Heather K Haig Executor of The Estate of Joy Garvin De Vos and Secretary, Department of Health and Aged Care
[2023] AATA 1988
•10 July 2023
Heather K Haig Executor of The Estate of Joy Garvin De Vos and Secretary, Department of Health and Aged Care [2023] AATA 1988 (10 July 2023)
Division: GENERAL DIVISION
File Number(s): 2018/7638
Re:Heather K Haig Executor of The Estate of Joy Garvin De Vos
APPLICANT
AndSecretary, Department of Health and Aged Care
RESPONDENT
DECISION
Tribunal:The Hon. Matthew Groom, Senior Member
Date:10 July 2023
Place:Melbourne
The decision under review is set aside and the matter is remitted back to the respondent for a recalculation of Mr de Vos Senior’s assets as at the relevant date in accordance with the Tribunal’s findings.
..........[sgn]..............................................................
The Hon. Matthew Groom, Senior Member
Catchwords
Application for Review – Health and Aged Care – Estate – Beneficial Interest – Equitable Claim – Assets Test – Income Test – Secondary Residence – Residential and Aged Care – Decision Under Review Set Aside
Legislation
Aged Care Act 1997 (Cth)
Social Security Act1991 (Cth)Veterans’ Entitlements Act 1986 (Cth)
Cases
Re Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787
Watts and Repatriation Commission (1986) 11 ALN N 225Repatriation Commission v Tsourounakis and Another [2007] FCAFC 29
Secondary Materials
Subsidy Principles 2014
REASONS FOR DECISION
The Hon. Matthew Groom, Senior Member
10 July 2023
INTRODUCTION
This matter involves an application for a review of the decision of a Centrelink review officer dated 6 November 2018 affirming an earlier decision of a delegated officer of Centrelink in relation to a combined assets and income assessment for the purpose of residential aged care subsidies in respect of the late Mr Joy de Vos (Mr de Vos Senior).
The application was initially lodged by Mr de Vos Senior’s daughter, Ms Heather Haig (Ms Haig). Subsequently, Mr de Vos Senior passed away and the application was continued by Ms Haig, as the Executor of the Estate of Mr de Vos Senior.
BACKGROUND
On 7 June 2018, Centrelink wrote to Mr de Vos Senior’s residential aged care provider advising that Mr de Vos Senior had not provided his assets and income information for the purpose of residential aged care. The letter notes that if he does not provide the information he can be asked to pay the maximum amount of fees and payments.
On 13 June 2018, Ms Haig, acting on behalf of Mr de Vos Senior under power of attorney, lodged a request for a combined assets and income assessment with Centrelink. In the request, Centrelink was advised that Mr de Vos Senior had a property in addition to his home and that the property was located in Moorabbin, Victoria (Moorabbin property).
In a submission provided by Ms Haig in support of the request, it was claimed that the Moorabbin property should be excluded as a means tested asset for the purpose of calculating Mr de Vos Senior’s combined assets and income on the basis that the Moorabbin property is subject to an enduring interest which was granted by Mr de Vos Senior to Ms Haig in 1991.
There is no dispute that Mr de Vos Senior was the legal owner of the property at all relevant times, although he had previously held the legal title jointly with his former wife, Ms Trixie de Vos.
When Mr de Vos Senior passed away he left the Moorabbin property to Ms Haig in his Will. Ms Haig continues to reside in the property.
Ms Haig claimed in her submission that she had continued to be a permanent occupant of the residential home situated at the Moorabbin property since 1991. The submission sets out further details of her claim as follows:
In 1987 Haig was conducting a clothing retail business in Keysborough.
Towards 1990 the business began to falter due to adverse economic conditions and an exponential increase in operating cost.
The unfavourable conditions resulted in Haig having to close business operations. Haig was also forced to sell her residential accommodation located in Keysborough to meet outstanding business and bank loan liabilities.
In 1991 the Applicant offered Haig the opportunity to move into the Property and live there on a permanent basis.
The undertaking between the parties was that Haig would provide capital to modify the house to enable her to live at the Property on a permanent and ongoing basis.
The Applicant granted an ongoing interest in the Property to Haig.
Haig provided capital for the modifications to the dwelling, commenced living at the property and continues residence until the present day.
Having received the interest in the Property, Haig on a continuing basis met the recurrent costs of the Property and provided support to her parents who also resided at the Property.
In March 1996 the spouse of the Applicant passed away suddenly and left the Applicant in a devastated emotional and psychological state.
Haig provided support and comfort to her bereaved father (Applicant) and ran the household including recurrent and other costs related to maintenance and repair of the premises.
On 20 August 2011 the Applicant remarried and subsequently moved into the premises owned by his wife (Ms Marlene Nicholas).
Following the marriage, the Applicant prepared a new Will as the previous Will was rendered invalid as a consequence of his marriage.
The Will reflected a bequest of the entire Property to Haig. This bequest clause was also present in the previously made Will of the Applicant.
Haig has continued to live at the Property. This fact is consistent with the claim that an interest was provided in the Property by the Applicant.
Further the Applicant has on a regular basis reinforced to Haig the continuity of her interest in the Property. The Applicant is able to adduce statements from independent witnesses to support their knowledge of the existence of a grant of interest by the Applicant to Haig.
In addition to the written submission, Ms Haig also provided additional supporting documentation in respect of her claim including:
(a)a statutory declaration from Mr Anthony Manning;
(b)a statutory declaration from Ms Jeanette Fernandes;
(c)a statutory declaration from Mr Cedric de Vos;
(d)a statutory declaration from Mr Johann de Vos;
(e)a letter from Joseph Rose, Solicitor, to Ms Haig dated 6 June 1990 in relation to the sale of her Keysborough home and evidence of finances that were used to fund the renovations at the Moorabbin property in 1990/91.
