Paget and Secretary, Department of Social Services (Social services second review) - [2023] AATA 4215

Paget and Secretary, Department of Social Services (Social services second review) [2023] AATA 4215 (6 September 2023)
Division:GENERAL DIVISION
File Number(s): 2023/0044
Re:Wendy Paget
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

REASONS FOR DECISION
Tribunal:Member Dr C Huntly
Date of oral decision: 6 September 2023
Date of written reasons: 20 December 2023
Place:Perth

On 6 September, I made the following decision:
The Reviewable Decision, being the AAT1 Decision, dated 8 December 2022, is set aside and substituted with the decision that:
(a) the ARO decision of 27 July 2022 is set aside and remitted to the Agency, with the direction that the Applicant’s transfer of $10,885 on 5 April 2022 and the Applicant’s Transfer of $10,287 were not disposals of assets as defined at s 1123 of the Act; and
(b) the Applicant’s age pension entitlement should be recalculated accordingly.
The Tribunal DIRECTS:
Both parties be given leave to request a copy of the transcript of the proceeding from the Tribunal’s Registry

Attached to this statement is a corrected transcript of the oral reasons for decision delivered to the parties in person at the conclusion of the hearing of the matter.
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Member Dr C Huntly
CATCHWORDS
SOCIAL SECURITY – age pension – application of asset test – disposal of assets – assessable gift – consideration – adequate consideration – meaning of ‘money’s worth’ – whether Applicant’s time with loved ones constitutes adequate consideration – oral decision delivered at hearing – written reasons provided at request of the Respondent – Reviewable Decision set aside
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – s 2A
Social Security Act 1991 (Cth) – ss 1123, 1124
Social Security (Administration) Act 1999 (Cth) – s 179
CASES
Bolton v Madden [1873] LR9 QB 55
Carlill v Carbolic Smoke Ball [1893] 1 QB 256
Chappell v Nestle [1960] AC 85
Curry v Misa [1875] LR 10 Exch 153
Director of Public Prosecutions for Victoria v Le [2007] HCA 52 (14 November 2007)
Giasoumi v Ribbera [2017] VSC 631
Hammer v Sidway 124 NY 538, 27 NE 256 (1891)
Lomax and Secretary, Department of Social Services [1989] AATA 457
Re Georgina Frendo v Secretary to the Department of Social Security [1987] FCA 438
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] 2 ALD 634
Soames and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 473
SECONDARY MATERIALS
Department of Social Services, ‘Guides to Social Policy Law’ Social Security Guide (current from 8 November 2021, <
REASONS FOR DECISION
Member Dr C Huntly
20 December 2023
MEMBER: Oral decision with reasons, 6 September 2023.
INTRODUCTION

