Peter Middleton and Secretary, Department of Employment, Education and Workplace Relations

[2009] AATA 494

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2009] AATA 494

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2007/2536

GENERAL ADMINISTRATIVE DIVISION		)
Re		Peter Middleton

Applicant

And Secretary, Department of Employment, Education and Workplace Relations

Respondent

DECISION

Tribunal The Hon B Tamberlin QC, Deputy President

Date 2 July 2009

PlaceSydney

Decision The decision of the Social Security Appeals Tribunal dated 26 March 2007 is set aside.  There is no debt due and payable by the Applicant in respect of Newstart Allowance.

.....................[Sgd]..................

The Hon B Tamberlin QC

Deputy President

CATCHWORDS:

SOCIAL SECURITY– Newstart allowance – decision made by Centrelink to raise and recover debts due to level of Applicant’s assets– decision varied by authoried review officer to reduce amount of the debt – Social Security Appeals Tribunal affirmed decision of authoried review officer - the decision under review is set aside – held no debt due and payable during the relevant period – presumption of advancement

RELEVANT ACTS:

Social Security Act 1991

Social Security (Administration) Act 1999

CITATIONS:

Napier v The Public Trustee (WA) (1980) 32 ALR 153 at 158

Nelson v Nelson (1995) 184 CLR 530 at 548, 549

OTHER:

Jacobs Law of Trust in Australia, 7th Edition at [1210] – [1216]

REASONS FOR DECISION

2 July 2009 The Hon B Tamberlin QC, Deputy President

Introduction

1.      This is an application to review a decision of the Social Security Appeals Tribunal (SSAT) which affirmed a decision by the Authorised Review Officer (ARO) to recover a debt being a Newstart Allowance of $13,932.17 from Mr Peter Middleton.

2. The question raised is whether Mr Peter Middleton's assets exceeded the applicable asset value limit pursuant to section 611 of the Social Security Act 1991 (“the Act”), in the period 30 April 2002 to 6 November 2003 and whether he owes the above amount. If the assets were above the limit a further question arises as to whether there are any reasons why the debt should not be recovered from him.

3.      At the hearing the dispute was narrowed to the question whether during the period he had a one half interest as tenant in common in property with his mother at 431 Parramatta Road, Leichhardt. It is common ground that if he had this interest his assets exceeded the prescribed limit (T2, page 7).

Background

4.      Mr Peter Middleton had received payment under the Newstart Allowance at various times in the period from 1993 to 28 July 2005. From 27 February 1997 he had a 50 per cent interest in a property at Mulvena Road, Larnook. That property has been valued over the relevant period at a figure within the range of $35,000-$45,000 (T2, page 7).

5.      By a document dated 1 October 1997 Mr Peter Middleton gave a Power of Attorney in "all matters" to his mother Mrs Dorothy Stanton. In November 1997 Mrs Stanton purchased the subject premises at 431 Parramatta Road, Leichhardt for an amount of $300,000 in the name of herself and Mr Peter Middleton as tenants in common. The entire purchase price was paid by Mrs Stanton from borrowed funds and none was paid by Mr Peter Middleton. The purchase was completed by 1 December 1997[S1] . The Certificate of Title records no mortgage on the property but states that Mr Peter Middleton and his mother had shares as tenants in common.

6.      Mr Peter Middleton has not paid any interest, council rates, water rates, land tax, or maintenance in respect of the property. Until approximately 2005 he said he was unaware that he had any interest in the Leichhardt property. Mrs Stanton confirmed in her evidence that her son was not told of the purchase and I accept their evidence on this point.

7.      During the period 1984 to 1994 Mrs Stanton was seeking a property settlement from her husband as part of, or incidental to, lengthy divorce proceedings arising from her marriage break-up. Mrs Stanton also has a daughter from whom she is "estranged" and she has two sons Ross and Peter. The property settlement with her former husband involved interests in a number of properties passing to her. She gave evidence, which I accept, that during and after the property settlement with her husband her accountant advised her to invest money in the names of the two sons in order to protect her estate, on her death, from claims by her “estranged daughter”. Mrs Stanton has had a serious heart condition and a grave incident in relation to this heart problem caused her to be hospitalised for some time in 2000. She continues to suffer from serious heart problems.

8.      Her other son Ross in 1997 wished to invest in real estate and located a property at 433 Parramatta Road, Leichhardt, but he did not have sufficient funds, so that property was purchased in the names of Mrs Stanton and her son Ross as tenants in common.