On 11 July 2018, a departmental sub-delegate wrote to Ms Haig requesting further information including a copy of the title deed to the Moorabbin property evidencing that Ms Haig was given a life interest in the property.
On 23 August 2018, a departmental sub-delegate determined that Mr de Vos Senior’s combined assets and income totalled $490,586 (being half of the combined total of Mr de Vos Senior’s and his then wife’s assets) and including an amount of $450,000 in respect of the Moorabbin property (being again half of the estimated value of the property).
On 24 December 2018, an application for review was lodged at the Administrative Appeals Tribunal (AAT), which is the matter presently before this Tribunal.
After a number of interlocutory matters were attended to a substantive hearing in respect of the matter was held on 14, 15 and 18 October 2021.
LEGISLATIVE PROVISIONS
The relevant legislative provisions in respect of this matter are contained in:
(a)the Aged Care Act 1997 (Act);
(b)the Social Security Act 1991 (SS Act); and
(c)the Subsidy Principles 2014 (Subsidy Principles).
Section 44‑26A of the Act provides as follows:
The value of a person’s assets
1) Subject to this section, the value of a person’s assets for the purposes of section 44‑22 is to be worked out in accordance with the Subsidy Principles.
(2) If a person who is receiving a *service pension, an *income support supplement or a *veteran payment has an income stream (within the meaning of the Veterans’ Entitlements Act 1986) that was purchased on or after 20 September 2007, the value of the person’s assets:
(a) is taken to include the amount that the Secretary determines to be the value of that income stream that would be included in the value of the person’s assets if Subdivision A of Division 11 of Part IIIB of the Veterans’ Entitlements Act 1986 applied for the purposes of this Act; and
(b) is taken to exclude the amount that the Secretary determines to be the value of that income stream that would not be included in the value of the person’s assets if Subdivision A of Division 11 of Part IIIB of the Veterans’ Entitlements Act 1986 applied for the purposes of this Act.
(3) If a person who is not receiving a *service pension, an *income support supplement or a *veteran payment has an income stream (within the meaning of the Social Security Act 1991) that was purchased on or after 20 September 2007, the value of the person’s assets:
(a) is taken to include the amount that the Secretary determines to be the value of that income stream that would be included in the value of the person’s assets if Division 1 of Part 3.12 of the Social Security Act 1991 applied for the purposes of this Act; and
(b) is taken to exclude the amount that the Secretary determines to be the value of that income stream that would not be included in the value of the person’s assets if Division 1 of Part 3.12 of the Social Security Act 1991 applied for the purposes of this Act.
(4) The value of a person’s assets is taken to include the amount that the Secretary determines to be the amount:
(a) if the person is receiving a *service pension, an *income support supplement or a *veteran payment—that would be included in the value of the person’s assets if Subdivisions B and BB of Division 11 and Subdivision H of Division 11A of Part IIIB of the Veterans’ Entitlements Act 1986 applied for the purposes of this Act; and
(b) otherwise—that would be included in the value of the person’s assets if Division 2 of Part 3.12 and Division 8 of Part 3.18 of the Social Security Act 1991 applied for the purposes of this Act.
Note 1: Subdivisions B and BB of Division 11 of Part IIIB of the Veterans’ Entitlements Act 1986, and Division 2 of Part 3.12 of the Social Security Act 1991, deal with disposal of assets.
Note 2: Subdivision H of Division 11A of Part IIIB of the Veterans’ Entitlements Act 1986, and Division 8 of Part 3.18 of the Social Security Act 1991, deal with the attribution to individuals of assets of private companies and private trusts.
(5) If a person has paid a *refundable deposit, the value of the person’s assets is taken to include the amount of the *refundable deposit balance.
(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) the *partner or 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.
(7) 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 to the extent that it exceeded the *maximum home value in force at that time.
(8) The value of the assets of a person who is a *member of a couple is taken to be 50% of the sum of:
(a) the value of the person’s assets; and
(b) the value of the assets of the person’s *partner.
(9) A reference to the value of the assets of a person is, in relation to an asset owned by the person jointly or in common with one or more other people, a reference to the value of the person’s interest in the asset.
(10) A determination under paragraph (2)(a), (2)(b), (3)(a) or (3)(b) or subsection (4) is not a legislative instrument.
Section 47(1) of the Subsidy Principles provides as follows:
Working out care recipient’s means tested amount—value of assets
(1) For subsection 44‑26A(1) of the Act, the value of a person’s assets is the value worked out in accordance with Division 1 of Part 3.12 of the Social Security Act, reduced by any compensation payments received by the person under:
(a) the Compensation (Japanese Internment) Act 2001; or
(b) the Veterans’ Entitlements (Compensation—Japanese Internment) Regulations 2001; or
(c) Part 2 of the Veterans’ Entitlements (Clarke Review) Act 2004; or
(d) Schedule 5 to the Social Security and Veterans’ Affairs Legislation Amendment (One‑off Payments and Other 2007 Budget Measures) Act 2007.
Section 1121 in Division 1 of Part 3.12 of the SS Act provides as follows:
1121 Effect of charge or encumbrance on value of assets
(1) If there is a charge or encumbrance over a particular asset of the person, the value of the asset, for the purposes of calculating the value of the person’s assets for the purposes of this Act (other than Division 1B of Part 3.10), is to be reduced by the value of that charge or encumbrance.
Note: This section does not apply to an asset to which section 1121A (primary production assets) applies.
(1A) Subsection (1) does not apply to a charge that arises under section 1138.
Note: See subsection (5) for a charge that arises under section 1138.
(2) Subsection (1) does not apply to a charge or encumbrance over an asset of a person to the extent that:
(a) the charge or encumbrance is a collateral security; or
(b) the charge or encumbrance was given for the benefit of a person other than the person or the person’s partner.
(3) Subsection (1) does not apply to a charge or encumbrance over assets that are to be disregarded under section 1118.
