Georgas and Department of Family and Community Services
[2002] AATA 371
•20 May 2002
DECISIONS AND REASONS FOR DECISION [2002] AATA 371
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2001/547
GENERAL ADMINISTRATIVE DIVISION )
Re PARASKEVAS GEORGAS
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Dr EK Christie, Member
Date20 May 2002
PlaceBrisbane
Decision The Tribunal affirms the decision under review.
.................(Sgnd).................
Dr EK Christie
Member
CATCHWORDS
SOCIAL SECURITY – disability support pension – financial assets test – express oral trust – whether beneficial interest held in trust by applicant for DSP – whether statutory requirements for writing observed
Social Security Act 1991
Property Law Act 1974 (Qld) s 11
Adamson v Hayes (1973) 130 CLR 276
Caswell v Powell Duffry Associated Collieries Ltd [1940] AC 152
Dineen v Secretary, Department of Social Security (1991) 30 FCR 475
Garret v L'Estrange (1911) 13 CLR 430
Kauter v Hilton (1953) 90 CLR 86
Kiatominas v Department of Social Security (1991) 30 FCR 475
Rochefoacald v Boustead [1897] 1 Ch 196
Ryder v Taylor (1935) 36 SR NSW 31
Secretary, Department of Social Security v James (1990) 20 ALD 5
REASONS FOR DECISION
20 May 2002 Dr EK Christie, Member
Mr Georgas sought a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 25 May 2001 that disability support pension ("DSP") was not payable to him. In addition, that a partner allowance was not payable to his wife. The assets of Mr and Mrs Georgas were "more than enough to reduce the rate [DSP] payable to zero" (T2 Folio 3).
The application for review has been brought by Mr Georgas because "the findings made by the Social Security Appeals Tribunal were made contrary to the evidence and against the weight of that evidence" (T1 Folio 2).
The Tribunal had in evidence before it documents lodged pursuant to Section 32 of the Administrative Appeals Tribunal Act 1975 (the 'T' Documents) and the following exhibits:
Exhibit A – Witness Statement, Mr P Georgas, 28 August 2001
Exhibit B – Witness Statement, Mr J Polichronis, 1 October 2001
Exhibit C – Witness Statement, Mr M J Anthony, 28 August 2001
Exhibit D – Witness Statement, Harold Drakos, 18 February 2002
Exhibit E - Certificate of Title, Spring Street, West End
Exhibit F – Certificate of Title, Cleveland Street, Stones Corner
Exhibit G – Certificate of Title, Crown Street, West End
Exhibit I – Letter Centrelink of Commonwealth Bank of Australia (CBA) re Loan, Cleveland Street, Stones Corner, 17 January 2000. Reply from CBA 1 February 2002
Exhibit J – Copy of Mr P Georgas will
Exhibit K – Copy of Mrs M Georgas will
Mr Ross Cameron of Counsel, instructed by H Drakos and Company represented Mr Georgas. The Department of Family and Community Services ("the Department") were represented by Mr P Kanowski, a Departmental Advocate.
FACTSOn the basis of the evidence before it, the SSAT made the following findings of fact:
"(i) Mr Georgas claimed a disability support pension on 6 December 2000.
(ii)Mr and Mrs Georgas are the beneficial owners of the properties at 63 Spring St, West End, and at 68 Cleveland Street, Greenslopes.
(iii) The total value of the two properties is $550,000." (T2 Folio 8)
It is not in dispute that a family trust came into existence pursuant to a trust deed executed by Mr and Mrs Georgas on 1 August 1978 (T21).
ISSUES BEFORE THE TRIBUNALThe issues for the Tribunal to decide based on the statement of facts and contentions and subsequent submissions by the parties were:
(a)which paragraph of s 11(1) of the Property Law Act 1974 (Qld) applied in the factual circumstances of Mr Georgas application for review;
(b)whether the statutory requirements imposed by s 11 of the Property Law Act 1974 (Qld) had been complied with; and
(c)whether Mr and Mrs Georgas were eligible for Social Security entitlements based on the financial assets test.
LEGAL FRAMEWORK
It is well established, through a series of Federal Court and Tribunal decisions, that property held by a person as a trustee is not included in their assets for the purposes of the assets test as prescribed in the Social Security Act.
