Enchelmaier and Secretary, Department of Employment and Workplace Relations
[2006] AATA 1005
•24 November 2006
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2006] AATA 1005
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2005/453
GENERAL ADMINISTRATIVE DIVISION ) Re MARGARET ANN ENCHELMAIER Applicant
And
SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
Respondent
DECISION
Tribunal Senior Member P. M. McDermott R.F.D Date24 November 2006
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
...............[Sgd]...............................
Senior Member
CATCHWORDS
SOCIAL SECURITY – Newstart allowance – property held in joint names with late mother –vacant block held to be an asset – property valued according to highest and best use – assets held to exceed asset limit - decision affirmed
TRUSTS – charitable trust – conservational trust – property held out to be unrealisable asset as held on trust – property held on trust by statutory declaration for protection of small birds and wildlife – insufficient scientific evidence to establish conservational trust – decision affirmed
Social Security Act 1991
Social Security and Veterans’ Entitlements Legislation Amendment (Private Trust and Private Companies – Integrity Of Means Testing) Act 2000Trusts Act 1973, s103(4)
Property Law Act 1974, s 11(1)(b)Charitable Uses Act 1601 (Imp.)
Kirkovski v Secretary, Department of Family and Community Services [2004] FCA 790
Re Eimberts and Repatriation Commission (1988)16 ALD 19
Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474
Re White and Secretary, Department of Family and Community Services (2000) 52 ALD 596
Spencer v Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 70
Re Secretary, Department of Social Security and Langdon (1993) 31 ALD 579
Re Timbs and Argles and Secretary, Department of Family and Community Services [2004] AATA 796
HTW Valuers v Astonville (2004) 217 CLR 640
Richards v Delbridge (1874) LR 18 Eq. 11.
Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200
Incorporated Council of Law Reporting of the State of Queensland v Federal Commissioner of Taxation (1971) 125 CLR 659; [1971] HCA 44
Re Ingram [1951] VLR 427
Re Grove-Hardy [1929] 1 Ch 557
Re Green [1970] VR 442
Royal Society for the Prevention of Cruelty to Animals (NSW) v Benevolent Society (NSW) (1960) 102 CLR 629
The Trustees of the Property of John Daniel Cummins, A Bankrupt v Cummins [2006] HCA 6
REASONS FOR DECISION
24 November 2006 Mr P McDermott, Senior Member INTRODUCTION
1. I have to decide whether Ms Margaret Enchelmaier is entitled to receive Newstart Allowance.
2. On 7 September 2004 a Centrelink officer made a decision to cancel Ms Enchelmaier’s Newstart Allowance.
3. On 14 December 2004 this decision was affirmed by an Authorised Review Officer of Centrelink.
4. On 7 June 2005 the Social Security Appeals Tribunal affirmed the decision of the Authorised Review Officer. Ms Enchelmaier seeks a review of that decision by this Tribunal.
ISSUES
5. I have to decide whether Ms Enchelmaier’s assets were above the relevant asset limit for the payment of Newstart Allowance at the time that Newstart Allowance was cancelled on 7 September 2004.
6. I have to determine whether Ms Enchelmaier is the beneficial owner of certain land.
7. To determine this issue I will need to consider:
(a)whether the land, which is a vacant block, is an “asset” for the purposes of the Social Security Act 1991 (“the Act”);
(b)if the land is an asset, what is the value of the asset for the purposes of the Act in September 2004; and
(c)whether the asset is an “unrealisable asset” under the Act.
HISTORY OF THE MATTER
8. Ms Enchelmaier was born on 28 March 1947 and is 59 years old. Ms Enchelmaier has undertaken legal studies and at one time worked in the Australian Capital Territory. In 1989 she moved from Canberra to Toowoomba to be with and assist her elderly, recently widowed mother. Ms Enchelmaier and her mother lived on their own money for some 12 years.
9. On 9 November 2001, Ms Enchelmaier lodged a claim form for carer’s payment with Centrelink. On 29 March 2002 the benefit of carer’s payment was approved and payment was backdated to 9 November 2001. Ms Enchelmaier’s mother died on the 30 May 2002.
10. On 22 August 2002 Ms Enchelmaier made a claim for Newstart Allowance. She was granted Newstart Allowance from 3 September 2002 and regular fortnightly payments of Newstart Allowance were made until 31 August 2004.
