Williamson and Secretary, Department of Family and Community Serv Ices

[2003] AATA 652

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 652

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q2003/168

GENERAL ADMINISTRATIVE DIVISION		)
Re		ALLAN WILLIAMSON

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal Mr R G Kenny, Member

Date11 July 2003 

PlaceBrisbane

Decision The Tribunal affirms the decision under review. 

(Sgd) R G Kenny
  Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements - newstart allowance – liquid assets waiting period – monies borrowed by applicant in bank account – whether monies were liquid assets – whether severe financial hardship – use of Guide to Social Security Law

Social Security Act 1991 ss 14A, 19C, 598, 1121

Re Paulis and Department of Family and Community Services [2000] AATA 1070
Re Salas and Secretary, Department of Family and Community Services [2002] AATA 635
Re Secretary, Department of Social Security and Di Bernardo (AAT 9029, 4 October 1993)
Re Jacobson and Secretary, Department of Social Security (AAT 7846, 20 March 1992)
Re Biddlecombe and Department of Family and Community Services [1999] AATA 528
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Re Dainty and Minister for Immigration and Ethnic Affairs (1987) 6 AAR 259
Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82

REASONS FOR DECISION

11 July 2003  Mr R G Kenny, Member     

Background

1.      On 14 October 2002, a representative of Centrelink on behalf of the Secretary, Department of Family and Community Services (the respondent) determined that Allan Williamson (the applicant) was qualified to receive newstart allowance but that a liquid assets waiting period would be imposed from 7 October 2002 to 10 November 2002 (see T10).  That decision was affirmed by an authorised review officer on 6 December 2002 (see T31) and, on 6 February 2003, it was affirmed by the Social Security Appeals Tribunal (see T2).  On 27 February 2003, the applicant sought review of that decision by the Administrative Appeals Tribunal (the Tribunal) (see T1). 

2.      The applicant attended the hearing but was not represented.  Ms H Wallis-Dunn represented the respondent.  In evidence were the following:

§Exhibit 1 the T documents (T1-T35) lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975; and

§Exhibit 2     a Centrelink payment summary.

Issues and Legislation

3.      Newstart allowance is payable under the Social Security Act 1991 (the Act) and in accordance with various conditions imposed under that Act.  In particular, where a person has liquid assets available to him, a liquid assets test waiting period may be imposed during which the person is not qualified for the allowance.  The provisions, insofar as are relvant, read:

“598  Liquid assets test waiting period

(1) Subject to subsections … (5), (6) …, if:

(a)the value of a person's liquid assets exceeds the person's maximum reserve on:

(i)the day on which the person becomes unemployed; or

(ii)the day on which the person claims a newstart allowance; and

(b)the person is not a transferee to a newstart allowance;

the person is not qualified for a newstart allowance for a period unless the person has served the liquid assets test waiting period in relation to the claim before the beginning of that period.

(2) The liquid assets test waiting period in relation to the claim is to be worked out under subsections (2A), (2B) and (2C).

(2A) Work out the number of formula weeks (disregarding any fractions of a week) in relation to the claim using the formula:

Liquid assets – Maximum reserve amount

Divisor

where:

liquid assets means the person's liquid assets.

maximum reserve amount means the maximum reserve in relation to the person under subsection 14(1).

divisor means, in relation to a person:

(a)if the person is not a member of a couple and does not have a dependent child—$500; or

(b)otherwise—$1,000.

(2B) If the number of formula weeks is equal to or greater than 13 weeks, the liquid assets test waiting period in relation to the claim is 13 weeks.

(2C) If subsection (2B) does not apply, the liquid assets test waiting period in relation to the claim is the number of weeks equal to the number of formula weeks.

…

(5) If the Secretary is satisfied that a person is in severe financial hardship because the person has incurred unavoidable or reasonable expenditure while serving a liquid assets test waiting period, the Secretary may determine that the person does not have to serve the whole, or any part, of the waiting period.”

