Editors --- "Age pension: extended land use test; meaning of 'principal home'" [2010] SocSecRpr 13; (2010) 12(1) Social Security Reporter, Article 13

---

Age pension: extended land use test; meaning of 'principal home'

MATULA and SECRETARY TO THE DFHCSIA

(2009/993)

Decided: 24th December 2009 by A. K. Britton

Background

Rainville, a large rural property located in Western NSW, was owned by Matula Rural Pty Ltd. Until 1997, the company was jointly owned by Matula and his former wife. Since that time, Matula had been the sole shareholder and director of the company. Matula had lived alone at the property since 1980. His wife lived in Sydney and visited Rainville about four times a year.

In June 1995, as part of the divorce proceedings, Matula was ordered by the Family Court ‘until further order’ to vacate Rainville, not enter or remain on the property; or deal, dispose or interfere with the property in any way. On being served with the order, Matula left Rainville with the view that it was a short term move. He initially stayed with a family friend before he secured accommodation in a boarding house in May 1997.

Throughout the period, Matula was away from Rainville, namely June 1995 to May 1997 (‘the subject period’) he was involved in protracted negotiations with his wife about the family property which included Rainville. Also after his departure from the property in June 1995, Matula had returned to the property on three separate occasions: in November 1995 for just over a week to work on the harvest, in December 1995 for a few days to meet with his wife and her solicitor to discuss the property settlement and in September 1996 for about a week to vote in the local government elections, inspect the property and attend to other matters. When he returned he stayed in his own room and had the run of the house. Throughout the subject period, Matula had also maintained Rainville as his address with relevant authorities, retained his membership of the local branches of the Rural Fire Service and the RSL and kept in touch with members of the local community. All expenses of the house and property were born equally by Matula and his former wife through the family company, throughout the subject period.

Issues

Centrelink had rejected Matula’s claim for age pension in November 2008 on the grounds that the value of Matula’s assets exceeded the allowable threshold.

The issue before the Tribunal was whether the property ‘Rainville’ was Matula’s ‘principal home’ for a period of twenty years or more continuously’ and therefore was to be disregarded when calculating the value of his assets for the purposes of the Social Security Act 1991 (the Act).

The law

Subject to any statutory exception, a person’s ‘principal home’ is disregarded when calculating the value of their assets for the purpose of the Act: s.1118(1).

‘Principal home’ is defined in s.11A(1) of the Act to mean:

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...

It was common ground that the private land use test was satisfied and therefore the Rainville house and the surrounding two hectares together constituted Matula’s principal home.

The issue for determination was whether ‘the extended land use test’ as set out in s.11A(4) of the Act applied in relation to land adjacent to the dwelling house.

Section 11A(4) of the Act provides that the ‘extended land use test’ applies to a person in relation to land adjacent to the dwelling house if:

a) the person has reached pension age; and

b) the person is qualified for an age pension or carer payment and that pension or payment is payable to the person; and

c) the dwelling house has been the person’s principal home for 20 years or more continuously.

It was agreed that Matula satisfied paragraphs (a) and (b). DFHCSIA argued that because of Matula’s extended absences throughout the subject period he did not satisfy paragraph (c).

Section 11A(9) was relevant to deciding whether Matula satisfied paragraph (c) of

s.11A(4). It provides that a residence of a person is to be taken to continue to be their principal home during:

a) any period (not exceeding 12 months or any longer period determined under subsection (9A)) during which the person is temporarily absent from the residence.

Application of s.11A(9)(a) of the Social Security Act 1991

The Tribunal noted that the issue as to whether the Rainville house had been Matula’s principal home for twenty years or more continuously in part turned on how the subject period was characterized, namely, whether it operated to break continuity of residence.

The Tribunal found that central to this determination was s.11A(9)(a) which operated as a deeming provision. The effect of the deeming provision was to create a ‘statutory fiction’ that a residence of a person is to be taken to continue to be the person’s ‘principal home’ during any period of up to 12 months during which the person is temporarily absent from the residence.

