Fitas and Secretary, Department of Social Services (Social services second review)

Fitas and Secretary, Department of Social Services (Social services second review) [2017] AATA 2100 (6 November 2017)
Division:GENERAL DIVISION
File Number: 2016/5463
Re:Sacha Fitas
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal: Deputy President Dr Christopher Kendall
Date:6 November 2017
Place:Perth

The decision under review is affirmed.
....(Sgd).......................................................
Deputy President Dr Christopher Kendall
CATCHWORDS
SOCIAL SECURITY – age pension – failure to disclose assets – whether applicant holds assets on trust – no trust ̶ overpayment – debt due to the Commonwealth – whether recovery of debt should be written off or waived – debt not attributable solely to error made by Centrelink – no “special circumstances” – decision under review affirmed
LEGISLATION
Social Security Act 1991 – ss 8, 9, 43, 55, 1064, 1076, 1207, 1223, 1236, 1237A, 1237AAD
Social Security (Administration) Act 1999 – s 68(2)

CASES
Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25
Byrnes v Kendle (2009) 243 CLR 253
Bahr v Nicolay (No 2) (1988) 164 CLR 604
Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114
Dineen v Secretary, Department of Social Security (1988) 17 ALD 91
Drake and Minister for Immigration and Ethnic affairs (No 2) (1979) 2 ALD 634 at 645
Kidner, GS v Department of Social Security [1993] FCA 898
Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62
Locke and Secretary, Department of Social Services [2014] AATA 904
Slamkova and Secretary, Department of Social Security [2017] AATA 137
Snodgrass and Secretary, Department of Social Services (Social services second review) [2016] AATA 185
Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787
SECONDARY MATERIALS
The Guide to Social Security Law – parts 4.4.1.10, 4.12.3.51, 4.12.3.52
H A J Ford & W A Lee, Principles of the Law of Trusts, 2017 Thomson Reuters.
Heydon JD, Jacobs KS and Leeming MJ, Jacobs' Law of Trusts in Australia (7th ed, LexisNexis Butterworths, 2006)
REASONS FOR DECISION
Deputy President Dr Christopher Kendall
6 November 2017
BACKGROUND

