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An appeal against a decision of the Benefits Review Committee [2014] NZSSAA 15 (18 March 2014)

Last Updated: 28 July 2014

[2014] NZSSAA 15

Reference No. SSA 128/13

IN THE MATTER of the Social Security Act 1964

AND

IN THE MATTER of an appeal by xxxx of xxxx against a decision of a Benefits Review Committee

BEFORE THE SOCIAL SECURITY APPEAL AUTHORITY

Ms M Wallace - Chairperson
Mr K Williams - Member
Mrs T Moxon - Member

HEARING at Wellington on 12 February 2014

APPEARANCES

xxxx – Advocate for the appellant
Mr D Williment for the Chief Executive of the Ministry of Social Development

DECISION

Introduction

[1] The appellant appeals against a decision of the Chief Executive upheld by a Benefits Review Committee to assess the appellant as not being financially eligible for Residential Care Subsidy as at 4 June 2013.

[2] The assessment carried out included the value of the appellant’s wife’s half share in a holiday home.

[3] It is argued on behalf of the appellant that the half share in the property should be subject to a Constructive Trust in favour of his daughter, xxxx.

Background

[4] The appellant is aged 89 years. His wife (xxxx) is aged 85 years. xxxx cared for her husband at home for a number of years until she herself became unwell and it became impractical for her to continue to do so. He then took up residence in a rest home. His wife remains in the family home.

[5] xxxx entered long term residential care on 10 December 2012. On 13 February 2013 an application for a financial means assessment for Residential Care Subsidy was made.

[6] The appellant’s wife owns a half share of a beach house. The value of this half share was included in the assessment. It is the inclusion of this asset in the assessment of the assets for the purposes of the Financial Means Assessment which is the central issue in this appeal.

[7] The appellant’s wife and her sister originally inherited a beach house from their mother. The house has been owned by xxxx family since 1938. In 1999 xxxx sister’s share in the property was transferred to xxxx (xxxx), the daughter of the appellant and his wife. xxxx who represented the appellant at the hearing explained that the house was in need of repair and her aunt could not afford the repairs. xxxx therefore decided to buy out her aunt’s share. One of the first repairs undertaken was to repair the roof. She understood her mother had agreed to pay for half the cost of $4,347.81 however when the time came for her mother to reimburse her for the cost she contributed only $800.

[8] The house is used by members of the wider family who pay a contribution when they use the property. Originally these contributions covered the overheads but in more recent times they have not done so. In particular xxxx said that because the value of the land on which the bach is situated has significantly increased, the rates have gone up. xxxx said that in addition to putting a new roof on the property she and her husband have built a deck, renovated a bathroom, painted and generally maintained the property. She produced lists of expenses incurred.

[9] Originally xxxx managed the bookings and the payment of outgoings from the contributions account but since she had a stroke in 2012 responsibility has passed to xxxx. xxxx said her mother cannot afford to share the costs of maintenance or outgoings not covered by the family contributions and she (xxxx) has taken responsibility for the management of the bookings.

[10] xxxx said that when she first acquired a share in the property she and her husband continued to pay a contribution for the periods they used it but no longer do so in view of the fact that they have taken responsibility for payment of the insurance and the maintenance without contribution from xxxx. xxxx said that there have been no conversations between herself and her mother about sharing the outgoings not covered by the contributions. Her mother is simply embarrassed that she is not able to pay them. She said that there was no arrangement between herself and her mother that her additional contributions would result in her having a greater interest in the property while her mother is alive, however xxxx said that on her mother’s death she will receive a share of her mother’s interest in the property.

[11] xxxx explained that her parents’ cash reserves have now been depleted by paying for xxxx rest home fees and her mother therefore has no maintenance fund either for the home she lives in or the holiday home.

[12] As a result of the Ministry’s decision to include the half share of the holiday home in its Financial Means Assessment, xxxx has had to become responsible for payment of the shortfall in her father’s rest home fees in effect to preserve the property. xxxx points out that her father does not in fact own a share of the holiday home and her mother could not readily sell her half share.

