The Case of Bisset & Rounds is a very interesting case where the Judge had to determine, did Ms Rounds commit centrelink fraud or a fraudulent representation to the Court? The Case serves as a warning for parties who are defrauding Centrelink or the ATO in respect of their income and assets.
The result was that the Court refused to accept the submission that Ms Round’s property was held on trust for her Mother and it was included in the pool available for distribution.
Read on to find the relevance of assertions made by Ms Rounds to Centrelink and the ATO, to the Court’s decision.
Bisset & Rounds  FCCA 459
In Bisset & Rounds, one of the main issues in dispute between the parties was whether property B should be included in the property pool. Mr Bisset alleged it should be included in the pool whilst Ms Rounds alleged it was held on trust for her Mother.
The parties were 54 at the time of the trial, having been in a de facto relationship for 14 years.
The property pool at the time of the Trial was one of the central issues in dispute, namely in relation to Property B. The issue in relation to property B was that this property was purchased after separation, in the name of Ms Rounds with the assistance of $50,000 received from her Mother (with a total deposit of $80,000 being received by Ms Rounds from her mother into her account). Additional funds were contributed by Ms Rounds mother to her account thereafter of $16,000.
It was argued by Mr Bisset that this property should be included in the pool.
It was argued by Ms Rounds, that this property was being held on trust for her Mother as were all the funds that were in Ms Rounds bank account and that that account was operated by her Mother and held for the benefit of her Mother.
The arrangement alleged by Ms Rounds was that property B was purchased in Ms Rounds name with a mortgage secured over it but that Ms Rounds Mother was always intended to be the beneficial owner of that property and that Ms Rounds Mother would live in that property and contribute towards the mortgage repayments and all outlays for the property.
The evidence at Trial supported that Ms Rounds was responsible for the mortgage secured over the property but that her mother made ‘rental repayments’ which were less than the mortgage and Ms Rounds mother covered all outgoings for the property. Ms Rounds declared the property as hers on her tax returns and in doing so obtained a negative gearing advantage in respect of her income.
Evidence produced at Trial by Ms Rounds, as to why she needed to buy the property in her name and not her mother’s was inconclusive. Despite her saying she held property B on trust for her Mother, she gave evidence that there was no trust arrangement in place and there was no evidence of the existence of a trust on her financial statement.
Evidence produced at Trial by Ms Round’s Mother was that she was unable to purchase a home in her sole name, as the lending institutions would not take her on, due to her age and income. Documentary evidence from Centrelink revealed that Ms Round’s Mother was receiving a pension and rent assistance on the basis that she held less than $3,000 in various bank accounts. There was no evidence to support a conclusion that Ms Rounds Mother had declared to Centrelink that she is the beneficial owner of property B or of the funds held in her daughter’s bank account.
There was no evidence produced by Ms Rounds as to why she did not advise Centrelink that she held a beneficial interest in the property, she she did not advice centrelink she had dispersed $80,000 to her daughter to purchase the property, why she declared $230 per week payments as rental when she was the beneficial owner of the property, why centrelink records showed that she did not own a home, shares her accommodation with the owner of the home and pays board of $200 per week and why the position she presented to centrelink, the bank and the ATO was completely at odds with the position that she and M Rounds presented to the Court.
The Court did not accept the submission that the property held in Ms Rounds name was held on trust for her mother and expressed concerns about Ms Rounds and her mother colluding to arrange her finances in a manner to as to provide her with the best possible centrelink benefit.
His Honour went on to say:
“The respondent in the course of cross examination clearly stated that the concept that the property was held on trust by her for her mother was “a term which my lawyer suggested.” Any concept in the Respondent’s mind that the property was held on trust appears to be something that was formulated in the course of these proceedings.”
There has been a course of conduct undertaken by the respondent and her mother in respect of her interactions with amongst other things, Bank A bank, the Australian Taxation office and Centrelink, that is consistent with teh view that the Respondent is in fact the owner of Property B and the Bank A bank account.”
If I am wrong on this, then there are grave concerns that the Respondent and her mother have colluded in providing wrong information to Bank A bank, the Australian Tax Office and Centrelink.”
The Court therefore preferred the position that Ms Rounds was the owner of property B, having been gifted a significant sum by her mother and in return the mother was able to occupy the property for nominal rent together with payment of the outgoings.
The contributions of the parties were said to significantly favour of Mr Bisset and the Court determined that the contributions were assessed at 73% to Mr Bisset and 27% to Ms Rounds.
An adjustment of 10% was made in favour of Ms Rounds due her lower income earning capacity.
The overall adjustment was 63% to Mr Bisset and 37% to Ms Rounds.
Given that property B said to be held ‘on trust’ for Ms Round’s Mother, was included in the property pool, having regard to the assets sought to be retained by each party, in order to achieve the above division, a cash payment of $156,000 was required to be made by Ms Rounds to Mr Bisset.
Courtney’s Cases: What can we learn?
It is very important to make full disclosure Centrelink, the ATO and all other entities you associate with in respect of the ownership of your assets and when you enter a de facto relationship with another person.
Failure to do so could result in the Court making a report to Centrelink and the ATO about your conduct which may result in a significant liability being incurred by you. It could also mean that negative inferences are made by a Court about the ownership of assets or the nature of your relationship, which could have a significant negative impact on your property settlement entitlements.
If you have separated and need advice in relation to the division of property between you and your ex partner, and the impact of any declarations you have made to Centrelink, our family law expert Courtney Barton can help you.
Contact us on 3465 9332 to book a reduced rate consultation with one of our family law experts to have a confidential discussion about your individual circumstances.