Flaracos and Secretary, Department of Health and Aged Care
[2023] AATA 2062
•8 June 2023
Flaracos and Secretary, Department of Health and Aged Care [2023] AATA 2062 (8 June 2023)
Division:GENERAL DIVISION
File Number(s): 2019/7805
Re:Stavroula Flaracos
APPLICANT
AndSecretary, Department of Health and Aged Care
RESPONDENT
DECISION
Tribunal:Emeritus Professor P A Fairall, Senior Member
Date:8 June 2023
Date of written reasons: 14 July 2023
Place:Sydney
For the reasons given orally at the conclusion of the hearing of this matter, the Tribunal affirms the reviewable decision made by the Authorised Review Officer of the Respondent dated 18 October 2019.
.........[SGD]...............................................................
Emeritus Professor P A Fairall, Senior Member
CATCHWORDS
Aged care – review of decision of Authorised Review Officer – where Applicant’s assets assessed to include a residential property – whether assessment of property value should be reduced – whether Applicant’s son a ‘protected person’ – whether payments to Applicant are unsecured loans against the property – whether payments gave Applicant an equitable charge over the property – no evidence of intention to create legal relations – decision under review affirmed
LEGISLATION
Aged Care Act 1997 (Cth) s 44-26A
Social Security Act 1991 (Cth)
CASES
Kamel and Secretary, Department of Social Services (Social services second review) [2023] AATA 1284
Repatriation Commission v Tsourounakis [2007] FCAFC 29
REASONS FOR DECISION
Emeritus Professor P A Fairall, Senior Member
14 July 2023
INTRODUCTION
This application arises under the Aged Care Act 1997 (Cth) (the Aged Care Act), and the Social Security Act 1991 (Cth) (the Social Security Act). The decision under review was made by an Authorised Review Officer (ARO) of Services Australia (the Agency) on 18 October 2019.
The matter was part heard by the Tribunal on 2 May 2022 and the hearing resumed on 8 June 2023 when an oral decision was made, affirming the reviewable decision.
The Respondent subsequently requested oral reasons, which I now provide.
WRITTEN REASONS
Prior to her death on 23 April 2021, Mrs S. Flaracos was the registered owner of a property at Summer Hill (the Summer Hill property). Her son Mr Dikeos Flaracos (Dikeos) lived at the property and cared for her until she moved into permanent aged care on the 25th of February 2019. Dikeos passed away some five months before his mother, on 22 November 2020. Under the terms of her will dated 13 November 2002, Mr T Flaracos (Mr Flaracos) and Dikeos are appointed as executors and trustees.[1]
[1] ST6, 182-184.
On 29 January 2018, Services Australia completed an assessment of age care fees, and the value of the Summer Hill property was included in the assessment.
In 2019, Mr Flaracos wrote to the Department of Human Services (now Services Australia) to ask for a reassessment, claiming that the Summer Hill property should not be included in the assessment because Dikeos was a ‘protected person’. The Department requested further information and provided a questionnaire.[2] Mr Flaracos responded by letter to the request for information.[3]
[2] T5, 130.
[3] T6, 133.
On 18 October 2019, an ARO of the Agency affirmed the original decision made by a delegate on 15 May 2019 to assess the late Mrs S. Flaracos’ (the applicant) residential care fees to include the Summer Hill property. The house was assessed at $650,000. Its current valuation is comfortably over $2m.[4]
[4] FST2, 380.
On 27 November 2019, Mrs S. Flaracos filed an application for review for the Tribunal, by her representative and son, Mr Flaracos.
These proceedings are maintained by Mr Flaracos as the surviving trustee of his late mother’s estate.
THE THREE SALIENT ISSUES
Protected Person
The first issue is whether the value of the Summer Hill property was to be disregarded because of the provisions of subsection 44-26A(6) of the Aged Care Act. During these proceedings Dikeos was referred to as a ‘protected person’. I note that this term is not defined in the relevant legislation but may be used as shorthand to refer to the categories of individuals falling within subsection 44-26A(6), which provides:
(6) In working out the value at a particular time of the assets of a person who is or was a homeowner, disregard the value of a home that, at the time, was occupied by:
(a) … a dependent child of the person; or
(b) a carer of the person who:
(i) had occupied the home for the past 2 years; and
(ii) was eligible to receive an income support payment at the time; or
(c) a close relation of the person who:
(i) had occupied the home for the past 5 years; and
(ii) was eligible to receive an income support payment at the time.
