Hopkins and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 50 (27 January 2010)

Last Updated: 8 March 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 50

ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2007/5905, 2007/5907

GENERAL ADMINISTRATIVE DIVISION )

Re Mary HOPKINS

Applicant

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

Respondent

DECISION

Tribunal Mr R P Handley, Deputy President

Date 27 January 2010

Place Sydney

Decision The decision under review is set aside and remitted to the Respondent to reassess Mrs Hopkins’ entitlement to a disability support pension for the period 20 December 1995 to 2 November 2004 on the following basis:

(a) that for the period 20 December 1995 to 31 December 2001, the properties at Ourimbah, Long Jetty, and Lisarow were, at the relevant times, the assets of the Hopkins Children’s Trust; and

(b) that for the period 1 January 2002 to 2 November 2004, Mrs Hopkins was an attributable stakeholder of the Trust, and 40% of the assets of the Trust should be attributed to her for the purpose of the application of the assets test.

....................[sgd]........................
Mr R P Handley
Deputy President

CATCHWORDS

SOCIAL SECURITY – disability support pension – attribution of assets – whether trustee an attributable stakeholder of private trust – whether applicant received a benefit – whether there are special circumstances - decision under review varied

...

RELEVANT ACT

Social Security Act 1999 ss 11, 1064, 1118, 1121, 1207P, 1207V, 1207X, 1208E, 1223, 1237A, 1237AAD

...

CITATIONS

Re Beadle and Director-General of Social Security (1994) 6 ALD 1

Re Beadle and Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225

Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541

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OTHER AUTHORITIES

Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000

Social Security (Attribution of Assets) Principles 2001

...

REASONS FOR DECISION

27 January 2010

Mr R P Handley, Deputy President

1. Mrs Hopkins has applied to the Tribunal for the review of a decision of the Social Security Appeals Tribunal (SSAT) affirming decisions made by Centrelink to cancel her disability support pension (DSP) and to recover a debt of $84,584.12 in respect of DSP paid in the period 20 December 1995 to 2 November 2004. The principal issue is whether assets held by a trust, for which Mrs Hopkins is the trustee, should be attributed to her for the purpose of determining her entitlement to a DSP.

BACKGROUND

2. On 27 February 1982, the Hopkins Children’s Trust (the Trust) was established by Mrs Hopkins’ father with Mrs Hopkins as the trustee and her four children as the beneficiaries. Mrs Hopkins father died in May 1995.
3. On 13 July 1995, Mrs Hopkins was granted a DSP. This was paid at the maximum rate until 2 November 2004. In 2004, Centrelink discovered through data-matching with the Australian Taxation Office (ATO) that Mrs Hopkins had an interest in the Trust and sought information from her about this. On 8 November 2004, she was notified of a decision to suspend her DSP for failure to respond to a request for information. On 19 January 2005, Mrs Hopkins was notified that her DSP had been cancelled for the same reason. On 7 March 2005, an authorised review officer affirmed this decision, noting that Mrs Hopkins had said she had had insufficient time to provide the information requested by Centrelink and that the Trust Deed did not permit her to benefit from the Trust.
4. On 15 May 2006, a Centrelink complex assessment officer determined that pursuant to Part 3.18 of the Social Security Act 1991 (the Act), 100% of the Trust’s assets and income were attributable to Mrs Hopkins. On 19 July 2006, Centrelink recalculated her entitlement to DSP and advised her that she owed a debt of $84,046.16 in respect of the period 20 December 1995 to 2 November 2004 which Centrelink sought to recover. This was varied to $84,584.12 on 11 December 2006. On 9 March 2007, the decision to raise and recover a debt of $84,584.12 was affirmed by an authorised review officer. On 23 October 2007, this decision was affirmed by the SSAT and, on 3 December 2007, Mrs Hopkins applied to the Tribunal for a further review.
5. The assessment of Mrs Hopkins’ assets involves a consideration of a number of properties and a business:

(a) A property at Tumbi Umbi (the Tumbi Umbi property), purchased in 1987, which is Mrs Hopkins’ principal home. This property comprises land of 13.21 hectares. Since for the purposes of the assets test the Act only allows for an exemption for the person’s principal home and up to two hectares of land adjacent to the dwelling (s 11(5) and s 1118(1)(a)), Centrelink has treated the excess curtilage as part of Mrs Hopkins’ assets for the purpose of calculating the value of her assets and has valued this, at various times, at $22,500, $20,000 and $25,000. (However, the value of this excess curtilage for the purpose of the assets test is reduced from August 1996 by a proportion of the charge securing the loan used to purchase the Ourimbah, property discussed below.)

