XDRK AND DWJY and SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
[2009] AATA 624
•21 August 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 624
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2008/5296
GENERAL ADMINISTRATIVE DIVISION ) Re XDRK AND DWJY Applicants
And
SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal G.D. Friedman, Senior Member Date21 August 2009
PlaceMelbourne
Decision The Tribunal sets aside the decision under review and remits the matter to the respondent with the following directions:
a) There was no constructive trust in respect of the property at Amaranth Avenue, North Altona (Amaranth Avenue);
b) XDRK was a homeowner in relation to the property at Bent Street, Moonee Ponds (Bent Street) under s 11(4) and (from 1 January 2007) s 11A of the Social Security Act 1991 as he had a right or interest that conferred reasonable security of tenure in Bent Street for the following periods:
(i) 7 August 1995 to 14 May 1997;
(ii) 3 August 2000 to 23 February 2005; and
(iii) 3 April 2008 to date.
c) DWJY was a homeowner in relation to Bent Street under s 11(4) and (from 1 January 2007) s 11A of the Act as she had a right or interest that conferred reasonable security of tenure in Bent Street for the following periods:
(i) 7 August 1995 to 23 February 2005; and
(ii) 22 August 2005 to date.
d) The social security entitlement reassessment in relation to XDRK is to include:
(i) application of the principal home exemption from the asset test under s 1118(1) of the Act for Amaranth Avenue from 24 February 2005 to 28 September 2007; and
(ii) 50% interest in the property at Blackshaws Road, Newport (Blackshaws) from 3 August 2000 until the date of sale. The value of that interest is to be reduced by the value of the mortgage under s 1121(1) of the Act from 20 June 2006.
e) The pension entitlement reassessment in relation to DWJY is to take into account the application of the principal home exemption from the asset test under s 1118(1) of the Act for Amaranth Avenue from 24 February 2005 to 21 August 2005.
f) Given the operation of s 109(2) of the Social Security (Administration) Act 1999, XDRK is not entitled to arrears of age pension with regard to Blackshaws Road during the period 2 June 2004 to 1 March 2005 inclusive as he did not seek review of the Centrelink decision dated 23 June 2005 until 20 June 2006.
g) The entitlement to disability support pension of XDRK is to be reassessed by Centrelink in respect of the period from 30 December 1999 to 7 May 2002. The entitlement to age pension of XDRK is to be reassessed by Centrelink in respect of the period 8 May 2002 to 30 April 2008.
h) The entitlement to age pension of DWJY is to be reassessed by Centrelink in respect of the period 30 December 1999 to 30 April 2008.
i) DWJY qualifies for rent assistance under s 1070B of the Act in respect of Bent Street during the period 22 March 2007 to 4 October 2007 inclusive.
(sgd) G.D. Friedman
Senior Member
SOCIAL SECURITY – assessment for age pension and disability support pension - ownership of properties - whether homeowners - whether principal place of residence - eligibility for rent assistance
Social Security Act 1991 ss 11(4), 11A, 1064, 1070B, 1118, 1121(1)
Social Security (Administration) Act 1999 ss 109(2), 179(2)
Re Lountzis and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 1503
Re Secretary, Department of Family and Community Services and Kulshrestha (2003) 73 ALD 438
Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876
REASONS FOR DECISION
21 August 2009 G.D. Friedman, Senior Member
1. XDRK and DWJY are husband and wife and have been receiving Centrelink benefits since 1983. Between 1989 and 1995 they lived in a house in Blackshaws Road, Newport owned jointly by XDRK and their son since 1975. In 1995 XDRK and DWJY moved to a house in Bent Street, Moonee Ponds owned by their son. In 1997 XDRK returned to Blackshaws Road, and DWJY remained at Bent Street. In 2000 XDRK returned to Bent Street until February 2005, when XDRK and DWJY moved to a house in Amaranth Avenue, Altona North owned by them, until they separated in August 2005. DWJY returned to Bent Street, where she still lives, and XDRK remained at Amaranth Avenue until the property was sold in 2007. In April 2008 XDRK returned to Bent Street, where he remains, but XDRK and DWJY live separately in the property. Centrelink made a number of decisions regarding the entitlement of XDRK and DWJY to social security payments based on assessment of their principal residence and the value of their assets at various times. Centrelink also decided that DWJY was not entitled to receive rent assistance.
