Cameron and Secretary, Department of Families, Community Services and Indigenous Affairs
[2006] AATA 1049
•5 December 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1049
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2006/142
GENERAL ADMINISTRATIVE DIVISION ) Re SHIRLEY ENA CAMERON Applicant
And
SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES & INDIGENOUS AFFAIRS
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date5 December 2006
PlacePerth
Decision The Tribunal sets aside the decisions under review and directs that this matter be remitted to the decision-maker to make a finding that in accordance with the Tribunal’s decision the applicant’s claim for age pension made on 24 November 2005 should be accepted.
........... (Sgd. Mr A Sweidan).........
Senior Member
CATCHWORDS
Age Pension – asset test – whether property in fact owned by partnership even though title held under joint tenancy – whether property held on trust
LEGISLATION
Social Security Act 1991
Social Security (Administration) Act 1999
Partnership Act 1895 (WA)
CASES
Follone and Secretary, Department of Social Security (1987) 11 ALD 477
Muschinski v Dodds (1985) HCA 78
Lake v Craddock (1732) 3PWms 158; 24 ER 1011
REASONS FOR DECISION
5 December 2006 Mr A Sweidan, Senior Member 1. The applicant (Mrs Cameron) has appealed to this Tribunal against a decision of the Social Security Appeals Tribunal (“SSAT”) made on 10 May 2006 that affirmed the decision made by a Centrelink officer on 24 November 2005 to reject Mrs Cameron’s claim for age pension.
Issues
2. The issues as set out in the respondent’s Statement of Facts and Contentions are:
·Was the Marybrook land an asset of Mrs Cameron for the purposes of determining her age pension entitlement? And if so,
·Should half of the proceeds of the sale of the Marybrook land given by Mrs Cameron to her son, James Andrew Cameron (“Andrew”) be assessed as being a gift; and
·Should Mrs Cameron’s claim for age pension made on 24 November 2005 have been rejected?
Facts
3. Except for the question of whether the Marybrook land was an asset of the partnership between Mrs Cameron and her late husband or otherwise held on trust for Andrew the facts do not appear to be in dispute. The respondent’s Statement of Facts and Contentions sets out the following:
“3.1On 9 June 1961, Mrs Cameron and her late husband Mr Keith Cameron signed a Partnership Agreement in regard to the business K.E. & S.E. CAMERON.
3.2Paragraph 5 of the Agreement states in part that the ’capital assets of the Partnership shall consist of such assets as may from time to time hereafter be acquired by or on behalf of the Partnership’.
3.3Paragraph 17 of the Agreement states that in the event of Mr Cameron’s death, his personal representative would succeed to his share of the business and property and would pay an amount equal to the equity of the deceased partner to their representative. If the representative elected not to purchase the share, then the Partnership was to be wound up and the assets sold. (It should be noted that this statement is incorrect. The relevant cause of the Partnership Agreement provides that the payment is to be made to the surviving partner. However, in any event the clause appears to be erroneous and presumably what was intended was that the surviving partner was to pay out the share of the deceased partner or else the partnership was to be wound up).
3.4Paragraph 19 of the Agreement allowed the Partnership the use of the Kojonup property, which was their principal home and only property at the time, but expressly stated that it remained the property of Mr Cameron or on his death, his personal representative.
3.5In 1978 Mr and Mrs Cameron purchased Sussex Location 2864 (the “Marybrook land”).
3.6The offer documentation was signed in joint names.
3.7The receipt from the purchaser dated 20 March 1978 refers to KE & SE Cameron.
3.8The settlement account from Stafford Settlements dated 30 March 1978 is addressed to K.E. & S.E. Cameron.
3.9The Lump Sum Building Contract dated 20 June 1979 is in the names of KE & SE Cameron
3.10The Certificate of Title shows that Mr and Mrs Cameron owned the Marybrook land as joint tenants.
3.11The letter from the Defence Service Homes Corporation dated 11 February 1980 is addressed to Mr & Mrs K E Cameron and states the details of their loan.
3.12The ANZ Partnership bank statement issued on 4 December 1980 shows a debit of $3,000 which Mrs Cameron has identified as the deposit for the house they built and a debit of $73.82 which matches the amount of the mortgage repayments.
