Slamkova and Secretary, Department of Social Services (Social services second review)
[2017] AATA 137
•10 February 2017
Slamkova and Secretary, Department of Social Services (Social services second review) [2017] AATA 137 (10 February 2017)
Division:GENERAL DIVISION
File Number: 2016/1530
Re:Mita Slamkova
APPLICANT
AndSecretary, Department of Social Services
RESPONDENT
DECISION
Tribunal:Senior Member J F Toohey
Date:10 February 2017
Place:Sydney
The Tribunal affirms the decision under review.
.....................[sgd]...................................................
Senior Member J F Toohey
CATCHWORDS
SOCIAL SECURITY – newstart allowance – whether applicant’s assets exceeded allowable limit – whether property registered in applicant’s name should be excluded – whether applicant held property on trust for her son – express or implied trust – constructive trust – Tribunal not satisfied applicant held property on trust for her son – property to be included in assessing value of the applicant’s assets – decision under review affirmed
LEGISLATION
Administrative Appeals Tribunal Act 1975, s 37
Social Security Act 1991, ss 11, 611, 643, 1068, 1118(1), 1121
Social Security (Administration) Act 1999
CASES
Muschinski v Dodds (1985) 160 CLR 583
REASONS FOR DECISION
Senior Member J F Toohey
10 February 2017
Background
On 8 January 2014, Ms Mita Slamkova applied for newstart allowance. She seeks review of a decision that she did not qualify for the allowance because her assets exceeded the allowable limit.
In calculating the value of Ms Slamkova’s assets, Centrelink took into account the value of a residential property registered in her name. It is not in dispute that Ms Slamkova has been the lawful owner of the property since its purchase in 1999. However, she claims she holds the property on trust for her adult son, Aleksandar Slamkov. She says its value should not have been taken into account when calculating her entitlement to newstart allowance.
I have to decide whether the value of the property in question should be disregarded when determining the value of Ms Slamkova’s assets for the purposes of calculating her entitlement to newstart allowance.
Relevant legislation
The legislation concerning qualification for newstart allowance and valuation of assets for the purposes of payment is in the Social Security Act 1991 (SS Act) and the Social Security (Administration) Act 1999 (SSA Act).
The rate at which a person is paid newstart allowance is calculated according to a calculator in s 1068 of the SS Act: s 643. The calculation takes into account factors including whether a person is single or a member of a couple, whether he or she is a homeowner, and the value of his or her income and assets. If the value of a person’s assets exceeds the asset value limit, newstart allowance is not payable: s 611, SS Act.
Assets means property or money (including property or money outside Australia): s 11, SS Act. Certain assets, including a person’s principal home, are disregarded for the purposes of the assets test: s 1118(1), SS Act. Section 1121 provides that the value of an asset is reduced by the value of any charge or encumbrance against it. There are no provisions in the legislation specifically concerning the value of assets held on trust. However, I understand the Secretary accepts, as a matter of law, that property held on trust is not an asset of the trustee.
It is not in dispute that, unless the Tribunal is satisfied that Ms Slamkova holds the property in question on trust for her son, its value must be included in calculating the value of her assets. When she applied for newstart allowance, Ms Slamkova estimated the value of the property to be $600,000. The total value of her assessable assets was $605,933. The applicable assets value limit at the time was $202,000. As a result, unless Ms Slamkova is found to have held the property on trust for her son, its value excluded her from receiving newstart allowance.
Express, implied or constructive trust
For Ms Slamkova it is submitted that an express trust exists by reason of her express intention at the time the property was purchased in 1999 and subsequently. It is submitted that the requirements of certainty of intention, subject matter and objects of an express trust are fulfilled. It is submitted that Ms Slamkova and her son communicated their intentions to each other, to her former husband, and to her older son, and in written directions to the real estate agents who later managed the property.
In the alternative, it is submitted, the Tribunal should infer, from all of the circumstances, that a constructive trust exists in favour of Ms Slamkova’s son.
