Theo and Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2010] AATA 669 (3 September 2010)

Last Updated: 6 September 2010

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 669

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/1465

GENERAL ADMINISTRATIVE DIVISION		)
	Re		SOL THEO

Applicant

And

SECRETARY, DEPARTMENT OF FAMILIES, HOUSING, COMMUNITY SERVICES AND INDIGENOUS AFFAIRS

Respondent

DECISION

Tribunal

Senior Member Bernard J McCabe

Date 3 September 2010

Place Brisbane

Decision

The applicant is refused leave to proceed on a fresh application pursuant to s 42B of the Administrative Appeals Tribunal Act 1975.

........................[Sgd]......................
Senior Member

CATCHWORDS

SOCIAL SECURITY – age pension – leave required for fresh application – marital status – affairs of family trust – appointment of son as trustee – trust deed allowed applicant to appoint new trustee – means test – controlled private trusts – leave refused.

Administrative Appeals Tribunal Act 1975 (Cth), ss 2A, 42B

Duties Act 2001 (Qld), s 117

Social Security (Administration) Act 1999 (Cth), s 37

Social Security Act 1991 (Cth), ss 1207C, 1207P, 1207V, 1207X

Theo v Secretary, Department of Families, Community Services, Indigenous Affairs [2007] FCAFC 72

REASONS FOR DECISION

3 September 2010

Senior Member Bernard J McCabe

1. Mr Solon (Sol) Theo applied for the age pension on 22 December 2009. The application was rejected because the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (“the Secretary”) was not satisfied Mr Theo was qualified to receive the pension. Mr Theo has now asked the Tribunal to reconsider the matter.
2. Mr Theo has been involved in a long-running dispute with the Secretary over his entitlement to various social security benefits. In recent times, he has only made claims in respect of the age pension. He requires leave from the Tribunal before he can bring a fresh application pursuant to s 42B of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”). The direction imposing the leave requirement was made on 1 August 2007. It is expressed in broad terms. The Secretary says leave should be refused in this case.
3. Given the parties were both ready to participate in a full hearing, I proceeded to take evidence and hear submissions on the substance of the case before expressing a concluded view on the question of leave. As it happens, I would have affirmed the decision under the review if leave to proceed were granted. In those circumstances, Mr Theo should not have leave to proceed.

THE LEGISLATION

4. The Secretary is obliged to grant a claim for a social security payment if the Secretary is satisfied the claimant is qualified to receive the payment and the payment is payable: s 37, Social Security (Administration) Act 1999 (“the Administration Act”). The Secretary must have regard to a number of matters when determining whether a claimant is qualified. Amongst other things, the Secretary must consider the value of the claimant’s income and assets, including the value of any income or assets that might be attributed to him by operation of law.
5. The Secretary may seek information from the claimant to assist in the decision-making process. If the Secretary does not receive information that would enable the Secretary to be satisfied that a claimant is qualified, the application for the payment must be rejected.
6. In this case, the Secretary sought information about the applicant’s marital status and the affairs of the Solon Theo Family Trust before making a decision. The applicant has refused to supply much of the information, although he suggests Centrelink is already aware of some matters as a result of earlier interactions. The Secretary was not satisfied and rejected the claim. At the hearing, Mr Theo answered some questions about his relationship status but insisted he was unable to provide detailed information about the affairs of the Solon Theo Family Trust as he was no longer a trustee and did not take an interest in its affairs. He referred me to a number of documents in support of his claim that he had ceased to play a substantive role in the trust, including:
   • a statutory declaration dated 14 December 2001 (exhibit one, p 82);
   • a more detailed statutory declaration dated 27 June 2002 (exhibit three, p 242);
   • an affidavit dated 25 March 2003 (exhibit three, p 244); and
   • a Centrelink form titled “Declaration – No long involved” dated sometime in May 2002 (exhibit three, p 243).
7. Mr Theo says those documents all confirm he relinquished the trustee’s role some time ago. Apparently his son has been appointed to replace him. Mr Theo says some of the certificates of title to properties held in trust still bear his name but that is an anomaly of the conveyancing process. He says his only involvement with the trust these days is to provide assistance of an “administrative” or “honorary” kind at the request of his son. He says he does not understand why the Secretary cannot accept he is no longer involved with the trust in anything other than an “honorary capacity”.
8. The Secretary accepts Mr Theo is not a beneficiary under the trust. Mr Hamilton, for the Secretary, pointed out the Tribunal has not been provided with a copy of the document appointing Mr Theo’s son as the trustee. But the appointment is not seriously contested and can be accepted for present purposes. The obstacle for Mr Theo lies in clause 8 of the trust deed. That provision says Mr Theo is free to resign as trustee and appoint someone else in his place. But the clause also allows Mr Theo to replace any trustee whom he appointed. He can even re-appoint himself to the role, if he is minded to do so. Mr Theo says his affidavit of 25 March 2003 contains an undertaking that he will not exercise that power of appointment. The Secretary says the undertaking has no value. The proper course, according to Mr Hamilton, was to formally amend the trust deed to put the question beyond doubt. Mr Theo refuses to do so because he says he is worried about the stamp duty implications.
9. The fact that Mr Theo retains the formal right to be appointed trustee is a problem because of the operation of Part 3.18 of the Social Security Act 1991 (“the Act”). Part 3.18 deals with the application of the means test in relation to controlled private trusts. The Full Federal Court explained the operation and impact of Part 3.18 in the course of its decision in Theo v Secretary, Department of Families, Community Services, Indigenous Affairs [2007] FCAFC 72. In that case, the Court concluded the Solon Theo Family Trust was a controlled private trust within the meaning of s1207P in relation to Mr Theo because Mr Theo satisfied the control test in s 1207V as:
   • he was still a trustee (s 1207V(2)(a)), or
   • Mr Theo’s son – who is an “associate” within the meaning of s 1207C of the Act – had become the trustee (s 1207V(2)(a)), or
   • Mr Theo or his son retained the power to vary the deed and appoint a new trustee (s 1207V(2)(b) and (c)).

