Kotevski and Secretary, Department of Social Services (Social services second review)
[2020] AATA 3598
•16 September 2020
Kotevski and Secretary, Department of Social Services (Social services second review) [2020] AATA 3598 (16 September 2020)
Division:GENERAL DIVISION
File Number(s): 2019/1792 & 1975
Re:David Kotevski and Violetta Kotevski
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:16 September 2020
Place:Sydney
In proceedings 2019/1792, the reviewable decision affirming the decision to reject Mr Kotevski’s claim for Age Pension is affirmed.
In proceedings 2019/1975, the reviewable decision is set aside and in substitution, it is decided that Mrs Kotevski’s claim for Newstart Allowance is rejected.
............................[sgd]............................................
Mrs J C Kelly, Senior Member
CATCHWORDS
SOCIAL SECURITY – age pension – newstart allowance – assets test – whether Applicant’s interest in the property a constructive trust – common intention to be beneficial owners – decision under review affirmed – decision set aside and substituted
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) ss 25, 43
Social Security Act 1991 (Cth) ss 55, 611, 1121, 1064
Social Security Administration Act 1999 (Cth) ss 36, 37, 179
CASES
Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21
Re Drake and Minister for Immigration and Ethnic Affairs (1978) 2 ALD 162
Re Drake (No. 2) (1979) 2 ALD 634
Re Irene Kintominas v Secretary, Department of Social Security [1991] 30 FCR 475
Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213
Slamkova and Secretary, Department of Social Security [2017] AATA 137Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787
SECONDARY MATERIALS
Guides to Social Policy Law, Social Security Guide
A guide to Australian Government payments 20 September - 31 December 2017
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
16 September 2020
Introduction
Mr Kotevski’s claim for the Age Pension and Mrs Kotevski’s claim for “Carer Allowance” were rejected because the value of their combined assets exceeded the assets value limit for the payment of each of those social security payments under the Social Security Act 1991 (Cth) (the Act).
The substantive question to be decided is whether a property at Hurstville (the Hurstville property) is an assessable asset. Mr Kotevski is the registered owner of the Hurstville property which is subject to a mortgage to the National Australia Bank (the mortgage).[1] He purchased it outright in 1975 and made improvements to it for which he took out the mortgage in 2000 for $250,000. He lived there until 2004.
[1] T9/310-311.
Both parties accept that the value of the Hurstville property at 25 July 2017 is $1.35 million dollars.[2] The amount remaining on the mortgage is $364,392.85. The value of the Hurstville property after deducting the outstanding loan is $985,608.[3] That amount exceeds the asset test limit for partnered homeowner of $830,000 for Aged Pension and Carer Allowance and $380,500 for Newstart Allowance when Mr and Mrs Kotevski claimed each of those social security payments.
[2] T6/169-176 and 181-191.
[3] In accordance with s 1121 of the Act the value of an asset is reduced by the amount of any outstanding charge or encumbrance over the asset.
If the Hurstville property is an assessable asset, then both Mr and Mrs Kotevski’s claims for social security payments were correctly rejected.
The second issue to be decided is whether the Tribunal can make a decision that reflects that Mrs Kotevski’s application should be treated as an application for Newstart allowance rather than an application for Carer Allowance. That is how it was treated during the internal review process by an Authorised Review Officer (ARO) from the Department of Human Services, now known as Services Australia, (the Department) and by the Social Services & Child Support Division of the Administrative Appeals Tribunal (AAT1).
Mr Kotevski represented himself and Mrs Kotevski. He argued that the Hurstville property is not an assessable asset because his interest is subject to a constructive trust in favour of the couple’s three children, Alexander, Michelle and Michael (the children). The Respondent in this review application to the General Division of the Administrative Appeals Tribunal (the Tribunal), the Secretary, Department of Social Services (the Secretary) argued the opposite, that Mr Kotevski’s interest is not subject to a trust and is therefore an assessable asset.