The terms implied or resulting, and constructive, trusts tend to be used interchangeably, although a constructive trust is essentially remedial (see Deane J in Muschinski v Dodds (1985) 160 CLR 583 at [589] – [593]. As I understand it, the submission on Ms Slamklova’s behalf is that, if an express trust is not found to exist, the Tribunal should infer an implied, or resulting, trust by reason of the circumstances of the purchase which evidence Ms Slamkova’s intention to hold the property on trust for her son, and the manner in which the property has been dealt with since.
Information before the Tribunal
Ms Slamkova provided a statutory declaration sworn on 9 December 2016. Giving oral evidence, she did not recall signing this document but thought “maybe” she had.
The Secretary has provided Ms Slamkova and the Tribunal with documents in accordance with s 37 of the Administrative Appeals Tribunal Act 1975. They include a letter dated 28 June 2016 from Aleksandar Slamkov to the Tribunal. Other documents provided by the parties, including documents produced under summons, include Commonwealth Bank of Australia (CBA) documents relating to the loan for the purchase of the property, statements of bank accounts, a lease agreement purportedly signed on 22 November 2011 and correspondence from the managing agents for the property in question, and Ms Slamkova’s tax returns for the financial years 2008-2009 to 2013-2014.
The hearing was originally listed for 9 November 2016. It was adjourned to 13 December 2016 to give Ms Slamkova’s legal representative, who was engaged shortly before the hearing, time to consider all of the documents.
Aleksandar Slamkov was present at the hearing on 9 November 2016 but was due to return to Macedonia, where he has lived since 2008, within a matter of weeks. The date for the resumed hearing was fixed so that he could attend the hearing before he left Australia. He did not attend the resumed hearing and has not provided any further evidence. Ms Slamkova was represented by new counsel at the resumed hearing.
Purchase of the property
The property in question is next door to the property in which Ms Slamkova and her former husband have lived for many years. They have been separated for some years but have continued to live in the former matrimonial home, Ms Slamkova in the main house and her former husband in a granny flat. They divorced in December 2014. The Secretary agrees that, for the purposes of the assets test, Ms Slamkova is a single homeowner.
Evidence about the circumstances of the purchase of the property is in the written statements of Ms Slamkova and Aleksandar Slamkov, her oral evidence, CBA documents, and correspondence from Ms Slamkova’s solicitor at the time.
Ms Slamkova gave evidence that, around September 1999, Aleksandar Slamkov wanted to buy the property in question. He was 21 and working, but the bank would not give him a loan without his parents’ guarantee, and she and her former husband agreed. Giving oral evidence, Ms Slamkova maintained that she always understood that she and her former husband only acted as guarantors for the loan. She recalled her son telling her the price of the property but she could not remember how much it was. In her written statement, Ms Slamkova said she believed he had savings from which he paid the balance of the purchase price. Giving oral evidence, she could not recall who paid the deposit.
For reasons which are not clear, CBA documents (referred to below) show the original loan offer was addressed to Aleksandar Slamkov, but the loan was approved in all three names, and the loan account was in all three names. Ms Slamkova maintains she has no idea why she and her former husband were made co-borrowers.
In his letter to the Tribunal, Aleksandar Slamkov stated:
The banks would not lend me the money so my parents decided to be my guarantors. My father and I worked full-time, my mother only 3 hours a day. During the time of transfer, my mother saw a solicitor on my behalf, but due to her lack of English, she did not understand what it was explained to her and that by signing the papers her name had been put against the new property. I was not aware of this up until recently when my mother tried to apply for C’link payments. However, I was paying off the loan and given the good money I was earning I was able to pay off the loan by 2006.
A letter dated 27 December 2006 from CBA to A S & M Slamkov, “Dear Mr and Mrs A Slamkov”, confirmed the loan had been repaid.
I do not accept Aleksandar Slamkov’s claim that Ms Slamkova was unaware that the property was registered in her name. A letter dated 13 October 1999 from her then solicitor addressed to her referred to “discussions held with you and your son Alex, at your premises on Monday, 11th October 1999” and confirmed “that we are acting for you in the above matter and that contracts were exchanged on Tuesday, 12th October 1999”. The attached costs agreement was with Ms Slamkova and was apparently signed by her. The Transfer was witnessed by Ms Slamkova’s solicitor at the time and appears to bear her signature. The Mortgage also appears to bear her signature.