3.13On 19 February 1986 Mr Cameron, knowing he was dying, made a Will leaving the Marybrook land to his trustee (Mrs Cameron) on trust for his son Andrew.
3.14On 6 March 1986 the Defence Service Homes Corporation wrote to Mr Cameron’s solicitors advising that the Cameron’s mortgage could not be transferred from joint tenancy to tenancy in common. The letter further stated that under section 35(1) of the Defence Service Homes Act, the transfer of any estate or interest in the property required written consent by them for it to be effective.
3.15Mr Cameron died on 12 May 1986.
3.16On 15 August 1986 Mrs Cameron was granted payment of age pension, backdated to 12 June 1986.
3.17On 15 September 1986, Mr Cameron’s will was granted Probate and Mrs Cameron was confirmed as the Executrix.
3.18On 25 September 1986 the Marybrook land was transferred to Mrs Cameron and she became the sole registered proprietor.
3.19On 22 August 2002 the Australian Valuation Office valued the Marybrook land at $500,000, $200,000 of which was for the house and curtilage.
3.20Mrs Cameron’s payments of age pension were cancelled from 31 December 2002, because her assets were in excess of the age pension assets limit for a single homeowner.
3.21On 30 June 2004 Mrs Cameron purchased her present home at 30 Blum Boulevard, Busselton.
3.22Mrs Cameron contacted Centrelink on 1 October 2004 in regard to making a claim for age pension.
3.23On 20 October 2004, Mr Andrew Cameron, acting on behalf of his mother, attended an interview with a Centrelink Financial Information Services Officer.
They discussed the implications of Mrs Cameron selling the Marybrook land and the impact on her payments of Age Pension.
3.24Mrs Cameron sold the Marybrook land on 18 April 2005 for $780,000 and gave $330.000 of the proceeds to Andrew.
3.25Mrs Cameron lodged a claim for age pension on 24 November 2005.
3.26On 29 November 2005 a Centrelink officer decided that $330,000 which Mrs Cameron had given to her son was a gift, and that $320,000 of it should be included in the value of her total assets for a period of 5 years from 18 April 2005.
3.27Centrelink notified Mrs Cameron on 30 November 2005 that her claim for age pension had been rejected because the value of her assets was above the allowable asset limit.
3.28Mrs Cameron sought a review of this decision and it was affirmed by an authorised review officer (ARO) on 15 February 2006. The ARO found that Mr Cameron’s Will did not over-ride Mrs Cameron’s legal ownership of the Marybrook property.
3.29On 10 May 2006 the SSAT affirmed the decision not to pay Mrs Cameron age pension. The SSAT found that:
·The Marybrook property was not an asset of the Partnership, even though the Partnership shared the profits from the use of the land;
·there was no express trust, equitable right or obligation or constructive trust over part of the Marybrook land in favour of Andrew; and
·It was open to Mrs Cameron to dispose of, or manage, the Marybrook land as she pleased.
3.30The SSAT commented that ‘when the Cameron family met in 1985/86 to discuss how land was to be distributed, it was not Mr and Mrs Cameron’s intention to divest themselves of all rights they enjoyed as legal and beneficial owners of the Marybrook land, that is, to create a trust in favour of Andrew’.”
The Contentions of the Respondent
“4.1The relevant legislation in this matter is contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Admin Act).
4.2Section 11(1) of the Admin Act requires a person to lodge a written claim for a payment.
4.3Section 37(1) of the Admin Act states that a claim can only be granted to a person if they are qualified for the payment and the payment is payable to them.
4.4Mrs Cameron met all the qualification requirements of section 43 of the Act.
4.5Section 44(1) of the Act provides that age pension is not payable to a person if their rate of pension is nil.
4.6For a claim to be payable, a person must satisfy the income and asset tests as set out in the rate calculator A of section 1064 of the Act.
4.7Section 1064-G1 of the Act sets out how the value of a person’s assets effect their rate of pension and section 1064-G3 gives the assets value limits.
4.8Section 9(1) of the Act defines an asset as being property or money, including property or money outside of Australia.
4.9Section 9(1) of the Act gives the definition of a financial asset, which can be either a financial investment or a deprived asset.