In Kintominas v Department of Social Security (1991) 30 FCR 475, the Federal Court held that it was appropriate to exclude from a pensioner's assessable property any property held only as a trustee. The court rejected the Tribunal's view that it had no power to give effect to equitable interests and that equitable interests should be determined in the relevant equity court jurisdiction rather than be argued before the Tribunal. Such trusts had earlier been upheld by the Federal Court in Dineen v Secretary, Department of Social Security (1988) 17 ALD 91 and Secretary,Department of Social Security v James (1990) 20 ALD 5 where the court accepted the appropriateness of the Tribunal's recognising equitable interests for the purposes of the assets test. In both cases, the court concerned itself predominantly with the issue of whether the alleged trust had been validly created according to the law of the State to which the trust related.
The essential requirements for creating a valid express trust have long been recognized at Law (See The Laws of Australia, LBC Sydney, Vol 15.13, "Trusts"). These requirements are that:
"(1) the intention of the settlor or declarant to create the trust is certain;
(2) the property or right which is subject to the trust is certain;
(3) the objects of the trust are ascertained or ascertainable;
(4) the statutory requirements for writing are observed;
(5) the trust is not illegal or otherwise contrary to public policy; and
(6) the trust is completely constituted".
Legislation imposes writing requirement in respect of trusts concerning land. The statutory requirements for writing are prescribed in s 11 of the Property Law Act 1974 (Qld) and provides that a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.
"Instruments required to be in writing
11.(1) Subject to this Act with respect to the creation of interests in land by parol - -(a)no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by the person's agent lawfully authorised in writing, or by will, or by operation of law; and
(b)a declaration of trust respecting any land must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will; and
(c)a disposition of an equitable interest or trust subsisting at the time of the disposition must be manifested and proved by some writing signed by the person disposing of the same, or by the person's agent lawfully authorised in writing, or by will.
(2) This section does not affect the creation or operation of resulting, implied or constructive trusts."
The decision of the High Court in Kauter v Hilton (1953) 90 CLR 86 at 98 is relevant:
"[The legislation] does not require that a trust of land should be created by writing. The trust may be created orally. All that the section requires is that the trust so created should be manifested and proved by writing".
The writing is required to contain all the terms of the trust [Ryder vTaylor (1935) 36 SRNSW 31 per Nicholas J at 50] namely, the beneficiaries, the trust property and the nature of the trust.
In Garrett v L'Estrange (1911) 13 CLR 432, the High Court held that:
"to constitute a declaration of trust of land there must be an intention on the part of the person who makes the declaration to divest himself of the beneficial interest, and constitute himself a trustee of the land for the other party".
In relation to the factual evidence that a Tribunal need consider in deciding whether the trust had been validly created according to the law of the State to which the trust related, the Federal Court in Secretary, Department of Social Security v James (1990) 20 ALD 5, held:
"(ii) Section 34 (1) of the Property Law Act 1969 (WA) 1 did not require an equitable interest in land to be created by writing but did not require such an interest to be manifested and proved by writing signed by the person creating the interest. This requirement could be satisfied by a combination of documents capable of being read together. Such documents could include documents which came into existence after the declaration of the trust.
(iii) In the present case, the Tribunal had resorted to oral evidence to augment, rather than to clarify, the writing upon which the respondent relied to satisfy the requirements of s 34 (1) of the Property Law Act. By relying on that oral evidence in such a way, the Tribunal had committed an error of law".Furthermore, Lee J in James' case said at 11:
"The requirements of s.34(1)(b) may be satisfied by a combination of documents capable of being read together. Any informal writing may stand as evidence of the existence of a trust including correspondence from third parties, a telegram, an affidavit or an answer to interrogatories."
A trust respecting land may be enforced in the absence of written evidence in certain circumstances. For example, the statutory requirement of writing may be avoided where the legislation would otherwise operate, for example, as an instrument for fraud. An express trust of property may be proved by oral evidence where, in the absence of this evidence, the requirements of writing prescribed by legislation are being used an instrument of fraud: see Rochefoucald v Boustead[1897] 1 Ch 196 at 206.
The difficulties in interpreting the applicable subsection of s 11 of the Property Law Act in the factual circumstances of this application for review are well illustrated by the High Court in its analysis of the equivalent section [s 34(1), Property Law Act 1969 (WA)] in Adamson v Hayes (1973) 130 CLR 276:
Menzies J at 292:
"s. 34 (1) (a) although expressed with great generality, its operation ought in the light of the provisions of ss. 34 (1) (b) and (c), to be confined to the creation of disposal of legal interests. It if were to apply to equitable interests, it seems to me that (b) an (c) would not have been necessary".
