SRAAAA and Secretary, Department of Family and Community Services

[2003] AATA 360

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 360

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2002/1337

GENERAL ADMINISTRATIVE APPEALS TRIBUNAL  DIVISION		)
Re		SRAAAA

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Ms N Bell, Member

Date7 April 2003

PlaceSydney

Decision The Tribunal affirms the decision under review.

[SGD] Ms N Bell 
  Member

CATCHWORDS

SOCIAL SECURITY - whether the Sefer Torah (an oriental sephardic scroll encased in silver) is a marketable asset - whether the Sefer Torah is to be included in the calculation of Applicant’s assets for the purpose of calculation of rate of age pension - whether it can be treated as a disposed asset or as a gift for social security purposes - decision affirmed

Social Security Act 1991- ss 11, 1123

Guide to Social Security Law

REASONS FOR DECISION

7 April 2003 Ms N Bell, Member

1.      This is an application for review of the decision of the Social Security Appeals Tribunal (“the SSAT”) dated 12 August 2002 to set aside the decision of the Respondent, Centrelink, to treat the purchase of a Sefer Torah as a gift, and send the matter back to Centrelink with the direction that the Applicant has not disposed of assets.  The SSAT stated, in its decision:

“The effect of the Tribunal’s decision is that the value of SRAAAA’s Sefer Torah, measured by its cost of purchase, is to be included in the calculation of her assets for the purpose of calculating her rate of pension.  Her rate of age pension is to be recalculated accordingly and any arrears owing are to be reimbursed”.

2. The Applicant requested a confidentiality order. An order under section 35 of the Administrative Appeals Tribunal Act 1975 was made on 3 March 2003 with the Applicant henceforth referred to as “SRAAAA” and the contents of Tribunal files to be kept confidential other than to the parties and members of staff of the Tribunal.   The hearing was held in private.

3.      The Applicant appeared on her own behalf and gave oral evidence to the Tribunal and the Respondent was represented by Ms Rachael Quinn.

BACKGROUND

4.      It is not in dispute that the Applicant’s husband passed away in tragic circumstances in February 1997 and, in May 2001, the Applicant received a compensation settlement of some $103,000 in respect of her husband’s death.  She sent a total of US$50,000, in May and June 2001, to her cousin in the United States, who is a Rabbi, for the purchase of a Sefer Torah.  At document T23, in a letter from the Applicant to Centrelink dated 28 February 2002 she described the Sefer Torah as follows:    

“The Sefer Torah is a scroll of law and teaching handwritten by a professional scribe on parchment in Jerusalem only.  Great care is taken in its execution as one mistake would require him to start all over again.  It takes six to twelve months to complete.  It is encased in pure silver.  Installed in the Holy Ark and taken out only on holy days, Saturdays and Festivals whereby certain portions are read.  Hence its costs.  It is cherished and handled with great care and reverence when carried to and from the pulpit.  Should it fall accidentally, the congregation present must fast for twenty-four hours!

When the Sefer Torah was ready it was consecrated on 9 December 2001 in the Synagogue being an auspicious day in Hanuka.”

5.      The Respondent decided to treat an amount of US$50,000 as a gift for the purpose of assessing the Applicant’s rate of Age Pension.  The SSAT, in reviewing the Respondent’s decision, decided that the Applicant had not disposed of her assets but rather that the Sefer Torah remained an asset of the Applicant's and its cost of purchase should be included in the calculation of the value of her assets for the purpose of calculating her rate of Age Pension.

ISSUE

6. The issue to be considered by the Tribunal is whether the Sefer Torah paid for by the Applicant is an asset which should be taken into account in the calculation of the rate of her Age Pension. Section 11(1) of the Social Security Act1991 (“the Act”) defines the word “asset”. Section 11(1) provides, in part:

“11(1) In this Act, unless the contrary intention appears:

asset means property or money (including property or money outside Australia).”

7. Section 11(2) of the Act defines the value of a particular asset as:

“11(2) A reference in this Act to the value of a particular asset of a person is, if the asset is owned by the person jointly or in common with another person or persons, a reference to the value of the person's interest in the asset.”

8.      While the Applicant considers that the value of the Sefer Torah, which she regards as having no market value, should be disregarded by the Respondent, the Respondent considers that the Sefer Torah is a marketable asset and so should be taken into account in the calculation of the Applicant’s grant of age pension.

