Longo and Secretary, Department of Family and Community Services
[2003] AATA 1307
•19 December 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 1307
ADMINISTRATIVE APPEALS TRIBUNAL )
) No V03/457
GENERAL ADMINISTRATIVE DIVISION ) Re CARMEL LONGO Applicant
And
SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
Respondent
DECISION
Tribunal Mrs Joan Dwyer, Senior Member Date19 December 2003
PlaceMelbourne
Decision The Tribunal sets aside the decision under review and in substitution remits the matter to the Secretary for reconsideration in accordance with the direction that Mrs Longo is qualified for a farm help re-establishment grant.
(Sgd) Joan Dwyer
Senior Member
SOCIAL SECURITY – farm help re-establishment grant – date of claim – requirement of sale of farm within one year of application for grant – system of requiring two applications for grant – one before and one after sale – requirement that farm be sold within one year of the pre-sale application – definition of “farmer” – requirement that applicant “have a right or interest in the land used for the purposes of a farm enterprise” – significance of order giving Bank possession of property – applicant had “a right or interest in the land” until registration of transfer to purchasers – finding that applicant was at all relevant times “effectively in control of the farm enterprise” – decision under review set aside – matter remitted to respondent for reconsideration in accordance with the direction that applicant entitled to a farm help re-establishment grant
Farm Household Support Act 1992 (Cth)s 3, s 6, s 8B and s 8C, s 52A
Social Security Administration Act 1999 (Cth) s 140(1)(d)
The Farm Help Re-establishment Grant Scheme 1997 (Cth) s 2.1 and s 2.3(2) and s 3.2(1)
Transfer of Land Act (Vic) s 77(4)
Farm Household Support Amendment (Restart and Exceptional Circumstances) Bill 1997 (Cth)
Re Comiskey and Secretary, Department of Family and Community Services [2002]
AATA 596
Re Elliott and Secretary, Department of Family and Community Services [2000] AATA 151
REASONS FOR DECISION
19 December 2003 Mrs Joan Dwyer, Senior Member FORMAL MATTERS
1. This is an application by Mrs Longo for review of a decision of the Social Security Appeals Tribunal (“the SSAT”) made on 17 March 2003, which rejected her application for a farm help re-establishment grant under the Farm Household Support Act 1992 (“the Act”). The decision of the SSAT affirmed a decision of an officer under the Act, as described in s 140(1)(d) of the Social Security Administration Act 1999.
2. The Tribunal has decided to set aside the decision under review and to remit the matter to the respondent with the direction that Mrs Longo is qualified for a farm help re-establishment grant.
3. Mrs Longo appeared and gave evidence by telephone. Ms R Bradley, an employee of Centrelink, appeared for the respondent (“the Secretary”). The Tribunal had before it the documents (“the T documents”) lodged pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) and the exhibits tendered during the hearing.
4. The Tribunal also received written submissions from the parties after the hearing, in response to a letter from the Tribunal. As a result of its research into the matter, the Tribunal arranged for the District Registrar to write to the parties inviting further submissions on one issue. The District Registrar on 6 October 2003 wrote as follows:
Senior Member Dwyer has asked me to write to the parties about this matter. It is her view that s 77 of the Transfer of Land Act 1958 (Vic) is relevant to the issue of whether Mrs Longo retained “a right or interest in the land used for the purposes of a farming enterprise” as at 17 December 2002.
At that date Mrs Longo was still a registered proprietor of the land although the Bank had obtained an order for possession and had sold the property at auction. The sale had not been completed (T23 p203) and thus the transfer to the purchasers had not been registered.
Section 77(4) of the Transfer of Land Act 1958 provides:
77. Power of sale under a mortgage or charge
(4) Upon the registration of any transfer under this section all the estate and interest of the mortgagor or grantor of the annuity as registered proprietor of the land mortgaged or charged shall vest in the purchaser as proprietor by transfer, freed and discharged from all liability on account of such mortgage or charge and (except where such a mortgagor or grantor is the purchaser) of any mortgage charge or encumbrance recorded in the Register subsequent thereto except-
(a)a lease easement or restrictive covenant to which the mortgagee or annuitant has consented in writing or to which he is a party; or
(b)a mortgage charge easement or other right that is for any reason binding upon the mortgagee or annuitant-
and the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorize the sale or that due notice was not given or that the power was otherwise improperly or irregularly exercised but any person thereby damnified shall have his remedy in damages against the person exercising the power, and for the purposes of Part III the purchaser shall be deemed to have dealt with the registered proprietor of the land.
The Tribunal invites the parties to make a submission as to the relevance and effect of that sub-section. It appears to the Tribunal to indicate that in Victoria, at least, a mortgagor retains a right or interest in land which has been sold by a mortgagee in possession, until registration of the transfer to the purchaser.
5. The parties’ submissions on the issue were received by the Tribunal on 20 and 24 October 2003. As will be discussed later in these reasons, the respondent conceded the specific point raised by the Tribunal, and agreed that Mrs Longo had a “right or interest” in the relevant land as at the day she lodged her application for a re-establishment grant. However, the respondent raised a new issue, as to the date of the sale of the property. The respondent claimed that as Mrs Longo only lodged the relevant application after the sale of her farm, she could not satisfy the requirement of the relevant scheme (sub-para 3.2(1)(b)(ii)) that the farm enterprise be sold within one year of the date the person applied for the grant.