(3A) Subsection (1) does not apply to an asset that is an asset‑tested income stream (long‑term).
(3B) Subsection (1) does not apply to an asset that is a partially asset‑test exempt income stream (within the meaning of section 1118).
(3C) Subsection (1) does not apply to an asset that is an asset‑tested income stream (lifetime).
(4) If:
(a) there is a charge or encumbrance over assets; and
(b) the charge does not arise under section 1138; and
(c) the assets consist of assets whose value is to be disregarded under section 1118 and other assets;
the amount to be deducted under subsection (1) is:
(5) If:
(a) a person is or was participating in the pension loans scheme; and
(b) either:
(i) the person’s real assets are subject to a charge under section 1138; or
(ii) if the person is a member of a couple—the couple’s real assets are subject to a charge under section 1138;
then the value of those real assets, for the purposes of calculating the value of the person’s assets for the purposes of this Act (other than Division 1B of Part 3.10), is to be reduced by the amount of the debt owed by the person under section 1135 because of that participation.
Note: If there are other charges or encumbrances over any of those real assets, there may be a further reduction under subsection (1) in the value of those assets.
(6) This section has effect subject to sections 1145A to 1157 (special residences).
ISSUES
The issues for determination by the Tribunal are:
(a)What if any interest did Ms Haig have in the Moorabbin property at the time of the original combined assets and income assessment determination (relevant date); and
(b)To the extent Ms Haig had an interest in the property, how does that interest affect Mr de Vos Senior’s combined assets calculation for the purpose of Division 1 of Part 3.12 of the SS Act?
CONSIDERATION
A series of written submissions were provided on behalf of the applicant for the purpose of the hearing. In those submissions it was claimed that Ms Haig had acquired an interest in the Moorabbin property as a consequence of a series of agreements entered into with her father, Mr de Vos Senior, in 1991, 2004/2005 and 2008. The claims in respect of those purported agreements can be summarised as follows:
(a)The purported 1991 agreement (first agreement)
Ms Haig claims to have acquired an initial interest in the property in 1991 by making a payment of $48,000 which was then applied towards renovation costs for the property. It is claimed that the $48,000 amount was derived from the sale of Ms Haig’s home in Keysborough, Victoria. It is claimed that at the time of the agreement the Moorabbin property was valued at $105,000 and that therefore Ms Haig’s capital contribution represented an interest in the property equating to 45.71%. It is claimed that the purpose of the renovation was to create a residential space at the Moorabbin property for Ms Haig and her daughter to use as their permanent home. It is claimed that this arrangement was entered into by way of agreement between Ms Haig, Mr de Vos Senior and his then wife, Esme Trixie de Vos. It is claimed that the wider family and close friends were aware of and agreeable to the arrangement. It is claimed that Ms Haig’s motivation was to secure a home to live in after encountering financial difficulties in connection with her retail fashion business that had forced her to sell her home and use a significant part of the proceeds to pay off her debt. It is claimed that part of Mr de Vos Senior’s motivation was to help his daughter out and ensure she had a house of her own. It is claimed that under the arrangement, Ms Haig would acquire further interests in the property over time as and when further funds became available. It is claimed that as part of the arrangement, Ms Haig would meet a proportion of the recurrent operating and maintenance costs of the property.
(b)The purported 2004/2005 agreement (second agreement)
Ms Haig claims to have acquired a further interest in the Moorabbin property by making an additional capital contribution in accordance with a further agreement she claims to have reached with Mr de Vos Senior in around 2004/2005. Ms Haig claims that in accordance with the agreement she was to make a further capital contribution by way of a series of instalments totalling $198,314 to be paid in accordance with her father’s instructions. In return, Ms Haig would acquire an increased interest in the property proportionate to the value of the property at the time. Ms Haig claims that she inherited the funds for the payments as part of a bequest from her deceased Aunt’s Estate. The funds from the bequest were acquired by Ms Haig in 3 instalments, the first commencing on about August 2004 (although there has been some inconsistency with regard to this precise date). Ms Haig claims Mr de Vos Senior’s instructions were that the payments were to be made into nominated accounts overseas to be applied towards activities of a newly established charity named “Home of Joy” based in Sri Lanka of which Mr de Vos Senior was a founder. The relevant activities are claimed to have included the establishment of the charity including acquiring land, erecting buildings suitable for the care and welfare of underprivileged children in Sri Lanka, as well as day-to-day operations. Ms Haig claims she subsequently made the payments in accordance with the agreement. It is claimed that at the time of the second agreement the Moorabbin property was valued at approximately $310,000 and that the contributions made by Ms Haig were equal to 63.97% of the value of the property.
It is claimed on behalf of the applicant that the combined effect of the capital contributions made pursuant to the two agreements equates to Ms Haig having acquired a beneficial interest in the property equal to greater than 100% of its value (the combined contributions from the first and second agreements having equalled approximately 110% of the value of the property). The applicant contends that, as such, the Moorabbin property should not be treated as Mr de Vos Senior’s property for the purpose of the assets calculation and should be excluded from that calculation.
In subsequent written submissions, it was further claimed on behalf of the applicant that Ms Haig and her father had entered into a third agreement whereby she would provide further amounts of money to fund the recurrent costs of the ‘Home of Joy’ charity and that these payments would be treated as an additional capital contribution to further increase Ms Haig’s interest in the Moorabbin property (third agreement). It was claimed in written submissions on behalf of the applicant that these payments were made on a monthly basis and amounted to approximately $12,000 per annum and that by 31 December 2010 Ms Haig had contributed $36,000 which had the effect of increasing her interest in the property by a further 7% (this is based on a claimed valuation of the property as at 2009 of $500,000).
The applicant contends that consistent with the agreements Ms Haig had with her father she has lived in the property since 1991 and contributed to maintenance and operational costs associated with the property. Ms Haig claims that from 2011 she has met all ongoing costs of the property.
