Salecic and Secretary, Department of Family and Community Service S

[2004] AATA 217

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 217

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          N2003/1435

GENERAL ADMINISTRATIVE DIVISION

)

Re

Jaka SALECIC

Zeljko SALECIC

Applicant

And Secretary, Department of Family and Community Services

Respondent

DECISION

Tribunal Ms N Isenberg, Member

Date2 March 2004

PlaceSydney

Decision The Administrative Appeals Tribunal affirms the decision under review.

[Sgd] Ms N Isenberg, Member

CATCHWORDS

SOCIAL SECURITY – cancellation of age pension – assets test – value of property – issue of whether property can be considered as an ‘unrealisable asset’ – issue of reasonableness of Applicant’s selling or borrowing against asset - claim for consideration under the hardship rules – decision affirmed

Social Security Act 1991 sections 11(12), 11(13), 1129

Freeman v Secretary, Department of Social Security (1998) 87 ALR 506

Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409

Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 6 AAR 259

Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82

REASONS FOR DECISION

2 March 2004 Ms N Isenberg, Member

DECISION UNDER REVIEW

1.      The decision under review before the Administrative Appeals Tribunals (“the Tribunal") was the decision of the Social Security Appeals Tribunal (“the SSAT") dated 20 August 2003 (T2) which affirmed the decision of an Authorised Review Officer (“ARO”) on 21 May 2003 (T58) and the Secretary, Department of Family and Community Services (“Centrelink") dated 7 December 2002 (T19) to cancel Mrs Jaka Salecic and Mr Zeljko Salecic’s (“the Salecics”) Australian Age Pensions (“the pension”) and to reject their claim for consideration under the assets hardship rules.

BACKGROUND

2.      Mr Salecic is 72 years of age and Mrs Salecic is 66 years of age.  Both were born in Croatia.  On 3 October 1996, Mr Salecic was granted the pension.  Mrs Salecic was granted the pension on 5 March 1998.  On 25 March 2000, the Salecics left Australia and have been living in Croatia since that time.

3.      The Salecics own a house located at 187 Elizabeth Street, Croydon (“the Croydon property”), which was valued by the Australian Valuation Office (‘AVO’) at $450,000.00 (T24/43).

4.      At the date of cancellation of the Salecics’ pension, 31 December 2002, the assets limit for a partnered couple was $206,500.00 or $103,250.00 each.  The annual married rate of pension (excluding Pharmaceutical Allowance, to which they were not entitled), was $358.40 x 26 = $9,318.40.  The reduction to the amount payable per annum was $(223,500 less 103,250) multiplied by 19.50 and divided by 250, which is an amount of $9,519.90, which is about $200 in excess of their annual rate.  As a result the pensions were cancelled (T17/35-36).

ISSUE BEFORE THE TRIBUNAL

5.      Whether the value of the Salecics’ assets is sufficient to preclude them from receipt of a pension.  This further involves consideration of:

·the value of their Croydon property

·whether the Salecics’ circumstances warrant consideration of the Croydon property as an ‘unrealisable asset’.

APPEARANCES

6.      A hearing was held before the Tribunal on 16 February 2002 at which the Salecics appeared by conference telephone from Croatia, assisted by Ms Jasna Slebinger, accredited interpreter in the Croatian language.  They were represented by Mr Stephen Horwick, real estate agent and family friend.  Centrelink was represented by Ms Andrea Garcia, an advocate from the Centrelink Service Recovery Team.

EVIDENCE, CONSIDERATION OF ISSUES and FINDINGS

7.      The Tribunal had before it documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 ("the T-documents"), which the Tribunal took into evidence. 

8.      Mr Salecic, Zeljko Salecic Jnr (“Zeljko”) and Mr Horwick all gave evidence and were cross-examined on behalf of Centrelink.  I also put questions to the witnesses.

9.      In coming to the correct and preferable decision, I took into account all the evidence, submissions, case law and relevant legislation.

10.     By way of preliminary point, there was some discussion during the hearing to the effect that in 2003, that is, after cancellation of the Salecics’ pension, Centrelink increased the threshold value of assets to be taken into account in determining entitlement to the pension.  The relevant amount is in excess of the presently available valuation of the Salecics’ assets.  It was submitted on their behalf that as that test now applied, they fell below the assets limit and accordingly should now be granted the pension. 

