Vance and Secretary, Department of Social Services (Social security) - [2025] ARTA 657

Vance and Secretary, Department of Social Services (Social security) [2025] ARTA 657 (11 April 2025)

Applicant/s: Ms Vance

Respondent: Secretary, Department of Social Services

Chief Executive Centrelink

Tribunal Number: 2025/S193481
Tribunal: Member K Hamilton
Place:Brisbane
Date:11 April 2025

Decision:The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that:

·     The property situated at [Address], NSW was at all times held by Ms Vance on a constructive trust for the benefit of her mother, and the property therefore was not an asset of Ms Vance;
·     Ms Vance’s DSP should not have been cancelled from 31 January 2025; and
·     Ms Vance is to be paid arrears of DSP from 31 January 2025 calculated without regard to the value of the property, or any notional income from the property.

CATCHWORDS

SOCIAL SECURITY – Disability Support Pension – assets test, unrealisable asset and financial hardship provisions – registered owner of house purchased and occupied long-term by mother – value of property disregarded under asset hardship provisions – Centrelink’s request for information from applicant about mother’s financial position not answered – troubled relationship between applicant and mother – property recently transferred to mother, with no money changing hands – legal action against applicant by mother’s partner’s siblings – held on constructive trust and not beneficial owner – decision not rational or proportionate – value of property and notional income not to be taken into account and arrears to be repaid – decision under review set aside and remitted
Names used in all published decisions are pseudonyms. Any references appearing in square brackets indicate that information has been omitted from this decision and replaced with generic information pursuant to subsection 201(1A) of the Social Security (Administration) Act 1999.

Statement of Reasons

BACKGROUND

This matter concerns a decision made by Services Australia – Centrelink (Centrelink) on 31 January 2025 to cancel Ms Vance’s disability support pension (DSP) with effect from 31 January 2025.
Ms Vance was in receipt of DSP from 27 November 2023. Ms Vance was the registered owner of a property at [Address], NSW (the property). Ms Vance’s elderly mother, [Mrs A], resided in the property and had done so for over 25 years.
Centrelink, in granting Ms Vance DSP and assessing her rate of DSP, made a determination to disregard the value of the property under the “asset hardship” provisions.
On 6 January 2025, Centrelink wrote to Ms Vance requesting information about [Mrs A]’s financial position to assess Ms Vance’s continuing entitlement under the asset hardship provisions. Ms Vance was sent a questionnaire to complete and return.
On 31 January 2025, Centrelink cancelled Ms Vance’s DSP as she had not returned the requested questionnaire.
Ms Vance sought internal review of this decision and on 27 February 2025, a Centrelink authorised review officer (ARO) affirmed the decision. The ARO noted that, while the property was exempt for the purposes of the assets test, notional income from the property was required to be taken into account in determining Ms Vance’s rate of payment. As Ms Vance had failed to provide information to enable the notional income to be assessed, the ARO found that it was correct for her DSP to be cancelled.
Ms Vance then applied to the Administrative Review Tribunal (the Tribunal) for independent review.
A hearing was held on 28 March 2025. Ms Vance participated in the hearing by telephone and gave evidence under affirmation.
The Tribunal had regard to the following evidence provided prior to hearing:
·Relevant documents produced by Centrelink, numbered as pages 1-106
·Written submissions and documents provided on behalf of Ms Vance, numbered as pages A1-A81.
Following the hearing, Ms Vance was given an opportunity to provide further evidence regarding the purchase and beneficial ownership of the property. Ms Vance subsequently provided further documents to the Tribunal which were numbered as pages A82-A119.

ISSUES

The statutory provisions relevant to this review are contained in the Social Security Act 1991 (the Act) and the Social Security (Administration) Act 1999 (the Administration Act).
The issues which arise in this case are:
· Was Ms Vance entitled to receive DSP after 31 January 2025 having regard to her assets and/or income?
· Was the decision to cancel Ms Vance’s DSP with effect from 31 January 2025 correct?

