Thomas; Secretary, Department of Social Services and (Social services second review) - [2022] AATA 2324

Thomas; Secretary, Department of Social Services and (Social services second review) [2022] AATA 2324 (21 July 2022)
Division:GENERAL DIVISION
File Number:2020/0503
Re:Secretary, Department of Social Services
APPLICANT

Arthur ThomasAnd
RESPONDENT

DECISION
Tribunal:Deputy President J Sosso
Date:21 July 2022
Place:Brisbane

The decision under review is affirmed.
................[SGD]........................................................
Deputy President J Sosso
CATCHWORDS
SOCIAL SECURITY – Age Pension – whether property registered in Applicant’s name should be excluded – whether Applicant held property on trust for his son – whether a constructive trust exists – whether Applicant held to be an attributable stakeholder pursuant to s 1207X of the Social Security Act 1991 (Cth) – decision under review affirmed
LEGISLATION
Social Security Act 1991 (Cth)
Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017 (Cth)
CASES
Agnew and Secretary, Department of Social Security (1998) 52 ALD 426
Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566
Baumgartner v Baumgartner (1987) 164 CLR 137
Grant v Edwards [1986] Ch 638
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Higgins v Wingfield [1987] VR 689
Hohol v Hohol [1981] VR 221
Imam All Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413
Kang v Secretary, Department of Social Services [2017] FCA 895
Lloyds Bank plc v Rosset [1991] 1 AC 107
Muschinski v Dodds (1985) 160 CLR 583
Secretary, Department of Social Security v Agnew (2000) 96 FCR 357
Slamkova and Secretary, Department of Social Security [2017] AATA 137
Thwaites v Ryan [1984] VR 65
Yaxley v Gotts [1999] 3 WLR 1217
REASONS FOR DECISION
Deputy President J Sosso
21 July 2022
INTRODUCTION

The Secretary, Department of Social Services (the Applicant) seeks a review of a decision of 24 December 2019 of the Social Services and Child Support Division of the Administrative Appeals Tribunal (AAT1) – Exhibit 1 T1 pp. 1 – 3. AAT1 set aside a decision of Services Australia – Centrelink (the Agency) which attributed 100% ownership of real property at 4 Fortuna Place, Parkwood (the Parkwood property) to Mr Arthur Thomas (the Respondent) and raised an Age Pension debt against him of $48,573.66 for the period 7 July 2010 to 16 October 2018 – Exhibit 1 T2 pp. 4 – 36.
AAT1 made the following Determination – Exhibit 1 T2 p. 4:
(a)a common intention constructive trust has been in existence in respect of the Parkwood property since its purchase in 2004 and the Respondent holds the property on trust for his son, Mr Paul Thomas (Paul);
(b)the asset value of the Parkwood property is not be taken into account as an asset of the Respondent from 23 June 2010 for the purpose of assessing his entitlement for the Age Pension;
(c)the Respondent has not been overpaid the Age Pension and has no debt; and
(d)arrears of the Age Pension are to be paid to the Respondent from the date it had previously been reduced.
The Respondent made a statement dated 30 September 2021. It is in the form of a Statutory Declaration – Exhibit 6. The following background information is primarily taken from the Respondent’s statement, with supplementary information from the T Documents (Exhibit 1). Insofar as the Respondent’s version of events, or interpretation of them, is at odds with the Applicant’s, the differences are dealt with later in this Determination.
The Respondent was born in Sydney in June 1945, left school at age 15, and served in the Australian Army from 1965 until 1967, followed by a year of Army Reserve service – Exhibit 6 p. 1 paras 1 – 4.
After leaving school, and before being “called up” for military service, the Respondent worked with New Zealand Insurance – Exhibit 6 p. 1 para 3.
In 1969, the Respondent married Janice, and together, they had five children: Julie-Anne, David, Paul, Michael and Leanne – Exhibit 6 p. 1 para 10.
After his discharge from the Australian Army, the Respondent went back to work with New Zealand Insurance, and then was employed by MLC. The Respondent chose to work for MLC as it offered mortgage facilities to its employees – Exhibit 6 p. 2 para 11.
The Respondent worked in the insurance industry for nearly 30 years, and during that time, worked in a number of geographic locations – Exhibit 6 p. 2 paras 12 – 14.
In 1989, the Respondent decided to move from Sydney to the Gold Coast. All of the family moved, with the exception of Julie-Anne who remained in Sydney. The Respondent stated that he decided to move to the Gold Coast in an endeavour to save his marriage. He had been working long hours doing difficult work. Unfortunately, he found it hard to find work in insurance and instead worked as a taxi driver. This also entailed working long hours, including doing “graveyard” shifts from 3am to 3pm – Exhibit 6 p. 2 para 17.
In, or about, 2000, the Respondent and Janice separated and later divorced. The family home was sold around 2001, with Janice receiving 55 per cent of the proceeds and most of the furniture – Exhibit 6 p. 2 para 19.
In 2003, the Respondent purchased a unit at Burleigh Heads with the proceeds of the divorce settlement, as well as a $50,000 loan from St George Bank. This transaction was facilitated with the assistance of a mortgage broker, Mr John Kennedy, from Mortgage Choice – Exhibit 6 p. 2 para 20.
Paul, who was born in December 1973, remained sociable with his father after the divorce.
In early 2004, Paul became interested in purchasing the Parkwood property and spoke to his father about the purchase.
The subsequent events relating to the purchase of the Parkwood property are not altogether clear. This is due to the fading memories of what had occurred by the parties involved. However, there is no dispute about the broader scope of what occurred.
Paul had problems obtaining a loan from the Commonwealth Bank to effect the purchase of the Parkwood property, and there was an informal agreement between the Respondent and Paul that the Respondent would help Paul obtain the property. The legal niceties that flowed from this father and son arrangement were not the subject of any formal written agreement. All of the subsequent problems that have arisen have their genesis in a father and son cooperating as a family unit in an informal manner to ensure that the son would get the property he wanted.
The Tribunal has been provided with a Statement of Account of the Respondent’s Freedom Offset account with St George Bank which discloses that, on 26 September 2003, a cheque deposit of $24,500 was made into the account – Exhibit 1 T35 p. 320. Both the Respondent and Paul claimed that the $24,500 deposit was the proceeds of the sale of Paul’s car, with the money to be held as a deposit towards any future purchase of property by Paul – Exhibit 6 p. 2 para 22.
Paul also utilised the services of Mr Kennedy who suggested that the Respondent be a guarantor to assist Paul in obtaining a house loan – Exhibit 6 p. 2 para 23.
The original purchase documents were executed by Paul on 13 May 2004, and by the seller on 14 May 2004 – Exhibit 1 T18 p. 184. The purchase was subject to finance, and the documentation provided to the Tribunal states that the financier was to be the Commonwealth Bank in the sum of $200,000, with a finance date 14 days from the contract date.
On 14 May 2004, Paul paid a $10,000 deposit for the purchase of the Parkwood property – Exhibit 1 T35 p. 316. The Trust Account Receipt, although initially completed in Paul’s name, was later changed, with Paul’s name being replaced with the Respondent’s name.
According to the Respondent, the Commonwealth Bank subsequently declined to loan money to Paul, and it was suggested that the loan be in the Respondent’s name, secured by a mortgage both over the Respondent’s Burleigh Heads unit, as well as the Parkwood property – Exhibit 6 p. 2 para 23.
The Respondent made the following statement – Exhibit 6 p. 3:
“24.I thought that the property Paul wanted to buy looked affordable for him, and he convinced me that he could meet the repayments. All I could see was my son was trying to purchase property, and I wanted to help him.
25.I was not involved in or present during the inspection of the Parkwood property or the payment of any deposit. I do not remember signing a contract of sale.
26.I did not realise that I was going to be on the title for the Parkwood property and was not aware that I was at the time. I was just happy that Paul got his mortgage through. We all understood that the Parkwood property belonged to Paul.”
The Parkwood property was purchased in the Respondent’s name for $350,000 on 15 June 2004 – Exhibit 1 T17 p. 168.
Documentation before the Tribunal discloses that $321,500 comprised the original loan amount, which was paid on 15 June 2004 – Exhibit 1 T22 p. 189.
It is the Respondent’s contention that the Commonwealth Bank loan was used in two ways.
Firstly, to discharge the Respondent’s St George Bank mortgage over his Burleigh Heads unit in the amount of $46,792.42 – Exhibit 1 T35 p. 319. The Respondent contends that this was his part of the loan – Respondent’s Closing Submissions (RCS) pp. 2 – 3 para 7(c).
Secondly, to pay the balance of the Parkwood property purchase, which, it is contended, Paul considered his share of the loan – RCS pp. 2 – 3 para 7(c).
At all relevant times, the Respondent resided in his Burleigh Heads unit and Paul at the Parkwood property – Exhibit 6 p. 3 para 27.
On 10 May 2004, $46,792.42 was paid to St George Bank to discharge the Respondent’s mortgage over the Burleigh Heads unit – Exhibit 1 T35 pp. 318 – 319.
It is contended by the Respondent that, to give effect to his informal agreement with Paul, he was required to pay back the amount used to discharge his mortgage, plus interest of approximately $25,000, with a total repayment figure of approximately $75,000 – RCS p. 3 para 7(d).
Paul would visit the Respondent every four to six weeks and give the Respondent cash for mortgage repayments, which money was deposited into the Respondent’s bank account – Exhibit 6 p. 3 paras 28 – 29.
During this period of time, the Respondent did not have a computer or access to emails – Exhibit 1 T5 p. 100.
In either 2016 or 2017, Paul stopped giving cash to the Respondent for mortgage repayments, claiming that he had paid his share of the loan – Exhibit 6 p. 3 para 31.
Paul paid the local government rates on the Parkwood property between 2004 until 2016, at which later time, he began to experience difficulties in meeting his obligations. The Respondent organised for the rates to be redirected to him and he set up a payment plan. Paul would transfer money to the Respondent for the local government rates, and the Respondent would make the payment – Exhibit 6 p. 3 paras 32 – 33.
The insurance for the Parkwood property was in the Respondent’s name from 2004, but Paul paid the Respondent the insurance bills – Exhibit 6 p. 3 para 34.
The Respondent and Paul have not been on speaking terms since 2017 – Exhibit 6 p. 3 para 36.
In 2008, the Respondent made a Will in which Paul was to receive 50% of the Burleigh Heads unit and 100% of the Parkwood property. The remaining 50% of the Burleigh Heads unit was to be divided equally between the remaining four children – Exhibit 1 T26 pp. 226 – 229, Exhibit 6 p. 4 para 41.
On 5 July 2010, the Respondent applied for the Age Pension, without declaring any interest in the Parkwood property – Exhibit 1 T5 pp. 93 – 120.
On 4 August 2010, the Respondent’s claim for the Age Pension was granted, payable from 23 June 2010 – Exhibit 1 T39 p. 504.
The Respondent continued driving taxis for a further three years, retiring on 31 December 2013 – Exhibit 3 p. 3 para 13(h).
In 2008, the Respondent was injured in a traffic accident on the road to Brisbane Airport. Following the accident, the Respondent experienced difficulties, including loading luggage and wheelchairs when driving a “maxi taxi” – Exhibit 6 p. 4 paras 38, 43 – 44.
On 17 September 2011, the Agency wrote to the Respondent informing him that it had received notification that he was entitled to receive a $40,000 lump sum compensation payment in relation to the August 2008 traffic accident, but there would be no change to his payments as a result – Exhibit 1 T18 p. 179.
The Respondent has no other property interest, mortgage, shares or trust accounts – Exhibit 3 p. 3 para 13(k).
On 11 September 2017, the Respondent made a new Will. This followed the Respondent seeking legal advice to put his affairs in order. The Respondent’s legal advisor asked why he had not sold the Parkwood property and he told her that it belong to Paul. The legal advisor told the Respondent to advise the Agency about the property – Exhibit 6 p. 4 para 48.
With respect to the Will, the Respondent wanted to take out Paul’s 50% share of the Burleigh Heads unit and rearrange it equally amongst all of the children. This was due to the fact that the 10 year loan for the purchase of the unit was finished by that time – Exhibit 6 p. 4 para 49.
Accordingly, the Will provided that the proceeds of sale of the Burleigh Heads unit be divided equally between all five children – Exhibit 1 T26 p. 221 para 3.1.
There is no mention of the Parkwood property in the Will, and the rest and residue of the Respondent’s estate is bequeathed to his five children in equal shares.
On 29 August 2017, the Respondent went to Centrelink Robina “to tell them about the Parkwood property and to get it transferred to Paul. They told me to make a written statement explaining what happened. I just wanted to transfer the property to Paul so there would be no problem. I provided as much information as I was able to at the time” – Exhibit 6 p. 5 para 50.
A Customer Service Officer of the Agency made the following notes of the meeting with the Respondent – Exhibit 1 T41 p. 574:
“Customer attended Robina SC 29.08 with asset enquiry and advised complex situation of homeownership… Customer explanation is that own opinion is that he does not and never has owned the home which was purchased in 2004 for his Son who could not obtain finance and who has been paying all associated costs, mortgage repayments, rates and insurance etc… Has been brought to customer attention only now as a result of wishing to change title of ownership and… has been told to advise Centrelink by solicitor for gifting purposes.”
On 17 October 2018, a Centrelink Complex Assessment Officer determined that 100% of the asset value of the Parkwood property be attributed to the Respondent under Part 3.18 of the Social Security Act 1991 (Cth) (the Act) and that no common intention constructive trust existed. Consequently, the assessable value of the Respondent’s assets was increased, and the rate of Age Pension was reduced to below $200 per fortnight, resulting in the Respondent being placed in severe financial hardship – Exhibit 1 T2 p. 5 para 2, Exhibit 6 p. 5 para 51.
On 6 May 2019, a decision was made by the Agency to raise and recover a debt of $48,573.66, due to overpayment of the Age Pension to the Respondent, for the period 7 July 2010 to 16 October 2018 – Exhibit 1 T2 p. 5 para 4.
Following the reduction in the amount of the Age Pension, the Respondent was placed in difficult circumstances. In a Statement of Financial Circumstances dated 9 November 2019, the Respondent stated – Exhibit 1 T35 p. 312:
“My sole income is $184 Centrelink payment. My family sons & daughters assist me with $20 to $50 by way of cash and Coles gift cards. The local branch of the R.S.L Burleigh Heads sub branch of which I am a member assist me with food donations, after BBQ’s spare bread, sausages etc and clothing, slacks/suits.”
The Respondent sought review of the various Agency decisions which culminated in the decision of AAT1 which is set out above – Exhibit 1 T2 pp. 4 – 36.
LEGISLATION
Section 55 of the Act, which provides for the calculation of the Age Pension provides as follows:
“A person’s age pension rate is worked out:
(a) if the person is not permanently blind — using Pension Rate Calculator A at the end of section 1064 (see Part 3.2); or
(b) if the person is permanently blind — using Pension Rate Calculator B at the end of section 1065 (see Part 3.3).”
In this matter, the calculation of the Respondent’s Age Pension is determined by using Calculator A. Within Calculator A is Module G, which sets out the assts test, which concerns the effect of a person’s assets on the rate of the Age Pension. Subsection 11(1) defines “asset” as “property or money (including property or money outside of Australia)”. Module G provides as follows:
“Module G — Assets test
Effect of assets on maximum payment rate
1064-G1 This is how to work out the effect of a person’s assets on the person’s maximum payment rate:

