Peterson and Secretary, Department of Health and Aged Care (Social security second review)
[2025] ARTA 337
•8 April 2025
Peterson and Secretary, Department of Health and Aged Care (Social security second review) [2025] ARTA 337 (8 April 2025)
Applicant/s: Alan Peterson
Respondent: Secretary, Department of Health and Aged Care
Tribunal Number: 2024/3010
Tribunal:General Member Darian-Smith
Place:Sydney
Date:8 April 2025
Decision:The Tribunal sets aside the Reviewable Decision and substitutes the decision that the money transferred from the Applicant’s CBA Account to Jessica Sumich in the period between 2021 and 2023 (including the amount of $190,000 described by the Respondent in the Reviewable Decision as Gifts) does not constitute a disposal of assets in accordance with s. 1123(1) of the Social Security Act and does not form part of the Applicant’s assets for Aged Care purposes. The Applicant can demonstrate financial hardship and is eligible for a hardship supplement payment from 12 June 2023.
.......................[SGD].................................................
General Member Darian-Smith
Catchwords
HEALTH and AGED CARE – Aged care recipient – assessable assets – whether applicants’ assessable assets calculated correctly – gifts – whether applicant transferral of money to his granddaughter constituted a gift – disposal of assets – whether applicant disposed of assets – capacity and undue influence– whether applicant had capacity or was under undue influence – financial hardship – whether applicant meets financial hardship threshold – decision under review set aside and substituted
Legislation
Social Security Act 1991 (Cth) ss. 11, 1123
Aged Care Act 1997 (Cth) ss. 44-2, 44-22, 44-26A, 44-30, 44-31
Subsidy Principles 2014 ss. 4, 60
Powers of Attorney Act 1998 (Qld) s. 87Guardianship and Administration Act 2000 (Qld) Schedule 4
Cases
Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113
Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286
BSJ [2022] QCAT 51
Crago v McIntyre [1976] 1 NSWLR 729
Birch v Birch [2020] QCA 31
Powell v Powell [1900] 1 Ch 243
Michaletos v Stivactas [1992] ANZ ConvR 90
Stafford and Secretary, Department of Social Services [2014] AATA 404
Boyd and Secretary, Department of Social Security [1994] AATA 580
James Ernest Cooper and Repatriation Commission [1997] AATA 18Statement of Reasons
The Applicant (Mr Peterson) seeks review of the decision of the Authorised Review Officer on 5 April 2024 affirming the two earlier decisions of the Respondent (the Secretary) made on 4 November 2023: to assess Mr Peterson’s assets on 12 June 2023 for Aged Care purposes as $226,428, and made on 27 March 2024: to reject Mr Peterson’s claim for financial hardship assistance for residential care on the basis that he had gifted more than $10,000 in the previous 12 months or more than $30,000 in the previous 5 years ( the two decisions are collectively referred to as the Reviewable Decision).
The parties have compiled a Joint Hearing Tender Bundle (Tender Bundle) which comprises the T-bundle (T1-T27 inclusive) and additional documents including Mr Peterson’s Statement of Facts, Issues and Contentions and Annexures A-F dated 10 December 2024 (Applicant’s SFIC) and the Secretary’s Statement of Facts, Issues and Contentions and Attachments A-B dated 4 February 2025 (Respondent’s SFIC). The Tender Bundle has been marked Exhibit 1. Refences to documents in these Reasons will include the page number references in the Tender Bundle. The Tribunal has had regard to all the material filed in these proceedings.
SEQUENCE OF EVENTS
Mr Peterson was born on 15 January 1937 and is 88 years old. Since 12 June 2023, he has been in residential aged care in Atherton, Queensland (Atherton) at Carinya Home for the Aged (Carinya).[1] There is no medical evidence before the Tribunal that Mr Peterson lacks capacity. Mr Peterson has a poor recollection of the relevant events in this matter and did not give evidence at the hearing.
[1] Tender Bundle (TB), pages 12, 64.
On 20 July 2021, settlement took place in the sale of Mr Peterson and his ex-wife’s home in Atherton, and Mr Peterson had $210,879.96 from the proceeds of sale transferred to his account at Commonwealth Bank of Australia (Applicant’s CBA Account).[2]
[2] TB, page 63.
Between 14 September 2021 and 15 June 2023, transfers totalling $203,824.66 were made from the Applicant’s CBA Account to Mr Peterson’s granddaughter, Jessica (Jessica).[3]
[3] TB, T27, pages 104 – 118.
On 4 November 2023, Services Australia completed an assessment of Mr Peterson’s income and assets for Aged Care purposes. His assets were determined as of his entry date at Carinya (12 June 2023) as $226,428.[4] The breakdown of this figure included $19,928 in bank accounts, $2,500 in household contents, $14,000 for motor vehicles and $190,000 described as gifts.[5]
[4] TB, T14, page 76.
[5] TB, T14, page 79.
On 12 December 2023, Mr Peterson submitted a claim for financial hardship assistance for Aged Care.[6] At that time, the assets limit for eligibility for financial hardship assistance was $42,771.30.[7]
[6] TB, page 12.
[7] TB, page 14.
On 27 March 2024, Services Australia rejected Mr Peterson’s claim for financial hardship assistance for Aged Care (hardship supplement). The rejection was made on the basis that Mr Peterson had gifted more than $30,000 in the previous five years, which meant that any excess amount for gifts was included in Mr Peterson’s assessable financial assets, which put them above the assets threshold of $42,771.30.[8]
[8] TB, T16, page 84; T21, page 95.
On 2 April 2024, Mr Peterson’s nominee, Raelene McDonald (Ms McDonald), requested a review of the two Services Australia decisions, being the assets assessment for Aged Care purposes and the rejection of the claim for financial hardship assistance for Aged Care purposes.