From 21 April 2009 to 30 April 2015 (the “debt period”), Mr Sacha Fitas (the Applicant in this matter) was in receipt of an age pension.
During the debt period, Mr Fitas:
(a)was, and still is, the sole proprietor of a property located in Marangaroo (T5 at 98); and
(b)held a term deposit account, in his sole name, with Police and Nurses Bank with a balance of $260,465 (the “P&N account”) as at March 2015 (T2 at 8).
On 6 January 2015, the Department of Human Services (the “Department”) commenced an ‘Unearned Income Intervention’ review (T33 at 337).
On 21 May 2015, an age pension debt of $13,316.19 was raised against Mr Fitas on the basis that he had failed to advise the Department of assets in his name ̶ in particular, his P&N account with a balance of $260,465 (the “Original Decision”) (T26 at 239 and T33 at 341).
On 26 August 2015, Mr Fitas advised the Department that he was a non-homeowner and requested a review of the age pension debt that had been raised against him (T33 at 342-343).
From 26 August 2015 the Department assessed Mr Fitas as being a non-homeowner.
On 28 October 2015, an Authorised Review Officer (an “ARO”) affirmed the Original Decision. However, the ARO did not consider the issue of whether Mr Fitas was a single non-homeowner or a home wner (T25 at 234).
On 25 January 2016, Mr Fitas sought further review to the Social Services and Child Support Division of the Administrative Appeals Tribunal (“AAT1”) (T2 at 4).
On 8 June 2016, the AAT1 affirmed the Original Decision. The AAT1 found that Mr Fitas should be considered a single homeowner during the debt period and moving forward (T2 at 11). The AAT1 also found, on the available evidence, that during the debt period Mr Fitas had failed to inform the Department of various bank accounts and had not provided updated balances for some of his bank accounts (T2 at 10). Overall, the AAT1 found that during the relevant debt period Mr Fitas had received a greater amount of age pension that he was entitled to receive.
On 11 October 2016, Mr Fitas applied to General Division of the Administrative Appeals Tribunal (this “Tribunal”) for further review (T1 at 1).
ISSUES
The Tribunal must first consider whether Mr Fitas holds the Marangaroo property on trust (and should therefore be assessed as a single non-homeowner) and whether he holds funds in the P&N account on trust (which should therefore not be assessed as an asset).
If it is found that Mr Fitas did not hold the Marangaroo property or the funds in the P&N account on trust, then the determinative issues for the Tribunal are whether Mr Fitas:
(a)has a recoverable debt due to the Commonwealth arising from overpayment of age pension; and
(b)if so, are there any grounds to write off or waive recovery of any or all of the debt.
LEGISLATION
The relevant legislation in this matter is the:
·Social Security Act 1991;
·Social Security (Administration) Act 1999; and
·Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000.
Government policy set out in the Guide to Social Security Law (“the Guide”) is also relevant, and is usually applied in the absence of cogent reasons not to follow such policy: Drake and Minister for Immigration and Ethnic affairs (No 2) (1979) 2 ALD 634 at 645.
The Tribunal notes that the Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000 (the “Principles”) are no longer in force but were in force at the time relevant to this matter.
Qualification for age pension
The legislation concerning age pension is in the Social Security Act 1991 (the “Act”) and Part 2.2 of the Act contains the provisions relating to whether a person is qualified for age pension.
Section 43 of the Act sets out the basic qualification for the payment as follows:
Qualification for age pension
(1) A person is qualified for an age pension if the person has reached pension age and any of the following applies:
(a) the person has 10 years qualifying Australian residence;
(b)the person has a qualifying residence exemption for an age pension;
(c)the person was receiving a widow B pension, a widow allowance, a mature age allowance or a partner allowance, immediately before reaching that age;
(d)if the person reached pension age before 20 March 1997--the person was receiving a widow B pension, a widow allowance or a partner allowance, immediately before 20 March 1997.
Calculation of rate of age pension
Section 55 of the Act provides that the rate of age pension is calculated using Pension Rate Calculator A at the end of s 1064. Section 1064 of the Act relevantly provides:
1) The rate of:
(a) age pension;
…
is, subject to subsection (2), to be calculated in accordance with the Rate Calculator at the end of this section.
Note 1:Module A of the Rate Calculator establishes the overall rate calculation process and the remaining Modules provide for the calculation of the component amounts used in the overall rate calculation.
This process of calculation of overall rate of age pension was succinctly outlined by Deputy President Professor Deutsch in the case of Snodgrass and Secretary, Department of Social Services (Social services second review) [2016] AATA 185 as follows:
29.Steps 5 and 8 of the Module A method statement require a calculation to be made of “the income reduction” calculated under Module E and for that amount to be taken away from the maximum pension amount. The net figure is the income reduced rate.
30.Steps 9 and 10 of the Module A method statement require a calculation to be made of “the reduction for assets” calculated under Module G and for that amount to be taken away from the maximum pension amount. The net figure is the assets reduced rate.
31.Step 11 of the Module A method statement requires a comparison to be made between the income and the assets reduced rates and the lower of the two rates becomes the rate of pension (after some other adjustments are made at step 12 none of which are relevant for present purposes).
[emphasis added]
Section 8 of the Act relevantly defines ‘income’ as an income amount earned, derived or received by the person for the person's own use or benefit. This definition includes income earned, derived or received by any means and from any source whether within or outside Australia: s 8(2) of the Act.
Section 9 of the Act defines a ‘financial asset’ as including ‘financial investments’. The same section also provides a definition of ‘financial investments’ which includes, inter alia, deposit money.
Section 1076 of the Act provides for deemed income from financial assets as it relates to persons other than members of couples. Subsection 1076(2) of the Act provides:
(2) A person who has financial assets is taken, for the purposes of this Act, to receive ordinary income on those assets in accordance with this section.