(b) A property at Pacific Highway, Johns River, that Mrs Hopkins inherited from her father and was transferred into her name on 20 December 1995, valued at $95,000. Mrs Hopkins sold this property for $107,000 on 2 February 1998.

(c) A property at Ourimbah, purchased in August 1996 for $232,500. The Certificate of Title for the property shows Mrs Hopkins as the registered proprietor although the contract for the purchase of the property shows the purchaser as Mrs Hopkins “On behalf Hopkins Children’s Trust”. Mrs Hopkins states that the Registrar General would not register the title to the property in the name of the Trust. The purchase was made with a loan from the Newcastle Permanent Building Society Ltd of $245,000 secured by a charge over that property and the Tumbi Umbi property. The borrowers are Mrs Hopkins and her two sons.

Pursuant to s 1121(4) of the Act, the charge must be apportioned between the two assets, thereby reducing their value. In the case of the Tumbi Umbi property, since Mrs Hopkins’ principal home and two hectares are not included in her assets for the purpose of the assets test, only a proportion of the deduction is applied in reducing the value of the excess curtilage which is taken into account for the purpose of calculating the value of her assets. According to Centrelink’s application of the formula used for this calculation (set out in s 1121(4)), a deduction of $10,370 should be applied in reducing the value of the assessable excess curtilage for the Tumbi Umbi property. In the case of the Ourimbah property, a deduction of $120,556 is made in respect of the assessable value of that property in 1996.

(d) A property at Long Jetty, purchased for $425,000 in December 1998. The Certificate of Title for the property shows Mrs Hopkins as the registered proprietor although the contract for the purchase of the property shows the purchaser as Mrs Hopkins “On behalf of the Hopkins Family Trust”. The purchase was made with the proceeds of sale of the Johns River property of $107,000 and a loan from the Commonwealth Bank of $280,000 secured by a charge over the property. Mrs Hopkins is recorded in the mortgage document as the mortgagor. This loan was subsequently refinanced with a loan of $388,000 from Permanent Custodians Ltd from 22 May 2001 secured by a charge over the property. Mrs Hopkins is recorded as the mortgagor and her two sons are recorded as the co-borrowers. Mrs Hopkins states that the additional finance raised on this loan ($122,684.64 over and above the redemption of the Commonwealth Bank loan – a photocopy of the bank cheque for this amount was provided to the Tribunal by Mrs Hopkins) was for the purpose of her two sons clearing a loan obtained to purchase a bar in May 2001. They subsequently sold the business at a significant loss in June 2006.

(e) A property at Lisarow, purchased for $440,000 in June 1999. The Certificate of Title for the property shows Mrs Hopkins as the registered proprietor although the contract for the purchase of the property shows the purchaser as Mrs Hopkins as trustee for the Hopkins Children’s Trust. The purchase was made with a loan from the State Bank of NSW of $352,000 secured by a charge over the property. Mrs Hopkins is recorded in the mortgage document as the mortgagor. (When this mortgage was discharged, the Discharge of Mortgage document (undated but apparently dating from 2001) records the mortgagor as Mrs Hopkins as trustee for the Hopkins Children’s Trust.) The property was subsequently refinanced with a loan from the Perpetual Trustee Co Ltd of $396,000 on 13 June 2001 secured by a charge over the property. Mrs Hopkins is recorded as the mortgagor, and she and her two sons as the co-borrowers. Mrs Hopkins said she gave $46,815.36 of this loan amount to her sons for the purchase of the bar in May 2001 and she provided the Tribunal with a photocopy of a bank cheque for this amount payable to the vendors of the business.

