Charles and Department of Family and Community Services

[2000] AATA 713

DECISION AND REASONS FOR DECISION [2000] AATA 713

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No   N1998/628

GENERAL ADMINISTRATIVE  DIVISION       )       
           Re      JOHN WILLIAM CHARLES        
  Applicant

And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES        
  Respondent

DECISION

Tribunal       Senior Member M D Allen

Date18 August 2000

PlaceSydney

Decision      The decision under review is varied by substituting the amount of $9,244.10 for the amount of $10,782.91 in the decision under review but in all other respects the said decision is affirmed.       

(Sgd)  M D ALLEN
  ..............................................
  Senior Member
CATCHWORDS

SOCIAL SECURITY  -  Payment of Newstart Allowance when not entitled.  Undertook work on basis at end of 12 months period partnership would be offered.  No offer eventuated.  Not unemployed. 

Social Security Act 1991 - ss593, 1224, 1237AAD

Director-General of Social Services v Thomson 38 ALR 624
Te Velde and Director-General of Social Services 3 ALN, N111
Secretary, Department of Social Security v Ellis 24 AAR 535

REASONS FOR DECISION

18 August 2000       Senior Member M D Allen

1. By application lodged 25 May 1998 the Applicant sought review of a decision of a Social Security Appeals Tribunal affirming a prior determination that the Applicant had been overpaid Newstart Allowance.

2. Although the decision under review referred to an amount of $10,782.91 allegedly overpaid, the Respondent conceded in these proceedings that the actual amount was the sum of $9,244.10.

3. The original decision was made on 18 March 1996 and reviewed and affirmed by an Authorised Review Officer on 19 November 1996.  The Applicant called that Review Officer in these proceedings and that officer confirmed that he had made his decision following a telephone conversation with the Applicant on 19 November 1996.

4. A record of that conversation was made by the Authorised Review Officer (Mr Slattery) and that record became Document T32 in the documents prepared for the Tribunal pursuant to s37 of the Administrative Appeals Tribunal Act 1975.

5. Although the Applicant put to Mr Slattery, in re-examination, that he may have got the conversation wrong in his notes and Mr Slattery conceded that that was possible, it was not directly put to Mr Slattery what any alleged error was and, as the notes are consistent with the evidence given by the Applicant, I accept the document at T32 as an accurate recollection of Mr Slattery's conversation with the Applicant.

6. Further I accept that the Applicant told the Authorised Review Officer, after that officer had read back to him his statement of 10 August 1995, that for about six months prior to 1 July 1993 the Applicant was engaged in fitting out premises and supervising labourers in the task of setting up a hairdressing business.  For the last three months he was at the shop premises every day.  The Applicant confirmed he had not told the then Department of Social Security about his employment at the hairdressing salon and then, significantly enough, the Authorised Review Officer's notes read (T32):

   "Mr Charles did not seem concerned over my finding that he was not qualified for JSA in 93/94.  He seemed to consider that this finding (and my letter to him re this) would serve as evidence in his claim against Mr McKeown.  He told me that he didn't mind if the debt was $10,000 or $100,000 as long as it would serve his interest in his claim against Mr McKeown.  He also told me that he wanted to clear his conscience and have this matter finalised.  He also wanted a letter explaining the calculation of the debt."

1. In evidence to the Tribunal the Applicant stated that he had entered into an agreement with a Paul McKeown to establish a hairdressing salon trading under the name of Paul David Salon.  It had been held out to him by Mr McKeown that if he (Charles) was able to build up the business, at the end of 12 months he would be taken in as a partner.

2. With this in mind the Applicant had concerned himself with the fit-out of the salon and also negotiated with a supplier of hair products for the provision of equipment.  After the salon began operating he worked in the salon.  At one point in his evidence in chief the Applicant stated he worked 10 to 15 hours a week at the salon, later he stated he had worked 60 hours a week working the business up.

3. Any hopes that the Applicant may have had regarding a partnership did not eventuate and there has been a falling out between the Applicant  and Mr McKeown.  Both the Applicant and Mr McKeown have made conflicting statements as to the Applicant's part in the business known as Paul David Salon.

4. The Applicant's evidence in this regard is consistent with a statement he made to an officer of the then Department of Social Security on 10 August 1995 (Document T12).  That statement reads inter alia:

   "I never received any re-numeration (sic) for my work as I undertook the work on the basis that I was a partner in the buisness (sic) and that was going to be resolved at the end of twelve months running of that business."

1. The Applicant called Mr McKeown as a witness.  In his evidence Mr McKeown stated that the Applicant had been employed and produced a wages book that contained entries for wages paid to the Applicant.  It was Mr McKeown's evidence that the Applicant was paid $200.00 per week for work he did at the Paul David Salon.  He also stated that the Applicant used the facilities of the Paul David Salon on Mondays when it was closed to the public for his own purposes including customers personal to the Applicant.