The taxation records pertaining to Dikeos for the five years prior to the assessment were provided to the Tribunal,[5] and it was apparent that at all relevant times he was in receipt of a comfortable salary that would have put him well over the threshold requirement for an income support payment.
[5] FST4, 388.
I am satisfied that Dikeos was neither a dependent child nor eligible to receive an income support payment at any time during the five-year period prior to the assessment, and therefore there was no basis for disregarding the value of the home by reference to this provision.
Loans
Mr Flaracos claimed that certain sums of money had been advanced to his mother and that these should be considered in calculating the net value of her property.
I accept that while his mother lived in the Summer Hill property, her sons provided varying degrees of financial and in-kind support. Those supports were for a variety of purposes, such as the carpets, rodent control, roof repairs and so on. Mr Flaracos said that such advances were ‘on the house’. Mr Flaracos and his brother were aware that their mother had drafted a will in 2002 under which they were beneficiaries and stood to inherit the estate, including the Summer Hill property.
At one point Mr Flaracos argued that these advances should be regarded as loans.
It is of course true that a person may enter binding legal relationships with other parties to whom they are related. Whether the parties intended to create binding legal relations is a question of fact. In the absence of a clear expression of intent at the time of entering such an arrangement, usually in the form of a formal contract, such arrangements, especially between close family members, will usually be regarded as matters of trust and honour and not enforceable at law.
During the hearing, Mr Flaracos conceded that the sums advanced were not loans, and that there was no expectation that his mother would repay any of the amounts advanced. It is in the essence of a loan that there is an agreement to repay at some point in the future.
Mr Flaracos accepted that there was no intention on his part to create legal relations with his mother. He said that had she taken steps to dispose of the house, thereby denying him and his brother their inheritance, he might have considered taking legal steps to prevent her doing so. He felt justified in this course, considering the financial support he had provided. But he had no intention to seek any repayment of monies advanced and there was no intention that they should be repaid in her lifetime.
I note that under section 1121 of the Social Security Act, certain loans which are supported by registered charges may be offset, and under the Social Security Guide, it is accepted that monies advanced for the purpose of acquiring a property may be considered, even if unsecured against the property.[6] However, in this case, there is no evidence of any loan agreements and there is no need to venture down this path.
[6] See Kamel and Secretary, Department of Social Services (Social services second review) [2023] AATA 1284.
I am satisfied that in respect of monies advanced for maintenance and upkeep of the Summer Hill property, to which Mr Flaracos deposed, there was no contract such that these amounts could be set off against the value of the house.
There is no basis for reducing the assessment that Centrelink made of $650,000 as the valuation of the house in question.
Equitable charge
During closing submissions, Mr Flaracos suggested that the reviewable decision should be set side on the basis that the Summer Hill property was the subject of an equitable charge in his favour, thus reducing its value by the amount of that charge. He suggested that the value of advances exceeded the value of the house which should therefore be valued at zero. He relied upon the decision of the Full Federal Court in Repatriation Commission v Tsourounakis [2007] FCAFC 29 (Tsourounakis).
Mr Flaracos provided a list of expenditures on the Summer Hill property. In essence, he argued that in advancing certain sums to his mother, whether for his father’s funeral, her travel expenses, new roofing, pest control and so on, he was acquiring an enforceable equitable interest and/or charge over the property.
It is axiomatic that decisions about social security entitlements must be based on evidence. Bare assertions are no substitute for evidence. The applicant did not provide evidence in support of the claimed expenditures. This was canvassed at length in cross examination. When pressed for details to substantiate the claimed expenditures, he was unable to provide any.[7] There is no documentation that supports any of the advances that are referred to in the list provided by Mr Flaracos. It is not supported by invoices or evidence of expenditure. There is simply no evidentiary basis for applying the doctrine in Tsourounakis.
[7] Transcript, 8 June 2023, 106.
I cannot be satisfied that the list of claimed expenditures reflects advances made for the benefit of Mrs Flaracos, when they were made, or the proportions in which they were made.
I am satisfied, based upon the evidence before the Tribunal, that there is no basis for reducing the value of the Summer Hill property by reference to any such charge or charges.
DECISION
The Tribunal affirms the decision made by the authorised review officer on 18 October 2019.
I certify that the preceding 27 (twenty-seven) paragraphs are a true copy of the reasons for the decision herein of Emeritus Professor P A Fairall, Senior Member
.........[SGD]...............................................................
Associate
Dated: 14 July 2023
Date(s) of hearing: 2 May 2022 and 8 June 2023 Advocate for the Applicant: Mr T Flaracos Solicitors for the Respondent: Dr S Thompson, Sparke Helmore Lawyers
0