6. The Tribunal was surprised that the issue had not been raised by the respondent earlier, although there had been plenty of opportunities to do so. It was not raised by Centrelink officers in dealing with Mrs Longo’s application, nor was it raised before the SSAT. It was not referred to in the respondent’s Statement of Facts and Contentions in this matter, nor did Ms Bradley rely on the point at the hearing. If the point were a good one, those facts would raise concern about the way in which the re-establishment grant scheme is administered. However I have concluded that the point is not a good one, and that is why it was not raised until the last minute, when it became apparent that Mrs Longo was likely to succeed on the issues which were raised at the hearing. The reasoning for that conclusion is set out in these reasons.
BACKGROUND FACTS
7. The Tribunal finds the facts set out in the following paragraphs on the basis of Mrs Longo’s uncontested evidence, much of which was confirmed by material in the T documents.
8. Mr and Mrs Longo purchased a farm near Shepparton in 1977, and for the following 24 years they operated a commercial orchard on the property. The orchard specialised in the growing of apples, pears, apricots and plums. The Commonwealth Bank of Australia (“the Bank”) was the mortgagee of the property from the time of purchase.
9. Mr and Mrs Longo also owned a house and a milk bar and post office in Shepparton, and they had overdraft accounts with the Bank.
10. Mrs Longo said that, so far as she was aware, she and her husband had never been in default on any mortgage repayments, but in the late 1980s she learnt that the Bank claimed that she and her husband were in default. She pointed out that the T documents (T23 p211) demonstrated that the Bank’s correspondence had been sent to the address where she and her husband had been living when they purchased the farm, rather than to the farm to which they had moved.
11. In the late 1980s the Bank required a restructure of Mr and Mrs Longo’s financial arrangements in order to consolidate their indebtedness. Mrs Longo said that the Bank increased the rate of interest on the mortgage to 24%, and increased the mortgage repayments from $1400 per month to $1500 per week.
12. The Bank issued a writ in January 1991 claiming $350,000. As a result of that action, Mr and Mrs Longo lost the house, milkbar and post office, but retained the farm.
13. A second writ was issued by the Bank in 1993. On 15 June 2001, Hansen J ordered that the Bank recover possession of the Longo’s farm property (T23 p212). At that stage the debt was said to be $1,332,796.66. A warrant of possession authorising the Sheriff to enter the land was issued on 20 August 2001 (T23 p214).
14. Mrs Longo sought advice from a solicitor, who advised in a letter dated 17 August 2001 (A1):
Re: Commonwealth Bank of Australia v Longo
We refer to the above mentioned matter, and advise that we have now received information from the Commonwealth Bank of Australia advising as follows:
1.That the bank intends to sell the property as mortgagee with an Auction date expected to be approximately around 7th September 2001.
2.That we require you to vacate the property when required (a few days prior to the Auction date)
3.That [if] you maintain the property in at least it’s [sic] current condition during your stay then the bank will be agreeable to you staying in occupation for the time being.
4.It will be necessary for you to permit access to the property and internally to the dwelling and out buildings for the bank selling agent and his client/perspective [sic] purchasers.
15. Mrs Longo said that after the Bank took possession of the property, she and her husband continued to run the orchard exactly as they had always done. She described the fruit growing process in some detail, month by month. Work as a fruit farmer begins in May and continues until March. In May the trees are pruned, before being sprayed with oil in June and July, and again when the blossom appears in August. From September the trees are maintained and sprayed and the grass around the trees is cut. In November and December the trees are watered every 3 to 5 days, and picking starts from mid-November, when the earliest apricots are picked to send to the market in Sydney.
16. Subject to the weather, fruit picking continues every day from mid-November until mid-March, with different varieties of fruit ripening at different times. The whole Longo family assisted with picking of the fruit, but additional fruit pickers would also be employed as required. Mrs Longo said that she usually paid $8-9000 a year to have the fruit picked. Once picked, the fruit is packed. That task requires considerable skill. Mr and Mrs Longo also did the grading of the fruit. Some was sent for processing as tinned fruit. The remainder went to the market or for making fruit juice.
17. The Bank auctioned the farm property on 14 September 2001. It was sold for $290,000. Settlement of the purchase was on 31 December 2001 and the new owners took possession of the farm on 1 January 2002. The date of settlement is confirmed in a letter from the Bank to Centrelink (T23 p203). Mrs Longo and her husband arranged with the new owner to continue living there under a lease agreement.
18. Mrs Longo said that she and her husband ran the property between June 2001 and 1 January 2002 with “no change whatsoever”, from their usual practice. They employed pickers and sold fruit just as they had done in previous years.
19. From 1 January 2002, when the new owners took possession, Mr and Mrs Longo taught them how to run the orchard and pick and prepare the fruit for sale. Mrs Longo said that she enjoys a friendly relationship with the new owners, and she and her husband arranged to lease their home for $150.00 per week from the new owners so they could continue living at the farm. Mrs Longo and her husband instructed the new owners in all aspects of the running of the orchard. Mrs Longo said that in place of wages, the new owners agreed to allow them the proceeds of the January/February fruit sales.
