Scholl and Secretary, Department of Family and Community Services

[2002] AATA 488

DECISION AND REASONS FOR DECISION [2002] AATA 488

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2001/424

GENERAL ADMINISTRATIVE  DIVISION       )      
           Re      NEVILLE SCHOLL            
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Mr J Horrigan, Member     

Date21 June 2002 

PlaceBrisbane

Decision      The Tribunal affirms the decision under review.          

(Sgnd)
  J Horrigan
  MEMBER
CATCHWORDS
SOCIAL SECURITY – Restart Re-establishment Grant - sale of farm – valuation of property – whether sale of property was "on commercial terms and at arms length"

Social Security Act 1991
Farm Household Act 1992
Restart Re-establishment Grant Scheme 1997

REASONS FOR DECISION

21 June 2002         Mr J Horrigan, Member                 

1. This is an appeal by Neville Scholl, the applicant, against the decision of the Social Security Appeals Tribunal (SSAT) affirming Centrelink's decision to reject Mr Scholl's claim for a Restart Re-establishment Grant.  The applicant appeared on his own behalf and the respondent in this matter, Secretary, Department of Family and Community Services, was represented by Mr Paul Kanowski.

2. The applicant called only one witness being Mr Lee Nevison, a Solicitor with Legal Aid Toowoomba specialising in farm finance, re-establishment grants, restart grants and farm help.  As well Mr Scholl presented evidence on his own behalf.  A valuation prepared by Mr D Knight was also tendered and marked as exhibit A.

3. The respondent called Mr Ian Collingwood, to give evidence as to the value of the subject property.  Mr Collingwood is a Senior Valuer with the Australian Valuation Office and a Registered Valuer in Queensland since 1979, having commenced with the Australian Valuation Office in 1988 and had wide experience in the subject locality and the south-east corner of Queensland for the last three years.

4. On behalf of the applicant, Mr Nevison gave evidence that he had prepared the Statutory Declaration for the applicant for presentation to Centrelink and that a variation of $85,000, being the value of the goods owned by Mr Scholl's son, had been deducted from the sale price and that a contract had been entered into for $135,000 transferring the property to Mr Scholl's son, Andrew Scholl and his wife.

5. The variation of $85,000 represented a packing shed at a value of $35,000, plant and machinery at $40,000 and stock at $10,000 all of which was claimed to be owned or constructed by Mr Scholl's son Andrew.

6. Mr Nevison also confirmed that stamp duty was assessed on the figure of $225,000 supported by a market appraisal by a Fran Jensen.  This can be seen on the stamped contract at T3 page 15 of the T-Documents.

7. Mr Nevison also stated that in his experience, the legislation was intended to assist people under the Social Security Act.  It was not "approached from the farmers perspective and latitude had to be allowed.  Rural enterprises are different to normal transactions where people are claiming assistance from Centrelink".

8. He further stated that a very strict interpretation was applied to the case of Mr Scholl and that the Australian Valuation Office valuation justified that outcome.

9. Mr Scholl in his evidence stated that he was being forced by the National Bank to sell the property, which was further influenced by his ill health and finance situation, together with the state of disrepair of the property.

10. He also stated that he had no great knowledge of forms and answered the questions to the best of his knowledge.  He considered that the grant was to be of assistance to farmers and due to his ill health, it was the only way out of his problem.

11. Under cross-examination he stated that he had no savings, only superannuation and was on an income support pension.  He had decided to sell the farm in December 1999 after suffering losses over the past trading years.  He had subsidised his income by working in a fibreglass business up to 1997 for around twelve years and as well helped his son Andrew working the farm. At harvest time this required night time working with a minium on weekends of around 30 hours.  He had tried to re-finance with other banks but they were not interested and had decided to sell the property within the family which had been the case for five generations. 

12. The bank was demanding that the property be sold in February 2000 and he stated he had sold the property to his son for $130,000 and gifted $85,000.

13. As well a valuation by Mr Doug Knight of Acval Turner Valuations was admitted as evidence (exhibit A) which was obtained at a later time to satisfy an appeal to the Social Security Appeals Tribunal in support of the market appraisal by Fran Jensen.

14. The responded called only one witness, Mr Collingwood of the Australian Valuation Office (exhibit 1).  Mr Collingwood had inspected the property on two occasions, being on 25 July 2000 and 11 December 2000, and determined the value of the property at $253,000 including stock, plant and equipment.

15. Mr Collingwood disagreed with Mr Knight's approach in his valuation contained in exhibit A for various reasons and did not agree with Mr Knight's method of valuation due to the comparisons made.  Other sales quoted by Mr Knight as being mortgagee in possession sales were thought to be by Mr Collingwood representative of fair market value after detailed research and investigation.

16. Establishment of the Restart Re-established Grant is provided in the s 52A of the Farm Household Act 1992.  Qualifications for the Grant are set out in s 3(2) of the disallowable instrument Restart Re-establishment Grant Scheme 1997.

17. Section 3(2) requires that the sale of the farm property must be "on commercial terms and at arms length".

18. A sale "at arms length" is the basis used for determining current market value which is defined as the estimated amount for which the property should exchange on the date of valuation between a willing buyer and a willing seller in "an arms length" transaction after proper marketing wherein the parties had each acted knowingly, prudently and without compulsion. 

19. Clearly this is not the case in the sale of the subject property to Mr Scholl's son and his wife, and the evidence of Mr Collingwood is to be preferred as to the value of the subject property.  It was transferred for an amount significantly below market value which cannot be said to have been made "on commercial terms and at arms length".

20. For the reasons given, the appeal is dismissed and the decision of the SSAT is affirmed.

    I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J Horrigan, Member

    Signed:         Sarah Oliver
      Associate

    Date of Hearing  12 October 2001
    Date of Decision  21 June 2002
    The Applicant appeared in Person
    Solicitor for the Respondent    Mr P Kanowski, Departmental Advocate