Kevin Keightley and Secretary, Department of Social Services

[2014] AATA 938

[2014] AATA 938 

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2014/3901
Re	Kevin Keightley
APPLICANT
And	Secretary, Department of Social Services
RESPONDENT

DECISION

Tribunal	Senior Member Bernard J McCabe
Date	17 December 2014
Place	Brisbane

The decision under review is affirmed.

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Senior Member Bernard J McCabe

CATCHWORDS

AGED CARE – Assets assessment – Inclusion of monies paid to applicant by daughter in 1989 – Classification of that transaction – Actual intention of the parties – Not a gift or loan – Not an express, implied or resulting trust – Applicant’s unjust enrichment does not alter characterisation of transaction – No basis for excluding funds from assets assessment – Decision under review affirmed.

LEGISLATION

Residential Care Subsidy Principles 1997

REASONS FOR DECISION

Senior Member Bernard J McCabe

17 December 2014

1. Kevin Keightley is an aged pensioner who sought assistance from Centrelink in connection with his move into a nursing home. As part of the application process, Centrelink undertook an assessment of Mr Keightley’s assets under the Residential Care Subsidy Principles 1997 (“the Principles”). The initial assessment in March 2014 concluded Mr Keightley’s assets – principally his home, which was subject to a mortgage – were properly valued at $181,477. That determination meant Mr Keightley was ineligible for assistance as a supported resident in a nursing home. In May 2014, shortly after Mr Keightley moved into a nursing home, he provided a statutory declaration dated 2 April 2014 indicating he had received some $68,000 from his daughter,

   
   

   Mrs Lynette Thomas, in 1989. Mr Keightley said he wanted to repay that amount together with interest. Significantly for present purposes, he says the value of his assets should be reduced by the amount of what he says is a loan (together with interest) owed to his daughter pursuant to s 21-15(4) of the Principles. That may put him under the limit so he will be eligible to be treated as a supported resident.

2. Mr Keightley’s case was presented by Mrs Thomas, his daughter. After hearing the evidence and seeking further submissions from the parties, I am satisfied the Secretary’s decision as to Mr Keightley’s assets should be affirmed. I explain my reasons below.

   The circumstances in which Mr Keightley obtained money from his daughter

3. Mrs Thomas explained in her statement and at the hearing that she and her husband and her parents purchased a motel together in 1988 for $600,000. The purchase was made through a family company. Each couple (that is, Mr and Mrs Thomas and
   Mr and Mrs Keightley) had equal shares and contributed equally towards the cost of the motel. They all moved into accommodation attached to the motel and ran it together. Over time, the relationship between Mr Keightley and his family broke down and he moved out.

4. Mrs Thomas said she has had a difficult relationship with her father since she was a child. She said she and her mother were scared of him. Mrs Thomas provided a number of examples of her father’s impulsive and demanding behaviour that made him difficult to work with in the business.

5. Mrs Thomas recalled being alone at the motel in late 1989 when her father appeared.
   He had been estranged from the family for some time by that point. Mrs Thomas said
   Mr Keightley entered the office and demanded that Mrs Thomas pay him out his share of the motel. She recalled him saying he needed the money to start a new life.
   (Mr Keightley, in his telephone evidence, recalled the money was needed to buy a truck.) She said she was worried about him making a scene. She wrote him out three cheques totalling $68,000. She recalled in her evidence that the cheques were drawn on a personal cheque account which was used for working capital. (There was some confusion in the evidence over whether the payments were all made on one occasion, or whether
   Mr Keightley in fact turned up on three occasions over a period of time and behaved badly on each occasion. I am inclined to accept there was only one encounter, but – if there was more than one – the evidence about Mr Keightley’s behaviour and his daughter’s reaction and motivations seems to be the same, and to similar effect, on each occasion.)

6. In cross-examination, Mrs Thomas confirmed she did not think of the payment as a loan and it was not described as such until Mr Keightley produced his statutory declaration in 2014. There was no discussion of interest rates or repayment. She said she never anticipated recovering the money, or being entitled to do so. She said she simply paid the money to her father when he demanded it because she wanted to get rid of him. She said she was scared of him and wanted him off the property, and out of their lives.

