Yvonne (Ann) Hardy and Repatriation Commission
[2014] AATA 746
•15 October 2014
[2014] AATA 746
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2014/1568
Re
Yvonne (Ann) Hardy
APPLICANT
And
Repatriation Commission
RESPONDENT
DECISION
Tribunal Brigadier (Retired) C Ermert, Member
Date 15 October 2014
Place Melbourne The Tribunal affirms the decision under review.
........................[sgd]................................................
Brigadier (Retired) C Ermert, Member
VETERANS' ENTITLEMENTS – disposal of assets – whether a gift or return of a loan – deprived asset – decision affirmed
Legislation
Aged Care Act 1997
Veterans' Entitlements Act 1986 (Cth) section 52E
REASONS FOR DECISION
Brigadier (Retired) C Ermert, Member
15 October 2014
INTRODUCTION
Mrs Hardy, the Applicant, is the daughter of Mrs Joan Darlow. Mrs Darlow resides in a nursing home and has given Mrs Hardy her power of attorney to act for her in regard to this application. Mrs Darlow is the widow of Mr Jack Darlow, the veteran, who died on 13 May 2010.
On 24 October 2013 Mrs Hardy lodged with the Repatriation Commission (the Commission), the Respondent, a Request for an Assets Assessment form (the Assets Assessment form) for Permanent Residential Aged Care for Mrs Darlow. On the same day, the Respondent determined the net value of Mrs Darlow’s assets to be $350,475 which included $50,000 of deprived assets. The deprived asset derived from an amount of $60,000 which was declared as a gift by Mrs Darlow to her son, James (Jim) Darlow. An amount of $10,000 was deducted from the $60,000 as an allowable gift in a single year.
In a letter dated 25 November 2013, Mrs Hardy requested a review of the Respondent’s decision. On 20 February 2014 a delegate of the Respondent affirmed the decision. In a letter received on 25 March 2014, Mrs Hardy applied to this Tribunal for a further review of the decision.
THE HEARING
Mrs Hardy appeared in person and gave evidence under affirmation. She was supported by her husband, Mr John William Hardy, who also gave evidence under affirmation. Mr Ken Rudge, a departmental lawyer of the Department of Veterans’ Affairs (the Department) represented the Respondent.
At the hearing, I had before me the documents lodged by the Respondent under section 37 of the Administrative Appeals Tribunal Act 1975 (the T-Documents). For Mrs Hardy, I took into evidence:
·an email dated 28 August 2014 from Jim Darlow together with photocopies of eight cheque butts (Exhibit A1),
·a statement by Mrs Hardy dated 10 September 2014 (Exhibit A2), and
·a letter from Mr J Darlow dated 28 August 2014 (Exhibit A3).
For the Respondent, I had before me the Respondent’s Statement of Facts and Contentions dated 25 August 2014. At the hearing, I took into evidence:
·a list of file entries regarding the properties and bank accounts of Mr and Mrs Darlow, consisting of four pages (Exhibit R1), and
·a bundle of copies of file folios, with pages numbered 1 to 110 (Exhibit R2).
THE LEGISLATION
The relevant legislation is contained in the Aged Care Act 1997 and the Veterans’ Entitlements Act 1986 (the VE Act).
The Aged Care Act contains provisions for the authority to determine the value of a person’s assets, the powers to delegate that authority to the Respondent and the provisions that allow a person to apply for a review of the decisions made in exercising that authority. The provisions of the Aged Care Act are not in contention in this matter and are not considered further.
Section 52E of the VE Act is concerned with the disposal of assets and provides that:
For the purposes of this Act, a person disposes of assets of the person if the person engages in a course of conduct that diminishes, directly or indirectly, the value of the person’s assets and:
(a)the person receives no consideration in money or money’s worth for the diminution in the value of the person’s assets; or
(b)the person receives inadequate consideration in money or money’s worth for the diminution in the value of the person’s assets; or
(c)the Commission is satisfied that the purpose, or the dominant purpose, of the person in engaging in that course of conduct was:
(i) …
(ii) …
(iii) to ensure that the person or the person’s partner would be eligible for benefits under Division 12 of this Part of fringe benefits under the Social Security Act.
In this case there is no contention that Mr Darlow engaged in a course of conduct for the purposes contained in sub-section (c) and this section of the Act is not considered further.
