Geeves; Secretary, Department of Family and Community Services an D

[2003] AATA 593

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 593

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No T2002/242

GENERAL ADMINISTRATIVE  DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And ROSLYN GEEVES

Respondent

DECISION

Tribunal Associate Professor B W Davis A.M. (Part-time Member)

Date25 June 2003

PlaceHobart

Decision

The Tribunal sets aside the decision under review and in substitution thereof finds that:

1. Mr Craig Escott’s beneficial interest in the Craig Andrew Escott Trust constitutes an asset within the meaning of s11 and s198D of the Social Security Act 1991.

2. The Craig Andrew Escott Trust is an excluded trust within the meaning of the amended s198E of the Social Security Act 1991 and Part 2, sub-section 6.1 of the Social Security (Means Test Treatment of Private Trusts – Excluded Trusts) Declaration 2001.    In consequence Roslyn Geeves is entitled to be in receipt of carer payment and is entitled to be reimbursed for arrears from the time her carer payment was cancelled (24 January 2002).

[Sgd B W Davis]

Part-Time Member

CATCHWORDS

Social Security - carer payments - cancellation - means test - assets - valuation - private trust - excluded trust - error in law.

Legislation

Social Security Act 1991 - ss198, also Part 3.2, s1064, Module 6 (Rate Calculator)

Social Security and Veterans' Entitlements Amendment (Private Trusts and Private Companies - Integrity of Means Testing) Act 2000 - Part 3.18

Social Security (Means Test Treatment of Private Trusts - Excluded Trusts) Declaration 2001.

Authorities

Re Kidner and Secretary, Department of Social Security (1993) 30 ALD 428

Re Backer and Department of Family and Community Services (24 December 2002) AATA 1335

REASONS FOR DECISION

25 June 2003 Associate Professor B W Davis A.M. (Part-time Member)   

The Application

3.      The applicant, the Department of Family and Community Services (DFCS) seeks review of a decision made by the Social Security Appeals Tribunal (SSAT) on 22 August 2002 that monies of Craig Andrew Escott Trust are not an asset of Mr Escott and that Roslyn Geeves (the respondent) should be reimbursed for arrears from the time her carer payment was cancelled (24 January 2002).

The Issues

4. The initial issue is whether Mr Craig Andrew Escott has a beneficial interest in the court-ordered private trust established in his name and whether this constitutes an asset within the meaning of s198D of the Social Security Act 1991 (“the 1991 Act”).

5. The subsequent issue is whether the Craig Andrew Escott Trust is an excluded trust, within the meaning of the amended s198E of the Social Security Act 1991 and whether in consequence Roslyn Geeves is entitled to be in receipt of carer payment  and is entitled to be reimbursed for arrears from the time her payment was cancelled.

Background

6.      Craig Andrew Escott is the beneficiary of a Trust which was set up as a result of a damages claim in the Supreme Court of Queensland.   In an order dated 5 August 1998 it was ordered that the Public Trustee (Tasmania) hold all sums paid to it by the Defendants upon Trust for Craig Andrew Escott, in terms of the Trust being set out in Order 24, Rule 11(3) and (4) of the Rules of the Supreme Court of Tasmania, as if the Public Trustee (Tasmania) has received such sums under the terms of that Rule.

7.      The damages awarded to Craig Andrew Escott amounted to $900,000, but as a result of payments by the Trust to him, had been reduced to approximately $630,000 in January 2002 and is now further reduced.   It is estimated the money will run out before Mr Escott reaches the age of 63 years in 2023.

8.      Roslyn Geeves met Mr Escott when he was undergoing rehabilitation at the same time as her mother.   She has now cared for him for more than seven years and was entitled to carer payment until it was cancelled by the DFCS in January 2002.   Mr Escott is not under a guardianship order, the Trust manages his money and are trying to make it last as long as possible.   In addition to paying Mr Escott approximately $26,000 per year, the Trust will release various amounts when he needs them, for example he received $7,000 to set up a home gymnasium.   The Trust is now paying Ms Geeves $400 per fortnight to make up for the carer payment cancelled by DFCS.

Legislation

9.      Section 11 of the 1991 Act sets out definitions of “asset”, “exempt asset” and “value” amongst other terms.   In each case the definitions are wide-ranging and based upon commonly accepted meanings.

10.     Section 198 of the 1991 Act sets out provisions for qualified carer (s198A) and asset test for carer payment (s198D).   It requires that both carer and care receiver pass an assets test and the specified means test is that the assets of the care receiver must be less than $464,500.