The claim is also at odds with Ms Slamkova’s oral evidence that the property was registered in her name on the advice of their accountant. According to notes of a conversation between a Centrelink officer and Ms Slamkova on 21 April 2015, she told the officer that she did not know why the accountant recommended the property being in her name. The written reasons of the Social Services and Child Support Division (SSCSD) of this tribunal show that Ms Slamkova gave similar evidence about their accountant’s advice to that tribunal.
The claim is further contradicted by Ms Slamkova herself. In her statutory declaration she stated she and her son saw a lawyer and she recalled saying “we put it in my name it is yours I hold it for you” because she did not want her son to lose the property if he married and the marriage did not work out. Further, she stated:
When the loan was repaid [in 2006] I said to my son Alex “the property is yours your brother knows this I have discussed it with him why it is registered in my name I hold it for you as you have paid off the loan” My then husband said the same thing. My son said “thank you for helping me”.
Ms Slamkova also said in her written statement that she recalled saying to Aleksandar:
“It [is] your house your brother knows that I have told him that it is not mine I am holding it for you pay $1,000 off a fortnight so the loan is repaid quickly and after you can pay me back from the rent once the loan is repaid”.
Ms Slamkova was working as a cleaner at the time they property was purchased, and Aleksandar Slamkov had a business. I accept that it could make sense, from a tax point of view, for the property to be in her name because of her low income. However, I find it improbable that a young man keen to buy his own property for the first time, who put up the balance of the purchase price and made all the repayments, had such little regard for the documents that he did not know that he was not the registered owner and moreover, that he had no idea for 15 years that he was not the lawful owner by title.
Who made the loan repayments?
In his letter to the Tribunal, Aleksandar Slamkov stated that he was paying off the loan and, given the “good money” he was earning, he was able to pay it off by 2006. He states that, in 2008, he decided to move to Macedonia where he married and now lives with his wife and two children. He stated that his parents have never made any contribution to the property, especially his mother, who worked only three to four hours a day as a cleaner.
Other than three loan repayments between 8 December 1999 and 20 January 2000 from a joint Streamline account (see paragraph 38 below), the only evidence of loan repayments is from an account in Ms Slamkova’s name (see below). No evidence has been produced to the Tribunal of any payments being made from an account in Aleksandar Slamkov’s name, or repayments by him by any other means.
Aleksandar Slamkov has provided two weekly payslips dated 10 November 2004 and 17 November 2004. They show his nett pay of $612.11 was deposited into CBA account XXXX958 which, according to the pay slip, was an account in his name. As CBA records (below) show, the account was in Ms Slamkova’s name.
Income from the property
Ms Slamkova gave evidence that Aleksandar Slamkov’s original intention was to live in the property but he continued to live next door with her and her former husband. She said Aleksandar took care of the property and let it out to different people at different times; he paid all expenses; there was also a period when he lived in the property himself although she could not recall when.
According to the written reasons of the SSCSD, Ms Slamkova told that tribunal that that the rental income was paid into her account and she would send the money to Aleksandar. According to a note of a conversation between a Centrelink officer and Aleksandar Slamkov on 24 April 2015, he said “he had allowed Ms Slamkova to keep the rental income from the property to help her out but he can no longer afford to do this”. If that is so, it would be inconsistent with her holding the property on trust.
In a “Customer Statement” signed on 15 January 2015, Aleksandar Slamkov stated that Ms Slamkova worked until October 2010 when she suffered a workplace injury as a result of which she did not work until September 2014; she had no form of income, she lived on borrowed money and rent that he allowed her to receive from the property. He stated that, from mid-2014, he no longer allowed her to receive his rental income and, when she received some compensation payout in September and November, he asked her to pay what she owed him and she kept her word and did so. He stated the property is his, and the fact that she was earning only $330 a week was proof that she could not have paid off the property.