Walsh J at 297:
"[whether] s. 34 (1) (a)….should be construed as only applying only to legal interests in land it was not argued, however, that is should be so construed and it would be difficult to support that construction having regard to s.33. of the same Act, which makes a deed necessary for the conveying or creating of a legal estate.
·Gibbs J at 303:
"That paragraph [s.34 (1) (a)] in my opinion refers to equitable as well as to legal interests in land; s.33 (s. 52 of the United Kingdom Act) provides that conveyances of land are void for the purpose of conveying or creating a legal interest unless made by deed and the comparison of that section with s. 34 (1) (a) by the word "legal" was deliberate. This construction may lead to some overlapping between par. (a) and the other paragraphs of s.34 (1), but in any case the provisions of that sub-section seem to overlap."
Stephen J at 319,320:
"It is sufficient for present purposes that I should conclude that the agreement of 3rd December operated so as to create new equitable interests in the claims and this was within pars. (a) and (b) of s. 34 (1)…
Since it is common ground that no writing such as is required by par. (a) or par. (b) of s. 34 (1) exists in relation to the agreement it follows that the pooling arrangement has never come into effect. Without it the very subject matter of the later clauses of the agreements of 3rd December and of the whole of the agreement of 12th December , namely fractional interests in the pooled claims, does not exist".
EVIDENCE OF PARASKEVAS GEORGAS
Mr Georgas said that in August 1978, he had purchased the Spring Street, West End property for the benefit of their four children. Acting on the advice of his Solicitor [Mr Anthony] he had instructed his solicitor to establish a family trust for this purpose. Mr and Mrs Georgas were trustees for the Trust. The Trust Deed (T21) had been lodged immediately with the taxation department.
In January 1992, Mr and Mrs Georges, as Trustees of the Family Trust, purchased the Cleveland Street, Stones Corner property.
Mr Georges said that since 1978 he had been assisted by John Polichronis in preparing personal income tax returns. Mr Georgas said that from the time the first Trust Income tax return had been prepared, he had advised John Polichronis that all of the property of the Trust was to go to their four children.
Mr Georgas stated that rental income from both properties was deposited in a separate account with the Commonwealth Bank of Australia (the 'CBA') held in his wife's name [Maria Georgas] as Trustee for their four children, the beneficiaries of the Trust. He said that this account was used to pay operating expenses for both rental properties.
Mr Georgas stated that his intention, when both properties were bought, was to benefit their four children. It was his belief that the Family Trust held both properties in trust for their children as primary beneficiaries of the Trust.
During cross-examination by Mr Kanowski as to specific deposits in the CBA bank account, Mr Georgas gave the following responses:
15 July 1983: He was uncertain about a cash deposit of $35,300 but thought it may have been a gift or a term deposit for their children; and
18 April 1990: He thought that a deposit of $51,341, deposited in the trust account as 'AEFC' may have possibly been a term deposit.
Mr Georgas acknowledged that all moneys distributed by the Family Trust were applied to their four children, for operating expenses for both rental properties and, occasionally, distribution for his wife. However, no distributions were made to himself or any other family members.
EVIDENCE OF MRS MARIA GEORGASMrs Georgas stated that from the time the Deed of Trust had been prepared and the Spring Street and Cleveland Street properties purchased, she believed both properties were properties of the Family Trust.
She said that the rental income from the Cleveland Street property had been banked in the CBA account held in her name as Trustee for their four children. She said that her children assisted her with banking by completing the deposit forms.
During cross-examination, Mrs Georgas was taken to a number of transactions (31 May 1989; 18 April 1990), but said that she could not remember their specific details.
Mrs Georgas stated that she could not identify any transaction in the CBA account as being a deposit for the Spring Street property saying that she "cannot remember since it was all mixed up".
Mrs Georgas said that the Trust income had been distributed to her four children. No other family members, including her husband, had received any distribution.
Any occasional distribution that she received from the Trust, was applied by her to her four children or for operating expenses for both properties.
EVIDENCE OF JOHN POLICHRONISMr Polichronis had tertiary qualifications (including a post-graduate degree) in business and finance. He was a lecturer at QUT in the Faculty of Business. Mr Polichronis said that he had assisted Mr and Mrs Georgas in preparing their personal tax returns, as well as the income tax returns for the Family Trust, over the period 1978 to 1995.