20. Mrs Longo provided bank statements from 30 November 2001 to 28 February 2002 (A2). The statements show that Mrs Longo received a total of $25,311.26 from the sale of fruit during this period.
RELEVANT LEGISLATIVE PROVISIONS
21. The objects of the Act are set out in s 6 which provides:
The objects of this Act are:
(a)to provide financial assistance and/or advice to farmers who are unable to meet day-to-day living expenses and cannot obtain commercial loans; and
(b) to provide a financial incentive for such persons to leave farming; and
(c) to provide financial assistance to farmers who:
(i) are experiencing difficulty in meeting living expenses; and
(ii) are in exceptional circumstances.
22. The Act, at ss 8B and 8C, sets out the qualifications for farm help income support:
8B Qualification for farm help income support
Subject to this Division, a person is qualified for farm help income support in respect of a period if:
(a)the period begins on or after the farm help scheme payment commencement day; and
(b) throughout the period, the person:
(i) is a farmer; and
(ii) is at least 18; and
(iii) is an Australian resident; and
(iv) is in Australia; and
(c)the person has been a farmer for a continuous period of at least 2 years immediately before the period; and
(d)a certificate of inability to obtain finance issued in respect of the person has effect throughout the period.
8C Persons not qualified if Secretary determines that they do not effectively control farm enterprises
A person is not qualified, or ceases to be qualified, for farm help income support in respect of a period if the Secretary determines that:
(a)the person is not effectively in control of the farm enterprise for which the person claims farm help income support; and
(b)farm help income support should not be payable to the person in respect of the period.
Note:Some examples of cases in which the Secretary may consider that a person is not effectively in control of a farm enterprise are when a mortgagee has taken possession of a farm, when a person is a bankrupt or when an eviction notice has been served on a person in respect of a farm.
23.Section 3 of the Act sets out the following relevant definitions:
farm enterprise means an enterprise carried on within any of the agricultural, horticultural, pastoral, apicultural or aquacultural industries.
farmer means a person who:
(a)has a right or interest in the land used for the purposes of a farm enterprise; and
(b)contributes a significant part of his or her labour and capital to the farm enterprise; and
(c)derives a significant part of his or her income from the farm enterprise.
sale of a farm means a transaction as a result of which the rights or interests of a person in:
(a) a farm enterprise; and
(b) the land used for the purposes of the farm enterprise;
are transferred to another person.
24. Section 52A of the Act was amended with effect from 18 December 2000. As amended, it authorised the Minister to formulate a scheme to be known as “the farm help re-establishment grant scheme” to grant financial assistance to people on the sale of farm enterprises or rights or interests in farm enterprises. Section 52A provided:
52A Farm help re-establishment grant scheme
(1) The Minister may, by written instrument:
(a)formulate a scheme for the provision of payments, to be made, after 1 December 1997, the restart scheme payment commencement day, by way of grant of financial assistance to people on the sale of farm enterprises, or rights or interests in farm enterprises; and
(b) provide for the implementation and regulation of the scheme.
On and after the farm help scheme payment commencement day, the scheme is to be known as the farm help re-establishment grant scheme and a grant is to be known as a re-establishment grant.
(2) Without limiting subsection (1), the scheme may deal with:
(a)the circumstances in which people are qualified to apply for re-establishment grants; and
(b) the procedure for applying for a grant; and
(c) the circumstances in which a grant is payable; and
(d) the amount of grant payable; and
(d)the method for paying a grant.
25. The Farm Help Re-establishment Grant Scheme 1997 (“the Scheme”) was made under s 52A of the Act. Under s 2.1 of the Scheme a person is eligible to apply for a re-establishment grant (“a Grant”) under the Scheme only if the person is qualified for ‘farm help income support’ under the Act and satisfies the other requirements of the Scheme. It is a requirement of s 2.3(2) of the Scheme, that although a person wants to apply for a re-establishment grant only, the person must also complete a claim for “farm help income support”.
THE ISSUES
26. At the commencement of the hearing, the only aspects of entitlement to the farm help re-establishment grant (“the grant”) which were in dispute were:
(i)whether Mrs Longo was throughout the relevant period, a “farmer”, as defined in s3 of the Act, as required by s 8B(b)(i) of the Act; and
(ii)whether Mrs Longo, on the day when she lodged the relevant application, “was effectively in control of the farm enterprise”, as required by s 8C(a) of the Act and by s 3.2(1)(ba) of the Scheme.
27. Because of the further submission lodged by the respondent on 24 October 2003, it is also necessary to identify the relevant application and to consider the meaning of s 3.2(1)(b)(ii) of the Scheme. It is convenient to consider those matters first. Ms Bradley also referred in her further submission to s 3.2(1)(ba) of the Scheme.