11. The reason why the Centrelink officer cancelled payment of the Newstart Allowance was because Ms Enchelmaier is the registered owner of land at 320 McKenzie Street, Toowoomba (herein referred to as “Bundarra”). This property was purchased on 2 July 1983 by Ms Enchelmaier and her late mother (Edna Mable Enchelmaier).
12. The property was purchased in both their names as joint tenants so that when Ms Enchelmaier died on 30 May 2002, her interest in the joint tenancy automatically passed to Ms Margaret Enchelmaier by operation of law.
13. On 4 September 2002, the Record of Death of Ms Edna Mable Enchelmaier was registered on the title of the property known as Bundarra and Ms Margaret Enchelmaier then became the sole registered owner of the property. The property is unencumbered.
14. For some time Ms Enchelmaier has been negotiating with the Toowoomba City Council for the remission of rates. The Council has recently agreed to the remission of rates from 1 July 2003 until 30 December 2006. The Council is also investigating the possibility of remitting rates that have been levied on Bundarra since 1986. In 2003 it was reported that she was negotiating with the Council, which then proposed a native plant garden in the locality.
Whether Bundarra is an asset under the Act
15. At the hearing, the Secretary contended that the vacant land at 320 McKenzie Street, Toowoomba (Bundarra) was an assessable asset for the purposes of the Act.
16. The term “asset” is defined in the Act to mean “property or money (including property or money outside Australia)”: see s11(1). The Secretary contended that real property fell within this description and that the property was an assessable asset of Ms Enchelmaier’s, in view of the fact that she held legal title to the property and that the property was free of any encumbrance. I accept the submission of the Secretary that the property is an asset for the purposes of the Act.
method of valuing Bundarra
17. The Act does not provide any specific method for valuing assets.
18. The Federal Court of Australia has held that this Tribunal should adopt a market value approach which is based on comparable sales and the best use to which an asset can be put: see Kirkovski v Secretary, Department of Family and Community Services[2004] FCA 790 at [17].
19. This approach has been consistently taken by this Tribunal: see Re Eimberts and Repatriation Commission(1988) 16 ALD 19: Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474: Re White and Secretary, Department of Family and Community Services (2000) 52 ALD 596. This approach is also consistent with the seminal decision of the High Court of Australia in Spencer and Commonwealth of Australia (1907) 5 CLR 418 at 432 per Griffith CJ.
20. In Re Secretary, Department of Social Security and Langdon (1993) 31 ALD 579 this Tribunal made observations that the market value of an asset is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arms’ length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
21. In Re Woodhouse and Secretary, Department of Social Security (1987) 12 ALD 474 at 477, this Tribunal also explained that in assessing market value one must both ascertain the highest and best use of the property and assess the price that a desirous buyer would pay to a willing but not anxious seller to purchase the property.
22. In determining the value of the property for the purposes of the Act I must therefore have regard to the highest and best use that can be made of the property when assessing its market value.
23. I appreciate that, although the Act has to be interpreted in a beneficial manner, the valuations which are conducted for social security purposes must be based on the evidence of market value: see Re Timbs and Argles and Secretary, Department of Family and Community Services [2004] AATA 796 at [24].
24. Ms Enchelmaier in her submission contended that I should not use the market value of the property. She placed reliance on the decision in HTW Valuers v Astonville (2004) 217 CLR 640. However that case concerned a property which was regarded as not "a readily marketable asset".
Evidence of market value of Bundarra
25. I heard evidence from two valuers as to the value of the property known as Bundarra.
26. One certified practising valuer, Mr S. Davis, gave evidence that Bundarra was valued at $80,000. Bundarra is an area of 1,573 square metres. Mr Davis valued the property as parkland and in determining the valuation figure for the property, he gave consideration to the purchase of the parcel of land in Tarlington Street, Middle Ridge, by the Toowoomba City Council on 30 August 2004.
27. The Tarlington Street property was described as Lot 16 on SP 170588 with an area of 3,932 square metres and with the land being purchased for $169,076. The land was sold by the vendor to the Toowoomba City Council, knowing that the property was to be used as parkland. In his evidence, Mr Davis acknowledged that the property in Tarlington Street, Middle Ridge, would have resulted in a higher sale price if the land was to be used for any residential purpose.
