretation that [the Tribunal] can give to section 1121(3) is that its effect is to ensure that once the disregarded asset is removed from the asset listing, any charge or encumbrance on such as asset is not available for off-sett against the value of non-disregarded assets . . . [T]he legislation makes no allowance for the situation where a disregarded asset provides the security for a loan of money which is used for a purpose which has absolutely no connection with that disregarded asset.
Therefore, whilst section 1121(1) allows that in general the value of an encumbrance can be set off against a specific asset, section 1121(3) has the effect that if a asset, disregarded under section 1118 (here, the principal home) is used to secure a loan, it cannot be used to reduce the value of assets overall.
In Re Berry the Tribunal commented on the apparent unfairness of the application of the provisions, and indeed this is a matter that Mr Achkar presses in the case now before the Tribunal. However the Tribunal must apply the law and the provisions of subsection 1121(1) are quite clear in their reference to "a charge or encumbrance over a particular asset". The particular asset here is the home at Barrow Street. Any encumbrance over the home is disregarded in determining any eligibility for parenting payment.
This leaves the whole of the value of the taxi licence at the time of the claim for parenting payment as an asset to be taken into account in determining the claim. I am satisfied that its value exceeded the assets limit set for the payment of parenting payment. As set out by the Federal Court in Repatriation Commission v Harrison (1997) 46 ALD 193, there is no general provision in the legislation that assets means "net assets". Liabilities can only be taken into account insofar as the Act allows for them to be. The only provision that allows for the liability to be disregarded is where the charge or encumbrance is over the "particular asset". In Mrs Achkar's case there was no charge or encumbrance over the taxi licence and it therefore had to be taken into account for its gross value.
Decision
The Tribunal affirms the decision under review.
I certify that the fifteen [15] preceding paragraphs are a true copy of the reasons for the decision herein of
M.J.Carstairs, Member
(sgd) Catherine Thomas
          Clerk
Date of Hearing:  25 July 2001
Date of Decision:  30 July 2001
Solicitor for Applicant:                 NIL — represented by her husband
Solicitor for Respondent:             NIL — Ms P. D'Cunha, Advocate with Centrelink