Hewitson and Secretary, Department of Family and Community Services - [2002] AATA 1178

DECISION AND REASONS FOR DECISION [2002] AATA 1178

ADMINISTRATIVE APPEALS TRIBUNAL )

) No V2002/26

GENERAL ADMINISTRATIVE DIVISION       )
           Re      JAMES HEWITSON
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY & COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Mr J. Handley, Senior Member

Date25 October 2002
PlaceMelbourne

Decision      The decision under review be set aside and in substitution therefore IT IS DECIDED that the applicant did not unreasonably delay entering into an agreement.
  .........Sgd Mr J Handley....................
  Senior Member
CATCHWORDS
Newstart Allowance- Newstart Activity Agreement – refusal to sign negotiated agreement – whether refusal to sign constitutes an "unreasonable delay" from "entering into an agreement" – no express legislative requirement to sign – decision set aside.
Financial Sector (Shareholding) Act 1998 (Cth) Schedule 1, clause 3(1) and (2)
Social Security Act 1991 (Cth) sections 593(1), 604, 604(1C), 605, 607(1)(a)- (d), 625, 625(1A) and 644AA
Re Secretary, Department of Social Security and Chadwick (1996) 44 ALD 479
Re Strider v Department of Employment Education Training & Youth Affairs (unreported decision of the Tribunal dated 21 November 1997 - decision No. 12410)
Department of Family & Community Services and Pettitt [2001] AATA 469
Re Geeves and Secretary, Department of Employment, Education & Training (1996) 41 ALD 467
Re Hoang and Department of Family & Community Services [2001] AATA 597

REASONS FOR DECISION

25 October 2002 Mr J. Handley, Senior Member

The applicant applies to review a decision made by the Social Security Appeals Tribunal ("SSAT") on 11 December 2001. The SSAT then decided to affirm decisions previously made by an Authorised Review Officer ("ARO") on 2 August 2001 and on 8 October 2001. Each of those decisions imposed a Newstart Allowance activity test breach. The consequence of each decision was to reduce the rate of Newstart Allowance for a period of six months at 18% with respect to the first decision and at 24% with respect to the second decision.
At the hearing the applicant appeared without representation. The respondent was represented by Mr Perdon. Documents prepared by the respondent pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 were received into evidence.
The application may be briefly summarised as follows-
On 4 May 2001 the applicant contacted Centrelink where an interview was arranged for 16 May 2001. On that day Mr Hewitson signed a number of forms where he declared that he-

was unemployed;
was willing to work;
had taken all reasonable steps to obtain employment;
would enter into a "Preparing for Work Agreement";
would attend an information seminar;
would enrol with a job network member;
would disclose any earnings; and
would provide any requested information.

