Truscott v Repatriation Commission

(1997) 48 ALD 359

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(Decision by: Barnett T E, DP)

Raymond Truscott v
Repatriation Commission

Tribunal:

Member:
Barnett T E, DP

Subject References:
VETERANS' AFFAIRS
Veterans' Entitlements
Assets and Income
applicant and wife receiving service pension
applicant and wife living in one half of a duplex
income tax returns revealing receipt of rent from second half of the duplex which was not disclosed in the initial application
respondent determined that second half of duplex not a part of the principal home and thus applicant's assets updated
applicant uses the laundry and grandchildren stay over in the second duplex half
office located in second half with rent paid to wife
question of whether the duplex half was a part of the principal home
separate title
land tax
separate rates for each half
not part of principal home

Legislative References:
Veterans' Entitlements Act 1986 - s.52(1)(a); s.52(1)(b)(i)

Case References:
Re Gowans and Repatriation Commission - (1988) 14 ALD 377
Re Samek and Secretary, Department of Social Security - (1988) 16 ALD 295
Re Waters and Department of Social Security (1991) Unreported, AAT Decision no. 7612 -

Hearing date: 1 November 1996
Decision date: 1 April 1997

PERTH

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Decision by:
Barnett T E, DP

1. This is an application for a review of a decision of the Senior Delegate of the Repatriation Commission dated 21 December 1995 which affirmed the decision of a delegate of the respondent dated 11 September 1995 that the applicant had been overpaid service pension.

2. At the hearing the applicant represented himself and the respondent was represented by Ms Lisa Ward of the Australian Government Solicitor. The Tribunal had before it the materials lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 ("the T Documents") and the following exhibits:

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Exhibit A1 - Certificate of Title - 21 Chiswick Street - 72 F579 and 72 F580;

•

Exhibit A2 - Floor Plan - 21 Chiswick Street and 21A Chiswick Street;

•

Exhibit A3 - Bundle of Documents - notices of water charges, valuations and rates;

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Exhibit A4 - Batch of 8 photographs of 21A Chiswick Street showing grounds;

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Exhibit A5 - Resident's letter dated 26 March 1996

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Exhibit A6 - Medical Certificate: Dr Stokes 27 September 1996; and

•

Exhibit A7 - 2 letters from Allan Rocher dated 14 May 1996 and 17 May 1996.

3. The applicant, Raymond Truscott, gave evidence at the hearing of this matter.

Background

4. The applicant successfully applied for a service pension on 12 October 1993 (T2). On 12 January 1995 the Department of Veteran's Affairs received Mrs Truscott's 1993/94 Income Tax Returns which revealed the receipt of rent from a property at 21A Chiswick Street, Wembley Downs (folio 36 of T Documents). The applicant had not advised the respondent about this property in his Claim for Service Pension (T2).

5. As a result of the tax return being filed, an officer of the respondent examined the applicant's file and noted, after a telephone conversation with the applicant on 16 March 1995, the following (T8):

(a)

the property at 21A Chiswick was a duplex half;

(b)

the applicant and his wife "lived in both properties";

(c)

the property was strata titled recently;

(d)

they pay separate rates for both properties;

(e)

they received no income for the property; and

(f)

there are no adjoining doors, so they have to go outside of one "unit" to enter the other.

6. The officer writing the file note suggested to the applicant during the course of the call that as the applicant paid separate rates and the property had a separate address then surely it must be regarded as another property.

7. A valuation of the property at 21A Chiswick Street, Wembley appears at T10. The value of the property is recorded as $115,000.

8. On 2 June 1995 a delegate of the respondent determined, after the applicant's assets were updated, that as the applicant's assets were in excess of the threshold, that his pension should be cancelled.

9. A file minute which appears at T13 notes that the strata title for the property was first registered with the Land Titles Office on 2 September 1993, which was prior to the date that the applicant was granted service pension (25 November 1993). The officer notes that even though the applicant disagrees;

"...I think we must regard 21A Chiswick Street as a second residence of the veteran and his wife from the date of strata titling."

10. The officer notes that taking into account the valuation of $115,000 for the property, the applicant would be well in excess of the asset limit.

