Stevanovic and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

[2010] AATA 933

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 933

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/2641

GENERAL ADMINISTRATIVE DIVISION		)
Re		BISENIJA STEVANOVIC

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal Senior Member R W Dunne

Date23 November 2010

PlaceAdelaide

Decision The Tribunal affirms the decision under review.

..............................................

R W DUNNE
  (Senior Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Age Pension recipient – ownership of principal home and investment properties – application of assets test hardship provisions – review of entitlement to Age Pension – assets test hardship provisions no longer applied – reduction in fortnightly rate of Age Pension – whether investment properties are unrealisable assets – decision under review affirmed.

Social Security Act 1991(Cth) ss 11, 1064, 1118, 1129, 1130

REASONS FOR DECISION

23 November 2010   Senior Member R W Dunne    

introduction

1.      Bisenija Stevanovic (“applicant”) has been receiving Age Pension since 29 December 1994.  She has a principal residence and owns two investment properties.  On 1 June 2007, the respondent (“Centrelink”) decided to reduce her Age Pension due to the level of her assets, including her investment properties.  Subsequently, Centrelink re-assessed her circumstances and applied the assets test hardship provisions to increase the rate of her pension.  Then, on 2 November 2009, Centrelink decided that the assets test hardship provisions no longer applied and her Age Pension was again reduced.  An Authorised Review Officer reviewed and affirmed the decision, which was also affirmed by the Social Security Appeals Tribunal (“SSAT”).  Mrs Stevanovic has applied to this Tribunal for review of the decision of the SSAT.

2. At the hearing before me, Mrs Stevanovic represented herself (with the assistance of her sister) and gave evidence through a Serbian interpreter and translator, Ms Gordana Kolundzjia. Mr C Visser (from the Centrelink Advocacy Branch) appeared for the respondent. I received into evidence the T documents lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (Exhibit R1), together with a neuro-psychological assessment report for the applicant from Ms René Grypma (Aged Mental Health Care Service) dated 23 July 2009 (Exhibit R2). 

issue for the tribunal

3.      The issue to be determined by the Tribunal is whether Mrs Stevanovic’s investment properties have been correctly assessed as not being unrealisable assets for the purposes of determining her rate of Age Pension.

legislation

4.      The legislation that relevantly applies in the present case is contained in the Social Security Act 1991 (“Act”). Section 1064 of the Act provides for the rate of payment of Age Pension for pension recipients. Module G of that section provides for the inclusion of a person’s assets to determine their rate of pension payment. Sub-section 11(1) of the Act defines “asset” to mean property or money, which definition would include Mrs Stevanovic’s investment properties. The combined effect of ss 1129 and 1130 of the Act allows a person in receipt of Age Pension to have his or her unrealisable assets disregarded, when calculating the person’s rate of pension payment, if the Secretary is satisfied that the person would suffer severe financial hardship if the sections were not applied to the person. 

5. Sub-sections 11(12) and 11(13) of the Act set out the circumstances where an asset is unrealisable. Those sub-sections read:

“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.”

background

6.      The material facts of this case are not in dispute and may be extracted from the reasons for decision of the SSAT.  Mrs Stevanovic has her own home at 102 Cedar Avenue, Royal Park.  She also owns investment properties at 8 James Street, Royal Park and at 68 Cedar Avenue, Royal Park.  It is understood that she purchased 68 Cedar Avenue for $150,000 in 1995 and James Street for $75,000 in 1997.

7.      On 19 November 2007, 1 April 2008 and 17 November 2008, Centrelink conducted complex assessments of Mrs Stevanovic’s assets and concluded that the assets test hardship provisions should be applied.  Effectively, this meant that her investment properties at 8 James Street and 68 Cedar Avenue would be disregarded in determining the rate of her Age Pension.  On 31 August 2009, Centrelink received an Income and Assets Update form from Mrs Stevanovic, which was dated 24 September 2009.  In the form, Mrs Stevanovic declared the property at 68 Cedar Avenue only and stated its value to be $100,000.On 18 September 2009, Centrelink issued Mrs Stevanovic a notice (Exhibit R1, T10), which read in part:

“…

Previously the two properties you own at 8 James St Royal Park and 68 Cedar Ave Royal Park, have been disregarded in the assessment of your Age Pension.