On 16 May 2001, Mr Hewitson also separately signed a claim for job network assistance and the "Preparing for Work Agreement" (T-7) ("the agreement").
The agreement recited a number of events which were described as "breach penalties" which "may be imposed" if those events occur. Relevantly, (for the purposes of this decision) those events are-
"i fail to engage in a program when asked to do so;
i do not agree to requests from Centrelink to:
- accept suitable paid work
- attend approved training courses
- Participate in approved activities
- Enter into and comply with an activity agreement if you are asked to do so and
- Contact your job network member, community work co-ordinator or program provided when asked."
Approximately one week later, the respondent decided that the applicant would benefit from "intensive assistance activity" and Mr Hewitson was referred to "Employment AMES" an agency with whom the respondent contracted. The letter referring Mr Hewitson recorded that he was required to attend that agency to renegotiate the "preparing for work agreement to include intensive assistance" (p. 29). Mr Hewitson also attended a "seminar" which he was obliged to do as a Newstart claimant.
Mr Hewitson did not attend the first appointment arranged with Employment AMES (for reasons that are not relevant), but he did attend an appointment arranged on 6 July 2001. An agreement was apparently negotiated between a representative of Employment AMES and Mr Hewitson who was prepared to be bound by the agreement, namely, to undertake the activities recorded. He took no exception to any of its terms, however he refused to sign it.
A representative of Employment AMES recommended to Centrelink that an "activity test breach penalty" be considered because the applicant had delayed entering into the activity agreement, as evidenced by his failure to sign it.
The applicant returned for further interview on 11 July 2001, as directed, but when it was learnt that Mr Hewitson would not sign any agreement, an agreement was not negotiated (nor was it prepared). Centrelink was then again notified of the applicant's refusal to sign the agreement.
In evidence at the Tribunal, Mr Hewitson said that at all times he was prepared to return to work and be bound by agreements negotiated between him and either Centrelink or a Centrelink agency. He said he reached agreement with the employment agency on 6 July 2001 as to all of its terms and so far as he was concerned he was prepared to be bound by it. Nonetheless, he said there is nothing in the legislation that compels him to sign the agreement. As far as he is concerned, an agreement may be constituted either by a verbal agreement, a handshake or by a "gentleman's agreement". Mr Hewitson said that he was "going by the rules" however Centrelink, by insisting that he sign the agreement, were "going outside the rules".
Mr Perdon on behalf of the respondent submitted that Centrelink and the applicant respectively have a mutual obligation to locate and undertake work. He said that Mr Hewitson was referred to an employment agency because he had been out of the workforce for approximately 25 years and needed intensive assistance to return to it. He noted that the applicant signed an agreement on 16 May 2001, however, he subsequently refused to sign agreements which were negotiated. It appeared from the documents that the applicant never disagreed with the terms of the agreement of 16 May 2001,or any other agreement. Subsequent to 16 May 2001, however, the applicant has refused to sign agreements, which were negotiated.
Mr Perdon submitted that when an agreement is reduced to writing it is normally constituted by all parties signing it. Additionally, it was submitted that the signing of an agreement or a contract constitutes a commitment by the parties to that agreement or that contact. It was submitted that it was not unreasonable for the respondent to insist that the applicant sign the agreement which would be an indicator of the applicant's pledge to be bound by the terms.
Mr Perdon dismissed the applicant's contentions that agreement can be constituted by a handshake or by a verbal agreement. He said that most contracts of a commercial nature are signed by parties. He pointed to the contract for the sale of property or entering into a lease or the purchase or sale of a motor car.
Additionally, Mr Perdon submitted that the failure of one or both parties to sign an agreement might cause impossibility in enforcement. That is to say, a party could not be held to the terms of an agreement unless it was signed.
In reply, Mr Hewitson referred to a pamphlet produced by Centrelink with respect to the obligations of a person under the "activity test". Under the sub-heading of "Preparing for Work Agreements", it is recorded that an applicant "will be required to negotiate and sign a Preparing for Work Agreement...". Mr Hewitson said that there is no obligation under the legislation to sign an agreement and he was doing no more than that which was required of him by the legislation. He reiterated that he was prepared to be bound by the terms of a negotiated agreement and noted that he never objected to any of the terms of the agreements submitted to him. He rejected the contention put by the respondent that he had failed to enter into a Newstart Activity Agreement by reason of his failure to sign the negotiated agreement.
An issue emerged during the hearing as to the events, which gave rise to the second imposition of an activity test breach. This emerged because on the second occasion that the applicant refused to sign an agreement, (11 July 2001) it appears that the "agreement" was not prepared. It appears that Mr Hewitson attended the employment agency office and when the officer learnt that Mr Hewitson would (again) refuse to sign any agreement that was negotiated, an agreement was not negotiated nor prepared.