On 5 April 2024, an Authorised Review Officer affirmed the two Services Australia decisions.[9]
[9] TB, T2, page 12.
On 8 May 2024, Mr Peterson, with the assistance of Mr Davison from Basic Rights Queensland, lodged an application for review with the Administrative Review Tribunal (Application for Review).[10]
[10] TB, T1, pages 1 - 9.
ISSUES
The two issues to be decided in the Application for Review are whether Mr Peterson’s:
(1)assets were correctly assessed by the Secretary for the purposes of the Aged Care Act 1997 (Cth) (Aged Care Act). The assessment of assets issue requires the Tribunal to consider whether the money transferred from Mr Peterson’s bank account to his granddaughter constituted a disposal of assets, or not, in accordance with the Social Security Act 1991 (Cth) (Social Security Act) and Aged Care Act.
(2)claim for financial hardship assistance for residential care was correctly rejected by the Secretary. The eligibility for a hardship supplement issue requires the Tribunal to consider whether Mr Peterson should be found to have been in financial hardship in accordance with the Aged Care Act and Subsidy Principles 2014 made under s. 96-1 of the Aged Care Act (Subsidy Principles), and therefore eligible for financial hardship assistance.
LEGISLATIVE FRAMEWORK
The Respondent’s SFIC summarises the legislative provisions which are relevant for present purposes.[11] They are to be found in the Aged Care Act, the Subsidy Principles, and the Social Security Act.
[11] Respondent’s SFIC, [13] – [22], TB, pages 122 – 126.
Section 44-26A of the Aged Care Act relevantly provides:
“44-26A The value of a person’s assets
(1) Subject to this section, the value of a person’s assets for the purposes of section 44-22 is to be worked out in accordance with the Subsidy Principles.
(2) …
(3) …
(4) The value of a person’s assets is taken to include the amount that the Secretary determines to be the amount: …
(b) otherwise – that would be included in the value of the person’s assets if Division 2 of Part 3.12 and Division 8 of Part 3.18 of the Social Security Act 1991 applied for the purposes of this Act.”[12]
[12] As to s. 1123 of the Social Security Act (which falls within Part 3.12 Division 2 of the Social Security Act) see paragraph [20] of these Reasons for Decision.
Under s.44-26A (1) of the Aged Care Act, the value of a person’s assets for the purposes of s.44-22 (the provision which deals with working out the means tested amount for a care recipient) is to be worked out in accordance with the Subsidy Principles. Under s.47(1) of the Subsidy Principles, for the purposes of s.44-26A (1) of the Aged Care Act, the value of a person’s assets is worked out in accordance with Division 1 of Part 3.12 of the SocialSecurity Act, which contains the general provisions which relate to the assets test for the Social Security Act.
The amount of residential care subsidy which is paid by the Australian Government to an aged care home like Carinya, is calculated in accordance with the residential care subsidy calculator in s. 44-2(2) of the Aged Care Act. Other supplements, including the hardship supplement in s. 44-30 of the Aged Care Act can be added to the residential care subsidy.
The mechanism for determining eligibility for the hardship supplement is set out in ss. 44-31(1) and (2) of the Aged Care Act and s.60 of the Subsidy Principles, the relevant parts of which are set out below:
(a)Subsections 44-31(1) and (2) of the Aged Care Act state:
“Determining cases of financial hardship
(1) The Secretary may, in accordance with the Subsidy Principles, determine that the care recipient is eligible for a hardship supplement if the Secretary is satisfied that paying a daily amount of resident fees of more than the amount specified in the determination would cause the care recipient financial hardship…
(2) In deciding whether to make a determination under this section, and in determining the specified amount, the Secretary must have regard to the matters (if any) specified in the Subsidy Principles.”
(b) Section 60 of the Subsidy Principles states:
“Eligibility for hardship supplement – determination by Secretary
(1) For subsection 44-31(2) of the Act, this section sets out the matters the Secretary must have regard to in deciding whether to determine that a care recipient is eligible for the hardship supplement.
(2) The Secretary must not determine that a care recipient is eligible for a hardship supplement if:
(a) the care recipient’s means have not been assessed in accordance with the Act; or
(b) the value of the care recipient’s assets…is more than 1.5 times the sum of the annual amount of the following:
(i) the basic pension amount.
(ii) the pension supplement amount.
(iii) the clean energy supplement; or
(c) the care recipient has gifted:
(i) more than $10,000 in the previous 12 months; or
(ii) more than $30,000 in the previous 5 years…
(3) For paragraph 2(b), in determining the value of the care recipient’s assets for this section, unrealisable assets are not to be included.
Note: Unrealisable asset is defined in section 4.
(4) In deciding whether to determine that a care recipient is eligible for a hardship supplement, the Secretary may have regard to the following matters:
(a) the care recipient’s total assessable income….
(b) whether the amount of income available to the care recipient after expenditure on essential expenses is less than 15% of the basic age pension amount…”
The term “unrealisable asset” is defined in s.4 of the Subsidy Principles as having the meaning given to that term in ss. 11(12) and 11(13) of the Social Security Act, which is as follows:
“Unrealisable asset
(12) An asset of a person is an unrealisable asset if:
(a) the person cannot sell or realise the asset; and
(b) the person cannot use the asset as a security for borrowing.
(13) For the purposes of the application of this Act to a social security pension (other than a pension PP (single)), an asset of a person is also an unrealisable asset if:
(a) the person could not reasonably be expected to sell or realise the asset; and
(b) the person could not reasonably be expected to use the asset as a security for borrowing.”
The Secretary notes in the Respondent’s SFIC that these provisions apply when considering whether a financial hardship determination should be made because the payment of the basic daily fee and the income tested fee for residential aged care would cause the person financial hardship. There are mirror provisions applying to whether the payment of the accommodation payment or contribution would cause the person financial hardship,[13] and both sets of provisions apply to Mr Peterson.