11.     In reviewing a decision cancelling pension I am to confine myself to considering eligibility as at the date of cancellation (Freeman v Secretary, Department of Social Security (1988) 87 ALR 506.) It is not for me to determine present entitlement. I am only considering whether the decision to cancel the Salecics’ pension, at the date of cancellation, namely, 31 December 2002, was correct.

12.     By way of assistance, Ms Garcia advised that while the Salecics were welcome to re-apply for pension given the increased asset limits, they could do so only if they were residents of Australia.  It was further pointed out that the valuation of their property may have also increased and entitlement may be affected.

13.     I turn now to examine the identified issues.

What was the value of the Croydon property?

14.     There was no dispute between the parties as to the value of the Croydon property.  The property value was estimated at $450,000.00 by the AVO on 1 January 2003.  Mr Horwick, a real estate agent, agreed that that amount was a fair assessment.  Mr Salecic’s own estimate, dated 18 March 2003, was the same. 

Do the Salecics’ circumstances warrant considering the Croydon property an ‘unrealisable asset’?

15. Section 1129 of the Social Security Act 1991 (‘the Act’) provides as follows:

“1129   Access to financial hardship rules—pensions

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 (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.

(1A)        In subsection (1):

social security pension does not include a pension PP (single).

1129(2)     A decision under subsection (1) takes effect:

(a)on the day on which the request under paragraph (1)(d) was lodged with the Department; or

(b)if the Secretary so decides in the special circumstances of the case—on a day not more than 6 months before the day referred to in paragraph (a).”

16. Centrelink conceded that the Salecics satisfy the provisions set out in subsections 1129(1)(a), (b) and (d) of the Act.

17.     However the issue was whether the co-requisite condition under subsection 1129(1)(c) has been met.

18. Subsections 11(12) and 11(13) of the Act define the term ‘unrealisable asset’ 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.”

19.     Mr Salecic explained his and his wife’s present circumstances to the Tribunal.  Their principal home is in Croatia, where they now live permanently, with their daughter and her family.  That property is owned in equal shares by Mrs Salecic, their daughter, and Zeljko.  The Salecics are not comfortable there.  It is a small house and they occupy one room.  There is little ‘peace and freedom’ there.  Their grandchildren are now young adults and are inconsiderate of their grandparents.  However he and his wife have little option but to live there because he is too ill to travel to Australia.  It would be his preference to return to Australia but his medical advice, tendered at the hearing, is to the effect that his heart condition precludes travel by ‘air, ship etc’.

20.     Ms Garcia suggested to Mr Salecic that if he were to sell the Croydon property then he would be able to purchase something more comfortable in Croatia.  In response, Mr Salecic said that he hoped to be in sufficient health to return to Australia in the future, and also that he could not sell the property because there was nowhere for his son to go.

21.     Mr Salecic told me that the Croydon property had been purchased in 1966.  While it had been intended that the property be purchased in the name of both Mr and Mrs Salecic, through some misconduct on the part of the solicitor, only Mr Salecic’s name appeared on the title documents. 

22.     It was the Salecics’ position that the Croydon property ought to be disregarded as an asset because their disabled son, Zeljko, resides there (T47/88) and he is otherwise homeless.  Zeljko has been in receipt of a Disability Support Pension (‘DSP’) since 20 August 1998 (T49/97) for a ‘psychological/psychiatric condition’. 

23.     Zeljko told me that he does not pay rent to his parents but does pay the outgoings such as the council, electricity and water rates.  Mr Horwick is recorded as having told Centrelink that he thought that Zeljko was paying rent for the Croydon property, but at the hearing agreed that it was the rates only. 

24.     Zeljko told me that he lived there from the time of purchase until about 1970 when he went overseas.  He said he has lived there continuously since 1996, but agreed that he had in fact spent lengthy periods at other premises since that time, including some months overseas.  He said he had lived elsewhere because he was seeking some independence and wanted to choose where he lived.

25.     On 8 May 2003 Zeljko is recorded as having told Centrelink that he lived with a flat-mate in his parents’ house.  At the hearing Zeljko told me that he has a ‘mate’ who comes to visit several times a week and sometimes stays overnight in the spare room.  His friend makes no contribution to the bills, but sometimes, when he shops, he will not take any money from Zeljko. 