11.     The method of application of the assets test is set out in Part 3.2, s1064, Module G of the Act.

12.     Attribution Rules, which came into effect in January 2002, are contained in Part 3.18 of the Act, dealing with means test treatment of private companies and private trusts.  Schedule 1 of the Social Security and Veterans’ Entitlements Legislation Amendment (Private Trusts and Private Companies – Integrity of Means Testing) Act 2000 applies.

13.     Subsection 1118(1) of the Act deals with exempted assets and s1207 with application of income and asset test reductions.   All private trusts are designated private trusts unless they come within the ambit of exclusions identified in s1207P(1).   One of these exclusions is an “excluded trust”..   Section 1207P(4) states that the Secretary may in writing declare that each trust included in a specified class of trusts is an excluded trust for the purpose of this section.   An instrument under subsection (4) is a disallowable instrument.

14.     The disallowable instrument for this purpose is the Social Security (Means Test Treatment of Private Trusts – Excluded Trusts) Declaration 2001.   This disallowable instrument states that court-ordered trusts are excluded trusts.   A court-ordered trust is defined as a trust created by an order of the court that relates to a personal injury matter, and that provides for some or all of the proceeds of the judgment or settlement to be held in trust for the person in whose favour the judgment or settlement was made.

15.     Centrelink’s Guide deals with excluded trusts at reference 4-12.3.20.   It says, amongst other things, specified classes of trust that are excluded from the attribution process are some court-ordered (statutory) trusts.    Guide reference 4-12.3.80 says that if money is held by a public trustee or similar body on behalf of an individual customer, then the full value of that money is the customer’s asset.   The validity of this interpretation is challenged in the current case.  

The SSAT Decision

16.     Roslyn Geeves was in receipt of carer payments from 14 December 1995 until the DFCS decision to cancel payment on 24 January 2002.   She sought a review of this determination on 22 March 2002 and an authorised review officer of DFCS affirmed the decision on 2 April 2002.   Ms Geeves then appealed to the SSAT on 24 June 2002.

17.     The SSAT hearing was conducted in Hobart on 22 August 2002.   Ms Geeves attended and spoke to the Tribunal, presenting a statement prepared by the Public Trustee which showed how the Craig Andrew Escott Trust money was invested and its projected income in the years ahead.   A copy of the statement was later placed on Centrelink files.

18.     The Tribunal considered financial and other evidence provided to it and made a finding of fact that the Craig Andrew Escott Trust is a court-ordered Trust.   The SSAT noted statutory provisions relating to private trusts, in particular the amendments of 2002 in ss1207P(1) and (4) and concluded that with a court-ordered trust the beneficiary had no control over how money was invested.   This led them to the view that the money held by the Craig Andrew Escott Trust was not an asset of Mr Escott and this did not preclude Ms Geeves receiving a carer payment.   The SSAT ordered that payment should be restored to Ms Geeves and arrears granted back to the date of cancellation.

19.     The DFCS sought review of this decision by the Administrative Appeals Tribunal on 30 September 2002.

The AAT Hearing

20.     The AAT hearing was conducted in Hobart on 12 May 2003, Ms Elizabeth King appearing for the applicant (DFCS) and Mr Hamish Locke of the Hobart Community Legal Service for the respondent (Roslyn Geeves).    No witnesses were called.

21.     Counsel for the applicant made reference to a statement of facts and contentions submitted on 17 February 2003.   DFCS claimed the SSAT had erred in fact and law.   The Court-ordered trust was an asset of Mr Escott under general principles of property law, since it was intended for his sole beneficial interest.   While the Court-ordered trust might be an excluded trust under s1207P of the Act, the attribution rules of s3.18 were not relevant in the current case, merely coinciding with the DFCS decision to cancel carer payment.

22. Cancellation should have occurred in 1998, when Mr Escott received his compensation payment, but the error was not detected until January 2002. Centrelink then decided his assets exceeded the limit prescribed in s198D(1) and on 24 January 2002 carer payment was cancelled. DFCS claimed the cancellation was correctly made, pursuant to applicant of the ordinary assets test contained in Module G, s1064, Part 3.2 of the Act.