6. On 16 June 1997, Mrs Hopkins received a distribution of $31,500 from her father’s estate. She said she used this money to pay the 10% deposit, stamp duty and legal fees for the purchase a business for the Trust operating a café in Gosford. The purchase was made by Mrs Hopkins “as trustee for Hopkins Family Trust”. The business was purchased for $210,000 on 8 December 1997, with the balance being provided from a second loan of $199,967 from the Newcastle Permanent Building Society Ltd secured by a charge over the Tumbi Umbi property and Ourimbah property. Mrs Hopkins is recorded as the mortgagor and the borrowers are listed as Mrs Hopkins and her two sons. Because the loan was for the benefit of persons other than Mrs Hopkins, the amount of the loan is not deductible from Mrs Hopkins’ assets (s 1121(2)).
7. The Tribunal notes a Department of Fair Trading ‘Statement of Change in Persons’ for the business name of the café to Mrs Hopkins “as trustee for the Hopkins Family Trust”, dated 11 December 1997. A recent ‘Certificate of Registration of Business’ for the café for the period 26 June 2007 to 26 June 2010 records the name of the proprietor as Mrs Hopkins “as trustee for the Hopkins Family Trust”. However, the Tribunal also notes a lease of the café premises dated 26 June 2002 for a period of five years names Mrs Hopkins as the lessee.

RELEVANT LEGISLATION

8. Prior to 1 January 2002, while a person who was a trustee and derived no benefit under the trust was not affected under the income and assets tests, a trustee in whose name the legal title of the property was vested was assessed for the purposes of the income and assets tests as being the legal owner of that property. However, from 1 January 2002, the Act was changed so that, pursuant to s 1207X(2), in the case of a controlled private trust in relation to an individual (as to which see s 1207P ‘designated private trust’ and s 1207V ‘controlled private trust’), the individual is an attributable stakeholder of the trust and 100% of the assets and income of the trust are attributable to the individual unless the Secretary determines a lower percentage to be attributable.
9. The Social Security (Attributable Stakeholders and Attribution Percentages) Principles 2000 (the 2000 Principles) are relevant to the determination of attributable stakeholders and asset attribution percentages under s 1207X(2).
10. Section 1208E provides relevantly that where an individual is an attributable stakeholder of a trust and the trust owns a particular asset, 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. The Social Security (Attribution of Assets) Principles 2001 (the 2001 Principles) are relevant to a determination that a specified asset is excluded from the attribution of assets of a trust to an attributable stakeholder.
11. The rate of DSP payable to a person is calculated in accordance with s 1064 of the Act taking into account the person’s assets and, where relevant, their income.
12. Where a person receives more than their entitlement to a social security payment, that over-payment is a debt due to the Commonwealth. Section 1223(1) of the Act states:

(1) Subject to this section, if:

(a) a social security payment is made; and
(b) a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.

13. In certain limited circumstances, the recovery of a debt can be waived. Because there is no evidence in this case that the debt or a portion of the debt was solely attributable to an administrative error by the Commonwealth (s 1237A(1)), the only applicable provision that might allow for waiver of the debt is that set out in s 1237AAD, where there are special circumstances:

The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making a false statement or a false representation; or
(ii) failing or omitting to comply with a provision of this Act, the Administration Act or the 1947 Act; and
(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and
(c) it is more appropriate to waive than to write off the debt or part of the debt.

SHOULD THE ASSETS OF THE TRUST BE ATTRIBUTABLE TO MRS HOPKINS?