Method statement

Step 1. Work out the value of the person’s assets.

Note 1: For the treatment of the assets of members of a couple see point 1064-G2.

Note 2: For the assets that are to be disregarded in valuing a person’s assets see section 1118.

Note 3: For the valuation of an asset that is subject to a charge or encumbrance see section 1121.

Step 2. Work out the person’s assets value limit (see point 1064-G3 below).

Note: A person’s assets value limit is the maximum value of assets the person can have without affecting the person’s pension rate.

Step 3. Work out whether the value of the person’s assets exceeds the person's assets value limit.

Step 4. If the value of the person’s assets does not exceed the person’s assets value limit, the person’s assets excess is nil.

Step 5. If the value of the person’s assets exceeds the person’s assets value limit, the person’s assets excess is the value of the person’s assets less the person’s assets value limit.

Step 6. Use the person’s assets excess to work out the person’s reduction for assets using points 1064-G4 to 1064-G7 below.

Note 1: See point 1064-A1 (steps 9 and 10) for the significance of the person’s reduction for assets.
Note 2: The application of the assets test is affected by provisions concerning disposal of assets (sections 1123 to 1128), retirement villages (sections 1145 to 1157) and financial hardship (sections 1129 and 1130).
…
Assets value limit
1064-G3 A person’s assets value limit is worked out using Table G-1. Work out the person’s family situation and home ownership situation. The assets value limit is the corresponding amount in column 3.

Table G-1--Assets value limit

Column 1

Column 2

Column 3

Assets value limit

Item

Person’s family situation

Column 3A

Either person or partner homeowner

Column 3B

Neither person nor partner homeowner

1.

Not member of a couple

$250,000

$450,000…”

It is not contested that the Respondent was, at all material times, the legal owner of the Parkwood property – Exhibit 5 p. 5 para 30.
However, the Respondent contends that he holds the Parkwood property pursuant to a constructive trust in favour of Paul – Exhibit 5 p. 5 para 30.
The threshold question to be determined by the Tribunal is whether a constructive trust exists, and in answering this question, and subsequent questions, attention will be directed to the provisions contained in Part 3.18 of the Act, which, inter alia, deals with how private trusts are treated for the purposes of the assets test.
The Applicant drew the Tribunal’s attention to various observations of Deputy President Burns in Agnew and Secretary, Department of Social Security (1998) 52 ALD 426. However, that Determination was overturned on appeal, first by the Federal Court, and then by the Full Federal Court.
It is preferable to turn to the Full Federal Court decision of Secretary, Department of Social Security v Agnew (2000) 96 FCR 357 (Agnew). This case helpfully sets out the general principles of law concerning constructive trusts, and provides a helpful example of direct relevance to this matter.
Mr Agnew was the registered proprietor of a farm which, since the late 1970’s, he, his wife and their three sons carried on business in partnership as farmers and graziers, even though the property was not an asset of the partnership. In 1980, Mr and Mrs Agnew moved to Western Australia and Mr Agnew told his sons that the farm was “yours now, you farm it as you see best”.