In these circumstances, Mr Perdon submitted that there continued to be a refusal to enter into an agreement because the applicant would again have refused to sign it.
The Legislation
Section 593(1) of the Social Security Act 1991 ("the Act") relevantly provides that a person is qualified for Newstart Allowance if:
"(c) …… at all times (if any) during the period when the person is not a party to a Newstart Activity Agreement, the person is prepared to enter into such agreement ……"
Section 604 provides that the Secretary may require a person to enter into a Newstart Activity Agreement. This section also provides that the Agreement is a written agreement and in a form the Secretary approves (s 604(1C)). Section 605 provides that if a person has made a claim for Newstart Allowance, or who is in receipt of Newstart Allowance but was not a party to a Newstart Activity agreement, that person may be required by the Secretary to enter into such an agreement.
The critical section for the purposes of this review is s.607(1) and it reads as follows:
"If
(a)a person has been given notice under subsection 605(3) of a requirement to enter into a Newstart Activity Agreement; and
(b)       because that person did not:
(i)        attend the negotiation of the agreement; or
(ii)       respond to correspondence about the agreement; or
(iii)      agree to terms of the agreement proposed by the Secretary;
or for any other reason, the Secretary is satisfied that the person is unreasonably delaying entering into the agreement;
(c)the Secretary may give the person notice that the person is being taken to have failed to enter the agreement; and
(d)       if the notice is given - the person is taken to have so failed".
Section 625 provides that if a person fails to enter into a Newstart Activity Agreement, the Newstart allowance is not payable because of the failure.
In the respondent's Statement of Facts and Contentions prepared and lodged prior to the commencement of the hearing, it was argued that the applicant has unreasonably delayed entering into the agreement by reason of his failure to sign a Newstart activity agreement as negotiated (s. 607). It followed that the applicant had therefore failed to enter into an agreement. The decision to make reduced payments by reason of imposition of a activity test breach was consistent with the provisions of s.625(1A) and s.644AA.
Conclusion & Reasons For Decision
The issue giving rise to the decision under review is discrete but is significant.
The respondent decided that Mr Hewitson unreasonably delayed entering into the agreement. It follows, according to the respondent, that the applicant has then failed to enter the agreement. A notice was issued to that effect and it is deemed - by reason of the notice being "given" - that the applicant has failed (refer 607 of the Act).
It is put on behalf of the respondent that the unreasonable delay in entering the agreement, giving rise to the failure to enter the agreement, is constituted by the refusal of Mr Hewitson to sign the agreement.
There are many decisions of this Tribunal concerning activity test breaches under the Social Security Act, but few with respect to the failure to sign an agreement. Most of the decisions arise either because an applicant has refused to attend an interview, refused to participate in negotiations for an agreement or have failed to attend employment when found.
In Re Strider v Department of Employment Education Training & Youth Affairs (an unreported decision of the Tribunal dated 21 November 1997 - decision No. 12410), it was decided that a subjective assessment of the reasonableness of the applicant's behaviour was not the appropriate test of unreasonable delay from entering into an agreement. In Re Secretary, Department of Social Security and Chadwick (1996) 44 ALD 479 ("Chadwick"), the Tribunal decided that whether a person unreasonably delayed entering into an agreement must be judged against an objective standard of what a reasonable person would do. In that application, the applicant had apparently failed to open letters that he had received from the respondent which notified him of appointments for interview. When he later opened the letters and learnt that the interview dates had passed, he then failed to notify the respondent of the reason for his failure to attend the interviews.
In Department of Family & Community Services and Pettitt [2001] AATA 469, the Tribunal followed the decision in Re Chadwick. Similar conclusions were also reached (although in obiter) in Re Geeves and Secretary, Department of Employment, Education & Training (1996) 41 ALD 467 ("Geeves").
The Tribunal, however, in Re Geeves, decided that "unreasonably delaying" "involves some mental element". Having made a finding as to the applicant's state of mind, the Tribunal concluded-
"the applicant's state of mind was therefore not such that it could be said to have unreasonably delayed entering into his case management activity agreement".
The Tribunal followed the decision in Re Geeves in Re Hoang and Department of Family & Community Services [2001] AATA 597.
I believe that the applicant is a witness of truth. Additionally, I am not satisfied that he has engaged in conduct which has frustrated the objectives of the legislation nor behaved in a manner which fails to recognise his obligations under the legislation.
Mr Hewitson completed all of the documents submitted to him at interview on 16 May 2001 and signed them. He made certain declarations (refer earlier) and also acknowledged his obligations when he also signed the Preparing for Work Agreement. He attended the interview with Employment AMES, he did not disagree with any of the "negotiated" terms of the agreement and acknowledged that he was prepared to be bound by it. He did all that was required of him under the legislation, and he made a number of declarations. He regarded the terms of these declarations as being binding upon him and he acted in a manner consistent with his obligations.
