Rossow and Secretary, Department of Health (Social services)
[2018] AATA 1275
•9 May 2018
Rossow and Secretary, Department of Health (Social services) [2018] AATA 1275 (9 May 2018)
Division:GENERAL DIVISION
File Number(s): 2017/3370 and 2017/4711
Re:Rene Rossow and Tommy Edwards
APPLICANT
AndSecretary, Department of Health
RESPONDENT
DECISION
Tribunal:Member D K Grigg
Date:9 May 2018
Place:Brisbane
The Tribunal affirms the decisions under review
.............................[sgd].....................................
Member D K Grigg
CATCHWORDS
AGED CARE – whether applicants eligible for a financial hardship supplement –– whether property an unrealisable asset – decision under review affirmed.
LEGISLATION
Aged Care Act 1997 (Cth)
Social Security Act 1991 (Cth)
Subsidy Principles 2014 (Cth)
SECONDARY MATERIALS
Guide to Social Security Law
CASES
Atkinson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 325
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Re Farrow and Secretary, Department of Social Security [1986] AATA 154
Repatriation Commission v Hall (1988)15 ALD 84
REASONS FOR DECISION
Member D K Grigg
9 May 2018
INTRODUCTION
The Applicants are age pension recipients.[1]
[1] Exhibit 1, T Documents, T5 and T6, pages 65 and 103, Combined Assets and Income Forms completed by the
Applicants dated 14 January 2016.
On 18 February 2016 the Applicants appointed a real estate agent (Ray White) to sell their home in Mossman at a list price of $240,000, with an estimated sale price of $220,000.[2]
[2] Exhibit 1, T Documents, T7, pages 137-148, Appointment of Agent dated 18 February 2016.
On 2 March 2016 the Applicants moved into a residential aged care home operated by Ozcare in Port Douglas.[3]
[3] Exhibit 1, T Documents, T8, pages 150-159, Applicants’ Claim for Financial Hardship Assistance Residential
Aged Care dated 31 August 2016; T15, page 222, Centrelink records.
On 2 July 2016, the Applicants were advised by the Department of Human Services (“Department”) that their aged care fees were as follows:[4]
(a)basic daily fee was $48.25 per day each; and
(b)accommodation contribution fee was $35.37 per day each.
[4] Exhibit 1, T Documents, T2, pages 31-32, Letter from the Department to the Applicants dated 2 July 2016.
As at July 2016 the Applicants were paying Ozcare a total of $2,341.36 per fortnight.
On 31 August 2016 the Applicants made a claim for financial hardship for their residential aged care fees and charges and reported, among other things, that:[5]
(a)their basic daily fee for their aged care was $48.25 each (or $675.50/fortnight);
(b)they each receive an age pension of $873.90/fortnight;[6]
(c)they were still receiving rent of $400/fortnight from their Mossman Property (which had not yet sold);[7] and
(d)they had not gifted more than $10,000 in the previous 12 months or more than $30,000 in the previous 5 years.
[5] Exhibit 1, T Documents, T8 and T9, pages 150-170, Applicants’ Claim for Financial Hardship Assistance
Residential Aged Care dated 31 August 2016.
[6] Exhibit 1, T Documents, T8, page 157, ANZ Bank Account Statement for the period 14 June 2016 to 26 August
2016.
[7] Exhibit 1, T Documents, T8, page 157, ANZ Bank Account Statement for the period 14 June 2016 to 26 August
2016.
On 20 September 2016 the Department wrote to the Applicants and advised that financial hardship assistance is provided to care recipients who have less than 15% of the maximum single rate of Aged Pension after paying essential expenses and less than $34,082.10 in additional financial resources available. The Department requested that the Applicants provide further information regarding:[8]
(e)whether the Mossman Property had been actively marketed for 6 months or more at a price equal or less than its agreed value;
(f)any mortgage or loan agreement; and
(g)a breakdown of essential expenses.
[8] Exhibit 1, T Documents, T10 – T11, pages 171-172, 174-177, Letter from the Department to the Applicants dated
20 September 2016.
On 8 October 2016 Ray White wrote to the Applicants and advised that:[9]
(h)the Mossman Property had been on the market for 6 months and the market had been quiet in that time;
(i)the Mossman Property was appraised to be worth between $170,000 and $190,000; and
(j)if the Applicants wanted a very quick sale, at an auction for instance, they estimated they would receive offers of around $180,000.