“14A  Social security benefit liquid assets test definitions

(1) In Parts 2.11, 2.11A, 2.12, 2.14 and 2.23A:

liquid assets, in relation to a person, means the person's cash and readily realisable assets, and includes:

(a)the person's shares and debentures in a public company within the meaning of the Corporations Law; and

(b)amounts deposited with, or lent to, a bank or other financial institution by the person (whether or not the amount can be withdrawn or repaid immediately); and

(c)amounts due, and able to be paid, to the person by, or on behalf of, a former employer of the person; …

maximum reserve, in relation to a person, means:

(a)if the person is not a member of a couple and does not have a dependent child - $2,500; or

(b)in any other case - $5,000

…

(5) If:

(a)a person has or had a debt not related to the person’s principal home or to any other residential property in which the person holds or held, solely or jointly, any right or interest; and

(b)since becoming unemployed or incapacitated for work or study (as the case requires), the person has, in order to discharge the debt in whole or in part, made a payment that the person was not obliged to make; and

(c)since becoming unemployed or incapacitated for work or study (as the case requires), the person had not already made such a payment in order to discharge that debt in part;

the amount of the payment referred to in paragraph (b) is to be disregarded for the purposes of determining the amount of the person’s liquid assets.

(6) For the purpose of determining whether a liquid assets test waiting period applies in relation to a claim for social security benefit, subsection (5) can apply to a payment made after the claim if the payment is made before such a liquid assets test waiting period would end under section 549A, 575A, 598 or 676 (whichever is applicable).

…

19C Severe financial hardship definitions  …

(3) A member of a couple who makes a claim for parenting payment, austudy payment or one of the following allowances:

(a)       newstart allowance; …

is in severe financial hardship if the value of the couple's liquid assets (within the meaning of subsections 14A(1) and (2)) is less than twice the fortnightly amount at the maximum payment rate of the payment or allowance that would be payable to the person if the person’s claim were granted:

(f)if the person's claim were granted; and

(g)in the case of a person to whom an income maintenance period applies, if that period did not apply.

(4) Unavoidable or reasonable expenditure, in relation to a person who is serving a liquid assets test waiting period or is subject to a seasonal work preclusion period, or a person to whom an income maintenance period applies, includes, but is not limited to, the following expenditure:

(a) the reasonable costs of living that the person is taken, under subsection (6)or (7), to have incurred in respect of:

(i)if the person is serving a liquid assets test waiting period—that part of the period that the person has served; or

(ii)if the person is subject to a seasonal work preclusion period—that part of the period that has expired; or

(iii)if an income maintenance period applies to the person—that part of the period that has already applied to the person;

(b)the costs of repairs to, or replacement of, essential whitegoods situated in the person's home;

(c)       school expenses;

(d)       funeral expenses;

(e)essential expenses arising on the birth of the person's child or the adoption of a child by the person;

(f)expenditure to buy replacement essential household goods because of loss of those goods through theft or natural disaster when the cost of replacement is not the subject of an insurance policy;

(g)       the costs of essential repairs to the person's car or home;

(h)       premiums in respect of vehicle or home insurance;

(i)        expenses in respect of vehicle registration;

(j)        essential medical expenses;

(k)any other costs that the Secretary determines are unavoidable or reasonable expenditure in the circumstances in relation to a person.

However, unavoidable or reasonable expenditure does not include any reasonable costs of living other than those referred to in paragraph (a).

(5) The reasonable costs of living of a person include, but are not limited to, the following costs:

(a)food costs;

(b) rent or mortgage payments;

(c) regular medical expenses;

(d) rates, water and sewerage payments;

(e) gas, electricity and telephone bills;

(f) costs of petrol for the person's vehicle;

(g) public transport costs;

(h) any other cost that the Secretary determines is a reasonable cost of living in relation to a person.”

4.      At the time of making his claim for newstart allowance, the applicant declared that he and his wife had a joint bank account with Suncorp Banking standing in the amount of $10,096.00 (see T8-38).  The issue for the Tribunal is whether that or some part of that sum constitutes a liquid asset for the purposes of the Act.

Applicant’s Evidence

5.      The applicant gave the following evidence.

6.      He was born on 7 September 1964 and he and his wife have two children born on 11 August 1995 and 10 November 1997 respectively.

