Editors --- "Notice of decision:valuation of shares" [2013] SocSecRpr 14; (2013) 15(2) Social Security Reporter, Article 7

• HALE and SECRETARY to the DFHCSIA
• Background
• Issues
• Discussion
• Formal decision

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Notice of decision:valuation of shares

HALE and SECRETARY to the DFHCSIA

(2013/165)

Decided: 18th April 2013 by R.P. Handley

Background

On 1 Ma rc h 2007, Ha l e , a n a ge pensioner, purchased $90,000 worth of shares in York Capital Ltd (York). The term of the investment was one year with the dividend to be paid on the date of maturity, 6 March 2008. The value of these shares was taken into account for the purposes of calculating the rate at which Hale’s pension was payable.

Sometime during the term of the investment, York was placed into administration and Hale ceased receiving income from the investment and was informed that he was only likely to receive a portion of his investment repaid to him.

In July 2009, Hale applied to Centrelink for a revaluation of his York shares to reflect their reduced value. On 11 August

2009, he provided a copy of a letter from a Director of York, dated 22 June 2009, stating York’s asset position and that York’s current liquid assets ‘reflects a possible return of some 25 cents in the dollar in a liquidation scenario’.

On 4 November 2009, Centrelink refused Hale’s application.

On 11 November 2009, he was issued with a standard quarterly notice advising him of his rights and obligations. Although the York investment was listed as one of Hale’s assets in the letter, there was no specific reference in the letter to the decision to refuse his application in July 2009.

On 7 July 2011, Hale provided Centrelink with correspondence confirming that York had been wound up by the Federal Court on 28 June

2011. This information was provided to a Complex Assessment Officer, but no action was taken. In December 2011, Hale followed this up and was advised that the value of his York shares would be valued at $0 from 28 June 2011.

Hale sought a review of the decision, which was reviewed by a Centrelink authorised review officer and affirmed.

Hale applied to the SSAT for a review of the decision. The SSAT affirmed the decision, and Hale applied to the AAT for a review of that decision.

Issues

The issues for determination by the AAT were:

1. Whether the notice issued on 11 November 2009 constituted a notice of the decision made on 4 November 2009, for the purposes of section 109 of the Social Security (Administration) Act 1999.

2. If not, the value of Hale’s shares between 16 July 2009 and 27 June 2011.

Discussion

The AAT adopted the approach in Peura and Secretary, Department of Community Services [2003] AATA 1123; (2003) 78 ALD 570 (at [37]) to determine whether the quarterly notice issued on 11 November 2009 constituted a notice of the decision made on 4 November 2009 in relation to Hale’s application. The AAT concluded that a reasonable person reading the notice would have been unaware that a decision had been made in response to the application, and would have considered the notice to have been a regular quarterly statement.

The AAT also accepted Hale's evidence as to the attempts he had made to follow up a decision on his application, and considered these steps to be consistent with the assertion that Hale did not know that a decision had already been made on his application.

In the circumstances, the A AT considered that the date of effect of any favourable decision in relation to Hale’s request for review of the decision made on 4 November 2009, for the purposes of section 109, would be the date he contacted Centrelink about the value of his York shares, being 16 July 2009.

The AAT reviewed the available evidence as to the value of the York shares as at 16 July 2009, and concluded that the most reliable evidence of the value of the shares was the letter from the director of York dated 22 June 2009, which indicated that the likely return on Hale’s investment was 25 cents in the dollar. The AAT was satisfied that this information was reliable and was not too vague to rely upon to assess the value of Hale’s shares.

Formal decision

The AAT set aside the decision under review and remitted the matter to the Secretary with a direction that Hale’s shares in York be re-valued at $22,500 between 16 July 2009 and 27 June 2011. [S.O.]