Venettacci and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2009] AATA 959 (16 December 2009)

Last Updated: 18 December 2009

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 959

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2009/3927

GENERAL ADMINISTRATIVE DIVISION		)
	Re		MARTA MARIA VENETTACCI

Applicant

And

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

Respondent

DECISION

Tribunal

Ms A F Cunningham (Senior Member)

Date 16 December 2009

Place Hobart

Decision

The decision under review is affirmed.

[Sgd Ms A F Cunningham]
Senior Member

CATCHWORDS

SOCIAL SECURITY - aged pension - assets test - applicant tenant in common of property divided into three separate units - meaning of principal home - assessment of applicant's interest in the property- exemption for interest in principal home - assets limit exceeded - decision under review to cancel aged pension affirmed

Social Security Act 1991, ss 11, 55, 1064, 1118

Guide to Social Security (4.12.3.51)

Ghata and Repatriation Commission [1990] AATA 365

Lymberopoulos and Secretary, Department of Family and Community Services [2004] AATA 891

Demovich and Secretary, Department of Family and Community Services [2004] AATA 647

Re Bowden and Repatriation Commission [1992] AATA 78

Goslino and Secretary, Department of Social Security [1995] AATA 10442

REASONS FOR DECISION

16 December 2009

Ms A F Cunningham (Senior Member)

1. Centrelink made a decision to cancel Mrs Venattacci's aged pension on the basis that her assets exceed the allowable limit. The decision was reviewed by an authorised review officer and affirmed by the Social Security Appeals Tribunal (SSAT) on 27 July 2009. Mrs Venattacci seeks the review of Centrelink's decision.
2. Mrs Venattacci did not attend the appeal hearing and was represented by her son, Mr Venettacci. Mr Sparkes appeared on behalf of the respondent. The T Documents were tendered in evidence and no additional evidence was given at the hearing.
3. The background of facts were largely agreed and are set out in the course of the decision. There was no dispute between the parties regarding the identity of the assets owned and in respect of which Mrs Venattacci has a legal interest. Mrs Venettacci does not dispute the values of the assets as listed by the respondent and accepts the Australian Valuation Office valuations for the real estate properties in which she has an interest.
4. The issue that arises is how Mrs Venettacci's interest in the property at 59-63 Queen Street Sandy Bay should be assessed. The certificate of title for this property shows that she and her brother-in-law, Nicola Venettacci own the property as tenants in common in equal shares. Their interest was registered on 25 May 1998.
5. It is submitted on behalf of Mrs Venettacci, that her interest in the property at 59-63 Queen Street should be limited to that part of the property that she occupies as her principal home, namely 63 Queen Street, which would be exempt from consideration under the assets test for the purposes of aged pension assessment.

BACKGROUND FACTS

6. Mrs Venattacci was first granted aged pension in March 1990. Since that date she has received the pension for a number of years at different intervals. On 18 February 2009 Centrelink cancelled Mrs Venettacci's aged pension on the basis that the value of her assets exceeded the allowable limit. The value of her assets was assessed at $566,028.00, exceeding the allowable limit of $550,500.00.
7. As well as her 50% interest as tenant in common in the property at 59-63 Queen Street, Mrs Venettacci owns the following assets:
   • a property at 32-32A Ryde Street valued at $350,000.00 plus contents of $1,000.00
   • managed investment with Perpetual Investment Management of $40,204.00
   • Commonwealth Bank savings account of $3,824.00
   • Commonwealth Bank term deposit of $40,000.00
   • household contents and personal affects of $6,000.00

Total Value - $441,028.00

8. Mrs Venattacci has occupied 63 Queen Street as her principal residence with her family for some 50 years. The other two units at 59 and 61 Queen Street are independently rented. Nicola Venettacci receives the entire rental income from these two units. Mrs Venattacci does not pay any rent to her brother-in-law for her occupation of the unit at 63 Queen Street which she considers her own property.