28. The other valuer who gave evidence before me was Mr Paul Lee of the Australian Valuation Office.
29. Mr Lee in his report of 24 April 2006 considered that as at 4 October 2004 the market value of Bundarra was $160,000. Mr Lee based the market value of the subject property by direct comparison to other vacant residential allotments which had been sold around the time of an initial valuation on 4 October 2004. These properties included an address at 25 Pelican Street, Rangeville, which was an area of 1,596 square metres which was sold on 8 April 2004 for $260,000. Mr Lee considered that the Tarlington Street property, although a larger property, was inferior overall due to its location on a busy road.
30. Mr Lee mentioned that Bundarra is zoned “mixed housing” under the city of Toowoomba Planning Scheme 2003. Mr Lee explained in his report that the “mixed housing” zoning allows a mixture of housing types at varying densities. The zoning allows for higher residential development than normally provided by traditional housing and enables the erection on the land of buildings such as duel occupancy buildings, multiple dwelling units and aged care housing [Exhibit F, page 2].
31. I consider that in assessing the value of Bundarra, Mr Lee has conducted a thorough investigation into the property. He has made a full search of Council records to confirm that there is no legal impediment to Ms Enchelmaier putting the property to its highest and best use under its current zoning. Mr Lee has also prepared his valuation on the basis of comparable sales in the local area. I am satisfied that he has adopted a methodology which is fair to the applicant.
32. Given the limited number of comparable sales for property zoned “mixed housing” in that locality, Mr Lee has used comparable sales for property zoned “neighbourhood residential”. The zoning “neighbourhood residential” does not allow the level of high density residential development that “mixed housing” does allow.
33. Mr Lee, in his evidence, was of the opinion that the actual market value of the land would probably be higher than his valuation if the property was offered for sale on the open market. This is because of the limited blocks of land zoned “mixed housing” which are available in the area.
34. I am satisfied that Mr Lee has adopted a fair approach in making a valuation of $160,000 as at October 2004.
35. I also make the observation that Mr Davis in his evidence agreed that the approach which was taken by Mr Lee to the valuation of Bundarra, was certainly technically correct. Mr Davis also considered that Mr Lee’s valuation of $160,000 as at October 2004 was reasonable on the basis of the best use that could be made of the property under the zoning “mixed housing”.
36. Mr Davis also recognised that the valuation of $160,000 was consistent with his earlier valuation of the property that was made in 2001. In September 2001 Mr Davis had valued the property at $110,000 [Exhibit B page 4].
37. I find that the value of Bundarra, as at the date of the decision under review, was $160,000.
whether Bundarra is an unrealisable asset
38. Ms Enchelmaier contended that Bundarra should be treated as an unrealisable asset under the Act.
39. As Ms Enchelmaier was in receipt of a social security benefit, being Newstart Allowance, it is important for me to consider s11(12) of the Act in determining whether the property is unrealisable.
40. Under s11(12) an asset is an unrealisable asset if the person cannot sell or realise the asset and the person cannot use the asset as a security for borrowing.
41. A fundamental argument that was raised by Ms Enchelmaier was that she was holding the property on trust and therefore could not sell the property or use it as security for borrowing. I have found that there was no valid trust and so there is, in my opinion, no legal impediment to Ms Enchelmaier selling the property. I, however, accept that Ms Enchelmaier would not place the property on the market having regard to the circumstances whereby she and her mother acquired the property.
42. Ms Enchelmaier also gave evidence that she was denied a loan which was proposed to be secured by a mortgage over property. The tenor of Ms Enchelmaier’s evidence was that the loan was refused on the basis that the financial institution was concerned about her ability to service loan repayments. Since the hearing she has clarified that she was contemplating granting a mortgage over her residence and not the property known as Bundarra. Accordingly, there is now no issue that Ms Enchalmaier was declined a loan as a result of Bundarra being an unsatisfactory security.
43. During the hearing, the issue was canvassed whether a potential purchaser of Bundarra would face difficulties with the Council if development of the property was sought. Indeed, in fairness to Ms Enchelmaier who was unrepresented, I felt it important to raise this issue with the valuers who gave evidence before me. However, there is no material before me to evidence that there would be any restriction on the use of the property for the purpose of “mixed housing”.
whether Bundarra is subject to a trust
44. The previous decision makers who considered Ms Enchelmaier’s application for Newstart Allowance have differed as to whether the property known as Bundarra is subject to a trust.
45. The Authorised Review Officer of Centrelink decided that the property was subject to a trust. However, the Social Security Appeals Tribunal considered that there was no trust.
46. I must therefore consider whether Bundarra is subject to a trust.
47. As Bundarra is an interest in land, any declaration of trust respecting land or any interest in land must be manifested and proved in writing: see Property Law Act 1974, s11(1)(b).
