FEDERAL COURT OF AUSTRALIA Kirkovski v Secretary, Department of Family and Community Services [2004] FCA 790 VASILIJE KIRKOVSKI v SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES N2542 OF 2003 BENNETT J 8 JUNE 2004 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N2542 OF 2003 BETWEEN: VASILIJE KIRKOVSKI APPLICANT AND: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES RESPONDENT JUDGE: BENNETT J DATE OF ORDER: 8 JUNE 2004 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application is dismissed. 2. There is no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N2542 OF 2003 BETWEEN: VASILIJE KIRKOVSKI APPLICANT AND: SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES RESPONDENT JUDGE: BENNETT J DATE: 8 JUNE 2004 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This application is an appeal brought under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) from a decision of the Administrative Appeals Tribunal ('the AAT'). In August 2001, the applicant started receiving Newstart Allowance. On 20 September 2002, the applicant completed a real estate details form on which he stated that he owned 100 percent of a three bedroom property at 368 Keira Street, Wollongong ('the property'). He estimated the value of the property at $100,000. The property is an investment property and there is no mortgage over it. On 14 October 2002, Centrelink asked the Australian Valuation Office ('AVO') for an alternative valuation of the property. The AVO estimated that the value of the property was $220,000. On 4 December 2004, Centrelink advised the applicant that his Newstart Allowance had been cancelled because the value of his combined assets was above the allowable asset limit. At the time that the applicant's Newstart Allowance was cancelled, the applicable asset cut off threshold was $206,500. 2 The applicant asked Centrelink to review the decision. On 4 February 2003, the original decision maker reconsidered the original decision and decided not to change it. The applicant asked for a further review from an authorised review officer. On 13 February 2003, the decision was affirmed by the authorised review officer. The applicant applied to the Social Security Appeals Tribunal ('the SSAT') for review of that decision and, on 24 April 2003, the SSAT affirmed the decision. The applicant then applied to the AAT for review of the decision of the SSAT and, on 4 February 2004, the AAT affirmed the decision of the SSAT. On 24 December 2003, the applicant applied to this Court for review of the decision of the AAT. On 2 April 2004, following a case management conference on 19 March 2004 with the Registrar of this Court, the applicant filed an amended notice of appeal. 3 The only matter that seems to be in dispute is the value of the property. The correctness of the asset value limit and its applicability to the applicant does not seem to have been in dispute. findings in relation to the value of the property Before the review authorised officer 4 The applicant told the authorised review officer that the property had not been rented out since 9 August 2002. The applicant provided the authorised review officer with an alternative valuation for the property from Mr Frank Conti, a real estate valuer from LBC estate agents in Wollongong. Mr Conti estimated that the value of the property was $190,000. The applicant refused to allow the AVO to do an on-site valuation of the property. The authorised review officer made a finding that the value of the property was $220,000, accepting the original AVO valuation. Before the SSAT 5 The applicant provided the SSAT with a further valuation from Mr Conti where the property was valued at $178,000. The valuation was completed after Mr Conti did an on-site inspection. Mr Conti's initial valuation was based on an appraisal of the property where he had only viewed the property from the outside. The valuation report included a locality plan, a plan of the property and a list of property sales in Keira Street and nearby streets. 6 The SSAT found that Mr Conti's valuation of $178,000 underestimated the value of the property for the following reasons: (a) The valuation was not comparable with the information about recent sales in the area. All the properties in Keira Street sold after 2000 were sold for considerably more than $178,000. (b) Units in nearby Kenny Street were sold in 2000 for $170,000 to $180,000. The SSAT considered it reasonable that a three bedroom house would be valued at considerably more than this. (c) The recent sales listings indicated that properties in Keira Street had a higher value than nearby Kenny and Kembla Streets, possibly due to the location. The locality plan indicated that part of Keira Street faces a park. (d) Mr Conti's written report provided limited information about the property's internal and external condition and was not sufficiently detailed for the SSAT to accept it at face value. 