[13] On behalf of the appellant xxxx submitted that the contributions she has made to the property over and above her half share should be quantified and it should be considered that a Constructive Trust exists for her benefit to reflect her additional contributions to the holiday home and to reflect xxxx intention that xxxx succeed to a further share of the property on her death.

[14] On behalf of the Chief Executive it was submitted that a reasonable person in the circumstances of xxxx would not expect an increased interest in the holiday home in the absence of any agreement and lack of measurable contributions. The principles involved in establishing a Constructive Trust cannot be made out. In addition it is submitted that the contributions made by xxxx to the holiday home should not be recognised as a liability or debt. There is no genuine debt or liability.

Decision

[15] The definition of “assets” in Part 2(4) of Schedule 27 of the Social Security Act 1964 provides that “assets” in relation to the person being means assessed means “the assets of the person and his or her spouse or partner that are capable of being realised by the person or his or her spouse or partner ....” In short the assets of a spouse must be included in the assessment. It is for that reason that any asset owned by xxxx capable of being realised must be included in the Financial Means Assessment. A half share in a house is an asset capable of being realised.

Constructive Trust

[16] We record at the outset the Authority does not have the powers of a court to impose a Constructive Trust. A person seeking to claim a Constructive Trust ought to establish their claim in a court where all the parties affected by such a claim would have an opportunity to be heard. The best the Authority can do in circumstances such as this is consider whether a court might impose a Constructive Trust.

[17] The circumstances in which a Constructive Trust have been found to exist have been considered by the Court of Appeal in New Zealand on a number of occasions. Factors which have been held to be relevant to the issue of whether or not a Constructive Trust should be found to exist include:

• (a) The degree of sacrifice by the claimant.[1]
• (b) The value of measurable contributions.1 & [2]
• (c) Any arrangements made by the parties themselves.2

(d) Whether or not the person claiming the benefit of the Constructive Trust had a reasonable expectation of an interest in a particular property.2
(e) Whether the person against whom the claim is made should reasonably expect to yield the claimant an interest.2

[18] xxxx as the appellant’s representative has provided lists of contributions she says have been made by herself and her husband from 1999 to 2009 to the property. They total $51,276 of which $24,956.81 is said to relate to repairs and maintenance. Divided over a 13 year period this amounts to less than $2,000 per annum. Mrs xxxx share of this cost would have been half.
[19] Detailed handwritten lists of how these amounts have been calculated have been provided. It is a noticeable feature of the lists that they include items such as pillows, duvets, microwave, kettle, cushions, keys, linen and kitchen equipment. These are chattels relating to the property. These items will have had no impact on the value of the holiday home or its preservation and in fact presumably remain the property of xxxx and her husband. It seems reasonable to infer that they have enhanced xxxx enjoyment of the property.

[20] The calculation also includes payment of rates ($6,500) however at the hearing before us the appellant acknowledged that the rates were paid from the contributions account operated by her mother until 2007. The solicitor’s submissions filed stated that the contributions accounts were used to pay the rates, electricity and phone. We are not satisfied that xxxx and her husband paid the full amount of the rates claimed. The list also includes an allowance for the insurance premiums. Whether the amount claimed is for a half share or a full share is not clear.

[21] An allowance for labour of 30 hours per annum ($7,800) has also been claimed. That does not appear to be an out of the ordinary contribution to the maintenance of an older house by a part owner.

[22] We accept that xxxx and her husband have had to take responsibility for the house but given the use by them of the property, any degree of sacrifice beyond xxxx obligation as a part owner appears to have been modest.

[23] The appellant submitted that her contributions to the property were recognised by her mother leaving her a further share of the property in her will. xxxx has left her half share of the property to xxxx and her brother in equal shares. There is no suggestion that xxxx brother has made any contribution to the holiday home apart for an amount of $800 – contributed to the roof repairs. Indeed we understand he lives overseas. The appellant did not claim that there was an agreement that a half share was to be left to her because of her mother’s inability to pay her share of the outgoings. Presumably for many years prior to purchasing her aunt’s share in the property xxxx and her family enjoyed the use of the property for the modest contributions to the outgoings she has referred to.

