Fraser and Secretary, Department of Family and Community Services

[2003] AATA 265

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 265

ADMINISTRATIVE APPEALS TRIBUNAL        Nº V2002/935

GENERAL ADMINISTRATIVE  DIVISION

Re:         JOHN ROBERT FRASER

Applicant

And:       SECRETARY TO THE
  DEPARTMENT OF FAMILY AND

COMMUNITY SERVICES

Respondent

DECISION

Tribunal:       M.J. Carstairs, Member

Date:             3 March 2003

Place:            Melbourne

Decision:For reasons given orally at the hearing, the Tribunal affirms the decision under review.

(sgd) M.J. Carstairs

Member

SOCIAL SECURITY – retirement assistance for farmers - cut-off date - whether equitable interest sufficient

Social Security Act1991 ss17A, 1185AA, 1185B

Breskvar v Wall (1971) 126 CLR 376

REASONS FOR DECISION

3 March 2003  M.J. Carstairs, Member

1.      This is an application by John Fraser (the applicant) for review of a decision made by the Social Security Appeals Tribunal (SSAT) on 24 July 2002.  The SSAT affirmed a decision of a Centrelink delegate of the Secretary to the Department of Family and Community Services, to reject a claim for age pension.

2.      Mr G. Simpson of Hunter Newns Group represented the applicant.  Mr M. Todd, a Centrelink advocate, represented the respondent.

3. The Tribunal had before it the documents lodged pursuant to s37 of the Administrative Appeals Tribunal Act1975 numbered T1-T22 and Statements of Facts and Contentions lodged by each party (exhibits A1 and R1).

BACKGROUND

4.      The applicant has been a farmer for forty-five years and farmed the property Lovatdale at Glenthompson for nineteen years.  His son, Robert, was involved in farming Lovatdale.  Under the provisions available to assist succession planning in the farming industry, the applicant made enquiries about the Retirement Assistance for Farmers Scheme.  Centrelink sent the applicant a form seeking information to assess his eligibility. On 25 May 2001 Centrelink made a provisional assessment  that the applicant would qualify under the scheme.

5.      This document for "pre-assessment" (T4) provided the basis of a letter of advice sent to the applicant on 25 May 2001 (T5) stating that, on the information provided, the applicant was entitled to some $338.40 per fortnight in age pension.  To take advantage of the Scheme it was necessary that he have legally transferred all the farm assets and provide the title deed that showed the date of the change of ownership. 

6.      On 7 September 2001 the applicant lodged a claim for age pension.  It was rejected on 16 September 2001 (T9).   As the pre-assessment by Centrelink was done on 25 May 2001, it was necessary that the applicant show that transfer had occurred within three months of that date.  The date of the registration of the transfer of the land to the applicant’s son was 8 November 2001. The applicant sought review of the decision to reject his claim.  The authorised review officer decided that the decision could not be changed, as there was no discretion under the Social Security Act 1991 (the Act) to vary the cut-off date.  The SSAT concurred.  The applicant lodged an application to this Tribunal for review of the SSAT decision on 29 August 2002.

EVIDENCE

7.      In the documentary material (T4) the applicant noted that to complete the transfer of the land to the applicant’s son it was first necessary that the land be transferred from the company which held the legal title and was being wound up to the applicant and his wife, before transfer could be effected to the son.  The transfers of the property were signed on 21 June 2001 and forwarded to the Land Titles office and the Titles Office acknowledged receipt on 29 June 2001. 

8.      The Land Titles office thereafter required the completion of a number of requisitions on title, which related to the liquidation of the family company.  As the form for the initial transfer, from the family company to the applicant and his wife, required amendment, it was necessary to withdraw that transfer document.  This entailed withdrawing the transfer form for the transfer from the applicant and his wife to the applicant’s son.

9.      The transfers were lodged as a fresh dealing on 8 November 2001 and were registered on that date.

10. The dealings with the Titles office were set out in exhibit A1 and none of these facts were disputed by the respondent. In a letter dated 13 November 2002 (attachment to exhibit A1) Mr J. Hartigan, Registrar of Titles, stated that it was fundamental to the Transfer of Land Act that the date of registration was the date of lodgement. He said it was not possible to change the date of the registration to that of the first lodgement in June 2001. He stated that to do otherwise would invite parties to lodge unregisterable instruments in order to gain priority. He said that it is fundamental that an instrument cannot be registered until it is capable of registration, and in the applicant's case the deficiency was of such a nature as not to be susceptible of remedy with out withdrawal. He said it might be arguable that a disposition in equity had occurred at the time that the documents were first lodged.