DFHCSIA argued that Matula could not rely on s.11A(9)(1) as he was absent from Rainville for a period in excess of 12 months. Whilst DFHCSIA accepted that the provision should be construed as referring to any single period of absence, it argued that the whole of the subject period should be treated as one period. Further DFHCSIA argued that throughout the subject period the boarding house in Sydney had become Matula’s principal home pointing out that Matula had returned to Rainville for only brief visits which were only able to be made with the consent of his wife or the court.

The Tribunal found that the issue as to whether Matula was temporarily absent from Rainville for any period in excess of twelve months was a question of fact. After referring to the Macquarie Dictionary which defined ‘absent’ to mean ‘not in a certain place at any given time; away’ and temporary as ‘lasting, existing, serving or effective for a time only; not permanent’, the Tribunal found that whilst Matula was temporarily absent from Rainville for a total period of more than 12 months, he was nonetheless not temporarily absent for any single period of more than 12 months. The longest period Matula had been absent from Rainville was nine months.

However, the Tribunal noted that

s.11A(9)(a) did not operate to ‘save’ all periods of temporary absence but only captured those periods where the absence ‘continues or follows on from a period’ where the residence had been the person’s principal home.

The Tribunal noted that it was not in issue that Rainville was Matula’s principal home prior to June 1995 and accordingly by operation of s.11A(9)(a) continued to be so throughout the period, May to November 1995. However, the key issue for determination was whether Matula’s subsequent absences ‘continued on’ from periods where the Rainville house was in fact his ‘principal home’ throughout the subject period or at least from the time of his first return visit in November 1995. The Tribunal noted that Matula could not rely on s.11A(9)

(a) for this purpose because its operation was restricted to deeming periods of temporary absences as periods where the residence was his ‘principal home’. Accordingly, the Tribunal concluded that for s.11A(9)(a) to operate it was necessary for the property to have been his principal home at the beginning and end of each of these absences. Only then would the provision deem them to have been ‘temporary’.

Was Rainville Matula’s principal home throughout the subject period?

After a review of a number of previous cases which had considered the term ‘principal home’ the Tribunal concluded that it would be an overly restrictive approach to view time spent in a place as determinative in all cases. The Tribunal commented that such an approach would fail to recognise that a ‘home’ or ‘principal home’ was something more than a place where a person spends time.

The Tribunal found that the weight to be given to this factor will depend on the circumstances of the individual case.

The Tribunal considered that the issue as to whether Rainville continued to be Matula’s principal home was a question of fact to be objectively assessed having regard to all relevant circumstances. After considering the totality of the circumstances, the Tribunal concluded that the Rainville house remained Matula’s principal home throughout the subject period. In the circumstances of this case, the Tribunal found that the intangible considerations such as continuity of association, emotional attachment and intention to return outweighed the physical amount of time spent in the property. In coming to this conclusion the Tribunal relied on the following factors:

• Matula’s move to Sydney had been of a temporary nature and for an indeterminate period as illustrated but the fact that he had left behind all but a few of his personal belongings and maintained Rainville as his address.

• From the outset, Matula had been intent upon returning to Rainville, his return being contingent upon the finalization of the Family Court proceedings or reaching agreement with his wife.

• Matula had evidenced a strong emotional attachment to Rainville and surrounding property witnessed by his comment – ‘I was prepared to die for it’. In contrast he saw the boarding house simply as a place to base himself until the divorce proceedings were finalized.

• Matula had maintained an association with the local community despite the challenges of distance, through his membership of local organisations and visits to the property.

• Throughout the subject period, Matula had contributed to the upkeep of the property and the house, paying 50% of all expenses.

• Matula’s proprietary interest in the house remained unchanged during the subject period.

Accordingly, the Tribunal found that, as at the date of the original claim for the age pension, the Rainville house had been Matula’s principal home for 20 years or more continuously.

Formal decision

The AAT set aside the decision under review and remitted the matter with the direction that Matula’s claim for age pension be reconsidered on the ground that the extended land use test under

s.11A(4) of the Act applied in respect of the land adjacent to the Rainville dwelling house.

[G.B.]