2. Questioned regarding any partnership arrangements, Mr McKeown stated that a partnership was discussed but rejected by him.

3. Document T9 is a copy of a letter from the New South Wales Department of Industrial Relations to the Applicant dated 10 November 1994.  That letter reads inter alia:

   "You claimed that you were employed as a hairdresser and that you had not received all wages and entitlements due under the Hairdressers (State) Award.
   In investigating your claim it was first necessary to establish if you were in fact employed by Paul David Hairdressers Pty Ltd.  An authorised officer of Paul David Hairdressers Pty Ltd stated to Inspector Moussallam and myself that you were engaged to provide a service to Paul David Hairdressers Pty Ltd.  That service being the marketing and development of the business.  To support this claim Paul David McKeown produced letters written on behalf of the business under the letterhead of 'James Charles, Marketing Consultant' with your home address and a business card with the same details.  At our meeting of 13 October, 1994 you confirmed that you were the James Charles referred to on the letterhead and business card.  Mr McKeown indicated that you did occasionally help out in the salon, but this was incidental to the service you were engaged to provide.  He indicated that you kept your own hours and worked independently.
   Consequently, we formed the view that there was not sufficient proof to support your claim that you were, firstly, an employee and secondly, a hairdresser.  It seemed more likely that you were in fact an independent contractor providing a service to Paul David Hairdressers Pty Ltd."

1. To my mind this letter dated 10 November 1994, and obviously written after the severance of any relationship between the Applicant and Mr McKeown, corroborates the evidence that the Applicant was working in the Paul David Salon with the hope of obtaining a partnership in the business.  It is not, to my mind, inconsistent with Mr McKeown's evidence to the Tribunal that the Applicant was paid $200.00 per week for the hairdressing work he did do.

2. Mr McKeown also gave evidence that at the time he was concerning himself with the Paul David Salon in the year 1993-1994, the Applicant was also concerned with a business at Brighton-Le-Sands and that he, Mr McKeown, had visited that business which was a coffee lounge.  I note the New South Wales Department of Industrial Relations' letter is addressed to the Applicant at an address at Brighton-Le-Sands.

3. Document T5 is a copy of a solicitor's letter forwarded to the Applicant dated 25 July 1994.  It reads inter alia:

   "We are instructed to act for the abovenamed Paul David McKeown and we have to hand your correspondence of 18 July, 1994.
   We advise that our client is not indebted to you in any manner whatsoever and if required, will provide independent witnesses to your receiving the wages specified in the Group Certificate tendered to you.  Our client has no liability to you for any sum whatsoever and you have no valid claim upon our client, his assets, business, or company.
   Our client is not prepared to continue communications with yourself and if you wish to initiate legal proceedings, we are instructed to accept service on behalf of Mr McKeown.
   …"

1. It is, of course, trite law to say that if in fact the Applicant was in the receipt of remuneration from Mr McKeown or his company for work performed then obviously he was not unemployed. 

2. In these proceedings I am not concerned in deciding any dispute between the Applicant and Mr McKeown.  At all times the Applicant has maintained to the Respondent and before the Social Security Appeals Tribunal and this Tribunal, that he was working in establishing the Paul David Salon, and then at that salon, with the ultimate goal of being taken into a partnership.  I am content to act upon this version of events, being the most favourable version to the Applicant.

3. Subsection 593(1) of the Social Security Act 1991 reads inter alia:

   "(1)Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if:

   (a)the person satisfies the Secretary that throughout the period the person is unemployed; …"

And subs1224(1) states:

"If:

(a)   an amount has been paid to a recipient by way of social security payment; and
(b)   the amount was paid because the recipient or another person:

(i)    made a false statement or a false representation; or

(ii)   failed or omitted to comply with a provision of this Act or the 1947 Act;

the amount so paid is a debt due by the recipient to the Commonwealth."

1. In Director-General of Social Security v Thomson 38 ALR 624 the Full Court of the Federal Court stated at p628:

   "… the possibility must be recognized that activities being pursued by a person without paid work may be so fundamentally incompatible with the person's being regarded as unemployed that no further inquiry is necessary.  …"

And added at p629:

"… For the reasons we have given, we prefer the view that the activities being pursued by an applicant for a benefit are to be considered with all other relevant factors in determining whether he or she is unemployed.  One important matter for consideration is the applicant's intention at the relevant time."

