SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES and BARRY SUMMERS

[2004] AATA 1059

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] 1059

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2003/843

GENERAL ADMINISTRATIVE DIVISION		)
Re		SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Applicant

And BARRY SUMMERS

Respondent

DECISION

Tribunal Senior Member KL Beddoe

Date12 October 2004  

PlaceBrisbane

Decision

The Tribunal decides:

(1)      the decision under review is set aside;

(2)      the matter is remitted to the applicant to reassess the respondent’s            assets taking into account the following directions:  

(a)   the respondent is not a homeowner as defined;

(b)   the assets of the respondent include the net assets of the trust adjusted for market values of assets; and

(c)   the value from time to time of the respondent’s loan to the trust is an asset of the respondent for the purposes of the assets test. 

..................(Sgd).................

Senior Member

CATCHWORDS

SOCIAL SECURITY – benefits and entitlements – eligibility - assets – respondent is the controlling mind of a company which, in turn, is the trustee of a family trust of which he is a beneficiary – respondent is owed money by the trust following the sale of his principal place of residence to the trust – whether respondent is a “homeowner” – respondent occupying former home under licence – not a homeowner – trust’s net assets and value of loan to be taken into account for the purposes of the assets test

Social Security Act 1991 (Cth) s 1122
Land Title Act 1994 (Qld) s 191

REASONS FOR DECISION

12 October 2004   Senior Member KL Beddoe           

1.      On 7 August 2003, an authorised review officer decided to affirm a decision to recover debts from the respondent. The debts were claimed as overpayments as follows:

(a)$7,026.77 for the period 27 June 1997 to 28 March 2000 in respect of Disability Support Pension and

(b)$4,781.61 for the period 29 March 2000 to 6 November 2001 in respect of Age Pension.

2.      The essence of the authorised review officer’s reasoning seems to be that because the respondent “controlled” the Summers Family Trust, a loan by the respondent to the trustee should be included in the assessment of the applicant’s assets and the net income of the Trust was deemed to be income of the respondent.

3.      On review the Social Security Appeals Tribunal set aside the authorised review officer’s decision and decided that the loan by the respondent to the trustee should be reduced by $118,000 in assessing the value of the respondent’s assets and the respective debts recalculated accordingly.  The applicant Secretary seeks review of this decision. 

4. Section 1122 of the Social Security Act 1991 (“the Act”) relevantly provides the value of the assets of a person for the purposes of the Act, includes so much of an amount lent as remains unpaid, but does not include any amount payable by way of interest under the loan.

5. For the purposes of the Assets Test (section 1063–G1 of the Act) it is necessary to work out the Assets Value Limit (section 1063–G3). That calculation is determined in part by whether a person is partnered. In this case the respondent is not partnered, that is not a member of a couple.

6.      A person who is not a member of a couple is a “homeowner” if:

(a)the person has a right or interest in the person’s principal home; and

(b)the person’s right or interest in the home gives the person reasonable security of tenure in the home. 

7.      While it is not necessary to quantify the amounts, the effect of calculating asset value limits in accordance with section 1064-G3 is that for a person who is not a member of a couple, the asset value limit is lower for a homeowner than a non-homeowner.  The difference is $108,000.  It is this differential which is at the heart of the dispute in this case.

8. Section 1118 of the Act provides that certain assets are to be disregarded in calculating the value of a person’s assets. In particular, if a person is not a member of a couple, the value of any right or interest of the person in the person’s principal home that gives the person reasonable security of tenure in the home is to be disregarded (section 1118(1)).

9.      At the hearing Mr Ffrench represented the applicant and Ms Hindman appeared for the respondent.

10. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the “T” documents and further documents were tendered and marked as exhibits.  No oral evidence was presented to the Tribunal.

11.     I make the following findings of fact:

(a)the respondent has been in receipt of a disability support pension and subsequently an age pension;

(b)in 1993 the respondent’s wife (who died on 25 December 1998) received an inheritance of $162,078 under her late mother’s will;

(c)funds made available from that inheritance were used to purchase real estate known as 2/28 Blamey Drive in joint names of the respondent and his wife;

(d)2/28 Blamey Drive was at all relevant times the principal place of residence for the respondent and, until her death, his wife;

(e)Exhibit 1 is a copy of a trust deed whereby the settlor created a trust for the benefit of persons who, I am satisfied, are members of the respondent’s extended family including any spouse of the respondent but not including the respondent himself;

(f)the trustee of the trust was and is a company (Bazrene Pty Ltd) and I am satisfied that the respondent is the controlling mind of that company;

(g)the trustee has an absolute discretion, subject to the terms of the trust deed in the administration of the trust fund and the distribution of the net income of the fund;

(h)in November 1996, the respondent and his late wife sold 2/28 Blamey Drive to Bazrene Pty Ltd, in its capacity as trustee, for a consideration of $118,000;

(i)neither the respondent nor his late wife was paid by the trustee and I am satisfied that the trustee was indebted to the respondent for this amount at all relevant times;

(j)in each of the financial years ended 30 June 1997, 1998, 1999, 2000, 2001 and 2002 the trustee was indebted to the respondent (and his late wife in earlier years) as follows:

1997  $162,077

1998  $157,627

1999  $202,357

2000  $159,392

2001  $151,743

2002  $145,499

(k)copies of income tax returns of the trustee in the T documents show that in each year of income the trustee exercised its discretion to distribute the net income of the trust to beneficiaries including the respondent who, I assume was appointed an additional beneficiary in terms of clause 3(2) of the deed of settlement;

(l)the arrangements outlined above were motivated by and entered into because of an earlier Part X Bankruptcy arrangement and a desire to protect the inheritance from any future claims by the creditors;

(m)the respondent does not have any significant assets in his own name and as far as I am aware does not have control of any other entities.