The applicant submitted a number of documents in support of the claims including:
(a)Statement of Facts, Issues and Contentions dated 16 January 2020
(b)AAMI Insurance Letter 6 August 2002
(c)RACV Membership Renewal Letter
(d)AAMI Home Insurance Letter 13 October 2003
(e)City of Kingston Rate Payments 2003/2004
(f)South East Water Letter 19 October 2005
(g)AGL Gas Account Summary
(h)Rates, Valuation and Fire Service Property Levy 29 August 2014
(i)South East Water Account Summary 20 January 2015
(j)Joseph Rose Barrister and Solicitor Letter 6 June 1990
(k)Statutory declarations from Mr Cedric de Vos, Mr Johann de Vos, Ms Jeannette Fernandes, Mr Anthony Maning and a statement in support of the claim by Ms Heather Haig.
(l)LMW Property Valuation Report
(m)Floor Plans/Details of Renovations Sketch
(n)Evidence of payments made by Ms Haig:
16 Bank statements
2 details of payments
Certificate of incorporations for overseas Charity
Remittance advice- Kapruka Pty Ltd
(o)Further written Submissions (Undated)
(p)Sworn statements by Ms Jeannette Fernandes, Ms Raquel Formosa, Mr Geoffrey de Worsop, Dr Doreen Jayamaha, Mr W.R.L. Fernando, Mr Anthony Maning, Ms Heather Haig, Mr Cedric de Vos and Mr Johann de Vos.
(q)Applicant’s further evidence provided on 7 February 2020
(r)Applicant’s further submissions provided on 7 February 2020
(s)Evidence of Building Costs (quotations and related expenses)
(t)Last will and Testament of Joy Garvin de Vos
(u)Advertisement Details (re Probate application) 1 October 2020
(v)Written submissions and evidence provided on 9 October 2020
(w)Probate Granted (Joy Garvin de Vos) 2 January 2021
(x)Response to Respondent’s Statement of Facts, Issues and Contentions 9 May 2021
(y)Further submissions dated 24 May 2021 together with attachments
(z)AMP General Insurance Limited Policy Schedule
The applicant provided copies of statutory declarations of several friends and family members who claimed to have knowledge of the understanding Ms Haig had with her father in relation to the Moorabbin property including:
Cedric de Vos statutory declaration dated 14 June 2018 which provides as follows:
Regarding the property situated at [Moorabbin property]:
The above said property was built by my parents in the late· 1960's. It has been the de Vos family home since then.
In 1991 my sister, Heather K. Haig moved into the property then occupied by our parents on the understanding that the family home would be given to her. Heather invested in the home financially by providing all the funds to renovate and extend the size of the home to provide accommodation for her and her daughter. Since then she has lived there and made it her permanent home.
Consequently my parents made a decision that the family home should be given to Heather. They explained their decision to me and my brother, Johann de Vos to ensure that we clearly understood their wishes, regarding their estate. We their sons would not be inheriting any share/portion of the home at [Moorabbin property], Moorabbin, Vic. 3189. That in fact, Heather will be the sole beneficiary of their family home in Moorabbin based on her financial investment and continuing contributions and willingness to stay there permanently and care for their needs. We understood and were pleased to know that our sister was well provided for, as we both had our own homes.
After my mother's death in 1996, dad remarried in 2011 and went to reside in the home of his 2nd wife. Heather has continued to upkeep the home in Moorabbin and has had financial responsibility for all matters relating to the property, as any property owner would do.
Jeanette Fernandes statutory declaration dated 14 June 2018 which provides as follows:
I have known Joy de Vos and his late wife Trixie de Vos for a period of over forty years.
I am aware that around 1991 the property situated at [Moorabbin property], Moorabbin, VIC 3189 was the subject of a grant of interest to Heather K. Haig the daughter of Joy de Vos.
The interest in the property was granted as Ms. Haig had lost her residence due to a forced sale as a consequence of a business that had to cease operation due to adverse economic conditions. The property was offered to be her home indefinitely.
I also understand that Mr Joy de Vos has in his Will left the entire property at [Moorabbin property] to Ms Heather Haig, It was his and Trixie's wish that Heather should have the family home for herself as both their sons already had homes of their own.
I am aware of this as Mr de Vos has actually told me of this provision in his Will. This has also been confirmed in conversations with Ms Haig.
I can state that Ms Haig has had continual residence at the property since 1991 and she has provided continual support (financial and emotional) to her father since the passing of his first wife, the mother of his three children.
Johann de Vos statutory declaration dated 15 June 2018 which provides as follows:
I am making a declaration with respect to the [Moorabbin property].
I am aware that the owner of the property Mr Joy de Vos made a grant of interest of this property to his daughter Ms Heather K Haig in 1991.
This grant was for the life time of Ms Haig and Mr de Vos also made provision in his Will for the property to pass to Ms Haig as part of his Estate. That clause is also present in his current Will.
This grant to interest was made after Mr Joy de Vos consulted with all members of his immediate family including myself.. There was complete agreement amongst those consulted about the making of the grant and the subsequent bequest of the property to Ms Heather Haig as a part of the Estate of Mr Joy de Vos
Anthony Manning statutory declaration dated 15 June 2018 which provides as follows:
I have known Mr Joy de Vos and his whole family since March 1996. Regarding the property situated at [Moorabbin property]: I have been told by Joy on different occasions that he has given Heather Haig, his daughter an ongoing interest in the property since she had decided to return to the family home and make it her permanent home.
He was pleased to have her living with him at the family home especially as he had lost his wife suddenly. Her presence and support, both emotionally and financially helped him through the loss of his wife of 40 years.
He told me that Heather had funded all the renovations to the property and that the property was given to her in his will. As they are a very close knit family and trust was not an issue, they did not think it necessary to go through the process of changing the name on title to the property as she had been named as the beneficiary of the property in his will.