[13] Under s. 52K-1 of the Aged Care Act and s. 38 of the Fees and Payments Principles 2014 (No.2).
In determining a person’s assets for Aged Care purposes, it may be necessary to determine whether there has been a disposal of assets for the purposes of s. 1123(1) of the SocialSecurity Act, which relevantly provides:
“Disposal of Assets
1123. (1) For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person’s assets and:
(a) the person receives no consideration in money or money’s worth for the diminution in the value of the person’s assets; or
(b) the person receives inadequate consideration in money or money’s worth for the diminution in value of the person’s assets…”[14]
[14] Section 1123 falls within Division 2 of Part 3.12 of the Social Security Act, which is referenced in s. 44-26A(4)(b) of the Aged Care Act.
FACTUAL MATRIX
Mr Davison, who appeared for Mr Peterson, opened his case on the basis that the facts in this application for review disclosed a case of elder abuse, perpetrated by or on behalf of Jessica against Mr Peterson, and likely to disclose circumstances where a presumption of undue influence would arise.
At some time prior to August 2021, Mr Peterson formed an intention to gift some of his assets to his grandchildren. The evidence was that he had given an Enduring Power of Attorney (EPOA) to one of his two daughters, Kerin, and her husband, Allan.
Prior to 2 August 2021, Mr Peterson’s bank, CBA, refused to transfer money from the Applicant’s CBA Account, as the instructions to transfer funds had not come from Mr Peterson himself. On 2 August 2021, Mr Peterson sought legal advice about his EPOA and the CBA’s position from Lilley, Grose & Long Solicitors.
On 21 August 2021, a letter of advice (LGL Legal Advice) was sent by Lilley, Grose & Long to Mr Peterson, care of Kerin and Allan, then the holders of his EPOA, in the following terms:
Re: Your Enduring Power of Attorney
“We refer to your attendance at this office on the 2nd instant.
We note that your attendance arose as a consequence of actions taken by your bank in relation to their refusal to transfer certain monies from your bank account, on instructions of persons other than yourself.
As advised, it is clear from the circumstances that were relayed to the writer, that the bank has undertaken this action in order to protect your interests.
As indicated to you during your attendance, it is not possible for your Attorneys (Mr and Mrs Sumich) to transfer monies from your account into either: -
* Their account;
* Their children’s accounts;
* Any business associates or other close relatives’ bank accounts;
* Or into their superannuation accounts.
Transactions of that nature by your Attorneys are prohibited by law as they constitute a conflict transaction as defined in the relevant legislation.
We confirm that you have indicated to the writer that you nonetheless wish to gift certain monies to your granddaughter Jessica together with other grandchildren.
We note that the sums you intended to gift, effectively represented almost your total financial worth.
We confirm our advices to you that your bank may be concerned in relation to any transaction which would have the effect of removing from your control almost all of your money. Having said that, however, it is in fact your money and you are entitled to do with it as you wish.
We re-iterate our recommendation that you do not divest yourself of all of your funds but rather you retain a sufficient sum to guard against unexpected circumstances. Once you have given all your money away, should circumstances arise which require additional funds, you would not be in an enviable position.
Noting your wish to proceed with the gifts as indicated to the writer, we confirm that we have suggested to you the following course of action: -
1. You obtain from your Doctor, correspondence confirming that in his opinion you have sufficient cognitive capacity to manage your own financial affairs;
2. That you arm yourself with an appropriate level of documentation to establish your identity (we confirm that we have provided to you a copy of the verification of identity standard document which provides guidance as to the level of documentation required);
3. Armed with the documents referred to in paragraphs 1 and 2 above, you then attend at the bank personally and provide the necessary instructions to your bank in relation to the provision of the proposed monies. We re-iterate our advice that you do not request the monies be transferred by way of direct transfer but rather purchase bank cheques made payable to the proposed recipients of the gifts. This will provide a paper trail in relation to the transactions which may assist in allaying any concerns the bank may have regarding same.
4. Once you have obtained the bank cheques you may either deliver them directly to your granddaughters or deposit them into their bank accounts. Please note that a bank cheque can only be deposited into an account at which the named recipient is in fact an account holder.
We confirm that we have raised with you actions that should be undertaken for your safety regarding the verification of your granddaughters bank account details, before banking any cheques into those accounts. We confirm our recommendation that you do not accept bank account details from your granddaughters by way of e-mail unless you have personally verified them by actually speaking to the relevant granddaughter and having them read back the bank details to you in order to confirm the accuracy of same.
Should the bank still not agree to release your monies, having followed the steps detailed above, please do not hesitate to contact this office for further assistance…
Yours etc”[15]
[15] Applicant’s SFIC Annexure A, TB, pages 132 – 133.
In the event, by a series of transactions taking place between 14 September 2021 and 15 June 2023, transfers of funds totalling $203,824.66 were made from the Applicant’s CBA Account to Jessica’s account by means of the CommBank App. Breaking those transactions down further it can be seen that:
(a)On 14, 16, 17, 20, 21, 22, 23 and 24 September 2021, transfers were made from the Applicant’s CBA Account to Jessica’s account by means of the CommBank App with the transaction description “gift”.[16]
(b)Further transfers were made in 2021 after 24 September 2021, on 25 September ($5,000.00), 29 September ($3,000.00), 7 October ($248.94), 16 October ($200.00), 17 October ($100.00), 18 October ($18,000.00), 19 October ($500.00), 28 October ($250.00), 9 November ($400.00), 18 November ($1,300.00), 3 December ($1,500.00) and 30 December ($800.00). Those transfers were also made from the Applicant’s CBA Account to Jessica’s account by means of the CommBank App with the transaction description “gift”.[17]
(c)On each of 10 January 2022 and 23 January 2022, a transfer of $800.00 was made from the Applicant’s CBA Account to Jessica’s account by means of the CommBank App with no transaction description.[18]
(d)In 2023, transfers were made on 9 January ($2,000.00), 13 January ($1,000.00), 17 January ($800.00), 24 January ($500.00), 29 January ($500.00), 3 February ($800.00), 5 February ($500.00), 8 February ($200.00), 18 February 2023 ($400.00), 6 March ($500.00), 8 March ($400.00), 20 March ($700.00), 27 March ($500.00), 5 April ($500.00), 28 April ($825.72), 3 May ($600.00), 29 May ($100.00) and 15 June ($100.00). The 2023 transfers were made from the Applicant’s CBA Account to Jessica’s account by means of the CommBank App with no transaction description.[19]
(Collectively the Transfers).