7 While the AVO did not do an on-site inspection of the property, the SSAT considered the AVO's valuation more realistic, based on the information about recent sales in the area and the property's condition and location. The SSAT accepted the AVO valuation of the property as it considered it the best evidence available, at the time, of the property's net market value. Accordingly, the SSAT made a finding of fact that the property was appropriately valued at $220,000. Before the AAT 8 The AAT had before it both of Mr Conti's valuations. The AAT found it curious that Mr Conti estimated that the value of the property decreased over $12,000 over a two month period especially when such a decrease was not consistent with the actual price of comparable properties sold in the area in 2002. Mr Conti was unavailable for cross examination at the hearing before the AAT. In the absence of adequate explanation, the AAT considered itself compelled to conclude that the relationship between the applicant and Mr Conti may have played some sort of part in the valuation process. 9 Mr Dyson, from the AVO, gave evidence that the property was reasonably valued at $220,000, confirming the prior AVO valuation. The AAT accepted that Mr Dyson was a suitably qualified valuer with the relevant experience in the Wollongong area and was persuaded that his valuation was independent and was calculated on the basis of reasonable and appropriate valuation methods. In considering the valuations of Mr Conti and Mr Dyson the AAT stated: 'There is no statutory mechanism governing the valuation of a person's assets under the [Social Security] Act [1991 (Cth)] … The market value of the property is to be estimated on the basis of its best use of the property in question and an assessment of the price that a prospective purchaser would pay to a willing but not anxious seller in an arm's length transaction (see Re Secretary, Department of Social Security and Langton and Another (1993) 31 ALD 579 at 586) … In order to assess the relative merits of these valuations I have adopted the approach set out in Re Evans and Secretary, Department of Social Security (AAT 8710, 18 May 1993) That is, appropriate weight will be given to a valuation prepared by a qualified valuer with relevant experience who is independent of the parties and is applying methods that are accepted within the valuation industry.' 10 The AAT preferred the valuation of Mr Dyson to that of Mr Conti and made a finding of fact that the value of the property was $220,000. At the case management conference 11 At the case management conference referred to above, on 19 March 2004, the Registrar made directions facilitating a further valuation of the property by the AVO. Despite the respondent making arrangements for this to occur, the applicant subsequently refused to permit the valuation to take place. I was informed of this matter in written submissions of the respondent and the applicant has not raised any dispute as to that fact. the appeal from the aat 12 Under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) an appeal from the AAT may only be brought on a question of law. 13 The applicant's amended notice of appeal is not in proper form. The amended notice of appeal states that the questions of law raised in the appeal are: 'THE QUESTION OF LAW AM DUET SELF; TRIBUNAL SHOULD HAVE; NOT Found, had to many ASSET to GET EMPLOyment BENEFIT TO CENTRELINK' At the hearing 14 The applicant appeared in person assisted by an interpreter. 15 When I questioned the applicant about the amended notice of appeal he explained that: (a) the first sentence was to indicate that he was self represented; and (b) the second part of the amended notice of appeal related to an assertion that the Tribunal found the value of the house was above the Centrelink asset value and that the valuation of the Centrelink people was wrong. 16 I asked the applicant what matters he wished to raise. He said that he did not agree with the valuation of his property and that that was the main issue. This was repeated in various forms. Other matters that he raised, such as his ongoing relationship or lack thereof with Centrelink, had no relation to this application. 17 Under the Social Security Act 1991 (Cth) there is no statutory provision specifying any method for the valuation of assets. The test which seems to have been applied by the AAT in a majority of cases is a net market value approach based on comparable sales and the 'best use' to which the asset could be put (see Fong and Secretary Department of Family and Community Services [2002] AAT 172; Re Emberts and Repatriation Commission (1988) 16 ALD 19). Following the same approach, the AAT accepted Mr Dyson's valuation and made a finding that the value of the property was $220,000. This was a finding of fact and was open to the AAT on the evidence before it. On the basis of this finding of fact, the AAT affirmed the decision to cancel the applicant's Newstart Allowance because the value of the applicant's combined assets was above the allowable asset limit. 18 The applicant has not raised any question of law and none is apparent on the face of the decision of the AAT. Accordingly, I dismiss the application. 19 The respondent has made an application for its costs. The respondent has also indicated that, if the application for costs is opposed, it would not press its application for costs. The applicant opposes the application. conclusion 20 The application is dismissed and there is no order as to costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett. Associate: Dated: 22 June 2004 Applicant appeared in person assisted by an interpreter Solicitor Advocate for the Respondent: A Crockett Date of Hearing: 8 June 2004 Date of Judgment: 8 June 2004