Procedural background
Mr Kotevski applied for the Age Pension on 5 December 2017.[4] The reviewable decision made on 4 March 2019 by AAT1 affirmed a decision made on 27 September 2018 by an ARO to reject Mr Kotevski’s claim for Age Pension.
[4] T6/102-119.
Mrs Kotevski contacted Centrelink on multiple occasions. She applied for Carer Payment online on 25 October 2017.[5]On 14 November 2017, Mrs Kotevski submitted an online claim for Newstart Allowance.[6] The application for Carer Payment was cancelled on that occasion. On 8 February 2018 the claim for Newstart Allowance was rejected.[7] There is no record in the Department’s records of a decision to reject Mrs Kotevski’s Carer Payment claim. The Secretary conceded that the type of decision was incorrectly recorded during the ARO referral process and that it carried through in the ARO’s decision and to AAT1. Therefore, the reviewable decision made by AAT1 on 4 March 2019 affirmed a decision made on 27 September 2018 by an ARO of the Department that affirmed the primary decision to reject Mrs Kotevski’s claim for “Carer Payment”. AAT1 added in a footnote “or newstart allowance”. This is further discussed below at [53] – [59]. AAT1 also pointed out in a footnote to paragraph 1 of its reasons for decision, that at the relevant time, the asset cut-off limit for Newstart Allowance was $380,000, which was considerably less than the $830,000 asset cut-off limit for Carer Payment.
[5] T4/86-88.
[6] T22/873.
[7] T22/875; ST2/1083-1084.
Is Mr Kotevski’s interest in the Hurstville property subject to a constructive trust?
In Re Irene Kintominas v Secretary, Department of Social Security [1991] 30 FCR 475 (Kintominas), at [53]
I find that despite the applicant's legal ownership, this home is, on the concepts discussed in Dillwyn v Llewelyn and Olsson v Dyson, and later in Waltons Stores and Verwayen, beneficially the property of Terry Kintominas. It is not necessary to characterise whether the applicant created an express or constructive trust in his favour. Such old cases as Milroy v Lord (1862) 4 De G.F. and J. 246 [1862] EngR 951; (45E.R.1185) and Richards v Delbridge (1874)L.R.18Eq11 established the rule that words of intention to make a gift of property cannot properly be construed as a declaration of trust. Whether this case goes further so as to avoid the rule does not need to be decided. The intention was to make the house Terry's, immediately and in every sense. The applicant sought to retain no rights in and no capacity to dispose of or encumber the property without Terry's consent. A trust seems unlikely and in terms of the concepts provided for in the SocialSecurityAct, estoppel is inappropriate.
However categorised, my conclusion is that it is not property with a value in the applicant's hands capable of being converted into an assessable basis for reducing her pension. In that sense the AAT erred in law.
Mr Kotevski claimed that Kintominas applied in this case for two reasons. The Hurstville property is not one of value in his hands capable of being converted into an assessable asset:
(a)by operation of a deed between him and the children in relation to the Hurstville property, and
(b)leaving aside the deed, because of the substantial sum of money the children had paid to the mortgage over the Hurstville property.
In support of its case that there was no constructive trust, the Secretary cited and quoted from two Tribunal cases: Sternberg and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2008] AATA 787 and Slamkova and Secretary, Department of Social Security [2017] AATA 137.
The Social Security Guide (the Guide) usefully summarises the principles relevant to determining whether a common intent constructive trust exists at Instruction 4.12.3.51:[8]
A common intention constructive trust is created to enforce a promise and/or a gift. The following elements need to be demonstrated to establish the existence of a common intention constructive trust:
·there must have been a common intention between the legal owner of the property and the beneficiary, regarding the beneficiary’s beneficial ownership of the property,
·this common intention is to be inferred as a fact from the words or conduct of the parties,
·the beneficiary must be able to show that they have acted to their detriment on the basis of the common intention as to the beneficial ownership of the property, and
·it must be a fraud on the beneficiary for the legal owner to assert that the beneficiary did not have the beneficial interest in the property.
