Re Goldfinch and Secretary, Department of Family and Community Services - [2000] AATA 837

DECISION AND REASONS FOR DECISION [2000] AATA 837

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S2000/72

GENERAL ADMINISTRATIVE DIVISION       )
           Re      JAMES GOLDFINCH
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICS
  Respondent

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date19 September 2000
PlaceAdelaide

Decision Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.

(Signed)
J.A. KIOSOGLOUS
(Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances - Newstart Allowance – liquid assets waiting period – severe financial hardship – reasonable or unavoidable expenditure – money in bank account used to purchase house – failure to make adequate enquiries
Social Security Act 1991 ss.14A,19C, 598
Social Security Legislation Amendment (Parenting and Other Measures) Act 1997
Re Biddlecombe and Secretary, Department of Family and Community Services [1999] AATA 528
Re Jacobsen and Secretary, Department of Social Security (AAT 7846, 20 March 1992)

REASONS FOR DECISION

19 September 2000 Senior Member J.A. Kiosoglous MBE

This is an application by Mr James Goldfinch (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 19 January 2000 (T2) which affirmed a decision of an authorised review officer (ARO) dated 10 September 1999 (T14), which had affirmed a delegate of the respondent's decision of 7 September 1999 (T9) to impose a liquid assets waiting period.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T16), together with two exhibits, one lodged by the applicant (Exhibit A1) and one lodged by the respondent (Exhibit R1). In addition, the Tribunal heard evidence from the applicant, who represented himself. Mr James Underwood, a departmental advocate, represented the respondent.
The issue before the Tribunal is whether or not the applicant's expenditure during his liquid assets test waiting period was reasonable or unavoidable, such that the waiting period should be reduced.
history of the application
The applicant ceased working for BHP in Port Hedland on 3 August 1999 (T3). He attended the Cannington office of Centrelink in Western Australia on route home to Adelaide and picked up Newstart Allowance application forms (T4).
According to a departmental file note, he lodged the Newstart Allowance forms on 25 August 1999 at the Parkside Centrelink office (T9). However, on his evidence, such forms were lodged on 7 September 1999. On the claim form he indicated that he and his wife held approximately $150,000 in bank accounts (T5).
On 29 August 1999 the applicant and his wife signed a contract to purchase a house for $157,000, with settlement set for 10 September 1999 (T7).
On 7 September 1999 the respondent advised the applicant that a liquid assets waiting period would be imposed, commencing on 4 August 1999 and ending on 2 November 1999. The ARO and the SSAT affirmed this decision upon review.
applicant's evidence and submissions
The applicant told the Tribunal that he and his wife worked in Port Hedland to save enough money to purchase a house. He stated that upon arrival back in Adelaide on or about 20 August 1999, he declared that they would find a house within seven days. He further stated that it actually took nine days, and that the contract of sale was signed on 29 August 1999, with settlement set for 10 September 1999.
At the time of application for Newstart Allowance, he considered himself to be a homeowner, and submitted to the Tribunal that once he had signed the contract, he was responsible for insuring the property, and could be sued if he reneged on the deal.
He told the Tribunal that he did not attend the Parkside Centrelink office on 25 August 1999. He stated that soon after his return from Port Hedland, he went to the City office of Centrelink, who arranged an interview for 1 September 1999 at the Parkside office. He further stated that as he and his wife were both sick on 1 September 1999, the interview was rescheduled to 7 September 1999, at which time the forms were actually lodged.
He stated that he did not think that having $150,000 in bank accounts should affect his entitlement to Newstart Allowance. He told the Tribunal that he considered that he had paid his fair share of taxes and that the allowance should not be dependent upon past spending habits. He thought that if he was unemployed and looking for work, then he should get Newstart Allowance. He told the Tribunal that he spent all the money on the house because he was expecting Centrelink to provide the allowance, and had also been led to believe by a Land Agent that stamp duty would be considerably less than what it turned out to be.