The only issue in contention in this matter is whether Mrs Darlow disposed of $60,000 of her assets and received no or inadequate consideration for the diminution of her assets.
THE EVIDENCE
Mrs Hardy stated that her parents moved into a government-funded aged care facility in 2009. Her father passed away in 2010. Her mother moved into a nursing home about a year ago.
Mrs Hardy said her brother, James, moved to the United Kingdom (UK) about 20 years ago. He had previously lived in Tasmania and owned a few properties there. She said he sold them when he moved to the UK and had available cash. Mrs Hardy said that her father bought properties but never took out a mortgage. She said her brother helped out her father with money for the properties. She said they did this for about 25 years.
Mrs Hardy explained that her brother was the only member of the family who had the money to help out in this way. She said the cheque butts (Exhibit A1) showed some of the money which went from her brother to her father. She said her brother was able to provide this help as he did not need the money in the UK.
Mrs Hardy said that two or three years ago, her brother wanted to purchase a house in the UK and needed some money. By then, her father had passed away. Her father had said that he owed $50,000 to $60,000 to her brother and so her mother returned $60,000 to her son in the UK.
Mrs Hardy testified that when she provided the information for the asset assessment she erroneously described the $60,000 as a gift. She said the money was, in fact, a repayment of the loans which had accumulated over the 25 years.
In his cross-examination, Mr Rudge took Mrs Hardy to the chronological list of file extracts contained in Exhibit R1. He referred to the entry dated 5 December 2007 which included … we wish to gift our son James F Darlow another $10,000 which brings our donation to $30,000 over 3 years which is the maximum donation over 5 years , to take effect from 3/1/08. Mr Rudge put to Mrs Hardy that her father understood the provisions regarding the making of gifts. He then asked her why Mr Darlow made this series of gifts rather than repaying loans. Mrs Hardy said her father was just trying to get money back to her brother. She said money was going backwards and forwards between her father and brother for years. Mrs Hardy agreed with Mr Rudge’s proposition that her father was meticulous in his documentation.
Mr Rudge referred to the Exhibit R1 entries for 21 April 1998, 17 May 1998 and 11 August 1998, relating to the purchase of a holiday home in Rosebud for $79,000. He put to Mrs Hardy that her father paid $68,000 from the sale of the property in Mentone. Mrs Hardy said that the sale of the Mentone property was not settled until later.
Referring to the entry for 24 August 1999, Mr Rudge noted that the Rosebud property was sold for $86,000. He put to Mrs Hardy that two properties, the Mentone property and the Rosebud property, had now been sold. Mrs Hardy said that her parents sold the Mentone property and moved to Mornington. She added that her parents bought the Rosebud property as a holiday home with money from her brother.
Mr Rudge referred to the entry for 26 November 1999, which recorded that the settlement on the new home was delayed so the family members would provide bridging loans to be repaid. He then referred to the entry for 20 March 2000, which recorded that the bridging loans had been repaid to family members. He asked whether the loans had in fact been repaid. Mrs Hardy said that they had not been repaid. She stated that her father was always honest and told the Department what was going on with his financial affairs. She said that money used to go backwards and forwards between her father and her brother, as evidenced by the cheque butts.
Mr Rudge referred to the entries for 17 June 2002 and 22 June 2002, which recorded the purchase of the unit in Patterson Lakes Retirement Village, paid for by James, and for which he was given the ownership of a property in Lucerne Avenue, Mornington. Mrs Hardy said she had no direct knowledge of these transactions.
When asked about the entry for 1 September 2002 Mrs Hardy said again that a lot of money passed backwards and forwards between her father and her brother.
Mr Rudge referred to the entry for 15 April 2003 and asked if the $60,000 was part of the reconciliation with James for the Lucerne Avenue, Mornington property. Mrs Hardy responded that the money was not much when considered part of the total amount of money which was going backwards and forwards between her father and her brother.
Mr Rudge took Mrs Hardy to the entries for 6 October 2005, 23 October 2005 and 21 November 2005, which recorded the purchase of a Pakenham property and the sale of a property in Vale Street, Mornington. He noted the entries referred to the re-imbursement of the temporary loans. Mr Rudge then referred to the entries for 9 February 2006, 15 February 2006, 5 February 2007 and 10 January 2008, which recorded Mr Darlow three amounts of $10,000 as gifts to James. He asked Mrs Hardy if she knew why her father gave money to her brother as gifts instead of simply repaying any outstanding loans. Mrs Hardy said that her brother did not know whether he would be coming back to Australia and whether he might need the money in Australia. She said she did not know why her father did not just repay the loan.