[16] Applicant’s SFIC, [6], TB, page 121; Annexure B, TB, page 118.
[17] Applicant’s SFIC, [7], TB, page 121; Annexure B, TB, pages 116 – 118.
[18] Applicant’s SFIC, [8], TB, page 121; Annexure B, TB, pages 115 – 116.
[19] Applicant’s SFIC, [9], TB, page 121, Annexure B, TB, pages 105 - 108.
Common features of the Transfers were that:
(a)they were all made to Jessica and none to other grandchildren of Mr Peterson;
(b)they were all made by someone other than Mr Peterson by the means of the CommBank App and not by way of bank cheque as recommended in the LGL Legal Advice; and
(c)they appear to have taken place without Mr Peterson’s awareness of, or consent to, the individual transactions.
On 21 September 2023, Mr Peterson signed a new EPOA, removing Kerin and Allan as attorneys, and appointing his other daughter, Ms McDonald as his sole EPOA.[20]
[20] Applicant’s SFIC, Annexure C, TB, pages 138 – 141, 145, 148 – 149.
After the Application for Review was lodged, Mr Peterson attended two appointments (on 11 July and 31 July 2024) with Andrew McDonnell (Mr McDonnell), a solicitor from the Cairns Community Legal Centre (CCLC). The CCLC is a service described on their website as providing “legal and support services for the benefit of seniors affected by elder abuse and financial exploitation”.[21]
[21] Applicant’s SFIC, [19], TB, page 123; >
On 12 August 2024, Mr McDonnell forwarded an email to Mr Peterson which summarised the advice given to him in the July appointments and having considered the bank statements from the Applicant’s CBA Account for the period from 28 August 2021 – 23 May 2023 and the letter of advice from Lilley, Grose & Long dated 16 August 2021.
Mr McDonnell’s email provided advice in relation to Mr Peterson’s legal options in seeking to recover the Transfers from Jessica, in the following terms:
“Legal Options:
Our advice to you at both appointments was that ultimately if you wanted to recover money from Jessica you would have to commence proceedings in the District Court of Queensland.
We advised that given you have minimal funds to pay for ongoing litigation this becomes a major impediment in recovery of any money from Jessica.
We have also advised legal proceedings can take a long time to go through the courts and in any civil litigation success is not guaranteed. We have also advised that civil litigation can be costly.
We have advised that costs follow the event in civil litigation meaning if you are successful you can seek costs from the other party at court scale. This is also the case if you are not successful which would mean you would be up for your own legal costs and potentially the costs of the other party at court scale.
We have provided advice that even if legal proceedings are commenced there are a number of issues which would affect your ability to engage in and provide accurate legal instructions to a solicitor in legal proceedings as your memory is problematic.
We confirm your instructions that you are hesitant to initiate legal proceedings against your granddaughter Jessica for personal reasons.
We could not provide you with an estimate of costs and referred you to a private solicitor.
We confirm the relevant statutory time limits of 6 years from the date the cause of action arose to initiate legal proceedings.
We are of the opinion that legal proceedings would be unaffordable to you and that you would be put into severe financial hardship to fund civil litigation through the courts.”[22]
[22] Applicant’s SFIC, [19], TB, pages 123-125; Annexure D, TB, pages 142 – 144.
On Mr Peterson’s instructions, CCLC prepared a letter of demand addressed to Jessica, but as Mr Peterson did not have an address for Jessica and could not afford to have a “Skip Trace Tracking” search conducted, the letter of demand was not sent.[23]
[23] Applicant’s SFIC, [20], TB, page 126.
On 8 October 2024, Mr Peterson made a complaint to the Queensland Police at the Atherton Police Station in relation to the unauthorised and fraudulent transfers totalling $203,624.66 made by or on behalf of Jessica via the CommBank app from the Applicant’s CBA Account during the period from 14 September 2021 until 15 June 2023.[24]
[24] Applicant’s SFIC, [21], TB, page 126; Annexure E, TB pages 146 - 147.
Mr Peterson currently has an outstanding unpaid invoice from Carinya for $44,783.47, dated 2 December 2024, mostly relating to his Daily Accommodation Payment, which he has insufficient remaining assets to pay.[25]
[25] Applicant’s SFIC [22], TB, page 126; Annexure F, TB page 150.
MR PETERSON’S CONTENTIONS
Mr Peterson contends that he did not authorise the gifting of $203,824.66 to Jessica and that he has not engaged in a course of conduct by which he has directly or indirectly disposed of his assets under s. 1123(1) of the Social Security Act and s. 44-26A(4)(b) of the Aged Care Act. He relies on the facts that:
(a)the legal advice obtained from Lilley, Grose & Long was not acted upon as the Transfers were made by means of the CommBank App without his authorisation, and not by bank cheque.
(b)all the Transfers were made to Jessica and none to his other grandchildren, which was not his wish or intention.