APPLICANT”S EVIDENCE         

9.      The Applicant said that, given that the compensation money she received arose out of her husband’s tragic death, she could never use that money for herself.  For that reason she sent US$50,000 to her cousin in the United States who is a Rabbi, for the purpose of arranging the Sefer Torah.  She said that since she has no children she wanted her family name to live on and considered that purchasing the Sefer Torah was the most appropriate way to ensure this.

10.     The Applicant told the Tribunal that since her husband’s death she has been suffering from depression.  She provided the Tribunal with copies of medical reports from various medical practitioners outlining the various physical conditions suffered by her including an aneurysm in her heart and left ventricular enlargement, osteoarthritis, osteoporosis, cervical disc disease, dermatitis, and depression.

11.     The Applicant said that the Sefer Torah does not belong to any individual, although she has control over it.  She said that if, for example, she was told that it is needed in England, she can have it sent to England.  She said that there are Sefer Torahs all over the world.  She said that the Sefer Torah is there for posterity and cannot be sold and has no market value.  She said that if it was damaged it must be buried in a cemetery.

12.     The Applicant said that the Sefer Torah belongs to her family and that when she dies anyone in the family can move it around as long as it is kept in a synagogue.  She said that no one would dream of selling the Sefer Torah and it is not insured and would never be stolen.

13.     The Applicant said that the scroll inside is the most valuable and the most expensive part of the object and that the case is made out of a particular type of wood from Israel and it is covered with pure silver.

OTHER EVIDENCE

14.     Document T15 is a summary dated 21 January 2002 and made by the Applicant outlining the amount of monies forwarded to the Applicant‘s cousin, a Rabbi, in the United States by the Applicant for the purchase of the Sefer Torah.  It shows an amount of US$50,000.

15. Exhibit R3 is an outline of the basis of assessment of the Applicant’s Age Pension under the Assets Test contained in the Act. It shows that the assets taken into account include a National Australia Bank Flexi Account of $12,451, a National Australia Bank Term Deposit of $80,000, a St. George Bank Term Deposit of $50,000, the value of the Sefer Torah of $96,394 and household contents and personal effects valued at $800. The basis of assessment also shows that the Applicant has income from bank accounts, from NSW State Superannuation of $4,173 per annum and from an AXA Life Annuity in the sum of $3,817 per annum. The assessment states that as the value of the Applicant’s assets produces a lower rate of pension than that calculated under the Income Test, the Applicant’s Age Pension is assessed under the Assets Test. The assessment also indicates that the Applicant is currently in receipt of Age Pension of $152.45 per fortnight together with Carer’s Allowance of $87.70 per fortnight.

16.     Exhibit R4 is a valuation by Shirley Lubofsky, Approved Valuer for the Australian Government Cultural Gifts Programme, Specialist in Judaica.  The valuation provides:

“It is not easy to offer an opinion without actually seeing the scroll which is enclosed in the case.  An oriental sephardic torah scroll and case is certainly marketable and this would undoubtedly be by private treaty rather than public auction which would be unbecoming.  (The cases are regularly sold at auction but not usable, or kosher, scrolls).  However, whichever way this would be sold, it should be realised that auction houses take 15 per cent commission and any dealer would also be charging a similar amount.

In my opinion the scroll and tiq (case) have a maximum value of US$40,000, but this would depend how urgently a sale would need to be negotiated.  I am assuming that the case if of a good quality silver (just below sterling – it looks like this from photograph), but it is difficult to put a more exact price on this item without seeing it and perhaps researching it further.  It could sell for as low as US$30,000 less commission.”

17.     Document T13 is a letter from Gabi Hasin and Saul Ezra of Jerusalem acknowledging receipt of the Sefer Torah.   The letter is dated 10 December 2001 and states as follows:

“This is to acknowledge with thanks the receipt of a Sefer Torah from SRAAAA C/O Rabbi Ezekiel N Musleah, of 520 D Lombard Street, Philadelphia, Pa 19147, USA.  This Sefer Torah will be on permanent loan to the abovementioned synagogue and will be looked after by the members of the committee.

If, however, at any time in the future the Sefer Torah will be needed to be returned, which we hope will not take place, the committee will comply with the request.  With our thanks and blessings to all concerned.”

CONSIDERATION

18.     The Applicant’s evidence was that she has control over the Sefer Torah, although she claimed that it cannot be owned by anyone individual.  At the same time her evidence was that “after her death” other members of her family would be entitled to exercise control over it.  This evidence is supported by document T13, the letter from Gabi Hasin and Saul Ezra, which confirms that the Sefer Torah is on permanent loan to the synagogue in Jerusalem and would be returned upon request.