The rate of income that a person is deemed to have received from those investments is a fixed amount, regardless of the amount of income the financial assets are actually earning.
The Guide, at part 4.4.1.10, provides historical deeming rates and applicable thresholds operating since 1 July 1996. The threshold amounts applicable to the debt period range from $41,000 in early 2009 to $48,600 in 2015. The current deeming rates are 1.75% for the first $48,600 and 3.25% for balances above this rate.
Change in circumstances
Section 68(2) of the Social Security (Administration) Act 1999 (the “Administration Act”), relevantly provides:
(2)The Secretary may give a person to whom this subsection applies a notice that requires the person to do any or all of the following:
(a)inform the Department if:
(i)a specified event or change of circumstances occurs; or
(ii)the person becomes aware that a specified event or change of circumstances is likely to occur;
…
Overpayment
Relevant to the overpayment of a social security payment, s 1223(1) of the Act provides:
… if
(a) a social security payment is made; and
(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;
the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.
Write off or waive recovery provisions
Section 1236 of the Act sets out the following circumstances in which a debt may be written off:
(a)if the debt is irrecoverable at law;
(b)if the debtor has no capacity to repay the debt;
(c)if the debtor’s whereabouts are unknown; or
(d)if it is not cost effective for Centrelink to recover the debt.
Further, s 1237A of the Act provides that the Secretary “must” waive the right to recover the proportion of a debt that is “attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt”.
The “Note” to s 1237A(1) of the Act states that s 1237A(1) “does not allow waiver of a part of a debt that was caused partly by an administrative error and partly by one or more other factors (such as error by the debtor)”.
Section 1237AAD of the Act provides that the Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a)the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii)failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.
The Act does not define what is meant by the term “special circumstances”, however, a considerable body of case law exists to assist the Tribunal in relation to this issue. In Angelakos and Secretary Department of Employment and Workplace Relations [2007] FCA 25 the Federal Court stated at [33]:
... There is less risk of overstatement if the words “unusual” or “uncommon” are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case...
In Davy and Secretary Department of Employment and Workplace Relations [2007] AATA 1114 Deputy President Forgie stated in part at [80]:
...“special circumstances” are not merely directed to the person’s own circumstances. Rather, they are directed to those that are “special circumstances ... that make it desirable to waive”. That necessarily requires a consideration of the person’s individual circumstances but also a consideration of the general administration of the social security system. Waiver of the debt would mean that Mr Davy would have had the benefit of part of his DSP in circumstances in which he was not entitled to it ... He has had the benefit of the money and there is no injustice in requiring him to repay the money of which he has had the benefit but not the entitlement ... The system of administration of the Social Security Act does not visit any injustice for many if not all social security recipients but it did not lead to any injustice or unfairness on Mr Davy that is not visited, or potentially visited, upon all other recipients of social security payments under the Act. Therefore, I am not satisfied that there are special circumstances that make it desirable to waive the debt under s 1237AAD of the Act ...
EVIDENCE
The matter was heard in Perth on 25 July 2017. Mr Fitas appeared in person and was self-represented. The Secretary was represented by Mr Burgess of Sparke Helmore. The Tribunal thanks Mr Burgess for the courtesy shown towards Mr Fitas who, as noted, was legally unrepresented. This cooperative style of advocacy is well suited to a Tribunal of this sort.
Evidence before the Tribunal
The evidence before the Tribunal consisted of the following:
(a)Mr Fitas’ Statement of Issues, Facts and Contentions dated 26 April 2017 (A1);
(b)a document entitled “Family Trust” (English translation of the document ‘Acte de Fiducie’) dated 19 May 2016 (A2);
(c)an annotated extract from Mr Fitas’ Centrelink record dated 29 December 2016 (A3);
(d)emails from the Royal Automobile Club of WA dated 24 May 2016 (A4);
(e)an English translation of the document entitled ‘Cancellation of the Avoue’ received at the hearing, 25 July 2017 (A5);
(f)Medical certificate from Dr Aminder Pal Singh dated 24 July 2017 (A7);
(g)two letters from Centrelink to Mr Fitas entitled ‘Your Age Pension’ dated 22 June 2015 and 26 August 2015 respectively (A7);
(h)a 346 page set of T-Documents (T1- T33) received 18 November 2016 (R1); and
(i)the Secretary’s Statement of Facts, Issues and Contentions with Annexures A to E dated 11 May 2017 (R2).
The Tribunal sought further submissions from both parties and has noted the responses received from both parties as follows:
(a)supplementary written closing submissions from the Secretary dated 15 August 2017;
(b)supplementary written closing submissions in response from Mr Fitas received 4 September 2017; and
(c)an email from Mr Fitas dated 11 September 2017 with further submissions.
The Tribunal also heard oral evidence from Mr Fitas.
The Tribunal has reviewed all of the evidence before it and notes relevantly as follows.
The Decision of the AAT1
The Tribunal notes the following summary of the evidence before the AAT1:
14.Mr Fitas told the tribunal that he did not agree with the Department's decision because the term deposit held with Police and Nurses Bank were monies that belonged to his brothers who reside in France and as such should not be included in the calculation of his rate of age pension. Mr Fitas provided the following evidence in support of his submissions:
a)Some time in about 1988 he was in France and there was a verbal agreement reached with his brothers that they would give him money to invest in Australia. This was because they felt Australia was a more secure place to invest and they would receive a better return.
b)He thinks that at the time he received in French Francs what would today be the equivalent of about 65,000 Euro (about $100,000 Australian Dollars).
c)The agreement was never expressly set out in a Deed of Trust. Once when he was in France on a visit he arranged for a document to be drawn up by a notary to confirm that he held the monies given to him by his brothers on trust - however this document was stolen when he was living in the United States.
