Stavrinidis and Secretary, Department of Social Services (Social services second review) - [2018] AATA 169

Stavrinidis and Secretary, Department of Social Services (Social services second review) [2018] AATA 169 (12 February 2018)
: Division General Division
File Number(s): 2017/1846
Re:Nikolitsa Stavrinidis
APPLICANT

AndSecretary, Department of Social Services
RESPONDENT

DECISION
Tribunal:Dr Damien Cremean and Ms A Wood
Date:12 February 2018
Place:Melbourne

The Tribunal sets aside the decision under review and remits the matter to the Respondent to make appropriate adjustments to the Applicant’s Age Pension including back payments to 18 September 2015.
[sgd]...............................................
Dr Damien Cremean, Senior Member
[sgd]...............................................
Ms Amy Wood, Member
SOCIAL SECURITY – Age Pension– reduction in rate — whether disposal of asset within meaning of s 1123 Social Security Act 1991 – income and assets test – acquisition of joint interest in new property—whether gift or not—consideration—constructive trust – whether diminished value of all assets – decision set aside and remitted
Legislation
Social Security Act 1991 (Cth) ss 11(1),12A,1123,1124
Cases
Carlill v Carbolic Smoke Ball Co [1893] 1 QB 271
REASONS FOR DECISION
Dr Damien Cremean, Senior Member and Ms Amy Wood, Member
12 February 2018

