Siviter and Secretary, Department of Social Services (Social security)
[2025] ARTA 188
•16 January 2025
Siviter and Secretary, Department of Social Services (Social security) [2025] ARTA 188 (16 January 2025)
Applicant/s: Mr Siviter
Respondent: Secretary, Department of Social Services
Chief Executive Centrelink
Tribunal Number: 2024/S191145
Tribunal: General Member L Manville
Place:Brisbane
Date:16 January 2025
Decision:The Tribunal affirms the decision under review.
Statement made on 16 January 2025 at 10:40am
CATCHWORDS
SOCIAL SECURITY – age pension – assessable assets above disqualifying limit – applicant’s cognitive impairment and high care – disposal of assets in excess of allowable threshold – house and car – interest in title held by applicant and wife (now deceased) as guarantors with son and daughter-in-law – no beneficial interest or proceeds from sale to applicant – gift of half-share despite claim of no beneficial interest – no contemporaneous evidence of common intention – decision under review affirmed
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.
Statement of Reasons
BACKGROUND
This decision concerns an application for review of a decision made by Services Australia – Centrelink (Centrelink) to reject an application for age pension by Mr Siviter.
Mr Siviter is 79 years of age. On 1 July 2024, he lodged a claim for age pension. On 16 July 2024, the claim was rejected by an employee of Centrelink on the ground that Mr Siviter’s assessable assets were above the disqualifying limit for a single homeowner from 1 July 2024.
Mr Siviter sought internal review of the decision and on 13 September 2024, an authorised review officer affirmed the original decision to reject the claim for age pension.
On 21 September 2024, Mr Siviter made an application to the Administrative Appeals Tribunal (the AAT) for independent review of the authorised review officer’s decision.
From 14 October 2024, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be an application for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
Mr Siviter did not participate at the hearing before the Tribunal on 8 January 2025 due to a medical condition, however his daughter and appointed Power of Attorney, [Ms A], attended the hearing, gave affirmed evidence, and made submissions on behalf of her father. The hearing was conducted via MS Teams audio conference. During the hearing, the Tribunal granted consent for Ms Jones to lodge medical materials in support of her contentions regarding Mr Siviter’s medical condition.
Mr Siviter has been diagnosed with vascular dementia, and other medical conditions. He lives in his own home and receives residential respite care. His primary health concerns are changes in his cognition since he received his diagnosis. [Ms A] told the Tribunal that he has been assessed and graded as high care, and that Mr Siviter expressed confusion about the Tribunal proceedings.
In addition to [Ms A’s] oral evidence and submissions at hearing, the Tribunal had regard to the documents provided by Centrelink to the Tribunal in accordance with subsection 37(1) of the Administrative Appeals Tribunal Act 1975 (then in force), pages 1 to 191 (the hearing papers). The hearing papers were provided to Mr Siviter prior to the hearing. The Tribunal also had materials lodged on Mr Siviter’s behalf marked A1 to A69. The materials were duplicates to materials contained within the hearing papers.
ISSUES
The statutory provisions relevant to this application for review are contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).
The primary issue to be determined in this application for review is whether Mr Siviter was qualified to receive age pension on the date of lodgement of his claim - that is, 1 July 2024. To determine the primary issue, the Tribunal had to consider the following sub issues:
a)Whether Mr Siviter made a gift in excess of the allowable ‘gifting’ threshold; And, if so;
b)Whether this amount is a deprived asset; And if so,
c)Whether this amount should be considered in calculating the rate of age pension.
CONSIDERATION
Under section 37 of the Administration Act, the Secretary must determine that a claim is granted if the person meets the qualification and payability requirements for the social security benefit.[1]
[1] Section 37 of the Administration Act.
The qualification requirements for age pension are set out in section 43 of the Act. Age pension is paid to persons who have reached age pension age. It is and subject to an income test and an assets test. The rate of age pension payable is the lowest rate produced by either test.[2] The assets test is provided for in point 1064-G1 of the Act and requires the value of a person’s assessable assets to be identified. Assets include money and property. Certain assets are exempt from assessment, such as a person’s interest in their principal home.