THE REQUIREMENTS OF s 3.2(1) OF THE SCHEME
28. Section 3.2(1) of the Scheme, so far as relevant, provides:
3.2 Who is qualified for a re-establishment grant?
(1) A person is qualified to receive a re-establishment grant if:
(a)the person was eligible to apply for the re-establishment grant when the person applied; and
(b)the person’s farm enterprise has been sold (and completion of the sale has taken place) within 1 year, or such longer period as the Minister, in writing, allows under section 3.2A, after:
(i)if the person has received farm help income support — the person last received farm help income support; or
(ii)in any other case — the person applied for the re-establishment grant; and
(baa). . .
(ba)immediately before the sale the person was effectively in control of the farm enterprise; and
29. The substance of the further submission lodged on behalf of the Secretary was that Mrs Longo was not qualified for the grant because she had lodged her application after her farm had been sold by the Bank and so she could not satisfy s 3.2(1)(b)(ii). In substance the submission was that the farm was not sold “within 1 year . . . after . . . [she] applied for the re-establishment grant”.
THE IDENTIFICATION OF THE RELEVANT CLAIM
30. The second paragraph of paragraph 6 of the respondent’s further submission reads as follows:
Another requirement of the scheme is that the farm enterprise be sold within 1 year of the date the person applied for the grant: see subparagraph 3.2.(1)(b)(ii). When read together with the requirement in subparagraph (b) that the person be effectively in control of the farm enterprise immediately before the sale, it is clear that the requirements of the scheme cannot be made here where the farm has been sold prior to the making of the grant application by a mortgagee exercising power of sale. From the date of the auction on 14 September 2001, Mrs Longo lost any control over the sale of the property and was unable to comply with this requirement of the scheme.
31. That submission was made on the basis that Mrs Longo’s relevant claim or application for a re-establishment grant was made on 17 December 2001. The T documents do include a claim made by her for re-establishment grant on that day (T3 pp19-41). However the T documents also include a claim dated 17 July 2001 (T4 pp42-118), which is stamped showing that it was lodged on 18 July 2001. That claim is made on a different form. It is a claim form for “AAA ‑ Farm Help – Supporting Families Through Change”. The information notes at the start of that form state (T4 p43):
Farm Help consists of two payment components:
· Restart Income Support….
· A Restart Re-establishment Grant…
That same page, in the margin, contains a description of the Restart Re-establishment Grant which states:
Restart Re-establishment
Grant
Restart Re-establishment
Grant is a payment of up to
$45,000 if you sell your farm
within 12 months of applying
for the Restart
Re-establishment Grant or
within 12 months of ceasing
Restart Income Support.
However, you must apply by
30 November 2003 and
complete the sale of your farm
within 12 months.
You must apply for Farm Help
before selling your farm.
32. The completion of that form, including the gathering of supporting documentation, must have been an onerous task. There are 76 pages in total. The last page of the actual claim form (T4 p53) contains an election in the following terms:
Election
I wish to take up:
r Restart Income Support ONLY,
þ a Restart Re-establishment Grant ONLY, OR
r Restart Income Support and
a Restart Re-establishment Grant.
Mrs Longo ticked the box showing she wished to take up “a Restart Re-establishment Grant ONLY”.
33. During the hearing, although I had no indication that the date of the claim was a matter on which the Secretary would rely, raised with Ms Bradley the issue of why the Tribunal should not treat the application dated 17 July 2001 as the relevant application. The transcript reads (pp7-9):
MRS DWYER: Why can't we be looking at the one of 17 July 2001, Ms Bradley?
MS BRADLEY: Just let me clarify that.
MRS DWYER: Right.
MS BRADLEY: My understanding is the one that was lodged in December was after the farm was sold and the one that was lodged in July was prior to the farm being sold, but it enabled Mrs Longo to rejoin the scheme when she had originally applied in June 2000 - 14 June 2000.
MRS DWYER: Sorry, that doesn't - - -
MS BRADLEY: Doesn't make - - -
MRS DWYER: Well, I mean if I could be looking at 17 June [sic] 2001 there wouldn't have been the writ for possession yet, would there, although - - -
MS BRADLEY: Although the proceedings - the proceedings - - -
MRS DWYER: - - - 17 July - although they - the proceedings would have started.
MS BRADLEY: Yes, the proceedings would have started.
MRS DWYER: But they wouldn't have concluded. Query can we rely on 17/07/01. It is an application for the same thing, is it - application at T4, page 52 and 53. Yes, restart re-establishment grant only. Yes.
MS BRADLEY: Senior Member, if we look at document T4, page 43, and on the left-hand side there is a box which talks about the restart re-establishment grant.
MRS DWYER: Yes.
MS BRADLEY: There is a payment of up to $45,000 if you sell your farm within 12 months of applying for the restart re-establishment grant or within 12 months of ceasing the restart income support, however, you must apply by 30 November and complete the sale of your farm within 12 months. You must apply for farm help before selling your farm. Now, Mrs Longo applied in June of 2000 but she didn't sell her farm within that 12 month period so then the claim - then she re-applied on 18 July 2001, so that enabled her to rejoin the scheme to qualify for the grant pending finalisation of the sale of her farm.
MRS DWYER: Right, so you need the two claims. It is very complicated.
34. At that stage of the proceedings, I had no idea that Ms Bradley would be relying on s3.2(1)(b)(ii) of the Scheme and submitting, as she did in the further submission of 24 October 2003, that Mrs Longo was not qualified for a Grant as her farm had been sold before, rather than after, the making of the claim, and thus she could not satisfy s 3.2(1)(b)(ii) of the Scheme.