Mr Polichronis said that the usual practice, each year, was for Mr Georgas to sign the original tax return which he would then send off the taxation office.
Since 1978, the personal income tax returns he had prepared for Mr and Mrs Georgas did not include the Spring Street and Cleveland Street properties. In contrast, the income tax returns prepared on behalf of the family Trust included both properties.
Mr Polichronis stated that Mr Georgas had advised him in 1978 that the Spring Street property was owned by the Family Trust and that the primary beneficiaries were their four children. Mr Polichronis further stated that he had also understood that both properties belonged to the Trust through a casual conversation he had with Mr Georgas' solicitor at that time (Mr Anthony).
Furthermore, Mr Polichronis said that it was his understanding that the family trust was formed in order to purchase the property at Spring Street, as well as for the future purchase of other properties.
During cross-examination, Mr Polichronis said that over the period he had been tax adviser to Mr and Mrs Georgas, he could recall distributions of income of the Family Trust to the four children of Mr and Mrs Georgas. He could not recall whether any distribution had been made from the Trust to Mr and Mrs Georges.
EVIDENCE OF MICHAEL JOHN ANTHONYMr Anthony was the solicitor who had acted for Mr and Mrs Georgas when they purchased the Spring Street property. He said that the approach he had taken was firstly to prepare the Deed of Trust (T21, 1 August 1978) and to then have it signed. This was then followed by the signing of the contract for the purchase of the Trust property.
Mr Anthony stated that his recollection of the time Mr and Mrs Georgas purchased the Spring Street property and their advice to him, was that they wished to purchase the property for the Trust.
Mr Anthony said that the title for the Spring Street property was registered in the name of Paraskevas Georgas and Maria Georgas without reference to the Trust. He said that there was no provision in the Titles Office procedure, at that time, which would allow a Trust to own property and be registered as such on the Title unless the Trust arose pursuant to the terms of a will.
When asked in cross-examination whether is was possible in 1978, though not mandatory for the registered title to reflect the fact that Mr and Mrs Georgas had purchased the property as Trustee, Mr Anthony replied:
"It was possible to do it that way in my opinion. Under a will you'd get it automatically. There'd be no problem."
Mr Anthony acknowledged hat he had no part in the conveyancing of the Cleveland Street property in 1992.
Mr Anthony stated that he believed there may have been a single page document at the time of the purchase of the Spring Street property relating to the purchase of this property for the benefit of the Family Trust. He had kept in his safe custody for some 10-15 years before the document was given to Mr Georgas "some time ago". However he could not recall exactly when.
In relation to this document Mr Anthony said that he himself "didn't actually keep a copy of it". In addition, all his records in relation to the Spring Street transaction had since been destroyed.
CONTENTIONS AND SUBMISSIONS OF THE PARTIESMr Cameron submitted that both properties were purchased by Mr and Mrs Georgas to be held in trust for the benefit of their children. The Trust Deed gave clear power for the trustees to acquire property.
Mr Cameron submitted that the oral evidence of Mr Georgas was that he had always treated both properties as being owned by the Trust – evidence that was corroborated by his adviser (Mr Polichronis) who had assisted Mr Georgas with preparing his tax returns.
Mr Cameron acknowledged that some copies of the tax returns before the Tribunal were unsigned. However, the oral evidence of Mr Polichronis was that the originals of the tax returns were always signed by Mr Georgas before they were lodged with the tax office.
Mr Cameron contended that it was a significant fact that the 1986/87 Income Tax Return for the Trust (T2 Folio 132) was signed by Mr Georgas and that it disclosed the name of the trust estate as the A, G, B, J Georgas Trust – the initials of their four children, the beneficiaries of the Trust. Of further significance was that this tax return, at Item 5, specified Spring Street, West End as the property that gave rise to the income derived by the Trust. Subsequent copies of income tax returns for the Trust clearly identified, according to documents annexed to them, that the Spring Street and Cleveland Street properties were the source of income for the Trust.