[8] T3/84-85.
The evidence
Mr Kotevski as the grantor, and the three children as the grantee, entered into two deeds on 15 February 2002.[9] The first related to the Hurstville property and the second related primarily to a property at Morton (the Morton property).
[9] T5/89-90; ST1/1056-1059.
The terms of the deed relating to the Hurstville property stated that:
·Mr Kotevski was the registered proprietor of one half share in that property. (His mother was the registered proprietor of the other one half share).
·The property was mortgaged to the National Australia Bank (NAB) which required payment in full of the monies owing under the mortgage in order to discharge the mortgage.
·Mr Kotevski could make regular or periodic payments of the mortgage and would be in default of the mortgage if he allowed the amount owing to exceed the mortgage limit.
·The children had been making payments “for and on behalf of” Mr Kotevski and the parties wished that to continue. They could make payments of principal and interest.
·The children had determined the sum owing under the mortgage as at the date of the deed and that Mr Kotevski was not in default.
·In consideration of the children making periodic or regular payments to the mortgagee and paying the principal sum in full at any time, Mr Kotevski would transfer his half of the land to the children in equal shares as tenants in common on payment of the principle sum in full.
·If the children allowed the amount owing under the mortgage to exceed the limit, Mr Kotevski could terminate the deed, in which event he would repay the children the monies they had paid to NAB.
·The deed created a caveatable interest in the land in favour of the children.
·Mr Kotevski could not increase the sum owed under the mortgage from the amount owed as of the date of the deed without the written permission of the children.
·Mr Kotevski could continue to have possession of the Hurstville property until the amount owing under the mortgage was paid in full and the land transferred to the children.
·The children were responsible for one half of the costs of maintenance and upkeep of the Hurstville property.
·Mr Kotevski was responsible for keeping the structures insured in the joint names of Mr Kotevski and his mother and the children were to pay half of the insurance premium.
·Mr Kotevski could make payments of principal and interest against the mortgage.
·Mr Kotevski would not sell the land without the prior written permission of the children.
·In the event that Mr Kotevski or the mortgagor sold the land, the total purchase monies were to be distributed in a specified order to pay various sale related costs, Mr Kotevski’s mother’s half share, the mortgage, rates, and the balance to the children.
·The children were responsible for payment of stamp duty payable in relation to the deed and the transfer of the property to them.
·If Mr Kotevski and his mother vacated the property, the children could take possession of the land with the permission of their grandmother.
·If Mr Kotevski and his mother leased the land, Mr Kotevski was to pay the children the rent to which he was entitled less the expenses of renting the land.
The deed relating to the Morton property included the following terms:
·Mr Kotevski was the registered proprietor of a one half share of another property at Moreton (the Moreton property). (His mother owned the other half share.)
·The children had been making “the Payments for and on behalf of” Mr Kotevski in relation to the Hurstville property which was subject to a mortgage with the NAB.
·In order to avoid bankruptcy and pay legal costs, “the flexi plus mortgage limit would have to be increased”.
·The whole of the Moreton property would be offered as additional security to the grantee.
·Mr Kotevski agreed to transfer ownership of the Moreton property to the children on receipt of $60,000.
·Mr Kotevski would transfer the Morton property to the children upon their written request at a date of their choosing.
·He would not sell the land without the children’s written permission.
·The children were to pay stamp duty payable in connection with the entering into of the deed and the transfer of land to them.
·While the deed was in force it created a caveatable interest in the Moreton property in favour of the children.
The Secretary accepted that $60,000 was “the full value of the Morton property at the time” the deed was entered into in 2002.[10] The evidence was that the children had paid the $60,000 but the property had not been transferred to them because of the cost of stamp duty.
[10] Secretary’s Statement of Facts, Issues and Contentions at [40].