[2] Point 1064-A1 of the Act.
The disqualifying asset limit for a single homeowner on 1 July 2024, was $686,250.
The social security law in respect of ‘gifting’ or, more accurately, deprivation, serves to continue to assess assets where this asset has been disposed of for less than adequate financial consideration. The deprivation rules are contained within section 1123 of the Act, read with associated provisions in Division 2 of Part 3.12 of the Act.
In summary, and relevantly, where a person disposes of an asset and receives inadequate consideration in money or money’s worth for the disposal, the person is deemed to have disposed of the assets for the purposes of social security law. Sections 1126AA and 1126AB of the Act provide that the value of the assets for the purposes of social security law increased by the value of the assets that was disposed of, minus $10,000 in each year, or if the value of the asset exceeds $30,000, the amount of the relevant disposal is included in the value of the person’s assets for the period of 5 years starting on the day on which the disposal took place.
On 1 July 2024, Mr Siviter lodged a claim for age pension in which he declared that he owned or was paying a mortgage on his own home, assets of $49,800 and $408 in 2 savings accounts, household, and personal effects to the value of $4,500, and that he had gifted a house valued at $2,210,000 on 6 October 2023 of which his share was recorded as ‘undefined%’ and a motor vehicle. In respect of his other financial interests, he declared that he did not have money invested in an Australian superannuation fund and that he did not receive any source of income.
The claim was not Mr Siviter’s first claim for age pension. On 18 July 2019, Mr Siviter lodged a claim for age pension that was rejected because he failed to meet the qualifying assets test.
Did Mr Siviter make a gift in excess of the allowable ‘gifting’ threshold?
On 30 May 2013, the property at [Suburb] was purchased for $750,000, by [Mr Siviter’s son and daughter-in-law] as 50% share joint tenants, and Mr Siviter and [Mr Siviter’s wife] as 50% share joint tenants.[3] A deposit of $75,000 was paid for the sale
[3] Folio 170.
[Mr Siviter’s wife] died on 15 September 2018. [Ms A] told the Tribunal that on the event of her mother’s death, her interest in the title of the property was transferred from [Mr Siviter’s wife] to Mr Siviter. Records of the New South Wales Land Registry Services recorded that on 26 April 2021, Mr Siviter’s 50% share of the property was held as tenant in common with [Mr Siviter’s son and daughter-in-law] (joint tenants in ½ share).[4]
[4] Folios 113 and 115.
The property at [Suburb] was sold by contract dated 3 August 2023, and the sale and was settled on 6 October 2023 for $2,210,000.[5] An electronic transaction evidencing the transfer of the balance of the proceeds of property settlement was sent to a [Bank] Mortgage account held by [Mr Siviter’s son].[6] The contract for sale included Mr Siviter as a vendor to the sale.[7]
[5] Folio 134.
[6] Folios 136 to 138.
[7] Folio 176.
Materials provided to Centrelink by Mr Siviter included a schedule of capital gains calculations in respect of Mr Siviter. A typed notion at the bottom of the document remarks “Also your Father would need to Pay back any Age Pension that he has received in the Financial Year”. The Tribunal infers from this document that a belief was held by Mr Siviter that at the date of the sale he retained an interest in the proceeds of the sale of the property.
The Tribunal finds that on the face of the legal and corroborative evidence available that as at the date of the sale of the property (6 October 2023), Mr Siviter held 50% value of the property at [Suburb]. The Tribunal therefore observes an error in Mr Siviter’s claim for age pension in that he declared to having gifted the entire 100% value of the property rather than the correct value of 50%.
By letter dated 30 October 2023, addressed to [Lawyers], Mr Siviter wrote:
I am advising legally and formally gift all of my part of [Address]
property to my [son] and his [wife]
.
All contributions to this property made by myself and my late wife has been in
name only as [Mr Siviter’s son and daughter-in-law] could not get a loan with me and my (now
deceased) [wife] as guarantors, we therefore had our names on the deed
to the property
I gift all ownership and monies made on the sale of this property on 6 October
2023.