7. After the motel was eventually sold in 1991 – a complicated process that took some time and required the sale of another property which was acquired as part payment for the motel – Mr Keightley was paid a further amount of approximately $110,000 in 1992.
   Mrs Thomas indicated that payment was due to her father because it was his share of the proceeds. Her oral evidence made it tolerably clear that the amount Mr Keightley received in late 1989 from his daughter was not deducted from his share of the proceeds of sale.

8. Mr Keightley said he decided he was going to repay the money together with interest at 5% because what occurred in late 1989 had been weighing on his conscience.
   The interest rate was agreed in the course of a discussion with Mrs Thomas after the original decision about the value of his assets in March 2014. (Mrs Thomas said she agreed with her father than 5% was a “fair” rate.) He insisted in cross-examination that the advance in 1989 was a loan and not a gift, although his evidence was unclear as to whether he intended repaying the money when he received it. Mrs Thomas, for her part, said in cross-examination that she was dumb-struck when her father told her in
   April 2014 that he was going to repay the money. She said the repayment was all her father’s idea: she had written off the amount long ago and did not expect repayment.

   How should the payment of $68,000 in 1989 be treated today?

9. There is simply no basis for treating the payment (or payments, if each cheque was paid in similar circumstances but on different occasions) as a loan. The parties to the transaction did not describe it as such, and there was no discussion of repayments or interest rates or anything else which one would normally expect if the transaction were a loan. Indeed, the evidence from Mrs Thomas suggests the payment was only described as an early payout of Mr Keightley’s share in the motel. Having said that, the evidence does not establish the payment was treated as an advance payment of his share of the business: when the proceeds of the sale were subsequently distributed, Mr Keightley appears to have received an equal share. I note the applicant’s own further submissions expressly rejected this possibility.

10. There is also no sufficient evidence of the money being treated as a gift, or being advanced under an express trust or any other arrangement. The evidence suggests – and I find – Mrs Thomas paid her father a total of $68,000 in “go away” money so he would leave them alone in light of his bad behaviour. It was Mr Keightley’s recent idea to treat the amount as a loan, and the obligation to pay interest was concocted at the same time.

11. I asked the parties to consider whether the monies paid in 1989 might still be repayable on the basis they were held in trust by Mr Keightley for his daughter. There was no express trust, of course, but I wondered whether the circumstances suggested there might be some sort of implied trust, such as a resulting trust.

12. In written submissions prepared by a lawyer, the applicant rejected the argument that the payment was made in circumstances that would give rise to a resulting trust over the $68,000. The Secretary was less certain on this point. He agreed there was no presumption of advancement here; he acknowledged it was possible a resulting trust might arise in circumstances where an individual made a payment to someone else without apparent explanation, but contended the presumption of a resulting trust would be rebutted by the actual intentions and behaviour of the parties. He argued the parties clearly intended the payment to be a gift, or at least an early return of capital, and behaved accordingly. But I have rejected both of these characterisations of the payment, for reasons I have explained.

13. I have concluded the monies were paid with the simple intention of convincing the applicant to go away. The evidence does not establish the monies were to be used for a particular purpose, or that there was any reservation or condition attached to the payment. There was no expectation or agreement that the money would ever be repaid or held for anyone’s benefit or for some common purpose. The money was paid for a reason – to convince the applicant to go away - and that reason is inconsistent with the existence of a resulting trust. In those circumstances, I do not think it is possible to find that such a trust exists in relation to the money – which means it cannot be deducted from the applicant’s assets.

14. The applicant’s written submissions did refer to an argument over whether the applicant was unjustly enriched as a consequence of the payment made in 1989. There may be something to that, but – assuming that is so – it merely underlines the fact he was enriched, and that increase in riches is properly taken into account for the purposes of the assets test. Although Mr Keightley paid Mr and Mrs Thomas approximately $150,000 in 2014, he was under no obligation to do so. .

    CONCLUSION

15. There is no basis for concluding the amount of an advance made by Mrs Thomas in 1989 together with interest should be deducted from the amount of the applicant’s assets for the purposes of the assets assessment under the Residential Care Subsidy Principles 1997. The decision under review must therefore be affirmed.

I certify that the preceding 15 (fifteen) paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

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Associate

Dated 17 December 2014

Dates of hearing	13 October 2014; 19 November 2014
Date final submissions received	20 November 2014
Applicant	By telephone
Advocate for the Respondent	Michelle Brazier
Solicitors for the Respondent	Department of Human Services