MELBOURNE, 26 November 1996, 24 January 1997 24:1:1997

Solicitor for the Respondent: Mr R Douglass (Departmental Advocate)

1. This is an application for review of a decision of a delegate of the Repatriation Commission made on 26 July 1995 under the Veterans' Entitlements Act 1986 ("the Act") and affirmed, on review, on 19 September 1995. The decision was that Mr Cooper's rate of service pension was reduced, in accordance with s 46ZJ and, from 1 July 1996, s 46D, and s 52G of the Act, from 3 August 1995 because he had disposed of assets within the meaning of s 52E of the Act.

2. Mr M Scarfo of Counsel appeared for the applicant. Mr R Douglass, an officer of the Department of Veterans' Affairs, appeared for the Repatriation Commission. The Tribunal had before it the documents ("the T documents") lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 and the exhibits tendered during the hearing.

3. When the matter first came on for hearing, there appeared to have been some misunderstanding between the parties' representatives as to whether or not evidence would be required to support the claim made on behalf of the applicant that he was suffering severe financial hardship as a result of the application to him of the disposal of asset provisions of the Act. The matter was therefore adjourned and at the resumed hearing the Tribunal received in evidence (as Exhibit A2) an affidavit sworn by Merilyn Ann Harvey, the daughter of the applicant. That affidavit set out details of the applicant's ill health and of his financial position.

4. There is no doubt that the fact situation is unfortunate. Mr Cooper, who owned a farm, transferred it to his son who had farmed it for some time, and described the transfer, in his advice to Department of Veterans' Affairs, as a gift. While he owned the farm, his service pension was not reduced as significantly as after he had disposed of it but, once he disposed of it for no, or an inadequate consideration, s 52G of the Act required that a deemed income be included in respect of that asset.

5. After discussions on the first day of hearing, an amended determination was made, on 22 January 1997, which recognised that Mr Cooper's son did have an equitable interest in the property of $55,000, and so provided some consideration for the transfer. This reduced the amount of the asset disposed of from $215,000 to $160,000. That led to an increase in the rate of pension payable to Mr Cooper with effect from 3 August 1995, the date when pension was first reduced. The Tribunal received in evidence a copy of that determination.

6. Mr Scarfo submitted that Mr Cooper was entitled to access to the financial hardship rules so as to allow the deemed income from the disposal of asset to be disregarded. I have concluded that the Act does not allow that course to be adopted.

7. The section relied on by Mr Scarfo was s 52Y of the Act. I agree with Mr Scarfo that it is difficult to follow that section and that, if it is given the interpretation contended for by Mr Douglass, there seems to be no provision in the Act which allows the Repatriation Commission or the Tribunal to disregard deemed income from a disposed of asset, even where, to have regard to that income, places a person in severe financial hardship. I also accept his submission that the construction of s 52Y suggested by Mr Douglass leaves a puzzle as to the circumstances in which, under s 52Y(1)(b)(ii), the Commission should, or will, determine in writing that the application of s 48B, 48C, 52G and 52H should be disregarded.

8. Nonetheless, I consider myself bound to hold that s 52Y(1) on its face only applies where paragraphs (a), (b), (c), (d) and (e) are all satisfied. In this matter, once Mr Cooper had disposed of his farm by transferring it to his son, he no longer had "an unrealisable asset". That term is defined in s 5L(11) and (12) and in each case must be "an asset of a person". Once Mr Cooper had disposed of the farm, it was no longer an asset of his. Therefore s 52Y(1)(c) did not apply.

9. It is clear that there is no reason for s 52Y to apply where a person does not have an unrealisable asset as its effect is to provide a gateway to s 52Z which simply provides that the unrealisable asset is to be disregarded in working out the person's service pension rate.

10. I cannot accede to Mr Scarfo's submission that s 52Y allows not only an unrealisable asset of a person but also a "disposed of asset" to be disregarded.

11. It is therefore not necessary for me to decide the question of whether Mr Cooper suffers severe financial hardship. However, as it was an issue during the hearing I will consider that issue. Mr Douglass tendered in evidence an extract from the "General Orders - Service Pension" to which he had referred in his statement of case. That sets out the policy of the Department of Veterans' Affairs and therefore, though not binding on the Tribunal, is a matter for the Tribunal to apply unless its application would produce an unjust result (see Re Drake and the Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634 and Re Moran and Department of Employment, Education and Training [1990] AATA 284; (1990) 13 AAR 7 at p10). In this matter Mr Cooper does not satisfy either of the first two criteria for severe financial hardship under the policy. Nor does the affidavit of his daughter, particularly in view of the amended determination, satisfy me that the application of the policy would be unjust in the circumstances. Thus I would not have been able to find that he suffered severe financial hardship. Although it does seem unfair that the disposal of his farm has disadvantaged him quite unnecessarily, I cannot say that he is suffering severe financial hardship.