Worthing and Secretary Department of Families Housing Community Services and Indigenous Affairs

[2008] AATA 328

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 328

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No. N 2006/0420

GENERAL ADMINSTRATIVE DIVISION		)
Re		PETER WORTHING

Applicant

And SECRETARY DEPARTMENT OF FAMILIES HOUSING COMMUNITY SERVICES & INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal  Senior Member M D Allen

Date23 April 2008

PlaceSydney

Decision The decision under review is affirmed.

.................[sgd].......................

M D Allen
  Senior Member

CATCHWORDS     

DISABILITY SUPPORT PENSION – review of decision affirming prior determination by respondent cancelling applicant’s disability support pension – severe financial hardship – hardship provisions of pension assets test – asset value threshold – unrealisable asset – opinion by experienced real estate agent as to value of real estate in particular market is not to be ignored – value of real estate is price obtained in open market – decision under review affirmed

LEGISLATION

Social Security Act 1991 sections 11(1) and 1129

CASE LAW

Re Weller and Secretary, Department of Social Security (unreported Nos. Q95/394, Q95/395 22 March 1996)

REASONS FOR DECISION

23 April 2008 Senior Member M D Allen

1. By application made the 10th day of April 2006, the Applicant sought review of the decision of the Social Security Appeals Tribunal made the 6th day of March 2006, affirming prior determinations by the Respondent to cancel the Disability Support Pension payable to him, and to reject a claim for payment of that pension pursuant to the hardship provisions, set forth in section 1129 of the Social Security Act 1991.

2.      The Applicant was in receipt of a Disability Support Pension but, with effect from 15 September 2005, that benefit was cancelled, as the Respondent estimated that the value of assets held by the Applicant exceeded the sum of $322,000.00.  Following the cancellation of his Disability Support Pension, the Applicant applied for the payment of that pension pursuant to the hardship provisions of the pension assets test.  This claim was also denied.

3.      The issues for resolution in this matter devolved into answering the following questions, namely:

a)What is the value of the Applicant’s investment property situated at 12 Lindsay Noonan Drive, South West Rocks, in the State of New South Wales; and

b)Is the Applicant experiencing severe financial hardship?

4.      When this matter first came on for hearing before me at Kempsey, I adjourned the matter in order that a more comprehensive valuation report could be obtained regarding the property at South West Rocks.  At that time, the Australian Valuation Office had carried out a kerb-side valuation, but the Applicant had refused permission for the valuer to enter the property.  This meant that the Respondent’s Valuer had no means of assessing the Applicant’s claim, that the property was not yet completed internally.

5.      Subsequently, the AVO Valuer obtained access to the property.  His amended valuation became exhibit R2 in these proceedings.  At that same hearing, the Applicant produced a valuation of the said property carried out by a local firm of Real Estate Agents.  That valuation had not been referred to the Respondent’s Valuer, consequently, these proceedings were further adjourned.  A report in reply to the Applicant’s valuation was received on 17 March 2006, and was marked as exhibit R4 in these proceedings.  That report values the subject property (when completed) at $410,000.00. 

6.      In the opinion of the AVO Valuer, the comparable sales relied upon by the Applicant’s Real Estate Agent were not truly comparable, as being on a single title and not the strata title proposed for the subject property.  Additionally, the sales are some 18 months after the date of the valuation of the subject property by the AVO.

7.      The property appraisal report tendered by the Applicant bears the caveat “disclaimer: this is only an opinion and is not a valuation as we are not registered valuers”.  The agents valued the property, when completed, at $350,000.00. 

8.      An opinion as to the value of real estate by a real estate agent, with experience in the particular market, is not to be ignored.  See Deputy President Breen and Mr Horrigan Member (Mr Horrigan was a registered valuer) in Re Weller and Secretary, Department of Social Security (unreported Nos. Q95/394, Q95/395 22 March 1996).  The value of any real estate is the price which it obtains in the open market.

9.      There is a considerable difference in the valuations quoted by the AVO and the real estate agent, namely the sum of $60,000.00, for the subject property when completed. 

10.     Exhibit A3 is a valuation report dated 7 July 2007 following an objection by the Applicant to the Valuer General’s land value.  It is of no assistance in these proceedings as it refers only to unimproved value, nor are any of the comparable sales relied upon the same as those relied upon by either the AVO Valuer or the Real Estate Agent.

11.     Doing the best I can in the absence of cross-examination of the respective authors of the valuation reports, I accept the value placed on the subject land by the registered Valuer as a starting point.  I note that the Real Estate Agent suggests that the sale be listed at $379,000.00.  I acknowledge that this may well represent a figure which can be “negotiated down” but, at the same time, must be regarded by the agent as realistic.  The report by the Real Estate Agent does indicate that the AVO value may be unduly optimistic.  To take a compromise between the AVO figure and the Real Estate Agent’s figure, I find that attributing a value of $395,000.00 to the property is a fair adjustment of the competing estimates.

12.     The Applicant has estimated that it will cost him $86,644.80 to complete the units.  The AVO Valuer, after internal inspection of the units, disagreed with this figure, estimating $48,000.00 to complete.

13.     Although the Applicant has pointed out that as a licensed builder his estimate of completion costs should be accepted as a registered valuer, the AVO Valuer is also trained to make such calculations.  I, therefore, accept that the cost of completing the work is as estimated by the Respondent’s value, namely the sum of $48,000.00.

14.     I also accept the Respondent’s submission that the costs of legal fees, rates, developers’ profit and interest should be excluded when assessing value on a comparable sales basis. 

15.     In his updated report, the AVO Valuer estimated cost of completion at $48,000.00.  Accepting this estimate, the value of the subject property is reduced to $347,000.00.  From this the Respondent has agreed to subtract an unsecured loan in the sum of $35,000.00.  This then gives a value of $312,000.00 for the Applicant’s real estate. 

16.     As at the date of calculation, namely the 20 September 2005, the Applicant’s other assets consisted of shares valued at $8,506.00, home contents at $2,800.00 plus savings of $730.00 and a motor vehicle, which the Applicant valued at $100.00.  This gives a total for other assets of $12,136.00.  This sum, together with the real estate value, gives a total asset value of $324,136.00, which exceeded the then asset value threshold for single home owners of $322,000.00.

17.     Subsection 11(12) of the SSA provides that an unrealisable asset is one which a person cannot sell or realise or use as an asset for borrowing.  Paragraph 1129(1)(c) of the SSA requires that, before payment of a pension pursuant to the hardship provisions can be paid, a person must have an unrealisable asset.  In this case, the Applicant has shares which can be readily traded and, indeed, his investment property, although uncompleted, could be put on the market.  In these circumstances, he cannot be said to have unrealisable assets. 

18.     For the reasons above, the decision under reviewed is affirmed. 

I certify that the 18 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.

Signed:         [sgd]           .....................................................................................
  Mwela Kapapa, Associate

Date/s of Hearing:   24 August 2007 and 11 February 2008         
Date of Decision:  23 April 2008     
Advocate for the Applicant:      Mr N Allan          
Advocate for the Respondent:  Centrelink Legal Services