Booth; Secretary, Department of Families, Housing, Community Services and Indigenous Affairs and

[2008] AATA 865

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 865

ADMINISTRATIVE APPEALS TRIBUNAL      )   

)    No: 2007/1227

GENERAL ADMINISTRATIVE DIVISION        )   

ReSECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Applicant

AndWILLIAM THOMAS BOOTH

Respondent

DECISION

TribunalSenior Member M D Allen

Date29 September 2008

PlaceSydney

DecisionThe decision under review is varied in that paragraph 1 thereof is set aside and is substituted in lieu thereof the decision that the Respondent William Thomas Booth is liable to repay to the Commonwealth of Australia all monies received by way of rent assistance under the Social Security Act1991 by him in the period 4 July 2000 to 18 February 2004.

....................[sgd]..........................

Mr M D Allen
  Senior Member

CATCHWORDS

Social security – equitable interests in land – was the Respondent entitled to payment of rent assistance – did provision of part of the purchase monies result in his having an interest in the Property – did the Respondent acquire an interest in property by co-signing the loan agreement when not the legal owner of the land – decision under review is set aside.

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RELEVANT ACT/S:

Social Security Act 1991: ss 11(4), 11A(10), 13(1), 1070, 1070C(b) 1224AA, 1236, 1236(1C), 1237A and 1237AAD

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CITATIONS

Calverley v Greene (1984) 155 CLR 242

Kintominas v Secretary, Department of Social Security (1991) 30 FCR 475

Repatriation Commission v Tsourounakis (2007) 158 FCR 214

Secretary, Department of Social Security v Ellis (1997) 46 ALD 1

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REASONS FOR DECISION

29 September 2008	Senior Member M D Allen
Summary

1.      By application made 10 April 2007, the Applicant sought review of that part of a decision by the Social Security Appeals Tribunal (SSAT) that determined that the Respondent did not have a rent assistance debt to the Commonwealth for the period 4 July 2000 to 18 February 2004.

2. Section 1224AA of the Social Security Act 1991 (the Act) provides that if a person has received a social security payment, which payment was made because of a false statement or representation, the amount so paid is a debt due to the Commonwealth by the recipient of the said payment.

3.      In this matter the Respondent received payment of a rent allowance pursuant to s 1070B of the Act.

4.      Section 1070C(b) of the Act states that a person is not entitled to rent allowance if they are an ineligible homeowner.  The term “ineligible homeowner” is defined in ss 13(1) of the Act as meaning a homeowner.  Subsection 11(4) of the Act relevantly provides:

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(a)person who is not a member of a couple is a homeowner if:

(i)the person has a right or interest in the person's principal home; and

(ii)the person's right or interest in the home gives the person reasonable security of tenure in the home;

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5.      Subsection 11A(10) of the Act states:

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(i)If a person has a right or interest in the person’s principle home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.

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6.      The application for review in this matter arose primarily because of the statement by the SSAT in its decision that:

…  It is also a fact, acknowledged by Mr Booth, that he contributed about one third of its purchase price.  It is irrelevant, in the tribunal’s view, that Mr Booth was a signatory to the loan account established by Mrs Booth’s mortgage over the property.  …

This latter statement by the SSAT is wrong both in law and in equity (see Calverley v Greene (1984) 155 CLR 242 and Lewin on Trusts, 18^th ed at para 9-70).

7.      The facts in issue are not in dispute, the real contest between the parties is as to the consequences of the Respondent’s actions.

8.      That an equitable interest in real estate is an interest which will constitute a right or interest for the purposes of Ss 11(4) of the Act, was made clear by the decision of the Federal Court in Kintominas v Secretary, Department of Social Security (1991) 30 FCR 475 (see also Repatriation Commission v Tsourounakis (2007) 158  FCR 214).

9.      On 16 June 2000, the Respondent’s mother settled the purchase of a residential property at Cabanda Street, Wynnum, Queensland (the Wynnum property).

10.     The purchase price of that property was $135,043.65.  Of that sum, $69,015.65 was withdrawn from an account at Suncorp Metway in the name of Mrs Booth.  In the record of an interview conducted with the Respondent on 29 July 2005, the Respondent stated that he had contributed to that sum from monies received from an “insurance settlement”.

11.     In the record of the interview, the Respondent states he contributed up to $80,000.00 towards the purchase price.  In his Statement of Facts and Contentions lodged in these proceedings, the Respondent states he contributed $49,000.00 towards the purchase of the Wynnum property.  The actual amount contributed is irrelevant to the issues involved.