35. The fact that the farm had been sold prior to the lodging of the claim on 17 December 2001, was something that was always known to Centrelink. If that were a disqualifying factor for a person seeking a Grant, it would be curious that the point was not taken by Centrelink, either at the SSAT hearing, or during the AAT preliminary hearing processes, or at the substantive hearing of this matter.
36. However the explanation is apparent when one looks carefully at the T documents. The printed forms used by Centrelink as forms on which to claim re-establishment grant, consistently with Ms Bradley’s comment at the hearing, require that an initial application be made before the sale of a farm enterprise and second claim be made after the sale. A note on the claim T4, p 53 states:
Restart Re-establishment Grant
Note: To be eligible for RRG you must make an initial application for Farm Help before you sell your farm assets.
To receive the Restart Re-establishment Grant you need to make a second claim after the sale of your farming assets. (See the Restart Re-establishment Grant Claim form SU476A for details or contact Centrelink.)
37. I find that Mrs Longo’s initial application for a Grant relevant to this hearing was made on 18 July 2001, so that she would be eligible for a Grant, (T4 pp 42-118). The claim dated 17 December 2001 (T3 pp19-30), was a second claim which was required to be put in after the farm was sold, in order to receive a Grant. The farm enterprise was sold (and the sale was completed) within one year of 18 July 2001. The lodging of the earlier application on 18 July 2001, before the sale, satisfies the requirements of s3.2(1)(b)(ii) of the scheme.
WAS MRS LONGO A “FARMER”?
38. In order to be eligible for the Grant, Mrs Longo had to satisfy the provisions of ss 8B and 8C of the Act, as set out at paragraph 22 of these reasons. The respondent submitted that Mrs Longo did not qualify for the Grant because she was not a “farmer” at the time she lodged her application for a Grant. As set out in paragraph 23 of these reasons, the word “farmer” is defined in s 3 of the Act.
39. The respondent conceded that Mrs Longo satisfied the requirements of paragraphs (b) and (c) of the definition of “farmer”. It was not in dispute that Mrs Longo had contributed a significant part of her labour and capital to the farm enterprise, and had derived a significant part of her income from the farm enterprise.
40. The point in issue was whether Mrs Longo satisfied the requirement in paragraph (a) of the definition of “farmer” on the date of her application. That date is now 18 July 2001, which in fact strengthens Mrs Longo’s case. In order to satisfy the requirement in paragraph (a) of the definition of “farmer”, Mrs Longo needed to have “a right or interest in the land used for the purposes of a farm enterprise’”
41. As to the issue whether Mrs Longo had “a right or interest in the land used for the purposes of a farming enterprise”, as at the date she lodged her claim, the respondent’s Statement of Facts and Contentions contended:
(b)It is submitted that the Applicant had no legal interest in the land after the Commonwealth Bank of Australia had assumed the status of mortgagee in possession pursuant to the Order of Hansen J.
(c)It is further submitted that the Applicant had no equitable interest in the land after the sale by the Commonwealth Bank of Australia, as mortgagee in possession, became unconditional, being 14 September 2001, as the property was sold at auction on that day.
(d)The Commonwealth Bank of Australia advised that there was no arrangement between the Bank and Mr and Mrs Longo for the latter to continue in occupancy after the sale of the property by the Bank (T23 page 202).
(e)The Applicant had provided a letter from her Solicitors, J Kotsifas & Associates, dated 17 August 2001 which states that the Bank requires the Applicant to vacate the property when required (a few days prior to the auction date) and that if the Applicant maintain the property in at least it’s current condition during her stay then the bank will be agreeable to the Applicant staying in occupation for the time being.
(f)It is submitted that there is no evidence of any formal tenancy between the Applicant and the Commonwealth Bank of Australia.
(g)It is submitted that the Applicant, as at 17 December 2001, did not have a right or interest in the land, and does not satisfy section 3(a) of the Act.
42. When I arranged for the District Registrar to write to the parties about this issue, I did so on the understanding that the relevant date at which to consider whether Mr and Mrs Longo retained a right or interest in the land was 17 December 2001. That date was after the sale of the property at auction on 14 September 2001, but before registration of the transfer to the purchasers, which occurred on 26 February 2002, after settlement on 31 December 2001. It is now apparent that the correct date at which to consider whether Mrs Longo retained a right or interest in the land used for the purposes of the farm enterprise was 18 July 2001. That date was shortly after Hansen J ordered that the Bank recover possession of the farm property, but before the Bank had obtained a warrant of possession and before the sale by the Bank at auction on 14 September 2001.
43. The respondent’s submission on this issue at the hearing was that Mrs Longo had lost any right or interest in the land used for the purposes of the farm enterprise, either when the Bank obtained the order for possession, or when the property was sold at auction. That submission was consistent with the Tribunal decisions of Re Comiskey and Secretary, Department of Family and Community Services [2002] AATA 596 and Re Elliott and Secretary, Department of Family and Community Services [2000] AATA 151.