LEGISLATION

9. The law applicable to the assessment and payment of aged pension is contained in the Social Security Act 1991 (the Act). Section 55 states that a person's aged pension rate is worked out using the pension rate calculator A at the end of section 1064. Step 9 of section 1064-A1 requires that the assets test using Module G be used to work out the reduction for assets. Module G- Assets Test contains the method used to work out the effect of a person's assets on their maximum payment rate. Step 1, Note 2 refers to section 1118 with respect to assets that are to be disregarded.
10. Section 1118(1)(a) states that the value of a person's right or interest in their principal home that gives the person a "reasonable security of tenure in the home", is to be disregarded in calculating the value of a person's assets.
11. The assets test definitions as contained in section 11 state that "principal home" has the meaning given by section 11A:

"11A Principal home definition for the purpose of the assets test
Principal home
(1) A reference in this Act to the principal home of a person includes a reference to:
(a) if the principal home is a dwelling-house—the land adjacent to the dwelling-house to the extent that:
(i) the land is held under the same title document as the land on which the dwelling-house is located; and
(ii) the private land use test in subsection (3) is satisfied in relation to the land or, if the person is one to whom the extended land use test applies in relation to the land, the extended land use test in subsection (6) is satisfied in relation to the land; or
(b) if the principal home is a flat or home unit—a garage or storeroom that is used primarily for private or domestic purposes in association with the flat or home unit.
(2) The Secretary may determine that land is to be treated, for the purpose of subparagraph (1)(a)(i), as if it were held on the same title document as other land if any of the following apply:
(a) the dwelling-house is located on both blocks of land;
(b) the dwelling-house is located on one of the blocks of land but that block and the other block, taken together, are a place, or are part of a place, that is protected under a law of the Commonwealth, or of a State or Territory, because of its natural, historic or indigenous heritage; ..."

CONSIDERATION

12. A copy of the title search at T19 indicates that the property described as Volume 234867 Folio 1 situated at the corner of Queen and Grosvenor Street Sandy Bay is owned by Marta Maria Venattacci and Nicola Venettacci as tenants in common in equal shares. This property comprises the three units at 59-63 Queen Street one of which, namely number 63 comprises Mrs Venettacci's principal home.
13. In their decision the SSAT considered whether an equitable interest in the property may be held by someone else. The SSAT referred to the situation where the intention and conduct of the legal owner and another person could support a finding that the property is held on trust for the other person, in other words "a constructive trust". The SSAT went on to consider the elements that constitute a common intention constructive trust by reference to the Guide to Social Security (4.12.3.51) and concluded that they are not present in the current case.
14. Mr Sparkes submitted that there is no evidence in this case to support any finding of a constructive trust and even if the Tribunal disagreed, the assets of the trust would be taken into account in this case as Mrs Venettacci has a controlling interest.
15. The Tribunal agrees with the SSAT's assessment and conclusion that there is no evidence which would support a finding that Mrs Venattacci and her brother-in-law had formed a common intention regarding the beneficial ownership of the property otherwise than as exhibited by the legal title as tenants in common in equal shares. The arrangement whereby Mrs Venettacci occupies the larger unit at 63 Queen Street as her principal home rent free is offset by the rental income received by Mr Venettacci for the two smaller units at 59 and 61 Queen Street. This arrangement does not evidence a finding that either party has acted to their detriment such that they could not legitimately assert a one half interest in the total property.
16. An aspect of the definition of principal home is that a person has "reasonable security and tenure in the home". This phrase was considered by the Tribunal in Goslino and Secretary, Department of Social Security [1995] AATA 10442 (4 October 1995) where the Tribunal said:

"(h) As a registered proprietor of the property the applicant enjoys reasonable security of tenure in the property. This is so regardless of the fact that the applicant's son's joint interest in the property was financed by a bank mortgage".

There was no evidence of any encumbrance on Mrs Venattacci's interest in the home or that she was not entitled to reasonable security of tenure.

