Evidence before the Department
- Unsecured Loan Agreement dated 5 December 2011 between the applicants and their son, Simon Offord, acknowledging the loan of $196,350 and Simon’s obligation to provide security for the loan at any time as requested.
- Title deed for the property situated at 61 Kiabora Drive, Widgee, showing the full ownership by Simon Offord registered on 21 February 2013, with a mortgage to the Commonwealth Bank of Australia noted on the title.
- Market appraisal for the property dated 19 February 2015 appraising the value of the property as $200,000.
- Title deed for the property situated at 61 Kiabora Drive, Widgee, showing 9/10 ownership by the applicants registered on 9 June 2015, with a mortgage to the Commonwealth Bank of Australia noted on the title.
- Deed of Acknowledgment of Loan and Loan Agreement between the applicants and Simon Offord dated 24 November 2015 acknowledging that on or about 5 December 2011, the applicants lent Simon Offord $196,350 to be used for the purchase of the property at 61 Kiabora Drive and the applicants’ claim by way of equitable tracing in the Kiabora property as a legally enforceable right to protect the loan of $196,350 to Simon Offord acknowledging that he was ready, willing and able to execute a Bill Mortgage over the Kiabora property in favour of the applicants in order to more fully secure the loan and agreeing that the loan was to be repaid on sale of the property.
New Evidence before the Tribunal
- Registered valuation dated 1 November 2015 valuing the property at $275,000.
- Registered valuation dated 19 November 2018 valuing the property at $300,000.
- Letter from the Commonwealth Bank dated 13 November 2018 confirming the balance outstanding on the loan associated with the mortgage encumbering the property as $132,376.28 as at 12 November 2018.
- Commonwealth Bank Account statement for the loan associated with the mortgage encumbering the property showing an opening balance of $159,200 as at 1 July 2015 and a closing balance of $74,677.26 as at 31 December 2015.
- When the applicants arrived in Australia they had a net asset position of GBP250,000 (approximately $400,000 AUD). In 2011, they loaned their son money so that he could buy the property. They themselves, however, have always lived in the property and it was considered their property irrespective of the title deed. In June 2015, 90% of the property was transferred to them on the title deed. At all times, the arrangement was that Simon Offord was responsible for the repayments commensurate with the money that they had loaned him for the property to be (initially) held in his and his partner’s name and then to be transferred to them.
- Simon Offord has at all times been responsible for the repayments and able to service the mortgage. Further, Simon Offord has been in a position to repay the entirety of the loan if required on demand.
It is clear that the applicants have always been the intended owners of the property and that the loan arrangement with Simon Offord was an interim arrangement made to assist him in securing his own property. The delegate did not accept the loan to Simon Offord as an asset of the applicants on the basis that it was an unsecured loan. However, an unsecured loan is not excluded from consideration as an asset by the Regulations. As submitted, the Macquarie Dictionary definition of ‘asset’ includes an economic resource. The loan agreement entered on 5 December 2011 between the applicants and Simon Offord enables the applicants to require security for the loan, failing which the whole of the loan is to be repaid. The Tribunal considers that the loan, as evidenced by the agreement, is properly considered an economic resource, and is an asset in the amount of $196,350 of the applicants as at 30 November 2014.
The evidence shows that the legal interests of the applicants changed on 9 June 2015 when they became registered owners (as to a 90% share) of the property. The value of the property at that time was $200,000 (and later was valued at $275,000 on 1 November 2015) and therefore a 90% share is therefore quantified as $180,000 as at 9 June 2015 and $247,500 as at 1 November 2015). While the property was encumbered by a mortgage of $159,200 as at 9 June 2015, $160,200 as at 1 November 2015 and $160,200 as at 29 November 2015, the Tribunal is satisfied that the mortgage from time to time can be offset by the asset in the form of a loan to Simon Offord equivalent to the outstanding mortgage.