[Ms A] told the Tribunal that she believed this letter was prepared in lieu of a statutory declaration as there was concern about Mr Siviter’s capacity to make a declaration of legal effect. The Tribunal did not have the benefit of receiving any further evidence regarding whether or not Mr Siviter was, in fact, deprived of his legal capacity at the time that the letter was prepared. The contents of the letter were taken into account as they relate to Mr Siviter’s intention, albeit with reduced weight given that it was an unsworn statement.
The Tribunal observes that the letter purported to “gift” the “all ownership” of the property and the proceeds of the sale after settlement and at a time when Mr Siviter no longer held a beneficial interest in it. The letter implies that Mr Siviter believed that he had a beneficial interest in the property and a corresponding beneficial right to the proceeds such that they were necessary to gift to his son and daughter-in-law.
[Ms A] contended on behalf of her father that he and his wife were placed on the title deed to assist her brother and sister-in-law to obtain a mortgage. She submitted that her father derived no benefit from being on the deed and that he received none of the proceeds of the sale of the property. [Ms A] told the Tribunal that she had provided copies of her father’s bank statements to show that he did not receive any money from the sale, and that he did not have to pay capital gains on his portion of the sale.
[Ms A] contended that no one understood the ramifications of including her parents to the title deed at the time and that Mr Siviter no longer holds the legal capacity to commence legal proceedings in respect of the circumstances surrounding his inclusion to the title deed. In respect to whether she could provide evidence to the Tribunal, [Ms A] said that she was not present when the arrangements were made, and that she has derived her knowledge from conversations with her father and brother.
Was the property held on constructive trust?
The Tribunal has had regard to the decision of Thomas; Secretary, Department of Social Services (Social Services second review),[8] in which Deputy President Sosso of the AAT summarised the law of constructive trusts. At paragraph 66 of that decision, Deputy President Sosso wrote:
[8] [2022] AATA 2324.
The Tribunal’s attention was also drawn to the Victorian Supreme Court case of Imam All Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413. Her Honour, McMillan J, provided the following helpful summary of the law governing constructive trusts:
“396 The term constructive trust is used in various manners to identify a remedy provided by a court of equity. Some variations of constructive trusts create proprietary interests while some merely impose a personal liability. The chief motivation of the courts of equity in imposing a constructive trust over property is to ensure that, ‘when property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee’.
397 The imposition of a constructive trust over property is a serious measure. A court will consider whether there is an appropriate equitable remedy that falls short of the imposition of a constructive trust. Although the catalyst for the imposition of a constructive trust may be unconscionability by a party in the assertion of a legal interest free of equitable encumbrance, the construction of such a remedy must be determined by reference to established equitable principles and not a vague notions of fairness or justice. In particular, mere unjust enrichment is not a sufficient basis for the award of a constructive trust.
398 There are a variety of recognised categories of constructive trusts. These categories are not closed. The principles governing some of the key categories of constructive trusts for the purposes of the current case are explained as follows.
Joint endeavour constructive trust
399 The first category of constructive trust is called a joint endeavour or Baumgartner constructive trust. This form of trust is commonly associated with the circumstances where a person in whose favour a constructive trust is found has, directly or indirectly, made financial contributions towards the cost of acquiring, improving or maintaining the property.
400 This form of trust was most notably considered by the High Court in Muschinski v Dodds and Baumgartner v Baumgartner. In the former case, Deane J stated that such a trust will arise:
‘…where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do…’
401This form of constructive trust may be imposed regardless of the actual or presumed intention to create a trust. This form of constructive trust is not advanced by the plaintiffs.
Common intention constructive trust
402The second class of constructive trust is a common intention constructive trust, which is distinct from the joint venture constructive trust. The court will construe a common intention constructive trust where:
‘(a) there is an actual or inferred common intention of the parties as to their beneficial interest in a property;
(b) there has been detrimental reliance on that common intention by the claimant; and
(c) it would be an equitable fraud on the claimant to deny his or her interest in the property.’