44. In Re Comiskey, the issue was only briefly mentioned. The Tribunal said at paragraph 32:
I am satisfied that the applicant effectively lost his interest in the land when the Bank took possession and leased the land and the business to a third party effective 1 July 1999 for five years. While it may be the case that there is a subsisting equity of redemption for the benefit of the applicant, I am satisfied that it is more likely that it would be valueless, if it exists at all.
45. In Re Elliott, the Tribunal considered the matter in more detail, but under the issue of “control” (which is dealt with later in these reasons). The Tribunal did not consider under paragraph (a) of the definition of “farmer”, whether the applicant at the relevant time had “a right or interest in the land used for the purposes of the farm enterprise”. However, the findings of the Tribunal could be seen to be relevant to paragraph (a) of the definition of “farmer”.
46. The Tribunal in Re Elliott said, at paragraph 47:
The applicant argued that he remained in control of the farm because he had not lost his equity of redemption. He stated that he could have re-financed the debt and redeemed the mortgage at any time up until the sale took place. The Tribunal notes the letter from the Bank dated 15 July 1998 where it states that 'whilst no application for finance has been considered for continuation or additional finance, any such application could not be entertained'. The Tribunal agrees with the Respondent that it was unlikely that the applicant could have exercised an equity of redemption at this point, considering the sizeable $2.3 million debt. Furthermore, the likelihood of this being able to be negotiated with any other financial institution would have been remote due to the partnership's indebtedness on the earlier loan, and given the order of the court.
47. In each of Re Comiskey and Re Elliott, the Tribunal seems to have taken the view that the applicant’s equity of redemption was “valueless”, or could not realistically be exercised considering the size of the mortgage debt. The question whether or not a mortgagor has an equity of redemption, and whether a mortgagor retains a “right or interest” in land is not affected by the value of that equity of redemption. It is a matter of law whether a registered proprietor of land, which has been sold by a mortgagor, does or does not retain an interest in that land. Until a property is sold by a mortgagee in possession, the mortgagor retains an equity of redemption. The position is less clear during the time between sale of the property and registration of the transfer to the purchaser.
48. As was pointed out in the letter which I arranged for the District Registrar to send to the parties, in Victoria at least, there seems to be statutory confirmation that the mortgagor retains a right or interest in the land until registration of the transfer to the purchaser. Section 77 of the Transfer of Land Act 1958(Vic) deals with “Power of Sale under a Mortgage or Charge”. Section 77(4) provides:
(4) Upon the registration of any transfer under this section all the estate and interest of the mortgagor or grantor of the annuity as registered proprietor of the land mortgaged or charged shall vest in the purchaser as proprietor by transfer, freed and discharged from all liability on account of such mortgage or charge and (except where such a mortgagor or grantor is the purchaser) of any mortgage charge or encumbrance recorded in the Register subsequent thereto except--
(a) a lease easement or restrictive covenant to which the mortgagee or annuitant has consented in writing or to which he is a party; or
(b) a mortgage charge easement or other right that is for any reason binding upon the mortgagee or annuitant--
and the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorize the sale or that due notice was not given or that the power was otherwise improperly or irregularly exercised but any person thereby damnified shall have his remedy in damages against the person exercising the power, and for the purposes of Part III the purchaser shall be deemed to have dealt with the registered proprietor of the land.
49. Thus, it would appear that it is only upon registration of a transfer in respect of a mortgagee’s sale, that “all the estate and interest of the mortgagor as registered proprietor of the land”, vests in the purchaser. Further, it is apparent from s 77(4) of the Transfer of Land Act 1958 (Vic), that until registration of the transfer, the title of the purchaser is impeachable on grounds showing that the power of sale was improperly or irregularly authorised or exercised.. The section indicates that a mortgagor does retain some right or interest in the land the subject of a mortgagee’s sale, until registration of the transfer to the purchaser.
50. In Sykes, E L, and Walker, S, (1993) The Law of Securities 5th Ed, the authors comment on s 77(4) of the Transfer of Land Act1958 (Vic) as follows:
It is thought on the whole that save in Victoria the protection exists prior to as well as after registration, though it is admitted that some doubt exists. This conclusion is supported by McKean v Maloney [1988] 1 Qd R 628 where McPherson J applied a purchaser’s protection clause in favour of an unregistered purchaser. In Victoria it might be thought that the change from the word “transferee” in the last paragraph of s.148 of the 1928 Act to “purchaser” in the present Act tended towards the same conclusion as in the other States; however, it is considered that the opening words of s.77(4), viz. “upon the registration of any transfer”, should be accorded considerable weight and should be viewed as controlling the rest of the section. The position remains dubious but it is thought that in this State the transferee is protected only after registration.
51. The sale in this matter took place in Victoria. When the matters set out above were pointed out to the parties in the letter from the District Registrar dated 6 October 2003, Ms Bradley, as set out in paragraph 5 of these reasons, acknowledged that Mrs Longo retained “a right or interest in the land” until registration of the transfer to the new purchasers on 26 February 2002. Bearing in mind the words of s 77(4) of the Transfer of Land Act 1958 (Vic), and the concession on behalf of the Secretary, in the written submission of 24 October 2003, I find that Mrs Longo did have a right or interest in the land until registration of the transfer to the purchasers.
