Theo and Secretary, Department of Families, Community Services and Indigenous Affairs

[2007] AATA 1210

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1210

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  Q 2006/455

GENERAL ADMINISTRATIVE DIVISION		)
Re		SOLON THEO

Applicant

And SECRETARY, DEPARTMENT OF FAMILIES, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal  Senior Member Bernard J McCabe

Date 5 April 2007

Place Brisbane

Decision  The decision under review is affirmed

................[Sgd].........................

SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY LAW – pensions and entitlements – age pension – request to provide additional information - decision to reject application for pension – adequate additional information – decision affirmed

Social Security (Administration) Act 1999 s36, 37

Theo and Secretary, Department of Family & Community Services [2003] AATA 489

Theo and Secretary, Department of Family and Community Services [2004] AATA 1273

Theo v Secretary, Department of Family & Community Services [2005] FCA 880

Theo v Secretary, Department of Family and Community Services [2006] FCA 279

Ebner v The Official Trustee in Bankruptcy [2000] HCA 63

Theo v Department of Family and Community Services [2005] FCAFC 239

Theo v Department of Families, Community Services and Indigenous Affairs [2007] FCA 171

REASONS FOR DECISION

5 April 2007	Senior Member B J McCabe
introduction

1.      Solon Theo has applied for the aged pension. The respondent asked Mr Theo to provide information about his assets and other matters. The respondent says the information is essential in order to assess whether Mr Theo is entitled to receive benefits. The respondent is particularly interested in information that might clarify the extent of Mr Theo’s involvement in the Solon Theo Family Trust. Mr Theo is registered as the owner of a number of properties. The title documents suggest he holds the properties as trustee. Mr Theo denies he plays a substantive role with respect to the trust. The respondent is not convinced, and has decided to reject Mr Theo’s application. The Social Security Appeals Tribunal (the SSAT) agreed with the respondent.

2.      This is not the first occasion Mr Theo has been before the Tribunal to argue about his entitlements to a pension. He is angry and frustrated by the process. That frustration manifested itself in an uncooperative and combative demeanour during the course of the hearing. He does not understand why his arguments have generally been unsuccessful. He says he has been denied his civil rights.

3.      I am satisfied the decision to refuse Mr Theo’s application for a pension is the correct and preferable one in the circumstances. I explain my reasons below.

4.      Mr Theo also asked the Tribunal to review an earlier decision of the respondent to pay him an aged pension at the married rate instead of the single rate. The payment was made in respect of the period 27 March 2002 to 1 July 2003 following a decision of the Tribunal in 2003: Theo and Secretary, Department of Family & Community Services [2003] AATA 489. Mr Theo subsequently sought review of aspects of the respondent’s decision with respect to the payment in his application to the Tribunal in Theo and Secretary, Department of Family and Community Services [2004] AATA 1273. He did not dispute the decision to pay him at the married rate on that occasion. He asked the Federal Court in the course of his appeal (Theo v Secretary, Department of Family & Community Services [2005] FCA 880) to deal with the issue, but French J confirmed (at [50]) the issue had not squarely been raised with the Tribunal and refused to consider the matter.

5.      The decision to pay Mr Theo at the married rate was made some time ago. It is unrelated to the existing appeal which deals with a different decision. I do not propose to deal with the earlier decision.

the material before the tribunal

6. The Tribunal was provided with the documents required under s 37 of the Administrative Appeals Tribunal Act 1975. The “T” documents include the original claim form filed with Centrelink and the PT module form that Centerlink uses to collect information about an applicant’s involvement with a trust. The respondent also tendered an affidavit sworn by Mr Barry Cosgrove, a solicitor in the employ of the Australian Government Solicitor. Mr Theo filed copies of his correspondence with the respondent and the Tribunal in which he says he set out most of his arguments. He also tendered a copy of a decision of Spender J in Theo v Secretary, Department of Family and Community Services [2006] FCA 279. He provided extracts of several pieces of legislation and a copy of an article by Professor Leslie Zines about the common law in Australia. He also tendered a copy of the International Covenant on Civil and Political Rights.

7.      Mr Theo appeared on his own behalf at the hearing. He said he was reluctant to make any oral submissions. He said his arguments were all apparent from the written material he provided to the Tribunal. He refused to answer many of the questions I asked. He also refused to answer many of the questions put in cross-examination by Mr McLeod, for the respondent. I repeatedly offered him the opportunity to provide more information or elaborate on his written submissions, but he declined to do so.

a preliminary matter

8.      Mr Theo asked me to excuse myself from the hearing. He said I was biased against him and had repeatedly displayed a hostile attitude. I asked him to give me examples of this behaviour but he was unable to point to anything of substance. After hearing from the respondent, I decided a reasonable bystander who observed these proceedings or any of the earlier proceedings could not form the view I was biased against Mr Theo in the sense that I “might not bring an impartial mind to the resolution of the question [I am] required to decide”:  Ebner v The Official Trustee in Bankruptcy [2000] HCA 63 at [6] per Gleeson CJ, McHugh, Gummow and Hayne JJ. I rejected his application and proceeded to hear the matter.

the background facts

9.      Mr Theo applied for the aged pension on 23 March 2006. He was 72 years of age at the time. His letter accompanying the application noted he was applying as a single person, rather than as a member of a couple. Mr Theo crossed out many of the questions with the letters “N/A”, which I assume means “not applicable”. He also indicated he was “single (never married, never lived with a partner)” although he acknowledged at the hearing that the answer was incorrect.