Mr Hewitson said that he did not sign the agreement, as he is not obliged to do so by the legislation. It might be said that objectively a reasonable person would sign the agreement. At the same time, a reasonable person would comply with all the obligations of the legislation. The agreement was in writing and in a form the Secretary approved. His refusal to sign, does not, in my view, amount to him "unreasonably delaying entering into" it.
A contract - no less, an agreement - may be written, oral or evidenced by performance or a combination of these elements. There was, at the first interview, a written document which the respondent asserts was a written agreement save that it was not signed. There was an oral communication by the applicant that he was prepared to be bound by those terms. On the applicant's evidence, if permitted, he would have performed those terms.
I am satisfied that at the completion of the "negotiated" agreement which was reduced to written terms, there was evidence of both the applicant and the agent having achieved a consensus and they intended to be bound (by the terms). It follows, in my view, that there was an agreement between the parties. That agreement was the Newstart Activity Agreement (per s.607(a)) and it contained terms "proposed by the secretary" (s.607(b)(iii)).
It might be thought that refusal to sign was unreasonable but that is no comfort to the respondent. The notice deeming a failure to enter the agreement (s.607(c) & (d)) can only be issued if there was "any other reason" which satisfies the Secretary that there was an unreasonable delay entering into the agreement. The "other reason" the Secretary advanced was the refusal to sign. But there is nothing in the presence of the binding consensus between the parties which points to unreasonable delay from entering into the agreement. Indeed, there was nothing which points to any failure to enter into it. Whatever might be meant by "enter into" the applicant was denied the opportunity to "enter" - by performance - because he was breached.
I could find no authority for the words "entering into the agreement", however the Financial Sector (Shareholding) Act 1998 (Cth) (Schedule 1, clause 3) records the following:
"(1) For the purposes of the ownership provisions a person is taken to have proposed to enter into an agreement or arrangement if the person takes part in, or proposes to take part in, negotiations with a view to entering into the agreement or arrangement.
(2) A reference in the ownership provisions to entering into an agreement or arrangement includes a reference to altering or varying an agreement or arrangement".
The above clauses are noteworthy because the applicant signed a number of documents by way of declaration when he first claimed Newstart Allowance, including a "preparing for work agreement". Arguably, he considered himself prepared (as he proposed by his declarations) to enter into an agreement (described by the respondent as "negotiations"). Additionally, the applicant was referred to the respondent's agent to renegotiate the preparing for work agreement because the respondent decided that he needed intensive assistance. The agreement produced at the first interview was not part of the T-documents and its terms therefore are not known, however there is nothing to suggest that the applicant was unwilling or not prepared to "re-negotiate" as he was directed by the respondent.
I have concluded that the insistence by the respondent upon the applicant signing the agreement and consequently deciding that he has unreasonably delayed entering the agreement because of his failure to sign it, is ultra vires of the legislation. There is nothing in the Act that compels the applicant to sign the agreement.
When the agency representative became aware that the applicant would refuse to sign the agreement, Centrelink decided that there was an unreasonable delay in entering into the agreement. That decision rationally could not be made because the applicant was denied the opportunity to demonstrate his commitment or his willingness to perform or undertake the terms of the agreement. Mr Hewitson did not refuse to agree to the terms of the agreement. He willingly attended to renegotiate as directed, he did not seek to frustrate or delay the negotiations, nor did he bargain irrationally or capriciously. Conduct or behaviour of this type might demonstrate "unreasonable delay" from "entering into an agreement", but there is nothing from the evidence which points to behaviour of this type.
In effect, the applicant was denied entering into the agreement because the respondent decided the agreement would only exist if he signed it. This does not constitute unreasonable delay on his part. Additionally, there was no evidence that the respondents agent signed the agreement. On the submissions of the respondent, an agreement must be signed by both parties (para 13).
An agreement or contract is usually in writing and signed due to the operation of the law or an intention of the parties. However, the Social Security legislation is beneficial in nature and must be interpreted and applied accordingly. It is not appropriate to apply considerations prevailing in a commercial environment when, from the examples given in these proceedings, there is specific legislation that apply to the subject of the agreement. The Statute of Frauds and the Property Law Act requires contracts for the sale of real estate to be in writing and signed by the parties. So also does the Motor Car Trader's Act when motor vehicles are sold and exchanged. There is only a requirement under the Social Security Act that the agreement be in writing in a form the Secretary approves (refer earlier). There are no further qualifications in the Act that the agreement must be signed.