In his letter to the Tribunal, Aleksandar Slamkov stated that his only income is the rent from the property “as the real estate puts the rent money directly into my account”. The first record of any payments by the managing agents into Aleksandar Slamkov’s account was on 21 July 2014 (see below). No evidence has been produced to the Tribunal of any payments to Aleksandar Slamkov before July 2014.
There is no evidence of rent being paid into any bank account before July 2014. The only evidence of who received the rent is in Ms Slamkova’s tax returns for 2008-2009 to 2013-2014 (below) in which she declared she had 100 percent ownership of the property, and declared income and deductible expenses for each year.
CBA documents
CBA documents before the Tribunal include the following:
Loan approval and establishment
·Letter dated 14 October 1999 addressed to Mr A Slamkov, Mr S Slamkov and Ms M Slamkova confirming that their application for an Investment Home Loan met the bank’s requirements for approval of an amount of $232,150;
·Letter dated 18 October 1999 addressed to Mr Alex Slamkov concerning “Loan offer to Alex Slamkov and Slavko Slamkov and Mita Slamkova”, confirming approval of “your application for a Commonwealth Bank Streamline Overdraft”.
Investment Home Loan account number XXXXX X604 transactions
It is agreed that this home loan (borrowers Alex Slamkov, Slavko Slamkov and Mita Slamkova), is the loan taken out for the property now in question. Statements from 1 January 2000 to 30 June 2006 show payments as follows:
·1 January 2000 to 30 June 2000: fortnightly credits of $679.50;
·1 July 2005 to 31 December 2005: fortnightly credits of $1000.00;
·1 January 2006 to 30 June 2006: fortnightly credits of $1000.00.
As set out above, CBA advised by letter dated 27 December 2006 that the loan had been repaid.
Home Loan Enquiry January 2000
A Home Loan Enquiry for loan number XXXXX X604 in January 2000 shows:
·21 January 2000: original loan amount $232,150.00, balance owing $231,853.94, payment by fortnightly direct debit of $679.50 from account number XXXXX 557;
There is limited information available about account number XXXXX 557. A list of transactions for Streamline Account number XXXXX 557 in the “Shortname” Slamkov A Slamkova M, for 8 December 1999 to 20 January 2000 shows debits of $679.50 on 31 December 1999 and 14 January 2000, to home loan account XXXXX X604. It shows credits of $530.90, and $489.75 on 11 and 17 January 2000 identified as “Pay” but it is not clear whose pay this was.
Ms Slamkova gave evidence that she cannot recall having the Streamline Account number XXXXX 557. It appears from the statement that it was closed, or became inactive, around 20 January 2000. According to CBA records, it was closed some time before 2009 and, as records are only held up to seven years, no other statements are available. For reasons that are not clear, it is identified in Ms Slamkova’s tax returns for 2012-2013 and 2013-2014 (but not before) as an account from which she had earned interest.
Home Loan Enquiry December 2004
A Home Loan Enquiry for loan number XXXXX X604 in December 2004 shows:
·30 December 2004: original loan amount $232,150, balance owing $165,707.18, payment by fortnightly direct debit of $1000 from account number XXXXX 958.
CBA records show Savings Investment Account No XXXX958 is in Ms Slamkova’s name. A statement from 26 October 2004 to 3 May 2005 shows regular deposits of “Pay” of $612.11 (or similar amounts), and fortnightly withdrawals of $1000 against “Loan Repay”.
Ms Slamkova acknowledges that account XXXXX 958 is her passbook account. She claims that, at some point, her son’s wages were being paid into it, and she allowed him to use her wages for a period so that the loan could be paid off more quickly, and he has since repaid her. She says it was a “cultural thing” that her family did not want debts and in effect, she and her son pooled their earnings to pay off loan as quickly as possible. She thinks this may account for the increase in loan repayments from $679.50 to $1000 per fortnight. (The Home Loan Enquiries also show a slight increase in the minimum monthly repayments on account of an interest rate increase).