Ms Haig gave evidence at the hearing. Ms Haig had also provided a written statement in support of the claim as well as a further sworn statement dated 12 January 2020. In her evidence Ms Haig told the Tribunal that:
(a)Prior to 1991 she owned and operated a fashion retail business that ran into financial difficulty and consequently she decided to liquidate her assets. As a part of that process Ms Haig sold her home and after the repayment of debts was left with an amount just under $50,000 from settlement.
(b)At that time she was approached by her father Mr de Vos Senior and his wife Ms Esme Trixie De Vos and they put a proposal to her that she would gain a financial interest in the Moorabbin property by investing funds with them for the purpose of doing renovations and extensions to their home. Ms Haig stated that she accepted the proposal. She told the Tribunal that her parents were interested in the increase in the value of the property the extension would achieve and in exchange for the funds they promised her a proportionate percentage interest in the value of the property. She told the Tribunal that it was agreed that based on the valuation of the property at that time her contribution would equate to “more than 46, 47% or something like that”. Ms Haig told the Tribunal that the arrangement was entered into with her parents prior to the renovations being undertaken and prior to her moving in. Ms Haig told the Tribunal that she did not arrange for a valuation to be done at the time but she recalls enquiring with property agents and being told the property was valued at around $105,000. She told the Tribunal that they took the valuation they had been provided and the amount she had contributed and worked out a specific percentage of her interest in the property. She told the Tribunal that they wrote the percentage down at the time and put the piece of paper away. It was filed with all of the other papers that her father had. She told the Tribunal that after her mother’s death her father had gone through all of their cupboards and all of the documents and torn the documents up because he was so grief stricken.
(c)The renovations to the Moorabbin property involved some updates and an extension which resulted in extra living space and facilities including a bedroom, a living room a kitchen and toilet facilities. She told the Tribunal it was like self-contained accommodation.
(d)Ms Haig told the Tribunal that she was also motivated by a desire to help support her parents, noting that they were a very close family and very supportive of one another.
(e)Ms Haig moved into the property and she has resided in the property since.
(f)Ms Haig did not pay rent to her parents and gave evidence to the Tribunal that her parents did not want rent but that she did pay for other expenses including some recurrent costs and maintenance of the property.
(g)Ms Haig’s parents did not contribute financially to the renovations.
(h)The arrangement in respect of the first agreement was not written down. “We didn’t have a formal agreement about the monies that I had invested other than noting down the calculated percentage value of the contribution which we put onto a sheet of paper and put into the files”.
(i)Ms Haig told the Tribunal that she could have invested the remainder of the sale proceeds from her former home into buying another property and she had a job at the time so she was able to secure a mortgage but she decided that it would be better to invest in her father’s property because then there would be someone to look after her daughter when she was required to travel overseas for work.
(j)In cross examination Ms Haig told the Tribunal that in respect of the first agreement she did not have a direct discussion with her parents about being put in a father’s Will as the beneficiary of the Moorabbin property. She told the Tribunal that that is something that she was subsequently advised of after they had agreed to do it.
(k)Her parents had said to her going forward if you get the opportunity to have more funds to invest more than you can do that. Ms Haig told the Tribunal that when she came across more money she decided to take up the offer and invest again in the property.
(l)Ms Haig was bequeathed an amount of money in her late auntie’s Estate around 2004 and consequently she had substantial funds coming to her at that time. Initially she received in excess of $200,000. She told the Tribunal that she received the funds in a series of instalments. She told the Tribunal that her father approached her at this time and proposed that she invest by buying a greater interest in the Moorabbin property. She told the Tribunal that her father described to her his dream of establishing a charity in Sri Lanka. Her evidence was that her father put to her that she could provide funds for the establishment of the charity and in return she could acquire an additional interest in the property. Ms Haig told the Tribunal that she thought it was a good deal because the Moorabbin property was in a good area and its value would have increased. Ms Haig told the Tribunal that she knew that if she invested “in this property and in the future this will be better off for me, for my future, be that I am single person and I want to secure my future. So hence I decided to do that”.
(m)The second agreement was also not documented in any way “it was more of a verbal agreement”. Ms Haig told the Tribunal that she was travelling within Asia a bit time and that she had become involved with the group that was set up for the purpose of assisting orphans in South India. “That’s when my father approached me with the idea that he had to start up a foundation in Sri Lanka for underprivileged children. He asked me whether I would be willing to help get the charity established on his behalf”. Her father told her that if she was willing to do it he would be offering an extra share in the Moorabbin property. Ms Haig told the Tribunal that she could have just transferred the funds to her father but that he was not a good administrator and didn’t have her contacts and so she agreed to do it on his behalf. She told the Tribunal that her father instructed her to send the funds through from Australia to Sri Lanka on an as needs basis.
(n)Despite being the administrator Ms Haig told the Tribunal that her father was the founder and the charity was named in his honour. “Everyone knew that it was his project”. He was on a committee for the project but he wasn’t the chair, just a member. He assumed this role “between the years of 2008 to 2010 or 2011, my father, even before 2008; 2006, 2007, I think”. She told the Tribunal her father would travel to Sri Lanka with his partner during this period.
(o)When asked what were the details of the second agreement Ms Haig responded “the agreement was up to an amount-were assessed with the, what do you call it, the research, the sorry, I’m feeling a little bit -I’m trying to think of the right words. Excuse me, I feel a bit kind of blocked. Let me just think for a moment”.
(p)Ms Haig told the Tribunal “we had done some estimations prior, coming up to the period, as to what it might cost to do such a project and it was assessed as being in the vicinity of around $200,000… And so I had more than that money with me, more than $200,000. But we said-when my dad proposed it to me, he said, based on these evaluations and these guesstimations and, you know, forecast that we’ve collected - the cost of land, you know, staffing, whatever, all the components of this project, it may come up to, it could be $180,000, it could be $220,000. But let’s say $200,000 roughly. So would you be willing to invest $200,000 of your funds-around that, that was the circa, that was the approximate-and, you know, it may vary as we go along”.