The hearing of this application was held on 6 September 2023. The Applicant was not present, but was represented by her son, Mr Jonathan Paget. The Respondent was represented by Ms Vetter for HWL Ebsworth.
The Tribunal had materials before it, including:
(a)Respondent’s Section 37 T-Documents consisting of T1-T9, pages 1-110;
(b)Submissions from the Applicant (undated); and
(c)Respondent’s Statement of Facts, Issues and Contentions, filed 21 April 2023 (SOFIC).
During the hearing, evidence was taken on affirmation from Mr Jonathan Paget and Ms Coral Lancaster, who are children of the Applicant.
I considered submissions that the Respondent be given leave to make further written submissions as to the law of contract regarding the technical legal meaning of consideration.
I note that I was specifically directed to this question of law by the Respondent’s SOFIC, which references the decision of Woodward J in the Federal Court case of Re Georgina Frendo v Secretary to the Department of Social Security [1987] FCA 438 (Frendo).
I have had regard to the Tribunal’s objectives at s 2A of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act).[1] Given that there is no controversy about the technical legal definition of ‘consideration’, given also the circumstances of the case, the length of time this application has been on foot and the requirements of s 2A of the AAT Act, I have found that the balance of convenience weighs in favour of proceeding to determine the application without granting the leave requested by the Respondent for the purpose of providing illumination on such a basic legal concept.
[1] “the Tribunal must pursue the objective of providing a mechanism of review that:
(a) is accessible; and
(b) is fair, just, economical, informal and quick; and
(c) is proportionate to the importance and complexity of the matter; and
(d) promotes public trust and confidence in the decision‑making of the Tribunal.”
FACTS
On 22 October 2010, the Applicant was granted the aged pension (T7/74).
In 2022, the Applicant was too frail to make a long-haul trip to the United Kingdom and reached agreements with:
(a)firstly, her married and adult son; and
(b)a later and separate agreement with her married adult daughter.
to send them some money so that they could make the journey to Australia to visit the Applicant with their respective families.
As a result of the first of these agreements, on 5 April 2022, the Applicant made a payment of $10,885.34 to the Applicant’s son, Mr Darren Paget to purchase (T2/16):
…the required airfares to enable Darren to take his wife and three kids with him to Perth, Western Australia to visit his mother, Wendy Kaye Paget and his brother Jonathan [sic] Robert Leslie Paget and his family, to reunite us after the tragic death of his father, Wilfred Robert Paget.
As a result of the second agreement, on the 14 June 2022, the Applicant made a payment of $16,850.70 to her daughter Coral Lancaster to purchase (T2/17):
…the required airfares to enable her, her husband and teenage children to Perth to visit her mother, Wendy Kaye Paget, and support her following the death of her father, Wilfred Robert Paget who, died on 28 July 2021 during the covid lockdowns.
The Applicant’s friend contributed $5,000.00 towards the second payment (T4/53;T5/63). Part of this payment also allowed for the Applicant's daughter to book a short stay in a holiday house while visiting Australia (T2/17).
The amount in contention relating to the second agreement is apparently $10,287.00 (T5/62).
On 3 June 2022, the agency advised the Applicant that her aged pension was being reduced because her assets had been increased by the value of the cash transfers described above (T9/101).
These are the relevant facts and they are not in dispute between the parties.
PROCEEDINGS
The Applicant firstly sought internal review of the ARO’s decision, which was unfavourable to her, this is dated 27 July 2022 (T5).
She then sought merits review in the Social Services and Child Support Division of the Tribunal at the first instance (AAT1), by application dated 11 August 2023. That review was unfavourable to the Applicant on 8 December 2022.
The Applicant then applied for merits review in the General Division of the Tribunal, which is the present review, by application dated 4 January 2023.
Accordingly, I have jurisdiction to determine the application pursuant to s 179 of the Social Security (Administration) Act 1999 (Cth) (the Administration Act).
LEGISLATIVE FRAMEWORK
The Tribunal is required to consider the relevant provisions of the Social Security Act 1991 (Cth) (the Act), the Administration Act, the Social Security Guide (the Guide) and the AAT Act.
The Tribunal as a decision maker will generally apply the guidance contained in the guide unless there are cogent reasons not to do so. The most commonly cited authority for this proposition is Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] 2 ALD 634, 644-645 (Brennan J, former President of the AAT).
It is common ground that this matter will be determined according to a correct construction and application of s 1123 of the Act which provides:
1For the purposes of this Act, a person disposes of assets of the person if
(a)the person engages in a course of conduct that directly or indirectly:
(i)     destroys all of some of the person's assets; or
(ii)    disposes of all or some of the persons assets; or
(iii)   diminishes the value of all or some of the persons assets; and
(b)one of the following subparagraphs are satisfied:
(i)     the person receives no consideration in money or money’s worth for the destruction, disposal or diminution;
(ii)    the person receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;
(iii)   The Secretary is satisfied that the person's purpose, or the dominant purpose, in engaging that course of conduct was to obtain a social security advantage.
