Panayides and Secretary, Department of Family and Community Servi ces [2003] AATA 1289 (17 December 2003)

Last Updated: 18 December 2003

DECISION AND REASONS FOR DECISION [2003] AATA 1289

ADMINISTRATIVE APPEALS TRIBUNAL Nº V2003/652

GENERAL ADMINISTRATIVE DIVISION

Re: STANLEY PANAYIDES

Applicant

And: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal: M.J. Carstairs, Member

Date: 17 December 2003

Place: Melbourne

Decision: The Tribunal affirms the decision under review.

(sgd) M.J. Carstairs

MemberSOCIAL SECURITY - reduction in age pension - assets exceeded allowable limit - valuation of property

Social Security Act 1991 s1064, s1065-G5

REASONS FOR DECISION

17 December 2003 M.J. Carstairs, Member

1. This is an application by Stanley Panayides (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 23 May 2003. The SSAT affirmed a decision of a Centrelink delegate of the Secretary, Department of Family and Community Services (the respondent) dated 28 November 2002 to reduce the rate of the applicant's age pension because of an increase in the value of his assets, based on a re-evaluation of his investment property.

2. The matter was heard on the papers with the agreement of the parties. The material before the Tribunal comprised the documents lodged under s37 of the Administrative Appeals Tribunal Act 1975 (T1-T19), as well as the following:

* an undated, written statement prepared by the applicant and his wife which was received by the Tribunal on 1 December 2003;

* an opinion dated 17 June 2003 by Mr D. Devlin, Director of Barry Plant Doherty Real Estate (Barry Plant) on the value of 40 Sydney Road, Coburg (the property);

* a written valuation of the property, dated 27 November 2003, by Mr P. Veale, Regional Manager, Australian Valuation Office, Melbourne;

* a statement of facts and contentions, dated 20 November 2003, prepared by the respondent; and

* an additional submission by the respondent dated 1 December 2003.

3. The issue to be decided by the Tribunal is whether the property has been valued correctly for the purposes of assessing the applicant's assets in determining the applicant's rate of age pension.

BACKGROUND

4. The applicant was granted age pension in November 1995. Centrelink valued the property at $140,000. On 25 November 2002 the Australian Valuation Office (AVO) revalued the property at $280,000. On 28 November 2002 Centrelink decided to reduce the applicant's age pension on the basis of the revaluation. Following a request from the applicant for a further valuation, the AVO completed a site visit on 4 January 2003 and confirmed the value of the property at $280,000. On 10 January 2003 Centrelink reduced the applicant's age pension because of the combined value of his assets. On 29 January 2003 an authorised review officer affirmed the decision. On 20 February 2003 the applicant sought review by the SSAT. Following the SSAT decision affirming the Centrelink decision, the applicant lodged an application with the Tribunal on 18 June 2003 for review of the decision.

EVIDENCE

5. In its 2003 report the AVO noted that the valuation of the property was provided as at 25 November 2002, nearly 11 months after an assessment by the City of Moreland (the Council), as specified on the rates notice (the Council valuation) which was sent to the applicant. The AVO stated that the Council valuation was based on a mass appraisal approach, which was, by definition, not necessarily specific to individual properties, hence the use of the term reasonably true and correct.. The report included the sale price of a number of nearby shops, which it described as inferior to the property. These prices were $300,000 (March 2003), $230,000 (July 2002) and $268,000 (February 2002), all of which were for single-storey brick shops. The property is a double-storey brick shop.

6. In his written submission the applicant stated that he strongly disagreed with the decision to increase the valuation of the property to $280,000. He said that the amount of $220,000, which appears on the rates notice is more accurate, as the Council is a legitimate local government authority. The applicant stated that the Council uses qualified valuers who are professionals holding recognised tertiary qualifications, with the required experience to perform municipal valuations. He maintained that the Council states in its documentation that property values are determined by analysis of property sales and rental evidence. This is then applied to the data on each particular property over time, through inspection, building and planning permits and other public sources, taking into account the different characteristics of each property.