(q)When asked how this related to the property Ms Haig responded “which property? The Moorabbin property?-Are you talking about the [Moorabbin property], the Moorabbin property?” Ms Haig then went on to say “yes, that was me basically giving my father $200,000- I’ll just say $200,000 in exchange for a further…” and then said “the agreement was that the amount that I invest, right, at that time, the amount, the accumulated total, which you will see on that chart that we have given you; that total will be represented as a percentage of the value of the property and that will then be my additional value interest in the property, putting aside already that I had the earlier interest in the property. So, therefore, the further interest would then be calculated as a percentage of my father’s percentage value of the property, the then value of the property, which we have given figures for as well. So I don’t know if that’s all clear”.
(r)When asked what additional percentage interest in the property she would secure as a consequence of the second agreement Ms Haig responded “well, the second transaction, we’ve got another paper for that, which is right in front of me but just from my memory. I think it comes to something like 60 something percent”. Ms Haig told the Tribunal that as a consequence of the second agreement she had acquired practically 100% of the property. Ms Haig told the Tribunal that she didn’t calculate the percentage interest she would secure from the second agreement at the time she entered into the agreement but rather at a later point in time once she had finished making the payments. When asked when that was Ms Haig told the Tribunal “well, I’m - just give me a moment. Sorry, I’m just looking at my notes. Sorry. I’m just trying to remember. It’s just so many papers, so many years”. Ms Haig told the Tribunal that she didn’t get a formal valuation of the property but just spoke to the real estate agents, more than one.
(s)When asked whether she had notes regarding the arrangements she discussed with her father in respect of the second agreement Ms Haig told the Tribunal that she did have file notes but that “they are in my files, they are filed away”. When asked why they had not been produced to the Tribunal Ms Haig responded “well, we didn’t provide, we couldn’t provide-we didn’t provide file notes as such because they weren’t an official, what do you call it, an official agreement”. Ms Haig was then offered the opportunity to produce any further files that she had but no substantial further evidence was forthcoming.
(t)When pressed in cross examination about her earlier written claim of a third agreement Ms Haig initially denied having a third agreement and then told the Tribunal that in the written submissions they had used the phrase “third agreement” but that it was not really a very significant arrangement it was really just about the ongoing operations of the charity.
The Tribunal also heard evidence from Ms Haig’s brothers, Mr Cedric de Vos and Mr Johann de Vos. They had also provided written statements in support of the claim as well as sworn statements for the purpose of the hearing. Their evidence was generally supportive of Ms Haig’s evidence. Mr Cedric de Vos told the Tribunal that he believed that there was an arrangement between Ms Haig and his father which involved Ms Haig investing money in the property for an agreed interest in the property. He told the Tribunal that Ms Haig moved into the Moorabbin property and gave money to his father and he used that money to build an extension and he got a benefit out of that. He said that he believed the arrangement involved the acknowledgment of an interest in the property so that if Ms Haig had to move out of the property for some reason, it would mean she would not have lost all the money that she had put in. He conceded the understanding between Ms Haig and her father in relation to the first agreement was not in writing and he did not believe it amounted to a formal obligation but rather a mutual understanding that was reached between the two of them. He told the Tribunal that he did not believe his father would have intended for Ms Haig to be out of pocket. In relation to the claimed second agreement Mr Cedric de Vos told the Tribunal that he had understood that his sister had agreed to provide about $200,000 to her father for his charity and in return secured a larger share in the property. When asked why he had not mentioned the second agreement in his earlier supporting statement Mr Cedric de Vos replied that it was “just an oversight, that’s all”. He also acknowledged that the second agreement had not be documented.
Mr Johann de Vos told the Tribunal that his understanding is that in around 1991 his father and his wife asked Ms Haig if she would be interested in putting some money into the property and his understanding is that in exchange she would have an interest in the property if ever they sold it. He told the Tribunal “I don’t know how that would have all worked but in any case the payment of money was to gain an interest in the property”. He told the Tribunal that he didn’t think the arrangement was in writing but rather was just oral. In relation to the second agreement Mr Johann de Vos told the Tribunal that he understood that his sister had inherited money and had agreed to provide funds to their father to secure a larger interest in the property. He also stated that the arrangement was not documented in any way. He told the Tribunal that he did not know the amount of money involved or how it was to be paid. He told the Tribunal that at the time he did not know the purpose for which the money would be used but has discovered that since. When asked why he did not mention the second agreement in his initial statutory declaration he told the Tribunal that he did not turn his mind to it at the time.
Ms Fernandes gave evidence at the hearing. Ms Fernandes also provided a statutory declaration in support of the claim and a further sworn statement for the purpose of the hearing. Ms Fernandes was a long-time family friend of Mr de Vos Senior and his wife, Esme Trixie. In her evidence Ms Fernandes told the Tribunal that she has known the family for over 60 years and she had maintained regular contact with them since their return to Australia in the early 80s and that she had a friendship with Ms Haig and that despite her being substantially younger she considered Ms Haig a sister. She told the Tribunal that she could recall in 1991 Ms Haig’s business failed and she went to live with her parents and that Mr de Vos Senior and Ms Haig decided at the time to use the little money she had to put a place for herself on their property. She told the Tribunal that she understood that Mr de Vos Senior approached Ms Haig and said “come and live here, you can stay here, you don’t have to worry about anything”. In her subsequent sworn statement Ms Fernandes references a further arrangement for Ms Haig to pay her father money she had inherited to her father for a larger interest in the property. She stated the money was to be used for a charity in Sri Lanka. However, in cross examination at the hearing when asked whether she was aware of any other agreements beyond the first agreement involving building renovations Ms Fernandes said that she was not.