4.10Section 9(4) of the Act states that an asset is a deprived asset if the person has disposed of the said asset for a nil consideration and that the value of it should be included in the total value of the person’s assets.
4.11Section 1126AA(1) of the Act applies to a single person who gifts an asset after 1 July 2002.
4.12The asset value of the deprived asset in calculated as per section 1126AA(2) of the Act.
4.13The Marybrook property was sold for $780,246.83.
4.14Mrs Cameron gave $330,000 to her son Andrew.
4.15Mrs Cameron had not gifted any assets prior to 18 April 2005, therefore the amount to be assessed for gifting is $320,000.
4.16At 24 November 2005 Mrs Cameron had the following assets:
·$320,000 - deprived asset
·$4,159 - ANZ bank account
·$10,000 - Esanda debenture
·$4,180 - Telstra shares
·$12,000 - Household and personal effect
·$1,200 - Holden Camira
·$397,539 - Total assets
4.17At 17 November 2005, the asset value limit for a single homeowner, such as Mrs Cameron, was $322,000.
4.18The Secretary contends that although Mrs Cameron satisfied the qualification criteria for age pension as per section 43(1) of the Act, the value of her assets was in excess of the relevant asset value limit, therefore her claim for payment of age pension was correctly rejected as per section 44(1) if the Act.
4.19The Secretary understands that the reason Mrs Cameron gave $330,000 to her son, was to satisfy the terms of her late husband’s will.
4.20Mrs Cameron has stated that she and Mr Cameron did not make mutual Wills, which means that as they owned the Marybrook land as joint tenants, the rule of survivorship applies, unless there is evidence that the Marybrook land was property of the Partnership, or the land was held on trust for Andrew.
Property of the Partnership
4.21Mrs Cameron said that she and her husband always regarded the Marybrook land as being part of the Partnership, as per the Partnership Act 1895 Part III clauses 30 and 31 and the Joint Tenancy and Tenancy in Common Report dated 22 November 1994.
4.22Her evidence to support this is documentation which she says shows that the deposit for the house and the mortgage repayments were being paid from the Partnership bank account.
4.23Mrs Cameron has also stated that although she and her husband legally owned the Marybrook property as joint tenants, because it was common property acquired by the Partnership, they should be regard as being tenants in common as per F W Maitland’s 1909 Equity and Forms of Action at common law and the Western Australian Law Reform Commission’s 1994 final report on joint tenancy and tenancy in common.
4.24The Secretary notes that the Partnership agreement related to the farming business only. It is acknowledged that the Marybrook land was used by the Partnership for the farming business, however the Marybrook land was registered in joint names, both at the time of purchase and at the time of mortgage with the Defence Service Homes Corporation. The Partnership Agreement was not amended to include the Marybrook land. The Secretary also notes that the Partnership Agreement specifically excluded the Kojonup property, which Mr Cameron personally owned.
4.25The Secretary contends that there is no evidence that the Marybrook land was an asset or property of the Partnership, even if the Partnership shared the profits from the use of the land, therefore the property was an asset of Mrs Cameron’s unless there is evidence that she held it on trust for Andrew.
Express Trust
4.26An express trust requires:
·A certainty of intention to create a trust which usually is via a trust deed, the oral words of the settler, or from the conduct of parties where there are no express words;
·A clearly defined subject matter or trust property; and
·A certainty of the person/s who are intended to benefit from the trust and the extent of that benefit
4.27Mrs Cameron has stated that it was always intended for Andrew to inherit half of the Marybrook land from his father, but that the Defence Service Home Corporation would not allow the land to be transferred to a tenants in common proprietorship while they had a mortgage over the property, and funds were not available to pay for the transfer before her husband died.
4.28There is no evidence that at the family conference in 1986, it was Mr and Mrs Cameron’s intention to divest themselves entirely of the beneficial ownership of half of the Marybrook land and to forfeit any right they might have to assert legal title again at some later time.
4.29There were specific purposes behind the preservation of legal title in Mr and Mrs Cameron’s name, namely, the refusal of the Defence Service Homes Corporation and the costs involved in transferring the Marybrook land from joint tenancy to tenants in common.