17. Mr Sparkes referred the Tribunal to several decisions that were concerned with the principal home definition where it had been argued that units attached to the home and separately rented formed part of the principal home and were therefore subject to exemption under the Act.
18. It is clear from those decisions that the extent of the principal home is confined to that part of the property used primarily for private or domestic purposes and can include adjacent land and garages and sheds associated with domestic use.
19. In the decision Ghata and Repatriation Commission [1990] AATA 365 the Tribunal determined that the entire upper floor which was occupied by the applicant and his children constituted the "principal home" and that the lower floor flats being separate and distinct, one of which was occupied by the applicant's married daughter and her family rent free, did not form part of the principal home and were not exempt from the assets test.
20. Similarly in Lymberopoulos and Secretary, Department of Family and Community Services [2004] AATA 891 the Tribunal determined that the separate flats in the building owned and partly occupied by the applicants were assessable assets and did not form part of the applicants' principal home. Mr and Mrs Lymberopoulos had purchased the property as joint tenants in approximately 1968/69. The property was divided into four self contained flats each having two bedrooms and two other separate rooms and all on the one title. Mr and Mrs Lymberopoulos occupied units 3 and 4 upstairs and rented out units 1 and 2 located on the lower level. Senior Member Ettinger relied on the findings of the Tribunal in Demovich and Secretary, Department of Family and Community Services [2004] AATA 647 that the separate dwellings on the title of the principal home were not considered to be part of the home but assessable assets.
21. The Senior Member referred to Re Bowden and Repatriation Commission [1992] AATA 78; (1992) 15 AAR 325 where it was said at paragraph 12:

"... it seems clear Parliament intended not only that a "principal home" could constitute only a part of an unsubdivided property, but also that any separately let part of a property would not constitute part of a "dwelling-house"."

22. At paragraph 39 Senior Member Ettinger in the Lymberopoulos decision said:

"Accordingly there was clear authority to support the view that the separate flats in the building owned and partially occupied by Mr and Mrs Lymberopoulos were assessable assets and not part of the Respondent's principal home".

23. The only part of the property at 59-63 used by Mrs Venettacci as her principal home is the unit known as 63 which is accordingly exempted from the assets test under the Act. Although it was not contended that units at 59 and 61 Queen Street should be included as part of the principal home, the Tribunal considers that there is clear authority to support a conclusion that they should not be despite the fact that all units are on the one title. For these reasons the Tribunal accepts the respondent's decision to include 59 and 61 Queen Street as a component of Mrs Venattacci's assets for the purposes of the assets test. These two units were valued together at $250,000.00 by the AVO.

24. The remaining issue is the value that should be ascribed to 63 Queen Street. Number 63 was valued at $300,00.00 by the AVO and this figure is not in dispute. The Tribunal accepts that the AVO valuation is an acceptable mode of valuing real property under the Act.

25. On the basis of the Tribunal's finding that 63 Queen Street constitutes an exempt asset, it is necessary to determine the value of Mrs Venettacci's interest in that property. Her legal interest is that of a tenant in common in equal shares which equates to a one half interest in the property. For the reasons outlined above the Tribunal sees no justification for a finding that Mrs Venattacci's interest is otherwise than as it appears on the title. One half of the valuation figure is $150,000.00. Being an exempt asset this figure is not included in Mrs Venettacci's list of assets. The remaining one half share is owned by a third party. The total value of Mrs Venattacci's other assets is $566,028.00 being $441,028.00 (see paragraph 7) plus $125,000.00 (one half interest numbers 59 and 61). This sum exceeds the allowable asset limit. The provisions of section 44 of the Act provide that aged pension is not payable if the person's aged pension rate would be nil. Because Mrs Venattacci's assets exceed the allowable limit, her aged pension rate under the Module is nil.

26. For these reasons the Tribunal determines to affirm the decision under review.

I certify that the 26 preceding paragraphs are a true copy of the reasons for the decision herein of Ms A F Cunningham (Senior Member)

Signed: [R Hunt]

R Hunt (Administrative Assistant)

Date/s of Hearing 25 November 2009

Date of Decision 16 December 2009

Representative for the Applicant Mr J Venattacci

Solicitor for the Respondent Mr B Sparkes, Centrelink Legal Services