Whiffen and Secretary, Department of Social Services (Social security) - [2025] ARTA 1287

Whiffen and Secretary, Department of Social Services (Social security) [2025] ARTA 1287 (2 January 2025)

Applicant/s: Mrs Whiffen

Respondent: Secretary, Department of Social Services

Tribunal Number: 2024/S190024
Tribunal: Member O Sarrinikolaou
Place:Melbourne
Date:2 January 2025

Decision:The Tribunal affirms the decision under review.

CATCHWORDS

SOCIAL SECURITY – Age Pension rent assistance – ineligible homeowner – rent payment – principal home – reasonable security of tenure – indefinite entitlement to residence by virtue of shareholding – no tenancy or lease agreement – written agreement for terms of occupancy – temporary interest in the land – contractual right to occupy the residence – decision under review affirmed

Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.

Statement of Reasons

BACKGROUND

Mrs Whiffen applied to the Administrative Appeals Tribunal (the AAT) for review of a decision made by Services Australia – Centrelink (Centrelink) to refuse her claim for rent assistance on the basis that she is a homeowner and is not liable to pay rent.
Mrs Whiffen has been receiving age pension since 1 July 2020. On 25 January 2021, an employee with Centrelink decided that Mrs Whiffen was not eligible for rent assistance.
Mrs Whiffen requested internal review of Centrelink’s decision and on 23 March 2023, an authorised review officer affirmed the decision.
On 26 July 2024, Mrs Whiffen applied to the AAT for an independent review of Centrelink’s decision.
On 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
The Tribunal hearing proceeded on 11 November 2024 via MS Teams audio. Mrs Whiffen gave evidence to the Tribunal on affirmation. She was represented by [Mr A], company secretary of [Centre 1]. The Tribunal had before it the documents provided by Centrelink (folios 1 to 502) and documents provided by Mrs Whiffen prior to the hearing (A1 to A8).

ISSUES

The statutory provisions relevant to this review are contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).
The issue before the Tribunal is whether Mrs Whiffen qualifies for rent assistance and the legal issues that arise are:
·Is Mrs Whiffen a homeowner? If so,
·Does Mrs Whiffen pay rent?

CONSIDERATION

Part 3.7 of the Act sets out the qualification and payability requirements for rent assistance. Section 1070B of the Act provides that a person qualifies for rent assistance if the person satisfies the common requirements in section 1070C and any requirements that are specific to the person’s pension. Section 1070C sets out the following common requirements for qualification of rent assistance:
·the person is not an aged care resident and is not taken to be an aged care resident for the purposes of the Rate Calculator;
·the person is not an ineligible homeowner;
·the person pays, or is liable to pay, rent, other than Government rent in respect of a period in respect of premises in Australia; and
·the person’s fortnightly rent is more than the rent threshold amount in section 1070T.
Mrs Whiffen is not an aged care resident and is not taken to be an aged care resident for the purposes of the Rate Calculator, which is not disputed. Therefore, she satisfies the first common requirement in section 1070C of the Act.
The issue in dispute between the parties and the reason Centrelink refused Mrs Whiffen’s claim for rent assistance was that she was considered an ineligible homeowner.

Is Mrs Whiffen a homeowner?

