Morrow and Secretary, Department of Social Services (Social services second review)

[2015] AATA 672

Morrow and Secretary, Department of Social Services (Social services second review) [2015] AATA 672 (4 September 2015)

Division

General Division

File Number(s)

2014/6681;

2014/6682

Re

Ian Morrow;

Sandra Morrow

APPLICANTS

And

Secretary, Department of Social Services

RESPONDENT

DECISION

Tribunal	Dr P McDermott RFD, Senior Member
Date	4 September 2015
Place	Brisbane

The Tribunal affirms the decision under review.

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Dr P McDermott RFD, Senior Member

CATCHWORDS

SOCIAL SECURITY – rent assistance – whether ineligible homeowners – applicants had right or interest in land – property partially owned by other family members – whether reasonable security of tenure – decision under review affirmed.

LEGISLATION

Social Security Act 1991 (Cth) ss 11, 11A, 1070B, 1070C

Land Title Act 1994 (Qld) s 184

Property Law Act1974 (Qld) s 11

CASES

Young v Secretary, Department Of Family & Community Services [2004] FCAFC 143

Secretary, Department of Employment and Workplace Relations v Vanderpluym (2007) 161 FCR 388
Leigh v Dickeson (1885) 15 QBD 60
Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635
Forgeard v Shanahan (1994) 35 NSWLR 206

SECONDARY MATERIALS

G E Dal Pont, Equity and Trusts in Australia (Thomson Reuters, 6^th ed, 2015)

REASONS FOR DECISION

Dr P McDermott RFD, Senior Member

4 September 2015

INTRODUCTION

1. Mr Ian Morrow and Mrs Sandra Morrow (“the applicants”) have in their applications sought review of a decision of Centrelink to reject their claims for rent assistance. Upon the consent of the applicants I made a direction on 5 March 2015 for both applications to be heard together.

   BACKGROUND

2. On 29 August 2007 one of the applicants (Mrs Sandra Morrow) became the registered owner of a property at Macleay Island (“the property”) as a tenant in common with a one third interest in the property. The other co-owners of the property are Douglas Morrow with a one third interest as a tenant in common, and Jonathan and Marnie Morrow as joint tenants inter se having a one third interest as a tenant in common. There is no issue that at all material times the property at Macleay Island has been and continues to be the principal home of the applicants.

3. On 4 December 2009 a general tenancy agreement was signed between the male applicant as tenant and the registered co-owners of the property (including the partner of the male applicant) as the lessor. The period of the tenancy agreement was for a term of 3 years. On 1 December 2012 the tenancy agreement was extended as a month to month tenancy by agreement between some of the owners of the property and the male applicant; however the female applicant’s name does not appear on that document.[1]

   [1] Exhibit A f 82.

4. On 8 December 2013 a general tenancy agreement was signed between the applicants as tenants and “Jonathan & Marnie Morrow & Douglas Morrow as tenants in common in 2/3 interest” as the lessor. The term of the tenancy agreement was fixed at 1 year.

5. On 8 December 2013 an agreement was signed between “Jonathan and Marnie Morrow [first tenant in common] Douglas Morrow [second tenant in common] and Ian and Sandra Morrow [third tenant in common]”.[2] This agreement has been referred to as the possession agreement by the applicants.

   [2] Exhibit B.

   PRIOR DECISIONS

6. The applicants have both been granted age pension without any payment for rent assistance. On 10 December 2013 the applicants wrote a letter to the Department which has been regarded as a joint application for rent assistance. On 10 March 2014 Centrelink made a decision that the applicants were not qualified to receive rent assistance because they were “ineligible homeowners”. The applicants then sought reconsideration of the decision.  On 13 October 2014 an Authorised Review Officer affirmed the decision. On 12 December 2014 the Social Security Appeals Tribunal (“SSAT”) affirmed the decision. On 23 December 2014 the applicants made an application to this Tribunal to review the decision.

   RELEVANT LEGISLATION

7. Section 1070B of the Social Security Act 1991 (Cth) (“the Act”) provides:

   A person qualifies for rent assistance if the person satisfies:

   (a) the common requirements set out in s 1070C of the Act; and

   (b) any specific requirement, set out in a later section of this Division, applicable to the person's social security payment.

8. Section 1070C of the Act provides the “common requirements” that qualify a person to receive rent assistance; relevantly paragraph (b) of that section provides the common requirement that the person must not be an “ineligible homeowner”.

9. Section 13 of the Act provides that an “ineligible homeowner” is a homeowner other than one covered by certain exceptions in paragraphs (a) to (e) of that section, which have no relevance to this application.

10. Section 11(4)(b) of the Act provides that a person who is a member of a couple is a homeowner if:

    (i)  the person, or the person's partner, has a right or interest in one residence that is:

    (A) the person's principal home; or

    (B)  the partner's principal home; or

    (C)  the principal home of both of them; and

    (ii)  the person's right or interest, or the partner's right or interest, in the home gives the person, or the person's partner, reasonable security of tenure in the home;

11. Section 11(1) of the Act provides that “reasonable security of tenure” has the meaning given by s 11A(10) of the Act which provides:

    If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.