Ms Slamkova’s tax returns
Tax returns prepared by Ms Slamkova’s accountant for the financial years 2008-2009 to 2013-2014 show that she declared income from two rental properties of which she had 100 per cent ownership, one being the property currently in question. In relation to that property, she declared:
Gross rental income Deductible expenses Net rent Weeks 2008-2009 13,000 3,422 9,578 52 2009-2010 14,000 5,051 8,949 35 2010-2011 18,126 5,564 13,450 52 2011-2012 7,310 8,144 -834 52 2012-2013 20,920 8,172 12,878 52 2013-2014 21,400 6,485 14,942 52
In her written statement of evidence, Ms Slamkova said she has always declared the rent and expenses in her tax returns because, when she told her accountant it was registered in her name, he said she should declare it and she followed his advice; she never explained to him that she held it for her son.
Documents concerning rental of the property
Ms Slamkova has submitted a document dated 22 December 2011 stating that she gives “permission for [the property group] to take instructions via email or telephone from my son Aleksandar Slamkova (sic) regarding [the property in question]”. It states “I acknowledge the rental monies received will be deposited into his nominated account”.
According to an agreement purportedly signed by Ms Slamkova on 22 December 2011, she gave Bobb Property Group exclusive rights to lease and manage the property in question. The agreement directed that remittances be paid to:
Aleksandar Slamkov
CBA
BSB XXX XXX
Account number XXXXX 634
A document dated 22 December 2011 in Ms Slamkova’s name states:
I the undersigned Mita Slamkova give permission for Bobb Property Group to take instructions via email or telephone from my son Aleksandar Slamkova (sic) regarding [the property in question].
I acknowledge the rental monies received will be deposited into his nominated account.
The agreement and Ms Slamkova’s written permission are apparently at odds with an exchange of emails between Aleksandar Slamkov and an employee of Bobb Property Group, and with documents apparently provided by Bobb Property Group.
By email on 19 July 2014, Aleksandar Slamkov wrote:
How are you? re rent and new account number … just making sure everything is ok with the changes? Is the last financial year clean? when (sic) am I expecting payment into new account? (emphasis added)
By email on 21 July 2014, the employee replied:
The details have been entered and just to confirm, they are:
CBA
BSB: XXX XXX
ACC: XXXXX 634
A letter from Bobb Property Group dated 7 June 2016, apparently from the employee who sent the email above and addressed “To whom it may concern”, states:
Please be advised that we are the Managing Agents for the above property which we have been managing since December 2011.
During this time all rental monies have been paid to Mita son’s nominated account – Aleksandar Slamkov.
The emails raise the question why the new account was the same account identified in the agreement purportedly signed on 22 December 2011. Moreover, as set out below, the first evidence of payment into that account is dated July 2014.
A letter from the same employee dated 17 June 2016, addressed “To whom it may concern” states that the “outgoings for the property, Water and Council rates are currently being sent to our office address and are being paid out of the rental monies.” An owner’s statement as at 31 August 2016 from the property addressed to Aleksandar Slamkov show his rent of $470 per week for the period 30 July 2016 to 10 September 2016. It shows “Payee name” as Mita Slamkova.
I am not satisfied that the documents are genuine. If they were in fact prepared by Bobb Property Group, I am not satisfied their contents are correct.
The CBA has provided copies of Aleksandar Slamkov’s bank account number XXXXX 634, being the account into which Bobb Property Group say they have paid since 21 July 2014 as per his email instructions.
The first appearance in Mr Slamkov’s account of a payment from Bobb Property Group appears on 21 July 2014, in the amount $1,223.00. Further payments from Bobb Property Group were made on 29 August 2014 ($2,413.70) and 30 September 2014 ($996.15). There is a gap in deposits by Bobb Property Group from September 2014 to 31 March 2015, after which payments were made at the end of each month up to May 2016 in amounts that appear to be for rent. I accept they represent the rent paid for the property.
Letter from Ms Slamkova’s solicitors
In a letter dated 16 June 2015 addressed “To whom it may concern”, Ms Slamkova’s current solicitors “confirm” that she has had no financial benefit from the rental of the property. The letter states that her son, Aleksandar, is the sole beneficiary of her Will; he was the “major contributor” to the maintenance and upkeep of the property and made the mortgage repayments, and it was always the intention that he be the beneficial owner; the property is currently tenanted and he has the sole benefit of the rental income.