48. Ms Enchelmaier has placed evidence before me that she has made a statutory declaration in respect of the vacant land at 320 McKenzie Street, Toowoomba. In that statutory declaration, which was made on 19 September 2002, Ms Enchelmaier stated “I hereby declare that I do hold and have always held the vacant land at 320 McKenzie Street Toowoomba as a trustee for the purpose of the conservation of wild life most particularly small birds.” [T15, folio 35].
49. In that statutory declaration, Ms Enchelmaier also stated that on her death, pursuant to her will, the land will pass to the Toowoomba Field Naturalists Club incorporated for the same purpose. I, however, make the observation that a will may be revoked at any time before her death.
50. In my capacity in reviewing a decision of an administrator, I do have reservations about recognising a trust in the form of a statutory declaration, rather than a formally executed declaration of trust under seal. I also observe that even if the trust is valid, there is a possibility of the full ownership of the property reverting to Ms Enchelmaier upon the failure of the trust.
51. In this document, Ms Enchelmaier has certainly used words which evidenced that she declares herself to be a trustee: see Richards v Delbridge(1874) LR 18 Eq. 11.
52. I must, however, consider whether in fact the declaration of trust is valid; having regard to the purpose provided in the declaration, which is the conservation of wildlife, most particularly small birds.
53. Ms Enchelmaier, in her submissions, contended that a trust for the preservation of animals and/or flora is capable of being a valid trust. In support of that submission she cited the case of Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200 where a trust for “the preservation of native wildlife (both flora and fauna)” was upheld as a valid trust: see submission dated 15 September 2006, para 6.
54. In order for there to be a valid charitable trust, it is clear that the trust must be for a purpose which is both of benefit to the community as well as falling within the spirit of the preamble of the Elizabethan Charitable Uses Act 1601 (Imp.): see Incorporated Council of Law Reporting of the State of Queensland v Federal Commissioner of Taxation (1971) 125 CLR 659 at 667 per Barwick CJ. The requirement that a charitable trust must be for the public benefit is also reinforced by s 103(4) of the Trusts Act 1973 (Qld).
55. The trend of modern authority is for conservation trusts to be upheld and in those cases it is clear that there has been a clearly identifiable public benefit present. The trust that was under consideration in Re Ingram [1951] VLR 427 had an express requirement that the trust was for the benefit of the public. In Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200 Holland J observed, at 217, that the case of Re Ingram [1951] VLR 427 was “a stronger case by reason of the expressed intention to benefit the people of Australia”.
56. I, however, consider that it is not necessary for such an express declaration of public benefit to be present for there to be a valid charitable trust. What a court of equity examines is the substance rather than the form of a transaction in order to ascertain whether the requisite public benefit is present.
57. I should be mention that the public does not have access to Bundarra. The property is fenced so as to ensure a safe and protected breeding habitat for small birds and other wild life. However, Ms Enchelmaier has stated that she admits the public for “working bees”.
58. In these circumstances, the Secretary contends that it cannot be said that Ms Enchelmaier is providing facilities for recreation or other leisure time activities for the public benefit. The fact that the public is not admitted is, in my opinion, not decisive of the issue under consideration, as one can envisage that is necessary for some animals to be protected from the public.
59. In Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200 the testatrix did not specify what property would be the subject of the trust. The trustees were given discretion in deciding what organisation would benefit from the application of the trust funds. In the statutory declaration that is before me the actual property is designated.
60. This case therefore differs somewhat from the trust which was under consideration in Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200. I appreciate that there are some cases which have held that trusts for the creation of a wildlife sanctuary are not valid: see Re Grove-Hardy [1929] 1 Ch 557 and Re Green [1970] VR 442. I consider that such cases would be reappraised having regard to the decision in Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200.
61. In Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200 at 217-218 Holland J discussed the case of Royal Society for the Prevention of Cruelty to Animals (NSW) v Benevolent Society (NSW) (1960) 102 CLR 629 in which the High Court of Australia had considered a case where a settlor had given two house properties and the small area of suburban land on which they stood to be maintained as a bird sanctuary and for food and water to be left out for the birds that called there. In Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200 at 217 Holland J remarked: “The High Court took the view that the purposes of the trust fell outside the scope of a trust for the public benefit”.