And in Te Velde and Director-General of Social Services 3 ALN, N111 at N114 the Administrative Appeals Tribunal (Senior Member Hall (as he then was)) said at para 34:

"… Whilst the concept of 'work' normally connotes some activity pursued as a means of earning one's livelihood, the absence of evidence that the activity is effective in producing a livelihood may not be critical in deciding whether the activity qualifies as 'work':  see Clear v Smith [1981] 1 WLR 399.  A self-employed person, in particular, may be engaged full-time in activities intended to earn him a living, but which, despite his diligent efforts, fail to do so.  …"

The learned Deputy President continued at 35:

"In the present case, I am satisfied that although the applicant's labours on the property were not productive of any remuneration during the February/August period, they were directed to maintaining and improving the value of her capital investment in the property and to establishing the property as a viable concern.  She was either carrying on the business of primary production or pursuing activities preparatory to carrying on that business (cf Ferguson's case, supra).  Either way, in my view, having regard to the time and effort she devoted to the property her activities constituted 'work' in the ordinary meaning of that word.  I do not consider therefore that she can be said to have been 'out of work' or 'unemployed' throughout the relevant period.  …"

1. Other cases were referred to by the Respondent's advocate in submissions but I regard those cases as no more than illustrations of the principles outlined above.

2. Having regard to the principles stated by the Full Court of Federal Court in Thomson supra and Senior Member Hall (as he then was) in Te Velde supra, I am satisfied that in the period under review the Applicant was not unemployed but was committed to a business in the expectation that his efforts would be rewarded by way of a partnership. 

3. The Applicant further submitted that special circumstances existed in his case which special circumstances should result in the decision that recovery of any overpayment should be waived.

4. Section 1237AAD of the Social Security Act 1991 states:

   "The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

   (a)the debt did not result wholly or partly from the debtor or another person knowingly:

   (i)    making a false statement or a false representation; or

   (ii)failing or omitting to comply with a provision of this Act or the 1947 Act; and

   (b)there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

   (c)it is more appropriate to waive than to write off the debt or part of the debt."

1. The term "special circumstances" relied upon by the Applicant were that fortnightly claims for Newstart Allowance submitted by him can not now be located and that a prosecution brought against him alleging that he, between 15 July 1993 and 30 June 1994, knowingly obtained payment of Newstart Allowance which was not payable in that he was not unemployed contrary to s1347 of the Social Security Act 1991 was dismissed.

2. The test for what constitutes "special circumstances" was set out by Carr J in Secretary, Department of Social Security v Ellis 24 AAR 535 at 539, namely:

   "In Beadle v Director-General of Social Security (1985) 7 ALD 670, a Full Court of this Court had to consider whether the Administrative Appeals Tribunal had erred in its interpretation of s 102(1)(a) of the Act which provided for an extension of time in which to claim a family allowance '… in special circumstances…'.  At 673-674 the Full Court said:

   'Presumably in this context special circumstances must include events which would render the six months unfair or inappropriate.  …  It would depend upon the circumstances of the particular case whether these constituted special circumstances.  We do not think it is possible to lay down precise limits or precise rules.  The matter is one for the Director-General bearing in mind the purpose for which the power is given.  The phrase 'special circumstances', although lacking precision, is sufficiently understood in our view not to require judicial gloss.'

   In Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545, Kiefel J, after referring to Beadle, said:

   '… for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case.  That was, I consider, the only inquiry to be undertaken in this case.  It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.  The inquiry I have referred to would involve considering what would be the effect, if the provision in question or the principle of liability it creates, is applied.'"

1. It was explained by Mr Slattery, from Centrelink, in these proceedings that Newstart Allowance application forms are destroyed in the normal course of business after 18 months.  I do not regard their absence as material to the Applicant's case and their absence cannot constitute special circumstances.  No question arises as to the Applicant not having submitted such forms and having received payments of Newstart Allowance.

2. So far as the Applicant's acquittal on account of knowingly receiving a benefit to which he was not entitled is concerned, at the outset it must be stated that the requirement of the prosecution to prove beyond reasonable doubt that the Applicant knowingly applied for a benefit, that is to say did so with intent, is quite different to the matter before this Tribunal. Section 1224 of the Social Security Act 1991 does not require that the statement made by the Applicant be made with knowledge of its falsity so long as it is false in fact. In this matter, as I am satisfied that the Applicant's claim to be unemployed was, as a matter of both fact and law, false, then he has a debt due to the Commonwealth.

3. Neither of the issues suggested by the Applicant as constituting special circumstances are special in the terms of Ellis' case supra and so I do not regard it as appropriate to waive the Applicant's debt.

4. Write off was not raised with me and as the Applicant is apparently in receipt of a Social Security Benefit at present, write off of the debt is not a matter which can be considered – see s1236 of the Social Security Act 1991.

5. For the reasons outlined above, the decision under review will be varied by substituting the amount of $9,244.10 for the amount of $10,782.91 but in all other respects the decision under review is affirmed.

I certify that the 31 preceding paragraphs are a true copy of the reasons for the decision herein of:

Senior Member M D Allen

Signed:        Kwai-Ling Wong            .....................................................................................
  Associate

Dates of Hearing  25 February 1999 and 14 August 2000
Date of Decision  18 August 2000
Representative for the Applicant     Applicant self-represented
Advocate for the Respondent          Mr P McDougall Centrelink