[9] Exhibit 1, T Documents, T11, pages 199-200, Letter from Ray White to the Applicants dated 8 October 2016.
On 18 October 2016 the Applicants informed the Department that:[10]
(k)the Mossman Property’s current market value was $180,000;
(l)they owed $39,550.97 on the Mossman Property;[11]
(m)they received $200/week rent on the Mossman Property;[12] and
(n)they were currently paying $200/week for rent at the Aged Care facility in Port Douglas.
[10] Exhibit 1, T Documents, T11, pages 178-193, Real Estate Details Form completed by Ms Rossow on 18 October
2016.
[11] Exhibit 1, T Documents, T11, page 201, ANZ Bank statement dated 8 October 2016.
[12] Exhibit 1, T Documents, T11, page 208, Confirmation from Mossman Property tenant dated 17 October 2016.
On 28 October 2016 the Department advised the Applicants that their claim for financial hardship assistance was not approved because they had not provided sufficient verification that the Mossman Property had been listed on the market for at least 6 months at a price equal to or less than its agreed value and therefore the Mossman Property was not an “unrealisable asset” and could not be excluded from the means test assessment.[13]
[13] Exhibit 1, T Documents, T12-T13, pages 209-216, Letters from the Department to the Applicants and Ozcare
dated 28 October 2016.
Ms Rossow advised the Department that:[14]
(o)the Mossman Property was listed for sale on 18 February 2016;
(p)after the appraisal by Ray White, they agreed to reduce the list price of the Mossman Property to $209,000 (not $180,000 as suggested) as it was fully furnished; and
(q)they dropped the price from $250,000.
[14] Exhibit 1, T Documents, T12, page 217, Letter from Ms Rossow to the Department.
On 19 April 2017 the Department wrote to the Applicants, requesting further information about the Mossman Property.[15]
[15] Exhibit 1, T Documents, T14, page 218-219, Letter from the Department to the Applicants dated 19 April 2017.
From 20 April 2017 the Applicants were only required to pay the basic daily fee, and not the accommodation fee, because they became fully supported residents.[16]
[16] Exhibit 2, Secretary’s Statement of Facts Issues and Contentions dated 28 February 2018, para 22,
Attachment A.
Claim History
An Authorised Review Officer (“ARO”) reviewed the Department’s Decision on 27 April 2017 (“ARO Decision) and affirmed the Department’s Decision because there was insufficient evidence to support a grant of the hardship supplement.[17]
[17] Exhibit 1, T Documents, T3, pages 44-51, Authorised Review Officer Decision dated 27 April 2017.
The Applicants then applied for a review of the ARO Decision by this Tribunal.[18]
[18] Exhibit 1, T Documents, T1-T2, pages 1-43, Applications for Review dated 5 June 2017 and 7 August 2017.
ISSUES FOR DETERMINATION
The Aged Care Act 1997 (Cth) (“the Act”) provides that:[19]
(r)the amount of residential care subsidy which is paid to the aged care home by the Australian Government is determined in accordance with the residential care subsidy calculator in subsection 44-2(2) of the Act;
(s)other supplements, such as the supplement in section 44-30, are added to the amount of the subsidy.
[19] Aged Care Act 1997 (Cth), s 44-1.
Pursuant to section 44-31(1) of the Act, the Secretary may determine that a care recipient is eligible for a hardship supplement in accordance with the Subsidy Principles 2014 (“Subsidy Principles”).[20]
[20] made under section 96‑1 of the Aged Care Act 1997.
Section 60 of the Subsidy Principles sets out the eligibility for the hardship supplement and provides (emphasis added):
(1) For subsection 44‑31(2) of the Act, this section sets out the matters the Secretary must have regard to in deciding whether to determine that a care recipient is eligible for a hardship supplement.
