Bonnici and Secretary, Department of Family and Community Services
[2004] AATA 658
•28 May 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 658
ADMINISTRATIVE APPEALS TRIBUNAL )
) No. N2003/2019
GENERAL ADMINISTRATIVE DIVISION )
Re
ANGELA BONNICI
Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Senior Member M D Allen
Date28 May 2004
PlaceSydney
ADMINISTRATIVE APPEALS TRIBUNAL )
) No. N2003/2019
GENERAL ADMINISTRATIVE DIVISION )
Re
ANGELA BONNICI
Applicant
And
SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Senior Member M D Allen
Date 28 May 2004
Place Sydney
DecisionFOR the reasons given orally at the conclusion of the hearing in this matter, the decision under review is SET ASIDE and the Tribunal substitutes in lieu thereof its decision, namely THAT:
this matter is to be remitted to the Respondent with the direction that the value of the Applicant’s asset, being her share of the property at 32 Therry Street, Drummoyne is one-third (1/3) only of the total value of the said property.
(Sgd) M D ALLEN
..........................................
Senior Member
CATCHWORDS
SOCIAL SECURITY – constructive trust – whether pooling of monies due to beneficiaries of an estate in order to provide a home for one beneficiary during her life but with property title in her name led to a constructive trust so that for asset test purposes her intent was one third of the value of the property
Social Security Act 1991 – ss.11(1) and (7), s.1034, s.1064
Kidner v. Secretary, Department of Social Security (1993) 31 ALD 63
Ford and Lee – Principles of the Law of Trusts, paras 22300, 22320
Meagher Heydon & Leeming - Meagher Gummow & Lehane’s Equity Doctrines and Remedies 4th ed, para 3-035
REASONS FOR DECISION
28 May 2004 Senior Member M D Allen
1. At the conclusion of the hearing of the above matter the terms of the decision intended to be made and the reasons therefor were stated orally. After service upon the Applicant of a copy of the decision that was in fact made, the Applicant pursuant to sub‑section 43(2A) of the Administrative Appeals Tribunal Act1975 requested the Tribunal to furnish to the Applicant a statement in writing of the reasons of the Tribunal for its decision.
2. The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service. Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.
3. The said transcript is annexed hereunto and furnished to the Applicant and to the Respondent as it is the reasons for the Tribunal's decision.
I certify that this and the preceding page are a true copy of the decision and reasons for decision herein of:
Senior Member M D Allen
Signed: (K. Wong)
..................................................................................………Associate
Date of Hearing 28 May 2004
Date of Decision 28 May 2004
Representative for Applicant Mr J Bonnici
Advocate for Respondent Mr G. Lozynsky, Department of Family and Community Services
DRAFT DECISION
ADMINISTRATIVE APPEALS TRIBUNAL
Matter No NO3/2019By MR M.D. ALLEN, Senior Member
BONNICI and THE SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICESSYDNEY, FRIDAY, 28 MAY 2004
MR ALLEN: By application made the 23rd day of December 2003, the applicant sought review of the decision by a Social Security Appeals Tribunal made the 20th day of November 2003 affirming a prior decision by the respondent to cancel payment of age pension to the applicant due to the value of her assets. The applicant was qualified for and was being paid age pension when on 31 August 1999 she was caused to vacate her residence at 32
Therry Street, Drummoyne and become an inmate of the Benelong Nursing Home at Ashfield. In August 2001 she transferred to the Park View Nursing Home at Five Dock where she has been residing ever since. At all relevant times the applicant held as sole proprietor in fee simple an unencumbered title to the property at 32 Therry Street, Drummoyne.On 26 September 2002 the applicant's age pension was cancelled. That cancellation was pursuant to paragraph (b) of subsection (7) of section 11 of the Social Security Act 1991, as amended, which reads inter alia:
That a residence of a person is taken to continue to be the person's principal home for the period of 2 years beginning where the person is in residential care.
In other words, the property at 32 Therry Street, Drummoyne, was not regarded as an asset of the applicant for the period of 2 years as and from 31 August 1999 when, as stated, she moved into a nursing home after that date, it was. In these proceedings, it was not disputed that the value of the residential property at 32 Therry Street, Drummoyne was $550,000 as assessed by the Australian Valuation Office.