Mr Cameron contended that it was not a correct statement of the law, in the context of this application for review, that Mr Georgas could not rely on oral evidence as to the creation of the Trust. It was his contention, that given that Mr Georgas had in his tax returns stated that both properties were the source of income for the trust, as well as declaring to others in the past that both properties were held by his wife and himself in trust for the benefit of his children, any argument that, in the absence of sufficient writing, their children could not prove the existence of the Trust was incorrect. Any action by the their children to prove the existence of the Trust would require Mr and Mrs Georgas to plead the Statute of Frauds, but the law of equity would not allow the Statute of Frauds to be used, in itself, as an instrument of fraud.
Mr Cameron submitted that Mr Georgas as Trustee of the Trust could declare the Trust, and did so, by completing his personal income tax returns and the income tax returns for the Trust. In each year, Mr Georgas had declared the income for the two properties.
Mr Cameron states that the Trust came into existence on 1 August 1978. It was his contention that declarations by Mr and Mrs Georgas, for a long period of item, as can be deduced from their oral evidence before the Tribunal, indicated that the Trust was not a "recent invention".
Mr Cameron submitted that the first declaration of the Trust was made to their Solicitor at that time (Mr Anthony) as well as to their tax adviser (Mr Polichronis) in 1978. Mr Cameron then referred to Mr Anthony's evidence by making the following submission:
"Look, I clearly remember documents being signed. I can't remember the exact documents. It's a long time ago, but I specifically remember Mr Georgas. He gave his reason as to why he remembers it, and he says that it was in effect his practice, ordinary practice, to have a declaration to trust executed by the intending purchaser." (Transcript p 13)
Mr Georgas had also declared that the Spring Street property was Trust property held upon trust for the benefit of their children. Later, a similar declaration was made in respect of their Cleveland Street property.
Mr Cameron further submitted that declarations of the trust were made by Mr Georgas, as Trustee of the family Trust, when he completed his personal income tax returns and income tax returns for the Trust. Mr Cameron contended that Mr and Mrs Georgas had in effect declared to the Commissioner of Taxation the trust property and that the trust earned the income derived from that property. Consequently, he submitted that "they are prevented from departing from those statements. They can't undo them. The Court will hold them to what they have told the revenue [department]".
Mr Cameron also submitted that further corroborative evidence of the Family Trust could be adduced in that the Cleveland Street property had the ABN number of the Trust.
In addition, Mr Cameron contended that the following statement in appeal documents lodged by Mr Georgas with the SSAT (T50 Folio 228, 1 May 2001) wherein Mr Georges stated:
"The family trust run by myself and my wife own the real estate from which we derive the income. We do not own the business. It is owned by the trust'.
would be sufficient to comply with the statutory requirements for writing.
Mr Cameron contended that the evidence of Mr Anthony had indicated that a declaration of trust, that the Spring Street property was held upon trust for the four children of Mr and Mrs Georgas, had been completed at the time of the purchase of the Spring Street property. This document was later given to Mr Georgas but could not be now produced to the Tribunal, other than to indicate the contents of a lost document.
Mr Cameron submitted that on all the evidence before the Tribunal, Mrs Georgas had only received distributions from the Trust income on two occasions. However, whatever money she received had been spent on their children.
Mr Kanowski submitted that Mr and Mrs Georges were the registered proprietors of two properties (Spring Street, West End; Cleveland Street, Stones Corner) which had been valued at $550,000. This value was greater that the statutory threshold value for assets of $189,500 to receive a full pension entitlement. It was also greater that the maximum threshold of $410,000 on which a part pension could be paid.
Mr Kanowski submitted that both properties should be assessed as assets of Mr and Mrs Georgas unless it could established that they held no beneficial interest in the properties.
It was Mr Kanowski's contention that both properties were registered in the name of Mr and Mrs Georgas without any reference to the Trust. The only contract of sale that had been produced was the contract for the Cleveland Street property. However, it made no reference to Mr and Mrs Georgas purchasing the property in their capacity as trustees. In addition, Mr Kanowski referred to correspondence between Mr Geogas' solicitor and Centrelink about the properties, in which the solicitor stated;
"When purchasing the properties the particular Lawyer had an option of disclosing the Trust or not disclosing the Trust on the Title and it appears that he elected not to disclose the Trust" (T20 Folio 112)
Mr Kanowski contended that the various leases in respect of the Cleveland Street property gave no indication that the lessors had acted in the capacity of trustees (see T51 Folio 30; Exhibit D). A further lease merely had an oblique reference to the Trust by listing an ABN. The business number was assigned to Mr and Mrs Georgas as Trustees (T31 Folio 165, T30 Folio 164).
