Croker and Secretary to the Department of Family and Community Services

[2001] AATA 321

DECISION AND REASONS FOR DECISION [2001] AATA 321

ADMINISTRATIVE APPEALS TRIBUNAL)
  Nº V00/1030
GENERAL ADMINISTRATIVE  DIVISION)

Re:            ROBERT ARTHUR CROKER

Applicant

And:         SECRETARY TO THE
  DEPARTMENT OF FAMILY AND
  COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       Mrs H.E. Hallowes, Senior Member
Date:             20 April 2001
Place:            Melbourne

Decision:The decision under review is affirmed.

(sgd) H.E. Hallowes
  Senior Member
  SOCIAL SECURITY — rent assistance — whether applicant an ineligible homeowner — principal home owned by company — company trustee of family trust — estranged wife sole director of company — applicant appointor of trust — whether reasonable security of tenure
Social Security Act 1991 ss.11, 13, 1064-D1
Residential Tenancy Act 1997 (Vic)

Veterans' Entitlements Act 1986

Re Johnston and Repatriation Commission (AAT 508, 31 May 1994)
In The Marriage of David Latimer Shaw and Ramona Shaw (1989) FLC 92-030
Re Skeats Settlement 42 ChD 522

REASONS FOR DECISION

20 April 2001  Mrs H.E. Hallowes, Senior Member

1. The only issue in this application is whether Mr Croker is eligible for rent assistance from 14 July 1999, the date on which he resigned as a director of Crolok Tools and Dies Pty Ltd ("the company").   He transferred his share in the company to his estranged wife on that day for a consideration of $1.   His estranged wife then became the sole director of the company.   On review, on 17 July 2000, the Social Security Appeals Tribunal ("the SSAT") decided that he was not eligible for rent assistance.  

2. Mr Croker represented himself at the hearing. The Secretary was represented by Centrelink advocate Ms C. McInnis, who provided Mr Croker and the Tribunal with a statement of the Secretary's case. The Tribunal had before it the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 ("the documents"), together with further material provided by Mr Croker at the hearing.

3. It is not in dispute that Mr Croker lives at 2 Hosken Street, Springvale.   It is his contention that he rents his home at that address from the company which owns the property.   The company is also the trustee of R.A. Croker Family Trust ("the trust").  

4. The Tribunal had before it a copy of the trust deed.   Under the trust deed, Mr Croker is a beneficiary, the guardian and appointor.   Clause 19(a) of the trust deed provides:

   19.(a)   THE Appointor if named and described in the Schedule (and on the death of the last surviving individual Appointor then his or her legal personal representatives and in the case of a company named as Appointor then any person or company duly appointed by it so as to act) shall have power to appoint in writing a new or additional Trustee or Trustees hereof (but not including the Settlor or any Appointor or Guardian named or described in the Schedule or any Company controlled by the said Settlor Appointor or Guardian) . . .  

Clause 21 of the trust deed provides that any trustee, guardian or appointor may resign or renounce such position.

1. On 20 January 2000 a decision was made not to pay rent assistance to Mr Croker on the basis that he had reasonable security of tenure. Section 1064-D1 of the Social Security Act 1991 ("the Act") provides that:

   1064-D1.    An additional amount to help cover the cost of rent is to be added to a person's maximum basic rate if:

   (a)the person is not an ineligible homeowner; and

   . . .  

Pursuant to subsection 13(1) of the Act, an "ineligible homeowner means a homeowner . . ." and subsections 11(4) and (8) of the Act provide:

11(4)        For the purposes of this Act:

(a)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; and

. . .

11(8)        If a person has a right or interest in the person's principal 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.  

1. Mr Croker is in receipt of disability support pension under the Act, first granted to him in about July 1985. Mr Croker gave oral evidence that he lives in a flat at 2 Hosken Street. There are other buildings on the site, including a home where his estranged wife lives. The company manufactures articles such as lathes at the site in order to make a profit and the flat in which he resides is a company asset for the purpose of producing a profit. Mr Croker said that Centrelink has suggested to him that he should appoint another trustee apart from the company and that it may then act sympathetically towards him. The trust was his father's family trust and Mr Croker told the Tribunal that he has never acted as an appointor in his life. He has no intention of exercising his rights as an appointor in the future. Having referred to clause 19 of the trust deed (paragraph 4 above), Mr Croker said:

   Now the important part comes in, it blows them out of the water.   This is what I have been going with:

   Or any company controlled by the said settler, appointer or guardian.

   That is an absolute no-no.   And that is the long and the short of it, I am afraid, Mrs Hallowes.

2. Ms McInnis contended in the statement of case that "As appointor under the trust, Mr Croker can exercise sufficient powers to give him reasonable security of tenure over 2 Hosken Street, Springvale . . .".   Mr Croker said he begged to differ; that it is "not on" because of what is written in the trust deed, and, being no longer a shareholder or director, Mr Croker contended he no longer has the power to give himself reasonable security of tenure.

3. Mr Croker agreed that he has been living at 2 Hosken Street since before 1985 and that in 1985 he began to be paid rent assistance.   Mr Croker was a director of the company with his estranged wife and he had a 50 per cent shareholding.   On 14 July 1999 Mr Croker transferred his shareholding to his estranged wife for a consideration of $1 and he ceased to be a director.   His only interest in the trust remained as appointor, guardian and beneficiary.  