The three sons continued to work on the farm and made improvements without consulting their father. After moving to Western Australia, Mr Agnew had nothing to do with the running of the farm. Management decisions were made without his approval. When Mr Agnew left the farm, 500 acres was being cropped, but by 1995, this had increased to 1,100 acres.
In 1995, Mr and Mrs Agnew formally retired from the business partnership, sold the farm to the trustee of their sons’ family trust, and released the trustee from payment of the balance of the purchase price.
Mr and Mrs Agnew applied for the Age Pension, but their claim was rejected under the assets test on the ground that, in the preceding five years, they had disposed of an asset for inadequate consideration.
Drummond, Sundberg and Marshall JJ found the farm had been held on a constructive trust by Mr Agnew for his three sons, and the trust came into existence when the conduct that gave rise to its imposition occurred, which was when the sons acted in reliance of the statement that the land was theirs. Finally, their Honours held that no amount was to be included in their assets under s 1125A of the Act, since the asset they disposed of in 1995 was the bare legal title to the land which had no significant value.
Their Honours made the following observations (362 – 365):
“11. Had Mr Agnew on his return from Western Australia asserted that Rosedene was his beneficially, his claim would have been rejected and the sons’ claim to beneficial ownership upheld on the ground that the land was held by their father on a constructive trust for them. In reliance on the father’s statement that the land was theirs, they improved it, doubled its capacity, turned stony land into arable land, extended the house on Rosedene and otherwise acted in reliance on the father’s statement that the land was theirs. Directing ourselves in accordance with Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 584-585; 157 ALR 414 at 425-426 and Giumelli at 113; 476 we consider that a remedy that falls short of the imposition of a trust would be inappropriate in the circumstances of the case. Factors such as those that led to more confined relief in Giumelli — a still pending partnership action, improvements to the land by family members other than the claimant, and the fact that another son who was not party to the proceeding lived on the land with his family — are not present in the instant case.
12. One of the reasons the Tribunal gave for rejecting the claim to a constructive trust was that the sons had established no detriment. It took from Hohol v Hohol [1981] VR 221 what it called the three necessary elements for a constructive trust — a common intention as to the ownership of the beneficial interest, acts to the detriment of the party claiming the beneficial interest, and that it would be a fraud on the claimant for the legal owner to deny that interest. As the primary judge said, it is no longer necessary to show a common intention: see Muschinski v Dodds (1985) 160 CLR 583 at 613-614. However, for ease of identifying the type of constructive trust involved in the present case, we will use the description ‘common intention constructive trust’. There are many cases and commentaries in which, as in Hohol, it is said that the claimant must have acted to his detriment.
13. The Privy Council has said that the common intention constructive trust is but a particular application of proprietary estoppel principles: Austin v Keele (1987) 10 NSWLR 283 at 290; 61 ALJR 605 at 609. Browne-Wilkinson VC has said that the two doctrines rest on the same foundation and have reached the same conclusions: Grant v Edwards [1986] Ch 638 at 656. In Lloyds Bank plc v Rosset [1991] 1 AC 107 at 129 Lord Bridge, with whom the other Law Lords agreed, said:
‘Even if there had been the clearest oral agreement between Mr and Mrs Rosset that Mr Rosset was to hold the property in trust for them both as tenants in common, this would, of course, have been ineffective since a valid declaration of trust by way of gift of a beneficial interest in land is required by s 53(1) of the Law of Property Act 1925 (UK) to be in writing. But if Mrs Rosset had, as pleaded, altered her position in reliance on the agreement this would have given rise to an enforceable interest in her favour by way either of a constructive trust or of a proprietary estoppel.’
See also Waters, Matrimonial Property — Resulting and Constructive Trusts — Restitution — Fielder v Fielder (1975) 53 Canadian Bar Review 366 at 375 — 376; Cope, Constructive Trusts (1992), pp 836-838; Ford and Lee, Principles of the Law of Trusts (3rd ed, 1996), par 22350.
14. Whatever the differences between the two doctrines (as to which see, for example, Pawlowski, The Doctrine of Proprietary Estoppel (1996), pp 10-16), they share the aim of frustrating unconscionable conduct: Yaxley v Gotts [1999] 3 WLR 1217 at 1227. Thus the notion of detriment common to both should have the same content. That is, one should not look for an act that can be seen to be to the claimant’s detriment when done, but for an act done by the claimant in reliance on the conduct of the legal owner in circumstances where detriment would be suffered if the owner were permitted to depart from the assumption that induced the reliance. As Dixon J said in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674:
‘…it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.’
Sir Owen Dixon’s understanding of detriment in the estoppel context has been adopted in some constructive trust cases. In Higgins v Wingfield [1987] VR 689 at 695-696 McGarvie J, with whom Murray J agreed, having set out the passage from Grundt quoted above, said:
‘The required nature and quality of the acts capable of amounting to detriment and their relation to the common intention have not been settled. However, where acts constitute a sufficient detriment to raise a trust, there is no reason for regarding them as having a rationale different from that explained by Sir Owen Dixon in the passage quoted above as the rationale of acts of detriment which will found an estoppel. …
… no case has been drawn to our attention where the marriage case principles have been regarded as giving rise to a trust without the claimant having done acts which would be acts detrimental to the claimant's interest if the claimed beneficial interest were denied.’
See also per Marks J at 700. The same view was taken in Thwaites v Ryan [1984] VR 65 at 90-92. And see Ong, Trusts Law in Australia (1999), p 467. Accordingly we think that in the passage we have set out in par 8, the Tribunal erred in law in literally applying the second criterion in Hohol with a view to discovering whether the acts done by the sons were detrimental to them when done.
15. The primary judge was correct in his treatment of detriment, which is consistent with what we have said in [14]. His Honour said that if Mr Agnew had attempted to renege on his contract, his sons would have rightly complained that a refusal to transfer legal title to them ‘would have been a detriment because it would mean that they would not gain their rightful proprietary interest in the land’.
16. The other reason the Tribunal gave for refusing to impose a trust was that at the time Mr Agnew departed for Western Australia he did not intend to transfer the whole of the beneficial title in Rosedene to his sons ‘at this time’. In par 32 of its reasons the Tribunal said that it regarded Mr Agnew and Peter as honest witnesses, and accepted the ‘factual content’ of their evidence as true, with one exception. That would lead one to expect that the exception would be an aspect of their evidence that the Tribunal rejected. But that is not the case. Rather, the Tribunal accepts the evidence in par 40, namely that Mr Agnew, speaking of the land, told the sons ‘it's yours now’, which led Peter to understand that the land was theirs ‘then in 1980’. We agree with the primary judge that it was not open to the Tribunal, having accepted that evidence, to hold that this was not ‘the reality of the situation’.
17. In any event, the Tribunal immediately went on to make a further error of law, and in so doing indicated that it did not understand the nature of a trust. Thus it said in par 42 that when Mr Agnew told his sons the land was theirs, it was not his intention to divest himself of ‘all rights as legal and beneficial owner, ie to create a trust in favour of his sons’. If Mr Agnew had divested himself of his legal and beneficial interest (that is, by transferring the land), there would of course have been no trust in the sons’ favour. The Tribunal repeated the error when it went on to say that there were specific purposes behind the ‘preservation of legal title in Mr Agnew's name’. The retention of legal title was not in question, and to search for reasons why Mr Agnew retained it shows that the Tribunal regarded a positive decision to retain legal title (that is, not to transfer the land outright) as fatal to the existence of a trust. It is true that in par 42 the Tribunal was dealing with an express trust. However, in par 47, when dealing with a constructive trust, it repeated the ‘findings’ it had made in par 42. The erroneous understanding of trust law disclosed by the express trust discussion permeates the constructive trust discussion, because the earlier express trust ‘finding’ was used by the Tribunal to show that the first Hohol element was not present. That is to say, there was no common intention that the sons should be the beneficial owners of the land. Thus, in addition to the error of law identified by the primary judge, the Tribunal erred in law in its understanding of the duality of ownership inherent in a trust.”
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)
THE HEARING
A Hearing was convened in Brisbane on 21 March 2022.
Ms Forsyth appeared for the Applicant and Mr Black appeared for the Respondent.
The Respondent gave evidence and was cross-examined. In addition to the Respondent, Paul, Ms Julie-Anne Wiersma (Julie-Anne) and Ms Janice Thomas (Janice) also gave evidence and were subject to cross-examination.
The Tribunal gave the parties the opportunity to provide written closing submissions, and the following documents were subsequently provided to the Tribunal:
(a)Secretary’s Closing Submissions (SCS) dated 28 April 2022;
(b)Secretary’s Closing Submissions in Reply (SCSR) dated 12 May 2022;
(c)Respondent’s Closing Submissions (RCS) dated 28 April 2022; and
(d)Respondent’s Reply Submissions (RRS) dated 12 May 2022.
CONSIDERATION
Introduction
The Applicant contends, and the Tribunal agrees, that the issues to be determined by the Tribunal are as follows – Exhibit 3 p. 1 para 3:
(a)was the Parkwood property held on a constructive trust by the Respondent for his son, Paul, or should it be assessed as the Respondent’s asset?;
(b)if a constructive trust is found to exist, what value of the Parkwood property should be attributed to the Respondent?;
(c)does the Respondent owe a debt to the Commonwealth?; and
(d)if a debt is owed, what, if any, ought to be recovered?
Credit of the witnesses
The law governing constructive trusts is complex and great weight has to be given to the intention of the persons involved. The existence, or otherwise, of a constructive trust usually depends on the understanding of the parties, which understanding may be implicit and not recorded in any documentation. In such cases, a decision-maker has to ascertain what exactly was motivating the parties, and on what basis they proceeded.
The Tribunal in Follone and Secretary, Department of Social Security (1987) 11 ALD 477 (Follone) at 481 properly pointed out the extraordinarily complex and difficult task of administering the assets test legislation. In particular, in the context of family life, of elevating all kinds of understandings or expectations into agreements which has the potential to undermine the proper administration of the assets test legislation.
The Tribunal is mindful of the caution highlighted in Follone, and has proceeded in this matter with the policy underpinning Part 3.18 of the Act clearly in mind.
Nonetheless, it is also essential for the Tribunal, when dealing with a question involving an alleged private trust, to apply the general law governing trusts, unless there is anything otherwise provided for in the Act. In this matter, as both parties have submitted, the Tribunal has to ascertain if there was a constructive trust between the Respondent and his son, Paul. To answer that question, the Tribunal has to apply the law governing trusts, and, as said, in doing so, expose their dealings and reach an objective conclusion on their intentions.
The Tribunal had the benefit of receiving evidence from the Respondent in person. As such, the Tribunal was able to observe him, especially during cross-examination by Ms Forsyth.
The Tribunal formed a positive view of the honesty and candour of the Respondent. He gave straightforward evidence, and it appeared to the Tribunal that he attempted to answer the Questions posed by Ms Forsyth in a direct and unequivocal manner. In short, the Respondent was not evasive, defensive or argumentative. He appeared to the Tribunal to be an honest elderly gentleman who, although understandably nervous, nonetheless participated in the Tribunal proceedings in an engaging and positive manner.

