Szlasa and Secretary, Department of Social Services (Social services second review)

This matter concerned an appeal by Mrs Szlasa against decisions of the Administrative Appeals Tribunal (AAT) which affirmed the Secretary of the Department of Social Services' rejection of her claims for a carer payment and an age pension. The dispute centred on the calculation of the value of the applicants' assets for the purpose of determining whether they exceeded the maximum asset limit prescribed by the Social Security Act 1991.

The primary legal issue before the court was the interpretation of subsection 1121(3) of the Social Security Act 1991, specifically whether the amount owing on mortgages secured against the applicants' principal place of residence could be used to reduce the value of their other assets when assessing compliance with the asset limit. The applicants contended that, pursuant to subsection 1121(1), the value of their assets should be reduced by the approximately $700,000 owed on mortgages taken out over their principal residence to acquire investment properties.

The court reasoned that while subsection 1121(1) generally allows for a reduction in asset value by the amount of any charge, subsection 1121(3) provides an exception. This exception states that subsection (1) does not apply to a charge over assets that are to be disregarded under section 1118. In this case, the principal place of residence was the only asset disregarded under section 1118. Therefore, the mortgages secured against the principal residence fell within the exclusion of subsection 1121(3), meaning the value of those mortgages could not be used to reduce the value of the applicants' other assets for the purpose of the asset limit calculation. The court affirmed that the value of the applicants' assets was correctly calculated as $974,356, which exceeded the maximum asset limit.

Consequently, the court affirmed the decisions of the Administrative Appeals Tribunal, finding that the applicants' claims for a carer payment and an age pension were properly rejected.