52. Of course, the position is even more clear in relation to the 18 July 2001 claim. When that claim was lodged the land had not yet been sold, in fact the warrant of possession had not yet been issued. I find that Mrs Longo was, as at both 18 July 2001 and 17 December 2001, a “farmer”, within the meaning of that term in s 8B(b)(i) of the Act, as defined in s 3 of the Act.
WAS MRS LONGO EFFECTIVELY IN CONTROL OF THE FARM ENTERPRISE?
53. First, it is relevant to state that s 8C is a disqualifying section. A person is not entitled to “farm help income support” in respect of a period, if “the person is not effectively in control of the farm enterprise for which the person claims farm help income support”.
54. Mrs Longo does not seek “farm help income support”, but in order to be eligible to apply for a Grant she had to be qualified for “farm help income support”, when she lodged her claim for a Grant. Thus the question is whether Mrs Longo was “effectively in control of the farm enterprise” when she lodged her claim on 18 July 2001.
55. The same requirement is set out in s 3.2(1)(ba) of the Scheme which provides that one of the requirements to be qualified to receive a re-establishment grant is that:
(ba) immediately before the sale the person was effectively in control of the farm enterprise; and
56. Mrs Longo’s unchallenged evidence was that, after the Bank obtained the order for possession, and then took possession, she and her husband ran the orchard exactly as they had done before. As set out above, she said there was “no change whatsoever”. She and her husband did all the work, except when they hired people to help with the picking. They made all the decisions and incurred liabilities for expenses such as wages of pickers, sprays, packaging, transport, electricity and water services (T23 pp156-167). They also received all proceeds of sales as shown by the Bank statements in evidence before the Tribunal. Mrs Longo said that the Bank never contacted them or attempted to control their method of operation of the farm property between the time the Bank obtained the order for possession and 1 January 2002, when the purchasers took over the farm property. The only contact was the one occasion when the bank advised her solicitor in August 2001, that Mr and Mrs Longo could continue living on the property, as set out in paragraph 14 of these reasons.
57. I accept that evidence of Mrs Longo. I find that Mrs Longo was “effectively in control of the farm enterprise” as at 18 July 2001 as well as at 17 December 2001. In making that finding I have taken into account the fact that the definition of “sale of a farm”, in s 3 of the Act, as set out in paragraph 23 of these reasons, recognises that there is a distinction between the rights or interests of a person in:
(a) a farm enterprise; and
(b) the land used for the purposes of the farm enterprise;
58. In order for a transaction to constitute a “sale of a farm” as defined, the rights or interests of a person in both the “farm enterprise” and “the land used for the purpose of the farm enterprise” must be transferred to another person. I find that at all relevant times Mrs Longo and her husband were “effectively in control of the farm enterprise”.
59. Ms Bradley on this issue relied on the note to s 8C of the Act and on s 3.2(1A) of the Scheme.
60. The note to s8C provides:
Note: Some examples of cases in which the Secretary may consider that a person is not effectively in control of a farm enterprise are when a mortgagee has taken possession of a farm, when a person is a bankrupt or when an eviction notice has been served on a person in respect of a farm.
61. That note does not expressly state that where a mortgagee has taken possession of a farm, a person can not be taken to be “effectively in control of a farm enterprise”. It simply draws attention to the fact that such a conclusion may be appropriate in that situation. It would no doubt depend on the facts of the case. I consider that the note at point 3.5.2 of the extract from a relevant Manual, (Tdocs p222) is somewhat misleading, because it does not reflect the discretionary aspect of the note to s 8C of the Act. There is a similar problem with bullet point 3 on the application form in the list of qualifications for a Restart Re-establishment Grant (T3 p20).
62. A mortgagor in possession would be entitled to take over control of the farm enterprise or to employ a new manager. If the mortgagor in possession did so, the mortgagee would no longer be “effectively in control of the farm enterprise”. That is not what happened in this matter. As set out earlier in these reasons, the unchallenged evidence establishes that Mrs Longo and her husband remained “effectively in control of the farm enterprise”, until the new purchasers took possession on 1 Jan 2002.
63. Ms Bradley also relied on s 3.2(1A) of the Scheme, which provides
(1A) For paragraph (1) (ba), and despite section 8C of the Act, a person is taken to have been effectively in control of a farm enterprise immediately before the sale of the enterprise if, after becoming qualified for farm help income support, but before the sale, the person:
(a) entered into a valid and enforceable deed of assignment or arrangement, or a composition, under Part X of the Bankruptcy Act 1966; or
(b) allowed a mortgagee to take possession of, or sell, the farm enterprise:
(i) without having defaulted on the mortgage; or
(ii) having defaulted on the mortgage, but before the mortgagee had started enforcement action in relation to the default.
64. Ms Bradley submitted that s 3.2(1A) of the Scheme implied that, where a person had not “allowed” a mortgagee to take possession of, or sell, the farm enterprise, but the mortgagee had taken possession because the person had “defaulted on the mortgage”, the person was not to be taken to have been “effectively in control of the farm enterprise”.