In his statutory declaration sworn on 6 August 2019 Mr Kotevski claimed that in 2008 when he was again subject to bankruptcy proceedings, the children “bailed him out” and he and his wife agreed that the Hurstville property be transferred into their children’s names “upon demand by my children”.[11] He contacted his solicitor who told him that there was no need to amend the deed because the terms of the 2002 deed were sufficient. However, a further deed was drawn up between Mr Kotevski, Mrs Kotevski and the children amending the 2002 deed and conferring on the children the “right to transfer the property into their name at any time in accordance with their equitable interest”.[12] They cannot locate a copy of that deed. The solicitor has retired and the new owners of his firm advised in an email dated 16 January 2019 that the “two deeds you request made in and around 2007 and 2008 are not present on the electronic records” of the previous solicitor.[13] Mr Kotevski had requested the deeds in a telephone conversation with the new owners on the same day.[14]
[11] Exhibit A3 at [1].
[12] Exhibit A3 at [4].
[13] Annexure to Exhibit A3.
[14] Ibid.
Mr Kotevski said that he was unemployed from 2002 to 2007. When he worked, his wages were paid into the mortgage. He had a visa card on that account which he used for everyday expenses but he only took out what he put in. He also said that he used the visa card to pay maintenance for the Hurstville property and has a record of those payments. He sometimes paid land tax with cash. When asked about various withdrawals from the mortgage, Mr Kotevski said that one was for a deposit on a flat for Michael. He was unable to explain a withdrawal of $35,000. He said that all payments to the children were to be deducted from their contributions.
The Hurstville property was rented out from 2007. A rental bond lodged for the Hurstville property on 31 May 2007 was addressed to “M&A Kotevski”.[15] Documents about an application relating to the Hurstville property in the Consumer, Trader & Tenancy Tribunal[16] in the second half of 2007 were addressed to Alexander and Michael Kotevski.[17] When asked about Michelle’s name not appearing in those documents, Mr Kotevski said that she was involved. In July 2012 the rental was $3,476.17 per month. In late 2017 the rental was $3,910.71 per month.[18]
[15] ST/1065.
[16] The function of the Consumer, Trader & Tenancy Tribunal was assumed by the New South Wales Civil and Administrative Tribunal from 2014.
[17] ST/1060-1064.
[18] T5/98; T8/287
On 5 October 2011, Mr Kotevski attended an interview with the Department’s Financial Information Service (FIS) in which he discussed his options in relation to the Hurstville property.[19] The first was that Mr Kotevski retain ownership of the property which is encumbered by the children’s contributions to the mortgage. The second was to gift the property to the children. In his written submission, Mr Kotevski said that the FIS officer said if there is a demonstration that the children have made financial contributions to repaying the mortgage, the property will be considered to be encumbered.
[19] T6/192-194.
In the Applicant’s Statement of Issues, Mr Kotevski claimed that the rental income from the Hurstville property:
“has been directed to paying down the mortgage (after payment of land tax and other expenses) on instructions from my children in accordance with Clause O of the deed.”
Mr Kotevski told the Tribunal that he had inherited his mother’s half interest in the Hurstville property when she died about eight years ago. The costs of her funeral totalling $35,000 to $50,000 were drawn from the mortgage.
In the real estate details form relating to the Hurstville property dated 28 November 2017 signed by Mr and Mrs Kotevski, Mr Kotevski stated that he owned 2% and his children owned 98% of the Hurstville property.[20]
[20] T6/173.
In his tax return for 2017 dated 12 February 2018, Mr Kotevski declared gross rental income of $50,187 from the Hurstville property and indicated that he owned 100% of the property.[21] He claimed interest deductions of $7,967 and other rental deductions of $12,033. In his submission, Mr Kotevski wrote that the children initially attempted to pay tax on the rental income and claim deductions for the Hurstville property but they were advised by “our” accountant and the Australian Taxation Office (ATO) that they could not because they were not on the title.
[21] T10/349 and 354.
In his statutory declaration sworn on 6 August 2019, Mr Kotevski claimed for the first time that a new agreement and deed had been made in 2008 to transfer the property to the children upon their demand.
