Pettas and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 178 (18 March 2009)

Last Updated: 18 March 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 178

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/4137

GENERAL ADMINISTRATIVE DIVISION		)
	Re		ALEX PETTAS

Applicants

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Ms N Isenberg, Senior Member

Date 18 March 2009

Place Sydney

Decision

The decision of the Social Security Appeals Tribunal of 18 August 2008 is varied such that the amount of $628,121 is included as the Applicant’s asset for the purposes of assessing his rate of age pension for the period 25 July 2007 to 11 June 2008.

.................[sgd]..........................
Ms N Isenberg
Senior Member

CATCHWORDS

SOCIAL SECURITY – age pension – assets test – sale of principal home – decision under review varied

Social Security Act 1991 – sections 9, 11, 1064-A1, 1118, 1126AA

Re Eimberts and Repatriation Commission (1988) 16 ALD 19

REASONS FOR DECISION

18 March 2009 Ms N Isenberg, Senior Member

1. Mr Pettas was granted age pension on 17 March 2000. In November 2006, he left Australia permanently for Greece, separating from his wife. In May 2007, the former matrimonial home was sold for $675,000, from which, after payment of the associated costs of the sale, the net amount was $608,288 (excluding the deposit). Centrelink assessed this amount as an asset in calculating Mr Pettas’ entitlement to age pension. Mr Pettas requested a review of this decision. On 3 June 2008 a Centrelink Authorised Review Officer (“ARO”) varied the decision and assessed Mr Pettas’ assets at $638,621. The effect of the decisions was to reduce Mr Pettas’ pension from $8,649.44 p.a. to $537.55 p.a. The decision under review is the decision of the Social Security Appeals Tribunal (“SSAT”) dated 18 August 2008 to affirm the ARO’s decision.

LEGISLATIVE FRAMEWORK

2. Age pension is a payment governed by a means test. The lower rate of pension resulting from the application of the Assets Test and the Ordinary Income Test is the rate payable: section 1064-A1 of the Social Security Act 1991 (“the Act”). If the allowable assets limit is exceeded the claimant is not eligible to receive the age pension.
3. When a person sells their principal home, effectively, the proceeds are exempt for 12 months while another principal home is obtained, after which time they are counted as assets: subsections 1118(1B) and (2). This exemption applies only if and to the extent the person intends to or applies the funds to build, rebuild, repair or renovate another residence that is to be the person’s principal home or intends to apply the funds to the purchase of another residence that is to be the person’s principal home.
4. In specified circumstances, the value of an asset that has been disposed of can be included in the person’s assets for the purposes of the assets test. Such assets are called deprived assets: section 9(4).

ISSUE

5. What was the appropriate amount of Mr Pettas’ assets to be taken into account in determining his rate of age pension?

CONSIDERATION OF THE EVIDENCE AND FINDINGS

6. I had before me documents lodged pursuant to section 37 of the Administrative Appeals Tribunals Act 1975 (“the T-documents”), which I took into evidence together with extracts from Mr Pettas’ Centrelink records (exhibits R1 and R2).
7. Mr Pettas gave evidence by telephone from Greece. Mr Pettas told me that he and his wife separated because of his gambling on horses and greyhounds. He said he owed a total of about $550,000 in amounts ranging from $3,000 to $25,000 to between 200 and 300 people he met through the local soccer club. He left Australia. Mr and Mrs Pettas agreed that they would sell the matrimonial home to pay his gambling debts. He said his wife had a Power of Attorney and she and their daughter arranged the sale of the house. He did not know where the proceeds of sale were paid, but thought it might have been a joint account in his and his wife’s names held at the ANZ bank at Kingsgrove. Mr Pettas said he received no proceeds of the sale whatsoever. He authorised his wife to withdraw the money from the account so that his daughter could pay the gambling debts he had accumulated over seven or eight years. However, his daughter left Australia, taking her children to Egypt, without paying the debts. She sent the children back to Australia and they arrived, unaccompanied and unannounced, at Mrs Pettas’ home. His daughter’s whereabouts are now unknown. Mr Pettas said he did not know when his daughter left Australia, although he had told the SSAT that it was about six months before the hearing there, which would make it early 2008. Mr Pettas has not involved the police nor taken any other action to pursue his daughter. He said she also had a Power of Attorney, but he does not appear to have previously told Centrelink or the SSAT about it.
8. Mr Pettas was asked about how he kept track of the debts, given the large number of creditors. He said he “just knew”. The creditors might have occasionally asked about repayment, but there were never any formal demands, nor indeed were there any formal records of the loans themselves. His daughter, who was to pay the creditors from the proceeds of the sale, had a list, and as she frequented the soccer club, she also knew who the people were.
9. Mr Pettas was referred to information from the ANZ bank (T12) to the effect that
   • on 22 May 2007 $558,121 was sent by international telegraphic transfer to a bank account in Greece in his name, his ex-wife’s name, and his son and daughter’s names,
   • on 22 May 2007 $500 was withdrawn in cash,
   • on 28 May 2007 $80,000 was withdrawn and deposited into his daughter’s account, and
   • on 31 May 2007 $400 was withdrawn in cash.

He said he did not know the money had been transferred into the account in Greece. He said the account had been opened many years beforehand and had been used by the family whenever they went to Greece. There was no evidence whether the money remained in the account or if it had been withdrawn since the date of the bank’s advice about the transfer on 11 August 2008.