2. XDRK and DWJY appealed to the Social Security Appeals Tribunal for review of three decisions made by authorised review officers of Centrelink. They were:
·A decision made on 4 January 2008 to treat XDRK as a non-homeowner in relation to Bent Street, and to include the asset value of Amaranth Avenue and Blackshaws Road in the assessment of XDRK’s entitlement to age pension;
·A decision made on 7 May 2004 to include the asset value of Amaranth Avenue in the assessment of the rate of DWJY’s age pension; and
·A decision made on 31 July 2007 not to pay rent assistance to DWJY.
3. On 29 September 2008 the SSAT decided to set aside Centrelink’s decisions and remit the matter to Centrelink with the following directions:
·XDRK and DWJY do not have a right or interest in Bent Street.
·XDRK and DWJY are homeowners, however they are presently living at Bent Street.
·XDRK had a 50% interest in Blackshaws Road. This was an exempt asset from 15 May 1997 until 2 August 2000 as it was their principal home. This property is an assessable asset from 3 August 2000 until its sale on 3 September 2007 and should be included in the assessment of XDRK’s age pension once the mortgage secured over that property has been offset against its value from 26 July 2006.
·XDRK and DWJY owned Amaranth Avenue. This was an exempt asset from 24 February 2005 until 22 August 2005 as this was their principal home. This property should be treated as an assessable asset from 23 August 2005 and should be included in the assessment of their rate of age pension.
·DWJY is not entitled to rent assistance in relation to her current residence at Bent Street as she is a homeowner.
4. Section 179(2) of the Social Security (Administration) Act 1999 (the Administration Act) states that this Tribunal is to review the directions of the SSAT.
ISSUES
5. The issues before the Tribunal are:
·whether XDRK and DWJY are homeowners and whether they have a right or interest in Bent Street;
·whether the value of Amaranth Avenue should be included in the assessment of XDRK and DWJY’s entitlement to social security payments;
·whether the value of Blackshaws Road, including the mortgage, should be regarded in the assessment of XDRK’s entitlement to social security payments; and
·whether rent assistance is payable to DWJY.
LEGISLATIVE BACKGROUND
6. Section 1064 of the Social Security Act 1991 (the Act) provides that a person’s social security payments including age pension and disability support pension is calculated on the basis of the person’s combined income and assets of the person and the person’s partner. The calculation also takes into account whether the person is a homeowner. Section 11(4) of the Act defines homeowner:
For the purposes of this Act:
(a)a person who is not a member of a couple is a homeowner if:
(i)the person has a right or interest in the person’s principal home; and
(ii)the person’s right or interest in the home gives the person reasonable security of tenure in the home; and
(b)a person who is a member of a couple is a homeowner if:
(i)the person, or the person’s partner, has a right or interest in one residence that is:
(A)the person’s principal home; or
(B)the partner’s principal home; or
(C)the principal home of both of them; and
(ii)the person’s right or interest, or the partner’s right or interest, in the home gives the person, or the person’s partner, reasonable security of tenure in the home; and
(c)a person (whether a member of a couple or not) is a homeowner while:
(i)the whole or a part of the proceeds of the sale of the person’s principal home are disregarded under subsection 1118(2); or
(ii)the value of a residence, land or a structure is disregarded under subsection 1118(2).
Section 1118 of the Act provides that a person’s principal home is disregarded as an asset for pension purposes.
7. Section 109(2) of the Administration Act provides that if a person applies for review of a determination more than 13 weeks after notice of the decision has been given and a favourable determination is made as a result of that application, the date of effect of the determination is the date of the application.