62. In Royal Society for the Prevention of Cruelty to Animals (NSW) v Benevolent Society (NSW) (1960) 102 CLR 629 at 647 Windeyer J remarked: “A trust for the provision and preservation of a sufficient area of bushland or of inland water, marshland or sea-coast, suitably situated, as a place where birds could breed unmolested might well, I think, be good”. This passage was quoted by Holland J In Attorney-General (New South Wales) v Sawtell [1978] 2 NSWLR 200 at 218.
63. It is clear from these remarks of Windeyer J that for a trust for a bird sanctuary to be valid, the land must be of a “sufficient area” and also be “suitably situated”. In Royal Society for the Prevention of Cruelty to Animals (NSW) v Benevolent Society (NSW) (1960) 102 CLR 629 there was evidence at first instance that the proposed sanctuary would in no way contribute to the preservation of Australian native birds.
64. There was no scientific evidence before me as to whether Bundarra was of a sufficient size and in a suitable location for the preservation of wildlife. I have mentioned that Bundarra, has an area of 1,573 square metres. There were certainly some statements of the desirability of preserving the property, but in my opinion they fall short of being sufficient evidence to base a finding that the property is a suitable location for the preservation of wildlife. In fact, there is evidence before me that some residents have complained that the stench from the habitat which adjoins Bundarra is unbearable. One councillor has recently stated: “It is sad to see that beautiful habitat being destroyed by the very creatures we were providing a haven for”.
65. In the absence of such scientific evidence, I must accept with the submission of the Secretary that Ms Enchelmaier has not demonstrated the requisite public benefit which would sustain the validity of the trust.
66. Accordingly, I do not accept that a valid trust exists in this case which prevents Ms Enchelmaier from freely dealing with the property. I consider that Ms Enchelmaier has the full beneficial ownership of Bundarra or, in terms recently expressed by the High Court of Australia in discussing resulting trusts, the “equitable interest is at home with the legal title, because no trust has arisen.”(The Trustees of the Property of John Daniel Cummins, A Bankrupt v Cummins [2006] HCA 6 at [55], citing Calverley v Green (1984) 155 CLR 242 at 268 per Deane J.)
67. In making these observations, I do not wish to impugn the sincerity of Ms Enchelmaier who has, in my opinion, a genuine intention to assist wildlife.
68. However, even if I was satisfied that there was a valid trust in existence I would have to consider the application of the provisions that were inserted into the Act by the Social Security and Veterans’ Entitlements Legislation Amendment (Private Trust and Private Companies – Integrity Of Means Testing) Act 2000. Ms Enchelmaier did not make any submissions on the effect of this legislation. The legislation introduced the concept of the designated private trust which is defined in s1207P1 as being any trust which would not satisfy ss1207P1A to C of the Act. Part 3.18 of the Act provides for the attribution of income and assets of a trust to individuals who pass the control test as set out in s1207V2 of the Act in relation to the trust. In this case Ms Enchelmaier would certainly pass the control test in relation to the trust as she is the trustee of the trust. See s1207V(2A) of the Act. As she is an attributable stakeholder of the trust, the value of the assets of the trust would be attributable to her by virtue of s1208E(1).
whether the assets of the applicant exceed the asset limit
69. I find on 7 September 2004, Ms Enchelmaier had assets valued at $188,000 being the block of land at 320 McKenzie Street, Toowoomba valued at $160,000; household contents and personal effects of $15,000 and a motor vehicle valued at $13,000. I make the observation that the values of Ms Enchelmaier’s household and personal effects and motor vehicle were based on estimates given by Ms Enchelmaier.
70. As Ms Enchelmaier was a single person who owns her own home, the relevant asset limit for Newstart Allowance on 7 September 2004 was $153,000. I accordingly consider that Ms Enchelmaier was not entitled to Newstart Allowance on that date.
71. I wish to express my appreciation to the Queensland Public Interest Law Clearing House Incorporated for assisting Ms Enchelmaier in preparing her submission. I also express my appreciations for the submissions that were prepared by the advocate who appeared for the secretary.
Decision
72. The decision under review is affirmed.
I certify that the preceding 72 paragraphs are a true copy of the reasons for the decision herein of Senior Member P. M. McDermott R.F.D
Signed: .....................................................................................
Legal Research OfficerDate/s of Hearing 27 April 2006, 9 August 2006
Date of latest submission 22 September 2006
Date of Decision 24 November 2006
Ms Enchelmaier appeared on her own behalf
For the respondent Ms S Oliver, departmental advocate
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