12.     The balance of the purchase monies for the Wynnum property was provided by Suncorp Metway who secured the loan by way of a mortgage over the Wynnum property.  Although the mortgage was registered at the Lands Titles Office (LTO) in Brisbane (the land being torrens system land), the register referred only to Mrs Booth as the mortgagee as she was the sole proprietor of the Wynnum property.

13.     Notwithstanding that the Wynnum property was registered at the LTO in the name of the Applicant’s mother as sole proprietor, the contract of loan with Suncorp Metway, which provided the balance of the purchase monies, was in the names of both the Respondent and his mother.

14.     As the Respondent explained in an interview conducted with him on 13 October 2005, the loan contract was in both names as he provided a security for the loan being another property owned by him.

15.     It is not disputed that during the period 4 July 2000 to 18 February 2004, the Respondent resided in the Wynnum property and during that period, applied for and received rent assistance.

16.     The High Court case of Calverley supra makes it abundantly clear that in providing part of the purchase monies and in becoming a cosignatory to the loan contract, the Respondent acquired an equitable interest in the Wynnum property (see also Lewin on Trusts (id) paras 9-69; 9-70).

17.     Counsel for the Respondent pointed out that the mortgage to Suncorp Metway was paid out after some three months following the sale by Mrs Booth of another property.  If this was correct, it seems to me that any equity arising out of the fact of being a cosignatory to the loan contract would cease.  However, as I understand the evidence, the mortgage was not fully paid out in order to avoid any penalty arising from an early release of the mortgage.

18.     Different considerations apply to the equity raised by the provision of part of the purchase monies.

19.     In Calverley supra, Gibbs CJ at p 251 said:

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However, both the presumption of advancement, and the presumption of a resulting trust, may be rebutted by evidence of the actual intention of the purchaser at the time of the purchase … (Tribunal’s emphasis)  (Citations omitted).

His Honour continued:

…  Where there are two purchasers, who have contributed unequal proportions, but have taken the purchase in their joint names, the intentions of both are material.  Even if the parties had no common intention, the intentions of each may be proved, for the purpose of proving or negating that one intends to make a gift to the other.

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20.     At 261, Mason and Brennan JJ (as they then were) said:

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It may be that evidence of a sole purchaser's own state of mind at the time of the purchase can be received from him when the court is seeking to ascertain his intention … but in the search for the common intention of two or more purchasers at that time, light will rarely be shed by evidence of their uncommunicated states of mind.  Lord Diplock's speech in Gissing v Gissing [1971] AC 886, at p 906 contains the principle ordinarily to be applied:

As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party.  On the other hand, he is not bound by any inference which the other party draws as to his intention unless that inference is one which can reasonably be drawn from his words or conduct.  It is in this sense that in the branch of English law relating to constructive, implied or resulting trusts effect is given to the inferences as to the intentions of parties to a transaction which a reasonable man would draw from their words or conduct and not to any subjective intention or absence of intention which was not made manifest at the time of the transaction itself.  It is for the court to determine what those inferences are.

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Their Honours went on to state:

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The Court of Appeal correctly took the time of the acquisition of the Baulkham Hills property as the material time for determining the beneficial interests of the parties.  The evidentiary material from which the court might have drawn an inference as to the intention of the parties included their acts and declarations before or at the time of the purchase, or so immediately after it as to constitute a part of the transaction.  Evidence of those acts and declarations were admissible either for or against the party who did the act or made the declaration, but any subsequent declarations would have been admissible only as admissions against interest.

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21.     Although their Honours referred to joint purchasers (ie, persons who take as joint tenants) in the passages above, I consider the same principles apply where two persons make the purchase monies available but the title is registered in one person’s name only.  That is to say, one must ascertain the intention of both parties and that intention must be sought at the time of purchase.

22.     In this matter, there is no evidence as to the intention of the Respondent and his mother at the time of purchase.

23.     For the Respondent it was submitted that statements by him in the records of the interviews with him, evidenced that he intended to make a gift of the purchase monies to his mother.  On the other hand, there are other statements by the Respondent in the records of interviews which contradict this assertion.  For example, on 29 July 2005 the Respondent said:

…  ‘Cause [sic] in a sense I figured I owned half of it anyway ‘cause [sic] it was my insurance monies that virtually paid for half of it.

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Later in the same interview, the Respondent said:

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If I can just clarify where you finished off before just there with the insurance monies that I received that I paid to me [sic] mum, like I really believed that I owed her that money, you know, but since the sale of the property in Brisbane there was so much money there I’ve sort of been re, trying to redefine that, you know, in my own head.  Strange, but.  You know.  I dunno.