    Does either applicant have an interest in the property?

12. Mrs Sandra Morrow has a one third interest in the property as a tenant in common as evidenced by the extract from the Queensland Land Titles search in evidence.[3] Mrs Morrow is a registered proprietor who under s 184 of the Land Title Act 1994 (Qld) holds an interest in the property. In Secretary, Department of Employment and Workplace Relations v Vanderpluym,[4] Greenwood J remarked that the interest of a registered proprietor is an “interest” within the meaning of s 11(4)(b) of the Act. I accordingly find that Mrs Sandra Morrow has an interest in the property as a tenant in common.

    [3] Exhibit A f 56.

    [4] (2007) 161 FCR 388 at 402.

13. Mr Ian Morrow asserts that he has an interest in the property. There is reliance on a document dated 11 September 2013 which was executed by the applicants. That document confirms that at all times “the interest that we have in [the property] as tenants in common as to a one third and the interest that we have under the tenancy agreement entered into with the other co-owners are held for the benefit of both of us jointly and are regarded by us as joint property”. The reference in that document to a tenancy agreement is a reference to the tenancy agreement which had been extended in the previous year. Whilst Mrs Sandra Morrow has a one third interest in the property as a tenant in common in the property, there is no evidence that Mr Ian Morrow is registered with Mrs Sandra Morrow as being a tenant in common. It is, however, fair to give that document a construction as being a declaration of trust so that the interest that is held by Mrs Sandra Morrow is not held for her benefit but is held by her as a trustee for both her and her husband.[5] The document which is signed by her would satisfy the formal requirements of s 11(1)(b) of the Property Law Act1974 (Qld). In Vanderpluym, Greenwood J remarked that an equitable interest in a property is an interest within the meaning of s 11(4)(b) of the Act.[6] The applicant Mr Ian Morrow therefore has an interest in the property within the meaning of s 11(4)(b)(i) of the Act.

    [5] G E Dal Pont, Equity and Trusts in Australia (Thomson Reuters, 6^th ed, 2015) 559.

    [6] Secretary, Department of Employment and Workplace Relations v Vanderpluym (2007) 161 FCR 388, 402-403.

    Are the applicants “homeowners”?

14. I have found that the applicants each have an interest in the property and must now consider whether the applicants can be regarded as homeowners.

15. The property is the principal home of Mr Ian Morrow and Mrs Sandra Morrow. Under s 11(4)(b) of the Act, Mr Ian Morrow is a homeowner by virtue of the fact that his partner, Mrs Sandra Morrow, has an interest in the property as a registered tenant in common in the property. He also has an interest in the property by virtue of the document of 11 September 2013 which provides that the registered interest that is held by Mrs Sandra Morrow is held by her for both her and her husband. If I am in error making a finding that Mr Morrow has an equitable interest in the property, it is sufficient for me to make a finding that Mr Morrow is a homeowner in reliance on the registered interest of his partner.

    Are the applicants “ineligible homeowners”?

16. I have found that the applicants are each homeowners and I must now consider whether the applicants can be regarded as “ineligible homeowners”.

17. Section 11A(10) of the Act provides that:

    If a person has a right or interest in the person's principal home, the person is to be taken to have a right or interest that gives the person reasonable security of tenure in the home unless the Secretary is satisfied that the right or interest does not give the person reasonable security of tenure in the home.

18. I have found that each applicant has an interest in the property (Mrs Sandra Morrow a legal interest and Mr Morrow an equitable interest) and under the terms of s 11A(10) of the Act each applicant is taken to have reasonable security of tenure in the property unless I find that the interest of each person does not give that person reasonable security of tenure in the property.[7] The applicants in reliance on the documentation before me ask me to make a finding that each applicant does not have reasonable security of tenure in the property. The evidence before me does not satisfy me that each applicant does not have reasonable security of tenure in the property. At the hearing I advised the applicant that there is no evidence of the extent of a mortgage debt. The applicants who were given leave to make submissions after the hearing have still not provided any evidence of the extent of any mortgage debt or any financial accounts of the property despite asserting that the property was purchased as an investment using “borrowed funds”. Neither applicant nor any party to the possession agreement has given evidence before me nor was any party made available for cross examination. In these circumstances I cannot be satisfied that each applicant does not have reasonable security of tenure in the property.  It is for this reason that I have decided to affirm the decision under review.

    [7] Cf. Young v Secretary, Department Of Family & Community Services [2004] FCAFC 143 [7] referring to the former s 11(8) of the Act.

19. While I have determined that I cannot be satisfied that each applicant does not have reasonable security of tenure in the property, I also make some observations on the documentation before me.