From the time he arrived in Adelaide until about 10 or 11 September, he and his wife resided rent free at a home belonging to his parents, and then moved into their newly purchased home.
respondent's submissions
Mr Underwood conceded, on behalf of the respondent, that the applicant was in severe financial hardship for the period subsequent to 10 September 1999, but submitted that it was not as a result of reasonable or unavoidable expenditure. He submitted that it was unreasonable for the applicant to spend all of his money securing housing without leaving sufficient funds for ongoing living expenses, and should have made enquiries as to the effect of his liquid assets upon his Social Security payments.
He further submitted that the applicant's spending on housing would not have been unavoidable had he inquired about his social security entitlements prior to signing the contract on his house.
discussion and findings
As a preliminary point, the Tribunal notes that there is some discrepancy between the applicant's evidence and the documentary evidence as to when the claim forms were actually lodged. Whilst the applicant was a credible witness, and the Tribunal has no doubts about the honesty of his evidence, it is difficult to reconcile his evidence that he did not lodge the claim form until 7 September 1999 with the file note suggesting attendance at Parkside to lodge the forms on 25 August 1999 (T9). That file note was in fact completed on 7 September 1999, such that one would not expect the officer to get the date wrong if the documents were lodged on the day the file note was made. In such circumstances, the officer would have had to have deliberately falsified the record. In the Tribunal's experience, it would be highly unlikely for a departmental officer to falsify a record for the purposes of bringing a claimant within the fourteen day period and, in the absence of any evidence to corroborate the applicant's version of events, the Tribunal prefers the contemporaneous documentary evidence, suggesting that the forms were lodged on 25 August 1999. It is clear that some contact took place with the Department between the applicant arriving in Adelaide and 7 September 1999 as, at the very least, some time in late August an interview was scheduled for 1 September 1999 (T4).
The Tribunal concurs with Mr Underwood that it is somewhat immaterial whether or not the applicant was a homeowner or not for the purposes of the liquid assets waiting period test provisions as, pursuant to sub-paragraph 598(1)(a) of the Social Security Act 1991 (the Act), the value of the person's assets is to be ascertained either at the date of claim or on the day the person becomes unemployed (which is 4 August 1999 in this case). As at 4 August 1999, the applicant clearly did not yet own a home, and had significant monies in the bank. Liquid assets are defined in sub-section 14A(1) of the Act and includes amounts deposited in a bank (sub-paragraph (14A(1)(b) of the Act).
The Tribunal finds that the waiting period was correctly calculated to be thirteen weeks, pursuant to sub-section 598(2B) of the Act.
With respect to severe financial hardship, the respondent concedes that as from 10 September 1999 the applicant was in severe financial hardship. The Tribunal can appreciate that as from the date of signing the contract the applicant had legal responsibilities regarding the house, and were he to have reneged on the deal subsequent to the cooling off period included in the contract for sale (T7), he would have been subject to possible legal and financial consequences, but up until 10 September 1999, these things were only potential consequences. On the face of it, he still had monies substantially in excess of twice the maximum fortnightly payment rate up until 10 September 1999 and the Tribunal finds that he was not in severe financial hardship prior to this date. This approach is in accordance with the Tribunal's comments in Re Biddlecombe and Secretary, Department of Family and Community Services [1999] AATA 528 at paragraph 17, referencing Re Jacobsen and Secretary, Department of Social Security (AAT 7846, 20 March 1992).
Accordingly, the Tribunal does not consider that sub-section 598(5) of the Act is applicable to the period prior to 10 September 1999, as the applicant was not in severe financial hardship in that period.
From 10 September 1999 onwards however, the applicant was in severe financial hardship. The question in relation to this period of time is whether or not the applicant has incurred unavoidable or reasonable expenditure whilst serving the remainder of the liquid assets test waiting period. Unavoidable or reasonable expenditure finds definition in sub-section 19C(4) of the Act, and relevant to this matter is sub-paragraph 19C(4)(k) of the Act, which provides:
"…
any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person
…"