The rate of age pension is assessed pursuant to section 1064 of the Social
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.bonfaJ 28.5.04 s P-1
©Auscript Pty Ltd 2004Security Act and in this case pursuant to module G of section 1034. In looking at module G, step 1 is to work out the value of a person's assets. The term "asset" is defined in subsection (1) of section 11 of the Act as meaning, "property or money, including property or money outside Australia." Subsection (2) of section 11 then provides a reference in this Act to the value of a particular asset of the person is, if the asset is owned by the person jointly or in common with another person or persons, a reference to the value of the person's interest in the asset.
As stated, it is not disputed the applicant holds an unencumbered fee simple in the property. It was maintained by the applicant that she held the said property as trustee and her interest was only one-third of the said property - the other two-thirds were divided equally amongst her three children. At first sight it seems strange that this Tribunal should be asked to determine equitable instruments as was stated in what is the fourth edition of Meagher Gummow & Lehane on equity, although perhaps more correctly now referred to as Meagher Heydon & Leeming. At para 3-035:
One self-evident application of this maxim is Equity's recognition of legal estates, rights, interests and titles. Equity can never say what the common law recognises as a legal fee simple is not a legal fee simple.
However, the learned authors do go on to say:
It can only prevent a legal owner from making an unconscientious use of the legal rights.
Indeed, this was the respondent's position as I appertain it that as the applicant held the fee simple as sole proprietor, the Tribunal should not look beyond that and any equitable interest should not be taken into account. It is perhaps a subset of that submission, that if the applicant wished to assert equitable interests, either she or her children should approach the courts for such a declaration. However, as was pointed out by, Drummond J in Kidna v Secretary Department of Social Security, 31 Administrative Law Decisions 63 commencing at page 66:
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.bonfaJ 28.5.04 s P-2
©Auscript Pty Ltd 2004It would obviously be administratively convenient for the respondent when identifying the assets of a person required to be taken into account for the purposes of the assets test, if it had to have regard only to assets the legal title to which was vested in the pension claimant so that the respondent would in many cases not have to go beyond what appeared on public land and share registers.
Moreover, the fact that the sons are not parties to these proceedings and are not in dispute with the applicant about their having a claim to the properties in question, may make it difficult to fully investigate the relevant relationship between them and the applicant.
But the term "assets" in the rate calculator in section 1064 of the Act is defined in subsection (1) of section 11 to mean; "property (including property outside Australia)." In the contents of section 1064 the term "assets" so defined bears its ordinary English meaning:
In ordinary parlance a person's assets would not be regarded as including property of which that person was the bare legal owner, when the beneficial interest was vested in another.
The respondent is therefore required on the proper construction of module G in the rate calculator in section 1064 of the Act:
To bring into account in applying the assets tests, only the value of the beneficial interest which a person has in property of which he or she is the legal owner.
In this matter, evidence was given orally by the applicant's son, Mr Joseph Bonnici and there was also in evidence as exhibit A1 a statement from the applicant's daughter, now Mrs Marie Cremona. The situation seems to be one which I can say, with respect, is not dissimilar from other situations where decisions are made by a family but proper and fully effective legal advice is not obtained. Indeed I do not resile from what I said during the course of argument here that it seems to me that the applicant's original solicitor may have been negligent.
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.bonfaJ 28.5.04 s P-3
©Auscript Pty Ltd 2004The facts are that the applicant's husband died in 1966 intestate. She was appointed as administrator of the estate and under the intestacy rules then in force, the estate was apportioned as one-third to the applicant and two-thirds to the applicant's three children. At the time of his death, the late Mr Bonnici owned, as sole proprietor in his own name, three properties: 61 Thompson Street, Drummoyne which was the family home; 28 Smith Street, Rozelle which was rented out; and 13 Duke Street, Balmain East which was also rented out.
In 1985 or thereabouts, the tenants at 28 Smith Street, Rozelle left the premises and it was decided amongst the family that the house should be sold, which it was in 1986 or thereabouts. Obviously, at this stage, exact dates are difficult to ascertain and I accept the evidence of Mr Joseph Bonnici that inquiries at the firm of solicitors who acted for the estate and the sales have been unable to result in any documents being made available. Apparently the principals of the firm at the time of the estate administration and the particular sales are no longer members of the firm.
Smith Street sold somewhere for around about $60,000 and these funds were held in a bank account, it seems, probably in Mrs Bonnici's name. The premises at 13 Duke Street, Balmain East, were sold in 1985 and apparently the proceeds of that sale were divided equally amongst the three children. The family home, 61 Thompson Street, was sold in 1986 for $110,000. The proceeds of that sale was first of all invested in the Advance Bank, but then went towards the purchase of property at 32 Therry Street.