The Applicant (Mrs Stavrinidis) seeks review of a decision of this Tribunal (Social Services and Child Support Division) made on 7 March 2017 to affirm a decision of an authorised review officer made on 21 September 2016 to reduce the rate of her Age Pension from 18 September 2015.
The issue to be decided in this application is identified by the Respondent as whether the Applicant’s rate of Age Pension was correctly reduced on the ground that she disposed of an asset that is subject to a deemed income and assets test under the Social Security Act1991 (Cth)(‘the Act’).
The asset in question is the residential house at 12 Watson Court, Clarinda, in Victoria. The Applicant had lived in her former home located at 20 Elora Road, Oakleigh South, for many years with her husband and her daughter Maria and in later years with her daughter’s two children.
The Applicant’s daughter, who is aged in her late 40’s, had lived at that house for about 46 years.
The Applicant sold this house on 18 September 2015 for $961,000 and, out of this, she paid the existing mortgage balance of $40,000 and purchased a property at 1 Clarinda for a sum of $870,000. She procured a loan of $66,200 to go towards the purchase of the new property.
The Clarinda property was put in the joint names of the Applicant herself and her daughter.
On 23 October 2015 the Applicant advised the Department of these matters and advised that Maria had been put on the title.
Following this, the Applicant’s rate of Age Pension was reduced. A Departmental delegate determined that she had ‘gifted’ 50% of the new property to her daughter. The value of the gift was determined to be $402,000 (being 50% of the purchase price less the mortgage) and the amount maintained in the assessment of her rate was $392,000.
On 21 January 2016 the Department issued a notice to the Applicant advising she had an Age Pension debt of $720.40 for the period from 18 September 2015 (the date of sale) to 20 October 2015 giving as the reason that the ‘gifting’ of property to Maria had not been taken into account in the payment of Age Pension made during that period.
This was followed by a notice to the Applicant on 3 February 2016 advising that the amount used to calculate the rate of Age Pension included the value of her total assets of $396,500.00 and an annual income of $12,027.25.
An earlier file note dated 15 November 2015 states that the Applicant had contacted the Department about the recent ‘gifting’ assessment and that she had enquired whether it would impact on the rate of her Age Pension. She is adamant that she had been told that it would not do so.
At the hearing sworn evidence was given by the Applicant and by her daughter Maria and both were cross-examined. An advocate from Social Security Rights Victoria appeared on behalf of Mrs Stavrinidis. No witnesses were called by the Department of Human Services, who appeared for the Respondent.
The Respondent’s contention is that by including her daughter as joint proprietor on the Clarinda property, the Applicant has diminished the value of all her assets, thereby effectively giving 50% of that property to her daughter.
Reference is made to complex provisions of the Act, including s 1123(1) which provides:
1)    For the purposes of this Act a person disposes of assets of the person if:
a)the person engages in a course of conduct that directly or indirectly:
i)   destroys all or some of the person’s assets; or
ii)     disposes of all or some of the person’s assets; or
iii)   diminishes the value of all or some of the person’s assets; and
b)one of the following subparagraphs is satisfied:
i)   the person receives no consideration in money or money’s worth for the destruction, disposal or diminution;
ii)     the person receives inadequate consideration in money or money’s worth for the destruction, disposal or diminution;
iii)   the Secretary is satisfied that the person’s purpose, or the dominant purpose, in engaging in that course of conduct was to obtain a social security advantage.
By s 11(1) of the Act, unless the contrary appears, asset is defined exhaustively to mean property or money (including property or money outside Australia).
Section 1124 of the Act provides that if a person disposes of assets, the amount of the disposal or disposition is
a)    if the person receives no consideration for the destruction, disposal or diminution--an amount equal to:
i)the value of the assets that are destroyed; or
ii)   the value of the assets that are disposed of; or
iii)    the amount of the diminution in the value of the assets whose value is
diminished; or
b)    if the person receives consideration for the destruction ,disposal or diminution--an amount equal to:
i) the value of the assets that are destroyed; or
ii) the value of the assets that are disposed of; or
iii) the amount of the diminution in the value of the assets whose value is
diminished;
less the amount of the consideration received by the person in respect of the destruction, disposal or diminution.
Other provisions of the Act to which reference was made include ss 8, 9, 11A,12A, 55, 1076, 1118, 1121, 1126AA, 1026AB and 1126E. As well, reference was made to Module G – Assets test.
The Tribunal has considered each of the provisions of the Act referred to above. As to s12A of the Act relating to granny flats, it notes that the Applicant at the hearing no longer pressed any position in that regard.
The Respondent’s argument at the hearing, as we apprehend it, was that there was no or no adequate consideration for the transfer by the Applicant to her daughter. It was a gift by her to Maria. The Applicant had therefore disposed of assets under s 1123(1) of the Act in receiving no or no adequate consideration for the disposal. By reason of s 1124(a) of the Act, the amount of the disposal should be an amount equal to the value of the asset disposed of or the amount of the diminution in value of the asset concerned. This means that half the value of the Clarinda property, which the Tribunal accepts is an asset, should be the value of the asset disposed of less any allowable amount(s).
The Tribunal, having heard the evidence, and having considered the submissions of both parties, does not agree with this analysis. The Tribunal adds that it accepts the evidence of the Applicant and her daughter.