26.     Zeljko said he is able do basic maintenance such as changing light bulbs and attending to the lawn.  His friend will do some cooking and helps with the washing and the cleaning.  He does this because he, Zeljko, has no energy and lies in bed all day.  He ‘hears voices’.

27.     Zeljko said he pays the household bills by either going to the Post Office or to the Council Chambers.  When he is ‘broke’ he might speak with his father on the phone and his father will tell him to go to Mr Horwick for financial assistance.  This occurs ‘rarely’.  Mr Horwick’s evidence was that he thought Zeljko came to him for ‘advice’ ‘almost every time’ a bill was received.  Mr Horwick said that it was up to him to keep an eye on the property, such as arranging rubbish removal and plumbing etc, as necessary.  Mr Horwick said he drops by the Croydon property about once every two weeks. 

28.     Zeljko also said that while he has been prescribed medication he does not take it because of side effects.  He told the Tribunal that when he was taking it he was able to manage the dosage himself.

29.     Zeljko’s evidence to the SSAT was that he was capable of living on his own.

30.      Zeljko is recorded as having told Centrelink that he lives in the Croydon house for financial reasons. (T51/101).  He repeated this at the hearing but said there were also health reasons.  While his doctor, he said, had recommended a boarding house or hostel he did not think he could tolerate that.  He said he did not know if he could live elsewhere because he was used to the Croydon property.  He did say in answer to Ms Garcia’s questions that he could live close by.

31.      As to what circumstances it may be unreasonable to expect a person to sell assets is set out in paragraph 4.6.7.50 of the Guide to Social Security Law (“the Guide”), which is published by Centrelink for assistance in administering the Act. Whilst I am not bound to apply policy guidelines of the kind referred to in the Guide (see Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409) I may do so and, indeed, the Tribunal will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethic Affairs (1987) 6 AAR 259 at 267; and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86. In so far as relevant, paragraph 4.6.7.50 of the Guide reads:

“The hardship rules for pensioner customers include a test of whether it would be unreasonable to expect the customer to sell an asset.

…

·     the asset is a house occupied by a near relative AND the near relative has lived in the house for at least 10 years OR the near relative has previously provided care for the customer in the house …OR the near relative is a handicapped son or daughter and the customer is providing the house to promote the child’s independent living”

32.      The test of whether it is ‘reasonable’ for the Salecics to sell or borrow against an asset is an objective one.  The Salecics’ desire to provide for Zeljko must be balanced with the community expectations that those with assets use those assets to support themselves.

33.      I accept that Zeljko, the Salecics’ son, is ‘handicapped’ insofar as he is in receipt of DSP for a psychological/psychiatric condition.  I find however, Zeljko to have no specific care or mobility requirements, which would necessitate his remaining in the Croydon property.  I do not find a nexus between his continued presence at the Croydon property and his ‘independent living’..  He manages his finances with occasional loans from Mr Horwick.  He was able to manage his medication, and has determined its benefit and has assessed this against side effects.  He has a friend who comes to assist him but there was no evidence that he could not manage without his friend’s input.  He agreed himself that he could live in appropriate alternative accommodation close to the house.  At the hearing I found him, for the most part, to be articulate although he did exhibit some occasional minor distress.  He managed the purchase of the phonecards during the course of the hearing without apparent difficulty.

34.      Further, I accept Centrelink’s contention that it is likely that he would be able to obtain assistance with accommodation expenses from Centrelink if he was required to pay rent, board or lodging expenses for his accommodation.  Thus any contention by the Salecics that it would be unreasonable to expect their son to find his own accommodation appears unfounded, and, as such seems to be the only basis for their concerns over selling the property.  It is not, in my view, unreasonable for them to access funds they have invested in the property.

35.      The property is therefore not an ‘unrealisable asset’.

DECISION

36.      The Administrative Appeals Tribunal affirms the decision under review.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of  

Signed: A. Krilis  Associate

Date of Hearing  16 February 2004
Date of Decision  2 March 2004
Representative for the Applicant    Mr Stephen Horwick
Advocate for the Respondent        Ms Andrea Garcia