23.     DFCS further claimed that the attribution rules which came into effect in January 2002 and contained in s3.18 of the Act had no relevance or application to the respondent’s circumstances.  This is because Court-ordered trusts are specifically excluded from the definition of “designated trusts” in the Act by paragraph 6 of the Social Security (Means Test Treatment of Private Trusts - Excluded Trusts) Declaration 2002.  “The SSAT correctly held that the Court-ordered trust in this case was an “excluded trust” for the purpose of attribution rules, but erred in law in its conclusions as to the legal consequence of it being so excluded”.

24.     DFCS claimed the purpose of the new Part 3.18 was to extend the operation of the pre-existing assets test and at no stage was it intended the new rules would produce the strange result that something which would plainly and unequivocally have been treated as a particular person’s asset prior to the introduction of these rules (i.e. under ordinary property-law principles) would cease to be so treated after commencement of the new Part 3.18.   This was clear from perusal of the Explanatory Memorandum which introduced the new Part 3.18 and the Parliamentary debates.

25.     Counsel for the applicant posed the rhetorical question, “if the beneficial interest in the Court-ordered trust in his favour is not to be regarded as an asset of his, precisely whose asset is it?”     It is clearly not an asset of the Supreme court, the Public Trustee or the respondent.   The decision of the SSAT should be set aside; the beneficial interest of Mr Escott in the Court-ordered trust was clearly an asset for purposes of the asset test.

26.     In response to DFCS submissions, counsel for the respondent (Roslyn Geeves) argued that carer payments should be restored to her as the SSAT had directed.   The Tribunal was correct in its application of s1207P(4), since this section is included as part of the new Part 3.18 and clearly applies to the assets test for carer payments.   While it might be argued that Mr Escott and therefore Ms Geeves were not previously entitled to the benefits which flow from s1207P, it is contended they do so now and therefore the decision to cancel Roslyn Geeves carer payment is incorrect and should be overturned.

27.     Counsel for the respondent also claimed the new s1207P(4) clearly stated it applied to the whole of s1207P, by inclusion of the words “in this section”..   Had the legislation intended to limit the effect of s1207P(4) it would have expressly done so.   The Social Security (Means Test Treatment of Private Trusts - Excluded Trusts) Declaration 2002 (“the Declaration”) is made by virtue of this sub-section.    To hold that the Declaration applies only for the purpose of s1207(4) of the Act is to disregard the purpose identified in Part 1, Clause 3 and Part 2, Clause 6 where it is clearly stated: “… each trust that is a court-ordered trust in an excluded trust for section 1207P of the Act.”   Further, to try to limit application to s1207P(4) alone makes no sense, as this sub-section has no substance or content of its own.

28.     An order is sought that the respondent’s carer payment should be reinstated for arrears from the time her payment was cancelled.

Analysis

29.     The Tribunal is required to stand in the shoes of the original decision-maker and consider all evidence anew, bearing in mind statutory provisions and any significant legal precedent.

30. In the current case the first matter to be determined is whether Mr Craig Andrew Escott has a beneficial interest in the Court-ordered private trust established in his name and whether this constitutes an asset within the meaning of s198D of the Act.

31. The subsequent issue is whether the Craig Andrew Escott Trust is an excluded trust within the meaning of s198E of the Act and whether in consequence Roslyn Geeves is entitled to be in receipt of carer payment and is entitled to be reimbursed for arrears from the time her payment was cancelled.

32.     Section 11 of the Act defines “asset” as money or property (including money and property outside Australia), each term bearing its ordinary English meaning, see Kidner and Secretary, Department of Social Security (1993) 30 ALD 428. The SSAT, having examined all evidence before it determined as a matter of fact that the Craig Andrew Escott Trust was a Court-ordered trust, but then went on to decide that because the beneficiary had no control over how the money was invested, it was not an asset of Mr Escott. The DFCS claimed this to be an error of fact and law and having assessed the evidence before it, the AAT Tribunal agrees with their assessment, rejecting the SSAT interpretation.

33. It is useful to restate the rhetorical question: if proceeds of the Craig Andrew Escott Trust are not an asset of Mr Escott, whose benefits are they? Clearly they are not an asset of the Supreme Court of Queensland which in its order of 21 July 1998 identified the sole beneficiary as Craig Andrew Escott. Similarly, proceeds of the trust administered by the Public Trustee (Tasmania) are paid solely to the account of Craig Andrew Escott and nobody else. The reality is that the sole beneficiary of the trust is Mr Escott and therefore it is an asset of his within the meaning of s11 and s198D of the Act.