(c)he sought legal advice from CCLC about recovering the Transfers and a letter of demand was prepared. and
(d)he made a complaint to Queensland Police about the fraudulent and unauthorised nature of the transactions made by or on behalf of Jessica from the Applicant’s CBA Account.[26]
[26] Applicant’s SFIC, [23] – [25], TB, page 126.
Mr Peterson further contends that, even if he is found to have engaged in a course of conduct by which he has disposed of assets under s.1123(1) of the Social Security Act and s. 44-26A(4)(b) of the Aged Care Act, he should be found to be in financial hardship under s. 44-31 of the Aged Care Act and Subsidy Principles. That outcome is reached if the Transfers are “unrealisable” and Mr Peterson is therefore considered not to have gifted more than $30,000 in the previous 5 years, meeting the requirements of ss. 4, 60(2) and 60(3) of the Subsidy Principles and ss. 11(12) and 11(13) of the Social Security Act.[27]
[27] Applicant’s SFIC, [26], TB, pages 126 – 129.
Mr Peterson supports the submission that the Transfers should be treated as “unrealisable” assets by reference to the fact that although the CCLC email identified that an avenue for issuing legal proceedings against Jessica existed, for practical reasons it was not reasonable to expect him to adopt that course. Those reasons included his inability to provide the necessary instructions to sustain the litigation, that he lacked the financial means to prosecute the proceedings and the likelihood that Jessica would not be able to repay the money even if the proceedings were successful.[28]
[28] Applicant’s SFIC, [27], TB, page 127.
Reference was made to the Secretary’s own website, which stated that an asset may be considered unrealisable in circumstances “where the decision to gift was made by a Power of Attorney or when the person was incapacitated.”[29]
[29] Applicant’s SFIC, [28], TB, page 127; https:/>
Mr Peterson’s submission is that the decision to “gift” the Transfers was made by his then EPOA, Kerin, and otherwise that he should be considered to have been acting at the time of the Transfers under the undue influence of Kerin or Jessica. The doctrine of undue influence is said to be applicable either by the operation of the statutory presumption of undue influence to be found in s. 87 of the Powers of Attorney Act 1998 (Qld) (POA Act), or under the common law principles established by the High Court in Johnson vButtress[30] and the cases which follow it.
[30] [1936] HCA 41; (1936) 56 CLR 113.
Section 87 of the POA Act states:
“87 PRESUMPTION OF UNDUE INFLUENCE
The fact that a transaction is between a principal and 1 or more of the following--
(a) an attorney under an enduring power of attorney or advance health directive;
(b) a relation, business associate or close friend of the attorney;
gives rise to a presumption in the principal’s favour that the principal was induced to enter the transaction by the attorney’s undue influence.”
While Mr Peterson did receive some legal advice prior to the Transfers, the contention made by him is that the advice was not followed and acted upon and was insufficient in any event to rebut the presumption of undue influence.[31] Further, there was a lack of specific advice in the LGL Legal Advice, and an absence of any other independent financial advice appropriate to an 84-year-old man with no income other than the Age Pension, who was contemplating gifting sums representing most of his remaining assets.[32]
[31] Applicant’s SFIC, [32] – [34], TB, pages 128 - 129.
[32] Applicant’s SFIC, [35] – [36], TB, pages 129 – 130. Referencing BSJ [2022] QCAT 51.
On the question of whether Mr Peterson lacked the capacity to freely and voluntarily make decisions about the Transfers, the Tribunal was directed to the definition of “capacity” in Schedule 4 to the Guardianship and Administration Act 2000 (Qld) (GAA), which reads:
“capacity, for a person for a matter, means the person is capable of—
(a) understanding the nature and effect of decisions about the matter; and
(b) freely and voluntarily making decisions about the matter; and
(c) communicating the decisions in some way.”[33]
[33] Applicant’s SFIC, [37], TB, page 130.
The submission made by Mr Peterson in respect of lack of capacity was that if the Tribunal was to make a finding that the presumption of undue influence was not rebutted, it was also open to the Tribunal to find that Mr Peterson had not freely and voluntarily made the decision to make the Transfers.[34]
[34] Applicant’s SFIC, [38], TB, page 130; also citing BSJ [2022] QCAT 51 at [212].
SECRETARY’S CONTENTIONS
The Secretary’s contentions in relation to Mr Peterson’s eligibility for the hardship supplement can be summarised as follows:
(a)Mr Peterson’s available money prior to effecting the Transfers was a financial asset under s. 9 of the Social Security Act.[35]
(b)The making of the Transfers by Mr Peterson was a disposal of an asset for the purposes of s. 1123 of the Social Security Act.[36]
(c)The Secretary assessed Mr Peterson’s assessable assets as of 12 June 2023 to be $226,428, which included $190,000 in “Gifts” included in the Transfers. To the extent that any gifts exceeded the allowable gifting amount of $30,000 in the previous 5 years under s. 60(2)(c) of the Subsidy Principles, they cannot be deducted from Mr Peterson’s assessable assets (unless they are an unrealisable asset);[37] and
(d)Mr Peterson’s assessable assets of $226,428 exceeded the allowable maximum value of a recipient’s assets to be eligible for the hardship supplement. The allowable maximum value of a recipient’s assets at the time Mr Peterson applied for the hardship supplement (12 December 2023)[38] was $42,771, being 1.5 times the annual value of the age pension under s. 60(2)(b)(i) of the Subsidy Principles.[39]
[35] Respondent’s SFIC, [25], TB, page 156.
[36] Respondent’s SFIC, [26], TB, page 156.
[37] Respondent’s SFIC, [28] – [29], [48] – [50], TB, pages 156, 159.
[38] TB, pages 162 – 176.
[39] Respondent’s SFIC, [30] – [32], TB, pages 156 – 157.
