Scherbakova and Secretary, Department of Families, Community Services and Indigenous Affairs
[2006] AATA 526
•19 June 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 526
ADMINISTRATIVE APPEALS TRIBUNAL Nº V2005/999
GENERAL ADMINISTRATIVE DIVISION
Re: SVETA SCHERBAKOVA
Applicant
And: SECRETARY,
DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal: Dr Gordon Hughes, Member
Date:19 June 2006
Place:Melbourne
Decision: The Tribunal affirms the decision under review.
(sgd) Gordon Hughes
Member
CATCHWORDS - Applicant for age pension failed means test – whether home shared with mother is "principal home" – effect of gifting of assets – conflicting asset valuations
Social Security Act 1991 ss 11, 44 and 118
REASONS FOR DECISION
19 May 2006 Dr Gordon Hughes, Member
This application was heard before the Tribunal on 8 May 2006. The Applicant represented herself. The Respondent was represented by a Centrelink advocate, Ms A. Bramley.
The Applicant had been receiving age pension which was cancelled on 25 August 2004 following a review of her assets by Centrelink. Centrelink acts as the respondent’s agent. She sought a review of the decision but was unsuccessful. On 13 October 2004 the Applicant lodged a new claim for age pension. The claim was rejected on 4 November 2004 because the value of her assets was in excess of that allowed under the legislation. This decision was affirmed by an authorised review officer on 4 January 2005.
On 5 August 2005 the Applicant sought review of the decision by the Social Security Appeals Tribunal (SSAT). The SSAT affirmed the decision to reject the claim for age pension on 6 October 2005. The Applicant now seeks a review of the decision of the Social Security Appeals Tribunal.
The Respondent contends that the Applicant's assets at the time of the claim made on 13 October 2004 were:
Assets
Value
Financial assets
$16,112
Vehicle
$1,200
Household and personal effects
$400
8/112 Punt Road, Windsor
$146,184
37 Tilley Street, Redcliffe
$200,000
Total
$363,896
This list of assets excluded the Applicant's principal home at 25 Tweedside Street, Essendon, valued at $500,000.
The Respondent explains why it contends the age pension is not payable in it’s Statement of Facts and Contentions:
4.40Section 44 of the Social Security Act 1991 provides that age pension is not payable if the rate is nil.
4.41The assets test operates to reduce the rate of pension by three dollars per fortnight for every $1,000 above the applicable assets value limit. Under the operation of the assets test (at 13 October 2004) age pension reduced to nil where the value of a single homeowner's asses exceeded $312,000.
4.42At 13 October 2004, the assets value limit for a single homeowner was $153,000.
4.43The assets test reduction is worked out by reference to the formula in point 1064-G4. For a single person the formula is:
4.44In Ms Scherbakova's case the assets excess is $210,896, being the total value of her assets $363,896 less the assets value limit of $153,000.
4.45The assets excess of $210,896 is multiplied by 19.50 to give $4,112,472; which is divided by 250, to give the pension reduction amount of $16,449.89.
4.46The pension reduction amount is subtracted from the maximum annual rate of age pension, which at 13 October 2004, was $12,238.20. As the pension reduction amount exceeds the maximum pension rate, Ms Scherbakova's rate is nil.
The Applicant objected to this calculation, in the course of the hearing, on a number of bases. These can, however, be condensed to two grounds: First, she contended that her principal home was the property in Redcliffe, while the property in Essendon should have been disregarded entirely, on the grounds that it was partly owned by her mother; and secondly, she contended that the property in Redcliffe had been overvalued.
The Applicant's Principal Home
The term "homeowner" is defined in ss 11(c) of the Social Security Act 1991 as a person who has a right or interest in the place they occupy and that right or interest gives the person reasonable security of tenure. The Applicant is deemed to live in the Essendon home with her mother. She and her mother bought the house jointly in 1963 and both have contributed to the expenses. The Applicant is unsure what proportion of the total expenses have been borne by her and what proportion have been borne by her mother.
Taking into account her property in Redcliffe, there is no doubt that the Applicant is a "homeowner" for the purposes of ss 11(4) of the Social Security Act 1991. The Applicant does not dispute this. The real issue is whether the Essendon property or the Redcliffe property is her "principal" home.
Section 118 of the Social Security Act 1991 provides that the values of certain assets are disregarded for assessment purposes. This includes, pursuant to s 118(1)(a), a person's "principal home". The Applicant claimed that her principal home was at Redcliffe. The SSAT found that the Applicant's principal home was in fact at Essendon.
