Social Security Act 1991 (Cth) - s 11A

Muller v Dalgety & Co Ltd [1909] HCA 67; (1909) 9 CLR 693

Hafza v. Director-General of Social Security, [1985] FCA 164; (1985) 60 ALR 674

Re Robert Clark and Secretary to the Department of Social Security [1986] AATA 342

Re Samek and Department of Social Security (1988) 16 ALD 295

Dickeson and Secretary, Department of Social Security [1989] AATA 190; (1989) 18 ALD 58

1. Mr Alexander Matula applies for review of the decision made by the Social Security Appeals Tribunal (the SSAT) to refuse his claim for an age pension. The claim was refused on the ground that the value of his assets exceeded the "allowable asset limit".
2. The sole issue addressed in these Reasons is whether the property "Rainville", was Mr Matula's "principal home" for a period of twenty of more continuous years. If so, the property surrounding the house will be treated as an exempt asset for the purposes of the Social Security Act 1991 (Cth).

1. Rainville is a large rural property located in Western NSW, on which is located a large four bedroom house. Mr Matula has lived at Rainville since 1980 and continues to live there today.
2. Rainville is owned by Matula Rural Pty Ltd. Until 1997, the company was jointly owned by Mr Matula and his former wife. Mr Matula has been the sole shareholder and director of the company since that time.
3. Mr Matula lived alone at Rainville. Until divorce proceedings were commenced in the mid-nineties Mr Matula's wife lived in Sydney and visited Rainville about four times a year.
4. In June 1995, Mr 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.
5. The day after being served with those orders, Mr Matula left Rainville taking little else but a change of clothes. Before leaving he gathered up his personal belongings and placed then in a locked room, left all furniture, whitegoods and household items in situ and made arrangements for his firearms to be stored at the local police station.
6. Mr Matula said when he left Rainville he did not know where he was going to live or how long he would be away. At all times he considered the move to be short-term. On arrival in Sydney he stayed with a family friend for a short period and then moved to a boarding house where he remained until he returned to live in Rainville on a permanent basis in May 1997. He described his accommodation in the boarding house as "a cell".
7. Throughout the period Mr 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 division of the family property, which included Rainville. He said it never occurred to him that he would not go back. On his account he had been prepared to "die for Rainville". He claimed he was deeply attached to the property and the local community.
8. After his departure from the property in June 1995, Mr Matula 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
   • - In September 1996, for about a week to vote in the local government elections, inspect the property and to attend to various matters.

9. When he returned to the property he stayed in his old room and had the run of the house. The property manager also stayed in the house during this time.
10. Throughout the subject period Mr Matula maintained Rainville as his address with relevant authorities for passport, drivers licence, insurance, electoral etc purposes. He 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.
11. All expenses of the house and property were borne equally by Mr Matula and his wife, through the family company, throughout the subject period.
12. Mr Matula lodged a claim for aged pension in November 2008. The claim was rejected on the grounds that the value of Mr Matula's assets exceeded the allowable threshold.
13. In July 2009 Mr Matula was granted the age pension on the basis of a significant reduction in the value of one of his assets, City Pacific First Mortgage. That decision has no bearing on whether the property Rainville is an exempt asset under the Act.

1. Subject to any statutory exception, a person's "principal home" is disregarded when calculating the value of their assets for the purposes of the Act: s 1118(1) the Act.
2. "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 [emphasis added]

1. Section 11A(3) provides that the "private land use test" is satisfied if:

(a) the area of the land, together with the area of the ground floor of the dwelling house, is not more than 2 hectares; and

(b) the land is used primarily for private or domestic purposes in association with the dwelling house.

1. It is common ground that the private land use test is satisfied, and therefore that the Rainville house and the surrounding two hectares together constitute Mr Matula's "principal home".
2. 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:

(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.

1. It is agreed that Mr Matula satisfies paragraphs (a) and (b). The respondent Secretary argues that because of Mr Matula's extended absence throughout the subject period he does not satisfy paragraph (c).
2. Section 11A(9) is relevant to deciding whether Mr Matula satisfies 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;

...