Further, the Secretary contended that a financial hardship determination was precluded under s. 60(2)(c) of the Subsidy Principles, because Mr Peterson had gifted more than $10,000 in the previous 12 months and more than $30,000 in the previous 5 years.[40]
[40] Respondent’s SFIC, [48].
The Secretary placed reliance on the Tribunal’s decision in Stafford and Secretary, Department of Social Services (Stafford)[41] in respect of gifted amounts above the allowable threshold for the hardship supplement, noting the Tribunal’s observation that: “Gifting is considered to be a discretionary decision and hardship assistance is generally not available where a resident chooses to place themselves in a position of financial difficulty…”[42]
[41] [2014] AATA 404.
[42] [2014] AATA 404, [14].
The Secretary noted that the Tribunal in Stafford had considered whether all available steps had been taken to recover the moneys loaned as part of its consideration of the financial hardship decision. The Secretary’s contention was that Mr Peterson had not taken all available steps to recover the Transfers.[43] In particular:
(a)there was no evidence that legal proceedings to recover the Transfers had commenced;[44]
(b)Mr Peterson had not provided the necessary solicitor’s letter for the purposes of Services Australia’s Operational Blueprint (065-05030010 – Aged care financial hardship assistance – assessment) to “demonstrate that proceedings have begun to attempt to recover the funds”;[45] and
(c)other than Mr Peterson’s complaint to the police dated 8 October 2024, there was little information provided about what Mr Peterson had done to seek to recover the Transfers.[46]
[43] Respondent’s SFIC, [56], TB, page 160.
[44] Respondent’s SFIC, [53], TB, page 160.
[45] Respondent’s SFIC, [54], TB, page 160; Attachment B, TB, page 211.
[46] Respondent’s SFIC, [55], TB, page 160.
The Secretary submits that the Transfers cannot be treated as an unrealisable asset for the purposes of ss. 11(12) and 11(13) of the Social Security Act, maintaining that the available evidence supports a finding that Mr Peterson or his then EPOA, Kerin, engaged in a course of conduct which caused the disposal of the amount of $203,824.66 in the period from 14 September 2021 until 15 June 2023.[47]
[47] Respondent’s SFIC, [33] – [44], TB, pages 157 – 158.
The Secretary relies on the LGL Legal Advice as evidence of Mr Peterson’s intention to gift away a major part of his money to his grandchildren and as to his lawyers having adequately advised him not to dispose of his money.[48] Further, the Secretary maintains, relying on the decisions of Boyd and Secretary, Department of Social Security[49], and Ernest Cooper and Repatriation Commission[50], that the Transfers should be treated as disposed assets, which have been held in those cases to be, once disposed of, no longer “an unrealisable asset.”[51]
[48] Respondent’s SFIC, [42], TB, page 158.
[49] [1994] AATA 580, [74].
[50] [1997] AATA 18.
[51] Respondent’s SFIC, [45] – [47], TB, pages 158-159.
CONSIDERATION OF THE ISSUES
The Secretary noted in the Respondent’s SFIC that “it does not appear that the Agency was originally provided with information to determine that the decision to transfer funds was made by a Power of Attorney, or that the Applicant was incapacitated or that his Power of Attorney had exerted undue influence.”[52] The Tribunal’s task, absent any legislative indication otherwise, is to make the correct or preferable decision based on the circumstances as they exist and are before the Tribunal at the time of its decision.[53] Material was before the Tribunal at the hearing of the review application concerning the position of the Power of Attorney, Mr Peterson’s capacity and addressing the issue of whether undue influence had been exerted on Mr Peterson.
[52] Respondent’s SFIC, [43], TB, page 158.
[53] Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286.
The Tribunal agrees with the submission made by Mr Peterson’s advocate that the facts of this case bear the hallmarks of an elder abuse claim. The hallmark facts which tend to indicate that Mr Peterson has been the victim of elder abuse and set out in paragraphs [22] – [26] above. The Tribunal is satisfied that the transfers made by or on behalf of Jessica in the period between 14 September 2021 and 15 June 2023 totalling $203,824.66 were made without the knowledge and consent of Mr Peterson.
BSJ,[54] concerned an application to the Queensland Civil and Administrative Tribunal (QCAT) by BSJ’s adult son for a declaration as to the capacity of BSJ to transfer real property to ML, who was BSJ’s attorney and adult daughter. BSJ relevantly considered the rebuttable presumption of capacity and the rebuttable presumption of undue influence.
[54] [2022] QCAT 51.
As to the presumption of capacity, the Tribunal said the starting point is that the transferor of the property is presumed to have capacity to do so, which presumption is rebuttable. The onus of proving an incapacity to transfer the property rests with the party seeking to set aside the transaction.[55]
[55] [2022] QCAT 51, [50].
Capacity is defined in Schedule 4 of the GAA (set out in paragraph [41] above). In considering the scope of the limbs of that definition, the test of capacity will depend on whether the gift is minor and without serious ramifications, or major with serious ramifications for the estate of the donor or transferor. As the Tribunal explained: “In the case of a gift which comprises the bulk of a donor’s estate and which pre-empts the terms of the donor’s will, the test of capacity is that required to make a will or other testamentary disposition.”[56]
[56] [2022] QCAT 51, [56].
The Tribunal then referred[57] to what was said by Holland J in Crago v McIntyre[58], about the requisite mental capacity to make a voluntary transfer of property inter vivos:
“No question of depriving another party of the benefits of a fair or proper bargain for which he has given consideration arises on a voluntary settlement, but such a settlement may put a settlor in a position in which he has failed to do justice, not only to himself, but also to those who may become dependent upon him, or to whom he might owe or acquire a moral duty to provide. For these reasons I think that there should be applied to the case of a voluntary settlement the same test of mental capacity as is applied to the creation of a testamentary trust.”[59]
[57] [2022] QCAT 51, [57].