7.      The applicant owned a lawn mowing business which he sold in February 2002.  He then began a share trading business and financed this with the proceeds of the sale of his previous business and with an investment loan of $30,000.00 from Suncorp Banking for which the house of himself and his wife was security. This loan was taken over three years and he was required to make minimum payments of $216.17 per month.  By October 2002, he had lost some $50,000.00 through his trading operations and all that he and his wife had left was the amount of $10,096.00 in their joint Suncorp Banking account.  He declared this amount in his claim for newstart allowance and, in his claim form, he advised that he had ceased trading on 6 October 2002. 

8.      When he spoke with a Centrelink officer during the processing of his claim, he was advised that, because of the monies in the Suncorp account, a liquid assets test waiting period would be imposed on him. He then went to his bank where he withdrew the sum of $9,000.00 from the account and had it credited against his loan, after which he returned to the Centrelink office and advised them of the transfer, but was told that this action would not change the original decision. Subsequently, he returned to Suncorp and arranged for the reversal of the transaction so that a sum in excess of $10,000.00 again stood to the joint credit of his wife and himself. 

9.      In addition to the obligation to repay Suncorp in the amount of $216.17 per month, he also had an obligation to make repayments at a minimum amount of $44.00 per month in respect of a liability of $2,179.13 which was outstanding on a Telstra Visa card. 

Respondent’s Contentions

10. Ms Wallis-Dunn submitted that the purpose of the legislation at issue in this case was to ensure that recipients of social security benefits utilised financial resources at their disposal before access could be had to public monies. She submitted that, even though the applicant had borrowed the amount that was standing to his credit in the Suncorp account, it nevertheless met the definition of liquid assets in sub-section 14A(1) of the Act. She submitted that, therefore, a liquid assets test waiting period had to be imposed under sub-section 598(1) of the Act and that the amount upon which the calculation of the length of the waiting period should be based was the full amount of the deposit in the account.

11. Ms Wallis-Dunn noted that the Suncorp account was held jointly by the applicant and his wife but submitted that the full amount should be considered because of the way in which the formula for calculating the length of the period has application to members of a couple. This was for the operation of the maximum reserve which is $5,000.00 in the case of a member of a couple and only $2,500.00 in the case of a person who is not a member of a couple and does not have a dependent child. She also submitted that, because of the terms of sub-section 14A(5) of the Act, it was appropriate to disregard the transfer of $9,000.00 out of the applicant’s account, which was withdrawn by him after he was advised of the relevance of his monies to the success of his claim. She submitted that this was because the payment was not in relation to his home or residential property.

12. Ms Wallis-Dunn also submitted that the formula in sub-section 598(2A) of the Act for the calculation of the number of weeks had been correctly applied and that the waiting period in this case was five weeks.

13. Ms Wallis-Dunn referred to the discretion set out in sub-section 598(5) of the Act which enables a waiting period to be reduced if a person is in severe financial hardship because of incurring unavoidable or reasonable expenditure during a liquid assets test waiting period. She submitted there was no evidence that such financial hardship had been demonstrated in this case.

14.     Ms Wallis-Dunn made reference to the following cases in support of her submission: Re Paulis and Department of Family and Community Services [2000] AATA 1070 and Re Salas and Secretary, Department of Family and Community Services [2002] AATA 635.

Applicant’s Contentions

15.     The applicant submitted that the monies he had in the Suncorp account should not be considered because they did not meet the definition of liquid assets.  In particular, this was because they were not an asset in his hands as they represented monies he had borrowed.  The money was a debt which he had to repay and, in that regard, he also submitted that his position was significantly different from that in either of the cases relied upon by Ms Wallis-Dunn. He submitted that, in each of those cases, the amount standing to the person’s credit was an actual asset.  In Salas, he said that it represented money that had been reserved for the purposes of paying an income tax liability which had not been assessed and that, in Paulis, it was an amount of money set aside for medical treatment where the money had been received by way of compensation as a result of a motor vehicle accident.