d)He returned to Australia and used the money to buy a house outright (the Marangaroo property) and he put the balance of the money into successive term deposits. He moved the money about to attract the best rate.
e)The arrangement with his brothers is based on a verbal agreement. They have never received a return on their money or requested any repayment. If however they ever wanted the money he would be morally obliged to pay them even though legally the property and funds are all in his sole name. The money is there for the benefit of future generations of the family if they need it. This situation has reminded him that he needs to make a will leaving everything to his brothers.
f)Mr Fitas has always resided in the Marangaroo property that he purchased with the money apart for a time when he lived in the United States for about 10 years. During that time he rented out the property. The rent money was paid into the investment accounts.
g)After returning from the United States he continued and to this day still resides in the Marangaroo property. He pays rent but cannot say what amount this is as it changes every month - he doesn't pay that money directly to his brothers. Running costs for the house are taken from the investment accounts.
h)Mr Fitas says that he should not be treated as a homeowner as the property really belongs to his brothers and this is the real problem here because if the Department didn't treat him as a homeowner then he would not be over the relevant asset threshold 1 and this in turn would affect the calculation of any debt.
15. In response to questions asked by the tribunal Mr Fitas stated that:
a)The house and term deposits are and have always been in his name. He is the sole' signatory of the term deposit and he is the registered proprietor of the Marangaroo property. He was told that he could not include his brothers' names on the accounts or the title on the property because they do not reside in Australia.
b)He cannot say with certainty whether or not he has accessed any of the funds he keeps on behalf of his brothers; he may have done this but is not sure. If he needed any of the money in a significant way he would need his brothers’ permission even though the funds are held in his name.
c)He has no idea exactly how much money he personally has in his personal bank account but agreed that the figures provided by the Department are probably right. Payments made into his personal accounts were not from the money he held on trust for his brothers but from his own private earnings and sources.
d)He agrees that whilst he received correspondence from the Department which required him to keep them updated about his circumstances, he never told the Department about changes to his own bank balances as he thought he only needed to do that if it exceeded a certain amount. He also never told the Department about the term deposit because he did not consider that to be his money.
16.At the hearing Mr Fitas provided the tribunal with two documents in support of his evidence. The first was a REIWA form, which lists his three brothers as owners of the Marangaroo property giving authority to a real estate agency to act as their agent - the document is initialled by Mr Fitas. Mr Fitas said he did this when he moved to the United States and appointed an agent to rent the property whilst he was away as he needed evidence that he did not own the house even though it was in his name.
17.The second document is written in French and is a hand written statement provided by one of Mr Fitas's brothers dated 19 May 2016 it is headed Acte De Fiducie (Trust Deed). Mr Fitas said he had not been able to get a translation of the document but it is a statutory declaration made by one of his brothers confirming that the brothers had provided Mr Fitas with 500,000 French Francs to invest on their behalf in the construction of a house and to invest the balance.
18.Following the hearing Mr Fitas provided further documents - a Centrelink Assets and Income review form. This undated form notes that Mr Fitas is recorded as a homeowner for Centrelink purposes, Mr Fitas has written on the document that the details on the form are correct but that the" House belongs to brothers as an investment. I did put my name as I was a permanent resident and they wasn’t (sic)." Other documents provided by Mr Fitas subsequent to the hearing appear to relate to a claim Mr Fitas lodged with the insurer of the property. That document includes his claim history (dating back to 1995) in relation to two insurance policies Mr Fitas holds in relation to the property. Mr Fitas also provided a document which references Mr Fitas movement records in and out of Australia and also he provided further written submissions which states that he would never have been able to afford buying the property back in 1989 as he was student.
19. The tribunal noted the following evidence provided by the Department:
a)Correspondence dated 30 July 2014 addressed to Mr Fitas, which states that according to the Department records Mr Fitas assets included cash/investment/savings of $14,641 and managed investments of $8,376.
b)Bank statements provided by various institutions showing that Mr Fitas:
•Opened and operated three Bankwest accounts at various dates from 2009 - 2014, including a Smart e-Saver with an opening balance of $25,930 and a closing balance of $27,000; a Retirement Advantage account with an opening balance of a cash deposit of $2,000.
•Held a number of saving and term deposit accounts with Police and Nurses Bank, which were opened and closed by Mr Fitas throughout the debt period. Including a current Hi Saver Account with a balance as of March 2015 of $260,465.
•Held ANZ savings and term deposit accounts including two current accounts, which as of June 2015 had a balance of $32,602 and $56,494.
•ANZ account balances as of September 2015 showing that Mr Fitas held balances of $28,585 and $56,040 and a Police and Nurses Bank term deposit of $260,465.
c)Debt calculations utilising the balances held in the bank accounts throughout the debt period which show that in the period 10 August 2012 to 30 April 2015 Mr Fitas was paid age pension totalling $56,888.56 when based on the financial investments identified by the Department he should have received the amount of $43,572.37 which resulted in an overpayment of $13,316.19.
d)According to the Department the period 10 August 2012 to 21 March 2013 the debt calculations appear to have been based on the deemed income derived from the amounts deposited in the various accounts in Mr Fitas's name. From 22 March 2013 to 30 April 2015 the debt was based on the value of Mr Fitas's assets.
Mr Fitas’ evidence before this Tribunal