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24.     Given the conflicting statements by the Respondent, I cannot ascertain any intention he may or may not have had.  In any event, there is no objective evidence of what his intention may have been at the time of purchase.

25. Document T32 of the documents provided to the Tribunal pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 is a statutory declaration by the Respondent’s mother.  If reads in part:

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1.Of the original $135,000.00 paid for the home in Wynnum I provided $86,000.00 and Bill paid $49,000.00 or 36% of the cost.

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4.When the house was sold in Brisbane and the house was purchased in Armidale Bill’s portion was $106,000.00 …

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These statements indicate that at all times the Respondent’s mother recognised that the Respondent had an interest in the Wynnum property.

26.     Exhibit A2 at page 7 is a copy of a file note made by the solicitors acting for the Respondent and his mother on the sale of the Wynnum property.  What the file note evidences is that it was the Respondent who was giving instructions to the solicitors as to the disposition of the proceeds of sale and that some of those proceeds were to be applied to the purchase of the property at Armidale, which was purchased in his name.

27.     The documents in Exhibit A2 negative any suggestion that the Respondent did not have an interest in the Wynnum property.

28.     I accept that during the period he resided in the house at Wynnum, the Respondent allocated funds out of his monies towards the property.  These monies may be regarded as a form of rent.  I do not regard it as unlikely that a person with an interest in a property would pay a fee (how so ever termed) to another person who holds the legal title, for the right to reside in the property.

29.     Despite the payment of a fee, which seems to have been applied to the upkeep of the Wynnum property amongst other things, there is no evidence that the Respondent did not have security of tenure.  He was not a tenant from week-to-week but held an equitable interest in the Wynnum property, an interest which he could have enforced.

30.     Apart from any interest the Respondent held in the Wynnum property, the evidence from his records of interviews and Exhibit A2 show that to a large degree he influenced the property dealings of his mother.  This fact also mitigates against any insecurity of his tenure in the Wynnum property.

31.     As the Respondent had an interest in the Wynnum property and I am satisfied that he had reasonable security of tenure, then he was ineligible for rent assistance.

32.     Prima facie, the finding that the Respondent was ineligible for rent assistance results in his having to refund to the Commonwealth the monies paid to him.  Section 1236 of the Act provides that in certain circumstances the dept owed may be written off.  Section 1236(1C) provides that a debt is recoverable if it can be deducted from the debtor's social security payments.  As the Respondent is in receipt of a social security benefit, namely disability support pension, the debt cannot be written off, unless the Respondent is in severe financial hardship.  There is no evidence of the Respondent being in severe financial hardship.

33.     Debts can be waived if attributable to administrative error alone (s 1237A of the Act).  This is not the case in this matter.

34.     Section 1237AAD of the Act states inter alia that a debt may be waived if there are special circumstances (other than financial hardship alone).  As to what constitutes special circumstances I refer to Secretary, Department of Social Security v Ellis (1997) 46 ALD 1 at 5 where Carr J pointed out that the phrase “special circumstances” required that there be some feature out of the ordinary, something unfair, unintended or unjust.

35.     The Respondent is in receipt of a disability support pension and the tendered medical and psychological reports evidence that he is mentally unwell.  Nevertheless, I do not accept that he is so mentally incapacitated to not know what he is (or was) doing or to be incapable of forming an intention.  In many ways, his intellectual functioning demonstrates no impairment at all; eg, he knew how to manipulate his mother’s power of attorney, how to assume another identity, open a dance school and give instructions in property dealings.  I do not regard any mental incapacity suffered by the Respondent as amounting to a special circumstance.  There is no other evidence of anything that could amount to special circumstances in the Respondent’s case.

36. The decision under review will be varied in that paragraph 1 thereof is set aside and there is substituted in lieu thereof the decision that the Respondent is liable to repay to the Commonwealth of Australia all monies received by him by way of rent assistance, under the Act, in the period 4 July 2000 to 18 February 2004.

I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member M D Allen.

Signed:   .....[sgd].......................................................................
               Associate

Date of Hearing:  11 September 2008
Date of Decision:  29 September 2008
Solicitor for the Applicant:                  Clayton Utz Lawyers
Counsel for the Applicant:                 Mr M A Wigney SC
Solicitor for the Respondent:             Sam Hegney Solicitors
Counsel for the Respondent:           Mr D C McCallum