Eric Slaven and Secretary, Department of Social Services
[2015] AATA 427
•17 June 2015
[2015] AATA 427
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/3069
Re
Eric Slaven
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Dr Gordon Hughes, Member
Date 17 June 2015 Place Melbourne The Tribunal affirms the decision under review.
[sgd]........................................................................
Dr Gordon Hughes, Member
Catchwords
SOCIAL SECURITY - Calculation of applicant's age pension rate – whether the value of second property to be included as an asset – whether a constructive trust exists in favour of a disabled child – insufficient evidence of a common understanding or that it would be a fraud for the applicant to deny the existence of a trust.
Legislation
Property Law Act 1958 (Vic) Section 53
Social Security Act 1991 (Cth) Sections 1118, 1129
Cases
Baumgartner v Baumgartner [1987] 164 CLR 137
Cleary and Secretary, Department of Family and Community Services [2004] AATA 1125
Demovich and Secretary, Department of Family and Community Services [2004] AATA 647
Kidner, GS v Department of Social Security [1993] FCA 898
Goldthorpe and Secretary Department of Employment and Workplace Relations [2007] AATA 1875
Henderson & Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 468
Irvine v Scaysbrook [2005] NSWSC 565
Kirkovski v Secretary, Department of Family and Community Services [2004] FCA 790
MuschinskivDodds (1985) 160 CLR 583
Re Agnew & Secretary, Department of Social Security [1998] 52 ALD 426
Re Carpenter & Secretary, Department of Families, Community Services & Indigenous Affairs [2006] 90 ALD 366
Re Giovanni and Grazia Follone & Secretary to the Department of Social Security [1987] AATA 99
Spencer v Commonwealth of Australia [1907] 5 CLR 418
"VAR" and "VAT" and Secretary to the Department of Family and Community Services [2003] AATA 926
Secondary Materials
Centrelink, Guide to the Social Security Law
Heydon JD, Jacobs KS and Leeming MJ, Jacobs' Law of Trusts in Australia (7th ed, LexisNexis Butterworths, 2006)
REASONS FOR DECISION
Dr Gordon Hughes, Member
17 June 2015
REASONS FOR DECISION
On 2 April 2014 an authorised review officer (ARO) of the Department of Human Services made a decision that the value of a property owned by the applicant was an asset for the purposes of calculating the applicant's Age Pension rate. The applicant sought a review of the decision of the ARO by the Social Security Appeals Tribunal (SSAT). On 13 May 2014 the SSAT affirmed the ARO’s decision.
The applicant, who receives the age pension and a carer allowance, lives in his own home in Belmont and owns a second property in Belmont. The value of the second property was included as an asset when calculating the applicant’s age pension entitlement. The applicant asserted that the property should be exempted on the grounds that it is required to assist his disabled son and daughter.
LEGISLATION
The Social Security Act 1991 section 1118 provides:
(1)In calculating the value of a person's assets for the purposes of this Act (other than sections 198F to 198MA (inclusive), Division 1B of Part 3.10, Division 2 and sections 1133 and 1135A), disregard the following:
(a)if the person is not a member of a couple--the value of any right or interest of the person in the person's principal home that is a right or interest that gives the person reasonable security of tenure in the home;
…
(n) if:
(i) personal property of the person is designed for use by a disabled person; and
(ii) the person, the person's partner, a dependent child of the person or a dependent child of the person's partner is disabled;
the value of the property;
…
The Social Security Act 1991 section 1129 provides:
(1) If:
(a)either:
(i)a social security pension is not payable to a person because of the application of an assets test; or
(ii)a person's social security pension rate is determined by the application of an assets test; and
...
(c)the person, or the person's partner, has an unrealisable asset; and
…
(d)the person lodges with the Department, in a form approved by the Secretary, a request that this section apply to the person; and
…
(e)the Secretary is satisfied that the person would suffer severe financial hardship if this section did not apply to the person;
the Secretary must determine that this section applies to the person.
The Property Law Act 1958 (Vic) section 53 provides:
(1)Subject to the provisions hereinafter contained with respect to the creation of interest in land by parol
(a)no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorized in writing, or by will, or by operation of law;
(b)a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will;
(c)a disposition of an equitable interest or trust subsisting at the time of the disposition must be in writing signed by the person disposing of the same, or by his agent thereunto lawfully authorized in writing or by will.
(2)This section shall not affect the creation or operation of resulting, implied or constructive trusts.
DISCUSSION
The applicant disputed the valuation of the second property but did not offer a credible alternative. He produced evidence that a purchase price of $43,500.00 was paid in 1985 and contended that the value should be regarded as unchanged. In this regard, the Tribunal accepts the valuation made by the Australian Valuation Office (AVO). There is ample authority for the proposition that net market value, which is the basis adopted by the AVO for its valuations, is the appropriate standard: Kirkovski v Secretary, Department of Family and Community Services [2004] FCA 790; Cleary and Secretary, Department of Family and Community Services [2004] AATA 1125; Demovich and Secretary, Department of Family and Community Services [2004] AATA 647; Henderson & Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 468; Spencer v Commonwealth of Australia [1907] 5 CLR 418.
Under the Social Security Act 1991, age pension payments are subject to an assets test which takes account of the value of all assets unless and to the extent that those assets are subject to an exemption.
One exemption relates to a person's principal home.
A further exemption, relevant to this decision, exempts personal property which is designed for use by a disabled person. The concept of personal property does not, however, extend to real estate.