The evidence given by Mr Fitas in this matter is essentially the same as that given to the AAT1, relevantly extracted above.
In order to establish that a trust relationship of some sort existed, Mr Fitas again relied on the following documentation:
(a)in his Transfer to Age Pension – Income and Asset Review form dated 10 March 2008 (T5 at 98), Mr Fitas asserted that the reason the Marangaroo Property was in his name was because ‘I was a permanent and [my brother] wasn’t.
(b)Mr Fitas provided the Tribunal with a translated version of a document titled ‘Family Trust’, translated from French, dated 19 May 2016 (A2); and
(c)a REIWA form (undated) in which Mr Fitas lists his brothers as the owners of the Marangaroo Property (T31 at 262).
In the extract from Mr Fitas’ Centrelink record dated 29 December 2016 (A3) it relevantly stated as follows:
… cus att csc – advised to can statement for update
cus has transferred $255,045. Letter stated was repay family member
when questioned re why cus had the funds – he said it was complicated
At the hearing, Mr Fitas’ was emphatic that he merely held the Marangaroo Property and the funds held in the P&N account on trust for his brothers. He stressed that his three brothers are effectively equal shareholders in the Marangaroo Property and he is merely the caretaker of the property ̶ not the owner.
In response to the Tribunal’s request for an explanation regarding his belief that a trust of some sort existed, Mr Fitas said that he had stored a number of ‘special documents’, including an original trust deed created in or around 1989, in a suit case at the Marangaroo Property. He said that while he was living in the United States this suitcase was stolen when his house was burgled. He said that he had spoken with his brothers about the trust document being stolen but there was “no urgency with the document” because he “didn’t need it”.
When asked by counsel for the Secretary about the rent he says he pays to his brothers under the alleged trust, Mr Fitas said that the rent was approximately $100 - $120 per week. He said that the only rent agreement between him and his brothers was a “verbal one”. He explained that, at the moment, he is not in a financial position to pay rent and is not doing so.
Mr Fitas was then questioned as to why, for the period 12 July 2012 to 25 May 2014, he had failed to disclose the sum of approximately $54,000 held in an ANZ Bank account in his sole name. In response he said this amount was reported incorrectly and that he did not know why there was a disparity between his actual financial circumstances and Centrelink’s understanding of them for that period.
When asked about his dealings with the P&N account, Mr Fitas said that he pays for the upkeep of and tax on the account. He seemed to suggest that because the money in the P&N account was not his he did not report it. He also said that to date he had not paid his brothers any money from the P&N account.
Mr Fitas also said that he did not think about any asset and income limits as they related to his age pension.
Mr Fitas struck the Tribunal as quite intelligent but entirely obstructive and uncooperative as a witness. He was argumentative and was not convincing when giving evidence that he did not know he had to disclose the funds in his ANZ Bank account to Centrelink. This version of events as relayed by him was completely unconvincing. This goes directly to his credibility as a witness. In the circumstances, the Tribunal attaches little weight to his evidence.
CONTENTIONS AND SUBMISSIONS OF THE PARTIES
The Secretary’s contentions
The Secretary contended in his Statement of Facts, Issues and Contentions dated 11 May 2017 (R2) that the available evidence does not establish a trust between Mr Fitas and his brothers. Mr Fitas disagreed and seemed to suggest that the evidence proves unequivocally that there was either an express trust, a resulting trust or a constructive trust.
In relation to whether a trust of some sort exists between Mr Fitas and his brothers, the Secretary relevantly contended in his Statement of Facts, Issues and Contentions dated 11 May 2017 (R2) as follows:
26.… there is no constructive or resulting (implied) trust between the Applicant and his brothers for the following reasons. The:
(a)bank account and property are held in the Applicant’s name only [T2, p6];
(b)Applicant has been solely responsible for the up keep of the property since it was purchased in the 1980s and there is no clear evidence of rent being paid;
(c)evidence provided by the Applicant and his brothers in regard to returns on investments is ambiguous and at times conflicting. Specifically, the Secretary notes that the translated ‘Family Trust’ document was not written until 19 May 2016 and states that in an act of good faith and good will, [Mr Fitas] is able to contribute as a form of rent, a modest irregular undisclosed sum of money to the brothers. The Applicant also states in his submissions to this Tribunal that he pays an undisclosed sum of money as rent (Annexure C);
(d)Applicant told the AAT1 that his brothers had never received a return on their money or requested repayment, if however, they ever wanted the money he would be morally obliged to pay them even though legally the property and funds are all in his sole name [T2, p 6];
(e)Income and Assets form in which the Applicant noted his brother as owner also indicated that the Applicant’s own status as a homeowner was correct [T5, p 98];
(f)REIWA form in which the Applicant listed his brothers as owners the Applicant also noted himself as the owner [T31, p 262];
(g)Applicant told the AAT1 that he rented out the Marangaroo property for ten years while he lived in the United States and deposited the rent into the investment accounts [T2, p 6];
(h)Applicant’s brothers had not clearly requested a return on their investment for 28 years which was confirmed by the Applicant in his evidence to the AAT 1 [T2, p6].
27.In the AAT matter of Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787 Senior Member Taylor considered the circumstances in which the existence of a trust may or may not be established:
81.…But the evidence must evidence that the actual intention of the parties is to impose such an obligation in relation to the property: Jacobs Law of Trusts in Australia 7th ed at [110]. There is no trust if the restrictions imposed on the transferee are merely personal obligations, even though they are enforceable by the transferor: Re Lester [1942] Ch 324 at 325-6; Cohen v Cohen [1929] HCA 15; (1929) 42 CLR 91 at 101.
82.The importance of evidence of obligation, and particularly obligation attaching to the property itself, is exemplified by decisions involving “precatory” trusts. These arise where the property transfer is accompanied by expressions of confidence, belief, expectation or discretion, in relation to benefits being conferred on third parties. The critical matter to decide is whether those expressions or expectations indicate the imposition of an enforceable obligation, or whether they are confined to mere expectation or moral obligation: see Jacobs Law of Trusts in Australia 7th ed at [503]. For example, in Dean v Cole (1921) 30 CLR 1 the High Court held that no trust was created by a testamentary gift to a wife “trusting to her that she will at some time during her lifetime or at her death” divide the property equally between her children. Similarly a gift made “in the fullest trust and confidence” that the donee would confer a benefit on her daughter was held not to constitute a trust: Re Williams [1897] 2 Ch 12 at 27. Where the circumstances of the gift occur in the context of family relationship and appear to rely on mere expectations of moral or familial obligation and generosity, particular care is exercised before accepting that those expectations give rise to enforceable obligations in relation to the property: Re Follone and Secretary, Department of Social Security (1987) 11 ALD 477 at 481. No trust will arise from equivocal expressions of intended familial generosity in the absence of explicit conduct indicative of actual obligation. Even an avowed intention to confer a benefit on another person in relation to the property is not sufficient to give rise to a present trust: Dineen v Secretary, Department of Social Security (1988) 17 ALD 91. This is so unless the stated intention either evidences the creation of an subsisting actual obligation: Olsson v Dyson (1968) 120 CLR 365 at 375; Secretary, Department of Social Security v James [1990] FCA 150; (1990) 95 ALR 615; or it induces reliance that requires the intention to be fulfilled: Baumgartner v Baumgartner [1987] HCA 59; (1987) 164 CLR 137; Re Holden and Secretary, Department of Social Security [1995] AATA 77; (1995) 37 ALD 783 (emphasis added)
28.The Secretary contends that the evidence may support a moral obligation for the Applicant to repay his brothers, however, there is insufficient evidence to support the Applicant’s contention that he was holding the property and funds on trust especially in light of the manner in which he has dealt with the property and funds which was inconsistent with a trustee and more consistent with a sole owner.
…
30.The Secretary contends that the circumstances outlined above do not conform to any of the examples listed in the Guide of when an implied trust may be found, specifically, namely duress or fraud, mutual wills, uncompleted sale of land, foreclosure or breach of promise.
31.Further, as outlined above, the manner in which the Applicant has dealt with the property and funds during the debt period is inconsistent with any circumstances giving rise to the finding of an implied trust.
…
33.As noted by the AAT1, in many of the cases on trusts, the transaction in question is between family members and the issue is whether a trust has been created in the sense that binding legal relations were intended as opposed to informal domestic arrangements.