The onus of proving such a trust lies on the party asserting the beneficial interest against the legal owner.
403 The parties’ intentions can be found or inferred from the party’s contemporaneous words and conduct, also having regard to the surrounding circumstances and context in which they were uttered or performed. The relevant intention may arise after the property has been acquired. The intention to be established need not designate a specific share of the property; it is sufficient that the claimant should have a beneficial interest.
404 The cases considering this form of constructive trust have commonly concerned persons in a domestic relationship, but the principle can be applied to disputes between parties to a commercial relationship.
405 A common intention constructive trust creates substantive rights and is not merely a remedy that arises when a court makes a declaration to that effect. The trust will generally take effect from the moment at which the conduct giving rise to its imposition occurs. The interest created may, however, be deferred in accordance with principles governing priority between competing equitable interests.
406 There is considerable doctrinal debate on how a common intention constructive trust should be appropriately characterised. Some say it is more appropriately characterised as an express trust because it is based upon the parties’ intentions. Others say it is more accurately characterised as an aspect of equitable estoppel. The classification of this form of trust as a constructive trust admittedly does not sit comfortably with the observation of Deane J in Muschinski v Dodds that constructive trusts differ from other forms of trust in that they arise regardless of intention. It has nonetheless been observed that ‘[t]here is ample authority that a constructive trust may be based on the common intention of the parties’. Despite the evident taxonomical confusion, it appears from the authorities that a common intention constructive trust has a role to play distinct, albeit not always mutually exclusive, from a joint endeavour constructive trust and a constructive trust arising from equitable estoppel. The common intention constructive trust will enter centre stage where the formalities for a contract or express written trust are not satisfied, and the other paths are either not pleaded or are not satisfied.”
(footnotes omitted)
While the Tribunal is not bound by previous decisions, in reaching the preferable decision one of the factors to be considered is consistency with comparable cases and decisions.
The Social Security Guide (the Guide) contains governmental guidelines and policy to assist Centrelink officers in their application of the social security law. The Tribunal had regard to the Guide where relevant. The Tribunal acknowledges that, whilst it may be guided by policy and it is not bound to follow it, it should consider the relevant government policy which is consistent with the provisions or objects of the Act.[9]
[9] Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.
Topic 4.12.3.51 of the Guide provides:
A common intention constructive trust is created to enforce a promise and/or a gift. The following elements need to be demonstrated to establish the existence of a common intention constructive trust:
· there must have been a common intention between the legal owner of the property and the beneficiary, regarding the beneficiary's beneficial ownership of the property,
· this common intention is to be inferred as a fact from the words or conduct of the parties,
· the beneficiary must be able to show that they have acted to their detriment on the basis of the common intention as to the beneficial ownership of the property, and
· it must be a fraud on the beneficiary for the legal owner to assert that the beneficiary did not have the beneficial interest in the property.
Mr Siviter did not attend the hearing to give evidence. That was uncontroversial given his cognitive impairment. As Mr Siviter was unable to participate in the evidence taking process, it is difficult to approach the fact-finding required in this review when the evidence regarding the circumstances of the mortgage and the nature of the arrangement concerning the purchase of the property and the circumstances surrounding Mr Siviter’s purporting to ‘gift’ his share of the property on 30 October 2023 is unavailable.
On 30 August 2024, [Mr Siviter’s son] signed a statutory declaration in which he declared:
Mr Siviter and [Mr Siviter’s wife] were required to be placed on the title of my property at [Address] (the property) as guarantors for the loan between [Mr Siviter’s daughter-in-law and son] and the [Bank]. At no time did Mr Siviter or [Mr Siviter’s wife] obtain a beneficial interest in the property when the property was sold Mr Siviter and [Mr Siviter’s wife] were not entitled to receive any funds from the sale.
On the same date, [Mr Siviter’s daughter-in-law] signed a statutory declaration wherein she declared, in completely identical language without modification and including an identical typographical error in her address, the facts as deposed in the statutory declaration of [Mr Siviter’s son].