10.     Centrelink wrote to Mr Theo on 4 April 2006 seeking additional information about his claim. The letter asked him to complete a number of forms including an S module (which asks about the circumstances of an applicant’s separation from his or her spouse or partner) and a PT module (which asks about an applicant’s involvement in a private trust). As an alternative to completing the PT module, Mr Theo was advised he could produce an amended trust deed that showed he had relinquished any role in the trust. Mr Theo returned the letter with notes on the bottom which claimed Centrelink had treated his application with contempt. He wrote “N/A” on the cover of the PT form and did not answer any questions. He attached a copy of the Federal Court’s decision in Theo v Secretary, Department of Family and Community Services [2006] FCA 279 and advised the “information you requested exists in my application and your files.”

11.     The Solon Theo Family Trust was established on 8 September 1978. The trust deed is exhibited to Mr Cosgrove’s affidavit. Mr Theo was nominated as the trustee. Clause three of the deed provides the trustee “may at any time by writing under his hand and seal alter the settlement herein” to confer additional powers on the trustee, add or remove beneficiaries and exercise a range of other powers. Clause 8 says he may retire as trustee and appoint someone else to that role – but he may also remove anyone he appoints, or re-appoint himself. Mr Theo has not produced a document under seal that formally makes any amendment to the trust, or which confirms his resignation from the trust. He provided a number of other documents (including several statutory declarations) in which he says he has renounced any interest or formal role in the trust as of 14 December 2001. His statutory declaration of that date adds “should I assist in any shape or form with any administrative matters relevant to the said trust, this will be on an honorary capacity ONLY.” Copies of the documents have also been exhibited to the affidavit of Mr Cosgrove.

12.     Centrelink was not satisfied with the information provided and rejected the application on 18 April 2006. An authorised review officer confirmed the information available about the trust was not sufficient to enable the respondent to determine whether or not the applicant was entitled to a pension. That decision was made on 31 May 2006. The SSAT affirmed the decision on 28 June 2006.

mr theo’s argument about the validity of the legislation

13.     Mr Theo disputes the validity of the provisions in the Social Security (Administration) Act 1999 that require him to provide information and submit to an assets test in connection with his application for an aged pension. He says the legislation is inconsistent with a number of other statutes which, when read together, have the effect of creating a social contract between the Commonwealth and the taxpayer. Under the terms of that contract, the applicant says he is entitled to receive social security in his old age or when he becomes too ill to work.

14.     Mr Theo is wrong. The legislation he referred to does not have the effect of creating an enforceable contract. But even if I thought his argument had merit – and I do not – I would be obliged to reject it because the Federal Court has already considered and rejected the same argument in Theo v Secretary, Department of Family & Community Services [2005] FCA 880, Theo v Department of Family and Community Services [2005] FCAFC 239 and – most recently – in Theo v Department of Families, Community Services and Indigenous Affairs [2007] FCA 171.

15.     I am satisfied the respondent has the power to request information about the trust and the status of the applicant’s relationship with his wife.

did mr theo proffer adequate responses to the requests for information?

16.     I have already explained how Mr Theo responded to many of the questions in the original claim form by striking them through and writing “N/A”. Some of his other responses were unhelpful: for example, when asked to describe where he lived in Question H2, he checked the box marked “Other” and wrote “Anywhere” in the space provided for an explanation. When questioned about that response in the hearing, he said he lived in his car and could not remember when he last visited the home he previously shared with Mrs Theo – even though his mail was delivered to that address. He refused to explain how he came to receive mail. Mr McLeod pointed out exhibit 3 was faxed from a number previously used by Mr and Mrs Theo when they were still together. Mr Theo gave the same number as a contact number on the fax, suggesting it is a phone/fax number.  

17.     Spender J pointed out in Theo v Secretary, Department of Family and Community Services [2006] FCA 279 that the Tribunal must critically evaluate Centrelink’s requests for information. The Tribunal must be satisfied the requested information was in fact required by Centrelink in order for it to do its job of assessing whether the applicant was eligible to receive benefits. In that case, Centrelink sought information about the identity of the individual who controlled the trust, and documentation establishing that Mr Theo was no longer trustee. His Honour pointed out (at [14]):

…while it is clear that in order to decide whether a person has an entitlement to Age Pension, an assessment of income and assets has to be made, it is by no means clear (and seems to me to reflect an imperfect understanding of the difference between any entitlement to income and assets of a trust, and the status of controller of trust property), that, in order to be able to assess income and assets, Centrelink ‘require[s] proper original evidence of the legal date of transfer of control of the trust and of who is now in control of the trust, a completed "Private Trust" form and full financial documents for the trust dealing income and assets held’.

