Wragg and Secretary, Department of Family and Community Services

[2004] AATA 1399

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1399

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2004/456

GENERAL ADMINISTRATIVE  DIVISION

Re:         MAREE ANNE WRAGG

Applicant

And:       SECRETARY,
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Regina Perton, Member

Date:             24 December 2004

Place:            Melbourne

Decision:The Tribunal affirms the decision under review.

(sgd) Regina Perton

Member

SOCIAL SECURITY – disability support pension – assets test – property valuation disputed – rejection of claim – decision affirmed

Social Security Act 1991 ss 11, 117, 1064

Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474

Re Eimberts and Repatriation Commission (1988) 16 ALD 19

Re Evans and Secretary, Department of Social Security (1993) AATA 8710

Re Reid and Secretary, Department of Family and Community Services [2002] AATA 652

REASONS FOR DECISION

24 December 2004  Regina Perton, Member

1.      This is an application by Maree Anne Wragg (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 9 March 2004.  The SSAT affirmed a decision of a delegate of the Secretary to the Department of Family and Community Services (the respondent) dated 26 November 2003, to refuse a claim for disability support pension (DSP) because the value of the applicant’s assets exceeded the allowable limit under the assets test.  

2.      The application to the Tribunal was lodged out of time.  The Tribunal, differently constituted, determined that the applicant should be granted an extension of time for lodgement.

3.      At the hearing on 25 October 2004, the applicant represented herself.  Ms K. Navarro, a Centrelink advocate, represented the respondent. 

4. The Tribunal received into evidence the documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T1‑T30).  

BACKGROUND

5.      The applicant was born on 14 November 1957 and is 47 years old.  She suffers from the residual effects of a stroke in 1996 which impact on her ability to work.  The applicant received DSP for some years after the stroke but the benefit was eventually stopped due to increases in the value of her assets.  The applicant is single and lives in her carer’s home, paying board to the carer.  Her assets include a unit in Wattle Road, Hawthorn (the property), which had been her place of residence prior to her stroke, but is now tenanted. 

6.      On 31 October 2003, the applicant lodged a claim for DSP, which was initially refused on 26 November 2003 on the basis that the applicant’s assets exceeded the allowable limit.  The delegate determined that the applicant’s assets, which included bank accounts, shares, household effects as well as the property, totalled $465,321.00 at the time of the claim, which was above the allowable limit of $410,000.00.  A valuation of the property by the Australian Valuation Office (AVO) dated 25 November 2003 put its market value at $320,000 (T12).  The applicant disputed the AVO’s assessment.  She had provided Centrelink with a letter from a local real estate firm dated 16 September 2003 in which the market value of the property was estimated at $280,000 (T9).  She asserted that Centrelink should have valued the property at the lower value.   

7.      The respondent arranged for a fresh valuation by the AVO based on an internal inspection of the property, rather than the external view upon which the original valuation was based.  A certified practising valuer from the AVO viewed the interior of the property on 15 December 2003 and estimated that the market value of the property at the time of the claim was $310,000.

8.      On 30 January 2004, the applicant sought review by the SSAT.  On 9 March 2004, the SSAT affirmed the decision to refuse the applicant’s claim for DSP.  The applicant filed an application for review of the SSAT decision with this Tribunal on 14 April 2004.

9.      The issue before the Tribunal is whether the assets test has been properly applied to the applicant’s claim for DSP and, in particular, whether the property was given an appropriate market value. 

EVIDENCE

10.     The applicant told the Tribunal that she believes that the estimated market value by the AVO was too high.  She said that the property was in a large group of units and required extensive repair and refurbishment.  She expressed the view that the comparable properties cited by the valuer were either in better locations and/or part of a smaller group of units.  She said that the local agent’s estimate should be preferred over the AVO.  However, she did not know the qualifications of the author of the estimate, namely the property manager of the estate agency which manages the property.  The applicant said that she had not obtained a sworn valuation because she could not afford to do so. 