ARE XDRK AND DWJY HOMEOWNERS AND DO THEY HAVE A RIGHT OR INTEREST IN BENT STREET?
8. XDRK and DWJY’s son told the Tribunal that as at August 2000 his parents resided at Bent Street but had been the joint proprietors of Amaranth Avenue since 1972, although they had not lived there for some time. He said that on 15 September 2003 Centrelink reduced the rate of age pension for XDRK and DWJY on the basis of their combined assets, including Amaranth Avenue. Centrelink decided that Bent Street was their principal residence. In 2004 XDRK advised Centrelink that he and DWJY had leased Amaranth Avenue to tenants and the rental income was paid to their son in return for their son allowing XDRK and DWJY to live at Bent Street rent-free. The son told the Tribunal that this arrangement was based on a verbal family agreement made back in 1988 and that he had gifted Bent Street to the family trust in 1999, appointing XDRK and DWJY as trustees.
9. The son stated that in 2004 his parents disputed the decision by Centrelink to classify Bent Street as an assessable asset while they were living in Amaranth Avenue, and also the decision to classify Amaranth Avenue as an assessable asset while they were living in Bent Street rather than their principal residence. XDRK and DWJY told Centrelink that they were not the legal owners of Bent Street but were holding the property on trust for their son’s children as beneficiaries of the family trust. The property is the trust’s sole asset. As a result of its decision Centrelink decided to recover social security payments made to XDRK and DWJY. In 2005 Centrelink reinstated the age pension to XDRK and DWJY on the basis that they had returned to live at Amaranth Avenue, but that recovery of debts would proceed. Centrelink also decided that Amaranth Avenue would no longer be considered an assessable asset after XDRK and DWJY moved there on 25 February 2005 and the property became their principal residence.
10. After a further review Centrelink decided on 12 September 2007 to reduce the debts raised for the period 30 December 1999 to 1 June 2004 to nil as it decided that Bent Street was never an assessable asset of XDRK and DWJY. However, Centrelink maintained that XDRK and DWJY should be regarded as homeowners while living at Bent Street as they have reasonable security of tenure in that property, and that Amaranth Avenue was an assessable asset during this time. XDRK asked for this decision to be reviewed and on 4 January 2008 the authorised review officer decided to regard XDRK as a non-homeowner while living at Bent Street but otherwise affirmed the decision. The SSAT disagreed with the authorised review officer and determined that XDRK and DWJY were to be regarded as homeowners.
11. The son told the Tribunal that Bent Street, as a trust asset, is not an asset of XDRK and DWJY, so they should be regarded as non-homeowners while living at Bent Street as they did not have reasonable security of tenure, even though as trustees they have the power to appoint themselves as beneficiaries of the trust.
12. The son noted that he and XDRK jointly owned Blackshaws Road, and Centrelink found that between 1995 and 1997 XDRK and DWJY were regarded as homeowners, and Blackshaws Road was considered to be exempt from the assets test as a principal residence. In 1997 when XDRK moved back to Blackshaws Road this property became his principal residence, and was removed from debt calculation because Centrelink was unable to assess its market value retrospectively.
13. Mr Noonan, on behalf of the respondent, submitted that XDRK and DWJY ceased to be a couple on 24 August 2005 and were homeowners at Bent Street at relevant times since 1995 because they had reasonable security of tenure, and their principal place of residence is exempt from the assets test under s 1118(1) of the Act. He said that the son controls the family trust but XDRK and DWJY are appointors and trustees, and that they could appoint themselves as beneficiaries of the trust.
14. In Re Secretary, Department of Family and Community Services and Kulshrestha (2003) 73 ALD 438 the Tribunal considered the meaning of principal home and stated at [24]:
Taken together, a person’s principal home is the place of residence that is his or her chief or first and foremost residence.