11. On 26 June 1995 another officer of the Department recorded:

"Raise OP for period 25/11/95 to 8/6/95 maintaining asset value of $115,000 for property at 21 A Chiswick Street. (Although I think 21A is a different property from 21 GOSP say any portion of home property used for business is not exempt.)

It appears the OP between 2/2/95 and 8/6/95 fits waiver under Admin Delay..."

12. The Department sent the applicant a letter dated 13 September 1995 explaining that as the applicant did not advise the Department of the property at 21A Chiswick Street when first claiming the Service Pension in October 1993, he had been overpaid and he was liable to repay the debt.

13. The applicant wrote a letter to the Department on 17 November 1995 advising that he wished to appeal against the decision to cancel the applicant's pension. On 22 November 1995 an officer of the respondent wrote a letter in reply to the applicant suggesting that as his pension was cancelled on 2 June 1995 and the letter advising of the decision was sent soon afterwards, he was outside the 3 month limitation period.

14. The applicant wrote to the respondent on 29 November 1995 saying that while the decision to cancel the pension was made on 2 June 1995, the decision to raise an overpayment was dated 13 September 1995. He suggested that as :

(a)

he had contacted the office on 20 September 1995;

(b)

Mr Rocher had written to the Department on his behalf on 3 October 1995; and

(c)

the applicant wrote to the Department on 17 November 1995

that he was within time for appealing against the decision to raise the overpayment.

15. On 2 January 1996 a delegate of the respondent wrote to the applicant to inform him that the decision to raise an Overpayment of Service Pension had been reviewed by a senior delegate of the Repatriation Commission who on 21 December 1995 affirmed the decision to raise the overpayment.

Relevant Legislation

16. The provision relevant to this matter is s.52(1)(b) of the Veterans' Entitlements Act 1986 ("the VE Act") which provides:

"52(1)

In calculating the value of a person's assets for the purposes of this Act (other than sections 52G and 52H), disregard the following:

(a)

...

(b)

if the person is a member of a couple - the value of any right or interest of the person in one residence that is the principal home of the person, of the person's partner or of both of them that:

(i)

is a right or interest that gives the person or the person's partner reasonable security of tenure in the home;"

Applicant's Submissions

17. At the hearing of this matter Mr Truscott explained to the Tribunal that his wife had previously owned the duplex and was using it as an investment property before he married her. When he married her in the 1970s he moved in to one half with her and they later decided to get rid of the tenants in the other half and live in both halves. They lived in Lot 1, 21 Chiswick Street and furnished the 21A Chiswick Street, he says, so that his wife's grandchildren could stay over there when the parents wanted to go out on special occasions.

18. The applicant also used one of the bedrooms in 21A Chiswick Street as his office and he used the lounge room as a show room for his agency business importing clothing. He paid rent of $1,500 a year, to his wife, for that part of those premises. He claims that their washing machine was shifted into 21A Chiswick Street and their washing and ironing are completed there. The applicant also gave evidence that he often sits at 21A Chiswick Street to watch television when his wife was watching a different program in 21 Chiswick Street.

19. He submitted that the whole premises really is one residence and one home. He described the access from one part to the other, suggesting that he would leave the laundry of one side, walk across the patio attached to 21A Chiswick Street (which was not enclosed) and enter the laundry at 21 Chiswick Street.

Respondent's Submissions

20. Ms Ward, for the respondent, submitted to the Tribunal that the issue to be considered is whether or not the respondent correctly determined that the property at 21A Chiswick Street is not part of the applicant's principal home within s.52(1)(b) of the VE Act. Ms Ward submitted that as the applicant spends most of his time at 21 Chiswick Street and ordinarily sleeps and eats there, this constitutes his principal home. Ms Ward also suggested that 21A Chiswick Street did not form part of the principal home because :

(a)

it is physically separate to 21 Chiswick Street as there are no adjoining doors;

(b)

it has a separate title (Exhibit A1);

(c)

it is subject to land tax as a non-owner occupied property, whereas 21 Chiswick Street is residential exempt (Exhibit A3 : page 10);

(d)

it is rated separately by the City of Stirling (Exhibit A3 : pages 5 & 9); and

(e)

it is charged separately by the Water Authority of Western Australia and unlike 21 Chiswick Street it does not have a registered senior or registered pensioner discount as it is not owner occupied (Exhibit A3 pages 1 & 6 compared with pages 2 & 7).