Paragraph 11(4)(a) of the Act provides that a person who is not a member of a couple is a homeowner if:
·the person has a right or interest in the person's principal home; and
·the person's right or interest in the home gives the person reasonable security of tenure in the home.
Section 11A of the Act provides that if a person’s principal home is a dwelling, the principal home is the house and adjacent land to the extent that the land is on the same title document and satisfies the private land use test. If the principal home is a flat or unit, the principal home includes a garage or storeroom used primarily for private or domestic purposes.
Subsection 13(1) of the Act provides that an ineligible homeowner is a homeowner other than:
·A person who is a homeowner by virtue of paragraph 11(4)(c) which provides that a person remains a homeowner when the proceeds of sale of the principal home or their home is disregarded under subsection 1182(2) of the Act for the purpose of the assets test;
·A person who is absent from their principal home and is personally providing care in another private residence;
·A person who is in care other than a retirement village;
·A person who pays amounts for the use of a site for a caravan or other vehicle, or a structure, that is the person's principal home; or
·A person who pays amounts for the right to moor a vessel that is the person's principal home.
Mrs Whiffen gave evidence to the Tribunal that 10 years ago she relocated from Sydney to [Town 1], a coastal town in the [specified region] and lives in a cottage located on a site operated by [Centre 1]. Mrs Whiffen said that she and her husband owned a share in [Centre 1] for 40 years which entitled them to use the cottage as they pleased. It was initially purchased as a holiday home and since her husband’s passing and in anticipation of retirement, she decided to move to the cottage indefinitely.
In response to questions from the Tribunal, Mrs Whiffen said that she is entitled to live in the cottage by virtue of the shareholding and can do so indefinitely or until the lease ends in 2030. There is no tenancy or lease agreement and no contract or any other written agreement that sets out the terms of the occupancy. Mrs Whiffen gave evidence that she is required to pay an annual membership fee. The current fee payable by March 2025 is $7,200 which covers outgoings, including land tax, council rates, insurance, sewerage and water, as well as rent to the NSW Department of Lands.
[Mr A] submitted that Mrs Whiffen is not a homeowner because the cottage which she lives in is on Crown land that is subject to a long-term lease agreement between [Centre 1] and the Lands Department. The current lease is due to expire in 2030 with no option to renew or purchase. [Mr A] explained that [Centre 1] pays rent to the Lands Department which is collected from shareholders as part of the annual membership fee charged by [Centre 1]. In his submission to the Tribunal and in a letter to Centrelink, [Mr A] relied on the common law principle that “what is affixed to the land is the land.” He submitted that Mrs Whiffen’s cottage is on leasehold land which offers only a temporary interest in the land, which is due to end, and, in those circumstances, Mrs Whiffen cannot be considered a homeowner.
To determine whether Mrs Whiffen is a homeowner, the Tribunal first considered whether she has a right or interest in the principal home as required under subsection 11(4) of the Act. There is no dispute that the cottage on the [Centre 1] site at [Town 1] is Mrs Whiffen’s principal home and has been for the last 10 years. The issue for the Tribunal is whether Mrs Whiffen has a right or interest in the cottage. The term “right or interest” is not defined in the Act or the Administration Act. However, it has been considered by the Tribunal and the Federal Court on a number of occasions.
It is clear from those previously decided cases that the right or interest as contemplated by subsection 11(4) of the Act, is not limited to the traditional proprietary rights in property but extends to all legal or equitable rights or interests recognised in law. In Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876 at [58] Greenwood J said that an applicant may be a beneficiary under a trust, a lessee under a registered or unregistered lease agreement or a tenant under an oral agreement. His Honour recognised that the provision contemplates a “species or class of right” that may not necessarily involve a legal or equitable interest in the residence but may give an applicant a personal right to the principal home (bare rights) [at 60].
In assessing whether an interest or right exists, the Tribunal also considered the relevant legislation in New South Wales which provides for interests and rights in real property. In summary, sections 23B and 23C of the Conveyancing Act 1919 provide that all interests in land are to be created or transferred by deed. Section 14 of the Residential Tenancies Act 2010 provides that a lease or tenancy agreement must be in writing. That is not to say that a tenancy agreed to verbally does not carry rights and remedies for the parties involved. Mrs Whiffen told the Tribunal that there was no transfer of the cottage to her or a signed lease agreement governing her occupancy. The Tribunal accepts Mrs Whiffen’s evidence.
The Tribunal accepts that Mrs Whiffen is not the registered proprietor of the cottage and the relationship between [Centre 1] and Mrs Whiffen is not one of lessor and lessee or landlord and tenant. However, the Tribunal does not accept that Mrs Whiffen does not have a right or interest in the cottage for the purposes of paragraph 11(4)(a) of the Act. Mrs Whiffen owns a share in [Centre 1] which carries with it a right to reside in the cottage as set out in [Centre 1’s] Memorandum and Articles of Association.[1] Mrs Whiffen enjoys exclusive possession of the cottage; she has the right to occupy and manage the cottage and lease it as she pleases. Mrs Whiffen is also responsible for maintenance and repairs of her cottage which is supported by the documentary evidence before the Tribunal.[2] Having regard to the evidence before it, the Tribunal finds that Mrs Whiffen has a contractual (legal) right to occupy the cottage and use it as she pleases as a shareholder of [Centre 1].
[1] Hearing papers, page 133
[2] Hearing papers, page 312-317
Having found that Mrs Whiffen has a legal right to the cottage, which is her principal home, the next question for the Tribunal is to determine whether that legal right gives her reasonable security of tenure. Subsection 11A(10) of the Act provides that if a person has a right or interest in the person’s principal home, the person is taken to have a right or interest that gives the person reasonable security of tenure unless the Secretary (or the Tribunal standing in the shoes of the Secretary) is satisfied that the right or interest does not give reasonable security of tenure.
[Mr A] said that [Centre 1] does not own the cottages because the cottages are on leasehold land owned by the Lands Department. There is no option to renew or purchase the leasehold. The land is also subject to a Native Title Claim so there is no security for [Centre 1] or Mrs Whiffen. The evidence before the Tribunal confirms that [Centre 1] has been the lessee of the [Town 1] site owned by the New South Wales government for [number] years. The most recent lease commenced [in] 2010 and terminates [in] 2030. Mrs Whiffen has had the benefit of the lease for 10 years and will continue to enjoy the security of the lease for a further 7 years. Whilst the Tribunal acknowledges that her right to occupy the cottage is not absolute, her right does give her reasonable security of tenure. The Tribunal is satisfied that Mrs Whiffen has a right or interest in her principal home that gives her reasonable security of tenure and therefore, she is a homeowner in accordance with paragraph 11(4)(a) of the Act.
Subsection 13(1) of the Act defines an ineligible homeowner and sets out exceptions to the definition of homeowner. That is, the provision sets out situations in which a person will not be considered a homeowner. Mrs Whiffen is not a homeowner because of the operation of paragraph 11(4)(c) of the Act and she is not absent from her home because she is providing care or receiving care. She also is not paying a fee to moor a vessel. Relevantly, paragraph 13(1)(d) provides that a person who pays amounts for the use of a site for a caravan or other vehicle, or a structure, that is the person's principal home, is not a homeowner. The Tribunal interprets this provision to apply to moveable structures or transportable homes and therefore, does not apply to Mrs Whiffen whose cottage has been built on the site and fixed to the land. As none of the provisions in subsection 13(1) apply to Mrs Whiffen, she is a homeowner as defined and is therefore, not qualified for rent assistance under section 1070C of the Act.