15. In Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876 Greenwood J stated at [58]:
[58] …The social policy of the Social Security Act is to adopt a broad notion of ‘homeowner’ by s 11(4)(b) so as to ensure that those applicants (or their partners) who have a right or interest in a residence which gives reasonable security of tenure in the home are to be treated as homeowners for the purposes of calculating assets value limits and thus pension entitlements.
…
[60] Section 11(4)(b) of the Social Security Act contemplates an ‘interest’ which is either a legal or an equitable interest. However, the reference to the term ‘right’ also contemplates a class or species of ‘right’ which may not necessarily involve a legal or equitable interest in the residence...Accordingly, having regard to the objectives of the Social Security Act and the disjunctive reference, the term ‘right’ is not to be read in a way which is simply a synonym for ‘interest’ which comprehends a legal or equitable interest in the residence. The balance the legislation seeks to strike in determining whether an applicant is a homeowner in respect of a principal home is achieved by the application of the second limb of s 11(4)(b) which asks the question whether such a right ‘gives’ to the person with that right, reasonable security of tenure in the home. The same question is asked in respect of a legal or equitable interest. The different character of the right or interest will inform the objective assessment of reasonable security of tenure in the home.
…
[61] …It is the conjunction of the character of the right or interest and the circumstances in which it arises that conveys an objective sense of whether the right or interest confers reasonable security of tenure in the home.
16. In Re Lountzis and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 1503 the Tribunal referred to Vanderpluym and concluded at [30]:
In other words, something short of an interest in the principal residence, for example, a contract which gives rise to bare rights in respect of a residence which is the principal home of a person who is an applicant for a Social Security payment, will suffice. Of course even such a limited right must give rise to reasonable security of tenure in the principal home.
17. The Tribunal accepts Mr Noonan’s submission and finds that XDRK and DWJY’s positions of appointers and trustees of the family trust, together with their occupation of Bent Street under the verbal agreement with their son, created at least an equitable interest in Bent Street. This interest gave XDRK and DWJY reasonable security of tenure in the property, as family members, while they were living there, despite the separation of XDRK and DWJY on 24 August 2005. The Tribunal notes that the security of tenure was formalised by the purchase from the son of a life interest in Bent Street by XDRK (on 3 November 2007) and DWJY (on 3 April 2008).
18. For these reasons the Tribunal finds that XDRK was a homeowner under s 11(4) of the Act and (from 1 January 2007) s 11A of the Act in relation to Bent Street for the following periods:
·7 August 1995 to 14 May 1997;
·3 August 2000 to 23 February 2005;
·3 April 2008 to date.
19. The Tribunal finds that DWJY was a homeowner in relation to Bent Street for the following periods:
·7 August 1995 to 23 February 2005;
·22 August 2005 to date.
SHOULD THE VALUE OF AMARANTH AVENUE BE INCLUDED IN THE ASSESSMENT OF XDRK AND DWJY’s ENTITLEMENT TO SOCIAL SECURITY PAYMENTS?
20. On 4 January 2008 an authorised review officer affirmed the decision to include the value of Amaranth Avenue in the assessment of XDRK’s entitlement to social security payments. On 7 May 2004 an authorised review officer found that DWJY jointly owns Amaranth Avenue with XDRK and that when DWJY is not residing at this property its value is to be included in the assessment of her entitlement to age pension.
21. The SSAT decided that despite the informal family agreement, Amaranth Avenue remained the property of XDRK and DWJY, so it remained an assessable asset while they did not live in it, and they were homeowners while they lived in it. The son agreed that there was no constructive trust in respect of Amaranth Avenue. However he submitted that if the Tribunal found that XDRK and DWJY were homeowners in relation to Bent Street, then Amaranth Avenue should be exempt from the asset test during this period on the basis of the family agreement. He said that due to the family agreement XDRK and DWJY were residing at his house and they had no control over Amaranth Avenue.