In his letter dated 15 January 2019, Alexander Kotevski listed payments each of the children had made to the mortgage.[22] He stated that to the best of his ability he had calculated that the children had paid $921,000 to the mortgage over the Hurstville property. He argued that Mr Kotevski’s equity in the property was $100,000. This was based on the Hurstville property having a value of $1,150,000, minus $921,000 and nominal $79,000 compound growth, and accounting for the outstanding debt on the mortgage of $50,000 as at 15 January 2019.
[22] ST1/1028-1038.
In their statutory declarations sworn on 27 November 2019, each of the children stated the following. The children managed the tenancy of the Hurstville property and directed the tenants to pay the rent to the mortgage. They had initially attempted to pay tax on the rental income and claim deductions in relation to the Hurstville property but were advised by their accountant and the ATO that they could not do so because they were not the registered owners. In 2008 they “bailed out” their father again. They all agreed then that the children could transfer the Hurstville property into their names upon request whenever they chose and the deed was amended to give effect to that agreement which cannot be located. Each of them also claimed that the Hurstville property was becoming a burden because the tenant had “all most destroyed it” and it would cost over $200,000 to repair. Each of them also claimed that they had contributed more to the mortgage than the Hurstville property was worth.
Alexander said the following in his oral evidence. The $35,000 withdrawal in September 2013 “may have been” in preparation for Michael to purchase a property. He kept records of the children’s equity in the Hurstville property. His summaries do not include “drawdowns” from the mortgage. He did not keep a copy of the 2008 deed. His parents kept all the documents. The children did not transfer the property in 2008 because stamp duty was astronomical. The arrangement also provided protection from a bad relationship break up. He did not want anything in his name. The FIS interview stated that if the property was encumbered it would not be included in the means test. He conceded that he had paid considerably more than his siblings. That included $300,000 in February 2018 and $110,000 on 28 January 2010.[23] He had to sell his primary residence to reduce the debt when he paid the $300,000. He did not remember why he made the $110,000 payment. There were thousands of deposit slips that were given to his mother which was one way of making payments. The rent received should also be included in the children’s contributions.
[23] T14/804 and ST1/1033.
Michelle Kotevski’s evidence supported the claim that there had been deeds signed in 2002 and 2008, and that about $40,000 to $50,000 was provided to Michael for a mortgage deposit. About $60,000 was paid for weddings. She made regular payments to the mortgage when she had regular work. She was not confident that Alexander’s list of contributions included everything. She had also had a Bendigo Bank account which was not taken into account. Each sibling paid what they could afford. The pressure was relieved when the Hurstville property was tenanted in 2007. She did not have a copy of the 2008 deed.
Michael Kotevski was not certain of his total contribution to the mortgage, but he thought they should be considerable. He had seen a variety of documents that had been prepared in relation to the various properties. He made various cash payments to his parents and siblings, and by bank transfer. He was not aware of the contributions that Alexander and Michelle had made. He had drawn about $50,000 from the mortgage to purchase a property. His equity would be reduced by that amount. He was not specifically aware that the mortgage had increased from 2012 to 2017 and could not say who was taking the money out. He leaves it to Alexander. There had been his and Alexander’s weddings. Money from the mortgage may have been used. He recalled signing one deed and there may have been more than one, but he could not remember.
Mr Kotevski stated the following in his written submission. The 2008 arrangement was that the children could transfer the Hurstville property and the mortgage into their names upon their request whenever they chose but did not do so at that time because they would have had to pay stamp duty. It was better for them to leave the Hurstville property and the mortgage in his name to protect them from any claims against them by spouses.
The balance of the mortgage in the earliest bank statement in evidence was $177,467.50 at 31 July 2012.[24] Mr Kotevski said that he was told that he only needed two years of records. At the end of November 2017 the balance of the mortgage was $364,614.43, an increase of $187,146.93.[25]
[24] T14/689.
[25] T14/800.