Paul gave evidence in response to a summons issued at the request of the Applicant. The following exchange occurred between the Tribunal and Mr Black – Transcript (Tr.) 21.3.2022 pp. 2 – 3:
“…Mr Paul Thomas is giving evidence in response to a summons issued at the request of the applicant. We didn’t actual arrange for Paul Thomas to be a witness… And Deputy President, you may have seen from the material we – the relationship between Arthur Thomas and Paul Thomas, it’s – I don’t want to say it’s completely ruined or non-existent, it’s not. And for example I have instructions that, they saw each other over Christmas as a family event and that sort of thing. But, we certainly haven’t had any opportunity to have discussions with Mr Paul Thomas and it’s potentially the case that he might be adverse to us.
DEPUTY PRESIDENT: So, he could be a hostile witness.
MR BLACK: That’s right. And I just don’t know. But as I say, I just flag that.”
There were serious technical issues receiving Paul’s evidence. The Tribunal was unable to successfully receive his evidence by Microsoft Teams, which, unfortunately is a common occurrence. In the end, Paul testified by means of a telephone, which is not the preferable way of receiving evidence.
Despite the technical difficulties, Paul gave straightforward testimony. Like his father, Paul was a candid witness, and the Tribunal formed the view that the answers he gave reflected his recollection and version of events.
As previously mentioned, the Tribunal also received evidence from the Respondent’s daughter, Julie-Anne and his ex-wife, Janice.
The only further matter that should be noted, was that the evidence of Janice, although short, was quite compelling. She was a forceful and direct witness who impressed the Tribunal.
Was the Parkwood property held in a constructive trust?
The Applicant accepts that, throughout, the Respondent has consistently asserted that the Parkwood property was always intended to be owned by his son, Paul – Exhibit 3 p. 10 para 48.
This state of affairs was repeated by Julie-Anne in a response to a Statutory Notice issued by Member Bradley of AAT1 and dated 10 December 2019. In that response, Julie-Anne made this statement – Exhibit 1 T33 p. 281:
“The intention of purchase of the above property was for Mr Paul Thomas to be the sole owner and resident.
Mr Arthur Thomas was guarantor for the loan to assist Mr Paul Thomas in purchasing his first residence.”
Julie-Anne re-iterated her understanding of the Parkwood property in a Statutory Declaration of 14 December 2021 in which she deposed as follows – Exhibit 8 p. 1:
“5.I can recall that, at around that time in 2003, Paul was renting a property in Parkwood. He was interested in buying a house and was considering purchasing a property on acreage or in an urban area. He ended up deciding a house in the urban area was preferable. The property he settled on was 4 Fortuna Place, Parkwood.
6.I can recall that Paul had a car that he sold to go towards the deposit. He also would have had money because he was working and had been saving up money towards the house. I believe it was a combination of that and selling the car, but I cannot remember the specific details and am not sure if I would have inquired more. I was just happy that Paul had bought a house.
7.I have always considered the property at 4 Fortuna Place, Parkwood to be Paul’s property. Paul had always paid for the house and has always lived there. I remember from speaking with Paul and Dad that Paul used to give Dad money for the mortgage.
8.I only found out that the house was in dad’s name around the time his pension was dropped.”
The Applicant noted, correctly, that in the Respondent’s 2008 Will, the Parkwood property was bequeathed to Paul, whereas in his 2017 Will, his property (without specific mention of the Parkwood property as in the 2008 Will) is bequeathed in equal shares to his children. The Applicant then contended – Exhibit 3 p. 10 para 50:
“…In circumstances where the Respondent’s property in his 2017 Will is bequeathed in equal shares to his five children, the Secretary notes that Ms Wiersma stands to gain more as a beneficiary under the Will if the Parkwood property remains as part of his residual estate. By declaring in support of the Respondent and her brother, Mr Paul Thomas, Ms Wiersma appears to accept that she would be entitled to a lesser share of the Respondent’s estate than is in fact provided for in the 2017 Will.”
Insofar as it would be in Julie-Anne’s financial interest to contend that the Parkwood property remained part of the residual estate of the Respondent, it is telling that she states and testifies to the contrary. In short, despite it is not in her potential financial interests, Julie-Anne has consistently stated and testified that the Parkwood property is, in reality, Paul’s property.
This understanding of Julie-Anne’s is made explicitly clear both in her Statutory Declaration and her testimony.
First, in her Statutory Declaration, she deposed as follows – Exhibit 8 p. 1:
“9.I am the executor of my father’s will. I know that his unit will be divided equally between his children. The will would acknowledge that the Parkwood property belongs completely to Paul. It was never Dad’s property.”
Second, when questioned by Ms Forsyth about her Statutory Declaration, the following exchange occurred – Tr. 21.3.2022 p. 54:
“So when you say you know that, at paragraph 7, that I’ve always considered the property at 4 Fortuna Place Parkwood to be Paul’s property, would you say that that stems from your reading of the will in 2008, and I don’t mean that in a legal term?--- I don’t think I’ve ever read the will, I don’t think I have a copy of it, I think I only had the paperwork to say I’m executor of the will.
Okay?---But dad – we’ve spoken about that, it’s never been dad’s property and that’s why, in the will, it would only have dad’s unit. He would never be able to put the – Paul’s house in the will because it’s never been dad’s property.
Okay, and that’s your understanding, that it was never included in the will because it was never your father’s property?---Yes, exactly.”
Janice made a Statutory Declaration, dated 8 December 2021, in which she deposed that she also understood the Parkwood property to be Paul’s – Exhibit 7 pp. 1 – 2:
“5. Paul was very keen around this time to buy his first home. He ended up deciding to purchase a property at 4 Fortuna Place, Parkwood. Arthur agreed to go guarantor for the loan. Apparently they went to the bank and for some reason Paul could not get a loan in his name, and the bank would only draw up the loan in Arthur’s name. That is what I heard afterwards.
…
8. I have spoken with Paul about his mortgage repayments over the years. He used to come down to Burleigh Waters regulary [sic] and give his father cash to pay the mortgage. Paul wanted to do it over the internet, but Arthur did not have internet. Paul paid all the bills, mortgage repayments, and insurance relating to his house by giving cash to Arthur. Paul also helped Arthur with his unit and was never given any rent for that.
…
10.Our family all know that the 4 Fortuna Place, Parkwood property belongs to Paul. Arthur would have only stepped foot in it a few times.”
At the Hearing, I asked Janice a clarificatory Question about paragraph 10 of her Statutory Declaration, and the following exchange occurred – Tr. 21.3.2022 pp. 58 – 59:
“Okay. And I think you said in your statutory declaration at paragraph 10, that our family knows that the Fortune Place, Parkwood, property belongs to Paul, Arthur would only have step foot in it a few times?---He hasn’t been in there very much – I think probably – when Paul first bought it, Arthur obviously went and had a look at it, and I’d say he’s been on the property four times, maybe five times, in the whole – since 2003. You know, sort of like at Christmas time when the daughter comes up from Sydney and we’ll all get together up there. He’s only visited the property – I doubt it’d be five times in its entirety.
So although you can tell me that, you know, that your son has improved the property by replacing toilets and has carried out general maintenance because you visited - - -?---Yes, yes, just – that’s all, he hasn’t – like he wants to put a garage in and all the rest of it but he can’t.
Yes, but you can tell me that because you’ve physically seen what’s going on, is that correct?---Yes, yes, I’ve – as I said, I’ve been fairly regularly visiting up there.
But your husband – ex-husband, couldn’t tell me that because he hardly ever visits the place?---No, no. Look you’re asking to draw a floor plan; I don’t know if he could know how to do it. You know, he’s – as I said, in the entirety since 2003, he’s probably, at the most, been there five times. And that’s at family gatherings.
…
WITNESS: Please sort it out, I mean the property is Paul’s, it is not Arthur’s, never has been and never will be Arthur’s property. It is Paul’s and he has paid the mortgage; he has paid the rates, he has paid everything on that property, he has maintained it, it is 100 per cent Paul’s property. He paid his father and his father paid the bank. It was because Paul was unable to get a loan in his name that it was put into Arthur’s name, it should not have been put into his name, he should’ve been as guarantor, or trustee, or whatever you would call that, Arthur was never to own the property.”
Reference can next be made to the statement made by Paul in response to Member Bradley’s Statutory Notice dated 9 December 2019. In response to Questions posed, Paul provided the following information – Exhibit 1 T34 pp. 282 – 283:
“I, Mr Paul Thomas, purchased the above property for my sole ownership and as my permanent residency.
The bank advised that for the Loan Application to be successful it would have to go in my Fathers name, (Mr Arthur Thomas) as per the broker’s advice. It was my Father’s intention to go Guarantor for my first property.
By doing this, I missed out on my First Home Buyers Grant.
…
My financial contribution was the sale of my car as deposit.
…
Yes, I, Mr Paul Thomas have lived in my property since I purchased it in 2004.
…
I, Mr Paul Thomas have maintained this property.
…
Yes, improvements have been made.
…
No, I have never paid any rent. I have paid Mortgage, insurance, Land & Water Rates, Utilities etc.
…
