BLANCK and SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

[2010] AATA 855

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 855

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2010/0921

GENERAL ADMINISTRATIVE DIVISION		)
Re		TRACEY BLANCK

Applicant

And SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal   Senior Member Bernard J McCabe

Date:             7 October 2010

Place:            Brisbane (heard in Toowoomba)

Decision: For the reasons given orally at the hearing the Tribunal sets aside the decision under review and decides in substitution that the matter is remitted to Centrelink under s 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 for reconsideration on the following basis:

a)the loan in question was an obligation owed by Mr Blanck to Mrs Blanck;

b)the amount was the lesser amount, exclusive of interest that was advanced;

c)the loan is to be treated as being unrecoverable from the date of Mr Blanck’s bankruptcy; and

d)reconsideration should proceed within 60 days.

..................[SGD]............................

Senior Member

CATCHWORDS

SOCIAL SECURITY – Newstart Allowance – whether applicant loaned money to a trust – whether loan and interest should be counted in calculation – terms of agreement produced – reference to trust was a reference to applicant’s husband – agreement made in process of marriage breakdown – obligation owed by applicant’s husband as an individual.

Administrative Appeals Tribunal Act 1975 (Cth)

REASONS FOR DECISION

2 November 2010 Senior Member Bernard J McCabe         

1.      A decision was given orally at the hearing in this matter. One of the parties subsequently requested written reasons. These reasons have been prepared from the transcript.

2.      From reading the documents and the file it seemed to me that the Social Security Appeals Tribunal (“the SSAT”) was correct in its decision insofar as Ms Blanck loaned money to the JB Joinery Family Trust (“JB Joinery”) until the trust effectively wound up. If that had occurred, the amount of the loan and any interest deemed to be paid under it would still have been counted for the purposes of the assets and income test. However, on the evidence that Ms Blanck gave, the tribunal has been presented with a slightly different story.

3.      In particular Ms Blanck referred me to the document that is now exhibit 6, which contains the terms of an agreement between Ms Blanck and Mr Blanck. The document is not dated but Ms Blanck told me, and I accept, that it was concluded and executed sometime around March in the year they separated. Ms Blanck said that the monies that were paid that were in dispute here came out of their joint account without her knowledge. She had originally received those monies under a personal injury settlement, and they were paid into the account.

4.      Ms Blanck said she agreed to make some money available to Mr Blanck. Ms Blanck told me that it was her understanding that she was loaning Mr Blanck the money. She says she did not know anything of a trust arrangement.

5.      I note there is a trust deed on file which Ms Blanck appears to have signed that establishes her as a trustee and beneficiary under the JB Joinery Family Trust.

6.      Ms Blanck says she has no recollection of signing that document, but she is not prepared to deny that it was her signature. We also have no evidence as to whether the Commissioner of Declarations who witnessed the signature acted appropriately when the signature was witnessed, but nor do we have reason to suspect that he failed to discharge his duty. However, it is entirely possible given Ms Blanck was heavily medicated at the time that she had no recollection of signing the document. She may not have been competent to do so. A letter from Dr Ramnanan in exhibit 5 says Ms Blanck was incapable of making decisions at the time. Specifically, Dr Ramnanan says “her capacity to sign and undersign legal documents will have been grossly affected” during this 2004/2005 period. The trust deed was signed 8 February 2005, which is in the period covered in that letter. I accept in any event that even if she was aware of signing a trust deed, she had no clear understanding of the implications of that act, nor did she have any general understanding of trust law or business.

7.      If we turn to the agreement at exhibit 6 I find that document is consistent with her account that she was loaning the money to Mr Blanck. I make that finding in the knowledge that the document was not drafted by lawyers, but rather by two lay individuals. Mr Blanck apparently intended to contact solicitors to write up a formal contract to confirm the agreement but that did not occur. I know the agreement says loan repayments were to be made by JB Joinery. Of course, JB Joinery was not in and of itself an entity that was capable of owing obligations: it was merely the trading name of a trust that was conducted by trustees, one of whom was Ms Blanck, albeit she says she was not aware. If she had been aware of the law she would have understood the implications of an agreement of those terms.

8.      I accept Ms Blanck’s account that she thought the reference to JB Joinery was just a reference to him perhaps paying the money out of his business account, and given that it was his business, she accepted it was his obligation. I note that the further provisions of that agreement are also consistent with the idea that this is a personal agreement between two individuals, in particular an agreement that must be read in the context of the fact that these are two individuals that appeared on the face of it to be in the process of a marriage breakdown. There is an acknowledgement that this is the amount owed to Ms Blanck, and there is a house owned by Ms Blanck. The house is not a trust asset. This is the settlement of a personal dispute which concludes with the extraordinary clause that “If I talk to Suzanne or have an affair everything is Traceys (sic)”. That can only be understood in the context of the settlement of a personal dispute between two individuals. The reference to payments being made by JB Joinery in that agreement is effectively a red herring.

9.      The obligation is owed by the individual, Mr Blanck, to the applicant. What he may have done to account for that in the books of the trust one can only imagine. There has been reference in the evidence to the trust but I don’t think that is anything more than his inaccurate understanding of the obligation that he entered into. In any event, that loan is now unrecoverable in light of Mr Blanck’s bankruptcy.

10. The Tribunal sets aside the decision under review and decides in substitution that the matter is remitted to Centrelink under s 43(1)(c)(ii) of the Administrative Appeals Tribunal Act 1975 for reconsideration on the following basis:

a)     the loan in question was an obligation owed by Mr Blanck to Mrs Blanck;

b)     the amount was the lesser amount, exclusive of interest that was advanced;

c)     the loan is to be treated as being unrecoverable from the date of bankruptcy; and

d)     reconsideration should proceed within 60 days.

I certify that the 10 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

Signed: .......................[SGD]....................................................
  Patrick MacDonald

Date of Hearing  7 October 2010 
Date of Decision  7 October 2010
Date of Written Reasons          2 November 2010
Applicant  Self-represented

Solicitor for the Respondent     Mr J Guthrie, Centrelink Advocacy Branch