Mr Manning gave evidence at the hearing. Mr Manning also provided previous supporting written statements. Mr Manning was a long-time friend of Mr de Vos Senior. Mr Manning told the Tribunal that he met Mr de Vos Senior in around 1996 shortly after his former wife passed away. Mr Manning told the Tribunal that he was made aware many years ago that Ms Haig had paid to do an extension to the residence and that she gained an interest in the property. He told the Tribunal that he learnt this over many years. He also told the Tribunal that his understanding was that later on Ms Haig inherited some funds, and he knew from conversations with Mr de Vos Senior that he had always wanted to support underprivileged people in Sri Lanka and that Ms Haig was willing to give funds to the charity and in return she would gain a larger interest in the property.
Ms Roquel Formosa gave evidence at the hearing. Ms Formosa also provided a sworn statement for the purpose of the hearing. Ms Formosa was a long-time family friend of Mr de Vos Senior and his wife. In her evidence Ms Formosa told the Tribunal that she has known the family for more than 40 years and that consistent with her written statement she understood that Ms Haig had invested most proceeds of the sale of her home into the Moorabbin property in exchange for an interest in the property. She told the Tribunal that she had previously had a discussion with Ms Haig’s mother who told her that Ms Haig had made the investment in exchange for an interest in the property. She told the Tribunal that she could recall there being further funds later on that were provided in exchange for a further interest in the property and that she had received these funds from a relative. She did not believe that Mr de Vos would take funds from Ms Haig without ensuring that she had secured an interest in the property.
Mr Ruwan Fernando gave evidence during the hearing. Mr Fernando also provided a sworn statement for the purpose of the hearing. Mr Fernando was the treasurer of the Home of Joy charity in Sri Lanka. Mr Fernando told the Tribunal that the charity was started by Mr de Vos Senior as part of discussions that he had had with Ms Haig. He told the Tribunal that he had understood that Ms Haig had sent funds on behalf of Mr de Vos Senior to start his charity. Mr Fernando told the Tribunal that Ms Haig sent funds through different methods, some direct to bank accounts, some via e-Remittance and some directly to companies. Mr Fernando said that he had understood through Ms Haig that she had inherited funds and agreed to pay the funds to the charity to secure an interest in the Moorabbin property. Mr Fernando said that he had known the family for a long time and that he did not believe that Mr de Vos Senior would take funds from Ms Haig without a clear understanding that she would secure a further interest in the property. When asked in cross examination if the arrangement was for a lump sum to be paid to Ms Haig’s father, Mr Fernando told the Tribunal that he did not know, that they had never discussed specific numbers or the details of how it would work. When asked how it was that his previous written statement he had referenced a series of payments being involved in the arrangement, he replied that “obviously there would have been payments made, I don’t know whether it was a full amount or several payments”.
Having considered the evidence before it, the Tribunal is satisfied that in 1991 Ms Haig entered into an arrangement with her father, Mr de Vos Senior, whereby she would commence living at the Moorabbin property on an indefinite basis and that she would contribute an amount toward renovations to make the Moorabbin property suitable as a place for her and her daughter to reside. The Tribunal accepts that this arrangement was entered into as a consequence of Ms Haig having financial difficulties in connection with her fashion retail business that had required her to sell her home and pay a substantial portion of the proceeds from the sale of that property to the repayment of debts in connection with her business. The Tribunal accepts that as part of the arrangement there was no expectation on the part of Mr de Vos Senior or his wife that Ms Haig would pay rent to reside at the property. There was an expectation that Ms Haig would meet her share of ongoing costs including maintenance costs. The Tribunal accepts that consistent with this arrangement Ms Haig did in fact make the contribution of approximately $48,000 toward the renovation consistent with her claim. The Tribunal accepts that in doing so Ms Haig had relied on the representations made by her father consistent with the arrangement described above. The Tribunal accepts Ms Haig’s evidence that when discussing this arrangement with her father they had agreed an approximate percentage share of her interest in the property with the understanding that if he ultimately sold the property she would be made good for her financial contribution. The Tribunal accepts that the percentage agreed was approximately 46% arrived on the basis of the understanding they had of the value of the property at the time, being approximately $105,000.
The Tribunal arrives at this conclusion for a number of reasons. First, it found this aspect of Ms Haig’s evidence to be relatively consistent and credible. While Ms Haig had not mentioned the specific details of this arrangement in her initial request for a recalculation of her father’s assets she had referenced securing an interest in the property. In the Tribunal’s view it is not rational that having confronted financial difficulties Ms Haig would then provide her father with the left over of the proceeds, which the Tribunal accepts that she did, and not secure some understanding as to an ongoing interest in the property.
The Tribunal accepts that it was not documented on the basis that they are a close, trusting family and that they did not consider it necessary to do so. The Tribunal is satisfied that this conclusion is supported further by the relatively consistent evidence on this arrangement provided by her brothers and other family friends. The Tribunal accepts Mr Cedric de Vos’ evidence that the arrangement did not amount to a formal legal obligation but was a shared understanding that had been reached at between Ms Haig and her father to ensure that if he later sold the property she would not be out of money. The Tribunal is satisfied that in agreeing to an approximate share in the property it was the expectation of both Ms Haig and her father that they would share in any increase in the value of the property to reflect her contribution towards the improvements to the property. This is consistent with the wording of Mr de Vos Senior’s Will. The Tribunal is satisfied that at the time of the first agreement there was no commitment by Mr de Vos Senior that the Moorabbin property would be left to Ms Haig but that became an understanding that emerged over time. Again, there was never a legal obligation for him to bequeath the property to Ms Haig just, ultimately, a shared understanding.