I, Mr Paul Thomas, have paid fully for the property, as I am the sole owner.
…
Repayment of the mortgage was paid by cash directly to my Father, Mr Arthur Thomas.”
At the Hearing, under examination by Mr Black, Paul confirmed the correctness of his answers – Tr. 21.3.2022 p. 43:
“Is there anything about those answers that you feel needs to be corrected?---Which in particular are you talking about?
Well, let me put it this way, on reading those answers, did you feel that any of them were wrong? Just giving you a chance to identify whether there was anything you thought on reflection was wrong. I’m not suggesting there is, I’m just asking you whether you thought there was?---I don’t believe there is.”
Attention will be given below to a document completed in March 2019 by Paul in relation to a social security payment.
Turning finally to the evidence of the Respondent, attention can first be directed towards his Statutory Declaration of 30 September 2021.
The Respondent deposed that the Commonwealth Bank refused to lend money to Paul to purchase the Parkwood property, and a suggestion was made that the loan be in his name, with a mortgage over his Burleigh Heads unit. The Respondent further deposed that he was not involved in, or was present, during the inspection of the Parkwood property or the payment of a deposit. He also could not remember the signing of a contract of sale. Importantly, the Respondent deposed as follows – Exhibit 6 p. 3 para 26:
“I did not realise that I was going to be on the title for the Parkwood property and was not aware that I was at the time. I was just happy that Paul got his mortgage through. We all understood that the Parkwood property belonged to Paul.”
It will be recalled that, when the Respondent visited the Robina Centrelink office on 29 August 2017, he told the Centrelink officer that his “own opinion is that he does not and never has owned the home which was purchased in 2004 for his Son” – Exhibit 1 T41 p. 574.
As mentioned earlier, the Tribunal found the Respondent to be an honest and direct witness. However, as previous examiners of him found, he can be, at times, confused and confusing. This confusion is exemplified in the confused financial circumstances surrounding the dealings of the Respondent and his son, Paul.
The Tribunal could, perhaps, set out in a number of pages the complicated and often perplexing financial dealings between father and son. In part, some of this confusion was born in the fact that the Respondent was stubborn in his refusal to accept and join the challenges and benefits of the digital age. He did not have a computer, an email account, or engage in telephone, let alone, computer banking. Rather, he was a child of the earlier era of cheques and physical money transactions.
The Applicant, quite properly, and with forensic attention to detail, has set out, for the benefit of the Tribunal, a history of the available bank statements of the Respondent. They cover, in some detail, the period between 2004 and 2010, and in some instances up and to including 2013 – Exhibit 3 pp. 12 – 13 paras 58 – 60. The Tribunal has perused, not only those paragraphs, but the numerous accounts contained in Attachment C to Exhibit 3. The Tribunal agrees that there is no obvious pattern in terms of deposits in those documents, but the Tribunal finds no issue with this.
The relationship between the Respondent and his son, Paul, like most family relationships, was not defined by bonds of strict financial rectitude. In short, like most family financial relationships, it was relatively relaxed and allowed bounds of latitude and freedom. A reading of the statements in Attachment C illustrates, overall, no set strict pattern of repayments. This should be of no surprise, after reading the Statutory Declaration of the Respondent. It would appear to the Tribunal, that the Respondent was a loving and quite tolerant father of his son, Paul, who was irregular with his financial commitments.
It is appropriate to deal, at this stage, with the Applicant’s submission about the previous work history of the Respondent and how this shines a light on his understanding of the documentation surrounding the loan, mortgage, repayments and legal relationship between himself and Paul.
The Applicant made the following submissions – RCS pp. 2 – 3 paras 8 – 9:
“8. The Secretary further notes that the Applicant has a significant work history with New Zealand Insurance as an underwriter and then commercial underwriter over a 30-year period and in charge of ‘serious finance’. He was eventually promoted to manager and gave oral evidence that while he purportedly found legal documents ‘confusing’, he was familiar nonetheless with legal documents ‘from a policy insurance side’.
9. The Secretary contends that it can reasonably be inferred that the Applicant’s professional experience demonstrates that he understood these documents. In any event, the Secretary notes the Respondent explained that he knew he had an interest in the Parkwood Property because, ‘I was concerned I would lose my unit’. Accordingly, the Secretary submits that the Respondent’s oral evidence is self-serving and any assertion that he did not know the Parkwood Property was not in his name or that he did not know he had an interest in that property to be without foundation.”
The Tribunal does not agree with the inferences the Applicant seeks to draw from the Respondent’s work background.
It is the case that the Respondent worked in the insurance industry for many years; however, he left that industry in 1989, over 30 years ago, and worked for two decades as a taxi driver. Having observed the Respondent in the witness box, he was, by 2022, a frail elderly gentleman, softly spoken and having difficulties in understanding some of the questions posed. He did not give the Tribunal the impression of being a man with a towering intellect who was au fait with the law governing real estate, mortgages and trusts.
Looking at what occurred from a distance, it is tolerably clear to the Tribunal that the Respondent did have some understanding of the legal arrangements between himself and Paul, albeit in an imprecise way. He did know that the Parkwood property loan was in his name, and that his Burleigh Heads unit was mortgaged to secure the loan. In his mind, Paul was the “owner” of the Parkwood property. The Respondent’s concern about losing his unit, no doubt sprang from the fact that his unit was mortgaged to pay for the Parkwood property, and if Paul ceased paying his share of the loan, then such a scenario could eventuate.
In short, the Tribunal does not draw any adverse inferences against the Respondent on the basis of his work history in the insurance industry and his subsequent failure to disclose his legal ownership of the Parkwood property. Indeed, on the contrary, if one was to impute to the Respondent a degree of legal knowledge that far exceeds what he possesses, then a case could be made for suggesting that he did not disclose legal ownership of the Parkwood property because he considered that Paul had equitable ownership, and all he had, as in Agnew, was the bare legal title to the property which had no value.
It is necessary, however, to deal with one issue raised by the Applicant about the financial dealings of the parties as they go to the heart of whether there was, in fact, a constructive trust between the Respondent and Paul.
The Applicant points out that the Respondent testified that he deposited the cash payments received by Paul, along with his own funds, into a Commonwealth Bank Mortgage Interest Saver Account, and used the money from that account for his own personal use, including body corporate bills – SCS p. 2 para 7. The following exchange occurred at the Hearing between the Respondent and Ms Forsyth – Tr. 21.3.2022 pp. 27 – 28:
“You just said you had taken that money out to pay for bills. You had body corporate? ---Yes. Well, body corp, it’s usually around the $500 mark, but I can’t specifically recall this one in ’14, because that’s eight years ago, I can’t recall it. But there’s nothing fraudulent, it’s just money I had in the offset and I’d use it to pay the mortgage.
No suggestion it was fraudulent, Mr Thomas. What I’m asking though is, you got money from Paul, cash?---Paul, yes.
You put it in the offset account to go then pay the mortgage?---Yes.
But then, you were also withdrawing that money to pay your bills. Would that be fair to say?---It sounds correct, yes. Yes.
…
But would it be then fair to say that that was a regular occurrence, there was money being withdrawn whenever you needed it?---Yes, it was my money and I just thought well I needed it to pay the mortgage and also my own living standards. But in ’14, I was receiving a pension. I wasn’t driving taxis anymore.”
In light of this intermingling of moneys in the Respondent’s Mortgage Interest Saver Account, the Applicant made the following submissions – SCS p. 4 paras 16 – 20:
“16. The Secretary further notes that the Respondent gave evidence that ‘Paul would always pay me the mortgage repayment in cash’ and further, ‘I would deposit the cash into my account’; the Secretary contends the Respondent’s evidence was in reference to the MIS account.
17. In his evidence, Paul confirmed that in 2004 he was paying $500 per week off the mortgage as the repayments were $2,000 per month and that he would pay this money in cash to the Respondent. The Secretary contends however that the MIS account statements do not corroborate the oral evidence of either the Respondent and Paul.
18. For example, the deposit made on 3 April 2014 in the amount of $1,000 into the MIS account was not subsequently transferred to the Standard Variable Rate Home Loan Transactions account… The Secretary notes however that an amount of $3,000 was withdrawn from the MIS account on 2 June 2014 and appears to be for the benefit of the Respondent, which is consistent with his oral evidence.
19. Similar withdrawals were made on 1 August 2014 in the amount of $1,500, on 27 October 2014 in the amount of $1,000, 8 December in the amount of $500, 1 May 2017 in the amount of $500, 1 December 2015 in the amount of $800, 27 March 2017 in the amount of $6,000…
20.The Secretary contends that when the evidence is viewed in its totality and objectively, the weight of the evidence would suggest there was no joint endeavour between the Respondent and Paul.”