Mr Hardy stated he was married to Mrs Hardy. Mr Hardy said that James sold some properties in Australia and as a result he had some cash reserves. Mr Hardy said that James moved to the UK but he did not want the funds in the UK. Instead he moved cash to his father to purchase properties. Mr Hardy said Mr Darlow was honest and would always do the right thing.
Mr Hardy said that Mrs Hardy was confused when using the word gifted on the Assets Assessment form. He said it was neither unlawful nor criminal to make such a mistake. He said the $60,000 was not a gift, but was the end of a series of self-help arrangements between Mr Darlow and James. Mr Hardy also said that the money may have been in Mr Darlow’s accounts but it was Jim’s in his own mind.
Mr Hardy said that if the $60,000 had to be counted as an asset it would go straight to the nursing home and would cause extreme hardship.
SUBMISSIONS
Mrs Hardy submitted that she made an error in entering the word gifted. She said she has explained as much as she knows. Her father and her brother always tried to help each other out. Her father continually wrote to the Department to keep them informed of his circumstances.
Mr Rudge submitted the only issue to be determined in this case was whether the $60,000 in question was a gift or a loan. Mr Rudge said it was not in dispute that Mrs Hardy had no knowledge of the issue.
Mr Rudge submitted that the file entries from 1999 to February 2006 document the purchase and sale of a number of properties and a number of loans from James to his father and a number of loan repayments to James. Mr Rudge submitted that the amounts shown in the records and the cheque butts cannot be reconciled, as money was transferred between the parties and all the records were not available.
Mr Rudge submitted that up to 9 February 2006 the records show Mr Darlow used terms such as loans, reimbursements and repayments to describe the transfers of money to and from his son. From 9 February 2006 onwards, Mr Darlow used terms such as gift and donate to describe transfers of money to James. Mr Rudge also pointed out that Mr Darlow transferred ownership of the Lucerne Avenue, Mornington property to James in exchange for James’ payment for the unit in Patterson Lakes Retirement Village.
Mr Rudge contended that it is unlikely that a loan amounting to $60,000 remained outstanding or unpaid at the time Mr Darlow passed away.
TRIBUNAL CONSIDERATIONS
A significant difficulty in determining this issue is the incomplete details of the financial dealings carried out between father and son over many years. It is clear that James provided money to his father on numerous occasions to assist Mr Darlow to buy properties without resorting to mortgages from lending institutions. Unfortunately, as the records of the transactions are not complete, a full reconciliation is not possible. This makes it difficult to determine whether the $60,000 in question is the repayment of a loan or a gift.
Unfortunately, Mrs Hardy’s evidence is not specific in regard to amounts transferred between father and son. She said that the financial transactions were conducted only between Mr Darlow and James. She said that James was the only member of the family who had money available to help Mr Darlow with his property purchases. As a result she had no direct knowledge of the transactions, and had no first-hand knowledge of the $60,000 in question.
Mr Hardy also had no first-hand knowledge of the details of the financial transactions between Mr Darlow and James.
In his email (Exhibit A1), James states:
I was involved in the purchase, by my father, of the holiday home in Rosebud, the property at Vale Street, Mornington and the property at Lucerne Avenue, Mornington … Certainly I was the only member of the family who could have given financial assistance to my father including the 60,000 dollars to purchase the Lucerne Avenue property.
Although the $60,000 for the Lucerne Avenue property matches the amount in question, James’ statement does not, of itself, connect this transaction with the $60,000 in question.
James also provided copies of eight cheque butts showing various amounts paid to Mr Darlow. However, the eight butts are not a complete record of payments made over the years. In addition, they do not show any receipts by James of money repaid to him by Mr Darlow.
The only direct evidence available was provided by Mr Darlow to the Respondent, as recorded in Exhibit R1. These records indicate that Mr Darlow was diligent in advising Centrelink of the changes in his assets resulting from his various property acquisitions and disposals. In addition, Mrs Hardy and her husband attest to Mr Darlow’s honesty, an issue not contested by the Respondent. Accordingly, I accept the records as the best evidence available on which to make my determination.