The Tribunal makes the finding that Maria was not put on title by way of a gift to her. The Respondent’s submissions to the contrary are rejected.
On the evidence, the Tribunal is satisfied that it cannot be said that, any disposal of assets within s 1123(1) of the Act occurred.
As regards s 1123(1)(a)(i) of the Act the Tribunal agrees there is nothing in the evidence to show that the Applicant has engaged in conduct destroying all or any of her assets.
As regards s 1123(1)(a)(iii) of the Act, the Tribunal is not satisfied on the evidence that the Applicant has engaged in conduct diminishing all or some of her assets. In that regard, as is pointed out to the Tribunal, reference must be made to s 1118(1)(a) of the Act by which the Act directs :
(1)In calculating the value of a person’s assets for the purposes of this Act
(other than sections 198F to 198MA (inclusive), Division 1B of Part
3.10, Division2 and sections 1133 and 1135A), disregard the following:
(a) if the 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 is a right or
interest that gives the person reasonable security of tenure in the home;
Hence, based on this provision, the value of the Applicant’s assets did not include the value of her right or interest in her home, meaning in consequence, that Maria in acquiring an interest in the Clarinda property did not diminish the value of the asset being that property.
There remains only s 1123(1)(a)(ii) of the Act for consideration, that is, whether there has been a—disposal of assets.
As regards s 1123(1)(b)(iii) the Tribunal accepts the Applicant’s contention that there is no suggestion that she ever intended to obtain a social security advantage out of placing Maria on title. The Tribunal finds that obtaining such an advantage was neither a purpose nor her dominant purpose. The Secretary therefore could have no occasion to be satisfied as to either.
As regards ss 1123(1)(b)(i) and (ii) the Tribunal is satisfied however that there was consideration in money or money’s worth for the disposal under paragraph (i) and it is satisfied also that such consideration was not inadequate under paragraph (ii).
There was, the Tribunal finds on the evidence, a clear but implicit, if not explicit understanding between the Applicant and her daughter that their household together as mother and daughter should continue at the Clarinda property, in which both parties would contribute to the running of the household. The basis of this, the Tribunal finds, was not only love and affection but utility as well. Maria had previously lived with the Applicant, for 46 years, but her mother was widowed (her husband, Maria’s father, died in 1993), and Maria was divorced with two children. It suited the Applicant and her daughter that both should continue to live together at the Clarinda property as they had been doing previously.
This was not a situation where the Applicant simply delivered over to her daughter a half interest in that property as a gift otherwise than in a context of corresponding benefits and burdens. The Tribunal is satisfied the Applicant’s daughter was put on title in recognition, so to speak, of the arrangement between her and her daughter. That is to say, in implementation of or giving effect to existing household arrangements between the two.
Those arrangements, the Tribunal is satisfied, were of a nature whereby there was a contribution by both parties to the household. In other words, the arrangements reflected consideration constituted by what each brought to the household. The Tribunal is aware of the usual definition of consideration given by Bowen LJ in Carlill v CarbolicSmoke Ball Co [1893] 1 QB 271 (quoting Tindal CJ) as any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience, sustained by the plaintiff, provided such act is performed, or such inconvenience suffered by the plaintiff with the consent, either express or implied, of the defendant. This, although not cited to us, is plain or trite law.
Bearing this in mind, the Tribunal finds therefore that it is not the case that the Applicant received no consideration in money or money’s worth for the disposal. See s 1123(1)(b) (i) of the Act
The arrangements between mother and daughter included but clearly went beyond mere love and affection. In doing so, the consideration in support received by the Applicant, the Tribunal is satisfied, was not inadequate either (see s 1123(1)(b)(ii) of the Act).
Further on this question of consideration, and on its adequacy, the Tribunal accepts the evidence given by the Applicant.
In her evidence, the Applicant explained that since her husband died her daughter has been like my husband in that she has looked after her and done the things her husband used to do, including especially paying household bills except for some small ones. This was a satisfactory arrangement because of the problems she (the Applicant) experienced with her health. The Applicant said she was now too old (or infirm) to do things around the house and she needed someone to look after her. That someone was her daughter. The Social Services and Child Support Division’s observation that in this matter there is no evidence the Applicant is currently in need of personal care is without basis.
In such circumstances it was the Applicant’s intention to provide for her daughter who suffers depression and anxiety and she was clear that she would not have put her daughter on title at the Clarinda property if she had known there could be a resultant problem with her Age Pension. At the same time she did not expressly say to authorities that she was doing so because of the daughter’s contributions to the South Oakleigh property. The Tribunal would have been surprised had she said that.. The Tribunal is satisfied that the Applicant never said that it had something or other to do with a family business.
The Tribunal accepts the evidence given by the Applicant’s daughter in this regard.
In her evidence, the Applicant’s the daughter said that at the time when her mother acquired the Clarinda property, she said to her on more than one occasion, this is your house too. Maria says that this was a reason why she contributed to the household and treated the house like my own. This was the reason why in substance she had busied herself with work about the house, in particular painting of it sometimes until 4 or 5 am. She said somewhat apologetically she could not get her son to do this work.