The Tribunal would note that this case is distinct from Re Biddlecombe in that the provisions of sub-section 598(5) of the Act were amended by the Social Security Legislation Amendment (Parenting and Other Measures) Act 1997 to make reference to "unavoidable or reasonable expenditure". Those amendments came into effect on 1 July 1998.
For the purposes of calculating liquid assets, the provisions of section 14A and 19C of the Act make some allowances for expenditure on housing. In particular sub-sections 14A(4), (5) and (5A) allow amounts to be disregarded in circumstances where a person owes money on a house, or has sold a house in the previous 12 months and is likely to buy another. The applicant made a legitimate point in that it can sometimes be unfair to not allow similar amounts to be disregarded when people in his position have not yet bought a home, but have the same intention to buy within 12 months of saving enough money. The Tribunal can appreciate that there would be administrative repercussions in administering such a scheme, especially in proving or disproving intent in all such cases. This is a matter for the legislature however, and the Tribunal is not in a position to do more than correctly apply the legislation as it stands.
On that basis, the Tribunal notes that as at the time of becoming unemployed, the applicant had approximately $150,000 in bank accounts. He had contact with the Department on several occasions prior to purchasing his house, but there is no record of him enquiring as to the effect the bank account monies may have on his entitlement. The applicant claims that he did not in fact apply for Newstart Allowance until after he entered into the contract for the purchase of the house. This claim is contrary to the documentary file note (T9) and for the reasons given in paragraph 15 herein, the Tribunal prefers the documentary record, which suggests that application for Newstart Allowance was made prior to the applicant's entry into a contract to purchase a house.
In this particularly unusual circumstance, where a person had some $150,000 in bank accounts and wished to receive Newstart Allowance, the Tribunal considers that it is entirely reasonable to have expected him to have checked with the Department prior to spending all of that money, as to whether it would affect any entitlement he may have. The applicant contended that eligibility should not be prejudiced by the fact that he had worked and saved hard, and the Tribunal considers that to be a reasonable proposition. It must further consider however, that there is a clear policy objective in the Social Security legislation, that people must reasonably exhaust available funds prior to seeking a government benefit. The Tribunal often makes similar statements in cases concerning people who receive workers' compensation payments. In those cases, people can be subject to even longer periods than the one that the applicant had to endure.
The applicant should have made enquiries and the expenditure of all of his money in the absence of such enquires was not reasonable. Any reasonable person must anticipate that such a large amount sitting in bank accounts may affect an entitlement to benefits. The applicant had filled out the claim form and signed it on 25 August 1999 (T5/63). That form requires some four pages of details of assets and income to be provided. One would imagine that the applicant must have thought that there was some reason for requiring those details. Further to that, the form clearly states "The amount of payment you can get from Centrelink may depend on: … the total net value of your (and your partner's) assets." (T5/59). The accompanying notes state "To assess whether you are eligible for income support, Centrelink will ask for information about your financial situation, and may ask for documents which confirm your income and assets." (T4/40). There was sufficient information provided by the respondent that one would reasonably expect a person with $150,000 in bank accounts, who wished to receive a benefit, to make enquiries.
Buying the house was not unavoidable expenditure, as the applicant had other housing options available. The Tribunal does not accept his blanket statement that banks do not lend to unemployed people. In his case, were he to have purchased the house and kept some of the $150,000 in reserve, one would imagine that he would not be an unattractive prospect to lending institutions, given that the size of the mortgage would be small in comparison to the available security.
Accordingly, the Tribunal finds that sub-section 598(5) of the Act is not applicable.
decision
For the reasons given, and pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.
I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  8 September 2000
Date of Decision  19 September 2000
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Mr J. Underwood
Solicitor for the Respondent    Centrelink