34.     This is in accordance with the intent of the new Part 3.18 of the Act, as outlined in its accompanying Explanatory Memorandum, whereby the social security means test is extended to private trusts and private companies.   Assets of such trusts are to be attributed for means testing purposes unless special provisions apply (see for example, Backer and Department of Family and Community Services (AATA 1335, 24 December 2002).

35. The next matter to be decided is now such an asset should be treated in terms of legal provisions relating to carer payment. It is clear from evidence presented to the Tribunal that prior to amendment of the Act in year 2000, Mr Escott’s assets would have exceeded the means test limit specified in s198 of the Act and Ms Geeves as carer would not have qualified for carer payment. However amendments made to s3.18 of the Act and in particular provisions relating to s198E concerning excluded trusts, entering into force in January 2002, have altered the situation.

36.     DFCS claim that the attribution rules which came into effect in January 2002 and are contained in Part 3.18 of the Act have no relevance or application to the respondent’s circumstances, merely coinciding with the decision to cancel carer payments.   The applicant further asserts that the purpose of the new Part 3.18 was misconstrued by the SSAT, in that it was never intended that something which was previously regarded as an asset, was not now so regarded.   This was clear from perusal of the Explanatory Memorandum which introduced the new s3.18 and Parliamentary debates.   DFCS also noted that the Centrelink Guide at reference 4.12.3.80 made it clear that money held by a public trustee or similar body on behalf of an individual, would be regarded as an asset.

37.     While the Tribunal notes it is accepted legal practice not to overturn existing policy or guidelines unless there are compelling reasons to do so, the Tribunal is required to treat statutes as they exist and where necessary give them precedence over claimed intentions or operational practices.

38.     As previously noted, attribution rules which came into effect in January 2002 are contained in Part 3.18 of the Act, dealing with means test treatment of private companies and private trusts.   Schedule 1 of the Social Security and Veterans' Entitlements Amendment (Private Trusts and Private Companies - Integrity of Means Testing) Act 2000 applies sub-section 1118(1) of the Social Security Act 1991 deals with exempted assets and s1207 with application of income and asset test reductions.  All private trusts are designated as such unless specifically excluded (s1207P(1)(c), s.1207P(4)) sets out the method of dealing with excluded trusts via a disallowable instrument, namely the Social Security (Means Test Treatment of Private Trusts - Excluded Trusts) Declaration 2001.   This disallowable instrument states that Court-ordered trusts are excluded trusts.

39.     It is common ground amongst parties to the current case that the Craig Andrew Escott Trust is a Court-ordered trust and also an excluded trust.   The point of contention is whether this would be read into s1207P of the Act as a whole or only in respect of s1207P(4).   The respondent argues the former, the applicant the latter.

40.     Turning directly to the legislation and guidelines in question, the wording of the Social Security (Means Test Treatment of Private Trusts - Excluded Trusts) Declaration 2002 is unambiguous.   At 6.1 of the Declaration it specifically states that Court-ordered trusts are excluded trusts for s1207P of the Act i.e. for s1207 P as a whole.   This being the case, the respondent is entitled to the benefits conferred by s1207P and hence funds of the Craig Andrew Escott Trust should not be treated as an asset in assessing carer payment.   This leads the Tribunal to agree with the SSAT’s assessment that carer payment should be restored to the respondent, Roslyn Geeves, and arrears granted back to the date of cancellation, namely 24 January 2002.

Decision

41.     The Tribunal sets aside the decision under review and in substitution thereof finds that:

(a) Mr Craig Escott’s beneficial interest in the Craig Andrew Escott Trust constitutes an asset within the meaning of s11 and s198D of the Social Security Act 1991.

(b) The Craig Andrew Escott Trust is an excluded trust within the meaning of the amended s198E of the Social Security Act 1991 and Part 2, sub-section 6.1 of the Social Security (Means Test Treatment of Private Trusts – Excluded Trusts) Declaration 2001.    In consequence Roslyn Geeves is entitled to be in receipt of carer payment and is entitled to be reimbursed for arrears from the time her carer payment was cancelled (24 January 2002).

I certify that the 41 preceding paragraphs are a true copy of the reasons for the decision herein of Associate Professor B W Davis A.M. (Part-time Member)

Signed:  K L Miller (Administrative Assistant)

Date/s of Hearing  12 May 2003
Date of Decision  25 June 2003
Counsel for the Applicant         Ms Elizabeth King
Solicitor for the Applicant          Centrelink
Counsel for the Respondent     Mr Hamish Locke
Solicitor for the Respondent     Hobart Community Legal Service