Consideration
The first question to decide is whether I accept that there was a 2008 deed which enabled the children to request that the Hurstville property be transferred to them at any time.
Before AAT1, Mr Kotevski relied on the 2002 deed. His present case relies on a 2008 deed of which no copy exists. AAT1 referred to “later documents drawn up, but these were lost by the solicitor, and Mr Kotevski does not have copies of them”.[26] Whether or not that was a reference to the 2008 deed, Mr Kotevski did not claim before AAT1 that there had been a new agreement made in 2008 that the Hurstville property would be transferred to the children at any time at their request. He first mentioned the 2008 deed in his statutory declaration sworn on 6 August 2019.
[26] T2/11 at [27].
I give little weight to the evidence of Mr Kotevski and the children that there was such an agreement because Mr Kotevski did not mention it before AAT1, there is no copy of the 2008 deed available, his solicitor told him that there was no need to amend the deed because the terms of the 2002 deed were sufficient, and he raised it for the first time in August 2019.
The evidence that the new solicitors could not find a copy of the 2008 deed in the electronic records shows that Mr Kotevski attempted to obtain a copy but does not prove that such a deed ever existed.
The 2002 deed exists. How it has been implemented is unclear in some respects.
AAT1 referred to the following evidence.[27] Mr Kotevski said that he had received advice that as the legal owner, he needed to rent the property and he has received the rent which goes towards paying the costs, including land tax. Mr Kotevski said that it would have been more beneficial for the children to have collected the rent, but they understood they could not because his name was on the title of the property. The notes of the complex assessment officer dated 31 August 2018 stated that Mr Kotevski declared the rent in his 2017 personal tax return; it is positively geared, the gross rent being $50,187; the net rental income is $30,187, and the interest expense claimed was $7,697.
[27] T2/14 at [41]-[42].
The evidence of Mr Kotevski and the children in this Tribunal was that they received the rent.
Mr Larcombe, representing the Secretary, calculated that the total of the amounts appearing at ST1/1030-1032 of Mr Alexander Kotevski’s calculations was approximately $20,000. Mr Alexander Kotevski had a total for the same amounts of $138,640. I have checked the calculation and agree with Mr Larcombe, which raises a concern about the accuracy of the calculations Mr Alexander Kotevski made of the children’s respective contributions.
The evidence suggests that the Hurstville property has been positively geared since the premises were rented. The first bank statement in evidence for the mortgage for July 2012 shows the rental income was $3,476.19 a month.[28] In December 2017 the rental income was $3,910.71 a month.[29] The children’s contributions to the mortgage were in addition to the net rent contribution.
[28] T14/689.
[29] T14/802.
There has been no clear explanation for the increase in the mortgage by $187,146.93 from 2012 to 2017. It seems that Mr Kotevski and the children withdraw funds when they need to. I do not accept Mr Kotevski’s evidence that he only withdraws what he puts in. He contradicted that when he said that he withdrew funds from the mortgage to pay for his mother’s funeral expenses. There is no record of the withdrawals by each of Mr Kotevski and the children in evidence. The evidence of Mr Kotevski and the children about various withdrawals was vague at best.
The net contribution each child has made to the mortgage is not apparent.
Under the 2002 deed, Mr Kotevski could make payments of principle and interest against the mortgage and could not increase the sum owed under the mortgage from the amount owed as of the date of the deed without the written permission of the children. The 2002 deed did not prevent him from withdrawing funds from the mortgage in excess of his contributions, subject to that limitation.
Whether there was a common Intention between Mr Kotevski and the children that the children were the beneficial owners of the Hurstville property
The 2002 deed sets out the rights and obligations of Mr Kotevski and the children in respect of the Hurstville property. The common intention shown by the 2002 deed is that the children can request that the Hurstville property be transferred to them when they pay out the mortgage. They have not done that. Until that occurs, the deed confers various benefits on Mr Kotevski in relation to the property, as set out above.