Apparently, monies from the sale of the Smith Street property and the Thompson Street properties were combined so that Therry Street was purchased and renovations carried out. It is difficult to ascertain how all the moneys were dissipated but Mr Joseph Bonnici gave evidence and there is nothing to challenge his sworn evidence on this account that he also contributed monies out of his own funds to assist with the completion of the renovations as 32 Therry Street, Drummoyne.
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.bonfaJ 28.5.04 s P-4
©Auscript Pty Ltd 2004In cross-examination he gave evidence to the effect that the family, to his knowledge, received no advice from the solicitors engaged as to setting up a trust or holding the property at 32 Therry Street other than in the name of Mrs Bonnici Senior as sole proprietor. At all times however it was understood amongst the Bonnici family that the mother held the property at 32 Therry Street for what amounted to a life interest. And upon her death it would revert to the three children.
I accept the evidence of Mr Joseph Bonnici and Mrs Cremona and indeed it was not seriously challenged in these proceedings. Although the applicant submitted a resulting trust had been established, I think myself the better view is that there has been a constructive trust. I say that because, it seems to me, that the monies from the estate of Mr Bonnici deceased were pooled together and ended up as the purchase and renovation monies for the Therry Street property.
But howsoever the trust is labelled, it seems to me that if the applicant sought to deal with the property contrary to the understanding of the other beneficiaries of the estate of the late Mr Bonnici then they could approach the Supreme Court of New South Wales for the appropriate declarations and orders. It seems to me there has been a detriment to beneficiaries in that upon the sale of all the estate properties, they are entitled to a distribution of their share but postponed that in order to provide the applicant with a home.
As pointed out by Drummond J in Kidner v Secretary, Department of Social Security supra at page 75:
I do not, however, think that a constructive trust can only arise in such a case if the legal owner, in fact, asserts that his legal title is unfettered by any interest in favour of the improver. The critical thing must be that the claimant has acted in circumstances in which it would be unconscionable for the legal owner to deny that that person's claim in respect of the property, whether it be a claim for the full beneficial interest or some lesser interest in it. I see no reason why, in an appropriate case, the Court would not exercise its jurisdiction to grant a declaration that a constructive trust exists, even though the legal owner
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.bonfaJ 28.5.04 s P-5
©Auscript Pty Ltd 2004has not, in fact, denied the others claims in respect of the property because it would be unconscionable for him to do so if he were so minded.
In Ford and Lee Principles of the Law of Trusts at paragraph 2230 the authors state:
If there is a common intention of X and Y that Y should have an interest in property, the title to which is in X's name and Y does not thereby acquire an interest either because the common intention is not an effective contract binding X or because there is no provable declaration of trust by X, there is still the possibility that a constructive trust will arise. A constructive trust can arise if Y sustains detriment on the faith of the common intention.
The authors then refer, commencing at paragraph 22320:
The situations attracting the common intention principle.
And in particular, they refer to that principle existing in family housing arrangements.
They refer to the case of Bannister v Bannister 1948 2 All England Reports 133 as:
Typical of the commonly recurring "granny flat" cases in which elderly relatives pay for the alteration or extension of a house owned by a member of their family, on the common understanding that the elderly relatives will dwell in the extension for the rest of their lives and in which the understanding is not reduced to definitive legal form.
Another example is where a house belonging to parents is extended with the assistance of contributions from a grown-up child in an informal arrangement to provide housing for the child and her or his family. And refer to an unreported decision of the Supreme Court of New South Wales. It seems to
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.bonfaJ 28.5.04 s P-6
©Auscript Pty Ltd 2004me that this situation is akin to those situations, namely that the children deferred payment of their two-third share of the estate of the late Mr Bonnici so that monies were pooled and a house provided for the mother on the understanding, as I said earlier, that upon her death the house would revert to them.
I am satisfied that the applicant does hold the property at 32 Therry Street, Drummoyne, subject to a constructive trust and her interest in the said property is one-third of its value only. The decision under review will be set aside and this matter remitted to the respondent with the direction that the value of the applicant's asset being her share of the property at 32 Therry Street, Drummoyne is one-third only of the total value of the said property.
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.bonfaJ 28.5.04 s P-7
©Auscript Pty Ltd 2004
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