34.The Secretary contends that in the circumstances of this matter and on the basis of the evidence provided (including the translated ‘Family Trust’ document) a trust cannot be established either in relation to the money held in the term deposit or the purchase of the Marangaroo property.
35.The Secretary also notes that the Applicant has provided evidence of an international transfer of $255,045 and claims to have returned the money to his brothers. There is insufficient evidence to establish that the Applicant has in fact repaid the money to his brothers and, regardless, it is not determinative in the establishment of a trust during the debt period.
36.The Secretary submits that the Applicant has been correctly assessed as a single non (sic)-homeowner for the purposes of calculating his rate of age pension as it cannot be established that he is holding the Marangaroo property on trust.
Mr Fitas’ contentions
In his response to the Secretary’s Supplementary Closing Submissions received 4 September 2017 Mr Fitas relevantly contended:
2.… [Mr Fitas] says that it is up to his brothers whether they allow him to live in the house and he cannot for example borrow against the house or take funds out of the bank account without his brother’s permission…
3.[Mr Fitas] says that he has not made a contribution to the trust property as the money used to purchase the house was his brothers’ money and the money he deposited into the bank account was in the nature of rent even though there was no formal lease agreement – it was a payment for being able to live in the house. He also made non-financial contributions to the trust property by carrying out some maintenance and repairs but he received consideration for these contributions by being allowed to live in the house at below market rental…
4.[Mr Fitas] submits he has not received a distribution from the trust…
5.[Mr Fitas] submits that it is not reasonably foreseeable that he will receive a future distribution from the trust as the trust has been in place for many years and he has not received a distribution from it…
6.[Mr Fitas] acknowledges that he has received a benefit from being able to live in the house at below market rent - section 11 of the Principles. In return he has been the caretaker of the house and done maintenance and repairs as needed.
CONSIDERATION
Did Mr Fitas hold the Marangaroo Property and funds in the P&N account on trust during the debt period?
An Express Trust?
The first issue for the Tribunal to address in establishing whether an express trust existed.
In Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62 (Korda), French CJ said at [3]:
The question whether an express trust exists must always be answered by reference to intention. An express trust cannot be created unless the person or persons creating it can be taken to have intended to do so. Absent, as in this case, an explicit declaration of such an intention, the court must determine whether intention is to be imputed. It does so by reference to the language of the documents or oral dealings having regard to the nature of the transactions and the circumstances attending the relationship between the parties.
[Emphasis added]
In Korda, French CJ at [11] warned that this passage should not be misconstrued and that:
A trust is not to be inferred simply because a court thinks it is an appropriate means of protecting or creating an interest.
In Bahr v Nicolay (No 2) (1988) 164 CLR 604 at [618–619] Mason CJ and Dawson J said:
If the inference to be drawn is that the parties intended to create or protect an interest in a third party and the trust relationship is the appropriate means of creating or protecting that interest or of giving effect to the intention, then there is no reason why in a given case an intention to create a trust should not be inferred.
In this regard, the Tribunal notes the alleged “Family Trust” document dated 19 May 2016 which reads as follows:
I - Mr FITAS Kamel - born the 20th August 1939 at MOSTAGANEM and residing 27 Rue Voltaire at 92.240 (MALAKOFF) in France, honourably affirms to have given in my quality of Trustee and in association with my two brothers FITAS Éric & FITAS Nadir, residing in France and all three of French nationality, from 1985 to 1988, the total sum of approximately five hundred thousand French francs, or its equivalent in seventy five thousand euros, to our brother FITAS Sacha residing … at MARANGAROO - 6064, Western Australia and I Kamel as Trustee.
The money was used for the construction of a house of which we are (Kamel / Éric / Nadir) the sole beneficiaries as well as being the rightful owners. As to the surplus of the money, it has been placed for it to grow, managed by our brother Sacha in whom we have placed our entire trust. Sacha dwells in the house caretaking and maintaining the premises whilst honouring the mandatory rates. Sporadically, Sacha in an act of good faith and good will is able to contribute as a form of rent, a modest irregular undisclosed sum of money to us.
This ‘Affirmation’ apart from certifying the above was established not only to be valid but also to serve as a legal document.
Made in MALAKOFF on 19th May 2016
It is Mr Fitas’ contention is that this document is strong prima facie evidence that a trust exists and did so during the debt period.
The Tribunal disagrees.
This “Family Trust” document postdates the transfer of French francs to Mr Fita’s and was not written until 19 May 2016 (approximately 30 years later). There is no written trust deed before the Tribunal to establish an express trust. Further, and importantly, Mr Fitas clearly told the AAT1 that no express trust deed was created at the time of the alleged agreement (T2 at 6).
Even if the Tribunal were to accept (which it does not) this document as evidence of the creation of a trust relationship, it is noted that the above document makes specific references to Mr Fitas’ brother, Kamel, as ‘trustee’. In Byrnes v Kendle (2009) 243 CLR 253 at [114 Heydon and Crennan JJ made following relevant comments:
That truth tends to be obscured by constant repetition of the need to search for an “intention to create a trust”. That search can be seen as concerning the first of the three “certainties” — what Dixon CJ, Williams and Fullagar JJ called in Kauter v Hilton:
the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries.
… the “intention” referred to is an intention to be extracted from the words used, not a subjective intention which may have existed but which cannot be extracted from those words.
[Emphasis added]
A literal and common sense reading of this document is completely inconsistent with Mr Fitas’ claims that his brothers intended to appoint him as a trustee. The document instead suggests that if any trust relationship was created (and the Tribunal has serious doubts about the validity of this document) it would be with Kamel Fitas, Mr Fitas’ brother, as trustee.
It is noted, in this regard, that Mr Fitas did not call any of his brothers as witnesses – something that could easily have been done and something that would have added credibility to his evidence.
The Tribunal has also identified the following additional facts and circumstances which lead to the conclusion that no express trust was created. They are:
(a)Mr Fitas is unable to provide a written trust deed to establish the existence of an express trust and has stated that no express Deed of Trust was created at the time of the alleged agreement between his brothers (T2 at 6).
(b)the ‘Family Trust’ document postdates the transfer of French francs to Mr Fita’s and was not written until 19 May 2016, approximately 30 years later.
(c)the ‘Family Trust’ document states that “Sporadically, [Mr Fitas] in an act of good faith and good will is able to contribute as a form of rent, a modest irregular undisclosed sum of money to [the brothers]”. Despite this, Mr Fitas has been unable to provide the Tribunal with clear evidence of rent ever having been paid by him to his brothers;
(d)the P&N account is, and has always been, in Mr Fitas’ sole name;
(e)Mr Fitas is the sole registered proprietor of the Marangaroo Property;
(f)there is no evidence before the Tribunal showing the transfer of funds from Mr Fita’s brother to himself nor any evidence of instructions given to Mr Fitas by his brothers in relation to the management of the funds; and
(g)decisions relating to the Marangroo Property and funds held in the P&N account appear to have been made by Mr Fitas independent of consultation with his brothers[1]; and
(h)the only person who seems to have benefited from the use of the property in nearly 30 years is Mr Fitas.
[1]. For example, on 23 December 2016 Mr Fitas transferred the sum of $255,045.00 from the P&N account to an international bank account. Mr Fitas stated that the purpose of the transfer was to “repay his brothers”. However, there is no evidence that Mr Fitas was prompted by his brothers to transfer these funds, that these funds were actually transferred to them, or that he transferred the funds in the execution of his capacity as trustee.
The evidence before the Tribunal is inconsistent with the existence of an express trust and the Tribunal finds that at no time during the debt period, or at all, were the Marangaroo Property or the funds held in the P&N account subject to an express trust in favour of Mr Fitas’ Brothers.
Constructive trust?
A constructive trust is imposed by operation of law (being the application of established equitable principles to a particular set of facts) where it would be unconscientious for the holder of the title to a property to deny the claimant a beneficial interest in that property: H A J Ford & W A Lee, Principles of the Law of Trusts at [22.020].