[58] [1976] 1 NSWLR 729.
[59] [1976] 1 NSWLR 729, 739.
The Tribunal in BSJ went on to say:
“[60] To arrive at a conclusion as to whether the presumption of capacity has been rebutted and that BSJ did not have an understanding of the nature and effect of his decision to transfer the Property inter vivos, it is appropriate to apply the modern test of testamentary capacity.
[61] As well as an understanding of the nature and effect of his decision, BSJ must be able to freely and voluntarily make the decision to transfer his Property. That question buts up against the presumption of undue influence present in this case.”
As to the presumption of undue influence, the starting point is s. 87 of the POA Act (set out in paragraph [39] above), which is to be read with the common law principles pronounced by the High Court in Johnson v Buttress[60] and by the Queensland Court of Appeal in Birchv Birch (Birch).[61] When the Tribunal in BSJ spoke of the question of capacity “butting up” against the presumption of undue influence, it had in mind that where the presumption of undue influence has not been rebutted that will in turn influence the Tribunal’s finding in relation to whether the donor had the capacity to freely and voluntarily make the decision about the property transferred or gifted.
[60] (1936) 56 CLR 113.
[61] [2020] QCA 31.
Mr Davison took the Tribunal to three statements of principle in the judgment of Latham CJ in Johnson v Buttress[62], which were the following (excluding citations made):
“Wherever the relation between donor and done is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter, the presumption of undue influence is raised.”[63] …
“It must be affirmatively shown by the donee that the gift was (to use the words of Eldon L.C. in the leading case of Huguenin v Basely) “the pure, voluntary, well-understood act of the mind” of the donor.” [64]…
“In the case of a … weak-minded person it will be more difficult for the done to discharge the prescribed onus of proof than in other cases. The burden will be still heavier upon the done where the donor has given him all or practically all of his property.”[65]
[62] (1936) 56 CLR 113.
[63] (1936) 56 CLR 113, 119.
[64] (1936) 56 CLR 113, 119.
[65] (1936) 56 CLR 113, 120.
Latham CJ went on to conclude that:
“… though it has not been affirmatively proved against the defendant that she exercised undue influence, yet she has not displaced the presumption of undue influence which arises in the circumstances of this case. Thus the transaction cannot stand by reason of the general policy of the law directed to preventing the possible abuse of relations of trust and confidence.”[66]
[66] (1936) 56 CLR 113, 123.
The authorities make it clear that evidence of the receipt by the donor of independent legal advice may be one means by which the donee can rebut the presumption of undue influence. A question arises in the present case as to whether Mr Peterson was in receipt of sufficient independent legal advice to make good the argument that the presumption of undue influence was rebutted.
The Queensland Court of Appeal in Birch, in stating the requirements for independent legal advice in the context of alleged undue influence, adopted passages[67] from the judgments of Farwell J in Powell v Powell (Powell)[68] and Waddell CJ in Equity in Michaletos v Stivactas (Stivactas)[69].
[67] [2020] QCA 31, [62].
[68] [1900] 1 Ch 243.
[69] [1992] ANZ ConvR 90.
The passage from Powell states:
“[The duty of a solicitor] is to protect the donor against himself, and not merely against the personal influence of the donee, in the particular transaction … the solicitor does not discharge his duty by satisfying himself simply that the donor understands and wishes to carry out the particular transaction. He must also satisfy himself that the gift is one that is right and proper for the donor to make under all the circumstances; and if he is not so satisfied, his duty is to advise his client not to go on with the transaction, and to refuse to act further for him if he persists.”[70]
[70] [1900] 1 Ch 243, 247.
The passage from Stivactas states:
“A person in the plaintiff’s position at that time should have been asked what was the extent of her Property and the question of her future care and maintenance should have been discussed and the advisor should have pointed out to her the possible disadvantages of divesting herself of her major assets and relying completely on the defendant.”[71]
[71] [1992] ANZ ConvR 90, 95.
Applying the statements of principle from Powell and Stivactas regarding what independent legal advice should have been comprised of to the LGL Legal Advice (set out in paragraph [24] above), the following points emerge:
(a)the client’s instructions recorded in the opening paragraphs of the LGL Legal Advice (the bank’s refusal to transfer funds, possible prohibited transactions by EPOA, sums to be gifted being almost Mr Peterson’s entire wealth) are all red flags to the solicitor that elder abuse might be taking place.
(b)The presence of red flags underscores the solicitor’s duty (described in Powell) to protect Mr Peterson from himself and from the personal influence of the EPOA and/or Jessica.
(c)The solicitor could do this by satisfying himself that the nature and extent of the proposed gifting by Mr Peterson was “right and proper” in all the circumstances, and, if he was not satisfied that it was, to advise Mr Peterson that he should not proceed with the proposed gifts.
(d)Rather than telling Mr Peterson in plain words that he should not proceed with the proposed gifts, the LGL Legal Advice suggested a course of conduct by Mr Peterson to effect the gifts, which involved the provision to the bank of a doctor’s letter as to his capacity to make the gifts and the drawing of bank cheques rather than direct transfer of funds.
(e)In the event, the advice in (d) was not followed anyway, but the advice falls short of the solicitor’s duty (described in Powell) “to advise his client not to go on with the transaction.” The LGL Legal Advice seems to be more directed to working around the bank’s refusal to transfer funds than it is to protecting Mr Peterson from making an improvident transaction or transactions.
(f)The LGL Legal Advice recommended to Mr Peterson in general terms that he not divest himself of all of his funds and that he retains sufficient assets “to guard against unexpected circumstances.” However, the LGL Legal Advice does not evidence, and there was no other evidence before the Tribunal, that the detailed discussions which the court in Stivactas envisaged taking place between solicitor and client about the extent of Mr Peterson’s property, what his future care and maintenance would entail and the downside risk of divesting himself of all of funds while still alive, had taken place.