18.     The respondent’s renewed request for information about Mr Theo’s position in the trust was presumably an attempt to give effect to the intent of the legislation as it was explained in the course of the decision of French J in Theo v Secretary, Department of Family & Community Services [2005] FCA 880. His Honour explained Part 3.18 of the legislation (dealing with control tests) was introduced to give a clearer picture of the actual relationship between an individual and assets, regardless of how that relationship was formally described. His Honour said (at [9]):

A test based on identifying control of a structure was said to be justified on the grounds that the controller of the structure could be considered the de facto ‘owner’ of the structure’s assets when he or she could use them for his or her own purposes or benefit. In assessing whether an individual passed the control test the interests of that individual and of his or her associates, as defined in the legislation, would be taken into account. This would prevent a person, in relation to whom a trust or company was a controlled private trust or company, from diluting his or her interest in a structure. The Memorandum pointed out that a test based on identifying the source of assets in a structure was justified where the transfer of assets to an interposed structure was done because they would continue to be used for the transferee’s benefit or for their family’s benefit. Where it was claimed that assets transferred to an interposed structure should be regarded as a gift, the transferee would have to establish that the property was in fact given away. The Memorandum then said:

‘This would be difficult to establish if the person retained any involvement with the interposed structure.’

It may be seen from this that the question of cessation of involvement with a private trust structure was, from the outset, of importance to the operation of the provisions of Pt 3.18.

19.     In any event, additional facts have come to light since the decision in Theo v Secretary, Department of Family and Community Services [2006] FCA 279 suggesting the respondent was right to seek clarification as to Mr Theo’s involvement with the trust. The affidavit of Mr Cosgrove refers to a series of land transactions after the date on which Mr Theo said he ceased playing a formal role in relation to the trust. Mr Theo is identified in the title documents in each case as the transferee of real property, albeit as trustee. He admits he signed the relevant documents. He said he did so at the request of someone from the Department of Natural Resources and Water, which maintains the register. He did not identify who made the request, nor was I able to discern from his oral evidence why such a request would be made. Mr Theo said he was merely playing an administrative role when he signed the documents. He expressly declined to explain what he meant by that expression, and became abusive when pressed.

20.     Even if I accept the various statutory declarations were capable of being treated as evidence of Mr Theo’s resignation as trustee, his conduct in executing the transfers and being registered as the owner of the various properties is not consistent with that conclusion. It seems to me he was doing precisely what trustees do: he was taking property on trust for the beneficiaries of the relevant trust. It is nonsense to suggest he was acting in an informal or “administrative” capacity.

21.     Given the evidence that the applicant has in fact continued to act as a trustee of the trust, I decline to accept his account of his status. But that is not the end of the matter, as Spender J pointed out. Merely establishing Mr Theo was a trustee of assets to which he had no other entitlement may not be a problem for him when it comes to the assessment of his assets – although it must be said the trust deed confers considerable power on Mr Theo to use the assets as he sees fit.

22.     The respondent plainly believes Mr Theo is not merely a trustee in relation to the assets. The respondent suspects the applicant may have a beneficial interest in at least some of the properties as well. There also appears to be some doubt as to the precise status of the applicant’s relationship with Mrs Theo, not least because he inaccurately suggested in the claim form that they had never been married. Mr Theo was evasive in response to questions about his living arrangements. He refused to confirm where he lived or how he collected his mail from Mrs Theo’s home.

23.     Mr Theo was an unsatisfactory witness. He was evasive and uncooperative. Although he presented his reluctance to cooperate as a principled refusal to deal with incompetent and malevolent bureaucrats intent on depriving him of his entitlements, the way in which he conducted his case left me with the distinct impression of a man who had something to hide.

24.     I share the respondent’s doubts about the applicant’s explanations of his relationship with the trust property (and, for that matter, about his relationship with Mrs Theo who does retain a beneficial interest under the terms of the trust). I am therefore satisfied the respondent was right to seek more information about the trust. In the absence of reliable information, I cannot be satisfied the applicant is eligible to receive the aged pension.

conclusion

25. Mr Theo has been encouraged on a number of occasions to comply with the requirements of Centrelink so his entitlements might be assessed. He refuses to cooperate. As a consequence, the Secretary does not have sufficient information to enable him to form an opinion pursuant to ss 36 and 37 of the Social Security (Administration) Act 1999 that Mr Theo is qualified to receive the payment he seeks. He was given ample opportunity to provide that additional information at the hearing. I quoted the remarks of Spender J in Theo v Department of Families, Community Services and Indigenous Affairs [2007] FCA 171 at [14] exhorting him to adopt a more compliant attitude, but Mr Theo was unmoved. I have therefore decided to affirm the decision under review.

I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

Signed:         .....................................................................................
  Associate      Stephen O’Grady

Date of Hearing  26 March 2007
Date of Decision  5 April 2007
The applicant represented himself at the hearing.

The respondent was represented by Mr McLeod, of counsel.