The Tribunal was not confidently satisfied that the statutory declarations of [Mr Siviter’s son and daughter-in-law] were made independently and represent each deponent’s independent knowledge and belief of the matters asserted. Neither [Mr Siviter’s son nor daughter-in-law] participated in the hearing.
The Tribunal observes that the state of affairs asserted in the statutory declarations are at odds with the letter of Mr Siviter. While Mr Siviter purported to ‘gift’ the property and proceeds of its sale to [Mr Siviter’s son] and his wife, both deponents of the statutory declarations assert that he had no beneficial interest in the property to gift.
In respect of the surrounding circumstances, Mr Siviter provided Centrelink with the following documents in respect of the property:
(a)Letter from [Building Certifiers] dated 14 December 2020, addressed to [Mr Siviter’s son and daughter-in-law], and Mr Siviter in respect of an approved whole occupancy certificate for a swimming pool development at the property and accompanying certification documents;
(b)Letter dated 27 April 2021 from [Council], addressed to his former legal representatives, [Lawyers] in respect of a request for an internal sewerage connection plan with advice regarding the status of the plan as requested;
(c)Letter dated 28 April 2021 from [Council], addressed to former legal representatives, [Lawyers], regarding a request for a mains sewer diagram;
(d)NSW Swimming Pool Register evidencing registration on 1 August 2023;
(e)Statement of Account of [Bank] account held in the name of [Mr Siviter’s son and daughter-in-law] evidencing electronic property settlement credit of $168,332.31 on 6 October 2023.
(f)Undated capital gains spreadsheet in respect of Mr Siviter referred to above at paragraph 21.
The Tribunal did not have before it any evidence as to whether Mr Siviter, or all of the parties, contributed, directly or indirectly, to the deposit paid for the purchase of the property, rates, taxes, and any other outgoings.
The Tribunal also observes that when Mr Siviter’s wife died, her share of the property was not bequeathed to either [Mr Siviter’s son or daughter-in-law].
In the absence of contemporaneous evidence surrounding the circumstances of the agreement when the property was purchased, mortgaged, and sold, the subsequent ‘gifting’ of that property, or the outgoings associated with its maintenance and improvements to value, the Tribunal is unable to favourably find that the evidence establishes a common intention constructive trust between Mr Siviter and his son and daughter-in-law. Further, there was no evidence available to the Tribunal to demonstrate that [Mr Siviter’s son and daughter-in-law] acted to their detriment on the basis of a common intention to gain a beneficial interest. While there may have been expectations or understandings regarding the property, those expectations and understandings fell short of persuading the Tribunal to a reasonable degree of satisfaction that a trust existed.
Was it an assessable asset?
Section 11 of the Act defines ‘asset’ to mean property or money (including property or money outside of Australia).
The Tribunal is satisfied and finds that no consideration passed to Mr Siviter and, resultantly, he disposed of the assets for the purposes of social security law.
Because of the reasons above, the Tribunal finds that Mr Siviter made a gift of an assessable asset that on 1 July 2024 (the date of his age pension claim), was valued at $1,105,000.
Should this amount be taken into account in calculating the rate of age pension?
The amount should be considered in calculating the rate of age pension. In combination with Mr Siviter’s other assets excluding his principal home, the value of his assets was $1,149,708 and exceeded the disqualifying limits for age pension and, resultantly, age pension payments were not payable to Mr Siviter.
The Tribunal therefore finds that the requirements to grant age pension under section 37 of the Act have not been met.
The Tribunal notes that Centrelink records show Mr Siviter will not be eligible for age pension until 6 October 2028.[10] The applicable statutory provisions do not provide any capacity to reduce the period of ineligibility.
[10] Folio 251.
The Tribunal therefore finds that the decision to reject Mr Siviter’s claim for age pension was the correct legal decision and affirms the decision under review.
DECISION
The Tribunal affirms the decision under review.
| Date(s) of hearing: | Wednesday, 8 January 2025 |
| Representative for the Applicant: | [Ms A] |
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