Mr Kanowski acknowledged the SSAT conclusion that Mr and Mrs Georgas viewed the Trust money as their own quite interchangeably (T2 Folio 8). It was his contention that notwithstanding that Mr and Mrs Georgas owned two valuable properties, there was a lack of full and proper records to support their assertion that they held no beneficial interest. For example, a single balance sheet listing Trust property or a single schedule of Trust property had never been produced.
Mr Kanowski contended that although the Spring Street property had been owned by Mr and Mrs Geogas for almost 23 years, they were unable to point to any entry in the Trust bank book (Exhibit A) that could be identified as a deposit for rent received. In addition, he contended that the bank book was in the name of Mrs Georgas only (as Trustee for their children) and was an incomplete record for the period July 1983 to November 2001. Accordingly, it was Mr Kanowski's contention that little evidentiary weight should be given to the bank book records as they did not provide any certainty for decision-making.
Mr Kanowski contended that the property or rights to the Trust were uncertain. He submitted that Mr and Mrs Georgas had not clearly identified which of the powers under Clause 9 of the Trust of Settlement had been exercised in order to make the Spring Street and Cleveland Street properties part of the Trust Fund.
In relation to the acquisition of the Spring Street property, he submitted that Mr Georgas could only point to the establishment of the Trust with the intention of holding the property on Trust for the children. However, he submitted that intention, alone, was insufficient with respect to the creation of an interest in land.
Mr Kanowksi submitted that whilst the children were the primary beneficiaries of the Trust, there were a number of other beneficiaries including Mr and Mrs Georgas, established under the Trust Deed in 1978. Occasional distributions were made to Mrs Georgas, but no distributions had been seen for Mr Georgas.
Mr Kanowski contended that as Mr and Mrs Georgas had purchased the Spring Street property mainly with their own funds, they had surrendered all but the legal title.
However, no written documents had been produced and signed by both Mr and Mrs Georgas, for the Spring Street property, and so it could not be considered as part of the Trust Fund.
Mr Kanowski further contended that Mr Georgas as one of only two owners of real property, could not declare a Trust over property jointly owned with another person. The statutory requirement for writing to create an interest in land would need to be signed by both Mr and Mrs Georgas.
Mr Kanowski challenged Mr Georgas' statement that the purchase of the Cleveland Street property was, in part, contributed to by a mortgage or the Trust property at Spring Street as well as "funds obtained from the sale of the Trustee's property at Raven Street..".
He contended that no documentary evidence of the mortgage had been produced. Furthermore, the Raven Street property belonged to Mr and Mrs Georgas personally, and was not held by them as Trustees (T2 Folio 4).
With respect to the Cleveland Street property, Mr Kanowski submitted that it had been purchased by Mr and Mrs Georgas with their own funds. However, there was no written document to confirm that they had disposed of their beneficial interest in the property. Moreover, the Contract of Sale for the Cleveland Street property gave no indication, other than Mr and Mrs Georgas had acted in their personal capacity. That is, the property did not form part of the Trust Fund.
Mr Kanowski contended that the tax returns did not unequivocally establish that the Spring Street and Cleveland Street properties formed part of the Trust Fund. None of the tax returns actually declared either property to be Trust property. Rather, they were consistent with a mere assignment of income to the Trust from these sources.
With respect to express trusts, oral evidence and the issue of legislation requirements being used as an instrument of fraud, Mr Kanowski contended that the question of fraud did not arise in the factual circumstances of this case. It was Mr and Mrs Georgas "desire to assist their children which they say caused them to set up their Trust and to view the properties as being part of it…it would be hard to see how that could be fraud when the children are purely volunteers in the situation".
Mr Kanowski concluded with the submission that whilst the oral evidence of Mr and Mrs Georgas may have revealed an intention that the properties were held in trust, this evidence only supplemented the writing upon which Mr Georgas had relied upon.
CONSIDERATION OF THE ISSUESThe objective of the Tribunal is to review administrative decisions, not only on their merits but in accordance with the law at all times. The Social Security Act prescribes an assets test, which determines the rate of payment of Social Security entitlement.
The problems associated with the administration of the assets test is clearly illustrated in the following observations made by the Tribunal Re Follone and Secretary, Department of Social Security (1987) 11 ALD of 477 of 481:
"Administration of the assets test legislation is an extraordinarily complex and difficult task. It is important for all who might be subject to its application, that the assets test be administered fairly. It can only be administered fairly by the respondent where clear evidence is submitted, by those who would seek to avoid or reduce its application, that property or money which has all the appearance of being in their hands has in fact legitimately passed to someone else.