20 December 1995 to 31 December 2001

14. In respect of the period prior to 1 January 2002, Centrelink has treated Mrs Hopkins as the owner of the properties at Ourimbah, Long Jetty and Lisarow because the legal title of the properties is vested in Mrs Hopkins’ name. The Tribunal notes s 82(1) of the Real Property Act 1900 (NSW) states that subject to some exceptions (that do not appear to be applicable in this case), “the Registrar General shall not record in the Register any notice of trusts whether express, implied or constructive”. The Directions issued by the Registrar General (of the Land and Property Management Authority) also state that for most dealings, the dealing form must not include any reference to a party being a trustee. Thus, Mrs Hopkins is correct in stating that the Registrar General will not register the title to a property in the name of a trust.
15. Mrs Hopkins has produced copies of the first page of the contracts for the purchase of these three properties which, in each case, show Mrs Hopkins as the purchaser on behalf of or as trustee of the Hopkins Children’s Trust. With regard to other relevant documentation, the Tribunal notes the Discharge of a Mortgage document in respect of the Lisarow property refers to Mrs Hopkins as trustee for the Hopkins Children’s Trust.
16. The Tribunal has been provided with very few documents concerning the Trust’s accounts or tax returns. The accounts for the financial years ending 30 June 2001 and 2002 do not list the non-business assets held by the Trust. The accounts for the year ended 30 June 2003 only list the Ourimbah property and not the Long Jetty and Lisarow properties. The tax returns for the Trust for the years 2000/2001, 2001/2002 and 2002/2003 do not mention the properties specifically and the returns for 2001/2002 and 2002/2003 are those that were subsequently amended by the Trust’s new accountant.
17. The Tribunal has also reviewed the bank statements provided by Mrs Hopkins. One Commonwealth Bank account for which statements have been provided for the period 2 July 1999 to 26 February 2002, is in the name of the Hopkins Children’s Trust and shows deposits and payments which appear to be related to the operation of the Trust including payments for insurance, council rates and utilities. It is not possible to identify a specific property to which particular payments may be referable. Another Commonwealth Bank account in Mrs Hopkins’ name appears to have been used to receive payments of rent and make mortgage payments. Statements for this account have been provided for the period from 31 August 2001. Copies of recent statements for this account show that the name of the account was changed to Mrs Hopkins ‘in trust for the Hopkins Children’s Trust’ early in 2009. A Bendigo Bank account opened in about November 2009 is also in the name of Mrs Hopkins ‘in trust for the Hopkins Children’s Trust’ and appears to be used for Trust purposes.
18. The documentation in relation to the title to the properties when considered in conjunction with the other somewhat sparse documentary evidence and Mrs Hopkins’ evidence is sufficient to satisfy me that the properties were purchased for the Trust. Thus, in relation to the period from 20 December 1995 to 31 December 2001, I accept that from the time of their acquisition, the properties were assets of the Trust and not of Mrs Hopkins personally. While legal title to the properties was vested in her, equitable title was vested in the Trust. Thus, the properties should not be included in Mrs Hopkins’ assets for the purpose of the application of the assets test.
19. What is not clear is whether Mrs Hopkins’ derived any personal benefit from the Trust. Certainly clause 9 of the Trust Deed entitles the trustee:

to be reimbursed from the Trust Fund for all expenses incurred or payments made by it in respect of the Trust including interest on any credit accommodation procured by it for the Trust and shall be entitled to be paid and receive commission for acting as Trustee of the Trust at a rate not in excess of the income and corpus commission as charged from time to time by the Permanent Trustee Company of New South Wales.

20. There is no evidence before the Tribunal as to what the relevant entitlement was during the period in question. However, because Mrs Hopkins is not a beneficiary of the Trust, she is not otherwise entitled to receive any assets or income of the Trust, and any attempt to alter the Trust Deed to add herself as a beneficiary and delete the current prohibition on her doing so in clause 16 could be regarded as a breach of trust (see the letter from Gregory H Smith, solicitor, dated 3 February 2005).