(Original emphasis.)
CONTENTIONS
The Respondent contends in the SOFIC as follows:
33. Section 1123 of the Act makes clear that consideration is to be given in “money or money’s worth” for the disposal.
34. The Guide at 1.1.A55 provides that for adequate financial consideration to be received “the person must receive value in the form of money or assets” or “the person must receive goods or services which approximate in value to the rate of disposed income”.
35. Considering the corresponding provision in the Social Security Act 1947 (Cth) in Re Georgina Frendo and Secretary to the Department of Social Security [1987) FCA 438 (“Frendo”) Woodward J considered that “consideration” in this context bore its technical, legal sense (at [17]). After referring to the Second Reading Speech for the Minister which contained the immediately relevant legislation, his Honour said:
19.‘Thus the Ministerial policy expressed in the words “without receiving adequate value in return” has been converted by the legislative draftsman into “receives no consideration or inadequate consideration, in money or money’s worth”. There are sound reasons why the draftsman would choose this term well known to the law. In the first place it should make for greater certainty of interpretation. Secondly, it comprehends in a single word both a present benefit and the promise of a future benefit. Thirdly, it covers both an act and a forbearance. Finally it underlines the requirement that “adequate value” received must be “in return” for the disposal of assets – the concept of a bargain is highlighted.
20.There is, of course, authority for the commons-sense proposition that, when a well-known legal term is used in a statute, it will be presumed (unless a contrary intention can be shown) that the term bears its normal legal meaning; see Attorney-General for NSW v Brewery Employees Union of NSW [1908] HCA 1994; (1908) 6 CLR 469 at 531.
21. Accordingly, I take the view that, if a pensioner disposes of property, then to escape the effect of sub-section (10) of s.6AC of the Act, he or she must receive consideration, in the sense recognised by the law of some contract of an act, forbearance or promise sufficient to establish the existence of a binding contract. In the present case, it was conceded that there was, at most, a family understanding for the future provision of accommodation, which did not result in any immediate benefit or enforceable future right for the applicant.
(Emphasis added.)
The Respondent’s submissions then refer me to the AAT decisions in Lomax and Secretary, Department of Social Services [1989] AATA 457, and Soames and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2013] AATA 473 as exemplars of how the judicial construction of this clause has been and should be applied to specific facts. The Respondent’s submissions then state:
39. The secretary contends that the payment of money for flights and return for her family to visit is a family arrangement only. There was no forbearance of promise sufficient to establish the existence of a binding contract between the Applicant and her children as considered by the Court in Frendo. On that basis, there was no, or inadequate, consideration in money’s worth for the disposition.
40. Similar to the tribunal’s reasoning in Soames, even if the Tribunal accepts that the Applicant received incorrect advice from Centrelink, that does not change the character of the disposition of the assets for the purposes of section 123 of the Act.
41. For completeness, there is no evidence that the applicant has been repaid the funds from her children.
41. The Secretary contends that the Applicant satisfies both 1123 (1)(b)(i) and/or (ii), in that the Applicant received no consideration and/or inadequate consideration for the disposal of her assets.
For reasons that will shortly become apparent, it is not necessary for me to further examine the contentions of either party in determining the application. Before I proceed, I note that the test posited in the Guide at 1.1.A55 provides that, for adequate financial consideration to be received the person ‘must receive value in the form of money or assets’ or ‘the person must receive money goods or services which approximate in value to the rate of disposed income.’ I agree with this proposition.
However, s 1123 of the Act relevantly allows for consideration to be adequate where the pensioner received ‘money’s worth’. This clearly allows for experiential benefits that might be termed ‘happiness’ by the libertarian philosopher, or for adherents to the teachings of Bentham, ‘utility’. It matters little that reliance is placed by the Respondent on the expansion of definitional matters in s 1124 of the Act, as that section also refers to ‘the amount of consideration received’. Such matters are relatively easy to calculate in the context of purely financial transactions, but other forms of agreement must fall to be determined according to ordinary contractual principles governing consideration.
The classic legal definition of consideration most commonly quoted is that of Lush, J in the case of Curry v Misa [1875] LR 10 Exch 153, 162, where his Honour said.
A valuable consideration in the sense of the law may consist rather in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given suffered or undertaken by the other.
Consideration is often conceptualised as the price of a promise.
The qualities of consideration for legal purposes are reasonably well-known. There are a number of aspects of consideration that must be borne in mind. One such aspect is that consideration must move from a promisee. Another of the key aspects of consideration at common law is that it is not for the court to determine the question of ‘value’ in the absence of other considerations.