4.30The following comments of the AAT in the case re Follone and Secretary, Department of Social Security (1987) 11 ALD 477 para 481 were taken into consideration:
“Administration of the assets test legislation is an extraordinary complex and difficult task. It is important for all who might be subject to its application, that the assets test be administered fairly. It can only be administered fairly by the respondent where clear evidence is submitted, by those who would seek to avoid or reduce its application, that property which has all the appearance of being in the hands has in fact legitimately passed to someone else.
It is possible, in the context of family life, to elevate all kinds of understanding and expectations between family members into agreements which might be claimed legitimately to have divested pension recipients of whole or part of their assets. If, though the tribunal’s interpretation of the assets test legislation, it were made possible to allow such expectations and understandings to be so elevated, the respondent would be in an impossible position in its attempt to dispute the legitimacy of disposition of assets, as part of its duty to ensure fair and equal application of the assets test formula to all who might fall within in.”
4.31The Secretary contends that there was no intention to transfer half of the beneficial title of the Marybrook land to Andrew either prior to, or following the late Mr Cameron’s death in 1986, therefore no express trust was created.
Equitable right or obligation or constructive trust
4.32The case of Muschinski v Dodds (1985) HCA 78 states that there are two necessary elements of a trust :
“…the party claiming a beneficial interest must show that he, or she, has acted to his, or her detriment. Secondly that it would be a fraud on the claimant for the other party to assert that the claimant had no beneficial interest in the property.”
And that it is no longer necessary to show a common intention for a constructive trust.
4.33The case of Rasmussen v Rasmussen [1995] 1 VR 613 says that where there has been detriment there will necessarily be a fraud or an act of be a fraud or an act of unconscionability, if the other party tries to deny the claimant’s interest. That is, the two elements as set out in Muschinski v Dodds are but two sides of the same coin:
4.34In 2005, Andrew paid $4,923 for expenses to prepare the Marybrook land for sale. Andrew also assisted with work on the Marybrook land from time to time. These arrangements do not give rise to Andrew having a lien or proprietary interest in the Marybrook land.
4.35It is the Secretary’s contention the elements of a constructive trust are absent. Despite the late Mr Cameron and Mrs Cameron’s said representation to their son Andrew that half of the Marybrook land was to be his and his reliance on this, Andrew did not act to his detriment and therefore no unconscionable act or fraud would arise if Mrs Cameron were to deny her son’s claimed interest in the Marybrook land.
Summary
4.36The Secretary contends that the Marybrook property did not form part of the Partnership and that no trust existed or was created over it. The property was passed to Mrs Cameron by right of survivorship in 1986 and it was open to her to dispose of, or manage the Marybrook land as she pleased. As a result, Mrs Cameron’s action in giving Andrew $330,000 of the proceeds of the sale of the land is gifting as per section 1126AA of the Act and the sum of $320,000 is to be included in the calculation of Mrs Cameron’s assets, for a period of 5 years from the date of the gifting. This means that at 24 November 2005, Mrs Cameron’s assets exceeded the asset value limit that permitted a single homeowner to be paid age pension and her claim for age pension was correctly rejected.”
4. The Secretary accordingly contended that the SSAT decision of 10 May 2006 should be affirmed.
Documents
5. The Tribunal was provided with the following relevant documents:
A1pages 1-13 Partnership Agreement
A2page 14 Receipt for deposit in regard to the Marybrook land
A3pages 15-18 Documentation from Stafford Settlements
A4 page 19 Copy of the cover of the Lump Sum Contract
A5 page 20 Letter from Defence Service Homes Corporation
A6page 21 ANZ statement
A7page 22 Clauses 30 and 31 of the Partnership Act 1895 (WA)
A8pages 23-56 Joint Tenancy and Tenancy in Common Report of the Law Reform Commission of Western Australia 1994
A9 pages 57 -58 Computer printout of E-Reference 108.20200
Evidence
6. Mrs Cameron did not attend the Tribunal hearing or give evidence but was represented by her son Andrew.
Applicant’s Contentions
7. On behalf of the applicant it was contended that the evidence shows that the Marybrook land was an asset of the KE and SE Cameron partnership, notwithstanding that the Certificate of Title shows a joint tenancy.