CONSIDERATION

Issue 1 – Was Ms Vance entitled to receive DSP after 31 January 2025 having regard to her assets and/or income?

It is not disputed that Ms Vance satisfied the qualification criteria for DSP at all relevant times. However, if a person’s rate of DSP is nil, that payment is not payable to the person: section 98 of the Act.
A person’s rate of DSP is determined by applying the Pension Rate Calculator A set out in section 1064 of the Act. The rate must be calculated by applying both an income and an assets test. The lower of the rates calculated under the income test or the assets test is the rate payable to the person.
Under the income test a person’s fortnightly rate of pension is reduced by 50 cents for every dollar of income earned above the income free area ($212 per fortnight as at 1 January 2025). Once a person’s income reaches $2,510 (the income limit), their rate of pension is nil.
Section 8 of the Act sets of the income test definitions, including the definition of “ordinary income”.
Under the assets test a person’s fortnightly rate of pension is reduced by $3 for every $1,000 in assets over the assets value limit (the assets-free area). Over a certain value of assets (the assets limit) a person’s rate of pension is nil. Different assets-free areas and assets limits apply depending on whether a person is single or a member of a couple, and whether they are a homeowner or a non-homeowner.
A “homeowner” is a person with a right or interest in their principal home which provides them with “reasonable security of tenure”: subsection 11(4) of the Act. As at 1 January 2025 the assets limit for a single homeowner was $695,500 and $947,500 for a single non-homeowner.[1]
[1] See Guide to Australian Government Payments
Section 11 of the Act sets out the assets test definitions. Generally, the market value of an asset is used in the application of the assets test. The value of an asset may not be reduced by anything other than certain charges or encumbrances, such as a mortgage: section 1121 of the Act.
The asset hardship provisions are contained in Part 3.12 Division 3 of the Act. In essence, if a pension is not payable to a person (or a person’s rate of pension is reduced) due to application of the assets test, but the person has an unrealisable asset and would suffer severe financial hardship if the value of that asset were taken into account in assessing their rate of payment, then the value of any unrealisable asset may be disregarded in working out the person’s rate of payment: sections 1129 and 1130 of the Act.
An “unrealisable asset” is defined in subsections 11(12) and (13) of the Act as an asset which a person cannot, or cannot reasonably be expected, to sell or use as security for borrowing. The Social Security Guide, a document which sets out government policy to assist decision-makers, provides at 4.6.7.50 that it is unreasonable for a person to sell or borrow against an asset if that asset is a home that is and had been occupied by a near relative of the person for at least 10 years.
In granting Ms Vance DSP, Centrelink accepted that the property was an unrealisable asset, on the basis that the property had been occupied continuously by [Mrs A] for approximately 25 years and it was unreasonable for the property to be sold or for Ms Vance to borrow against the property.
On review, the ARO agreed that Ms Vance’s DSP should be cancelled on the basis that she had failed to provide requested information and therefore her notional income from the property could not be assessed. The ARO further noted that, as the property had been transferred on 14 February 2025 by Ms Vance to [Mrs A], Ms Vance was unable to be assessed under the asset hardship provisions from this date.
Prior to cancelling Ms Vance’s DSP, Centrelink did not consider whether or not Ms Vance had disposed of an asset (being the property) or, if she had, whether there was any basis for that disposal to be disregarded in Ms Vance’s circumstances.
In determining whether or not Ms Vance remained entitled to DSP from 31 January 2025, the Tribunal must first consider whether or not the property was an asset of Ms Vance.
If the property was Ms Vance’s asset, the Tribunal may also consider:
·     Should the value of that asset be disregarded under the assets test because of the application of the asset hardship provisions?
·     Should notional income from that asset be taken into account under the income test and, if so, on what basis?
·     Did Ms Vance dispose of that asset?

Is the property Ms Vance’s asset?