1 January 2002 to 2 November 2004

21. The applicability of the amended trust provisions in the Act effective from 1 January 2002 depends on whether the trust satisfies various definitions. Section 1207V provides that a ‘controlled private trust’ in relation to an individual is one where the trust is a ‘designated private trust’ and the individual passes the ‘control test’ or the ‘source test’ set out in ss 1207V(2) or (3) respectively. A trust is a ‘designated private trust’ unless certain conditions set out in s 1207P are satisfied. There is no dispute that the Trust is a designated private trust. In this case, Mrs Hopkins passes the ‘control test’ set out in s 1207V(2) because she is a trustee of the Trust.
22. Section 1207X(2) provides that if, as is the case here, a trust is a controlled private trust and not a concessional primary production trust in relation to the individual, then the individual is an attributable stakeholder of the trust unless the Secretary otherwise determines, and the individual’s asset attribution percentage in relation to the trust is 100% or such lower percentage as the Secretary determines.
23. Part 2 of the 2000 Principles sets out the decision-making principles with which the Secretary must comply in making a determination under s 1207X that a person is not an attributable stakeholder. The relevant circumstances that must be considered include whether the individual can reasonably be expected to exercise effective control in relation to the trust, any contribution the individual has made to the trust relative to the total assets and financial position of the trust, any past benefits or likely future benefits received by the individual from the trust, and any other circumstances affecting the individual’s involvement with the trust.
24. In Mrs Hopkins’ case, under the terms of the deed establishing the Trust, she is the ‘appointor’ of the Trust with power to appoint or remove a trustee, control the trustees’ actions and change the Trust Deed. She is also the sole trustee. Essentially, she has full control over the assets and income of the Trust and is the source of its assets. While Mrs Hopkins is not a beneficiary of the Trust and under the terms of the Trust Deed, subject to clause 9 referred to above, neither the income nor assets of the Trust may be paid to her as a trustee, she has power to change the Trust Deed, appoint new beneficiaries etc.
25. Mrs Hopkins provided a copy of two opinions obtained from solicitors. The first, from Gregory Smith, dated 3 February 2005, referred to above, which contains a two page analysis, states:

Any attempt to alter the Trust Deed by you to add yourself as a beneficiary and delete the ‘prohibition’ currently existing under clause 16 would constitute a breach of trust on your part and action could be taken on behalf of the beneficiaries to seek a declaration that any purported alteration etc was void.

The second opinion, a short letter from Susan Jackson, dated 14 February 2005, contains no analysis, and merely states: “Under Clause 16 of the Trust, the Trustee cannot receive any assets or income under the Trust.”

26. Ms Schuster, for the respondent, noted that neither opinion addresses the extent of the powers of the appointor to appoint or remove a trustee (clause 15), and of the trustee, with the consent of the appointor, to declare a named person or class of persons to be beneficiaries of the Trust (clause 17(b)). While this appears to be correct, Mr Smith’s opinion suggests that any attempt by the trustee to include him or herself as a beneficiary of the trust could, nevertheless, be considered a breach of trust.
27. In Mrs Hopkins’ case, the assets of the Trust include a number of properties and a business, the station café. The income of the Trust comprises rental income from the properties and that generated by the café. With regard to any past or likely future benefits received by Mrs Hopkins from the Trust, the evidence before the Tribunal is not clear. It would appear that while, according to the amended tax returns for the Trust for the financial years 2001/2002 and 2002/2003, Mrs Hopkins did not receive an income from the Trust, she does receive some payments from the Trust. In her submission received on 24 December 2009, she said she does not receive a weekly wage from the Trust business, but she referred to her currently managing financially:

on the small commission for clerical duties allowed by the Trust in section 9 of the Trust Deed, which basically pays my frugal living expenses > petrol, $20 pw, $3.00 3rd Party car insurance, electricity $5 pw, and food $70 pw, phone $15 pw. Anything else eg clothing, car repair is paid for by my children ex their wages.