The value of a promise is entirely a matter for the parties to the agreement. So, for example in the case of Bolton v Madden [1873] LR 9; QB 55, the promise to vote a certain way was held to have been good consideration. Similarly, in the case of Hammer v Sidway 124 NY 538, 27 NE 256 (1891), a promise to refrain from ‘drinking, smoking, swearing and gambling prior to the age of 21’ was equally regarded as sufficient consideration.
The reward cases, including Carlill v Carbolic Smoke Ball [1893] 1 QB 256 of course, also raise the point that actions and forbearances at the request of the promisor can each constitute sufficient consideration. The adage that consideration needs to be sufficient but need not be adequate, has been considered in many cases throughout the years. This highlights the fact that consideration must have a value, as was discussed in the case of Giasoumi v Ribbera [2017] VSC 631 at [69] to the effect that consideration must have some content or reality and, if it does, the law of contract is unconcerned with its sufficiency. We see this also in terms of things such as chocolate wrappers as per the case in Chappell v Nestle [1960] AC 85 and in instances where peppercorn rent has been held to be good consideration.
In Director of Public Prosecutions for Victoria v Le [2007] HCA 52 (14 November 2007), Kirby and Crennan JJ in their joint judgement observed at [114] that:
In the Court of Appeal, Maxwell P and Chernov JA (with whom Neave JA agreed on this point) noted:
The term “sufficient consideration” is not defined in the Act, although courts have sometimes used it as a synonym for adequate or “valuable” consideration. Thus, for example, in describing as “sufficient” the valuable consideration given by the promisee in Wigan, Mason J meant no more that the consideration was adequate to impose on the promisor an enforceable obligation.
Their Honours’ comments at [117]-[124] strongly suggest that the absence of exclusionary words relating to ‘love or affection’ at a definitional level within the relevant enactment allows for even ‘love or affection’ to constitute good consideration in the eyes of the law.
More to the point are comments of Gleeson CJ at [6] and [7] of the same case, where his Honour stated:[2]
… It is common ground that it does not include nominal consideration; yet to restrict it to commercial transactions supported by payment in money or money's worth goes beyond what is required by the legislative text and purpose. On the other hand, it is easy to imagine examples of transfers to near relatives which are motivated purely by goodwill or generosity, and reflect no form of obligation.
A transfer in consideration of natural love and affection may be for sufficient consideration within the meaning of the Act where it reflects a legal or equitable obligation of the transferor to the transferee. Such an obligation may arise out of a matrimonial relationship, and commonly does so. It is not necessary that it be capable of precise measurement, or that there be a search for exact equivalence between the obligation and the value of the interest transferred. A substantial parity will suffice. It is unnecessary to decide the issue that would arise in a case of a transfer for money or money's worth, but at a substantial undervalue. In the circumstances of the present case, the consideration was sufficient.
(Emphasis added.)
[2] Citing Vaizey on Settlements (1887) vol 1 at 66; and, Gibsons Conveyancing, 20th ed (1970) at 198.
The Respondent’s SOFIC at [33] and [34] states as follows:
Section 1123 of the Act makes clear that consideration is to be given in “money or money’s worth” for the disposal.
The Guide at 1.1.A55 provides that for adequate financial consideration to be received “the person must receive value in the form of money or assets” or “the person must receive money, goods or services which approximate in value to the rate of disposed income”.
This needs to be read in connection with [39] of the SOFIC which states:
The Secretary contends that the payment of money for flights in return for her family to visit is a family arrangement only. There was no forbearance or promise sufficient to establish the existence of a binding contract between the Applicant and her children as considered by the Court in Frendo. On that basis, there was no, or inadequate, consideration in money’s worth for the disposition.
I take the inference that has been led by the Respondent in these comments to be that the terms ‘no consideration’ or ‘inadequate consideration in money or money’s worth’ in s 1123(1)(b) of the Act, either requires that the agreement to which the relevant consideration element applies, must be commercial in nature, or that consideration must be equivalent in market terms.
It is clear enough from the words of the text of the Act that consideration for the purposes of s 1123 must be for ‘money or money’s worth’. Read together with the extract of the judgement of Woodward J in Frendo at [17], to which the Respondent has directed my attention to at [35] of the SOFIC, ‘consideration’ should be construed as follows:
… Secondly, it comprehends in a single word both a present benefit and the promise of a future benefit. Thirdly, it covers both an act and a forbearance. Finally it underlines the requirement that the “adequate value” received must be “in return” for the disposal of assets - the concept of a bargain is highlighted.
… Accordingly I take the view that, if a pensioner disposes of property, then to escape the effect of sub-sec. (10) of s.6AC of the Act, he or she must receive consideration, in the sense recognized by the law of contract of an act, forbearance or promise sufficient to establish the existence of a binding contract.
(Emphasis added.)