Ms Vance told the Tribunal that the property has been her mother’s home for over 25 years. [Mrs B] purchased the land and entered into a contract to build a home on the property. Unbeknownst to Ms Vance, [Mrs B] purchased the property in Ms Vance’s name. Ms Vance was overseas at the time the property was purchased by her mother and was not aware that the property had been put in her name.
Ms Vance told the Tribunal that [Mrs A] later explained that she did this in anticipation of Ms Vance marrying and having children, expecting that Ms Vance and her family would then live at the property with [Mrs A]. However, this never eventuated. Ms Vance said that she has never lived at the property, although over the years she would occasionally visit and stay with her mother overnight.
Ms Vance said that [Mrs A] paid the full purchase price for the land herself and paid all costs for the construction of the house on the property. [Mrs A] has lived in the property ever since construction was completed and has paid all costs associated with the property over more than 25 years, including all rates, insurances, repair and maintenance costs and so on. Ms Vance said she had always regarded the property as her mother’s.
Documents provided by Ms Vance confirm that the property was transferred to [Mrs A] on 14 February 2025 for a consideration of $1.7 million. However, Ms Vance told the Tribunal that no money had changed hands and she did not receive any consideration for the transfer of the property to her mother. This fact was confirmed by a letter from the solicitors who acted on behalf of the parties to effect the transfer.
Ms Vance said that the reason for the property being transferred to [Mrs A] at this time was due to legal action having been taken against Ms Vance by her partner’s siblings following the death of her partner. At the time of her partner’s death, Ms Vance was living in a home owned by her partner, in which they had lived together for a number of years. After her partner’s death, her partner’s siblings took legal action to obtain control of his assets. She has been served with a notice of eviction to leave the home she shared with her partner. This legal action led Ms Vance and [Mrs A] to be concerned about the potential for the siblings to try to make a claim over the property.
Ms Vance provided to the Tribunal a copy of the contract for the purchase of the property that names her as purchaser. This document is not signed by her as purchaser.
Ms Vance also provided compelling documents to the Tribunal that corroborate her oral evidence that [Mrs A] paid for the construction of a home on the property, including documents from the builder and from [Mrs A]’s bank confirming various progress payments being requested and paid by [Mrs A].
In Thomas and Secretary, Department of Social Services (Social Services second review) [2022] AATA 2324 Deputy President Sosso of the Administrative Appeals Tribunal summarised the circumstances in which a constructive trust may arise, as follows:
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)
A common intention may arise after a property has been acquired (Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413). It is not necessary for a common intention to exist that the parties have a specific share in a property, and it is sufficient that there is an intention for the person to obtain “some form of proprietary interest” (Gritzman v McRae [2022] NSWSC 745).
Detrimental reliance will be established where a person erects a home, makes improvements or performs substantial maintenance on the property over which the constructive trust is claimed (Giumelli v Giumelli (1999) 196 CLR 101).
I am satisfied that there is ample evidence to conclude that Ms Vance at all times held the property under a constructive trust for the benefit of [Mrs A]. There is no question that the property was always intended to be, and was regarded by both parties as being, solely beneficially owned by [Mrs A]. [Mrs A] has acted to her detriment in reliance on that understanding by paying for the purchase, construction and upkeep of the property over many years from the date of purchase, such that it would be inequitable for her interest in the property to be denied.
As such, I find that the property is not to be regarded as an asset of Ms Vance.

Has Ms Vance disposed of an asset?

Part 3.12 Division 2 of the Act contains provisions regarding the disposal of assets. Where a person disposes of an asset for no or inadequate consideration (commonly referred to as “gifting” the asset), the value of that asset in excess of a certain amount is included in the value of the person’s assets for 5 years from the date of disposal.
In certain circumstances where a person is in severe financial hardship, and such hardship is not the direct result of the disposal of an asset, the value of a disposed asset can be disregarded under the assets test (see the Social Security Guide at 4.6.7.20).