CONSIDERATION OF THE ISSUES

11. The scheme was initially introduced, according to the Second Reading Speech to the Bill, in 1998, to provide a three year window, for persons who were at or approaching retirement age, to hand the farm on to the younger generation without affecting their access to age pension. This was subject to several conditions that had to be met under the Act, set out generally at s1185B of the Act. The parties agreed there was no question the applicant was met these conditions.

12. Section 17A of the Act provides the definitions for the Scheme in Part 3.14A of the Act that provides retirement assistance to farmers.

"relevant farm asset", in relation to a farm, means any livestock, crop, plant or equipment that is a produce of, or is used for the purposes of, the farm enterprise.

"relevant State land law" means any of the following laws:

(a)…

(b)the Transfer of Land Act 1958 of Victoria;

…

"transfer":

(a)in relation to a qualifying interest in a farm-has the meaning given by subsections (7), (8), (10) and (11); or

(b)in relation to a qualifying interest in a relevant farm asset-has the meaning given by subsections (9) and (11).

…

17A(5)     A person has a qualifying interest in a farm if:

(a)the person has a legal estate or interest in the farm; or

(b)the person has a transferable legal right or a transferable licence to occupy the farm for a particular purpose of the farm enterprise; or

(c)as the mortgagor of a legal estate or interest in the farm (being an estate or interest that is not registered under a relevant State land law), the person has an equitable estate or interest in the farm; or

(d)the person is a shareholder in a proprietary company that has a legal estate or interest in the farm.

…

17A(7)     Subject to subsections (8), (10) and (11), a qualifying interest that a person has in a farm is transferred to another person if, and only if, the qualifying interest:

(a)ceases to be vested in the person; and

(b)becomes vested in the other person.

17A(8)     To avoid any doubt, it is stated that if a person who transfers a legal estate or interest in a farm to another person is, under a relevant State land law, registered as being the proprietor (whether that word or any other word is used) of that estate or interest, the legal estate or interest in the farm is taken not to have become vested in the other person unless and until the transfer is registered in accordance with that law.

13. In Part 3.14A s1185B sets out the provisions that have to be met for qualification under the Act. It also refers to the term applicable cut- off date

1185B(1) Subject to subsection (3), this Part applies to a person if:

(a)at any time after 14 September 1992 but before the applicable cut-off date, the person, being then a qualifying farmer, transferred by way of gift to one, or more than one, eligible descendant (either solely to the eligible descendant or jointly to him or her and his or her partner):

(i)his or her qualifying interest in the farm or farms in which he or she had such an interest; and

(ii)all the qualifying interests that he or she had in relevant farm assets; and

(b)the person, or (if the person is a member of a couple) the person or his or her partner:

(i)has reached pension age; or

(ii)will reach pension age before 1 July 2001; and

(c)the total value for the purposes of this section of the farm or farms, and the relevant farm assets, referred to in paragraph (a) does not exceed $500,000; and

(d)during the last 3 years before the transfer was completed, the eligible descendant or each of the eligible descendants:

(i)had been actively involved with the farm or any of the farms; or

(ii)would, in the opinion of the Secretary, have been so involved but for exceptional circumstances beyond his or her control; and

(e)if the person is a member of a couple—the person’s partner does not have:

(i)a legal estate or interest in the farm or farms referred to in subparagraph (a)(i) or in any other farm; or

(ii)a legal interest in any relevant farm asset; and

(f)the person satisfies the farmers’ income test for the purposes of this Part.

14. Section 1185AA then provides the definition of applicable cut-off date:

1185AA   In this Part:

applicable cut-off date means:

(a)in relation to a transfer, where:

(i)the transfer was not completed before 1 July 2001; and

(ii)a pre-assessment request in relation to the transfer was lodged with the Department or the Agency before 1 August 2001; and

(iii)the Department or Agency responded affirmatively to the request;

the first day after the end of the period of 3 months beginning on the day on which the Department or Agency responded to the request; and

(b)in relation to any other transfer—1 July 2001.