22. The Tribunal has found above that XDRK and DWJY are homeowners in relation to Bent Street while living at Bent Street. Despite the informal family agreement made, the Tribunal finds that XDRK and DWJY are joint owners and have an interest in Amaranth Avenue. The Tribunal agrees with the SSAT and finds that while XDRK is living at Bent Street, or Blackshaws Road, Amaranth Avenue is to be taken into account in the assessment of his entitlement to social security payments, and that while DWJY is living at Bent Street, Amaranth Avenue is to be taken into account in the assessment of her entitlement to age pension. In 1999 Amaranth Avenue was valued at $47,000. In September 2003, February 2005 and October 2007 it was valued at $265,000. There is no dispute with regard to these valuations.
23. From 24 February 2005 to 28 September 2007, while XDRK was living at Amaranth Avenue, the property is exempt from the asset test, under the principal home exemption contained in s 1118(1) of the Act. From 24 February 2005 to 21 August 2005, while DWJY is living at Amaranth Avenue, the property is exempt from the asset test, under the principal home exemption contained in s 1118(1) of the Act. At all other times, the property is an assessable asset for the purposes of calculating the entitlement of XDRK and DWJY to social security payments.
SHOULD VALUE OF BLACKSHAWS ROAD, INCLUDING THE VALUE OF THE MORTGAGE, BE REGARDED IN THE ASSESSMENT OF XDRK’s ENTITLEMENT TO SOCIAL SECURITY PAYMENTS?
24. On 23 October 2004 Centrelink advised the son’s solicitor that XDRK and DWJY were entitled to partial age pension from 2 June 2004. In June 2005 the son requested Centrelink to inform him of the method used to calculate the level of pension. On 23 June 2005 Centrelink informed the son’s solicitor that pension arrears would be paid but no earlier than from 24 February 2005. On 20 June 2006 mortgage documents in respect of Blackshaws Road were supplied to Centrelink. On 26 July 2006 the son sought review of the decision by Centrelink on 23 June 2005 and asked for waiver of the requirement to seek review within 13 weeks. On 12 September 2007 Centrelink decided that no overpayment was made to the applicants during the period 30 December 1999 to 1 June 2004. Part of the reason why Centrelink determined there was no overpayment was because it determined that the mortgage over Blackshaws Road should have been taken into account when assessing XDRK’s interest in the property for the purposes of calculating XDRK’s entitlement to social security payments. At all relevant times XDRK had a 50% interest in Blackshaws Road.
25. The son submitted that the decision of 23 June 2005 was incorrect and potentially misleading, and that the documents on which the calculations were based were not provided to him in response to his letter of 30 June 2005 and his telephone call to Centrelink on 30 June 2005. He said that he was unable to request a review until he had received the documents and checked the calculations.
26. The date of the original decision was 23 June 2005. The request for review was made on 26 July 2006 or no earlier than 20 June 2006, which was more than 13 weeks after the decision. The favourable determination was made on 12 September 2007. Therefore under s 109(2) of the Administration Act the mortgage over Blackshaws Road can only be taken into account in assessing XDRK’s entitlement to age pension no earlier than 20 June 2006. It follows that XDRK is not entitled to arrears of age pension with regard to Blackshaws Road during the period 2 June 2004 to 1 March 2005 inclusive.
27. The Tribunal finds that the social security entitlement reassessment in relation to XDRK is to include the 50% interest in Blackshaws Road from 30 December 1999 until the date of sale. The value of that interest is to be reduced by the value of the mortgage under s 1121(1) of the Act from 20 June 2006.
28. The son submitted that a nil figure should be assigned for the value of Blackshaws Road for the period 30 December 1999 to 1 June 2004 as determined by the decision of the complex assessment officer dated 12 September 2007. In that decision the officer determined that it was not open to retrospectively assess the market value of Blackshaws Road for the purposes of calculating an overpayment. Mr Noonan submitted that from 30 December 1999 until the date of sale the Blackshaws property was an assessable asset and should be treated as such. The parties otherwise agreed on the following valuations:
Blackshaws Road Date Valuation 1/8/2000 $220,000 1/9/2003 $300,000 18/1/2007 $310,000 3/9/2007 $310.000 The mortgage as at 14 March 2006 was $171,050.03 and at 3 September 2007 was $153,952.