28. At the hearing, Mrs Hopkins said she has no other source of income. There is no evidence as to the amount of commission she receives from the Trust. The bank statements for the three bank accounts referred to above do not identify the specific properties in respect of which utilities are paid. Essentially, the evidence is very unclear, although the Tribunal accepts that Mrs Hopkins lives frugally.
29. On the basis of the evidence before the Tribunal and in terms of the relevant circumstances set out in the 2000 Principles, the Tribunal is not satisfied that there are sufficient grounds to determine that Mrs Hopkins is not an attributable stakeholder.
30. Having so determined, the Tribunal must also determine the asset attribution percentage to be applied in Mrs Hopkins’ case. In determining whether the specified percentage is lower than 100%, Part 3 of the 2000 Principles must be applied. Relevant circumstances to be taken into account are similar to those set out in Part 2 of the 2000 Principles and include circumstances arising from the legal structure of the trust, whether the individual can reasonably be expected to exercise effective control in relation to the trust, the person’s contribution to the trust, whether the person has received past benefits or may receive future benefits from the trust, and any other relevant circumstances affecting the person’s involvement with the trust.
31. In Mrs Hopkins’ case, as stated above, the evidence is that she controls the Trust which, with exception of the original $20 settlement made by her father in 1982, is comprised of assets acquired through the application of her contributions to the Trust together with loan finance. I asked Mrs Hopkins how she manages to support herself since she is not receiving a DSP and she states that she derives no benefit from the Trust in terms of income and has no other source of income. (She said all the income from the Trust is now paid into a Bendigo Bank account and is used to pay mortgages, rates, insurance and other expenses.)
32. Mrs Hopkins replied that her children give her “handouts”. They “help out” with the electricity bills and other expenses. The third party and registration for her car (an old Volvo she bought for $4,000 in 2005) are not expensive and she lives very frugally. She does not go out or have her “hair done” and buys many of her clothes from charity shops. However, she provided more information in her written submission received on 24 December 2009 and it appears that she does receive what she refers to as a “small commission for clerical duties” from the Trust although, as noted, there is no evidence as to how much this amounts to beyond her setting out the expenses paid from this commission.
33. Ms Schuster noted that the accounts for the Trust for the year ending 30 June 2001 show Mrs Hopkins as having benefited from drawings of $10,070 and for the year ending 30 June 2002 in the amount of $8,271. Mrs Hopkins’ evidence is that her accountant at this time made serious errors in preparing the accounts for the Trust, as a result of which she changed accountants. A later accountant confirmed in correspondence with Centrelink that her previous accountants were in error in this regard and that amended tax returns for the 2002 and 2003 financial years would be lodged with the ATO. These were subsequently lodged under cover of a letter dated 13 February 2005. It is not clear whether an amendment was also lodged in respect of the year ending 30 June 2001.
34. I found Mrs Hopkins’ evidence about the payment of her living expenses unconvincing and, in my view, it seems likely that she has benefited from the Trust, at least indirectly in terms of the support received from her children. Her evidence about receiving a commission from the Trust and payment of her living expenses indicates that the Trust pays probably a significant proportion of those expenses, albeit that these are fairly minimal, and I am not satisfied from the evidence that these are directly related to clerical duties for the Trust as she suggests. Of course, during for the period from July 1995 to November 2004, she was paid a DSP and it is not clear whether she received a benefit from the Trust and if so how much during those years. On the other hand, I accept that the evidence indicates that the major part of the Trust’s income is directed to paying the expenses associated with its assets, for example, the mortgage payments and other outgoings on its properties and the expenses of running the café.
35. In my view, it is not possible to make an accurate assessment of the benefit Mrs Hopkins has personally received from the Trust from the available evidence. I accept Mrs Hopkins’ sincerity in seeking to promote the interests of her children through the Trust, and I am satisfied that the Trust was not established to enable her to avoid the application of the assets test, noting that it was established in 1982 following her divorce and it was not until 1995 that she claimed the DSP. The best I can do is to estimate what might be considered a fair asset attribution percentage in Mrs Hopkins’ case. Having regard to the circumstances of the Trust, Mrs Hopkins’ contribution to its assets and administration of the Trust, and the past benefits she may have received and possible benefits she may receive in the future, I am satisfied that the asset attribution percentage should be lower than 100% and consider it would be fair to attribute 40% of the assets of the Trust to Mrs Hopkins for the period 1 January 2002 to 2 November 2004 (on the basis that 60% is attributable to the four beneficiaries - ie 15% each).
36. Having determined that Mrs Hopkins is an attributable stakeholder and that the asset attribution percentage in her case should be 40%, s 1208E requires that, for the purposes of the Act, Mrs Hopkins’ assets include an amount equal to her asset attribution percentage of the value of the assets owned by the Trust. While there is provision under s 1208E(2) for specified assets of a trust to be excluded from the assets the value of which is attributed to an attributable stakeholder in accordance with the 2001 Principles, in my view these Principles are not relevant in Mrs Hopkins’ case because she is an attributable stakeholder of the Trust and there is no basis for any specified assets to be treated as excluded assets.
37. Thus, I am satisfied on the evidence before me that in respect of the period 1 January 2002 to 2 November 2004, 40% of the assets of the Trust should be attributable to Mrs Hopkins for the purposes of the application of the assets test.
38. The result of the above determinations in respect of the two periods in issue – 20 December 1995 to 31 December 2001, and 1 January 2002 to 2 November 2004 – is that Centrelink will need to reassess Mrs Hopkins’ entitlement to DSP for these periods. This reassessment will result in a reduction of the overpayment she received and therefore of the debt owing for these periods.
39. I note Ms Schuster’s advice that the valuation of the Trust assets used in the calculations is conservative in nature and, further, the calculations are based on a disposal of $21,500, being part of Mrs Hopkins’ inheritance from her father’s estate of $31,500, whereas Mrs Hopkins’ evidence indicates the whole of the $31,500 inheritance was a ‘disposal’ in so far as that sum was entirely dispersed in paying the 10% deposit, stamp duty and legal fees for the purchase of the station café business. Ms Schuster said that a reassessment of the value of the assets under review is likely to lead to an increase in the values attributed to the assets.
40. While the amount of any overpayment and therefore of any debt will need to be re-determined by Centrelink following reassessment of the value of the assets and in accordance with the above determinations, it is likely that the outcome will still result in a debt being raised against Mrs Hopkins, albeit of a lesser amount. Assuming this to be the case, should the debt be recovered?