[24] We did not hear from xxxx as to what her contribution to the property has been since the appellant became a half owner of the property however it is apparent that she was the person responsible for managing the letting of the property and paying some of the bills from the letting fees. The contribution of xxxx and her husband has been to pay the insurance, to organise any pay for maintenance and particularly for the replacement of the roof and the construction of a deck. Clearly their efforts have enabled them to enjoy the property and their efforts have resulted in the improvement and preservation of the property. However in general these contributions do not show a significant degree of sacrifice and we do not consider that xxxx could have had a reasonable expectation of an additional interest in the property beyond her half share arising from her contribution. The advantage for Mr and Mrs xxxx is that in a sense they have the use of xxxx capital to secure the use of a holiday home for themselves and their family.

[25] There was no evidence of any arrangement between Mrs xxxx and Mrs xxxx that Mrs xxxx would be recompensed by way of ownership in a share of her mother’s interest in lieu of paying for various costs.

[26] We are not satisfied on the basis of the evidence available that a court would find that xxxx holds any portion of her share of the holiday home in a Constructive Trust for xxxx

Recognition of Debt

[27] On behalf of the Chief Executive it is submitted that genuine debt can be deducted from assets for the purposes of a Financial Means Assessment. A genuine debt will generally be one that is owed to an independent third party. A genuine debt will generally be provable, sufficiently evidenced and genuinely recoverable. On behalf of the Chief Executive it is submitted that demand for payment has not occurred and no action has been taken to recover any debt or is planned.

[28] After discovering that xxxx was not going to contribute to half the cost of the roofing work once it was done the appellant and her husband continued to pay for maintenance of the property and have not requested reimbursement. The major work was carried out in 2000, 2001 and 2005. We would expect the Limitation Act to prevent demand now being made from xxxx for a half share of any costs prior to 2008. xxxx conceded that there has been no real discussion between herself and her mother about the fact that her mother is unable to pay for half the costs associated with the property, which suggests that there was never any real expectation that any amounts that Mr and Mrs xxxx paid in excess of their half share of the costs were not viewed by either party as debts to be recovered. We are not satisfied that there is any genuine debt owed by Mrs xxxx to Mr and Mrs xxxx.

[29] We accept that this is not an easy situation for Mrs xxxx. She is now obliged to pay for her father’s rest home fees to preserve her mother’s half share in the family holiday home. The alternative is to sell the property and that is not an easy decision.

[30] Had careful accounts been kept of the actual payments made and there been a clear expectation that one owner would reimburse the other we would have been satisfied that there was a debt. Rather Mrs xxxx sees herself as the guardian of the family holiday home. She expects that she and her family will be able to continue to use and enjoy it into the future. Her maintenance of the property is best seen in that way.

Valuation

[31] At the hearing of this matter xxxx produced a new valuation for the property. The valuation is of a fractional share which makes allowance for the fact that if Mrs xxxx half share in the property were to be sold the value may well be something different from the value if the whole property was sold. No submissions were made on behalf of the Ministry as to whether or not the fractional valuation was correct. The approach does not seem unreasonable. Previously the method of valuation was simply to look at a traditional market based value on the property and divide it by two. We accept that the fractional valuation more accurately reflects the value of a half interest in the property and is the value that should be used in any future application.

Summary

[32] In summary we accept that the Chief Executive was correct to include the value of xxxx half share in the holiday home in the assessment of the appellant’s Financial Means Assessment. Ideally that should have been a fractional valuation rather than a simple half value but on this occasion xxxx would still have been assessed as having excess assets.

[33] The appeal is dismissed.

DATED at WELLINGTON this 18th day of March 2014

______________________________
Ms M Wallace
Chairperson

______________________________
Mr K Williams
Member

______________________________
Mrs T Moxon
Member

SSA128-13.doc(jeh)

[1] Gillies v Keogh [1989] NZCA 168; [1989] 2 NZLR 327
[2] Lankow v Rose [1995] 1 NZLR 277