The Tribunal does not agree with the Applicant’s interpretation of the evidence. The Tribunal prefers the following interpretation provided by Mr Black on behalf of the Respondent – RRS p. 1 para 3:
“…Once it is accepted that Paul in fact made the regular cash payments that have been described in the evidence, it is immaterial whether Mr Thomas used that cash or different funds to pay the mortgage. The purpose of Paul’s cash was to pay down his ‘share’ of the mortgage. Even if Mr Thomas essentially treated Paul’s cash as part of his ‘consolidated revenue’, he nevertheless ensured that the mortgage payments were made out of that ‘consolidated revenue’. Regardless of whether Paul’s cash payments were applied directly or indirectly towards the mortgage, they were nonetheless mortgage payments.”
The financial records of the Respondent are untidy and, sometimes, not easy to follow. It would appear, as Mr Black submits, he did not separate Paul’s repayments from other funds. Rather, there was a haphazard comingling. The Respondent’s approach to his bank accounts could be described as laissez faire. This ultimately led to Paul ceasing payments altogether because he believed that he had paid his fair share of the mortgage, and whilst the Respondent disputed it, he had no tidy paperwork to counter that ultimatum.
However, none of this is to the point. The central issue is one of joint intent. The evidence highlights that there was a very clear understanding that Paul would pay his father a sum of money calculated weekly, and paid usually monthly, for his share of the mortgage repayments. Paul would travel from Parkwood to Burleigh Heads and give the Respondent that sum of money in cash, usually over a lunch. The Respondent would pay that money into his Mortgage Interest Saver Account. That account was also credited with other moneys deposited by the Respondent. From that pool of funds, the Respondent would pay the mortgage, as well as meet a number of other legal obligations. It could be categorised, as Mr Black submits, a “consolidated revenue account”. In any event, the money was comingled, and the Respondent paid his bills as and when they fell due. There is no suggestion that the Respondent improperly dealt with the moneys he received or that he failed to meet his mortgage obligations. The substantive questions are whether Paul, at agreed times, gave the Respondent agreed amounts of money to repay the mortgage, whether those moneys were paid into his Mortgage Interest Saver Account, and whether the Respondent actually repaid the mortgage out of the funds in his Mortgage Interest Saver Account. The answer to those questions is in the affirmative.
This leads to a serious issue that requires careful consideration, as, on its face, it undercuts some of the evidence put forward on behalf of the Respondent with respect to the Parkwood property.
The Applicant referred the Tribunal to various statements of the Respondent that, since the purchase of the Parkwood property, Paul made mortgage repayments, paid outgoings on the property and undertook upkeep work on the Parkwood property – Exhibit 1 T18 p. 182, T26 p. 218 and Exhibit 4 p. 2 para 8.
The Tribunal’s attention was drawn to ostensibly different information provided by Paul when he applied for a Newstart Allowance in March 2019 – Exhibit 3 Attachment D pp. 549 – 554.
Under the heading “Home Ownership Details”, the following information is given – Exhibit 3 Attachment D p. 551:
“I do not own or am not paying a mortgage for the home I am living in
My home is not owned by a trust or company I have an interest in
I do not own a home and have to live somewhere else.”
After drawing the Tribunal’s attention to this answer, the Applicant referred the Tribunal to a number of constructive trust cases, one of which, was Follone – Exhibit 4 p. 3 paras 12 – 14.
The following submission was made by the Applicant:
“12.The Courts have applied high standards when deciding whether a constructive trust should be imposed. In particular, the law of equity will not step in to give substance or proprietary effect to loose, informal ‘family’ arrangements.”
The Applicant then quoted from Follone and then submitted as follows – Exhibit 4 p. 3 para 14:
“14.In Follone the Tribunal stated that ‘there must be some external evidence of their existence, beyond the bald assertions of the parties that claim to be privy to them’. Pursuant to Follone, the Secretary submits there is no satisfactory evidence that there was a common intention in relation to beneficial ownership of the Parkwood Property.”
Before returning to the Newstart Allowance Form, it is desirable to address the legal point raised by the Applicant.
At the outset, constructive trusts are to be distinguished from express or resulting trusts. The category of constructive trusts is residual and contains various types of trusts. As a matter of common sense, constructive trusts are inferred because there is no clear trust documentation. The absence of clear documentation creating the trust and outlining its terms is almost always the case for constructive trusts. So, some care needs to be taken when quoting Follone as authority for the proposition that equity will not intervene to effect ‘loose’ family arrangements. If that proposition were taken too literally, then a decision-maker would be in error, as the Full Court decision in Agnew illustrates. In that matter, there was simply a ‘loose’ family arrangement.
It will be recalled that in Agnew, the father said to the sons of their farm: “it’s yours now”. There was no documentation backing up this promise or exhortation. Rather, the sons took their father on his word, acted in reliance on it, improved the farm and expended considerable sums of money in the process. The Full Court decided that the father held the farm on a constructive trust for his sons.
In Agnew, their Honours also discussed the notion of detriment, and, without going into any great detail, focused on the aim of frustrating unconscionable conduct. In this regard, it is useful to refer to a wider principle set out in the American Restatement of Restitution (1937):
“Where a person holding title to property is subject to an equitable duty to convey it to another on the ground that he would be unjustly enriched if he were permitted to retain, a constructive trust arises.”
It is the task of a decision-maker to shine a bright light on the dealings and understanding of the parties, particularly, when, as in this case, it involves complicated family arrangements. If Follone stands for the proposition that family “expectations” and informal agreements cannot be relied upon when determining if a constructive trust exists, then, with due respect, Follone is at odds with Agnew and cannot be held up as good authority. However, a closer reading of Follone does not support such a bald proposition. All Follone stands for is that the mere suggestion of a family or informal agreement without any evidence supporting it, is not sufficient to found (for example) a constructive trust.
Each matter brings with it different factual circumstances and different interpersonal relationships. It would be wrong to try and pigeonhole each matter, as a decision-maker is required to closely examine the evidence and reach a considered view of the intention of the parties.
The Tribunal agrees with Follone insofar as it was stated that “there must be some external evidence” of the existence of a particular legal or equitable relationship that goes beyond “the bald assertions of the parties” (at 482).
In Agnew, that external evidence comprised the reliance of the brothers on their father’s promise with many years of hard work and personal expenditure given in reliance on the promise.
The Applicant drew the Tribunal’s attention to a number of Tribunal determinations including Slamkova and Secretary, Department of Social Security [2017] AATA 137 (Slamkova). This was another instance of a parent allegedly holding a property on trust for a son. The Applicant quoted Senior Member Toohey (at [61]):
“…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 Tribunal agrees with this statement of the law; however, it is helpful to set out all of Senior Member Toohey’s findings:
“59. 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.
60. 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.
61.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.
62. 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.
63. 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.
64. 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.
65. 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.
66. 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.”
It is tolerably clear that the factual matrix in Slamkova is quite different from this matter. In Slamkova, there was little of “real substance” to support the proposition that there was a trust relationship between mother and son with respect to the property in question. Indeed, a fair reading of the material before Senior Member Toohey supported an alternative proposition. In this matter, in contradistinction, there is an abundance of material that supports the proposition that the Parkwood property was held by the Respondent on trust for his son.
The only material before the Tribunal that would seriously cast doubt on a finding of a constructive trust is Paul’s Newstart Allowance application form.
Paul was questioned by both Mr Black and Ms Forsyth about this form.
First, the following exchange occurred between Paul and Mr Black – Tr. 21.3.2022 pp. 43 – 44:
“Okay. Now, did you make a claim for some sort of social security payment in about March 2019?---I did.
Do you recognise the information in this document as relating to that claim?---I do recognise it. I recognise my answers there, but - - -
All right. And, look, what I want to check first of all is in relation to the property at 4 Fortuna Place, you’ve described that in that earlier document as essentially that’s your property?---Yes.
Is that right?---Yes.
Okay. Do you consider yourself to owe any money towards a mortgage or any debt in relation to that property?---No.
Are you able to say when you consider you had paid off any debt or mortgage that you had in relation to that property?---It would've been a few years ago.
In this document, this Claim Answers document, it’s the third page, at the top it says, ‘type of accommodation’?---Yes.
Now, a bit more than half-way down it talks about fee type. It says ‘other’, do you see that?---Yes.
Then it says, ‘Total amount paid for premises $200 fortnightly’?---Yes, I see that.
Is that information that you provided?---It is…
…What does that $200 fortnight refer to?---Well, it’s I suppose a combination of rates, you know, house insurance, stuff like that.
Okay?---You know, I suppose if you add the water and sewerage rate notice, council rates, household insurance.
Yes?---Over the year and divided it up.”
Ms Forsyth then asked Paul the following Questions – Tr. 21.3.2022 pp. 44 – 45:
“…So the amount that you just said there – well, that was referred to you, that 200 fortnightly under fee type, 200 per fortnight- - -?---Yes.
‑ ‑ ‑ you say that’s made up of rates, home insurance, and stuff like that?‑‑‑Yes, general – this is a form – looking at the date, this is a form I would have filled out when I was heavily medicated after an incident I had here.
Sorry, Mr Thomas, we didn’t quite catch the end of that sentence. You say it was after an incident in when?---Yes. So, I was a victim of a home invasion, and I, you know, had two guys burst through the front door and work me over with a metal bar, so, I was heavily medicated with a few injuries and broken bones.
When did that occur, that home invasion?---In 19 March
Which year?---2019.
Now, with that $200, you say you started paying that from 15 June 2004; is that right?---No, it would’ve been higher than that earlier on.
And what would that amount be?---I paid $500 a week.
And what did that amount entail? What was that for?---For the mortgage.”
After asking questions relating to the mortgage repayments, Ms Forsyth returned to the Newstart Allowance claim form, and referred Paul to the Question relating to the “Type of Accommodation”. Before he answered the Question, the following exchange occurred between the Tribunal and Ms Forsyth – Tr. 21.3.2022 p. 46:
“DEPUTY PRESIDENT: Just before you go, Mr Thomas, I’ll just ask a question of Ms Forsyth. I don’t have the online form in front of me, but it looks like, when I look at this, as if they’ve populated – it’s a form populated and you choose in part what’s populated by Centrelink, because it seems a bit odd the wording there. You know---
MS FORSYTH: In terms of - - -
DEPUTY PRESIDENT: Yes, it doesn’t look like that’s an answer that the person would give, it looks like people are given multiple opportunities to basically highlight one of the prepopulated answers.
…
MS FORSYTH: - - - I understood that, and I understand those answers are prepopulated and there’s some sort of tick - - -
DEPUTY PRESIDENT: Yes.
MS FORSYTH: - - - twisty that you click on and provide - - -
DEPUTY PRESIDENT: And I’m just wondering whether he hasn’t ticked one and he’s just – you’ve got there potential opportunities all populated there and they’re not - - -”
First, Paul explained that he “completed” the Newstart Allowance claim form when he was recovering from a severe assault following a home invasion and was heavily medicated. In his Newstart Allowance claim form, Paul describes a serious violent assault that occurred on 17 March 2019, involving two masked men armed with an axe, metal bar and hammers, smashing down the front door of his home and then assaulting him – Exhibit 3 Attachment D p. 552.
The Tribunal accepts that such an event occurred as it is referred to by other members of the family. For example, the Respondent, in his Statutory Declaration, deposed as follows – Exhibit 6 pp. 3 – 4 para 37:
“I understand that Paul was assaulted during a home invasion a few years ago. I found out about this through other family members. I heard two men broke into his house and assaulted him. I know Paul had a security camera installed in the house which captured the people who did it, but I am not sure what came of it.”
The home invasion is also mentioned in the Statutory Declaration of Janice – Exhibit 7 p. 1 para 7:
“In 2019, Paul was assaulted during a home invasion. He went through a bad time and was too scared to leave his house for a while. He was unable to do anything. He had busted ribs, arm and other injuries and no means of getting a job.”
Paul explained that the $200 fortnightly accommodation expenses he noted on the Newstart Allowance claim form related to rates, insurance and utilities. The Tribunal observed Paul give the answers set out above, and accepts the truthfulness of his testimony.
Further there is nothing in the “Home Ownership Details” part of the Newstart Allowance claim form that casts any doubt on the arrangement that existed between the Respondent and Paul. As was made tolerably clear during the exchange between the Tribunal and Ms Forsyth, it would appear that the “answers” under the heading of “Home Ownership Details” were prepopulated.
The first two “answers” are not inconsistent with Paul’s living arrangements. He was not paying a mortgage for the Parkwood property in 2019, as he had told his father two years prior that he had fully paid his share of mortgage repayments. Further, the Parkwood property is not owned by a company or trust that Paul has an interest in. The final “answer” makes no sense, as it purports to state that Paul does not own a home and has to live somewhere else. However, elsewhere in the form, Paul recounts that he was assaulted at his home on 17 March 2019. Moreover, he states he started living at his home on 28 March 2019 – Exhibit 3 Attachment D p. 549. It would appear that, after being assaulted on 17 March 2019, Paul has hospitalised and was heavily medicated. It may be that Paul only returned to his home on 28 March 2019. The electronic claim form gives an applicant an opportunity to choose prepopulated “drop down” answers. It is not helpful, having regard to Paul’s medical state, to interrogate the claim form in an overly forensic manner. The Tribunal has formed the view that Paul filled out the claim form to the best of his ability at the time, and there is nothing in the form that casts any serious doubt on the arrangements that existed between himself and his father over the period commencing with the purchase of the Parkwood property.