65. In my opinion s 3.2(1A) of the Scheme is not to be read that way. It is a beneficial deeming provision, which covers situations where a person is not actually still “effectively in control of a farm enterprise”. It is not applicable in a matter such as this, where the applicant was still living on the farm property and is found to have been, at the relevant date, “effectively in control of the farm enterprise”. It is a deeming provision which allows a person to be “taken to have been effectively in control of a farm enterprise”, even where the person was not in fact in control of the farm enterprise. The benefit of that deeming provision can only apply to a person who has left a farm in the circumstances set out in s 3.2(1A) paragraphs (a) and (b).
66. I am aware that my conclusion on this matter is not consistent with the views expressed by the Tribunal in Re Elliott at paragraphs 45 and 49 where it said:
45.The applicant claimed that because he continued to farm the land, he remained in control of the property until 11 September 1998. The Tribunal does not accept this argument. When the writ of possession was issued, the partnership lost its ability to grant or discharge any rights or interest in the property without a further court order. It was only because the Bank consented to the applicant remaining on the land, that the applicant could continue farming. At this point, the Bank was clearly "effectively in control" of the farming enterprise. The applicant's physical possession and continued farming of the land does not equal control for the purposes of section 8C(a).
. . .
49.Further, section 8C(a) clearly contemplates that "effectively in control" relates to the real property which is the subject of the farming enterprise. The Note to the section suggests that the control of the farm is central to the control of the farming enterprise when it refers to "when a mortgagee has taken possession of a farm" or "when an eviction notice has been served on a person in respect of a farm". Both these legal remedies are inextricably linked to real property.
67. The Tribunal, in Re Elliott, seems to have accepted the respondent’s submission that the fact that the Bank had obtained a writ of possession constituted a loss “of control of the farm enterprise” under s 8C, despite the fact that the Bank did not exercise its rights “of control of the farm enterprise” until a later date (paragraph 32).
68. The Tribunal in Re Elliott rejected the applicant’s submission that “control of the farming enterprise” is distinct from control of the property. That conclusion is not required by the Note to s 8C of the Act, nor by s 3.2(1A) of the Scheme.
69. Further, the Tribunal in Re Elliot did not refer to the definition of “sale of a farm” in s3 of the Act. As set out in paragraph 57 of these reasons, the definition requires sale of two components, namely the “farm enterprise” and “the land used for the farm enterprise”. Bearing that fact in mind, I consider that the expression “effectively in control of the farm enterprise” refers to control of the business of the farm enterprise, and not, as the Tribunal found in Re Elliott, “to the real property which is the subject of the farming enterprise”.
70. The Tribunal in Re Elliott said at paragraph 50 of its reasons:
One of the purposes of this grant scheme is to provide an incentive for unsuccessful eligible farmers to leave farming. Clearly, the applicant has not been a successful farmer. However, if a farmer has already effectively lost control of the farm property, there is no longer a need for the Government to provide an incentive to leave farming.
71. Ms Bradley, in her further submission of 24 October 2003, paragraph 11, also referred to the intention of the Scheme as set out in the Second Reading Speech for the Farm Household Support Amendment (Restart and Exceptional Circumstances) Bill 1997. She set out the following extract:
“A re-establishment grant of up to $45,000 will be available to eligible farmers. This grant will provide positive incentives for farmers to leave farming before their assets are severely depleted . . . . To receive the grant, those who apply and meet the eligibility criteria will need to sell their farm within 12 months of ceasing income support, or from the date of their application if income support is not sought.”
Ms Bradley submitted:
An outcome which resulted in the grant being paid at a time when the farmer’s financial position had reached the point that the Bank had entered into possession of and sold the farm property (and therefore at a time when the farm family had no farming future to consider) would be inconsistent with the objectives of the scheme.
72. One answer to Ms Bradley’s submission is provided by the express words of s 3.2(1A) of the Scheme which are set out in paragraph 63 of these reasons. The purpose of that provision is to allow a person to qualify for a Grant even though a mortgagee has taken possession of or sold the person’s farm.
73. I do not find any clear provision in either the Act or the Scheme under which Mrs Longo is prevented from being qualified for a Grant, because when she lodged her initial claim on 18 July 2001, the Bank had already obtained an order for possession in the Supreme Court on 15 June 2001. I have found that Mrs Longo satisfies each of the necessary qualifying provisions of the Act and the Scheme. I do not see any basis to reject her claim, on the ground that the Bank had already obtained an order for possession when she lodged her initial application.
74. I find that Mrs Longo was “a farmer” as at 18 July 2001, and also as at 17 December 2001. I find that as at both those dates she was in effective control of the farming enterprise in respect of which she claimed a Grant. I find that she was qualified for the Grant for which she made an initial application on 18 July 2001 and a second claim after the sale of the farm on 17 December 2001.
75. The decision under review will be set aside. In substitution I will remit the matter to the Secretary for reconsideration in accordance with the direction that Mrs Longo is qualified for a farm help re-establishment grant.
I certify that the 75 preceding paragraphs are a true copy of the reasons for the decision herein of
Mrs Joan Dwyer, Senior MemberSigned: Grace Carney
Personal AssistantDate of Hearing 12 September 2003
Date of Decision 19 December 2003
Solicitor for the Applicant Self Represented
Departmental Advocate Ms R. Bradley
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