29. The Tribunal accepts Mr Noonan’s submission that there is no valid reason for assigning a nil value for Blackshaws Road during the period 30 December 1999 to 1 June 2004 for the purposes of calculating the entitlement of XDRK and DWJY to social security payments. As an assessable asset the property could reasonably be assigned a market value at all relevant times.
IS RENT ASSISTANCE PAYABLE TO DWJY?
30. On 31 July 2007 an authorised review officer determined that DWJY did not qualify for rent assistance as she met the definition of homeowner in s 11 of the Act. The SSAT also decided that DWJY did not qualify for rent assistance.
31. Mr Noonan on behalf of the respondent conceded that DWJY, from 22 March 2007 to 4 October 2007, satisfies the criteria for rent assistance in s 1070B of the Act in respect of Bent Street and the Tribunal finds that DWJY was eligible for rent assistance from 22 March 2007 to 4 October 2007 inclusive.
DECISION
32. The Tribunal sets aside the decision under review and remits the matter to the respondent with the following directions:
a)There was no constructive trust in respect of the property at Amaranth Avenue, North Altona (Amaranth Avenue);
b)XDRK was a homeowner in relation to the property at Bent Street, Moonee Ponds (Bent Street) under ss 11(4) and (from 1 January 2007) s 11A of the Social Security Act 1991 as he had a right or interest that conferred reasonable security of tenure in Bent Street for the following periods:
(i) 7 August 1995 to 14 May 1997;
(ii) 3 August 2000 to 23 February 2005; and
(iii) 3 April 2008 to date.
c)DWJY was a homeowner in relation to Bent Street under s 11(4) and (from 1 January 2007) s 11A of the Act as she had a right or interest that conferred reasonable security of tenure in Bent Street for the following periods:
(i) 7 August 1995 to 23 February 2005; and
(ii) 22 August 2005 to date.
d)The social security entitlement reassessment in relation to XDRK is to include:
(i)application of the principal home exemption from the asset test under s 1118(1) of the Act for Amaranth Avenue from 24 February 2005 to 28 September 2007; and
(ii)50% interest in the property at Blackshaws Road, Newport (Blackshaws Road) from 3 August 2000 until the date of sale. The value of that interest is to be reduced by the value of the mortgage under s 1121(1) of the Act from 20 June 2006.
e)The pension entitlement reassessment in relation to DWJY is to take into account the application of the principal home exemption from the asset test under s 1118(1) of the Act for Amaranth Avenue from 24 February 2005 to 21 August 2005.
f)Given the operation of s 109(2) of the Social Security (Administration) Act 1999, XDRK is not entitled to arrears of age pension with regard to Blackshaws Road during the period 2 June 2004 to 1 March 2005 inclusive as he did not seek review of the Centrelink decision dated 23 June 2005 until 20 June 2006.
g)The entitlement to disability support pension of XDRK is to be reassessed by Centrelink in respect of the period from 30 December 1999 to 7 May 2002. The entitlement to age pension of XDRK is to be reassessed by Centrelink in respect of the period 8 May 2002 to 30 April 2008.
h)The entitlement to age pension of DWJY is to be reassessed by Centrelink in respect of the period 30 December 1999 to 30 April 2008.
i)DWJY qualifies for rent assistance under s 1070B of the Act in respect of Bent Street during the period 22 March 2007 to 4 October 2007 inclusive.
I certify that the thirty-two [32] preceding paragraphs are a true copy of the reasons for the decision of:
G.D. Friedman, Senior Member
(sgd) Mara Putnis
Associate
Dates of hearing: 22 May 2009 and 14 August 2009
Date of decision: 21 August 2009
Advocate for the applicants: XDRK’s and DWJY’s son
Advocate for Centrelink: Mr T Noonan
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