Editors --- "Rent assistance: ineligible homeowner" [2010] SocSecRpr 40; (2010) 12(3) Social Security Reporter, Article 6

• SECRETARY TO THE DFHCSIA and IVA
• Background
• Issue
• Discussion
• Formal decision

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Rent assistance: ineligible homeowner

SECRETARY TO THE DFHCSIA and IVA

(2010/466)

Decided: 8th June 2010 by P.E.Hack

Background

Iva had been in receipt of family tax benefit, which included an amount for rent assistance, between April 2007 and October 2009. Rent assistance is only payable if the recipient is not an ‘ineligible homeowner’.

In September 2005, Iva’s husband agreed to become a joint borrower with his parents to assist them in obtaining a mortgage to purchase property at Eagleby. Although he was a joint borrower, Iva’s husband did not contribute any monies towards the purchase of the real property, and never made any payments towards the mortgage. Upon the purchase of the property, unbeknownst to Iva’s husband, he became the registered proprietor of a 1/10^th interest as a tenant in common in the real property. His father held a 4/5^th interest in the property and his mother held the remaining 1/10^th interest in the property.

In around April 2006, Iva and her husband commenced residing at the real property as tenants, together with two others. From August 2008, Iva and her husband had been the sole tenants of the property, and had paid rent of $360 per week. It was accepted that this was fair market rent for the property.

In late 2009, Centrelink determined that Iva had been overpaid rent assistance, as Iva’s husband had an interest in the real property for which Iva had been receiving rent assistance. Centrelink raised a debt of $8,578.62. Iva appealed the decision and, in March 2010, the SSAT set aside the decision. The Secretary applied to the AAT for a review of the SSAT’s decision.

On 23 April 2010, Iva’s husband transferred his 1/10^th interest in the real property to his father for no consideration.

Issue

The issue for determination by the AAT was whether Iva was an ‘ineligible homeowner’ as defined in section 11 of the Social Security Act 1991 (the Act).

Discussion

The AAT accepted that, at all material times, Iva’s husband had a legal interest in the real property. However, the AAT found that Iva’s husband held his legal interest on a resulting trust for his co-owners, they being the persons who provided the purchase price, the loan repayments and all the outgoings on the residence.

The AAT further found that Iva’s husband’s 1/10th interest in the real property did not give him and Iva security of tenure in relation to the property. The AAT observed that a 1/10th interest could not overcome the interests of the co-owners were they to seek to resume occupation of the property. The AAT also observed that, as the interest was held on a resulting trust, Iva’s husband would not benefit from the appointment of a trustee for the sale of the property.

The AAT concluded that Iva and her husband’s security of tenure in relation to the property arose from their tenancy agreement and not his 1/10^th legal interest in the property. The AAT was satisfied that a genuine landlord and tenant relationship existed, and that the circumstances of this case were distinguishable from the circumstances in Secretary, Department of Employment and Workplace Relations v Vanderpluym [2007] FCA 876; 161 FCR 388 (where the landlord was a company of which Vanderpluym was the sole director and shareholder).

The AAT therefore found that Iva was not an ‘ineligible homeowner’.

Formal decision

The AAT affirmed the decision of the SSAT.

[S.O.]