16.     The applicant also submitted that he had been through a difficult financial period in 2003 including the loss of some $50,000.00 in his share trading business and because of the expenses associated with living, particularly in the period when he was denied payment of a newstart allowance because of the liquid assets test waiting period.  He said, during that period, he had been forced to rely upon the monies that were in the Suncorp account.

Consideration

17. Under sub-section 598(1) of the Act, the applicant will not be qualified for a newstart allowance for a period if the value of his liquid assets exceeded his maximum reserve on the day on which he became unemployed. I am satisfied that the relevant date when he became unemployed was 6 October 2002, the date that he gave in his claim for when he ceased trading in his business. I am also satisfied that the maximum reserve applicable in this case, in accordance with the definition in sub-section 14A(1) of the Act, is $5,000.00 and that the only relevant asset for consideration is the amount of $10,096.00 which was standing to his credit in his Suncorp account. Further, I am satisfied that this amount constituted the residue of a loan which he had originally taken in the amount of $30,562.74. This is specifically referred to in various investment loan statements from Suncorp (see T25). I also accept his evidence that the security for that loan was the residence of him and his wife.

18. The definition of liquid assets in sub-section 14A(1) of the Act includes cash and also readily realisable assets including an amount deposited with the bank or other financial institution. The applicant submitted that the amount in the Suncorp account should not be considered as an asset because it constituted a debt which he owed to Suncorp rather than an asset. The cases referred to by Ms Wallis-Dunn are examples of situations where a sum was found to be a liquid asset under the Act even where the social security claimant had quarantined the money or part of it for a particular purpose.

19.     Thus, in Paulis, the claimant had $20,700.00 in his bank account when he applied for newstart allowance in July 1999.  The money had been paid to him in 1998 by way of compensation for injuries he received in a motor vehicle accident in 1994.  In part, the monies had been preserved by the applicant in his account for the purposes of meeting future obligations in relation to on-going medical treatment.  The Tribunal said (at par 10):

“… Social Security payments are a safety net for those unable to meet daily living expenses.  It is very frustrating for a prudent man like Mr Paulis to have to use monies he put aside for medical treatment when he is aware of others who are not precluded from a Social Security payment because they have expended compensation payments on a home or their lifestyle. However, the Tribunal can do no more than apply the law in effect.”

20.     There, the Tribunal determined that money in the account constituted a liquid asset.  In Salas, the claimant had $14,930.00 in bank accounts he held jointly with his wife and the intended use of at least part of these monies was for the payment of income tax liabilities once they had been assessed.  However, the applicant’s liability had not been assessed or paid during the liquid assets waiting period.  Again, the Tribunal held that the amounts in the bank accounts constituted a liquid asset.

21.     In relation to whether an amount that constitutes a debt by a claimant can be a liquid asset, the Act does not give any indication in the definition of that term.  In Re Secretary, Department of Social Security and Di Bernardo (AAT 9029, 4 October 1993), an amount of $18,667.00 was in the relevant account and $18,000.00 of that represented the proceeds of a business in relation to which there was an outstanding business loan debt of $29,150.00. In that case, the Tribunal determined that the asset of $18,667.00 was so closely associated with the liability of $29,150.00 that the liability should be taken into account in assessing the asset.  In the result, it was held that there were no liquid assets.

22.     The matter has been dealt with differently in other Tribunal decisions: see Re Jacobson and Secretary, Department of Social Security (AAT 7846, 20 March 1992) and Re Biddlecombe and Department of Family and Community Services [1999] AATA 528. In those cases, the Tribunal held that the term “liquid asset” meant no more than assets which are capable of ready conversion into cash and that the provision did not include the prospect of taking the existence of liabilities into account.