(2) The Secretary must not determine that a care recipient is eligible for a hardship supplement if:
(a) the care recipient’s means have not been assessed in accordance with the Act; or
(b) the value of the care recipient’s assets (worked out under section 44‑26A of the Act and section 47 of these principles) is more than 1.5 times the sum of the annual amount of the following (worked out under the Social Security Act):
(i) the basic age pension amount;
(ii) the pension supplement amount;
(iii) the clean energy supplement amount; or
(c) the care recipient has gifted:
(i) more than $10 000 in the previous 12 months; or
(ii) more than $30 000 in the previous 5 years.
Note: Basic age pension amount is defined in clause 1 of Schedule 1 to the Act.
(3) For paragraph (2)(b), in determining the value of the care recipient’s assets for this section, unrealisable assets are not to be included.
Note: Unrealisable asset is defined in section 4.
(4) In deciding whether to determine that a care recipient is eligible for a hardship supplement, the Secretary may have regard to the following matters:
(a) the care recipient’s total assessable income (worked out under section 44‑24 of the Act and section 41 of these principles);
(b) whether the amount of income available to the care recipient after expenditure on essential expenses is less than 15% of the basic age pension amount;
(c) the financial arrangements of the care recipient;
(d) the care recipient’s entitlement to income support:
(i) under the Social Security Act; or
(ii) under the Veterans’ Entitlements Act; or
(iii) from any other source;
(e) whether the care recipient has taken steps to obtain information about his or her entitlement to pension, benefit or other income support payments;
(f) whether the care recipient has access to financial assistance:
(i) under section 1129 of the Social Security Act (relating to access to financial hardship rules for pensions); or
(ii) under the pension loans scheme under Division 4 of Part 3.12 of the Social Security Act; or
(iii) from any other source;
(g) whether any income of the care recipient is income that he or she does not reasonably have access to;
(h) whether there is a charge on the care recipient’s income over which the payment of resident fees cannot practically take precedence;
(i) whether the care recipient is in Australia on a temporary basis;
(j) any other matters the Secretary considers relevant.
Section 4 of the Subsidy Principles provides that an “unrealisable asset” of a care recipient has the meaning given by subsections 11(12) and (13) of the Social Security Act 1991 (Cth) as follows (emphasis added):
Unrealisable asset
(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.
(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.
It is open to the Tribunal to consider the impact of changes in the Applicants' circumstances in the period after the date of the original decisions and up to the date of the Tribunal decision.[21]
[21] Shi v Migration Agents Registration Authority (2008) CLR 286.
Contentions
The Applicants contend that the Mossman Property is an unrealisable asset and therefore should not be taken into account in determining the value of their assets.
The Respondent contends that:[22]
(t)the value of the Mossman Property should be taken into account in determining the value of the Applicants’ assets and that in doing so, the value their assets is greater than 1.5 times the sum of the basic age pension and therefore, pursuant to section 60(2)(b)(i) of the Subsidy Principles the Applicants cannot be eligible for a hardship supplement; further, or alternatively
(u)the Applicants’ have gifted more than $10,000 in the previous 12 months and more than $30,000 in the previous 5 years and therefore pursuant to section 60(2)(c) of the Subsidy Principles the Applicants cannot be eligible for a hardship supplement.
[22] Exhibit 2, Respondent’s Statement of Facts, Issues and Contentions dated 28 February 2018, paragraphs 39-40.
Is the Mossman Property an “unrealisable asset"?
The Respondent referred the Tribunal to extracts from the Guide to Social Security Law (“the Guide”) which is used by the Department. The Tribunal is not bound to apply the Guide but it may, and it should, apply it in exercising its discretion unless it is unlawful or “tends to produce an unjust decision”.[23]
[23] Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634, at 645.
The Tribunal also notes the comments of Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 70,[24] that:
....the Tribunal is not, in the absence of specific statutory provision, entitled to abdicate its function of determining whether the decision made was, on the material before the Tribunal, the correct or preferable one in favour of a function of merely determining whether the decision made conformed with whatever the relevant general government policy might be.
[24] Referred to by Deputy President Dr P McDermott RFD in Secretary, Department of Social
Services and Irvine [2016] AATA 306, at [24]-[25].
The Guide sets out in section 4.6.7.50 of the Guide to Social Security Law ("the Guide"):
An unrealisable asset is an asset that cannot be sold or borrowed against, or which a pensioner cannot be reasonably expected to sell or borrow against.