The Applicant purchased the Redcliffe property in 1988 with the intention of using it as a regular holiday home. Ideally, she would have liked to spend six months of the year at Redcliffe but this has not been possible as she has had to care for her mother at Essendon. There was evidence that the Applicant had stayed for about three months at Redcliffe around the time of her claim but spent the majority of her time at Essendon. She told this Tribunal that her motor vehicle was stationed in Melbourne.
The Tribunal is satisfied that the Applicant's principal home is at Essendon. Indeed, the Applicant did not seriously dispute this conclusion. Rather, she contended that the operation of the legislation was unfair as it in effect penalised her for having two homes, each of which she claimed was part owned by her mother. She considered it would be more equitable if one home was deemed to be her principal residence and the other was deemed to be solely her mother's home. Putting aside the fact that the Tribunal does not accept that the Applicant's mother has an interest in the Redcliffe property (a point discussed in more detail below), and putting aside the merits or otherwise of the Applicant's perception of what the law should be, the argument is unsustainable under the legislation as it currently stands.
Value of Assets
The Applicant's objections in relation to the value of her assets, to the extent relevant to this application, were two-fold. First, she claimed that her mother had a beneficial interest in the Redcliffe property. Secondly, she claimed that the valuation of the Redcliffe property was too high.
In relation to the Applicant's claim that her mother had a beneficial interest in the Redcliffe property, the Applicant claimed to have been gifting $10,000 of her assets to her mother each year since 2000. She claimed that as a consequence of this gifting and contributions made by her mother towards the Redcliffe property, her mother should now be regarded as having a 50% share of that property.
The Social Security Appeals Tribunal noted that an affidavit by the Applicant dated 7 April 2000 regarding her intention to gift $10,000 of her assets each year did not specify which assets were to be transferred. A subsequent affidavit dated 30 August 2004 nominated Redcliffe as the asset which was being gifted. The mother's interest is not recorded on the title of the property, however, and there is no other evidence that the gifting occurred in such a way as to provide the Applicant's mother with a beneficial interest in the Redcliffe property.
The Applicant contended that it would have been disproportionately costly to amend the Redcliffe certificate of title to record her mother's interest and that there was no other way which she could record the gifting. She claimed that she could do nothing more than swear an affidavit, as requested by Centrelink. Notwithstanding the Applicant's intentions, however, on the evidence before it, the Tribunal finds it impossible to accept that any gifting which did occur in fact related to the Redcliffe asset.
As to the valuation of the Redcliffe property, the Australian Valuation Office (AVO) valued the property at $200,000 on 16 August 2004. This valuation was confirmed by a further AVO valuation received by the Respondent on 13 April 2006. The Applicant contends the market value should be $64,000, based on a valuation provided by the Department of Natural Resources and Mines in 2002 with the date of effect being 30 June 2003.
The Applicant's contention ignores a subsequent valuation of $141,000 provided by the Department of Natural Resources and Mines on 1 October 2004, with the date of effect being 30 June 2005. While this valuation did not come into effect until after the date of the Applicant's claim, it nevertheless demonstrates that the previous valuation by the Department and Natural Resources and Mines was at best out of date. More significantly, however, the Tribunal finds no basis for questioning the valuation by AVO. The AVO adopts a methodology, being a net market value of the property based on comparable sales and the "best use" to which the property can be put, and can therefore be regarded as an objective and realistic assessment of sale price. While the Tribunal heard no evidence as to the methodology adopted by the Department of Natural Resources and Mines, it is apparent that such valuation is for government rating and land tax purposes which can result in a figure distinctly different, and lower, than a realistic estimate of sale price. The Applicant produced evidence, in the form of advertisements for the sales of properties in the Redcliffe area, which she argued demonstrated that her property had been over-valued. The Tribunal is not persuaded by this evidence, however, because it is simply not possible to realistically compare the advertised properties with the Applicant's property.
Other Issues
In addressing the Tribunal, the Applicant raised a number of other issues in relation to her treatment by the Respondent. As these issues are not relevant to the application before the Tribunal, the Tribunal makes no further comment about them.
For the above reasons, the Tribunal affirms the decision under review.
I certify that the nineteen [19] preceding paragraphs are a true copy
of the reasons for the decision of:
Dr. Gordon Hughes, Member
(sgd) Catherine Lake
Clerk
Date of hearing: 8 May 2006
Date of decision: 19 June 2006
Advocate for the applicant: Self-represented
Advocate for the respondent: Ms A. Bramley, Legal Services Branch, Centrelink
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