In order for a person to have disposed of an asset, that asset must have been an asset of the person. In the present case, Ms Vance was named on the title as owner of the property but I have found that she was not, and never had been, the beneficial owner of the property and no part of the property was her asset. Ms Vance therefore did not dispose of an asset by transferring the property to her mother on 14 February 2025.
Although it is unnecessary for the Tribunal to make any findings on this point, the Tribunal observes that even if the property was determined to be an asset of Ms Vance (that is, the property was not held on a constructive trust) and Ms Vance had disposed of that asset, there appears sufficient basis for the value of the asset to be disregarded as a disposal having regard to the policy set out in the Social Security Guide. This is because Ms Vance is in severe financial hardship that is not a direct result of disposing of the property, and she would have qualified for hardship even if the asset had not been disposed of.

Issue 2 – Was the decision to cancel Ms Vance’s DSP correct?

The Administration Act provides a number of mechanisms whereby Centrelink can require a person who is in receipt of a social security payment to provide information to Centrelink. The letter and questionnaire issued by Centrelink to Ms Vance on 6 January 2025 was specified to be issued under section 63 of the Administration Act. For such notice to be valid, it must be made in writing and given to the recipient personally, by post or in any other manner approved by the Secretary.
If a person fails to comply with a written request issued pursuant to section 63 of the Administration Act, their payment is not payable provided the Secretary is satisfied that it is reasonable for the relevant provision to apply to the person: section 64 of the Administration Act. In order for this provision to be apply, the notice issued to the person must advise them of the effect of section 64 of the Administration Act (that is, the notice must advise that a failure to comply may result in the person’s payment being suspended or cancelled).
If a social security payment is not payable to a person, the Secretary is to determine that the person’s payment is to be suspended or cancelled: section 80 of the Administration Act.
I am satisfied that the letter issued by Centrelink to Ms Vance on 6 January 2025 was a valid request for information.
Both in its initial assessment of Ms Vance’s qualification for DSP and in reviewing her continuing entitlement to have her rate of DSP assessed under the asset hardship provisions, Centrelink has accepted, quite properly, that the property was an unrealisable asset and that Ms Vance would suffer severe financial hardship if the value of the property were to be taken into account under the assets test. This means that the value of the property was disregarded in assessing the value of Ms Vance’s assets.
However, while the value of the property may be disregarded for the purposes of the assets test under the asset hardship provisions, the notional annual rate of ordinary income from such asset must be taken into account in assessing the person’s rate of payment under the income test: subsection 1130(3) of the Act.
The Social Security Guide at 4.6.7.90 provides that notional income from an unrealisable asset is the lower of:
·2.5% of its value, OR
·its commercial lease value (1.1.C.207).
Exception: Where the unrealisable asset is a property occupied by a near relative or a long term tenant with a low income the commercial lease value is calculated as 20% of the total income of the occupant (and partner) of the property. Total income includes all social security income support payments. If the property does not have a commercial lease value, then notional income CANNOT be assessed.
The commercial lease value of a non-farming property is generally the asset’s market rental value.
Information about the income of [Mrs A] was not provided at the time Ms Vance’s entitlement to DSP was first assessed. Although [Mrs A] appeared to have been in receipt of age pension at the time Ms Vance applied for DSP, [Mrs A] refused to provide permission for Centrelink to access her records to confirm this.
Centrelink instead obtained a valuation of the market rental of the property which stated that as of 20 March 2024, the rental value of the property was $33,864 per annum.
On 8 May 2024, Centrelink advised Ms Vance that, absent information about her mother’s income, it had assessed her rate of DSP as being $347.07 per fortnight.