It was pointed out by the Full Court in Agnew that following the High Court decision of Muschinski v Dodds (1985) 160 CLR 583 at 613 – 614, it is no longer necessary to show a common intention as to the ownership of the beneficial interest to establish a constructive trust – at 363. However, on the facts before them, their Honours proceeded on the basis to find a common intention constructive trust. Insofar as the factual matrix in this matter has similarities to Agnew, the Tribunal also proceeds on the basis of determining if a common intention constructive trust exists.
The first question is whether the evidence establishes that there was a common intention between the Respondent and Paul that the Parkwood property was to be purchased, and held, for Paul’s sole benefit.
The Applicant properly accepts that throughout the history of the application, the Respondent has consistently asserted that the Parkwood property was always intended to belong to his Paul – Exhibit 3 p. 10 para 48.
For the reasons that have been set out at length above, the Tribunal accepts that the Respondent and Paul intended that the Parkwood property be purchased for the sole benefit of Paul.
This intention is succinctly summed up in the Respondent’s Statutory Declaration as follows – Exhibit 6 p. 3 para 24:
“24.I thought that the property Paul wanted to buy looked affordable for him, and he convinced me that he could meet the repayments. All I could see was my son was trying to purchase property, and I wanted to help him.”
The Tribunal has not only evidence from the Respondent and Paul, but also from Janice and Julie-Anne. The evidence from Julie-Anne is of significance, because her support for the proposition that the Parkwood property was always intended to be for Paul’s sole benefit is actually to her detriment, having regard to the terms of the Respondent’s final Will. The testimony of Janice was particularly powerful, and she ended her evidence with a heartfelt plea – Tr. 21.3.2022 p. 58:
“Please sort it out, I mean the property is Paul’s, it is not Arthur’s, never has been and never will be Arthur’s property. It is Paul’s and he has paid the mortgage; he has paid the rates, he has paid everything on that property, he has maintained it, it is 100 per cent Paul’s property…”
The Tribunal, therefore, accepts that there was a common intention that the Parkwood property be purchased and held for Paul.
The second question is whether Paul acted to his detriment. The question of detriment was explained by the Full Court in Agnew as follows (at 363):
“…That is, one should not look for an act that can be seen to be to the claimant's detriment when done, but for an act done by the claimant in reliance on the conduct of the legal owner in circumstances where detriment would be suffered if the owner were permitted to depart from the assumption that induced the reliance…”
The Tribunal agrees with the submissions of the legal representatives of the Respondent that the following detriment would result if Paul was deprived of his beneficial interest in the Parkwood property – Exhibit 5 pp. 8 – 9 para 45:
(a) If the Respondent were permitted to renege on the intention that Paul would have the beneficial ownership of the Parkwood property, then the detriment would be that Paul would not gain his rightful proprietary interest in the property. In this regard, reference can also be made to the following observations in Agnew at 364: “The primary judge was correct in his treatment of detriment… His Honour said that if Mr Agnew had attempted to renege on his contract, his sons would have rightly complained that a refusal to transfer legal title to them ‘would have been a detriment because it would mean that they would not gain their rightful proprietary interest in the land’”.
(b) In addition, relying on the common intention, Paul contributed funds from the sale of his motor vehicle in 2003 towards the purchase of the Parkwood property and has paid outgoings on the property and maintained it for 18 years.
The third question is whether, having regard to the factual findings made above, it would be an equitable fraud if the Respondent were permitted to depart from the common intention that the Parkwood property was beneficially owned by Paul.
The evidence presented establishes, to the satisfaction of the Tribunal, that Paul made substantial financial contributions for the purchase of the Parkwood property, gave his father substantial sums of money for the repayment of the mortgage over a period of approximately 13 years and has paid the outgoings on the Parkwood property since its purchase in 2004. The only substantial argument against this state of affairs is the Newstart Allowance claim form – Exhibit 3 p. 13 paras 62 – 65.
The Tribunal does not accept that there is any inconsistency of evidence given by Paul, and, even if there were some inconsistencies, they are minor and can be explained by his medical state when he filled out the Newstart Allowance claim form. Further, even if it accepted that there were inconsistencies in the Newstart Allowance claim form (which the Tribunal does not subscribe to), then the totality of the evidence from the Respondent, Janice, Julie-Anne, and the copious documentation presented, establishes, to the satisfaction of the Tribunal, that an equitable fraud would be occasioned if the Respondent were allowed to depart from the clearly established common intention that Paul is the beneficial owner of the Parkwood property.
The Tribunal is, therefore, satisfied that the three elements for a common purpose constructive trust have been met. It is not necessary, in these circumstances, to go further and ascertain if a joint endeavour constructive trust was established.
The Tribunal finds that the Respondent has held the Parkwood property on trust since the time that Paul acted in reliance on the conduct which gave rise to its imposition occurred, which, in this matter, is from the outset, and thus, at all material times.
ATTRIBUTION OF TRUST ASSETS
It is not disputed that, having found that the Respondent holds the Parkwood property on trust for Paul, it is necessary to apply Part 3.18 of the Act to determine if there should be attribution of the asset to the Respondent. Part 3.18 provides how the assets and income of a private trust may be treated as being attributed to an individual. The rationale of Part 3.18 is to provide a statutory scheme to apply the social security means test where a person holds and controls assets in private trusts and companies. Section 1207 of the Act provides that for a trust asset or income to be attributed to an individual for the purposes of the means test:
(a) the trust must be a designated private trust – s 1207P;
(b) the trust must be a controlled private trust in relation to the individual – s 1207V; and
(c) the individual must be an attributable stakeholder of the trust – s 1207X.
In particular, it is accepted by the Respondent that any constructive trust arising in this matter is a designated private trust within the meaning of s 1207P of the Act and a controlled private trust for the purposes of s 1207V – Exhibit 5 p. 10 para 51.
Section 1208E deems the percentage attribution of the stakeholder determined by s 1207X of the trust assets, to be assets of the attributable stakeholder for the purposes of the stakeholder’s personal assets test. Section 1208E provides as follows:
“Attribution of assets
(1)    For the purposes of this Act, if:
(a)   an individual is an attributable stakeholder of a company or trust at a particular time on or after 1 January 2002; and
(b)   at that time, the company or trust owns a particular asset (whether alone or jointly or in common with another entity or entities); and
(c) if, at that time, that asset had been owned by the individual instead of by the company or trust, the value of the asset would not be required to be disregarded by any express provision of this Act; and
(d)    at that time, the asset is not an excluded asset (see subsection (2));
there is to be included in the value of the individual's assets an amount equal to the individual's asset attribution percentage of the value of the asset referred to in paragraph (b).
Note: For attribution of the assets of a special disability trust, see section 1209Y.
Excluded assets
(2)   The Secretary may, by writing, determine that, for the purposes of the application of subsection (1) to a specified individual and a particular company or trust, a specified asset is an excluded asset.
(3)    A determination under subsection (2) has effect accordingly.
(4)   In making a determination under subsection (2), the Secretary must comply with any relevant decision-making principles.”
Turning next to s 1207X, this section provides that an attributable stakeholder is deemed to have 100% of the assets and income of the trust attributed to him or her, unless the Applicant determines a lesser percentage. Subsections 1207X(2) and (5) provide as follows:
“Trust
(2)    For the purposes of this Part, if:
(a)    a trust is a controlled private trust in relation to an individual; and
(b)   the trust is not a concessional primary production trust in relation to the individual (see section 1208U);
then:
(c)   the individual is an attributable stakeholder of the trust unless the Secretary otherwise determines; and
(d)   if the individual is an attributable stakeholder of the trust--the individual's asset attribution percentage in relation to the trust is:
(i)     100%; or
(ii)    if the Secretary determines a lower percentage in relation to the individual and the trust--that lower percentage; and
(e)   if the individual is an attributable stakeholder of the trust--the individual's income attribution percentage in relation to the trust is:
(i)     100%; or
(ii)     if the Secretary determines a lower percentage in relation to the individual and the trust--that lower percentage.
…
(5)   In making a determination under this section, the Secretary must comply with any relevant decision-making principles.”
In Kang v Secretary, Department of Social Services [2017] FCA 895, McKerracher J had to consider the above provisions in respect of a person who was held in the reviewable decision to be an attributable stakeholder pursuant to s 1207X and where 100% of the Trust assets were attributed to the applicant personally. McKerracher J helpfully discussed the relevant legal principles, which are of relevance to this matter:
“12. Having satisfied para (a) and para (b) of subs 1207X(2) of the Act, the provision gives the decision maker discretion to:
(a)determine whether the individual is not an attributable stakeholder of the trust; and
(b)determine whether, in the event that the individual is an attributable stakeholder, whether the individual's asset attribution percentage in relation to the trust will be either 100% or a lower percentage.
13. There are no express criteria under the Act setting out when a person who is an attributable stakeholder should be determined to be otherwise, or when a person’s asset attribution percentage should be determined to be lower than 100%. However, subs 1207X(5) of the Act provides that in making a determination under s 1207X, the respondent ‘must comply with any relevant decision-making principles’. It is also common ground between the parties that the relevant decision-making principles are the Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000 (Cth) (the Attribution Principles).
14. Part 2 of the Attribution Principles governs the exercise of discretion in determining that an individual is not an attributable stakeholder. Section 5 of the Attribution Principles states the following purpose:
[Part 2] sets out decision-making principles with which the Secretary must comply in making a determination, under paragraph 1207X(1)(a) or (2)(c) of the Act, that an individual is not an attributable stakeholder of a company or trust.
15. Sections 6 to 13 of the Attribution Principles set out various matters which the respondent (and the Tribunal on review) must consider in the exercise of that discretion. Amongst other things, the decision maker must consider:
(a)The ‘relationship between the individual and the company or trust having regard to … the reason why, but for a determination, the individual would be an attributable stakeholder … and … the circumstances mentioned in this Part’: subs 6(2).
(b)‘[W]hether, having regard to the relationship between the individual and the company or trust, the individual can reasonably be expected to exercise effective control in relation to the company or trust’: subs 7(2)(c).
(c)‘[W]hether the individual has received a benefit from a distribution made by the company or trust’: subs 9(1).
(d)‘[W]hether it is reasonably foreseeable that the individual may receive a benefit from a future distribution by the company or trust’: subs 10(1).
(e)‘[W]hether the individual receives or derives any kind of benefit (other than a benefit mentioned in section 9 or 10) from the assets or income, or both, of the company or trust’: subs 11(1). ‘Benefit’ for the purposes of this section is ‘not limited to a benefit to which the individual has a legal or equitable entitlement’ and ‘includes benefits received or derived in the form of property or services’: subs 11(2).
16. Part 3 of the Attribution Principles governs the exercise of the discretion in determining whether an attributable stakeholder’s asset attribution percentage in relation to a trust should be a percentage lower than 100%: s 14 of the Attributable Principles. Part 3 sets out various matters which the respondent must consider in the exercise of that discretion, which include the same considerations referred to in Pt 2, as discussed above: ss 16-22 of the Attribution Principles.”
As McKerracher J explains, when determining if an individual is not an attributable stakeholder, a decision-maker is required to consider the principles prescribed by Part 2 of the Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2017 (Cth) (the Principles). Although McKerracher J referred to the 2000 version of the Principles, for present purposes, there are no significant differences with the current (2017) version.
It is helpful to set out in full below all the provisions in Part 2 of the Principles, and then to address the submissions made by the Applicant and the Respondent.
Part 2 provides as follows:
“Part 2 Determination that individual is not attributable stakeholder
5       Purpose
This Part sets out decision-making principles with which the Secretary must comply in making a determination, under paragraph 1207X (1) (a) or (2) (c) of the Act, that an individual is not an attributable stakeholder of a company or trust.
6       Application
(1) This Part applies if, but for a determination by the Secretary, the individual would be an attributable stakeholder of the company or trust.
(2) The Secretary must consider the relationship between the individual and the company or trust having regard to:
(a)    the reason why, but for a determination, the individual would be an attributable stakeholder; and
(b)    the circumstances mentioned in this Part.
(3) In particular, the Secretary must consider whether the effect of one or more of the circumstances mentioned in this Part, in relation to the individual and the company or trust, provides a sufficient basis on which to determine that the individual is not an attributable stakeholder of the company or trust.
7       Circumstances affecting relationship with company or trust
(1) The Secretary must consider whether there are relevant circumstances that make it inappropriate for the individual to be an attributable stakeholder of the company or trust.
(2) For subsection (1), relevant circumstances include the extent to which the relationship between the individual and the company or trust is affected by any of the following circumstances:
(a)     circumstances arising from the legal structure of the company or trust;
(b)    circumstances arising from the administrative arrangements of the company or trust;
(c)    whether, having regard to the relationship between the individual and the company or trust, the individual can reasonably be expected to exercise effective control in relation to the company or trust.
8       Contribution to company or trust
If the individual has made a contribution to the company or trust, the Secretary must consider the circumstances in which the contribution was made and, in particular:
(a)    the value of the contribution; and
(b) the proportion that the value of the contribution has to the total assets of the company or trust at the time of the contribution; and
(c) the effect of the contribution on the financial position of the company or trust; and
(d) if the individual received consideration for the contribution, the amount of consideration.
9       Past benefit from distributions by company or trust
(1) The Secretary must consider whether the individual has received a benefit from a distribution made by the company or trust.
(2)   If an individual has received a benefit, the Secretary must also consider:
(a)    the value of the benefit; and
(b)    if the individual has received a benefit on more than 1 occasion, the frequency with which the individual has received benefits.
(3)   For this section, a distribution includes distributions:
(a)    in the case of a distribution by a company — of the capital or income, or both, of the company; and
(b)    in the case of a distribution by a trust — of the corpus or income, or both, of the trust.
10      Future benefit from distributions by company or trust
(1)   The Secretary must consider whether it is reasonably foreseeable that the individual may receive a benefit from a future distribution by the company or trust.
(2) If subsection (1) applies, the Secretary must also consider the likely value of the benefit.
(3)   For this section, the Secretary must have regard to:
(a)    the constituent documents of the company; or
(b)    documents, if any, establishing the terms of the trust.
(4)   For this section, a distribution includes distributions:
(a)    in the case of a distribution by a company — of the capital or income, or both, of the company; and
(b)    in the case of a distribution by a trust — of the corpus or income, or both, of the trust.
11      Benefit from assets and income of company or trust
(1) The Secretary must consider whether the individual receives or derives any kind of benefit (other than a benefit mentioned in section 9 or 10) from the assets or income, or both, of the company or trust.
(2)   For this section, benefit:
(a)     is not limited to a benefit to which the individual has a legal or equitable entitlement; and
(b)     includes benefits received or derived in the form of property or services.
12      Existing attribution to individual
(1)   The Secretary must consider whether the individual is:
(a)    under the Act — an attributable stakeholder of any other company or trust; or
(b) under the Veterans’ Entitlements Act 1986 — an attributable stakeholder of the company or trust, or of any other company or trust.
(2)   If subsection (1) applies, the Secretary must also consider:
(a)     the asset attribution percentage attributed to the individual, if any; and
(b)    the income attribution percentage attributed to the individual, if any.
13      Other circumstances
The Secretary must consider any other circumstance that affects the involvement of the individual with the activities or the administration of the company or trust.”
(emphasis in original)