The Court went on to conclude Mr Theo was therefore an “attributable stakeholder” in relation to the trust within the meaning of s 1207X. That meant 100% of the value of the assets of the trust were attributed to him unless it was decided that a different percentage should be attributed. The fact he did not formally own the properties or have any legal or equitable interest in the assets of the trust was irrelevant. The legislation caught him in any event.

10. I have no reason to reach a different view from that taken by the Full Federal Court in its decision in Theo. Mr Theo retains the power to appoint a new trustee, and his son, the current trustee, is an associate.
11. There is a question over whether less than 100% of the value of the assets held by the trust should be attributed to Mr Theo pursuant to s 1207X(1)(b)(ii). He talked about his activities in relation to the trust in the course of his oral evidence. He spoke about performing “administrative” tasks at the request of his son. He has spoken in the documents of acting in an “honorary capacity”. Although he gave some examples of activities that he might undertake at the request of the trustee, I was left in some doubt about the true nature of his role. In those circumstances, I do not think I am justified in attributing less than 100% of the value of the assets of the controlled private trust to Mr Theo.
12. The question is moot in any case because I do not know the value of the assets held on trust. Mr Theo has not provided that information and he says he is unwilling or perhaps unable to obtain it. I am told the trust owns a number of properties, but I have not been provided with an analysis of their value or any income they might generate. Even if I were to conclude that less than 100% of the value of those assets and the income should be attributed to him, I do not know what those figures are. Given the state of the evidence, I am unable to be satisfied that Mr Theo is qualified to receive the pension, or that the pension is payable at a particular rate. In those circumstances, I would affirm the decision under review were I to give the applicant leave to proceed before the Tribunal.
13. Mr Theo made a further argument at the hearing. I should mention it briefly. He says the federal government collected monies from taxpayers through the tax system over many years. Those monies were explicitly described as Social Services Contributions prior to 1965. He says anyone who paid those contributions was entitled to receive a pension on retirement without regard to an assets or income test. On this argument, the provisions of the social security legislation that imposed an assets test are invalid.
14. This argument has been considered and rejected by the Tribunal and the courts on a number of occasions: see, for example, Theo at [31]-[33]. I do not think I can usefully add anything to that discussion.

CONCLUSION

15. Given I would have affirmed the decision under review if I had given leave to proceed, it is appropriate to deny leave under the terms of the Tribunal’s direction of 1 August 2007 (as amended).
    

I certify that the 15 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

Signed: .......................[Sgd]....................................................

Patrick MacDonald

Date of Hearing 16 August 2010

Date of Decision 3 September 2010

Applicant Unrepresented

Advocate for the Respondent Mr R Hamilton, Centrelink Advocacy Branch