21. Ms Ward submitted that in the alternative, if the Tribunal found that 21A Chiswick Street was a part of the applicant's principal home, then that part of it which is rented to the applicant should be treated as an income producing asset and not part of the principal home.

22. Ms Ward directed the Tribunal's attention to Re Gowans and Repatriation Commission, 14 ALD 377 for the purpose of the assets test. Deputy President Thompson, at p381, stated:

"The purpose of the assets test is apparently to compel a person with assets of a value above the threshold amount set from time to time to liquidate some of them so as to provide him with money to meet his recurrent living expenses and so that he does not need to be supported from the public purse."

23. As the terms "principal home" and "principal" and "home" are not clearly defined in the Act, Ms Ward directed the Tribunal to a number of authorities which considered these terms. The Tribunal found Re Samek and Secretary, Department of Social Security (1988) 16 ALD 295 and Re Waters and Department of Social Security (1991) Unreported, AAT Decision no. 7612 to be helpful in defining these terms. In Re Samek at page 296 Senior Member Hayes states:

"The Act contains no definition of "the principal home". In most cases, there will be no doubt about it...A married couple might over the course of their lives, acquire other properties. They might ultimately develop a beach or country house, which is used by their family at odd times during the year for recreational purposes. They might also acquire what are clearly investment properties. In this context, the family home will remain the principal home, even though the couple, as they approach retiring age, might progressively shift the focus of their activities to the holiday house...

The concept of "the principal home" assumes, however, that there is more than one property which is used as a home. If one moves from home to home, then the home in which one spends the most time would, logically, be the principal home."

In Waters the applicant lived in Unit 25/83 Old South Head Road for 30 years and then inherited Unit 15. The applicant gave evidence that she spent most of her time in Unit 25, sleeping, cooking, and watching television at night. However when she acquired Unit 15 she did her laundry, showered and performed her tasks associated with her role as the Secretary/Treasurer of the complex in this unit. The applicant argued that both units made up her principal place of residence because she lives in both units and divides her time between each. The respondent submitted that as the units were on separate floors, had separate titles and the rates were paid separately, that Unit 25 only should be considered the applicant's principal residence.

The Tribunal, constituted by Senior Member Grimes, and Mr Woodley (Member) and Mr McAuley (Member) found:

"The Tribunal finds that the evidence of the physical separateness of the two units, the individual titles, rating and assessment of other charges confirm the Department's view that these are separate and distinct residences for the purposes of the Social Security Act. The fact that Mrs Waters chooses to undertake some of her daily activities in Unit 15 does not change this. In the view of the Tribunal each unit is separate and Unit 15 should therefore be treated separately and included in calculation of assets for the purpose of pension assessment."

Findings

24. Whilst these authorities relate to determining the definition of "principal home" for the purposes of assets tests pursuant to the Social Security Act 1947, the Tribunal considers that these definitions are useful for interpreting s.52(1)(b) of the VE Act. The Tribunal finds (as per the Waters decision) that the applicant's principal home is 21 Chiswick Street alone. The Tribunal is not satisfied that 21A Chiswick Street can be included as being part of the principal home for the following reasons:

(a)

the physical separateness of the two duplex halves. There are no adjoining doors connecting the two duplex halves and on the applicant's own evidence, access from one of the halves into the other is achieved by walking out of the laundry door, across a patio (which is not enclosed) and into the other;

(b)

the separate titles. The property was strata titled on 2 September 1993;

(c)

the properties are rated separately;

(d)

the properties are charged separately by the Water Authority;

(e)

21A Chiswick Street is subject to land tax as a non owner occupied property.

25. The Tribunal is confirmed in this view by the fact that Mrs Truscott treated 21A Chiswick Street as separate premises for other purposes. For instance, she treated as the rent paid by the applicant for part of 21A Chiswick Street as income and claimed tax deductions for the total expenses for electricity and garden maintenance for the whole of 21A Chiswick Street as if it were separate premises.

26. Mrs Truscott also differentiated between the two premises by claiming seniors rebates on rates and land tax allowable on a pensioner's residence on 21 Chiswick Street but did not claim rebates on 21A Chiswick Street.

Decision

27. In accordance with section 43 of the Administrative Appeals Tribunal Act 1975 the Tribunal affirms the decision under review.