Consistent with these conclusions regarding the first agreement the Tribunal is satisfied that the agreement did not rise to the level of a legally enforceable obligation. Nor was there an arrangement whereby the property or a share of the property was held in trust for Ms Haig. In the Tribunal’s view there was no enforceable obligation that would give rise to the existence of such a trust. As noted by Senior Member Taylor in Re Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787 at [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] HCA 46; (1921) 30 CLR 1 the High Court held that no trust was created by a testamentary gift tour 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 appeared 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.
In the Tribunal’s view, the property continued to be the property of Mr de Vos Senior to do with as he saw fit but that does not mean that Ms Haig had no claim at all in respect of the property. In the Tribunal’s view she did. In the Tribunal’s view, Ms Haig had an equitable claim against her father in respect of the property. Ms Haig had made significant contributions towards the property that had substantially increased its value. She had also made ongoing contributions towards maintenance costs. In return she had an understanding that if the property were sold she would be made good consistent with an agreed share of the property’s value. Her father had made presentations to her to that effect and she had relied on those representations. As she told the Tribunal she could have spent her money elsewhere and secured an alternative property. But she did not. She invested the money into the Moorabbin property on the understanding that had been reached. If Mr de Vos Senior had subsequently sold the property and denied Ms Haig her agreed share of the value of the property Mr de Vos Senior would have been unjustly enriched. It would be unconscionable for him to not keep her whole in respect of her contribution. In such circumstances Ms Haig would clearly suffer detriment and she would be entitled to equitable relief.
However, the Tribunal rejects Ms Haig’s evidence with respect to the purported second agreement. The Tribunal found Ms Haig’s evidence with respect to the second agreement inconsistent and wholly unpersuasive. The Tribunal was left with the distinct impression that when pressed on specific details with respect to this second agreement Ms Haig was clutching for detail and struggling to provide a coherent response. The Tribunal was left with the distinct impression that the second agreement was a reconstructed concept that was not reflective of any agreed understanding that had been reached between Ms Haig and her father at the time. While there were a number of supporting witnesses in respect of this purported agreement the Tribunal was not persuaded by that evidence. Again, the evidence provided was inconsistent, lacking in detail and not credible. The Tribunal accepts the respondent’s representation in this respect that the failure to mention this second agreement at all in her initial request for recalculation further undermines the reliability of the claim. It was also not mentioned in any of the supporting statutory declarations provided together with that request. While it was mentioned in subsequent sworn statements in each case when pressed the witness could not provided credible detail in relation to the arrangement. Ms Fernandes, who referenced the arrangement in her sworn statement could not recall there being a second arrangement when giving her oral evidence. The Tribunal accepts that the charity was established and that Ms Haig inherited money and made significant financial contributions towards the establishment of the charity but does not accept that it was in any way for the purpose of securing an increased interest in the Moorabbin property. The Tribunal also accepts that to have secured an increased share in the property in that manner was inconsistent with Ms Haig’s understanding that she would one day inherit the property. The conclusion is further reinforced by the absence of any mention of the purported second agreement in Mr de Vos Senior’s Will. The Tribunal also accepts the respondent’s contention that the purported third agreement was a reconstructed detail that was an attempt to explain contributions being made to the charity on an ongoing basis that went beyond an amount equal in value to a 100% interest in the property.
The Tribunal is satisfied that the equitable claim Ms Haig had in respect of the Moorabbin property as consequence of the first agreement could constitute an encumbrance of a form that would reduce Mr de Vos Senior’s residual value in the property equal to the value of Ms Haig’s 46% interest.
Section 1121(1) of the SS Act provides that in the event there is an encumbrance over a particular asset of the person [who’s assets are being assessed] the value of the asset, for the purposes of calculating the value of the person’s assets is to be reduced by the value of that encumbrance. “Encumbrance” is not defined in the SS Act but the Tribunal is satisfied it would extend to include an equitable claim against the property consistent with its ordinary meaning.[1] The respondent contends that even if Ms Haig’s equitable claim could constitute an encumbrance for the purpose of section 1121(1) of the SS Act it should not result in a reduction in the value of Mr de Vos Senior’s assets by virtue of the application of section 1121(2) of the SS Act. That section provides that section 1121(1) does not apply in circumstances where there is an encumbrance over an asset of the person who’s assets are being assessed to the extent that the encumbrance was given for the benefit of another person other than that person or that person’s partner.
[1] For a similar recognition of an equitable claim as an encumbrance for the purpose of section 52C of the Veterans’ Entitlements Act 1986 (Cth) see Repatriation Commission v Tsourounakis and Another [2007] FCAFC 29 at [107]; See also Re Watts and Repatriation Commission (1986) 11 ALN N 225;
The Tribunal does not accept this contention. In the Tribunal’s view, the equitable claim Ms Haig would have in respect of the Moorabbin property is a claim that reflects the increased value in the property that, absent her claim, Mr De Vos Senior would have enjoyed as a result of her capital contribution. The encumbrance existed because Mr de Vos Senior, as the owner of the property, enjoyed that benefit. Accordingly, the Tribunal is satisfied that the effect of section 1121(2) of the SS Act is not to remove the application of section 1121(1) of the SS Act.
For these reasons, the Tribunal is satisfied that the correct or preferable decision in the circumstances of this case is that the decision under review should be set aside and the matter remitted to the respondent to recalculate the value of Mr de Vos Senior’s assets as at the relevant date and to reduce the value of the Moorabbin property to properly reflect Ms Haig’s 46% interest.
DECISION
The decision under review is set aside and the matter is remitted back to the respondent for a recalculation of Mr de Vos Senior’s assets as at the relevant date in accordance with the Tribunal’s findings.
I certify that the preceding 42 (fourty-two) paragraphs are a true copy of the reasons for the decision herein of The Honourable. Matthew Groom, Senior Member
....[sgn]....................................................................
Associate
Dated: 10 July 2023
Date(s) of hearing: 14, 15, 18 October 2021 Applicant: Mr Cedric de Vos Counsel for the Respondent: Keith Sypott
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