I note particularly the following records in Exhibit R1 (emphasis added):
·26.11.99 – Settlement on new home delayed; our home has not yet sold, so family members will provide bridging loans to be repaid when sale takes place;
·21.1.00 – … when we settle on new residence using the NAB balance plus various bridging loans from members of the family … at which time we will reimburse family members for the bridging loans;
·20.3.00 – Settlement … Barkly Street 7th March. Bridging loans have been repaid to family members …;
·17.6.02 – Bought retirement unit … Our son paid for this unit & in exchange he has become the sole proprietor of investment unit … Lucerne Ave, Mornington … we will declare the balance left after taking out moneys lent to us for the purchase of … Lucerne;
·1.9.02 – … Out of $60,000 loaned to us our son contributed $10,000 … ;
·15.4.03 – Proceeds of sale of retirement unit received 15/4/03. We wish to repay $60,000 to family members who helped us buy investment unit … ;
·13.6.03 – Have repaid debt to family members … ;
·6.10.05 – Purchasing home at … King St, Pakenham. Family members providing temporary loans. When our house at … Vale St, Mornington is sold, the proceeds will go to reimburse family … ;
·21.11.05 – After repayment of temporary loans to various members of our family … ;
·9.2.06 – Gifted $10,000 to son … ;
·15.2.06 – … King St. Pakenham $204,970; loan from family … After reimbursing our family … we understand that we can donate $10,000 for 3 years to family members: we wish to do this in the name of James Francis Darlow … ;
· 5.2.07 – … We wish to donate $10,000 to our son James F Darlow (as we did this time last year) … ;
·25.12.07 – … we wish to gift our son James F Darlow another $10,000 which brings our donation to $30,000 over 3 years which is the maximum donation over 5 years … ;
·10.1.08 – Now donated $10,000 for the third consecutive year … ;
There were no more entries directly from Mr Darlow. He died on 13 May 2010.
From November 1999 to November 2005 Mr Darlow was consistent in using the term loan to describe money received by him from family members. He was also consistent in using the terms such as repayment or reimbursement to describe the money he paid to the family members.
In February 2006 he clearly distinguished a gift of $10,000 to James from the reimbursement of $55,000. From 9 February 2006 onwards Mr Darlow used the terms gift and donations to describe payments to family members.
The entry on 15 February 2006 also shows Mr Darlow’s clear understanding of the provisions regarding donations.
From the evidence of Mr Darlow’s honesty, the meticulous nature of his advice to Centrelink, and his understanding of the donation provisions, I accept that his use of terminology was particular and intentional. Accordingly, I accept as accurate the statements that bridging loans have been repaid to family members (made on 20 March 2000), have repaid loans to family members (made on 13 June 2003) and after reimbursing our family (made on 15 February 2006). I also accept as accurate Mr Darlow’s file statements made on 17 February 2002 that in exchange for the payment provided by James for the unit in Patterson Lakes Retirement Village, James was given ownership of the Lucerne Avenue property.
From these records, I accept that Mr Darlow had repaid the loans from James. I also accept that the further payments made by Mr Darlow to James were, and were intended to be, gifts.
Mrs Hardy’s evidence was that her father had said he owed $50,000 to $60,000 to James. However, there is no corroborating evidence in the records. Mrs Hardy said that she was not directly involved in the financial transactions and she had made a mistake when entering the word gifted in the Assets Assessment form. Accepting, as I do, the particularity of Mr Darlow’s records, I prefer the evidence of the records to Mrs Hardy’s memories.
I am satisfied that the $60,000 in question was a gift to James, and not the repayment of a loan, and I find accordingly. There is no evidence that Mrs Darlow received any consideration in money or money’s worth for the $60,000. Accordingly, I find that Mrs Darlow disposed of $60,000 of her assets and received no or inadequate consideration in money or money’s worth for the diminution of the value of her assets. I find that Mrs Darlow disposed of the $60,000 of her assets in the terms of section 52E of the Act. Accordingly, the $60,000 in question was properly considered to be a deprived asset, resulting in a diminution of $50,000 in the net value of her assets.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 49 (forty -nine) paragraphs are a true copy of the reasons for the decision herein of Brigadier (Retired) C Ermert, Member ........................[sgd]................................................
Associate
Dated 15 October 2014
Date of hearing 29 September 2014 Applicant In person Advocate for the Respondent Mr K Rudge, Department of Veterans' Affairs
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