Consideration

12.     The applicant submits that the full value of the loan standing to the credit of the respondent in the trusts accounts from time to time, is an asset to be included in the respondent’s assets for the purposes of the assets test.

13. The applicant also submits because of the circumstances of the respondent’s occupancy of 2/28 Blamey Drive (and, it might be thought the respondent being the controlling mind of the trustee), the respondent has a tenancy at will, and therefore a relevant interest in 2/28 Blamey Drive so that he is a homeowner for the purposes of the Act.

14.     The applicant is content to ignore the issue of double counting as is made clear by the submission in relation to how the value of the respondent’s assets are to be ascertained.

15.     There is no dispute that the net asset position of the trust is a deemed asset of the respondent.

16.     The applicant says in effect, that the calculation of the respondent’s assets should be made up as follows:

(a)the net assets of the trust which includes 2/28 Blamey Drive to which is added;

(b)the value of the loan by the respondent to the trustee to which is added;

(c)the value of 2/28 Blamey Drive; and

(d)deduct the value of the respondent’s interest in 2/28 Blamey Drive which needs to be disregarded because he is a homeowner.

17.     The respondent submits, that (c) above should not be included in the calculation.

18.     The respondent also made submissions about whether the respondent is a homeowner as defined. Those submissions tried to accommodate previous decisions of the Tribunal which are, in my view, somewhat confusing.

19. The respondent is a homeowner as defined in section 11(4)(a) of the Act if:

(a)he has a right or interest in 2/28 Blamey Drive; and

(b)the right or interest gives the respondent reasonable security of tenure in the home.

20.     It is clear on the facts that 2/28 Blamey Drive is owned by the trustee and held for the benefit of the beneficiaries of the family trust.  I am prepared to assume the respondent is one of those beneficiaries of the family trust ranking equally with others.  It maybe that he is not a beneficiary ranking equally with others.  It maybe that he is not a beneficiary at all but I make the assumption because there have been distributions of net income over the years to the respondent (and also other beneficiaries).

21.     The respondent resides at 2/28 Blamey Drive because the trustee allows him to do so.  The respondent is the controlling mind of the trustee.  While nothing has been formalised, it is reasonable to infer that the respondent resides at the property on licence and not as a trespasser.  While the respondent is the controlling mind of the trustee it is unlikely that the licence will be revoked.

22.     If it is correct to say that the respondent occupies that property on licence it does not mean that the trustee has passed some interest in the property to the respondent and to the detriment of the other beneficiaries.

23.     The respondent is a tenant at will so that he would have no right in relation to the property if the licence to occupy was revoked.  Revocation remains unlikely while the respondent is the controlling mind of the trustee.

24.     It is the licence which gives the respondent security of occupancy, not because of any relevant right or interest in the property.  His right or interest in the property (if any) is only as a beneficiary of the trust estate which is no different to the other beneficial interests in the trust estate. 

25. It follows that I am not satisfied that the respondent is a homeowner as defined in sub-section 11(4) of the Act because he does not have a relevant right or interest in 2/28 Blamey Drive which is his principal home.

26. Sub-section 1118(1) will not operate to exclude any amount from the value of the respondent’s assets for the purposes of the Act because the respondent is not a homeowner as defined.

27. I am satisfied that the Social Security Appeals Tribunal was wrong to find that the respondent had a Vendor’s lien in respect of 2/28 Blamey Drive because of the operation of section 191 of the Land Title Act 1994 (Qld).

28. The assets of the respondent for the purposes of the Act include:

(a)the net assets of the trust adjusted so as to reflect the market value of 2/28 Blamey Drive and the investments; and

(b)the value from time to time of the loan by the respondent to the trustee.

29.     The decision of the Social Security Appeals Tribunal will be set aside and the matter remitted to the applicant to reassess the respondent’s assets taking into account the following directions:

(a)the respondent is not a homeowner as defined;

(b)the assets of the respondent include the net assets of the trust adjusted for market values of assets; and

(c)the value from time to time of the respondent’s loan to the trust is an asset of the respondent for the purposes of the assets test. 

I certify that the 29 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member KL Beddoe

Signed:         Sarah Oliver
  Associate

Date of Hearing  30 March 2004
Date of Decision  12 October 2004

For the Applicant  Mr T Ffrench, Departmental Advocate
Counsel for the Respondent     Ms M Hindman
Solicitor for the Respondent     Welfare Rights Centre