That Mr Kostevski declared the gross rental income and claiming expenses in relation to the Hurstville property in his 2017 personal income tax return dated 12 February 2018 is inconsistent with him and the children having a common intention that that they were the beneficial owners of the Hurstville property. I have taken into account Mr Kotevski’s inconsistent evidence to AAT1. I give little weight to the evidence that the family had advice from the ATO and an accountant on this issue. There was no documentary evidence of such advice.
At the relevant dates, there was not a common intention that the children were the beneficial owners of the Hurstville property.
Did the children act to their detriment on the basis of the common intention as to the beneficial ownership of the Hurstville property?
The common intention between Mr Kotevski and the children set out in the 2002 deed was that the children have beneficial ownership of the Hurstville property when they pay out the mortgage. They have not done so. That they have continued to contribute to the mortgage and not taken that additional step has been their decision. They have not acted to their detriment on the basis of the common intention as to the beneficial ownership of the Hurstville property.
Mr Alexander Kotevski’s argument about their contributions being more than the value of the property is not relevant. The parties are bound by the 2002 deed. For whatever reason, the children have continued to make contributions to the mortgage, relevantly for 15 years, but have not discharged that mortgage. The mortgage bank statements show that they have allowed the principal to increase by about $187,146.93from 2012 to 2017.
Whether it would be a fraud on the children for Mr Kotevski to assert that the children did not have a beneficial interest in respect of the Hurstville property.
As I have found that the children do not have a beneficial interest in the Hurstville property until they discharge the mortgage, which they have chosen not to do, it would not be a fraud on them for Mr Kotevski to assert that they did not have a beneficial interest in respect of the property.
Conclusion
For the above reasons, Mr Kotevski’s interest in the Hurstville property is not subject to a constructive trust and was not when he and Mrs Kotevski claimed Aged Pension and Carer Payment/Newstart Allowance respectively.
The assessable asset value of the Hurstville property of $985,608 is to be included in the value of Mr and Mrs Kotevski’s combined assets.
Does the Tribunal have jurisdiction to make a decision in relation to Mrs Kotevski’s claim for Newstart Allowance?
The chronology of Mrs Kotevski’s claims is set out at [8]. The parties accept that:
·Mrs Kotevski withdrew her claim for Carer’s Payment before a decision was made with respect to that claim.
·She claimed Newstart Allowance which was rejected by the Department; and
·She has only ever sought a review of the decision to reject her Newstart Allowance.
·An error was made during the ARO referral process that identified the claim to be for Carer Payment rather than Newstart Allowance.
The Tribunal has jurisdiction to review a decision of AAT1 pursuant to s 179 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act) and s 25 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act).
The meaning of a “decision” in s 25(1) of the AAT Act was considered in Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21. Chief Justice Bowen said:
12. In the Administrative Appeals Tribunal Act a wide meaning is given to the word "decision" by s. 3(3). In s. 25 it appears to me that the word simply refers to a decision in fact made, regardless of whether or not it is a legally effective decision….
14. … The Act is clearly intended to give a person whose interests are affected by an administrative decision an effective appeal, free of technicalities, against that decision on questions of fact and of law see ss. 25, 27, 28, 31, 33, 42 and 44. [A restrictive] interpretation … would remove the most significant area involving questions of law from the jurisdiction of the Tribunal. It would render the appeal in many cases useless….
23. In the view which I take as to the meaning of s. 25 of the Administrative Appeals Tribunal Act, these questions do not need to be decided. As I have said, in my opinion an applicant to the Tribunal has standing and the Tribunal has jurisdiction provided there is a decision in fact and provided further that the decision purports to have been made in exercise of powers conferred by an enactment whether or not as a matter of law it was validly made and whether or not action on the basis there was power to make the decision was right or wrong.