23. The Act makes provision for liabilities to be considered when assessing the value of an asset in certain circumstances. In that regard, section 1121(1) of the Act reads:

“If there is a charge or encumbrance over a particular asset of the person, the value of the asset, for the purposes of calculating the value of the person's assets for the purposes of this Act, is to be reduced by the value of that charge or encumbrance. ”

24. In this case, it has not been suggested there was a charge or encumbrance present in relation to the monies in the Suncorp account. Rather, the investment loan statement shows it was subject to an obligation on the applicant to make a minimum payment of $216.17 per month. Apart from that obligation, I am satisfied that the monies were available to the applicant to use at his discretion and that section 1121 does not operate in this case to reduce the value of the applicant’s asset. In the absence of any specific reference, in the definition of liquid assets in section14A of the Act, to the taking into account of liabilities, I agree with the approach adopted in the cases of Jacobson and Biddlecombe.

25.     I am satisfied that the full amount of the monies in the applicant’s Suncorp account at the time of his lodgement of the claim constitutes a liquid asset under the Act.  That amount is $10,096.00.

26.     Sub-sections 14A(5) and (6) of the Act enable the amount of certain payments made by a person to be disregarded for the purposes of determining the amount of the person’s liquid assets.  The beneficial effect of these provisions is set out in paragraph 3.1.2.30 of the Guide to Social Security Law which is published by the respondent to provide assistance to those who administer the Act.  The Tribunal, whilst not bound to apply policy guidelines of the kind referred to in the Guide (see Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409) may do so and, indeed, will usually apply the guidelines unless there are cogent reasons in a particular case for not doing so: see Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639-645; Re Dainty and Minister for Immigration and Ethic Affairs (1987) 6 AAR 259 at 267; and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86. In so far as relevant, paragraph 3.1.2.30 of the Guide reads:

“Treatment of Liquid Assets

When voluntary one-off payments of non-housing debts are NOT liquid assets

A customer or their partner can make a voluntary payment on a debt after becoming unemployed or incapacitated, with the amount being disregarded in calculating the customer’s liquid asset level.  This applies only if:

§   the debt is not related to the principle home or any other residential property; and

§   the payment is voluntary; and

§   the payment is the first voluntary payment made on that debt since the customer became unemployed or incapacitated.

The payment can still be disregarded if the customer makes the payment while serving a LAWP – that is, AFTER the claim is processed.  In this case, the claim may need reassessing to reduce the length of the LAWP.”

27.     As I understand the benefit available under sub-sections 14A(5) and (6) of the Act, as they might apply to the applicant, if he made a payment that he was not obliged to make and, where that was the first such payment since becoming unemployed, the amount of the payment will not be included as a liquid asset provided the payment did not relate to his home or other residential property. Here, the applicant withdrew the sum of $9,000.00 from his Suncorp account and used it as a payment on his loan. However, his evidence was that the loan was secured against his home. For that reason, I am satisfied that the debt to Suncorp was related to his home and, for that reason, the benefit of sub-sections 14A(5) and (6) of the Act is not available to him.

28.     Sub-sections 14A(5) and (6) were considered in Salas (above), but found not to be applicable because the claimant had not paid his tax liability as it had not been assessed when the liquid assets waiting period was applicable.

29. Under sub-section 598(5) of the Act, the liquid assets waiting period may be reduced if the applicant was in severe financial hardship because he incurred unavoidable or reasonable expenditure while serving that waiting period. Sub-section 19C(3) of the Act provides the meaning of the term “being in severe financial hardship”.. This will be met if the value of the liquid assets is less than twice the fortnightly amount at the maximum rate of the payment of newstart allowance that would have been payable to him if his claim had been granted. Clearly, in this case, the applicant’s liquid asset of $10,096 greatly exceeds that amount and I am satisfied that the applicant was not in severe financial hardship as provided for in sub-section 598(5) of the Act.

30. I am satisfied that the formula in sub-section 598(2A) of the Act has been correctly applied in this case to the amount by which the applicant’s liquid assets of $10,096.00 exceeded his maximum reserve of $5,000.00 and that a liquid assets test waiting period of five weeks was correctly calculated.

31.     The Tribunal affirms the decision under review.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Member

Signed:         Sarah Oliver
  Associate

Date of Hearing  19 June 2003
Date of Decision  11 July 2003

The Applicant appeared in person
For the Respondent                  Ms Wallis-Dunn, Departmental Advocate