19. Although the Sefer Torah is a sacred item it is, nevertheless, property under the control of the Applicant. As such, it is, in accordance with the definition in section 11(1) of the Act, an asset of the Applicant.

20. Section 11(2) of the Act provides that the value of a particular asset of a person is a reference to the value of the person’s interest in the asset.

21.     The Applicant argued that her interest in the Sefer Torah is not a marketable one as it concerns a sacred object which has meaning only in a religious context.  However, the valuation provided by Shirley Lubofsky (Exhibit R4) is evidence of the market value of Sefer Torah.  The valuation of a maximum US$40,000 was made on the basis of the case being of good quality silver (just below Sterling).  However, the Applicant’s evidence was that the case is made of pure silver which may serve to add to the value of the item.  

22.     Ms Quinn for the Respondent directed the Tribunal’s attention to the Guide to the Social Security Law which provides in paragraph 6.6.10 that:

“Assets are generally assessed at the net market value.  The net market value is the amount you would expect to receive if you sold the asset on the open market, less any valid debts or encumbrances.” 

21.      It is not in dispute that the Applicant paid US$50,000 for the Sefer Torah and that the application of the exchange rate yields an amount, in Australian dollars, of $96,394.   On this basis the Tribunal concludes that the Applicant has an asset, in the Sefer Torah, with a value of A$96,394.

22. The issue of whether the Sefer Torah was a gift to the synagogue in Jerusalem and therefor constitutes a disposal of assets pursuant to section 1123 of the Act was canvassed briefly at the hearing. Section 1123 of the Act provides:

“1123(1) For the purposes of this Act, a person disposes of assets of the person if:

(a) the person engages in a course of conduct that directly or indirectly:

(i) destroys all or some of the person's assets; or

(ii) disposes of all or some of the person's assets; or

(iii) diminishes the value of all or some of the person's assets; and

(b) one of the following subparagraphs is satisfied:

i) the person receives no consideration in money or money's worth for the destruction, disposal or diminution;

(ii) the person receives inadequate consideration in money or money's worth for the destruction, disposal or diminution;

(iii) the Secretary is satisfied that the person's purpose, or the dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.

Note: If Part 3.14A applies in relation to the transfer by a person of a legal estate or interest in a farm or relevant farm asset, that transfer and certain transfers by the person's partner are taken not to be disposal of assets (see section 1185D).”

1123(2) For the purposes of subsection (1), a person has a purpose of obtaining a social security advantage if the person has a purpose of:

(a) obtaining a social security pension, a social security benefit, a parenting allowance, a service pension or an income support supplement or enabling the person's partner or someone else of whom the person is a family member to obtain such a pension, benefit, allowance or supplement, or a youth training allowance; or

(b) obtaining a social security pension, a social security benefit, a parenting allowance, a service pension or an income support supplement, or enabling the person's partner to obtain such a pension, benefit, allowance or supplement, or a youth training allowance, at a higher rate than would have otherwise been payable; or

(c) ensuring that the person or the person's partner would be qualified for fringe benefits for the purposes of this Act or the Veterans' Entitlements Act.

1123(3) For the purposes of subsection (1), the value of a person's granny flat interest is to be taken not to be consideration received by the person if the interest was acquired or retained before 22 August 1990.

Note: for granny flat interest see subsection 11(9).

1123(4) If, under subsection 1147(1A), the value of a granny flat interest is less than the amount paid, or agreed to be paid, for the interest, then, for the purposes of this section, so much of the amount paid, or agreed to be paid, as exceeds the value of the interest is not consideration for the interest.

Note: for granny flat interest see subsection 11(9).

23. However, it is clear that the Applicant received adequate consideration for the sum of money paid by her and thus, pursuant to section 1123 of the Act, the amount paid by her for the Sefer Torah cannot be treated as a disposed asset or a gift for social security purposes. In any event the Sefer Torah had not in fact been disposed of but rather, in accordance with the evidence in document T13, is on permanent loan.

DECISION

24.      The Tribunal affirms the decision under review.

I certify that the 24 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Bell, Member

Signed:         .......................................................................................
  Associate

Date of Hearing  3 March 2003
Date of Decision  7 April 2003
Advocate for the Applicant       Self represented
Advocate for the Respondent   Ms R Quinn