Cobon and Department of Family and Community Services - [2001] AATA 549

DECISION AND REASONS FOR DECISION [2001] AATA 549

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2000/696

GENERAL ADMINISTRATIVE DIVISION       )
           Re      ALLAN HUGH COBON
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr KL Beddoe (Senior Member)

Date19 June 2001
PlaceBrisbane

Decision      The Tribunal affirms the decision under review
  (Sgd) K L Beddoe
  Senior Member

Decision No: 549/2001
CATCHWORDS
SOCIAL SECURITY – Restart Re-establishment Scheme – whether applicant a farmer – proprietor of land and member of partnership in farm enterprise – expulsion from partnership – receipt of old age pension
Farm Household Support Act 1992 s 3(2), 4A, 8C, 12(1), 52A, Div 1B Part 2,
Drake v Minister for Immigration and Ethnic Affairs(1997) 2ALD 60 at 69-70.

REASONS FOR DECISION

19 June 2001 Mr KL Beddoe (Senior Member)

The applicant seeks review of a decision to reject a claim for payment under the Farm Household Support Act 1992 ("the Act"). In particular the applicant seeks a grant under the Restart Re-establishment Scheme.
The long title of the Act explains the purpose of the Act in terms which are illuminating as follows:
(a)the provision of income support and advice to farmers who may not have a long-term productive, sustainable and profitable future in the sector; and
(b)the provision of financial incentives to farmers to leave farming; and
(c)the provision of relief payments to farmers who are in exceptional circumstances.

The objects of the Act are in similar terms and set out in section 6.

Section 52A of the Act provides for a "Restart Re-Establishment Grant Scheme" to be instituted by way of the Minister's written instrument. The essence of the scheme is to grant financial assistance to persons on the sale of farm enterprises including rights or interests in farming enterprises.
The Minister for Primary Industries, by instrument in writing dated 25 November 1997, and notified in the Commonwealth of Australia Gazette of 27 November 1997, instituted the scheme, pursuant to section 52A(1) of the Act commencing on 1 December 1997.
Under the scheme a person is eligible to apply for a re-establishment grant only if he or she is qualified for restart income support under Division 1B of Part 2 of the Act (Clause 2.1).
A person who has claimed restart income support is also taken to have applied for a re-establishment grant, but a person who wants to apply for a re-establishment grant only must complete a claim for restart income support (Clause 2.3)
Qualifications for a re-establishment grant are set out in clause 3.2 of the instrument. In particular clause 3.2(i)(a) provides that a person is qualified to receive a re-establishment grant if the person was eligible to apply for the re-establishment grant when the person applied.
Eligibility to apply depends on being qualified for restart income support under division 1B of Part 2 of the Act. In particular section 8B of the Act relevantly provides that a person is qualified for restart income support in respect of a period if:
(a)      the period begins on or after 1 December 1997; and
(b)      throughout the period the person:
(i)        is a farmer; and
(ii)       ………..; and
(iii)      ………..; and
(iv)      ………..; and
(c)the person has been a farmer for a continuous period of at least two years immediately before the period; and
(d)a certificate of inability to obtain finance issued in respect of the person has effect throughout the period.
Unless the contrary intention appears "farmer" means a person who:
(a)has a right or interest in the land used for the purposes of a farm enterprise; and
(b)contributes a significant part of his labour and capital to the farm enterprise; and
(c) derives a significant part of his income from the farm enterprise.
A person is not qualified for restart income support in respect of a period if the Secretary (and therefore this Tribunal) determines that the person is not effectively in control of the farm enterprise for which the person claims restart income support and restart income support should not be payable to the person in respect of the period. (S 8c of the Act).
At the hearing Mr Hunter represented the applicant and Mr Walsh represented the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents and further documents were tendered and marked as exhibits. No oral evidence was given.