1. Where a person's principal home is lost or damaged (including for example by natural disaster) the Secretary may extend the period a person may be temporarily absent from to 24 months: s 11A(9A). A residence of a person is also to be taken to continue to be their principal home during any period of up to 24 months where among other things they are in a care situation or residential care, for period of up to 24 months. None of these provisions apply to this matter.
2. Section 11A(6) provides that the "extended land use test" will be satisfied if (i) the area of the property and house exceeds two hectares and (ii) the person is making effective use of the land. It is common ground that both elements are met.

WAS RAINVILLE MR MATULA'S PRINCIPAL HOME FOR 20 YEARS OR MORE CONTINUOUSLY?

1. The key issue to be determined is whether the Rainville house had been Mr Matula's principal home for twenty years or more continuously. This turns on how the subject period is to be characterised, namely, whether it operated to break continuity of residence.
2. Section 11(9)(a) is central to this determination. A deeming provision, it creates the "statutory fiction" (as described by Griffith CJ in Muller v Dalgety & Co Ltd [1909] HCA 67; (1909) 9 CLR 693 at 696) 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.

APPLICATION OF S 11(9)(A)

1. The Secretary contends that Mr Matula cannot rely on s 11(9)(a) as he was absent from Rainville for a period in excess of 12 months. While he accepts that the provision should be construed as referring to any single period of absence, the Secretary argues that the whole of the subject period should be treated as one period. He argues that throughout the subject period the boarding house in Sydney had become Mr Matula's "principal home". He points out that Mr Matula returned to Rainville for only brief visits which were only able to be made with the consent of his wife or the Court.
2. Whether Mr Matula was temporarily absent from Rainville for any period in excess of twelve months is a question of fact. Section 11(9)(a) must be construed strictly and only for the purpose for it is resorted to: per Fisher J in FCT v Comber (1986) 10 FCR 88 at 96.
3. The Macquarie Dictionary 4th Edition defines "absent" to mean "not in a certain place at a given time; away" and temporary as "lasting, existing, serving, or effective for a time only; not permanent".
4. On the three occasions in the subject period that Mr Matula visited Rainville, he had plainly ceased to be "temporarily absent from [Rainville]". While there can be no argument that he 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 he was absent from Rainville was nine months.
5. However, s 11A(9)(a) does not operate to "save" all periods of temporary absence. It only captures those periods where the absence continues or follows on from a period where the residence had been the person's principal home. That is made clear from the introductory words of the provision which for convenience is set out in full:

A residence of a person is to be taken to continue to be the person's 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;

...

(emphasis added)

1. It is not in issue that Rainville was Mr Matula's principal home prior to June 1995. Accordingly, by the operation of s 11A(9)(a), Rainville, continued to be Mr Matula's principal home throughout the period, May to November 1995.
2. The more difficult question is whether Mr Matula's subsequent absences "continued on" from periods where Rainville had been his "principal home". This turns on whether 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. Mr Matula cannot rely on s 11A(9)(a) for this purpose as it has a restricted operation - namely to deem periods of temporary absences as periods where the residence was his "principal home". Mr Matula cannot rely on a deemed period to establish that any absence "continued" on from a period when Rainville had been his principal home. For s 11A(9)(a) to operate with respect to Mr Matula's absences from Rainville, it is 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".
3. Whether the Rainville house was Mr Matula's "principal home" throughout the subject period requires an examination of the period as a whole. Before doing so it is necessary to determine the meaning of the term "principal home".