Mr Peterson’s advocate submitted that the LGL Legal Advice was simply insufficient independent legal advice for a man in Mr Peterson’s situation.[72] It was further submitted that specific advice needed to be given to him about the likely impact on his Age Pension of what he was proposing to do, the operation of relevant legislative provisions which would affect him if he entered into Aged Care in the next 5 years, how aged care would need to be paid for and how much of his assets he needed to retain to meet the likely contingencies of old age. The Tribunal agrees with these submissions.
[72] Applicant’s SFIC, [35].
It follows from what has been said about the nature and extent of the independent legal advice obtained by Mr Peterson that I do not regard that legal advice as sufficient to rebut the presumption of undue influence.
Drawing upon the facts as found and the authorities of Johnson v Buttress, Birch and BSJ referenced above, the Tribunal is not satisfied that the Secretary has rebutted the presumption of undue influence because:
(a)the LGL Legal Advice did not sufficiently protect Mr Peterson’s interests.
(b)by enabling the Transfers, the EPOA did not put Mr Peterson’s interests first in that the Transfers did not give effect to Mr Peterson’s wish to gift monies to each of his grandchildren and were not consistent with providing for Mr Peterson’s accommodation and care in his old age;
(c)Kerin (Mr Peterson’s daughter and EPOA) and Jessica (his granddaughter and an intended beneficiary of his gifts) were in a position to exercise dominion over Mr Peterson by reason of the trust and confidence reposed by him in them, and the evidence is that they abused that trust;
(d)there is no evidence that Jessica as donee could satisfy the onus of showing that the Transfers were “the pure, voluntary, well-understood act of mind” of Mr Peterson. Rather, the evidence shows that the Transfers took place without the knowledge or consent of Mr Peterson; and
(e)the Secretary has not adduced other evidence which would lead the Tribunal to find that the presumption of undue influence under s. 87 of the POA Act has been rebutted.
Having determined that the presumption of undue influence arises, there is the related question of whether the presumption of capacity has been rebutted in this case. I am satisfied that the presumption of capacity has been rebutted on the facts and that the undue influence of his EPOA, Kerin, and/or Jessica, meant that Mr Peterson was not capable of …” freely and voluntarily making decisions about the matter” for the purposes of sub-paragraph (b) of the definition of “capacity” in the GAA.
In answer to issue (1) stated in paragraph [12] above, the Tribunal has determined that the occurrence of the Transfers did not constitute a course of conduct by Mr Peterson by which he has disposed of an asset for the purposes of s.1123 of the Social Security Act and s. 44-26A(4)(b) of the Aged Care Act.
It follows from this determination that the Tribunal is of the view that when Services Australia completed the assessment of Mr Peterson’s income and assets for Aged Care purposes, it should not have included the amount of $190,000 described as “gifts” in reaching the assessed amount for total assets as $226,428. If the amount of $190,000 is removed from the assessment of Mr Peterson’s assets, the total assets figure is reduced to $36,428, which would have placed Mr Peterson below the $42,771.30 assets limit for eligibility for financial hardship assistance for Aged Care which applied on 12 December 2023 (the date Mr Peterson submitted his claim for financial hardship assistance).
In respect of issue (2) stated in paragraph [12] above, which is whether Mr Peterson’s claim for financial hardship assistance for residential care was correctly rejected by the Secretary, the Tribunal determines that the claim was not correctly rejected by the Secretary.
Mr Peterson meets the eligibility requirements for the financial hardship supplement set out in ss. 44-31(1) and (2) of the Aged Care Act and s. 60 of the Subsidy Principles, in that:
(a)Mr Peterson’s assets have been assessed in accordance with the Aged Care Act (s.60(2)(a) of the Subsidy Principles);
(b)Mr Peterson’s assets are not more than 1.5 times the sum of the annual amount of the basic pension amount (s. 60(2)(b) of the Subsidy Principles); and
(c)Mr Peterson has not gifted more than $10,000 in the previous 12 months or more than $30,000 in the previous 5 years (s. 60(2)(c) of the Subsidy Principles).
Having regard to the Tribunal’s decision in respect of issue (1), and the consequences which flow from that decision, when considering the eligibility requirements for financial hardship assistance set out in s. 60(2)(b) of the Subsidy Principles it is not necessary for the Tribunal to determine the question of “unrealisable assets” which is raised by s.60(3) of the SubsidyPrinciples.
The Tribunal is satisfied that Mr Peterson can demonstrate that he was in financial hardship for the purposes of the Aged Care Act and the Subsidy Principles and that was and is eligible for a hardship supplement payment from 12 June 2023.
CONCLUSION AND DECISION
For the reasons set out above, the Tribunal has decided that the Secretary:
(a)did not correctly assess Mr Peterson’s assets for the purposes of the Aged Care Act; and
(b)was not correct in rejecting Mr Peterson’s claim for financial hardship assistance for residential care.
The Tribunal sets aside the Reviewable Decision and substitutes the decision that the money transferred from the Applicant’s CBA Account to Jessica Sumich in the period between 2021 and 2023 (including the amount of $190,000 described by the Respondent in the Reviewable Decision as Gifts) does not constitute a disposal of assets in accordance with s. 1123(1) of the Social Security Act and does not form part of the Applicant’s assets for Aged Care purposes. The Applicant can demonstrate financial hardship and is eligible for a hardship supplement payment from 12 June 2023.
Date(s) of hearing: 25 February 2025 Solicitors for the Applicant: Mr A. Davison, Solicitor, Basic Rights Queensland Solicitors for the Respondent: Ms S. Kalia, Services Australia
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