I make the following findings of fact. The applicant and his wife purchased and commenced farming a property known as "Waverley", Cobon's Road, Loch Lomond, via Warwick in November 1975. The property is of 293 hectares with frontage and water rights to the Condamine River.
In September 1991 the applicant and his wife entered into a partnership with Moby Vic's Pty Ltd, Lloyd Arthur Toft, Carol Ann Toft, Geoffrey Brennan Gargett and Helen Dorothy Gargett. The partnership was to conduct a business of grazing and farming on the Waverley property. The partners were also to be tenants-in-common of the Waverley property in the proportions of their respective interests in the partnership as set out in Schedule 3 of the partnership agreement dated 6 September 1991 (Exhibit A).
The proportions as set out in clause 3.1 and Schedule 3 are as follows:
(a)      Mr and Mrs Cobon as joint tenants  34/80
(b)      Moby Vic's Pty Ltd  18/80
(c)       Dr and Dr Toft as joint tenants  12/80
(d)      Mr and Mrs Gargett as joint tenants  16/80
The partnership name was to be "Elbow Valley Pastoral Company" and the partnership business was deemed to commence on 14 September 1991. The applicant and his wife were granted a licence to occupy a dwelling house on the property rent free in effect while the applicant performed the duties of Manager of the partnership's business.
Clause 12.6 of the partnership agreement contained provisions whereby a partner may be expelled from the partnership and for sale of the expelled partner's interest in the partnership and the land. In particular paragraph (e) deals with transfer of land by delivery of a transfer of interest in the land, capable of registration, within 60 days from date of determination of the purchase price payable to the expelled partner.
The partnership carried on the farming and pastoral business on Waverley until August 1996 when the remaining partners purported to expel the applicant and his wife from the partnership.
That purported expulsion resulted in proceedings in the Supreme Court of Queensland instituted by the applicant and his wife. The applicant continued to work and live on the property until July 1997.
The applicant and his wife were also in dispute with the ANZ Bank in respect of a secured debt due to the bank, the debt being secured on the subject property.
A deed dated 8 June 1999 (the applicant and his wife executed the deed on 29 April 1999) settled the unpaid judgment debt owing to the ANZ Bank with funds payable by the remaining partners in the terms of the deed (T13). The terms of the deed were such that settlement of the disputes depended upon the applicant and his wife executing a transfer of their interest in Waverley to the continuing partners and the payment by those partners of the consideration payable on the transfer which was assigned to the ANZ Bank, to settle the dispute with the bank (T13).
By a memorandum of transfer dated 29 April 1999 the applicant and his wife transferred their interests in Waverley to Lloyd Arthur Toft, Carol Ann Toft as joint tenants as to 7/24, as tenants in common, Helen Dorothy Gargett as to 41/120 as tenant in common and Moby Vic's Pty Ltd as to 11/30 as tenant in common.
However, although the transfer of the interests of the applicant and his wife in the land only became effective at law after June 1999, the applicant and his wife ceased living on the property in August 1997 and took no part in the management of the business of the partnership or participation as partners after that time. To the extent that the applicant continued to participate in a dispute with the continuing partners he did so as a proprietor of the land.
Financial accounts of the partnership for years of income ended 30 June 1994 and 1995 disclose that the partnership operated a feedlot from which it derived substantial fees. The accounts indicate that the operation was unprofitable. The partnership also grazed cattle, but in the year ended 30 June 1995 sold off most of the herd leaving 14 cattle on hand at 30 June 1995. In the year ended 30 June 1996 there was a decrease of two in the stock on hand due to deaths. In each of the years ended 30 June 1994, 1995 and 1996 the partnership incurred a net loss from its business with the feedlot operations ceasing in the 1996 year. Cattle on hand at 30 June 1997 remained at 12 with no purchases or sales.
It seems the business adopted a strategy of selling substantial quantities of silage and hay gross sales of hay are recorded as follows:
1994 year  $8,755
1995 year  22,255
1996 year  17,910
1997 year   Nil