1. The term "principal home" is not defined by the Act. The words "principal" and "home" are ordinary English words and should be given their ordinary meaning in the context in which they appear.
2. The Macquarie Dictionary defines "home" to mean: "a house, or other shelter that is the fixed residence of a person....2. a place of one's domestic affections". "Residence" is defined as: "the place, especially the house, in which one resides; dwelling place; dwelling".
3. It is apparent from the use of the modifier "principal" that the Act contemplates that a person may have more than one "home".
4. The indicia which might indicate that a "place" - to use a neutral term - is a "principal home" within the meaning of the Act have been the subject of extensive consideration by this Tribunal.
5. In Dickeson and Secretary, Department of Social Security [1989] AATA 190; (1989) 18 ALD 58 the Tribunal said this about the criteria relevant to an assessment of what constitutes a "home" (at 61-62):

In assessing the criteria of what constitutes a "home" a substantial degree of occupation is persuasive... whereas conversely occupation by occasional visiting is not ... and living away from the family home in other premises causes the family home to no longer be the principal home ... A "home" is likely to be a place where persons ordinarily eat, morning and night, and where they sleep, and in the case of adults have the characteristics of permanency ... It is a concept of nature and "it is the place where the centre of gravity of one's domestic life is to be found" ...Where one chooses to live is relevant ... and a reference to a "home" requires an affinity to its location and usage by the occupier ... A home need not be a structure of four walls and a roof, but may be constituted by a caravan ... or a campervan...or a yacht...(authorities and citations omitted).

1. In Re Samek and Department of Social Security (1988) 16 ALD 295, the Tribunal held that where a person had two or more properties in which they had a proprietary interest, the "principal home" would generally be the one where they spent the bulk of their time. The Tribunal recognised that a person's relationship with "the principal home" might change over time (at 296).

... Typically, the principal home will be the family home, in the sense of being the home in which the couple whose assets are to be assessed have lived for most of their married lives while they have raised their children and in which, at the time of assessment, they continue to live. There will be no question but that they will remain living there for the foreseeable future.

A married couple might also, 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, possibly leaving the family home unoccupied for various periods over the year, or occupied by teenage or young adult children who might wish to remain in the city for study or work purposes. Again, notwithstanding this shift, there will be no difficulty in saying that the family home remains the principal home.

The concept of "the principal home" assumes, however, that there is more than one property that is used as a home. If one moves from home to home, then the home in which one spends most time would, logically, be the principal home. But in the context in which it appears, to talk of one home being a principal home, and another being a secondary home, the respective "homes" must be "property" which can be valued for the purposes of the Act. Thus, as between the city house and the holiday house owned by a retired couple in my earlier example, the city house would remain their principal home for as long as they spent the bulk of their time there. But once they spent the bulk of their time in their holiday house, it would become their principal home.

A person who owns a residential property in the city and who is in the habit of living there, but who spends the bulk of his or her time travelling around the country, living in hotels, and pursuing business or recreational activities from those hotels, can still be regarded as retaining the city property as his or her principal home. While the person spends more time in hotels each year that at home, he or she has no proprietary interest in the hotel room and so cannot be regarded as setting up a home which can be regarded as such as to make the city home a secondary one.

1. In Re Robert Clark and Secretary to the Department of Social Security [1986] AATA 342 the Tribunal considered at [21] the meaning of the term "permanent home" in the context of the now repealed Social Security Act 1947: "A characteristic of a person's home is that he usually resides there. It is by no means necessary, however, that both go hand in hand." The Tribunal went on to refer to the decision of Wilcox J in Hafza v. Director-General of Social Security, [1985] FCA 164; 60 ALR 674. His Honour was considering the meaning of the term "usual place of residence" in the context of the 1947 Act (at 680, 681):

Physical presence and intention will coincide for most of the time. But few people are always at home. Once a person has established a home in a particular place, even involuntarily (see Inland Revenue Commissioners v Lysaght (1928) AC 234 at 248 and Keil v. Keil [1947] VicLawRp 56; (1947) VLR 383) a person does not necessarily cease to be resident there because he or she is physically absent. The test is whether the person has retained a continuity of association with the place (Levene v. Inland Revenue Commissioners [1928] UKHL 1; (1928) AC 217 at 225 and Judd v. Judd (1957) 75 WN (NSW) 147 at 149) together with an intention to return to that place and an attitude that that place remains "home" (see Norman v. Norman (1969) 16 FLR 231 at 236). It is important to observe, firstly, that a person may simultaneously be a resident in more than one place - ..., secondly, that the application of the general concept of residence to any particular case must depend upon the wording, and underlying purposes, of the particular statute in relation to which the question arises. But, where the general concept is applicable, it is obvious that, as residence of a place in which a person is not physically present depends upon an intention to return and to continue to treat that place as "home", a change of intention may be decisive of the question whether residence in a particular place has been maintained.