As the applicant’s real estate cannot be regarded as personal property, the next issue to be considered by the Tribunal is whether in fact the second house should be regarded as an asset of the applicant at all, or whether it is an asset held by the applicant on behalf of one or both of his children under a constructive trust.
Relevant to the question of whether a constructive trust exists is the fact that the property was purchased by the applicant nearly 30 years ago to be used by his son, who has Down syndrome. The house has subsequently been used also by his daughter who, despite suffering a mental illness, cares for the son when the applicant needs respite from doing so. The daughter pays $200 per week rent while the applicant meets all outgoings.
The applicant told the Tribunal that when he bought the house he sought to have the title put in his disabled son's name, or some other form of joint tenancy, but was advised against this by his solicitor. The applicant told the Tribunal that the solicitor advised him that his son's name should not appear on the title because the son could not make a will. The Tribunal interprets this explanation as meaning that the applicant was advised that his son lacked the mental capacity to sign a document. No further evidence was produced in this regard. The applicant explained that his intention when buying the property was that it would provide some form of security for his son, who had been on a disability support pension since 1972.
For a constructive trust to exist, it is necessary to establish three elements. First, there must be a common intention to create a beneficial interest; secondly, the party claiming a beneficial interest must show that he or she has acted to his or her detriment; and thirdly it must be demonstrated 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: Re Agnew & Secretary, Department of Social Security [1998] 52 ALD 426; "VAR" and "VAT" and Secretary to the Department of Family and Community Services [2003] AATA 926.
By virtue of section 53 of the Property Law Act 1958 (Vic), a beneficiary can acquire an interest in land, in the form of an implied or constructive trust, without the need for written documentation to this effect.
There would appear to be no evidence, however, of a common intention between the applicant and his children in this instance. Courts (and Tribunals?) have traditionally adopted a conservative approach towards identifying a common intention to this effect, particularly in the context of family arrangements: Kidner, GS v Department of Social Security [1993] FCA 898; Re Giovanni and Grazia Follone & Secretary to the Department of Social Security [1987] AATA 99; and Re Carpenter & Secretary, Department of Families, Community Services & Indigenous Affairs [2006] 90 ALD 366; Irvine v Scaysbrook [2005] NSWSC 565. From the evidence, it appears improbable that there could have been a common intention between the applicant and his son in relation to use or ownership of the premises, given that the son lacked the legal capacity to sign a contract of sale. The applicant's objective when purchasing the property appears clear, but this alone is insufficient to constitute a constructive trust enforceable by his son.
The respondent acknowledged that there is High Court authority for the proposition that a common intention is in fact not required for the establishment of a constructive trust: Baumgartner v Baumgartner [1987] 164 CLR 137. Baumgartner can be distinguished, however, as in that case the remedy [of a constructive trust] [was] imposed to disentangle the property of the parties when their relationship ended Heydon JD, Jacobs KS and Leeming MJ, Jacobs' Law of Trusts in Australia (7th ed, LexisNexis Butterworths, 2006) (at page 264). (Or, Heydon, above, at page 264).
It would appear that the second limb of the test for a constructive trust – the fact that the beneficiary has acted to his or her detriment – is also not satisfied. Put simply, there is nothing before the Tribunal which would indicate that the applicant's son embarked upon, or refrained from, any course of action in the expectation or on the assumption of the existence of a beneficial interest in the property. The applicant's son has clearly benefited from his father's generosity, but he has not acted to his detriment in reliance upon that generosity.
The first and second limbs of the test overlap and intersect. As stated in Jacobs' Law of Trusts in Australia (2006) (at page 255):
The constructive trust…is raised by operation of law often without reference to the intentions of the parties concerned (citing Muschinski v Dodds (1985) 160 CLR 583) and indeed largely contrary to the desires and intentions of the constructive trustee...In the case of a constructive trust, the inquiry is not as to the actual or presumed intentions of the parties but as to whether, according to the principles of equity, it would be a fraud for the party in question to deny the trust
As to the third limb of the test for a constructive trust, the point becomes moot. Given the apparent absence of a common intention, and the absence of evidence that the applicant's son acted to his detriment in reliance upon any such interest, it cannot be asserted that it would have been a fraud on him for another party to deny the existence of a beneficial interest in the property.
The Tribunal also considered whether the value of the second property could be disregarded under the hardship rules as set out in section 1129 of the Act. The applicant does not, however, meet the guidelines as set out in Centrelink's Guide to the Social Security Law in relation to what constitutes severe financial hardship. The applicant has readily available financial assets well in excess of the allowable limit.
The Tribunal reaches this conclusion mindful of the disadvantageous situation in which the applicant finds himself. As explained to the applicant in the course of the hearing, the Tribunal has limited (or no) jurisdiction to address some of the issues and options confronting him in these circumstances. The applicant might be well advised to seek specialist legal advice as to whether his affairs could be better structured, but this is not something upon which the Tribunal can offer any further guidance.
DECISION
For the reasons set out above, the Tribunal affirms the decision under review.
I certify that the preceding 22 (twenty-two) paragraphs are a true copy of the reasons for the decision herein of Dr Gordon Hughes, Member [sgd]........................................................................
Administrative Assistant
Dated 17 June 2015
Date of hearing 30 April 2015 Applicant In person Advocate for the Respondent Mr Tim Noonan, Department of Human Services
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