7. The applicant said that although the AVO uses qualified valuers, the municipal valuers are more experienced and more accurate in respect of valuations in a specific area, and their valuations are uniform and unbiased. He stated that for these reasons the Tribunal should prefer the Council valuation. He said that there is no uniformity applied to AVO valuations and that the system is unfair.

8. The applicant stated that he did not provide a sworn valuation because of the cost, and said that the opinion of Barry Plant was more reliable because the estate agent was familiar with the local area. He said that Barry Plant estimated that on the AVO valuation of $280,000 a rental of $28,000 per year could be expected, but in fact the maximum rent that is achievable for the particular location in Sydney Road is about $15,000 per year, so the value of the property is about $220,000.

9. In respect of the features of the property, the applicant stated that the building includes a dwelling, but the dwelling does not have a separate access, so the dwelling cannot be sublet to receive additional rent. He also pointed out that the improvements in the decor and aesthetic appearance made by the existing tenant would be removed if the tenant decided to leave. The applicant said that for these reasons the recent sales listed in the schedule to the AVO report were not indicative of, or comparable to, the value of the property.

CONSIDERATION OF THE ISSUES

10. Section 1064 of the Social Security Act 1991 (the Act) provides that the rate of age pension is calculated in accordance with the Rate Calculator in the Act, and s1064-G5 of the Act refers to an assets value limit for a home-owner who is not a member of a couple.

11. In its statement of facts and contentions the respondent submitted that it followed accepted practice in obtaining a valuation from the AVO, which used a fully qualified and certified valuer and produced a figure based on market valuation. It argued that the AVO conducted an inspection of the shop and relied on the description of the residential dwelling provided by the tenant. The respondent said that the AVO took into account details of the property such as its position, condition and size, and considered comparable properties and recent sales in the local area.

12. The respondent noted that the applicant had not provided a sworn valuation prepared by a qualified valuer. It submitted that the figure of $220,000 on the rates notice was based on the capital improved value and was not the result of an on-site inspection. The respondent also pointed out that the capital improved value was dated January 2002, whereas the AVO valuation was completed in November 2002 and January 2003. The respondent stated that the capital improved value was generally determined by mass valuations and was not specific to individual properties, and so it did not reflect current market value.

13. In respect of the assessment provided by Barry Plant, the respondent noted that the author stated: In your interest, we prefer to approach the matter of value from a conservative view point...we would stress that this is only an opinion and not to be taken as a sworn valuation.. The respondent also pointed out that the assessment does not list the matters taken into account in arriving at the valuation.

14. In reaching its decision the Tribunal takes into account the written material, including the submissions made by the parties.

15. The Tribunal accepts that the applicant disagrees with the valuation provided by the AVO. However, the Tribunal is satisfied that the AVO valuation was conducted by a fully qualified and certified valuer, who took into account matters such as the position, quality and size of the property, its condition and recent sales of comparable property in the area. The Tribunal agrees with the respondent that the capital improved value as assessed by the Council is not necessarily the same as the market value, and the AVO valuation is more recent than the Council valuation. The applicant provided no valuation from another valuer. The valuations carried out by the Council and Barry Plant do not set out the factors taken into consideration in reaching the estimated value of the property.

16. There is no objective evidence that the level of rent received for the property is directly related to its current market value, or that the location of the property in the particular part of Sydney Road necessarily reduces its market value.

17. For these reasons the Tribunal prefers the AVO valuation over those produced by the Council and Barry Plant, and finds that the property was valued correctly at $280,000 for the purpose of determining the rate of the applicant's age pension. Therefore, the Tribunal finds that the decision to reduce the applicant's age pension based on the revised valuation was correct.

DECISION

18. The Tribunal affirms the decision under review.

I certify that the eighteen [18] preceding paragraphs are a true copy of the reasons for the decision of:

M.J. Carstairs, Member

(sgd) Olympia Sarrinikolaou

Clerk

Date of hearing: Nil: decision on the papers

Date of decision: 17 December 2003