Finally, the letter states, Ms Slamkova could not have purchased and paid off the property alone on her income as a cleaner, so it is “logical to accept the proposition that her son solely paid for the acquisition of the property”.
Consideration
I recognise that families come to many different arrangements to help each other, and do not always do so with an eye to circumstances that might arise many years later, or not at all. I recognise that it is not uncommon for families to leave arrangements, even those involving substantial property and financial interests, undocumented as between each other.
There is much about Ms Slamkova’s claims that is entirely plausible. It is plausible that a bank would require one or more guarantors for a loan to a young person just starting out. It is plausible that Ms Slamkova had a limited understanding of the details of documents she was signing at the time of the purchase. It is plausible that family members would, in effect, pool their income to help pay off a loan as quickly as possible, and there is the evidence of Aleksandar Slamkov’s pay slips to show that his pay went into an account in her name.
That said, there must be something of real substance to support a claim that a property of which a person is the registered owner of 100 per cent, is in fact held on trust for another.
The Secretary submits that Ms Slamkova and Aleksandar Slamkov re-arranged their finances from mid-2014, after her claim for newstart allowance was rejected, to give the appearance that he was the beneficial owner of 100 per cent of the property so that she would qualify for newstart allowance. Some of the information before the Tribunal gives that appearance. For example, despite the documents provided by Bobb Property Group indicating otherwise, there is no evidence of payment of rent into Aleksandar Slamkov’s bank account until July 2014. There is no evidence of rental payments into any other account, or to anyone, before that date.
I am unable to make a finding that Ms Slamkova deliberately re-arranged her finances as the Secretary submits. However, even leaving that aside, I am not satisfied on the information before me that she has held, or holds, the property on trust for her son.
Ms Slamkova’s oral evidence was of limited assistance. Her memory of events and dates was poor. Aleksandar Slamkov has provided limited information, some of which I find improbable. There are many questions left unanswered. The information in the documents amounts to the following:
·Ms Slamkova has at all times been the sole registered owner of the property;
·her available tax returns show that she has declared herself to the sole owner, and she has declared the rental income and claimed deductible expenses since at least 2008;
·the only evidence of loan repayments is from an account in Ms Slamkova’s name showing repayments from January 2000 to July 2004;
·according to her tax returns, the property had been rented since 2004, and since at least 2008-2009, for 52 weeks each year (except in 2009-2010 when it was rented for 35 weeks);
·there is no independent evidence of where, or to whom, the rent was paid before July 2014.
As set out above, there is reason to doubt the veracity of the contents of some documents submitted by Ms Slamkova and Aleksandar Slamkov, in particular, the purported agreement with Bobb Property Group, the letters from Bobb Property Group, and the letter from Ms Slamkova authorising all payments to her son. If those documents are genuine, there is no evidence that those instructions were carried out.
It is not enough to say it is “logical” to infer that Ms Slamkova could not have put up the deposit and repaid the loan on the property on her limited income. Apart from anything else, she does not dispute that she had owned another property since around 1999 which her tax returns show had been rented out 52 weeks a year from 1 July 2004. Ms Slamkova gave evidence that she sold the property in 2011 for $210,000 and gave $100,000 to her children. It would be just as “logical” to believe she had income from sources other than her employment in previous years.
Conclusion
Ms Slamkova is the lawful owner of the property in question. I am not satisfied on the information before me that she has held, or holds, the property on trust for Aleksandar Slamkov. It follows that its value had to be included in assessing her assets for the purposes of newstart allowance.
I affirm the decision under review.
I certify that the preceding 68 (sixty-eight) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey
..........................[sgd]..............................................
Associate
Dated: 10 February 2017
Date(s) of hearing: 9 November 2016
13 December 2016
27 January 2017
Counsel for the Applicant: Mr M Licha Solicitors for the Applicant: J N Legal Solicitors for the Respondent: Department of Human Services
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