The Respondent’s legal representatives made the following initial submissions on whether the Respondent should be an attributable stakeholder of the constructive trust – Exhibit 5 pp. 10 – 13 paras 53 – 68:
(a)there should be a determination that the Respondent is not an attributable stakeholder in relation to the Parkwood property – p. 10 para 53;
(b) the Respondent is the trustee, but in circumstances where he is a bare trustee. Paul would be entitled to call for the immediate conveyance of the legal title of the Parkwood property – p. 11 para 58;
(c) with respect to s 7 of the Principles, the following circumstances apply:
(i)circumstances arising from the legal structure of the trust (s 7(2)(a)). There is a constructive trust, which arose from the date of the conduct giving rise to its effect. The purpose of the trust is to avoid what would be otherwise be an unconscionable assertion of ownership. The “common intention” was for Paul to achieve full ownership of the Parkwood property. This weighs heavily in favour of a finding that the Respondent should not be an attributable stakeholder of the Parkwood property trust – p. 11 para 59(a);
(ii)whether the relationship between the individual and the trust is affected by circumstances arising from the administrative arrangements of the trust (s 7(2)(b)). It is submitted that there are no formal administrative arrangements in place, but the de facto arrangement is that Paul has full and complete control of the trust asset (the Parkwood property). This arrangement affects the Respondent’s relationship to the trust, in the sense that it makes his “trustee” role symbolic – p. 11 para 59(b);
(iii)whether, having regard to the relationship between the individual and the trust, the individual can reasonably be expected to exercise effective control in relation to the trust (s7(2)(c)). It is pointed out that Paul has been in physical possession of the Parkwood property since its purchase and the family has always recognised that the property belongs to him. In these circumstances, the Respondent cannot reasonably be expected to exercise “effective” control over the Parkwood property – p. 11 para 59(c)
(d) with respect to s 8 of the Principles, the Respondent refers to the Applicant’s contention that all payments towards the mortgage of the Parkwood property originate from the Respondent’s bank account – p. 12 para 61. In response, the Respondent makes the following submissions:
(i) it is conceded that the Respondent has contributed to the trust, in that he took out a loan in his own name, secured in part by a mortgage over his Burleigh Heads unit – p. 12 para 61(a);
it is the substance of the contribution made by the Respondent that must be assessed. Looked at objectively, the Respondent’s contribution was essentially to facilitate, not substantively fund, Paul’s purchase of the Parkwood property – p. 12 para 61(b);
(ii) both Julie-Anne and Janice, as well as Paul, have provided statements and given evidence that the Respondent has not contributed to the upkeep or maintenance of the Parkwood property, and has only visited the property on rare occasions – p. 13 para 62;
(iii)the Respondent has contributed to the Parkwood property trust only to the extent of facilitating the purchase of the property in a way common for parents to assist their adult children. The contribution of the Respondent does not amount to a substantial proportion of the value of the Parkwood property, and this circumstance supports a finding that it is inappropriate that the Respondent be an attributable stakeholder of the trust – p. 13 para 63;
(e)with respect to ss 9(1) and 10(1) of the Principles, namely, whether the individual has received, or it is reasonably foreseeable that the individual may receive, a benefit from a distribution of the trust, the answer is “no” – p. 13 para 64;
(f)section 11 of the Principles requires a decision-maker to consider whether the individual receives or derives any kind of benefit from the assets or income of the trust. The Applicant contends that the Respondent has received a benefit from holding the legal title of the Parkwood property, and through rental income. It is submitted that this contention should be rejected for the following reasons:
(i) the Respondent does not have beneficial ownership of the Parkwood property. The mere legal ownership of the property provides no benefit, and the Respondent has not (for example) benefited from use of the property as security for other loans – p. 13 para 65(a);
(ii) Paul’s Newstart Allowance claim form did not, in fact, assert the payment of rent. The weight of the evidence is that no such rental income was received or paid. Instead, there was the repayment of the loan funds that the Respondent secured on Paul’s behalf – p. 13 para 65(b);
(g)section 12 of the Principles is not relevant – p. 13 para 66;
(h)taken as a whole, it would be inappropriate for the Respondent to be an attributable stakeholder of the Parkwood property trust. The Principles allow for a determination to be made which ameliorates against the, potentially harsh, consequences of the operation of Part 3.18 of the Act. The Respondent has not deliberately attempted, by deception, to gain a benefit. Once he realised the issue relating to the Parkwood property, he self-declared that issue on 29 August 2017 – p. 13 para 67; and
(i)the available material supports the making of a determination that the Respondent is not an attributable stakeholder – p. 13 para 68.
Mr Black, on behalf of the Respondent, made the following supplementary submissions – RCS pp. 5 – 6 para 18:
(a)the evidence establishes that the Respondent has no effective control over the Parkwood property and all effective control has rested with Paul since its purchase. This, it is contended, weighs heavily against a determination that the Respondent should be an attributable stakeholder;
(b)the purpose of the purchase of the Parkwood property was for it to be for Paul’s sole benefit. Again, it is contended, this weighs against a determination that the Respondent should be an attributable stakeholder; and
(c)there is no realistic prospect that the Respondent will receive any kind of “distribution” or benefit from the Parkwood property in the future.
The Applicant also provided detailed submissions on the question of attribution of trust assets. Although not conceding that the three elements of a constructive trust exist (Exhibit 3 p. 13 para 66), nonetheless provided the following submissions on the basis that the Tribunal finds that such a trust exists:
(a) the Applicant notes that the Respondent holds legal title to the trust property and is the trustee of it – p. 15 para 75(a);
(b) all payments towards the Parkwood property purchase, exclusive of the $10,000 deposit attributed to Paul, have been made by the Respondent from his personal bank account. All evidence of Paul’s contributions towards the mortgage repayments are contradictory, and arguably self-serving, in the context in which the information was given – p. 15 para 75(b);
(c) the Respondent holds the legal title to the Parkwood property, and, according to Paul’s Newstart Allowance claim form, the Respondent has benefitted from the rental income since the date of purchase – p. 15 para 75(c);
(d) regarding the Respondent’s existing attribution, the Applicant considers that the state of evidence is not such that a percentage attribution ought to be ascribed to Paul – p. 15 para 75(d); and
(e) in the absence of the Tribunal being satisfied that any attribution percentage above 0% ought to be assigned to Paul, the Respondent’s attribution must be 100% – p. 15 para 76.
The Tribunal has been presented with hundreds of pages of financial documentation, some of which shine little light on this matter. However, despite the voluminous documentation, what emerges from the evidence is a relatively straightforward situation. The Respondent, in his advanced years, determined to help his son, Paul, purchase a property on the Gold Coast. No doubt, the Respondent thought that it would be a good investment, and 18 years later, this has proved to be correct. However, Paul had few assets and limited income, and it came to pass that the Respondent, rather than being the guarantor for Paul, had to purchase the Parkwood property in his name, and mortgage his Burleigh Heads unit. Although the Respondent was the “legal” owner of the Parkwood property, he never lived there, nor did he usually pay for the outgoings on the property. In the period 2004 until 2016, Paul regularly paid the rates on the Parkwood property. It was only in 2016, when the Respondent discovered that Paul was falling behind with the rates that the Respondent assisted him with a “payment plan” – Exhibit 6 p. 3 para 33. Again, this was the product of a father trying to help his son, rather than the Respondent believing that he had a legal obligation to pay the rates because he was the legal owner of the Parkwood property.
Due to his inability to master the computer age, Paul would visit his father monthly, and pay him in cash, the mortgage payments on the Parkwood property. That money was comingled by the Respondent with his own moneys in a bank account. Eventually, Paul stopped paying mortgage repayments, and there was a falling out between father and son over the failure by the Respondent to transfer legal title to the Parkwood property to Paul. This failure was born of the Respondent’s understandable unwillingness to pay for the transfer costs, which having regard to stamp duty, could have been substantial. Accordingly, the Parkwood property remains in the name of the Respondent, but throughout, the Respondent, Paul, Janice, Julie-Anne and perhaps other members of the Thomas family, have all regarded the property as belonging to Paul. In short, the Respondent is a bare trustee of the constructive trust.
The reality is Paul is in physical possession of the Parkwood property, and has been so since its purchase in 2004. According to Janice, the Respondent has only visited the property on a few occasions over the years. No doubt, since the falling out of father and son, the Respondent’s visits have become even more rare. In these circumstances, it would be almost impossible for the Respondent to exercise “effective” control over the Parkwood property. Indeed, if the Respondent were to attempt to sell the property, apart from equitable remedies open to Paul to prevent the sale, he would also be in a position to place a caveat on the property to prevent the sale. In short, the Respondent has “paper” ownership of the Parkwood property, and his actual ability to dispose of the property or otherwise deal with it, without the permission of Paul, is non-existent.
The Applicant correctly points out that, not only is the Respondent the legal owner of the Parkwood property, but that all mortgage repayments were made from his personal bank account. However, the Tribunal accepts, based on the evidence presented, and the testimony of the Respondent, that Paul made monthly cash payments for the repayment of the mortgage. It is inconceivable that the Respondent could have paid the Parkwood property mortgage repayments. He was not a man of wealth, and the extremely poor conditions he faced once his Age Pension was reduced, highlight the true nature of his financial worth.
Much of the Respondent’s case is based on the veracity of the Newstart Allowance claim form that was partially completed by Paul when he was heavily medicated following a home invasion. For the reasons outlined above, the Tribunal does not draw any adverse conclusions from the Newstart Allowance claim form.
The Tribunal agrees with the submissions of the legal representatives of the Respondent in Exhibit 5, as set out above. Those submissions comport with the evidence presented, and also comport with the view the Tribunal has formed of the credit that should be given to the evidence, particularly, of the Respondent.
In these circumstances, the Tribunal determines under s 1207X(2)(c) that the Respondent is not an attributable stakeholder of the Parkwood property for the purposes of the Act.
It is not necessary in these circumstances for the Tribunal to go further and determine what “asset attribution percentage” should be assigned to the Respondent under s 1207X(2)(d). For the sake of completeness, the Tribunal agrees with the submissions of the legal representatives of the Respondent, as set out in RCS pp. 6 – 7 paras 20 – 25. If the Tribunal were required to determine an asset attribution percentage, for the cogent reasons set out in RCS pp. 6 – 7 paras 20 – 25, the Tribunal would make a determination of 0%.
DECISION
The decision under review is affirmed.

I certify that the preceding 177 (one hundred and seventy-seven) paragraphs are a true copy of the reasons for the decision herein of Deputy President J Sosso

.................[SGD]....................................................
Associate
Dated: 21/07/2022

Date of hearing:

Date final submissions received:

21 March 2022

12 May 2022

Applicant:
In-person

Solicitor for the Applicant:
Ms Jasmine Forsyth
Mills Oakley Lawyers

Counsel for the Respondent:
Mr Matt Black

Instructing Solicitor for the Respondent:
Mr Alexander Neilson
Legal Aid Queensland

Table G-1--Assets value limit
Column 1	Column 2	Column 3 Assets value limit
Item	Person’s family situation	Column 3A Either person or partner homeowner	Column 3B Neither person nor partner homeowner
1.	Not member of a couple	$250,000	$450,000…”

Date of hearing: Date final submissions received:	21 March 2022 12 May 2022
Applicant:	In-person
Solicitor for the Applicant:	Ms Jasmine Forsyth Mills Oakley Lawyers
Counsel for the Respondent:	Mr Matt Black
Instructing Solicitor for the Respondent:	Mr Alexander Neilson Legal Aid Queensland