I infer from these figures that sales of silage and hay ceased in the year of income ended 30 June 1996. The applicant has asserted that when he departed the property in August 1997 the partnership still held a substantial stock of silage. There is however nothing before me to suggest that this stock has been liquidated or is of any commercial value. There is no inventory of hay or silage in the partnership's balance sheets for the years ended 30 June 1996 and 30 June 1997. It is clear to me that the growing harvesting and sale of silage is an enterprise carried on within the pastoral and agricultural industries.
The applicant was unsuccessful with a claim for re-establishment grant under the Rural Adjustment Scheme administered by the Queensland Rural Adjustment Scheme. That claim was made after the purported expulsion from the partnership in August 1996.
I am satisfied that the partnership had ceased carrying on business as farmers and graziers by the end of the 1996 year; income for the 1997 year being from agistment receipts only ($3,278). The applicant and his wife were paid $1,380 as management fees in the 1997 year. I infer this was in respect of the period July/August 1996 prior to their purported expulsion from the partnership.
The applicant has been paid an age pension since 1993.
The applicant applied for the grant on 26 May 1999.
The Applicant's Contentions
The applicant has been a farmer, as defined, for more than twenty years until July 1997. It is not admitted that he was not engaged in farming activities after he left the Waverley property in July 1997. The interest in the property was not disposed of until 1999 when the memorandum of transfer was effective to transfer the applicant's interest in the land to the remaining partners.
The applicant continued to be a farmer after July 1997 because he continued to have an interest in the property, he continued to have a managerial and financial involvement in resolving the partnership's problems and he did not derive income (other than age pension from any other source).
In so far as the applicant relies on an expression of ministerial policy through a ministerial adviser, I have taken that advice into account. This Tribunal's responsibility is to apply the law to the facts found by the Tribunal. An expression of opinion by a public servant cannot be determinative of the issue but an expression of ministerial policy is taken into account. (See Drake v Minister for Immigration and Ethnic Affairs(1979) 2ALD 60 at 69-70).
The legislation is beneficial in nature and there is an ultimate discretion to be inferred that the Parliament intended the legislation to benefit farmers forced to leave their farms without slavish adherence to the words of the legislation..
Ownership of the land is sufficient to establish a right or interest in the land. Contribution of capital to the farm enterprise includes taking responsibility for liabilities of the enterprise, as in this case responsibility for debts of the partnership. That contribution was a significant part of the applicant's capital. It should be inferred that the two year test is intended to deal with recent purchase farmers and is not intended to disqualify long term farmers such as the applicant.
The Respondent's Contentions
Eligibility is to be determined as at the date of application (20 May 1999). Eligibility depends on being qualified for restart income support under division 1B of Part 2 of the Act. If the applicant cannot satisfy section 8B of the Act, he is not qualified for restart income support. That in turn will depend on a finding that the applicant is a farmer as defined in section 3(2) of the Act.
Qualification will not be satisfied if the Tribunal determines that the applicant did not effectively control the farm enterprise and, further, he was not qualified because restart income support was not payable because the applicant was in receipt of an age pension (S 12(1)).
The applicant left the property in July 1997 which preceded the Restart Re-establishment Grant Scheme coming into operation on 1 December 1997.
Consideration
Eligibility for the re-establishment grant under the Restart Re-establishment Grant Scheme formulated under section 52A of the Act by the Minister's written instrument dated 25 November 1997 is dependent upon qualification for restart income support (Clause 2.1 of the Minister's Instrument). I am satisfied that the fact of the applicant not applying for restart income support is not relevant to the consideration of whether the applicant is qualified for restart income support. That issue must be resolved in the applicant's favour before it can be accepted that he is eligible to apply for the re-establishment grant.
Subject to other provisions in Division 1B, a person is qualified for restart income support in respect of a period if the period begins on or after the restart scheme payment commencement day and the other requirements of section 8B of the Act are satisfied.
Before me the hearing proceeded on the basis that the restart scheme payment commencement date was 1 December 1997 because that was the date fixed by proclamation of the Governor-General signed and sealed on 26 November 1997.
The Act defines "restart scheme payment commencement day" to mean the day that is fixed under section 4A of the Act.
Section 4A(1) of the Act provides, subject to sub-sections (2) and (3) that the restart scheme payment commencement day is the day fixed by Proclamation.
Section 4A(2) provides that the day fixed by Proclamation under sub-section 4A(1) must not be more than six months after the day on which section 4A commences.
Section 4A was inserted in the Act by Act No 179 of 1997. That Act commenced on the day it received Royal Assent (25 November 1997). The proclamation was made by the Governor-General on the day following Royal Assent. Section 4A(2) was satisfied and I am satisfied that the relevant period for the applicant commenced on 1 December 1997 being the earliest possible date in terms of section 4A.
The tests in paragraph (b) of section 8B are conceded to be satisfied by the respondent except that the respondent does not concede that the applicant is a farmer as defined.
In terms of the definition of "farmer" I have to be satisfied that throughout the period from 1 December 1997 to the date of application (20 May 1999) the applicant:
(a)had a right or interest in the land used for the purposes of a farm enterprise; and
(b)contributed a significant part of his labour and capital to the farm enterprise; and
(c)derived a significant part of his income from the farm enterprise.
A farm enterprise means an enterprise carried on within various industries including the pastoral and agricultural industries. I am satisfied and find that at all relevant times the partnership carried on business and that business was an enterprise within the definition of farm enterprise.
The difficulty with this case is that the applicant had earlier ceased to be a member of the partnership as distinct from being a proprietor of the land on which the farm enterprise was conducted.
As to when the applicant ceased to be a member of the partnership, I am satisfied that he left the partnership when he was expelled by the continuing partners. The partnership agreement provided for the expulsion of members, that procedure occurred and has not been the subject of any revocation or court order setting it aside.
I am therefore satisfied that from the time that the applicant was expelled from the partnership, he ceased to have any relevant involvement in the farm enterprise except that he continued to have a right or interest in the land used for the purposes of the enterprise conducted by the partnership.
The tests to determine whether a person is a farmer are cumulative and must be satisfied in relation to the period which commenced on 1 December 1997 and ended on the date of application. The applicant does not satisfy the tests at (b) and (c) of the definition of "farmer" and I so find. It follows that paragraph (b) of section 8B cannot be satisfied so that the applicant is not a person qualified for restart income support and thereby eligible to apply for re-establishment grant.
Even if I had been able to find that the applicant was a "farmer", as defined, during the relevant period, section 12(1) of the Act would require me to determine that, because the applicant received a social security pension at all relevant times, restart income support should not be paid to the applicant in respect of the period and he was not therefore qualified for restart income support in respect of the period (S 8C).
If it was necessary for me to decide I would have held that feedlotting was an enterprise carried on within the pastoral industry.
For these reasons I am satisfied that the decision under review was correct.
I certify that the 58 preceding paragraphs are a true copy of the reasons for the decision herein of Mr KL Beddoe (Senior Member)
Signed:         .....................................................................................
  Associate
Date/s of Hearing  16 February 2001
Date of Decision  19 June 2001
For the Applicant  Mr Hunter
For the Respondent                 Mr Walsh