SHOULD RECOVERY OF THE DEBT BE WAIVED?

41. As stated above, the only applicable provision that could allow for a waiver of the whole or part of the debt in this case is s 1237AAD of the Act. This power may be exercised where the debt did not arise wholly or partly from the debtor or another person knowingly making a false statement or representation or failing or omitting to comply with a provision of the legislation and there are special circumstances other than financial hardship alone that make it desirable to waive the debt and it is more appropriate to waive than to write off the debt or part of the debt.
42. In my view, write-off – the suspension of recovery of a debt – is not appropriate in these circumstances. With regard to waiver, although the Act provides no guidance as to the meaning of "special circumstances", this has been the subject of statutory interpretation by the Federal Court and the Tribunal. A leading case is Beadle v Director-General of Social Security [1984] AATA 176; (1985) 60 ALR 225 (Beadle), a decision of the Full Federal Court. In Beadle, the Court did not think it possible to lay down precise limits or precise rules. It would depend on the circumstances of the particular case as to whether they constituted special circumstances. Moreover, even though the phrase "special circumstances" lacks precision, it "is sufficiently understood in our view not to require judicial gloss" (at 228).
43. In Beadle, the Court affirmed the decision under review in that case, Re Beadle and Director-General of Social Security (1984) 6 ALD 1, in which the Tribunal, whilst acknowledging that the phrase "special circumstances" is "incapable of precise and exhaustive definition", said, nevertheless, that the circumstances "must have a particular quality of unusualness that permits them to be described as special" (at 3).
    
44. In Groth v Secretary, Department of Social Security [1995] FCA 1708; (1995) 40 ALD 541 at 545, Kiefel J, after referring to the Federal Court’s decision in Beadle (supra 1985), observed that special circumstances:

would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary case... it would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