4. Ms McInnis put to the Tribunal that Mr Croker's rights and interests as a tenant would be protected under the Residential Tenancy Act 1997 (Vic). If this was the only thrust of her contentions, it would mean that all tenants may have reasonable security of tenure, and not be entitled to rent assistance under the Act. However, she also referred the Tribunal to the decision in Re Johnston and Repatriation Commission (AAT 508, 31 May 1994).   That application concerned provisions of the Veterans' Entitlements Act 1986, similar to the Act, with respect to ineligible homeowners, requiring consideration of whether or not a person has a right or interest in a residence, giving reasonable security of tenure. In the Tribunal's opinion the right or interest must equate with a right or interest in real property. The Tribunal noted that there were many "arrangements" relating to real property which may give rise to rights or interests. Having determined that through their lease, Mr and Mrs Johnston had a right to the property in which they resided, the Tribunal turned its mind to whether the right gave them reasonable security of tenure. The Tribunal said that the test is an objective one, which meant "a certainty or an assurance of occupation which need only be reasonable".

5. Ms McInnis also referred to a number of Tribunal decisions which have considered whether a person, holding a position of guardian or appointor of a family trust which owned residential property, was the controlling mind of the trust and that they therefore had reasonable security of tenure of the property itself.   Ms McInnis put to the Tribunal that, under clause 19 of the trust deed, Mr Croker has the power to appoint and remove the trustee or to appoint a number of other trustees who may be disposed to act in his favour, although she conceded that the trustee, under the trust deed, had an absolute discretion to evict Mr Croker (clause 7(e)).   Ms McInnis also drew attention to the decision of the Family Court In The Marriage of David Latimer Shaw and Ramona Shaw (1989) FLC 92-030 where the Court said that the power to appoint was not entirely unfettered, because, being a fiduciary power, it must be exercised "for the benefit of the trust, not for the benefit of any particular beneficiary . . . ", although Re Skeats Settlement 42 ChD 522, at page 526, is also an:

   . . . authority for the proposition that in the exercise of that power the husband could not appoint himself as trustee, although he may be able to appoint a company of which he is the majority shareholder, or some person (such as his solicitor or accountant) who might be expected, in exercising the powers of the trustee, to act sympathetically to the husband.  

Ms McInnis therefore contended that Mr Croker had considerable indirect influence over any decision of the trustee (the company of which his estranged wife is the sole director), although he is precluded from appointing himself as trustee or any company which he controls. Ms McInnis said that, in acting as an appointor, Mr Croker is obliged to consider the beneficiaries, so in effect he must consider himself and that, in deciding to transfer his interest in the company to his estranged wife for $1, he must have felt confident that she would not act against his interests. Ms McInnis concluded by saying that subparagraph 11(4)(a)(i) of the Act was satisfied in that Mr Croker had a right or interest in his principal home through his power as an appointor and through that right he has reasonable security of tenure, satisfying subparagraph 11(4)(a)(ii) of the Act.

1. When asked if he felt secure in his home, Mr Croker said that it has been his home for 20 years but that, if his estranged wife "packs up" or she decides to "throw it in" and to "sell the place up", he would have nowhere to live.   When asked whether his estranged wife pays rent for her home to the company, Mr Croker said that she did so as far as he knew.   When asked about his rent Mr Croker said that once every four weeks he knocks on his estranged wife's door and pays, "It is $95" a week, "what is that, 380, I think, 380 . . ." by cash.   He thought he received about $334 disability support pension a fortnight.   Mr Croker said that the company pays the rates on 2 Hosken Street.   If repairs are needed to his flat, his estranged wife arranges for somebody to come and fix it.  

2. The Tribunal had before it a copy of Mr Croker's bank account with respect to deposits and withdrawals between 5 September 2000 and 31 October 2000.   Four withdrawals of $340 were disclosed which, Mr Croker said, was money he used to pay for living expenses.   Ms McInnis provided the Tribunal with a copy of a receipt dated 14 July 1999, stamped $360 received from Croker Tools and Dies Pty Ltd, being rent for the period 14 July 1999 to 10 August 1999.  

3. If there is a falling out between Mr Croker and his estranged wife, it may be a matter of who acts first, the director of the company or the appointor.   However, at this time the Tribunal finds that Mr Croker is a homeowner because he has an interest in his principal home which gives him reasonable security of tenure.   Perhaps the most telling piece of evidence before the Tribunal was Mr Croker's response to a request made by the Tribunal that, if he changed his address before the date the decision was handed down, would he let the Tribunal know.   He said:

   Well, it has been the same.   I am not a person of — I am afraid I am a person of habit, not a person jumping around.

This suggests to the Tribunal that Mr Croker does not foresee that he will have to leave 2 Hosken Street.   He has lived there for a long time.   He was prepared to give up his directorship of the company, and to part with his interest in the company for only $1.   The Tribunal is satisfied that he has confidence that the company will act in his interests, but, if it appears that that situation will not continue, the Tribunal is satisfied that Mr Croker is astute enough to act quickly and to exercise his power as appointor.   As pointed out by the complex assessment officer on 31 January 2000, it was not explained why the company was paying rent to its sole director.   The complex assessment officer suggests that balance sheets with respect to the trust were placed before the SSAT.   They were not placed before the Tribunal, perhaps because they pre-dated the period with which the Tribunal is concerned.   Mr Croker did not place any further documents before the Tribunal to substantiate his contentions that he pays rent for his flat and that he is at arms length from the company such that he has no interest in 2 Hosken Street which gives him reasonable security of tenure.

1. It is for these reasons the decision under review will be affirmed.

   I certify that the fourteen [14] preceding paragraphs are a true copy of the reasons for the decision herein of 
   Mrs H.E. Hallowes, Senior Member

   (sgd)       Catherine Thomas
                 Personal Assistant

   Date of Hearing:  09.02.01
   Date of Decision:  20.04.01
   Solicitor for the Applicant:           NIL, IN PERSON
   Solicitor for the Respondent        Ms C. McInnis, Advocate with Centrelink