Comiskey and Department of Family and Community Services
[2002] AATA 596
•19 July 2002
DECISION AND REASONS FOR DECISION [2002] AATA 596
ADMINISTRATIVE APPEALS TRIBUNAL )
) No Q2000/1181
GENERAL ADMINISTRATIVE DIVISION )
Re VINCENT COMISKEY
Applicant
And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
Respondent
DECISION
Tribunal Senior Member KL Beddoe
Date19 July 2002
PlaceBrisbane
Decision The Tribunal decides: (a) that the decision under review is set aside; and (b) remits the matter to the respondent to give effect to the reasons for decision.
(Sgd)
KL Beddoe
SENIOR MEMBER
CATCHWORDS
FARM HOUSEHOLD SUPPORT – Restart Re-establishment Grant Scheme – whether a farmer – whether property sold within one year of claim.
Farm Household Support Act 1992 ss 8B, 8C, 52A
Parrett v Department of Family and Community Services [2002] FCA 716 at 21-23, 42
REASONS FOR DECISION
19 July 2002 Senior Member KL Beddoe
The respondent rejected the applicant's claim for a grant under the Restart Re-establishment Grant Scheme 1997 ("the Scheme") authorised by Section 52A of the Farm Household Support Act 1992 ("the Act"). The Social Security Appeals Tribunal subsequently affirmed that decision.
The objects of the Act are set out in Section 6 as follows:
"(a)to provide financial assistance and/or advice to farmers who are unable to meet day-to-day living expenses and cannot obtain commercial loans; and
(b)to provide a financial incentive for such persons to leave farming; and
(c)to provide financial assistance to farmers who:
(i)are experiencing difficulty in meeting living expenses; and
(ii)are in exceptional circumstances."
Section 8B, being included in Division 1A of Part 2 of the Act, sets out the criteria for qualification for farm help income support in respect of a period as follows:
"(a)the period begins on or after the farm help scheme payment commencement day; and
(b)throughout the period, the person:
(i)is a farmer; and
(ii)is at least 18; and
(iii)is an Australian resident; and
(iv)is in Australia; and
(c)the person has been a farmer for a continuous period of at least 2 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."
The "farm help scheme payment commencement day" is defined in effect by Section 3(2) of the Act to be 1 December 1997. "Farmer" is also defined to mean a person who:
(a)has a right or interest in land used for the purposes of a farm enterprise; and
(b)contributes a significant part of his or her labour and capital to the farm enterprise; and
(c)derives a significant part of his or her income from the farm enterprise.
"Farm enterprise" is also defined in Section 3(2) so as to mean an enterprise carried on within any of the agricultural, pastoral, apicultural or aquacultural industries.
Section 8C of the Act, also in Division 1A of Part 2 of the Act, provides that a person is not qualified, or ceases to be qualified, for farm help income support in respect of a period if the Secretary determines that:
(a)the person is not effectively in control of the farm enterprise for which the person claims farm help income support; and
(b)farm help income support should not be payable to the person in respect of the period.
Document T3 is a copy of the "Restart Re-establishment Grant Scheme 1997" dated 25 November 1997 by the Minister for Primary Industries and Energy and notified in the Commonwealth of Australia Gazette on 27 November 1997.
Clause 2.1 of the Scheme provides that 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 3.2 of the Scheme provides for qualifications for the re-establishment grant. The relevant qualifications are that the person was eligible to apply for the re-establishment grant when the person applied, the farm enterprise has been sold, and completion of the sale has taken place within one year (or such longer period as the Minister in writing allows), the sale was at arms length on commercial terms, the applicant and any partner are not farm operators or owners and they do not own any farm plant or machinery, farm livestock or other assets essential for the effective running of a farm enterprise.
At the hearing the applicant conducted his case and Mr McQuinlan 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. Oral evidence was given by the applicant.
I make the following findings of fact. Comishan Investments Pty Ltd ("the trustee") is trustee of the Comiskey Family Trust and carried on business under the name Topeka Farms. That business was one of farming and in particular the production of lychee and mangoes.
In his oral evidence the applicant said the farming property was owned by himself and his son. However, it is more likely that the beneficial ownership of the land was held by the trustee as property of the trust.
The applicant and his son conducted the day-to-day operations of the farm business and either (or both) was the controlling mind of the trustee.
In January 1999 the applicant and his son approached the Primary Industry Bank of Australia ("the Bank") on the basis that the business would not be able to meet future debt obligations of the trustee. The Bank was the principal financier of the business and mortgagee of the real property. In the result, the Bank appointed Receivers on 18 January 1999. The applicant and his son continued managing the day-to-day operations of the business, subject to direction by the Receivers, as employees of the trustee. The applicant was paid wages by the trustee.
At 13 May 1999 the Bank was creditor for $1,315,000 plus arrears of $120,598.
It is clear from Document T9, which is a copy of a letter dated 19 January 1999 by Ernst and Young notifying the appointment of Receivers and Managers of the trustee, and the applicant, that responsibility for the conduct of the business passed to the named representatives of the Receivers and Managers (Exhibit 1).
The applicant vacated premises on the farm on 23 July 1999.
The Receivers ceased to act on 22 November 1999.
The applicant applied for the grant by letter lodged with Centrelink on 17 May 1999 (T5).