The Guide at 4.12.3.51 relevantly notes the factors to be taken into consideration when determining whether a constructive trust exists:
Constructive trusts are non-express trusts and can be imposed by a court irrespective of the intention of the parties. A constructive trust may be imposed by a court where the party with legal title has a fiduciary obligation to another, usually due to past events or actions by the parties. However, the most frequent constructive trust is a common intention constructive trust.
…
… The following elements need to be demonstrated to establish the existence of a common intention constructive trust:
•    there must have been a common intention between the legal owner of the property and the beneficiary, regarding the beneficiary's beneficial ownership of the property,
•    this common intention is to be inferred as a fact from the words or conduct of the parties,
•    the beneficiary must be able to show that they have acted to their detriment on the basis of the common intention as to the beneficial ownership of the property, and
•    it must be a fraud on the beneficiary for the legal owner to assert that the beneficiary did not have the beneficial interest in the property.
Recently, in Slamkova and Secretary, Department of Social Security [2017] AATA 137 (Slamkova), the AAT refused to make a finding that a mother held a particular property on trust for her son, even though it was said this was the arrangement between them (and the son’s father), at the time the property was purchased. While the facts in that case differ from those in Mr Fitas’ application it is noted that Senior Member J Toohey observed at [61] that:
...there must be something of real substance to support a claim that a property of which a person is the registered owner of 100 per cent, is in fact held on trust for another.
Senior Member J Toohey’s observation in Slamkova could also reasonably be applied to bank accounts held in a party’s sole name ̶ in this case the P&N account.
(i) First element: common intention to create a beneficial interest
In relation to the first element, the enforceability of a constructive trust does not depend on an express common intention or expectation. As mentioned above, it may be inferred as a matter of fact from the words or conduct of the parties.
Courts 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.
In this case, the Tribunal is of the opinion that there is insufficient evidence to show that it was the intention of the parties to create a trust or that Mr Fitas actions can precipitate a conclusion that there is a constructive trust by way of conduct.
The Tribunal agrees with the Minister’s contention, given at the hearing, that the Family Trust document falls short of being evidence that the Fitas brothers intended to create a trust relationship. In large part this is because none of the brothers were called to give evidence at the hearing. Nor did Mr Fitas provide the Tribunal with witness statements from his brothers speaking to any intention.
Mr Fitas conduct is inconsistent with the existence of trust relationship as noted in above and as follows:
(a)Mr Fitas has been solely responsible for the up keep of the property since it was purchased in the 1980s;
(b)Mr Fitas told the AAT1 that his brothers had never received a return on their money or requested repayment. However, if they ever wanted the money he would be morally obliged to pay them even though legally the property and funds are all in his sole name (T2 at 6);
(c)The Income and Assets form in which Mr Fitas identified his brother as owner also indicated that his own status as a homeowner was correct (T5 at 98);
(d)Mr Fitas told the AAT1 that he rented out the Marangaroo property for ten years while he lived in the United States and deposited the rent into the investment accounts (T2 at 6);
(e)Mr Fitas’ brothers had not clearly requested a return on their investment for 28 years as confirmed by Mr Fitas in his evidence to the AAT1 (T2 at 6); and
(f)The only person who appears to have received any benefit from the property in almost 30 years is Mr Fitas.
Based on these observations as to Mr Fitas’ inconsistent conduct and that the creation of a constructive trust is reliant upon inferences drawn from the words or conduct of the parties, this first limb of the relevant test for a constructive trust – the fact that there must be intention of the parties to create a trust – is not satisfied. Put simply, there is insufficient material before the Tribunal which would indicate that Mr Fitas’ brothers intended for him to hold the Marangaroo Property or the funds held in the P&N account subject to a constructive trust in their favour. Unfortunately for Mr Fitas this is compounded by the circumstances and conduct surrounding his ownership of these assets which is inconsistent with an intention to create a trust relationship.
Even if the Tribunal were to accept that there was an agreement between Mr Fitas and his brothers, which it does not, the Tribunal would only be satisfied that this is evidence of a familial moral obligation as opposed to a legally binding obligation. In this regard the Tribunal agrees with the comments of Senior Member Taylor in Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787 in which Senior Member Taylor succinctly surmised (at [82]) the findings made in Dineen v Secretary, Department of Social Security (1988) 17 ALD 91 as follows:
No trust will arise from equivocal expressions of intended familial generosity in the absence of explicit conduct indicative of actual obligation. Even an avowed intention to confer a benefit on another person in relation to the property is not sufficient to give rise to a present trust
The Tribunal concludes that at no time during the relevant debt period, or at all, were the Marangaroo Property or the funds held in the P&N account subject to a constructive trust in favour of Mr Fitas’ Brothers.
Resulting trust?
In relation to resulting trusts, the Guide at 4.12.3.52 notes that:
Resulting trusts are a type of non-express trust. The most common situation in which a resulting trust arises is where the purchaser of a property does not also receive the legal title to the property (e.g. the property is not put into the purchaser's name). In such cases the holder of the legal title will be presumed to be holding the property on trust for the purchaser.