11.     The applicant said that she has an emotional attachment to the property which was her home before the stroke but, unfortunately, it is not suitable for a person with her disabilities.  She is receiving $260 per week in gross rent although the current tenants are due to move soon.  She pointed out the difficulties of living on her current diminishing funds and the need for some back‑up assets, given her ongoing inability to work.

CONSIDERATION OF THE ISSUES

12. Sections 117 and 1064 of the Social Security Act 1991 (the Act) set out the way in which the rate of DSP is calculated. Module G of s 1064 specifically relates to the impact of a person’s assets on their rate of DSP. In essence, a single person in the applicant’s situation, namely a person who did not live in her own home, was allowed assets up to a value of $410,000 at the time of her claim for DSP.

13.     Subsection 11(1) of the Act defines asset as follows:

…

"asset" means property or money (including property or money outside Australia);

14.     Subsections 11(4) to 11(10) of the Act provide that a property owned by a DSP recipient does not constitute part of the assets test if the recipient lives in that property or is living away from the property in certain prescribed circumstances.  The prescribed circumstances do not apply to the applicant.  Therefore, the property forms part of the applicant’s assets test. 

15.     There is no dispute between the parties as to the value of the applicant’s other assets at the time of claim for DSP. 

16.     There is no statutory provision in the Act setting out the method to be used for valuing property.  Ms Navarro cited past cases in which the Tribunal adopted the net market value approach based on comparable sales and the “best use” to which the assets could be put, including Re Eimberts and Repatriation Commission (1988) 16 ALD 19 and Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474. The applicant did not suggest that a different approach be adopted beyond asserting that the Tribunal should prefer the estimate of market value she had obtained. The Tribunal is satisfied that it is appropriate to adopt the net market value approach which, to its knowledge, is the standard mode of valuation adopted by valuers in assessing the value of property for statutory purposes.

17.     The AVO valuation, undertaken by a certified practising valuer, dated 16 December 2003 was that the estimated market value of the property at the time of the claim was $310,000.  The AVO report provides details about the nature and condition of the property, a market analysis and comparable sales.  The property manager’s report dated 16 September 2003 provided by the applicant states that the approximate market value of the property is $280,000.  

18.     Ms Navarro submitted that the Tribunal should prefer the AVO’s valuation over that supplied by the applicant for several reasons, including the qualifications and experience of the AVO valuer; the comprehensive nature of his reports; and the paucity of information about the basis for the property manager’s valuation.  She cited Re Evans and Secretary, Department of Social Security [1993] AATA 8710, as one of many matters where the Tribunal had preferred the AVO’s valuation to that of a local estate agent.

19.     The applicant submitted that the opinion of a real estate firm with local knowledge should be preferred to that of the AVO, citing Re Reid and Secretary, Department of Family and Community Services [2002] AATA 652, as a case where the Tribunal preferred the opinion of a local real estate agent to that of the AVO.

20.     The property manager, who estimated the property’s value at $280,000, works for a prominent eastern suburbs real estate firm.  However, the short letter in which she gave her opinion provides no information about how she arrived at that value.  There is no information about her qualifications to give that opinion.  There is no indication that she consulted persons in the firm involved in sales of property.  No comparable sales figures are provided, nor is there any description of the features of the property.  In contrast, the AVO report has been prepared by a qualified valuer, who has undertaken the review according to proper valuation principles.  He has inspected the property and provided details of comparable properties.  Therefore, the Tribunal prefers the AVO’s valuation and adopts that valuation, namely $310,000.  It follows that when the property, thus valued, was added to the applicant’s other assets of $145,321, the applicant’s total assets were $455,321 at the time of the claim.  That total was in excess of the then allowable limit of $410,000.

21.     The Tribunal finds that the applicant was not entitled to DSP at the time of claim as the value of her assets exceeded the allowable limit under the prescribed assets test.

DECISION

22.     The Tribunal affirms the decision under review.

I certify that the twenty-two [22] preceding paragraphs are a true copy of the reasons for the decision of:

Regina Perton, Member

(sgd)       Olympia Sarrinikolaou

Clerk

Date of hearing:  25 October 2004

Date of decision:  24 December 2004
Advocate for applicant:               Self‑represented
Advocate for respondent:            Ms K. Navarro, Centrelink