Nothing in s 1123 of the Act, and nothing in the available case law in the provision, requires that the agreement to which the relevant consideration would apply must either be commercial in nature or ‘for value’ in the sense of being equivalent.
The question of the value of ‘money’s worth’ should be construed in line with the ordinary law of contract, which expressly leaves the question of adequacy of the ‘money’s worth’ to the parties. If the Parliament had intended this to be otherwise, it would have used appropriately clear language to displace the relevant common law presumption as to the value of consideration in the agreement. It did not.
The parties concede that there was an agreement; whereby the Applicant’s lineal descendants and their spouses would undertake an arduous and complex journey from the United Kingdom to Australia. Ms Lancaster provided further detail of what this entailed in her oral evidence, which indicated the considerable disadvantage she experienced in making this trip (not just herself, but her family), for the purpose of spending precious time with the Applicant (transcript/21-23). In return, the Applicant would transfer approximately $11,000 (give or take) to each of her children in that country to help defray their costs of doing so.
Consideration (in terms of something of value) flowed from both parties in each agreement. Promises were made; promises were paid for; and promises were honoured. The bargain was completed.
The Applicant received her ‘money’s worth’, just as she would have, had she been well enough to undertake the same arduous journey herself and she had paid for her own travel and accommodation costs to obtain precisely the same money’s worth, namely, precious time with her loved ones.
If the price of admission to a cinema can be purchased by the showing of ephemeral moving slides on a blank screen in a darkened room, then the promise to undertake a long-haul trip as a family unit for a short vacation certainly can be.
The consideration in this case was far from illusory. The Applicant had cared for her late husband through the final demanding and very challenging stages of dementia, and she was isolated throughout this experience from those nearest and dearest to her by the COVID emergency.
Her advancing age and the circumstances of her life made these visits, which were partly funded by her, extremely and intrinsically valuable to her. Neither the Tribunal nor the Respondent were privy to the agreement between the parties. The only way which a non-party to such an agreement can regulate or evaluate the ‘money’s worth’ of the consideration, is if this is expressly provided for by statute. I see no such provision in the relevant statutory provisions.
On the basis of these assessments, I find therefore that the Applicant disposed of some of her assets as follows:
(a)on 5 April 2022 by transferring the amount of $10,885.34 to her son Darren Paget; and
(b)on 14 June 2022, by transferring the amount of $10,287 to her daughter Coral Lancaster.
I further find on the basis of the foregoing, that the Applicant received ‘adequate consideration in money’s worth’ for the destruction, disposal or diminution of her assets to that value as this is contemplated by s 1123(1)(b)(ii) of the Act.
Accordingly, my decision as at Western Standard Time 12.21 PM on 6 September 2023 was as follows:
DECISION
The Reviewable Decision, being the AAT1 decision dated 8 December 2022 is set aside and substituted with the decision that:
(a)the ARO decision of 27 July 2022 is set aside and remitted to the agency with the direction that the Applicant’s transfer of $10,885 on 5 April 2022 and the Applicant's transfer of $10,287 were not disposals of assets as defined at section 1123 of the Act and
(b)the Applicant's aged pension entitlement should be recalculated accordingly.
I also direct that both parties be given leave to request a copy of the transcripts of the proceedings today from the tribunal’s registry should they so require it.

I certify that the preceding 50 (fifty) paragraphs are a true copy of the reasons for the decision herein of Member Dr C Huntly

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Associate
Dated: 20 December 2023

51.     Date of hearing:

52.     6 September 2023

53.     Applicant:

54.     Mr J Paget

55.     Solicitors for the Respondent:

56.     Ms J Vetter, HWL Ebsworth Lawyers

57.

51. Date of hearing:	52. 6 September 2023
53. Applicant:	54. Mr J Paget
55. Solicitors for the Respondent:	56. Ms J Vetter, HWL Ebsworth Lawyers
57.