20. The applicants rely upon the possession agreement of 8 December 2013 which was executed by “Jonathan and Marnie Morrow [first tenant in common] Douglas Morrow [second tenant in common] and Ian and Sandra Morrow [third tenant in common]”.  The applicants provided the possession agreement to the respondent by a letter dated 6 January 2014.[8]  The possession agreement which is in two pages is in evidence.[9] The possession agreement provides:

    The parties now wish to terminate the existing arrangement to rent the property and to forthwith enter into a new tenancy agreement between the first and second tenants in common and the third tenant in common in the form of the agreement annexed [the tenancy agreement].

    [8] Exhibit A f 142.

    [9] Ibid ff 143-144.

21. There is no annexure to the possession agreement that was provided on 6 January 2014. However, the terms of the possession agreement would appear to terminate the tenancy agreement that was signed on 4 December 2009 (as extended from month to month) as that tenancy agreement would be “the existing arrangement to rent the property”. The applicants now rely on the tenancy agreement of 8 December 2013 which was certainly in force when the applicants made the application for rent assistance.

22. Certain documents which have been relied upon by the applicants, namely the document dated 11 September 2013[10] as well as the possession agreement, are drafted on the assumption that the applicants have an interest in the property as tenants in common, they are collectively described as the “third tenant in common”. The document dated 11 September 2013 which was executed by the applicants confirms:

    the interest that we have in [the property] as tenants in common as to a one third and the interest that we have under the tenancy agreement entered into with the other co-owners are held for the benefit of both of us jointly and are regarded by us as joint property.

    [10] Ibid f 107.

23. The tenancy agreement that was in force on 11 September 2013 has been terminated under the possession agreement. The possession agreement dated 8 December 2013 refers to the applicants as the “third tenant in common”. There is, however, no evidence that Mr Morrow has any registered interest in the property as a tenant in common. There is an extract from a search of the Queensland Land Titles in evidence,[11] that extract does not disclose Mr Morrow as having any interest in a tenancy in common of the property; the other parties to the possession agreement each have a registered interest. It is difficult to see how Mr Morrow can in the possession agreement deal with the property on the basis of him having an interest as a tenant in common when he does not have any such registered interest.  

    [11] Exhibit A f 56.

24. The possession agreement contains the following clauses:

    The parties agree that because of the financial circumstances of the parties and the necessity of the first and second tenants in common to receive rent the tenancy agreement and this agreement will be enforced strictly on its terms notwithstanding the family relationship.

    Default under the tenancy agreement by the third tenant in common shall be deemed to be default under this agreement.

    In the event of the third tenants in common defaulting under the tenancy agreement or this agreement the third tenants in common agree to forthwith vacate the property to allow all of the parties to grant a tenancy to a third party thereby satisfying the agreement between the parties to rent the property.

25. I am not persuaded that the children of the applicants who are party to the possession agreement (which is not in the form of a deed) would or could take any steps to require the applicants, who are their parents, to vacate the property. Mrs Morrow, who has a registered interest as a tenant in common has, as explained by Brennan J in Nullagine Investments Pty Ltd v Western Australian Club Inc,[12] the right to occupy the whole of the property in common with other tenants in common. 

    [12] (1993) 177 CLR 635, 643. Brennan J cited with approval Megarry and Wade, Law of Real Property, 5^th ed. (1984), p 422.

26. One remedy to satisfy disagreements between tenants in common is an action for partition. In a document entitled “Co-owners Statement of Intention” dated 7 May 2015[13] Douglas Morrow, Marnie Morrow and Jon Morrow declare:

    in the event of default in payment of rent and should we be unable to obtain vacant possession either voluntarily or under either of the above agreements it is our intention to immediately make an appropriate partition application for an order for sale of the property and therefore vacant possession of the property.

    [13] Exhibit B.

27. This document correctly contains recognition of the fact that a sale or partition is the only viable remedy where there are disagreements between tenants in common. In Forgeard v Shanahan[14] Meagher JA remarked that a co-owner not in occupation was normally virtually without remedy.[15] Lindley LJ in Leigh v Dickeson[16] remarked “Tenancy in common is a tenure of an inconvenient nature, and is unfit for persons who cannot agree amongst themselves; but the evils attaching to it can be dealt with only in a suit for partition or sale, in which the rights of the various owners can be properly adjusted”.[17] However, the fact that a partition action can be taken does not necessarily lead to a conclusion that the applicants do not have reasonable security of tenure in the property.

    [14] (1994) 35 NSWLR 206.

    [15] Ibid 221.

    [16] (1885) 15 QBD 60.

    [17] Ibid 69.

28. Furthermore, I do not accept the contention of the applicants that the terms of the tenancy agreement have the effect of effectively restricting the applicants’ rights to possession to being the same as an “everyday tenant”. The fact that the tenancy agreement does not provide for any rental bond[18] and that there is no evidence of any property inspections does not support this contention.

    [18] Exhibit A f 135.

29. It is for these reasons I find that each applicant is not qualified to receive rent assistance.

    CONCLUSION   

30. The decision under review is affirmed.

I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of

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Associate

Dated 4 September 2015

Date(s) of hearing	22 July 2015
Date final submissions received	7 July 2015
Applicant	In person
Solicitors for the Respondent	Mr Warren, Department of Human Services