The Bank took control of the properties known as Topeka Farms as mortgagees in possession on 1 July 1999 and entered into an agreement to lease the properties to a third party from that date. The lessee has an option to purchase at any time during the five years term of the lease (Exhibit 1).
Meanwhile, the applicant and his son remain (at the time of hearing) the registered proprietors of the farming properties. Lot 35, which is not part of the actual farming property, has been transferred to a different third party as two subdivided lots. While that property may have been used in the farming business it is not in the character of a farm being distant from the other properties and developed with shed/accommodation etc and no trees.
The farming operations conducted by the trustee were not insignificant. Relying on copies of income tax returns and accounts, the operations for the years of income ended 30 June 1995, 30 June 1996 and 30 June 1997 can be summarised as follows:
Sales 1995 1996 1997
$ $ $
Mangoes 909,533 845,442 1,282,556
Other crops 1,281 1,349 3,471
Processing 26,501 66,804 70,122
937,315 846,791 1,356,149
Less Cost of Purchases - 101,455 207,790
Gross Profit from Trading 937,315 812,140 1,148,359
Less Expenditure 1,008,040 897,612 1,370,335
Loss 70,725 85,472 221,976
___________ __________ _____________
While it is apparent from those figures that the trustee engaged in trade of produce not grown on the property, I am satisfied that the bulk of the sales was from mangoes grown by the business.
Those figures relate to periods in time prior to 1 December 1997 but I am satisfied that the business continued until 1 July 1999 when the Bank entered into possession of the business assets and the land.
ConsiderationIn Parrett v Department of Family and Community Services [2002] FCA 716 at paragraph 21 to 23, Madgwick J said:
"21 The following matters it seems to me are notorious.
22Farming in most parts of Australia is a risky business, subject to dramatic seasonal variations, fluctuations in the prices of primary products and the health of the farmer and any family he or she may have on the farm, whose services may not be easily replaceable by those of outside employees.
23In recent years changes in, and to the administration of, the revenue laws have tightened the availability of concessional treatment of, and the availability of some ordinary business-related deductions, for people whose non-farm based means and/or income permits them to conduct a farm-associated hobby, wearing the mere appearance of a serious farming venture. The image of the hard-working but economically struggling farmer remains a powerful one in Australia, as does the ethic that people who are needy but trying hard deserve assistance from government. On the other hand, there is little popular support for assistance to well-off farmers or rural dilettantes. Measures applicable to farming are increasingly, legislatively and administratively, targeted to reflect these values."
With respect, I adopt his Honour's dicta. I add that I accept that it is also notorious that many farm businesses are conducted and/or owned by family trusts. The motives for such arrangements are irrelevant here, but the purpose of those arrangements is to provide for a continuity of family ownership and interest in the farm.
In the present case the farming business was substantial and conducted by the trustee of the family trust. I am satisfied that the applicant was the controlling mind of the trustee company and the farm was the focus of the applicant's day-to-day endeavour. He was critically involved in the business so that he would be recognised by the officious bystander as a farmer or orchardist, that is a person engaged in agriculture.
In the context of the legislation I am satisfied that the applicant was a "farmer" as defined for more than two years prior to making his claim in May 1999. His status had changed earlier that year in that instead of being the controlling mind of the trustee as a director, he became, in effect, an employee of the Receivers and Managers appointed by the Bank. I am also satisfied that he had a relevant interest in the land as registered joint proprietor. Whether there were equitable obligations in relation to the land is unclear but I am prepared to assume that if such obligations did exist they were in part (or whole) for the benefit of the applicant and his son.
The fact of the farm business earning losses in the income years 1995 and thereafter does not detract from the fact of substantial farm income being derived by the trustee which I infer was derived in whole or in part for the benefit of the applicant and his son.
I am satisfied the applicant was a "farmer" at the time he made his claim.
I am also satisfied that the applicant effectively lost his interest in the farming land when the Bank became mortgagee in possession effective from 1 July 1999.
The issue is whether it can be accepted that the farm has been sold within one year after 12 May 1999. I am satisfied that the applicant effectively lost his interest in the land when the Bank took possession and leased the land and the business to a third party effective 1 July 1999 for five years. While it may be the case that there is a subsisting equity of redemption for the benefit of the applicant, I am satisfied that it is more likely that it would be valueless, if it exists at all.
Can I therefore accept that upon the Bank entering into possession on 1 July 1999 there was, in effect, a sale of the farm at arms length completed on that date? I think there was such a transaction which satisfies the definition of "sale of a farm" when the Bank entered into possession on 1 July 1999, and I so find.
As Madgwick J said in Parrett at paragraph 42:
"The legislation in question is beneficially intended for needy farms and, in cases of doubt, should be liberally interpreted. I agree with counsel for the applicant that the result produced by the Tribunal's construction of the legislation seems at odds with the purpose and objects of the Act. The 1997 amendments to the Act were designed, among other objectives, with the purpose of achieving a welfare safety net for the farming community."
I am satisfied the applicant was such a farmer, intended by the Parliament to have the benefit of the legislation.
I am unable to finally determine the claim on the material before me. The decision under review will be set aside and the matter remitted to the respondent with a direction to give effect to these reasons for decision.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member KL Beddoe
Signed: Sarah Oliver
AssociateDate of Hearing 28 March 2001
Date of Decision 19 July 2002The Applicant Appeared in Person
Solicitor for the Respondent Mr R McQuinlan, Departmental Advocate
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