For the reasons given in relation to the issue of the creation of constructive trust above, the Tribunal finds that at no time during the debt period, or at all, were the Marangaroo Property or the funds held in the P&N account subject to a resulting trust in favour of Mr Fitas’ brothers. Even if it is accepted, which it is not, that the funds in question were advanced by Mr Fitas’ brothers, the surrounding circumstances identified in relation to the non-existence of a constructive trust above apply equally to the non-existence of a resulting trust. Mr Fitas’ evidence in this regard is lacking in credibility. Overall, there is insufficient evidence to support such an argument.
Has Mr Fitas been overpaid the age pension?
As a result of the findings set out in paragraphs 52 to 79 above, the Tribunal finds that, for the purposes of calculating Mr Fitas’ rate of age pension:
(a)he be assessed as a single homeowner; and
(b)the funds held in the P&N account be counted as an assessable asset during the debt period.
Was the Centrelink debt against Mr Fitas appropriately raised?
The debt amount of $13,316.19 raised by Centrelink on 21 May 2015 has not been challenged by Mr Fitas, other than to contend that he does not owe any of it. The calculation of this sum is set out in the ADEX – debt explanation prepared by Centrelink on 18 February 2016 (T26 at 239-255). Having reviewed this document, the Tribunal is satisfied that the amount of $13,316.19 is correct and that this sum was appropriately raised by Centrelink under s 1223 of the Act for recovery from Mr Fitas.
On this basis, the Tribunal finds that from 21 April 2009 to 30 April 2015, Mr Fitas was overpaid age pension and has a debt to the Commonwealth of $13,316.19.
Waiver of debt due solely to administrative error of the Commonwealth
As noted in paragraph 30 above, 1237A of the Act provides that the Secretary “must” waive the right to recover the proportion of a debt that is “attributable solely to an administrative error made by the Commonwealth.
In this regard, the Tribunal notes the following submissions in the Secretary’s Statement of Facts, Issues and Contentions dated 11 May 2017 (R2):
57.Sole administrative error was considered by the Federal Court of Australia in Secretary, Department of Family & Community Services v Sekhon [2003] FCA 76 which stated:
However, it seems to me, the Tribunal failed to consider the significance of the inclusion, in s 1237A(1), of the word "solely". For the subsection to have effect, the "proportion" of the debt - in this case, it is common ground, that would be the whole of it - must be "attributable solely" to administrative error. It is not enough that, in the absence of administrative error, the debt would not have arisen. Administrative error must be the sole cause, not merely one of multiple causes.
58.The Secretary contends that the Applicant’s failure to advise the department of his correct income and assets, prevents a finding of sole administrative error and the debt cannot be waived on this basis.
In Mr Fitas’ Statement of Issues, Facts and Contentions dated 26 April 2017 (A1) he stated, inter alia, that he had advised the Department “about the lump sum of $11,000 I received and all days worked when working in an irregular part time basis.”
The evidence shows that Mr Fitas was sent various letters advising him of his obligation to tell the Department if his financial circumstances changed (T6-T13), the basis upon which his age pension rate was being calculated and that the Department was only aware of Mr Fitas’ savings with the ANZ Bank in the sum of $14,461 (T13 at 139).
There is no evidence before the Tribunal that Mr Fitas’ debt arose solely as a result of an administrative error on the part of the Commonwealth.
Waiver due to special circumstances
As outlined above, there must be something “unusual” or “uncommon” about Mr Fitas circumstances to warrant the debt being waived.
Mr Fitas contends that there are special circumstances that warrant waiving the debt. He says his special circumstances are effectively that:
(a)he is 74 years of age;
(b)contrary to the AAT1’s statement that he is debt free (apart from this matter) he is not, as he pays an undisclosed sum of money as rent;
(c)he is not managing financially; and
(d)his health is deteriorating.
In this regard the Tribunal notes that Mr Fitas has not provided it with sufficient details of his financial circumstances to allow the Tribunal to establish if he is in fact suffering from financial hardship. It is noted that, despite transferring the sum of $255,045 overseas, Mr Fitas’ financial circumstances appear to be better than the average social security receipt based on his significant savings.
In relation to the contention that his health is deteriorating, Mr Fitas provided the Tribunal with a letter from Dr Aminder Singh which relevantly reads as follows:
He is 74 years old suffering from Severe Osteoarthritis. Has had a Bilateral Hip joint replacements. Rotator cuff injuries. He is very frail and at a very high falls risk. Needs to take all preventative measures to avoid any future falls. Lives alone has stress and anxiety, finding it hard to cope.
While the Tribunal is quite sympathetic, the above letter outlines a list of medical issues/symptoms which are not “unusual” or “uncommon” for someone of this age or a person in receipt of an aged pension generally.
Unfortunately for Mr Fitas, his circumstances are not “unusual, uncommon, exceptional, markedly different, and special or out of the ordinary” such that they represent “special circumstances” as that expression is understood to mean: as per Locke and Secretary, Department of Social Services [2014] AATA 904 at [41].
Accordingly, Mr Fitas’ debt cannot be waived under section 1237AAD of the Act.
DECISION
For the reasons outlined above, the Tribunal affirms the decision under review.

I certify that the preceding 94 (ninety – four) paragraphs are a true copy of the reasons for the decision herein of Deputy President Dr Christopher Kendall

....(Sgd)..........................................
Administrative Assistant
Dated: 6 November 2017

Date of hearing: 25 July 2017

Date final submissions received: 20 September 2017

Applicant: In person

Representative of the Respondent: Mr A Burgess

Solicitors for the Respondent: Sparke Helmore Lawyers

[2017] AATA 2100

6 November 2017

Key Legal Topics

Areas of Law

Administrative Law

Statutory Interpretation

Legal Concepts

Judicial Review

Procedural Fairness

Standing

Statutory Construction

Appeal

Date of hearing:	25 July 2017
Date final submissions received:	20 September 2017
Applicant:	In person
Representative of the Respondent:	Mr A Burgess
Solicitors for the Respondent:	Sparke Helmore Lawyers