If the Parliament intended that agreements of the type in issue in these proceedings must be signed by both parties, it would have clearly been a term of the legislation.
Insofar as the occasion where the applicant refused to sign the agreement, which was prepared, I am satisfied for the above reasons that the decision under review should be set aside.
Insofar as this second "breach" occurred, an agreement was not prepared by the respondent's agent. Apparently, when it was learnt that the applicant would refuse to sign it, if prepared, no such agreement was prepared. The respondent cannot in those circumstances submit that there has been "unreasonable delay in entering into an agreement", if that agreement was not prepared. Additionally - and by way of completion - the applicant cannot "unreasonably delay to enter into an agreement" which does not exist. Simply put - there is no written agreement capable of being signed or entered into. This was a matter that was outside the applicant's control.
It was also put by the respondent that the applicant had an obligation to honour a policy of "Mutual Obligation" initiated by the Commonwealth Government in the 1990's which eventually was responsible for establishing the "Job Network" in 1998 and was the genesis for the introduction of the Social Security Legislation Amendment (Work for the Dole) Act 1997. Additionally, the respondent pointed to the McClure report published on 1 July 2002 entitled "Participation for a More Equitable Society".
The policy refers to a "mutual obligation" where persons receiving income support are expected "to contribute something to their community" (refer Department of Family & Community Services Policy Manual).
The principle of "mutual obligation" is recorded also in the "Preparing for Work Agreement" signed by Mr Hewitson (page 22). However, it is specifically recorded that the "mutual obligation initiative applies only to customers aged 18-34 years old".
The date of birth recorded for Mr Hewitson is 28 June 1951. At the present time, he is therefore 51 years of age. The mutual obligation initiative therefore does not apply to him.
I doubt in any event, having regard to the terms of the obligation, that it would have any application in the present circumstance. For reasons given above, Mr Hewitson did acknowledge that he was prepared to be bound by an agreement and there is nothing which points to him failing to comply with any requirement of the Social Security Act in terms of his obligations as a Newstart recipient.
In all of the circumstances, the decision under review should be set aside and in substitution therefore it is decided that at all relevant dates, Mr Hewitson did not unreasonably delay entering into an agreement.
I certify that the 52 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J. Handley, Senior Member
Signed:         Katherine Navarro...................................
  Associate
Date/s of Hearing  17 May 2002
Date of Decision  25 October 2002
Counsel for the Applicant        Self represented
Solicitor for the Applicant         Nil
Counsel for the Respondent    Mr D Perdon, Departmental Advocate
Solicitor for the Respondent    Centrelink