8. If the Marybrook land is a partnership asset the land is presumed under section 30(2) of the Partnership Act 1895 (WA) to be owned by the partners as tenants in common, absent proof to the contrary. This followed the long established principles of equity – see Lake v Craddock (1732) 3PWms 158; 24 ER 1011 which applied even though the legal interest was conveyed to them in joint tenancy.
9. If the Marybrook land was not a partnership asset then it was the subject of an express trust created when the Cameron family had a meeting in 1986 and Mr Cameron indicated that one half of the Marybrook land was to be Andrew’s and further that the events which followed that meeting show a clear intention on the part of Mr & Mrs Cameron to sever their joint tenancy to the intent that as desired by Mr Cameron one half of the Marybrook land was to go to Andrew.
Evidence
10. The Tribunal has had regard to the evidence before the SSAT and the facts as set out in the respondent’s Statement of Facts and Contentions as well as the documents presented to the Tribunal. In the Tribunal’s view this is sufficient to establish on the balance of probabilities that the Marybrook land was bought with partnership funds and was always regarded by Mr & Mrs Cameron as partnership property.
11. The Tribunal notes that it is undisputed that the deposit for the house built on the Marybrook land and at least some of the mortgage repayments made in respect of the loan taken to build that house were paid from the partnership bank account.
12. In the Tribunal’s view it is clear on the evidence that the late Mr Cameron at all relevant times following the 1986 family meeting intended that Andrew should have a one half share in the Marybrook land.
Decision
13. The Tribunal finds that the Marybrook land was partnership property, being property bought with money belonging to the partnership and under s31 of the Partnership Act 1895 (WA) unless the contrary intention appears, which is not the case on the evidence before the Tribunal, the land is accordingly deemed to have been bought on account of the partnership. Accordingly, under s 30(2) of that Act the land must be presumed to have been owned by Mr & Mrs Cameron as tenants in common, notwithstanding that the title was shown as a joint tenancy.
14. It follows that the testamentary disposition by Mr Cameron of his interest in the Marybrook land to Andrew was a valid disposition and accordingly when Mrs Cameron subsequently gave one-half of the proceeds of the sale to Andrew this was not a gift as it was simply carrying out the terms of Mr Cameron’s Will.
15. If the Tribunal’s view in this regard is incorrect, the Tribunal is in any event of the view that following the Cameron family conference in 1986, evidence of which was provided to the SSAT, the one half interest in the Marybrook land was held on trust by Mr & Mrs Cameron for Andrew. The Tribunal notes that in this regard that there was a clear intention as evidenced by the documents before the Tribunal for the joint tenancy to be severed and that the only things that prevented the title being changed were that the Defence Service Homes Corporation would not allow the land to be transferred to Mr & Mrs Cameron as tenants in common while the Corporation held a mortgage over the land, and also that funds were not available to pay for the transfer at that point in time.
16. The Tribunal accordingly finds that there was an express trust over one half of the Marybrook land which was created in 1986 and that, following the creation of that trust and following the severance by stated intention of Mr & Mrs Cameron of the joint tenancy, notwithstanding that the property remained registered in their names as joint tenants, Mr Cameron and, following his death Mrs Cameron, held that land as to a one half interest therein on trust for Andrew.
17. Having regard to these findings the Tribunal does not consider it necessary to consider whether there was any other equitable right or obligation or a constructive trust over one half of the Marybrook land.
18. The Tribunal accordingly finds that under the provisions of the Social Security Act and the Social Security (Administration) Act 1999 one-half of the Marybrook land and therefore the amount paid by Mrs Cameron to Andrew following the sale of the Marybrook land represented an asset or property held on trust by Mrs Cameron for Andrew and accordingly it was not an asset or property in Mrs Cameron’s possession for age pension rate calculation purposes.
19. The Tribunal accordingly sets aside the decisions under review and directs that this matter be remitted to the decision-maker to make a finding in accordance with the Tribunal’s decision.
I certify that the nineteen (19) preceding paragraphs are a true copy of the reasons for the decision herein of
Signed: ..................... (Miss C Skinner)..................................
AssociateDate of Hearing 14 August 2006
Date of Decision 5 December 2006
Representative for the Applicant Mr J A Cameron
Representative for the Respondent Ms M Conlon, Centrelink
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