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

[2007] AATA 1599

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1599

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No Q 200600823

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Neil Worthington

Applicant

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

Respondent

DECISION

Tribunal Senior Member Bernard J McCabe

Date27 July 2007

PlaceBrisbane (heard in Mackay)

Decision The decision under review is affirmed.

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SENIOR MEMBER

CATCHWORDS

SOCIAL SECURITY – Assets and Income – assets test – whether money paid out was held on trust – mere private family arrangement – part of monies still formed part of applicant’s assets – decision affirmed

Follone and Secretary, Department of Social Security (1987) 11 ALD 477

Social Security Act 1991 s 1123

REASONS FOR DECISION

27 July 2007 Senior Member Bernard J McCabe         

1. Mr Neil Worthington says Centrelink should not have reduced the amount of carer’s payment he was receiving. Centrelink acted after it decided an amount he paid to his brother was deemed to remain part of Mr Worthington’s assets for the purposes of the assets test that was applied in the course of assessing the applicant’s entitlements pursuant to s 1123 of the Social Security Act1991 (the Act). Mr Worthington, for his part, says he was merely paying money he held on trust for his brother. Money held on trust for someone else would not ordinarily form part of the applicant’s assets.

2. In order to decide the case, it is necessary for me to examine the evidence and decide whether I am satisfied the applicant held the equivalent of around $32,000 on trust for his brother. If he was merely paying out trust money, the payment of the money will not trigger the operation of s 1123.

3.      For reasons I will explain, I am not persuaded the money in question was held on trust. The decision under review must therefore be affirmed.

what the applicant says

4.      Mr Worthington says he received around $25,000 from his mother over a 12 year period. His mother apparently said the money was to be held by the applicant on trust for his brother, who has health problems. Mr Worthington acknowledged in his testimony:

·     There was no documentation recording the establishment of a trust or its terms;

·     the applicant did not hold the money he received from his mother in a separate account;

·     Mr Worthington used the money he received on trust from his mother for his own purposes. He says he was confident until not long before 2005 that he would be able to find the money to meet his obligations to his brother under what he understood to be the terms of the trust;

·     he did not tell the tax office that the money was trust money. Instead he allowed interest on the funds to be counted as part of his personal income.

5.      Mr Hamilton, for the respondent, asked the applicant during cross examination if he was willing to call his other brother who knew of the arrangement and its purpose. Mr Worthington acknowledged his brother would be able to corroborate his story but he declined to provide his brother’s contact details and refused to call him to give evidence. He said his family was going through a lot following the death of his parents and he did not wish to involve any other family members in his dispute with Centrelink. He said he was being honest and did not understand why he should corroborate his story. He said he should be believed because he gave his evidence in an honest and forthright way.

6.      Mr Worthington received a compensation payout in respect of a work-related injury in October 2005. He paid that money straight into his brother’s account. As luck would have it, he explained, the settlement amount was roughly equal to the amount he says he was holding on trust for his brother. He said he was pleased to make the payment because he had developed a gambling problem and he had come to doubt his ability to meet his obligations to his brother under the terms of the trust. He was able to tell his dying father about the payment. His father was pleased but urged Mr Worthington to remain vigilant with respect to his brother’s interests. Mr Worthington disclosed the payment to Centrelink. He says he was initially told the payment was unlikely to be a problem. Centrelink subsequently took the view the amount should be treated as if it were still part of his assets which led to a reduction in the amount of his carer’s payment. I note the applicant’s assets had already received a boost after he won Lotto in the preceding 12 months.

7.      The Secretary says the Tribunal should not be satisfied with Mr Worthington’s explanation. The Secretary accepts (as do I) that a payment in the amount of around $32,000 was made to the applicant’s brother. It is clear the payment to his brother was comprised of the monies the applicant received under the terms of his compensation payout as a result of a work-related injury. But the rest of the applicant’s account is uncorroborated.

8.      The respondent says it is unlikely the applicant would have failed to record any aspect of the trust if that is what his mother intended to achieve when she gave him whatever money she paid over. It is also unlikely the applicant would have failed to declare himself a trustee. His failure to do so meant he was assessed on income that was derived from the trust monies. The respondent also said I should draw adverse inferences from Mr Worthington’s insistence that his brother not be called even though the applicant acknowledged his brother could shed light on the arrangements with his mother. I note the applicant did not appear ready to offer a cogent and convincing excuse for that reluctance.

9. Mr Hamilton said the best that could be made of the evidence was that the applicant entered into some sort of informal arrangement with his mother that he would look after his ill brother in the future. He received money from his mother but it was never intended the money be kept on trust, and he did not behave as if it were trust property. In short, the respondent says Mr Worthington did not behave like a trustee because there was no trust – merely a family understanding. The payment to his brother in October 2005, while consistent with that understanding, was ultimately a gift which attracted the operation of s 1123.

the tribunal’s view of the arrangement

10. I think the respondent is right. I do not question Mr Worthington’s genuine desire to look after the interests of his brother, just as he looked after his parents. But I am not persuaded the evidence establishes the existence of a formal trust arrangement that would enable him to escape the operation of s 1123. In doing so, I note the Tribunal’s decision in Follone and Secretary, Department of Social Security (1987) 11 ALD 477 which was cited by the Social Security Appeals Tribunal. Follone warned of the danger of finding a trust if the evidence only pointed to domestic arrangements that were never intended to operate in a formal way. I think that is what we have here: informal arrangements that the parties never intended to operate in a formal way, and which were not operated in that way.

11.     The decision under review is affirmed.

I certify that the 11 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

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

Date of Hearing  10 July 2007
Date of Decision  27 July 2007
The applicant represented himself at the hearing.

The respondent was represented by Mr Hamilton, a departmental advocate.