…
Unable to sell or borrow against an asset
Accept that a person is unable to sell or borrow against an asset if:
·the asset is on the market but cannot attract a buyer and the asking price is no higher than 10% above the assessed assets test value,
The value of the Applicants’ assets at the date they entered care and at the time they lodged a claim for financial hardship was $123,168 each, which included the value of the Mossman Property and $6,000 worth of other assets.[25] The Secretary informed the Tribunal that the basic age pension amount as at 20 September 2016 was $34,082.10.[26]
[25] Exhibit 1, T Documents, T15, pages 246 and 275, Centrelink records; Exhibit 2, Secretary’s Statement of Facts Issues and Contentions dated 28 February 2018, para 21.
[26] Exhibit 2, Secretary’s Statement of Facts Issues and Contentions dated 28 February 2018, para 23.
If the value of the Mossman Property (either at the date of claim or the date it was sold) is taken into account, the value of the Applicants’ assets was more than 1.5 times the basic age pension and pursuant to section 60(2)(b)(i) of the Subsidy Principles the Applicants cannot be eligible for a hardship supplement. If the value of the Mossman Property was not taken into account, on the basis that it was an unrealisable asset, section 60(2)(b)(i) of the Subsidy Principles would not apply.
The Mossman Property was originally listed at $250,000, a price Ray White considered was reasonable at that time. However, in October 2016, Ray White advised the Applicants that there was a declining sales trend in Mossman and the price of the property should be adjusted accordingly. The Mossman Property was not an unrealisable asset as it could have been sold earlier than it was with a reduction in the price to adjust to the declining sales trend in Mossman based on the appraisal advice of Ray White.[27] Despite the advice of the agent to reduce the sale price to $180,000, the Applicants did not do so and instead reduced it only to $209,000. In December 2016 a contract was signed at a sale price of $200,000 and later negotiated down and was eventually sold for $185,000 on 1 March 2017.[28]
[27] Exhibit 1, T Documents, T1, page 16, Letter from Ray White dated 13 May 2017.
[28] Exhibit 1, T Documents, T1, page 16, Letter from Ray White dated 13 May 2017.
Whether it is reasonable to sell or realise an asset or use it as security for borrowing is an objective test.[29] The Secretary referred the Tribunal to Atkinson and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 325 where the Tribunal applied the Full Federal Court's reasoning in Repatriation Commission v Hall (1988)15 ALD 84 in considering the question of whether an asset was unrealisable and stated:
6 ...an overall aim of social security law was to ensure that persons utilise assets available to them to provide for their financial support rather than rely upon payments under the Act and that exercising a discretion to treat the [Applicant's] property as unrealisable did not give effect to that policy ...
[29] Repatriation Commission v Hall (1988)15 ALD 84
It was not “unreasonable or impossible”[30] for the Applicants to follow the advice of Ray White to sell their asset sooner to raise money.
[30] Re Farrow and Secretary, Department of Social Security [1986] AATA 154
Between the date of entry into the aged care facility to the date of sale of the Mossman Property the Applicants’ asset value was more than 1.5 times the basic age pension and pursuant to section 60(2)(b)(i) of the Subsidy Principles, the Applicants cannot be eligible for a hardship supplement during this period.
Between the date of sale of the Mossman Property to December 2017 the Applicants’ asset value was still more than 1.5 times the basic age pension, due to the sale proceeds of the Mossman Property, and pursuant to section 60(2)(b)(i) of the Subsidy Principles the Applicants cannot be eligible for a hardship supplement during this period.
Therefore, pursuant to section 60(2)(b)(i) of the Subsidy Principles, the Applicants are not entitled to a hardship supplement.
It is unnecessary for the Tribunal to consider the Secretary’s alternative submission concerning section 60(2)(c) of the Subsidy Principles.
DECISION
The decision under review is affirmed.
I certify that the preceding 35 (thirty-five) paragraphs are a true copy of the reasons for the decision herein of Member D K Grigg
..............................[sgd]...................................Associate
Dated 9 May 2018
Date of hearing 13 April 2018 Applicants By telephone Advocate for the Respondent Ms Donna Smith, Senior Government Lawyer Solicitors for the Respondent FOI and Litigation Branch, Department of Human Services
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