In Secretary, Department of Social Security v Alvaro (1994) 50 FCR 213, the Full Federal Court said:
16. In the hierarchy of reviews from original decision-maker to the AAT it was not necessary that there be at the outset an original decision that was in all respects validly made, and at each level of review thereafter another decision that was in all respects validly made. The person or tribunal to whom application for each of the reviews was made had jurisdiction to undertake that review so long as the preceding decision-maker had made what purported to be a decision in exercise of powers conferred by the Act affecting the interests of the person seeking review. It mattered not whether the ground of complaint made about the preceding decision was merely that it is wrong on the merits, or that in law it was not an effective decision because it was made by someone without authority, or in excess of authority, or for improper purposes, or was vitiated through procedural irregularity such as a failure to accord natural justice.
17. The purpose of a review provided for by the Act is to allow the reviewing authority to correct error and substitute a new decision where error is detected.
In this case, the original decision under review was incorrectly identified. The Tribunal has all the powers and discretions of the original decision maker.[30] It has a duty to make the correct or preferable decision.[31] The decision-maker in AAT1 recognised the difficulty as shown by its footnote reference to “or newstart allowance”.
[30] Administrative Appeals Tribunal Act 1975 (Cth) s 43(1).
[31] Re Drake and Minister for Immigration and Ethnic Affairs (1978) 2 ALD 162 per Bowen CJ and Deane J; Re Drake (No. 2) (1979) 2 ALD 634 at 642 per Brennan J.
A correct decision in this case would be concerned with Mrs Kotevski’s claim for Newstart allowance.
The authorities demonstrate that the Tribunal has jurisdiction to review the decision of AAT1 as if it had considered the decision to review Mrs Kotevski’s claim for Newstart Allowance.
What is the impact of Mr and Mrs Kotevski’s combined assets on Mrs Kotevski’s claim for Newstart Allowance?
Section 611 of the Act provides that Newstart Allowance is not payable if the value of the claimant's assets is more that the "assets value limit", which is worked out by determining the person's family situation and whether the person is a homeowner.
A guide to Australian Government payments 20 September - 31 December 2017 indicates that Newstart Allowance was not payable where a homeowner couple's combined assets exceeded $380,500.
As stated at the beginning of this decision, the other assets of Mr and Mrs Kotevski were not in dispute. In any event, the value of the Hurstville property alone, one of the combined assets, was above the assets value limit. Newstart Allowance was not payable in respect of Mrs Kotevski’s claim made on 14 November 2017. The decision to reject her claim was correct pursuant to ss 36 and 37 of the Administration Act.
What is the impact of Mr and Mrs Kotevski’s combined assets on Mr Kotevski’s claim for Age Pension?
The rate of Age Pension for a person who is not permanently blind is calculated using section 1064 of the Act.[32]
[32] In accordance with section 55 of the Act.
Under s1064 of the Act, a person's rate of Age Pension is determined under either the income test or the asset test depending on which test produces the lower rate of payment.
Module G of section 1064 of the Act sets out the asset test. Generally, the asset test requires that every $1000 in assets over the relevant 'asset value limit' reduces a pensioner's asset tested pension rate by $3 per fortnight.
A guide to Australian Government payments 20 September - 31 December 2017 indicates that:
·for full pension a homeowner couple's combined assets had to be less than $380,500.
·For part pension homeowner couple's combined assets had to be less than $830,000.
Mr and Mrs Kotevski's combined assets exceeded $830,000 as at 5 December 2017, and therefore no Age Pension was payable.
As Age Pension was not payable to Mr Kotevski, the decision to reject his claim was correct pursuant to sections 36 and 37 of the Administration Act.
DECISION
In proceedings 2019/1792, the reviewable decision affirming the decision to reject Mr Kotevski’s claim for Age Pension is affirmed.
In proceedings 2019/1975, the reviewable decision is set aside and in substitution, it is decided that Mrs Kotevski’s claim for Newstart Allowance is rejected.
I certify that the preceding 69 (sixty-nine) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member
..................................[sgd]......................................
Associate
Dated: 16 September 2020
Date(s) of hearing: 17 February 2020 Applicants: In person Solicitors for the Respondent: Mr J Larcombe, Services Australia
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