In order to continue to qualify to have these assets disregarded in the assessment of your Age Pension, you need to advise what prevents you from placing them on the market for sale. …”

Mrs Stevanovic did not reply to this notice.

8.      On 2 November 2009, Centrelink advised her that she would be paid Age Pension after taking into account the increase in value of her investment properties.  She would no longer have the benefit of the assets test hardship provisions.  The investment properties were valued by the Australian Valuation Office.  The property at 8 James Street was valued at $225,000 and the property at 68 Cedar Avenue was valued at $250,000.  Centrelink determined that the value of Mrs Stevanovic’s assets had been correctly valued at $384,150 as at 2 November 2009 and $479,150 as at 18 November 2009. 

evidence

9.      In her evidence, Mrs Stevanovic said that she had tried to sell her property at 68 Cedar Avenue seven or eight years ago.  She had started to build a new home on the property, but when construction was up to the roof level, her father had tried to destroy it.  When asked if there was any reason why she could not sell the property, she said that she wanted to sell it for $350,000.  She then said that she had received an offer of $335,000 for the property, but the purchaser did not have the money and the sale did not proceed.  She wanted to sell the property and needed the money for an operation.  However, she wanted the best price for the property that she could get. 

10.     She also wanted to sell the James Street property for between $300,00-$360,000.  However, she did not know the market value of the property.  She had not had a buyer for the property since February.  She wanted to sell the property, but only for her asking price.  In December 2009, she was asking $460,000 for the James Street property.  When asked, she said she also wanted to sell the property at 68 Cedar Avenue and that, if an agent came to her with an offer of $400,000, she would sell the property.  When asked by Mr Visser whether the property was able to be sold, Mrs Stevanovic confirmed that it was available for sale.  However, she wanted to save money for the expenses for her operation.

consideration

Have Mrs Stevanovic’s investment properties been correctly assessed as not being unrealisable assets for the purposes of determining her rate of Age Pension?

11.     Mrs Stevanovic owns her own home at 102 Cedar Avenue, Royal Park.  She also owns investment properties situated at 68 Cedar Avenue, Royal Park and at 8 James Street, Royal Park.  It is understood that all the properties are unencumbered.  Her home is an exempt asset and is disregarded in calculating the value of her assets for Age Pension purposes (see s 1118(1) of the Act). Her investment properties are “assets” within the meaning of s 11(1) of the Act. As such, the properties must be taken into account in the calculation of her Age Pension under the assets test set out in Module G of s 1064 of the Act. However, if each of the investment properties is an “unrealisable asset”, within the meaning of ss 11(12) and 11(13), ss 1129 and 1130 effectively allow for the value of her investment properties to be disregarded in determining the rate of her Age Pension payment.

12.     On the evidence before me, I am satisfied that both of Mrs Stevanovic’s investment properties are able to be sold or realised.  There is no reason why she cannot sell or realise the properties.  She says that she is unable to do so because she is unable to obtain the asking prices that she requires.  The properties have been valued by the Australian Valuation Office at $225,000 and $250,000 respectively, and offers have been made to purchase the properties for amounts significantly in excess of these valuations.  Moreover, I understand that Mrs Stevanovic was not prepared to sign a contract for the sale of one of the properties unless she received the whole of the purchase price for the property.  It seems to me that, for a normal real property transaction, this requirement would be totally unrealistic.  

13. In my view, there is no reason why Mrs Stevanovic is not able to sell or realise each of her investment properties. The properties are therefore not unrealisable assets under s 11(12) of the Act. Based on the independent valuations of the properties and the offers she has received for the purchase of each of them, it could be reasonably expected that she would sell or realise the properties (per s 11(13) of the Act), especially in view of her health and the need she has for funds for the operation I understand she requires.

conclusion

14.     Each of Mrs Stevanovic’s investment properties is an “asset” under s 11(1) and not an “unrealisable asset” under ss 11(12) and 11(13) of the Act. The investment properties must, therefore, be taken into account in determining the rate of payment of her Age Pension under s 1064 of the Act.

decision

15.     For the reasons outlined above, the Tribunal affirms the decision under review.

I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member R W Dunne

Signed:         .................J Coulthard....................................
  Associate

Date of Hearing  21 September 2010
Date of Decision  23 November 2010
Advocate for the Applicant       Self-represented

Advocate for the Respondent   Mr C Visser

Centrelink Advocacy Branch