1. The Tribunal in Re Robert Clark and Wilcox J in Hafza, were of course not discussing the term "principal home" within the meaning of the Act. While care should be exercised in importing tests relating to the meaning of different terms used in different statutory contexts, nonetheless these cases provide useful guidance on the factors to be taken into account when deciding what constitutes a "principal home".
2. I agree with the argument put for the respondent Secretary that as a general rule, where a person has more than one home, the place where they spend most of their time should be regarded as their "principal home". Nonetheless, in my view time spent in a place will not necessarily trump all other considerations. The weight to be given to this factor will depend on the circumstances of the individual case.

WAS RAINVILLE MR MATULA'S PRINCIPAL HOME THROUGHOUT THE SUBJECT PERIOD?

1. Whether Rainville continued to be Mr Matula's principal home is a question of fact to be objectively assessed having regard to all relevant circumstances.
2. In my opinion, the following factors support a finding that the Rainville house remained Mr Matula's principal home throughout the subject period. Firstly, Mr Matula's move to Sydney was of a temporary nature and for an indeterminate period. This is illustrated by the fact that he left behind all but a few of his personal belongings and maintained Rainville as his address for electoral, licensing, insurance and other purposes. Secondly, from the outset Mr Matula was intent upon returning to Rainville, his return being contingent upon the finalisation of the Family Court proceedings or reaching agreement with his wife. Thirdly, it is plain that he had a strong emotional attachment to the Rainville house and surrounding property - witness 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 finalised. Fourthly, he maintained an association with the local community despite the challenges of distance, through his membership of the local brigade of the Rural Fire Service and so forth and visits to the property. Fifth, throughout the subject period he contributed to the upkeep of the property and the house, paying 50% of all expenses. Sixth, his proprietary interest in the house remained unchanged.
3. Factors that favour a finding that Rainville was not Mr Matula's principal home include that he was absent from the property for a total period of about twenty months; that throughout that period he was effectively barred from entering the property; and that he spent most of his time during this period in alternative accommodation.
4. In my view, it would be an overly restrictive to view time spent in a place as determinative in all cases. Such an approach fails to recognise that a "home" or "principal home" is something more than a place where a person spends time. Due weight must also be given to intangible considerations such as continuity of association, emotional attachment, intention to return etc: see Hafza.
5. I am not persuaded that the boarding house was Mr Matula's principal home throughout the subject period. While undeniably the place where he spent most of his time the evidence reveals that it was nothing more than a temporary arrangement which provided Mr Matula with a base and shelter while he awaited the outcome of the Family Court proceedings. At all times, Mr Matula intended to return to Rainville, retained his association with the community, and had a deep attachment to the house and surrounding property. Having regard to the unique features of this case I am satisfied that the Rainville house continued to be Mr Matula's principal home throughout the subject period.
6. I find that as at the date of his original claim for the age pension, Rainville house has been Mr Matula's principal home for 20 years or more continuously.
7. For these reasons I have decided to set aside the decision of the Social Security Appeals Tribunal and remit Mr Matula's claim for an age pension for reconsideration to the respondent in accordance with the following direction:

(i) That the extended land use test under s 11A (4) of the Act applies to Mr Matula in respect of the land adjacent to the Rainville dwelling house.

I certify that the 50 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Britton

Signed: ..............................[SGD]................................................

Solicitor for the Respondent Centrelink Legal Services