While it is difficult to understand [Mrs A]’s reluctance to allow Centrelink to access her record to confirm her income, or to provide financial information, Ms Vance provided evidence to the Tribunal from her treating psychiatrist, [Dr B], which goes some way to explaining this. He notes that Ms Vance has a “troubled and fractious” relationship with her mother, with a reported history of abuse (both emotional and physical). [Dr B] stated that “my interview with the mother also indicated that the mother is suffering with serious medical and psychiatric problems, and possibly cognitive impairment” and, when discussing the decision to put the property in Ms Vance’s name, that “she thought this was in the interests of Ms Vance; but this seems to me not to have been a rational or sensible decision at the time.”
Ms Vance’s situation has not changed for the better since Centrelink first granted her DSP applying the asset hardship provisions. Ms Vance told the Tribunal that she is experiencing severe financial distress. She is unable to work due to significant mental health issues. Ms Vance has no income, no investments and no other assets. She is facing eviction from her home. She has extremely limited funds in her bank accounts. Her mother has been providing her with a small amount of money so she can afford to buy food. She has lost a considerable amount of weight as she often does not eat.
Given Ms Vance’s extreme vulnerabilities, it is unclear why Centrelink determined to cancel her DSP rather than continue to assess her rate of DSP on the same basis that it originally applied.
Centrelink instead have simply determined that Ms Vance’s DSP was not payable based on her failure to provide the information requested under the letter of 6 January 2025.
In Fry and Secretary, Department of Social Security [2021] AATA 4174, the applicant’s age pension was cancelled when he failed to respond to requests for information about his financial circumstances. While the applicant in that case suffered from dementia, the Tribunal was satisfied that he would have been “notoriously vulnerable” even if he had not suffered dementia and found that a decision to cancel the applicant’s age pension “when there had been no material change in the Secretary’s state of knowledge is impossible to characterise as ‘rational and proportionate’ ”.
At the time that Centrelink made its determination to cancel Ms Vance’s DSP, there was no information whatsoever before Centrelink that suggested that her circumstances had materially changed such that she was ineligible to continue to receive DSP.
When Ms Vance was unable to provide information about her mother’s income, Centrelink could simply have continued to assess Ms Vance’s rate of DSP on the best evidence available to it, rather than simply cancelling her DSP. That is, in the absence of information about [Mrs A]’s income, Centrelink ought to have assessed the notional income from the property as the lower of 2.5% of the value of the property[2] or the commercial lease value of the property: subsection 1130(5) of the Act.
[2] A letter from the solicitors who managed the transfer of the property confirmed that the consideration of $1.7 million noted in the transfer was based on a valuation that had been obtained of the property for the purposes of assessing stamp duty payable on the transfer. At hearing, Ms Vance agreed that the valuation of $1.7 million represented the fair market value of the property at the time of transfer.
Both of these methods of assessing notional income would likely have been far less beneficial to Ms Vance than any assessment of her rate of DSP having regard to her mother’s income. Centrelink’s failure to consider these reasonable options have had the unfortunate, and entirely avoidable, result of leaving Ms Vance, an already highly vulnerable person, destitute and distressed.
I am satisfied in Ms Vance’s circumstances that it was not reasonable for section 64 to apply and the decision to cancel her DSP from 31 January 2025 was not a “rational or proportionate” response to her failure to provide information.
I therefore find that Ms Vance’s DSP should not have been suspended or cancelled with effect from 31 January 2025 pursuant to section 80 of the Administration Act.
The effect of this decision is that Ms Vance’s DSP is to be restored from 31 January 2025 and Centrelink will be directed to pay her any arrears of DSP owing from that date on the basis that the property was not an asset of Ms Vance and the value of the property, or any notional income from the property, is not to be taken into account in assessing Ms Vance’s rate of payment.

DECISION

The Tribunal sets aside the decision under review and remits the matter for reconsideration in accordance with the order that:

The property situated at [Address], NSW was at all times held by Ms Vance on a constructive trust for the benefit of her mother, and the property therefore was not an asset of Ms Vance;
Ms Vance’s DSP should not have been cancelled from 31 January 2025; and
Ms Vance is to be paid arrears of DSP from 31 January 2025 calculated without regard to the value of the property, or any notional income from the property.

Date(s) of hearing:	Friday, 28 March 2025
Representative for the Applicant:	Self