45. I accept that Mrs Hopkins is living very frugally. She said she has never received any benefit from the Trust. “I have no money to pay this large debt of $84,000 and I survive on the charity of my children”. However, her further submissions received on 24 December 2009 indicate that, in terms of day to day living expenses, she draws a commission from the Trust which she uses to pay certain living expenses, and other expenses are paid for by her children. Essentially, she appears to be coping financially.
46. Mrs Hopkins said, and I accept, that the Trust was not set up with the intention of enabling her to obtain some advantage in terms of social security payments. The Trust was set up in February 1982 and she did not claim a DSP until 1995. Moreover, none of her children have ever been “on the dole” and income from the Trust was used to support her youngest daughter’s education between 1998 and 2004 thereby avoiding her claiming Austudy for those years.
47. Mrs Hopkins said she has been caught out by circumstances beyond her control. The mistakes made in respect of the financial accounts in recent years are those of her accountant at the time. These came about in part because of additional workload generated by the introduction of the Goods and Services Tax (GST), and have now been corrected by her new accountant.
48. Mrs Hopkins also noted that she was never made aware of the provisions of the Act stating that any excess curtilage (that is any land exceeding two hectares adjoining the person’s principal residence) is required to be assessed as part of a person’s assets. Had the value of the excess curtilage of her home not been included in her assets in late 1995, her assessable assets would not have reached the applicable threshold after which a person’s entitlement to a pension begins to be reduced.
49. Mrs Hopkins contended that the overpayment should only commence from 1 April 2002 when “the amnesty” for those relinquishing control of trusts ended, because she was not made aware of the amnesty. Ms Schuster noted that this was not an amnesty in the usual sense. Rather, it was described in Centrelink documentation published in November 2001 as a “window of opportunity”. This coincided with the new provisions affecting trusts taking effect on 1 January 2002, enabling persons who were the controllers of trusts to relinquish control of the trust without being subject to the usual five-year period applying to a deprivation of assets. Such a period would otherwise apply to a person relinquishing control of the assets of a trust. The “amnesty”, which was originally to end on 1 January 2002, was subsequently extended until 31 March 2002.
50. Ms Schuster noted that there is no evidence that Mrs Hopkins has ever sought to relinquish control of the Trust. She remains the driving force behind the Trust and there is little to distinguish her personal interests from those of the Trust.
51. As I have said, I recognise Mrs Hopkins’ sincerity and that her object with the Trust has not been to gain an advantage for herself in terms of accessing social security benefits. Clearly, her object has been to advance the material wellbeing of her children. I also accept that at the relevant times she did not understand how the provisions of the Act were applied to the assets and income of trusts. Nevertheless, the result of her contributing all her inheritance from her father’s estate – the property at John’s River and the distribution of $31,500 - to the Trust has been to deprive herself of assets that she could have used and have been used by the Trust as an investment to generate capital gains and income.
52. While it was necessary to borrow significant sums of money to achieve these ends, and there are still substantial sums owing on the mortgages used to fund the purchases, the net result was that over a period of nine years (20 December 1995 to 2 November 2004), there was a significant increase in the value of the assets.
53. While Mrs Hopkins’s evidence is that she is financially straitened, she states that she is drawing a commission from the Trust and being provided with additional support by her children who are the beneficiaries of the Trust. With regard to the other matters raised by Mrs Hopkins, referred to above, in my view these do not amount to circumstances that are sufficiently special within the meaning ascribed to that word in previous decisions of the Federal Court and Tribunal to warrant waiver of the whole or a part of the debt. Thus, on the basis of the evidence before me, I am not satisfied that the debt should be waived.

DECISION

54. The decision under review is set aside and remitted to the Respondent to reassess Mrs Hopkins’ entitlement to a disability support pension for the period 20 December 1995 to 2 November 2004 on the following basis:

(a) that for the period 20 December 1995 to 31 December 2001, the properties at Ourimbah, Long Jetty and Lisarow were, at the relevant times, the assets of the Hopkins Children’s Trust; and

(b) that for the period 1 January 2002 to 2 November 2004, Mrs Hopkins was an attributable stakeholder of the Trust, and 40% of the assets of the Trust should be attributed to her for the purpose of the application of the assets test.

I certify that the 54 preceding paragraphs are a true copy of the reasons for the decision herein of Mr R P Handley, Deputy President.

Signed: ...........[sgd]................................................................

Associate

Dates of Hearing: 12 October and 17 December 2009

Date of Decision: 27 January 2010

Applicant representative: Self-represented

Respondent representative: Ms H Schuster, Centrelink Legal Services