Editors --- "Newstart allowance: interest in property; terms of trust; whether presumption of advancement applies" [2009] SocSecRpr 24; (2009) 11(3) Social Security Reporter, Article 2

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Newstart allowance: interest in property; terms of trust; whether presumption of advancement applies

MIDDLETON and SECRETARY TO THE DEEWR

(2007/2536)

Decided: 2nd July 2009 by B. Tamberlin

Background

Middleton had given a Power of Attorney to his mother in ‘all matters’. In November 1997, Middleton’s mother purchased a property in the name of herself and Middleton as tenants in common. The entire purchase price was paid by Middleton’s mother from borrowed funds. Middleton’s evidence before the Tribunal was that he was unaware that he had any interest in the property until 2005 and had not paid any interest, council rates, water rates, land tax or maintenance in respect of the property. Middleton’s mother gave evidence to the Tribunal that following the property settlement with her husband she had received advice from her accountant to invest money in the names of her two sons in order to protect her estate, on her death, from claims by her estranged daughter. She had later purchased a property as tenants in common with her other son and so in order to treat her sons equitably she decided to purchase this property as tenants in common with Middleton. The Tribunal accepted her evidence that she never intended that Middleton would get an immediate beneficial one half interest as tenant in common but rather his entitlement would only arise on her death. Centrelink had subsequently raised a newstart allowance debt of $13,932.17 on the basis that he had a one half interest as tenant in common in the property.

The issue

The question for determination was whether Middleton had a one half interest as tenant in common in property with his mother. It was common ground that if he had this interest his assets exceeded the prescribed limit.

Discussion

The Tribunal noted that as a general rule, where part or whole title is vested in someone other than the person who paid the purchase price, a resulting trust in favour of the paying party will be presumed. However the Tribunal further noted that this general rule is displaced where an interest is vested in a child because of the counter-presumption of advancement whereby the parent is presumed to intend to benefit the child and there will be an absolute gift. The Tribunal observed that this counter presumption of advancement applied to both adult and non adult children relying on the decision of Nelson v Nelson (1995)184 CLR 530 at 548 – 549.

The Tribunal considered that whether the presumption of advancement applied in this case depended on the precise terms of the trust. The Tribunal found on the evidence that the presumption did not apply because Middleton’s mother never had any intention to make an immediate gift of any present interest to Middleton but rather intended to retain full ownership, legal and equitable, and to meet all obligations on the property until her death. The Tribunal further found that her actions in assuming full responsibility for taxes, maintenance and debts in relation to the property had been consistent with this intention.

The Tribunal went on to find that even if Middleton was found to have a contingent interest there was no evidence before it as to any valuation of that interest. The Tribunal also noted the considerable difficulties that would be involved in attempting to realize or sell such a contingent asset.

Accordingly, the Tribunal found that Middleton’s assets did not exceed the prescribed limit in the relevant period taking into account the limitations and contingencies attaching to his property interest.

Formal decision

The Tribunal held that there was no newstart allowance debt due and payable and set aside the decision under review.

[G.B.]