In the former house in South Oakleigh, Maria told the Tribunal that she had similarly paid various household costs, such as the plumbing and maintenance.
The Applicant’s daughter tabled a document listing at least 12 items of expenditures by her between 1991 and 2015 at the South Oakleigh property. The list included an item of $7000 she paid for her father’s funeral. Obviously, by Maria paying it and not her mother, this was not an expenditure borne by the Applicant so there was a consequent saving by her.
Additionally, in that document, at least 45 items of expenditures are listed by her in 2015 at the Clarinda property. Many of them are not small items and include a dining table, dining chairs, a buffet, side tables and mattresses. Again, in Maria spending money on these items for the new house, the Applicant was saved money to be spent elsewhere or on other things.
It is plain to the Tribunal, and the Tribunal so finds, that in such circumstances, Maria’s name was not put on title merely, therefore, as a gift. It was done by the Applicant in recognition of, and/or in return for, the contributions in money or money’s worth made by Maria over the years beginning with the South Oakleigh property and continuing with the Clarinda property.
A number of points were raised in the submissions made by the Respondent. In particular, it was said that what was essentially a family arrangement should not be elevated to anything higher than that. But that seems to mean that the Tribunal should characterise the arrangement between the Applicant and her daughter as merely a family arrangement and should not allow that arrangement to have any change in nature or complexion despite the evidence. On this basis, for example, it seems no account should be taken of expenditures and purchases by Maria.
The Tribunal does not accept this submission. The Applicant and her daughter are of course mother and daughter. But as the evidence shows their arrangement over the years has taken on also another aspect, that being a financial and/or carer aspect.
The Tribunal therefore rejects the view that there is little in the case which would take it out of a normal and expected family arrangement - in other words, that what happened in the case was merely part and parcel of a child or children living in the family home. The evidence in the case takes it well beyond merely a bare family arrangement.
Furthermore, the Tribunal was not satisfied that the money or money’s worth contributions of Maria over the years as the Applicant’s daughter should be minimised or trivialised as being what children do or what happens in families. The Tribunal rejects this submission. Its concern has been with what happened in this case and not with what other families may do. In any event, there was no evidence of what other families do put before the Tribunal.
It was submitted on behalf of the Applicant that a constructive trust existed in Maria’s favour in respect of a half interest in the Clarinda property arising out of her contributions in money or money’s worth to the South Oakleigh premises. That is to say, as we understood it, her daughter had an interest - a half interest - in the South Oakleigh premise arising out of such contributions; when that house was sold the proceeds of sale, representing the property, were applied in buying the Clarinda property; therefore, the Clarinda property must reflect the transfer over of that interest.
On this basis, the half share in the Clarinda property could never be a gift to Maria but represented her interest brought about by her contributions in money or money’s worth to the former premises.
There is much to be said for this view and the Tribunal upholds this analysis if required to do so in order to arrive at its decision
There is no doubt that the Applicant’s daughter made significant contributions in money or money’s worth to the South Oakleigh property. The Tribunal accepts that the nature and extent of the contributions made in the past, over many years are far greater in number than those which could be recalled from memory and reduced to writing for this proceeding (see email dated 20 September 2017). Maria specifically gave evidence that for her whole adult life she had been contributing. She stated that she did not have all receipts because she didn’t think she would end up here. The contention of the Respondent that there is no evidence of this therefore must be rejected.
There is no doubt also, as the Respondent concedes, that the inclusion of Maria on the title in the Clarinda property resulted in her being a legal owner (jointly) of the property with the Applicant. That gives her a legal interest.
It is likely in such circumstances that Maria could maintain legal proceedings to resist a notice to quit the Clarinda property or could seek a declaration that she has a half interest in that property.
It is unnecessary for the Tribunal to go further than this but it has expressed its view in deference to the submissions made.
The Tribunal is satisfied for the reasons given that the decision under review should be set aside. It is satisfied there was no disposal of assets within the meaning of s 1123(1) of the Act in Maria becoming a joint owner of the Clarinda property. It is satisfied therefore that appropriate adjustments should be made to the Applicant’s Age Pension including back payments from 18 September 2015.

55. I certify that the preceding 54 (fifty-four) paragraphs are a true copy of the reasons for the written reasons herein of Dr Damien Cremean, Senior Member and Ms Amy Wood, Member

[sgd].....................................................
Associate
Dated 12 February 2018

Date of hearing 21 September 2017

Advocate for the Applicant
Mr Denny Meadows, Social Security Rights Victoria

Advocate for the Respondent Ms Ailsa Bramley, Department of Human Services

Date of hearing	21 September 2017
Advocate for the Applicant	Mr Denny Meadows, Social Security Rights Victoria
Advocate for the Respondent	Ms Ailsa Bramley, Department of Human Services