15. Mr Todd submitted that although the applicant was pre-assessed as meeting the eligibility criteria for the Retirement Assistance for Farmers Scheme on 25 May 2001, the date of actual transfer was the critical date under the legislation. He submitted that as the date of transfer was 8 November 2001, s17A(8) provided clearly that transfer in this case occurred only at that date. He submitted that there was no discretion to choose an earlier date under the Act.

16. Mr Simpson submitted that under s17A(7) of the Act provides for the transfer of the qualifying interest in a farm asset to take place when the qualifying interest becomes vested in the other person. He said that this was on 21 June 2001, the date of the signing of the transfer. In regard to the operation of s17A(8), he said this provision only comes into play “if there is any doubt”.. In his submission there was no doubt in this case that the transfer took place through the intention of the parties on 21 June 2001. He submitted that the procedural requirement of the Titles Office should not stand in the way. Mr Simpson submitted that the Explanatory Memorandum to the Bill made plain that the applicant was the sort of person for whom the benefit of the Scheme was intended.

17.     Mr Simpson also submitted that there must be some discretion in the application of the Act, as implied in one Centrelink document (T15). In this case he said the evidence was that the initially lodged document was a registrable document that had been stamped, and he said there was no doubt that the transfer did take place at that time.  At general law, he said, it was possible for the purchaser to transfer his interest at that time even though registration had not occurred.  Furthermore, by reference to the scheme that was intended, it was clear that the applicant should be enabled to take the benefit.

18. The definition of applicable cut-off date was inserted by the Social Security and Veterans’ Entitlements Legislation Amendment (Retirement Assistance for Farmers) Act 2001.  The reason for its inclusion was to extend the period for the scheme which otherwise was to finish on 30 June 2001, and it was to deal with those farmers who were eligible under the scheme but who had not finalised the transfer of their farm by 30 June 2001.   The Second Reading Speech stated that the extension was to deal with those farmers, who were otherwise eligible under the scheme, who had made enquires prior to 1 August 2001 and who needed extra time to finalise the transfer.

19.     The provision for the cut-off date is, in the Tribunal’s view, quite clear.  It requires an understanding of the meaning of transfer as used in s17A. Clearly s17A looks to certain kinds of interest in land – set out comprehensively in the definition of qualifying interest in a farm. It is not all interests in land with which the Act, in these specific provisions, is concerned; though the case is otherwise in other parts of the Act. Through the operation of s17A(7) and 17A(8) the Act makes certain what might otherwise be uncertain. It ensures that the only vesting of an interest in land that will meet the requirement of showing that legal ownership has changed is the transfer of the legal estate under the Victorian Transfer of Land Act 1958.  The expression to avoid doubt in s17A(8) is a declaratory provision, to put beyond question that it is not merely an equitable interest that is to be established. It is the registration of the legal interest as proprietor.

20. Any equitable interest the applicant's son may have held in the period between 21 June 2001 and 8 November 2001 is irrelevant to the question that has to be addressed under the legislation. The Tribunal does not accept the submission that the words of s17A(8) only come into operation where there is a doubt. The section does not support the applicant's argument - namely, that it covers any estate or interest in land whether registered or not. The Torrens system of land registration relies on the conclusiveness of the Register – it is a system of title by registration (Breskvar V Wall (1971) 126 CLR 376). For clear reasons, Parliament has decided to rely on the conclusiveness of the Register, through the interaction of s17A(1) and 17A(7) and (8), to be able to establish when the qualifying interest in the farm has changed hands for purposes of s1185B.

21.     As the applicant cannot show that the transfer of the farm, as defined under the Act, occurred within the three months of the pre‑assessment his claim falls outside the period which Parliament has decided limits the scheme.  There is no discretion available under the Act to nominate a date earlier than the date of registration of the transfer.

DECISION

22.     The Tribunal affirms the decision under review.

I certify that the twenty‑two [22] preceding paragraphs are a true copy of the reasons for the decision of:

M.J. Carstairs, Member

(sgd)       Catherine Thomas

Clerk

Date of hearing:  27 February 2003

Date of decision:  3 March 2003
Solicitor for applicant:                  Mr G. Simpson, Hunter Newns Group
Advocate for respondent:            Ms E. King, Centrelink