10. Mr Pettas’ evidence was somewhat at odds with other information which was before me:
    • The solicitor’s settlement letter of 15 May 2007 (T8), addressed to Mr and Mrs Pettas, noted that $581,952.40 was to be paid to ‘A Pettas’.
    • Mrs Pettas was recorded as having told Centrelink on 9 July 2007 that she had transferred all the money into Mr Pettas’ accounts (T11, p. 47). (Mr Pettas told me that he thought Mrs Pettas must have been misunderstood.)
11. Further, Mr Pettas was recorded as having told Centrelink:
    • On 25 July 2007 (T5, p. 31) that the property had been sold and all the funds had been sent to him in Greece by his wife, although at the hearing he specifically denied that he had said that.
    • On 20 November 2007 (T5, p. 28) that he had to sell his house to pay his gambling debts and now was in financial hardship.
    • On 4 December 2007 (T5, pp. 26-27) that he has a gambling problem and no longer has the money from the sale and was being supported by relatives overseas.
    • On 6 December 2007 (T5, p. 26) that he has gambling problems and had sold the house to pay off debts.
    • On 5 March 2008 (T5, p. 23) that the proceeds from the sale of the home had been used to repay debts.
    • On 18 March 2008 (T5, p. 22) that the debts had been repaid to the friends who wished to remain anonymous.
    • On 21 May 2008 (T5, p. 20) that withdrawals were in two lots because he had forgotten to pay some of his debts, having been approached by people who were aware of others having been repaid. His wife had handled it all. He declined to tell Centrelink the names of the people he had paid.
12. Mr Pettas’ account also differed before the SSAT. He said that his wife had signed the withdrawal form with his permission, and that his daughter took the money later. Mr Pettas denied that he had told the SSAT that his wife had transferred all the money into his account.
13. From as early as November 2007 Mr Pettas was in contact with Centrelink claiming that he was in financial hardship because, after paying his gambling debts, he had no money. For reasons which are unclear, the fact that his daughter had absconded with the funds was never mentioned to Centrelink in the numerous discussions after that date, and it was not until he spoke with the SSAT in August 2008 that he first mentioned his daughter’s role in the dissipation of the money.
14. Mr Pettas had nominated his son as his contact (“nominee”) in his absence from Australia. Centrelink had written to both Mr Pettas’ son and Mr Pettas himself in April 2008 seeking some information, in relation to a company or trust, which was required to assess his entitlements. No response was provided, notwithstanding that suspension and cancellation were clearly stated as the consequence of failure to reply. Mr Pettas said that his son worked very long hours and has his own problems. On 11 June 2008, Mr Pettas’ age pension was suspended because of his failure to respond and on 10 September 2008, his age pension was cancelled, for the same reason. His conduct seems inconsistent with what might be expected of someone who, at the same time, was claiming to be destitute and living on the kindness of his overseas relatives.
15. I also consider his account that the grandchildren arrived unaccompanied and unannounced after having been put on a plane in Egypt by their mother, to be unlikely, but not critical to the outcome of this matter. Of greater relevance is his failure to mention his daughter absconding and his failure to take formal steps to find her, and his continual representations to Centrelink that he was in financial hardship following payment of his debts, in circumstances where he clearly was aware that the debts had not in fact been paid. It is noteworthy, too, that he claimed word had got around that he was paying his debts and other creditors had come forward thus requiring a second withdrawal – in the amount of $80,000.
16. In relation to the amount of $558,121 I accept that although there were four names in the Greek bank account, the money was sent to Greece where only the Applicant is known to reside. There is no evidence that the other three names in the joint account have access the money in Greece. There was no evidence that his daughter’s Power of Attorney, which was not produced by Mr Pettas, would be valid in Greece.
17. I therefore find that the proceeds of sale were correctly taken into account as assets. For completeness, I note that all the available evidence was to the effect that Mrs Pettas had assigned her right to the proceeds of sale to Mr Pettas and that there was no intention to purchase another home with the funds.
18. Even if I were to accept that his daughter had absconded with the funds as Mr Pettas alleged, Mr Pettas’ has a right to recover against his daughter. The debt is an asset for the purposes of section 11 of the Act: Re Eimberts and Repatriation Commission (1988) 16 ALD 19. If his daughter acted outside the scope of the Power of Attorney – although it was unclear if this was actually alleged – he should pursue that. While ever the right to pursue his daughter continues – and it will until the expiry of the limitation period – this will be properly considered to be an asset.
19. As to the correct amount to be taken into account, I find that the $558,121 should be assessed as the Applicant’s asset. In relation to the $80,000 that was withdrawn and deposited in his daughter’s account, this should be assessed as a gift to her. After deducting the allowable $10,000 the remaining $70,000 should be assessed as his deprived asset: section 1126AA(2). There was no evidence that Mr Pettas received the $900 withdrawn in cash, especially as he was not in Australia at the time, and this should not be assessed as Mr Pettas’ asset. In total, $628,121 should be assessed as the Applicant’s asset from 25 July 2007 until his age pension was suspended on 11 June 2008.

DECISION

20. The decision of the Social Security Appeals Tribunal of 18 August 2008 is varied such that the amount of $628,121 is included as the Applicant’s asset for the purposes of assessing his rate of age pension for the period 25 July 2007 to 11 June 2008.
    

I certify that the 20 preceding paragraphs are a true copy of the reasons for the decision herein of Ms N Isenberg, Senior Member

Signed: ..............[sgd].................................................................

Associate

Dates of Hearing 13 February 2009

Date of Decision 18 March 2009

Appearance for the Applicant Self-represented

Appearance for the Respondent Ms P. Lee, Centrelink Legal Services and Procurement Branch