9.      Adjoining the above property at 431 Parramatta Road, Leichhardt was the subject property, and in order to treat her sons equitably she decided to purchase that property in her name and that of Mr Peter Middleton as tenants in common. She said that her intention was to ensure that Peter would get a one half interest as tenant in common only on her death. It was never her intention that he would get an immediate beneficial one half interest as tenant in common. She also said that she entertained the hope that perhaps a viable business could be conducted on the property but this hope was never realised.

10.     Having heard the evidence in chief and the cross-examination of Mrs Stanton I consider her to be a reliable witness and I accept the evidence unreservedly. Mr Peter Middleton was also cross-examined and I found his evidence to be generally vague but I accept that he was unaware for some years of his mother's purchase of the property whereby he was made a tenant in common. He gave evidence that he was disturbed to learn in about 2005 that his name was on the title because it had caused problems with the Newstart Allowance. In these circumstances it is difficult to accept that he could or ought to have disclosed the existence of an asset of which he was unaware.

11.     For completeness I should add that on 30 April 2002 Mr Peter Middleton inherited from his father a one half share in a property at Bateman's Bay in New South Wales. That property is zoned rural and has no house on it and is covered in scrub. It had a value in the relevant period of around $140,000 making his one half interest worth $70,000.

12.     On 6 November 2003 Mr Peter Middleton moved into the Leichhardt property at 431 Parramatta Road and no further Newstart debt was raised against him because the level of his assets fell below the prescribed asset limit.

13.     The position is that if the Leichhardt property at 431 Parramatta Road is not to be treated as an asset of Mr Peter Middleton at the relevant time over which the debt is claimed, then the asset limit was not exceeded and no debt is due.

Reasoning

14.     Where part or the whole of the legal title is vested in someone other than the person who paid the purchase price, a resulting trust in favour of the paying party will be, as a general rule, presumed: see Napier v The Public Trustee (WA) (1980) 32 ALR 153 at 158; Jacobs Law of Trust in Australia, 7th Edition at [1210] – [1216].

15.     However, where an interest is vested in son or daughter of the party who paid the purchase price the presumption is that there is no resulting trust because of the counter-presumption of advancement whereby the parent is presumed to intend to benefit the child and there will be an absolute gift. This applies to both adult and non-adult children: see Nelson v Nelson (1995) 184 CLR 530 at 548-549.

16.     The precise terms of the trust are important in this case. On the evidence of Mrs Stanton and having regard to the circumstances of her desire to ensure that the interests of her son would be protected from claims by her daughter, I am satisfied that Mrs Stanton intended to limit the trust so as to beneficially entitle him to an interest only as from the date of her death.  Until that time she intended he should have no entitlement to the property or any proprietary or other interest in it by way of tenancy in common or otherwise. She never had any intention to make an immediate gift of any present interest to Mr Peter Middleton but intended to retain full ownership, legal and equitable, and to meet all obligations on the property until her death and she acted on that basis by assuming full responsibility for taxes, maintenance, and debts in respect of the property.. If the question of entitlement had gone to Court for sale of the property at a time prior to her death, then Mr Peter Middleton would have been found to have no present entitlement or claim during his mother's lifetime to the subject property because of the terms of the trust under which his entitlement was only to arise on her death.

17.     Even assuming he had received a contingent interest, there is no evidence before me as to any valuation of the tenancy in common of Mr Peter Middleton which takes into account the fact that his mother retained complete ownership of the property until her death. Accordingly the evidence before me, does not satisy me that his assets exceeded the prescribed limit in the relevant period, taking into account the limitations and contingencies attaching to his interest in the Leichhardt property.

18.     To attempt to realise or sell such a contingent asset in the relevant period would have required an application to the Court and this course, with all its attendant uncertainties, would be a considerable deterrent to any prospective purchaser of the property, with the consequence that the market value of the asset would be greatly diminished.

19.     Accordingly, I disagree with the decision of the SSAT and set that decision aside. I find that the correct and preferable decision in this case is that there is no debt due and payable in the relevant period by Mr Peter Middleton in respect of Newstart Allowance, in respect of the relevant period.

I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of The Hon B Tamberlin QC, Deputy President.

Signed...............[Sgd]..............................
  Associate

Date of Hearing  27 May 2009
Date of Decision  2 July 2009
Solicitor for the Applicant   Waterhouse Solicitors  

Representative for the Respondent          Centrelink Legal Services and Procurement Branch

[S1]Not sure about this date, couldn’t find it in T docs or affidavit