Does Mrs Whiffen pay rent?

The Tribunal has concluded that Mrs Whiffen is a homeowner and therefore, she is not qualified to receive rent assistance. However, for completeness and to address [Mr A’s] submissions, the Tribunal will consider whether Mrs Whiffen pays rent or is liable to pay rent in accordance with section 1070C of the Act. Subsection 13(2) of the Act provides that an amount is rent if it is paid as a condition of occupancy of premises, or of part of premises or for lodging in premises or for the use of a site, and either the amounts are payable every 3 months or more frequently or the amounts are payable at regular intervals (greater than 3 months) and the Secretary is satisfied that the amounts should be treated as rent for the purposes of this Act.
[Mr A] explained that there are [number] shareholders and [as many] cottages on the site. Each year the directors meet to prepare a budget for the site then divide it by [the number] of the cottages. Each shareholder pays a membership fee which covers land tax, water usage, water and sewer rates, repairs, road, lights, tree maintenance, electricity for streetlights, public liability insurance, directors’ insurance, council rates, accounting fees, rent to the Lands Department and the company’s administration/office expenses.[3] [Mr A] told the Tribunal that Mrs Whiffen has always paid the fee and most shareholders pay the annual fee once a year. In response to questions from the Tribunal, [Mr A] said that most of the residents have been there for many years and have always paid the fee – everyone understands that they need to pay the bills. He said that the payment of the fee is not specifically a condition of occupancy.
[3] Hearing papers, page 31
Having heard the submissions from [Mr A] and the evidence from Mrs Whiffen, the Tribunal is not satisfied that the membership fee is rent as defined in the Act. The membership fee is not a condition of occupancy which was confirmed by [Mr A]. The right to occupy and use the cottage as she pleases is attached to Mrs Whiffen’s shareholding. In response to a request for information from Centrelink, Mrs Whiffen recorded that she would be required to pay the membership fee even if she was not living in the cottage and that other shareholders who do not live in their cottages on the site pay the same fee.[4] Mrs Whiffen also recorded that if she leases her cottage, she will receive the rental income. These features of the membership fee payable by Mrs Whiffen support a finding that the fee is not rent as defined.
[4] Hearing papers, page 183
The membership fee is an annual fee which is generally paid in one lump sum although the shareholders can negotiate a payment plan. There is no evidence before the Tribunal that requires a payment every 3 months or more frequently as required in subsection 13(2) of the Act. Subsection 13(2) allows the Secretary or the Tribunal standing in the shoes of the Secretary to treat amounts as rent. The Tribunal considers that the membership fee is akin to strata fees or a levy payable by shareholders to cover the outgoing costs of the site operated by [Centre 1] including insurance, land tax, various utilities, maintenance costs, as well as administration costs and the rent to the Lands Department. While [Centre 1] is liable to pay rent for the site at [Town 1], a cost which is then transferred to Mrs Whiffen and the other shareholders, the Tribunal is not satisfied that Mrs Whiffen is liable to pay rent to [Centre 1] as defined in subsection 13(2) of the Act. Therefore, Mrs Whiffen does not satisfy the common requirements for rent assistance in section 1070C of the Act.

DECISION

The Tribunal affirms the decision under review.

Date(s) of hearing:	11 November 2024
Representative for the Applicant:	[Named]