It is possible, in the context of family life, to elevate all kinds of understandings and expectations between family members into agreements which might be claimed legitimately to have divested pension recipients of whole or part of their assets. If, through the Tribunal's interpretation of the assets test legislation, it were made possible to allow such expectations and understandings to be so elevated, the respondent would be in an impossible position in its attempts to dispute the legitimacy of dispositions of assets, as part of its duty to ensure fair and equal application of the assets test formula to all who might fall within it."The Tribunal has adopted the following approach in applying the legal authorities to the issues to be decided in this application for review:
(a)that a trust may be created in writing or orally. However, s 11 of the Property Law Act requires the trust so created to be manifested and proved by writing signed by the person creating the trust (Kauter's case; James' case);
(b)that oral evidence must clarify and not augment the writing (James' case);
(c)that there may be some overlapping between paragraph (a) and paragraph (b) of s 11 of the Property Law Act, but nevertheless such writing as is required by s.11 must be seen to exist (Adamson's case);
(d)that any informal writing may stand as evidence of the existence of the trust (James' case); and
(e)that evidence in writing of the existence of a trust is required to contain all of the terms of the trust (Ryder's case) with the declarant divesting himself of the properties and constituting himself a trustee of the land for the other party (Garret's case);
The Tribunal has carefully considered all of the oral evidence and written documentation and exhibits before the Tribunal.
The evidence of Mr Georgas is that he has orally declared over a period of time that it was his intention that the two properties were owned by the Family Trust. This evidence was corroborated by his tax adviser (Mr Polihronis) and the solicitor who did the conveyancing of the Spring Street property in 1978 (Mr Anthony).
Mr Georgas in completing the income tax returns for the Trust property has declared that "the Trust earnt the income derived from that property. Consequently they are prevented from departing from those statements" (see para 53).
Further documents relied on by Counsel for Mr Georgas were that the Cleveland Street property had the ABN numbers of the Trust, that the Trust Bank Account held by Mrs Georgas, and Mr Georgas' statement in his SSAT application for review.
The Tribunal concludes, that notwithstanding the existence of these documents, there is no written evidence before the Tribunal that contains all of the terms of the Trust - namely the beneficiaries, the trust properties and the nature of the Trust, and so confirm that Mr and Mrs Georgas had beneficially disposed of their interest in both Trust properties.
With respect to the Trust Bank Account, Counsel asserted the entries represented proof that Mr and Mrs Georgas held no beneficial interest in the two properties. However, the Tribunal concludes that there are no positive, proved facts arising from the oral evidence upon which, from the bank account entries, over time, such an inference could be established. Rather, the evidence before the Tribunal, of the purpose that moneys were drawn out or paid into the bank account were uncertain and so any assertions made would be mere conjecture Re Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 at 169.
The Tribunal also considers that the question of fraud does not arise in this case. There is nothing to suggest that the question of fraud arose with respect to the oral declarations made by Mr Georgas, over time, in relation to the Family Trust.
Based on all of the above findings, the Tribunal concludes that there is insufficient evidence before the Tribunal upon which it can be established, on the balance of probabilities, that Mr Georgas made a formal declaration of Trust in writing as evidence that it was his clear intention to divest himself of the beneficial interest in the Spring Street and Cleveland Street properties; in addition, to constitute Mr Georgas as trustee of the land for his four children.
Whilst the conclusion may seem harsh, it would be more correct to call it an unfortunate outcome. The legislation gives the Tribunal no option than to arrive at the above conclusion. The Tribunal makes the observation that the outcome is unfortunate in that Mr Georgas had received professional taxation and legal conveyancing assistance, at different periods of time, and so it may have been possible to have avoided this end point. That is, by taking the necessary steps, at law, to divest himself of both properties and to constitute himself as trustee – as opposed to informal declarations of intent.
For all of the above reasons, the Tribunal affirms the decision under review.
I certify that the 88 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed: .....................................................................................
AssociateDate of Hearing 18 February 2002
Date of Decision 20 May 2002
Counsel for the Applicant Mr R Cameron
Solicitor for the Applicant H Drakos and Company
Solicitor for the Respondent Mr P Kanowski (Departmental Advocate)
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