Iannella and Secretary, Department of Employment and Workplace Relations

[2006] AATA 370

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2006] AATA 370

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No S2005/107

GENERAL ADMINISTRATIVE DIVISION		)
Re		MARIO MICHAEL IANNELLA

Applicant

And SECRETARY, DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS

Respondent

DECISION

Tribunal Mr J G Short (Member)

Date28 April 2006

PlaceAdelaide

Decision The Tribunal affirms the decisions under review.

..............................................

J G SHORT
  (Member)

CATCHWORDS

SOCIAL SECURITY – pensions, benefits and allowances – Newstart Allowance – qualification for Newstart Allowance – decisions to cancel payment of Newstart Allowance and to raise and recover a debt, affirmed.

Social Security Act 1991 ss 593(1), 601(1), 1223(1), 1237AAD

Social Security (Administration) Act 1999 s 80(1)

Director-General of Social Services v Thomson (1981) 38 ALR 624

REASONS FOR DECISION

28 April 2006   Mr J G Short (Member)

1.      On 11 March 2003 Centrelink received public information to the effect that the applicant (Mr Iannella) was working full-time at Quo Vadis Pizzeria (Quo Vadis).  On 5 December 2003 Centrelink made a decision to cancel payment of Mr Iannella’s Newstart Allowance and on 8 December 2003 Centrelink made a decision to raise and recover an alleged over-payment of $1,956.05, the over-payment is said to have been made between 2 October 2003 until 28 November 2003.  The decisions were affirmed by the Social Security Appeals Tribunal (the SSAT) on 22 March 2005.  On 27 April 2005 Mr Iannella lodged an application for review by the Administrative Appeals Tribunal.

issues

2.      The issues for the Tribunal to determine are as follows:

·Was applicant qualified to receive Newstart Allowance from 2 October 2003?

·If no, was Mr Iannella’s Newstart Allowance correctly cancelled; and was Mr Iannella paid Newstart Allowance in the sum of $1,956.05 during a period in which he was not entitled to receive that allowance?

·If yes, is the last-mentioned sum a debt recoverable by the Commonwealth; and should recovery of all or part of the debt be waived or written off?

·Did Mr Iannella suffer a loss as a result of Centrelink breaching any duty of care it may have owed to Mr Iannella by failing to advise him of his ability to re-test his eligibility for a pension/allowance immediately following the cancellation of his Newstart Allowance?

evidence

3.      Mr Iannella told the Tribunal that he had been in receipt of one of the unemployment benefits from at least December 1996.  Mr Iannella said that he actively sought employment by checking newspapers and the Yellow Pages, and attending the Enfield office of Centrelink.

4.      Medical reports of Mr Iannella’s local medical officer, Dr Cocchiaro dated 24 May 2001, 15 June 2004 and 19 March 2005 confirm that Mr Iannella suffers from serious medical conditions including diabetes and ischaemic heart disease.

5.      Mr Iannella said that he had known the owners of Quo Vadis for approximately 20 years.  He said that he sometimes attended Quo Vadis as a form of socialising.  He said that he would drink coffee and sit out the back.  He said that children who attended Quo Vadis would call him “Mr Mushroom”.  He said that he would sometimes make a pizza, peel an onion or deliver a pizza if a delivery driver was not present.  Mr Iannella said that he had applied for work at Quo Vadis however his application was unsuccessful.

6.      Mr Iannella said that after the cancellation of his Newstart Allowance, he depended on the charity of friends.  He said that he had borrowed monies from 12 to 15 people although, during his evidence-in-chief, he could only name 9 people from whom he said he had borrowed monies.  Mr Iannella said that he did not keep a record of the amounts he had borrowed or repaid and that he simply relied on the honesty of the lender to tell him how much he owed.  Mr Iannella said that he was now in receipt of Disability Support Pension.

7.      Mr Iannella confirmed that he had advised Radio Rentals, on a loan application form dated 16 June 2003, that he worked at Quo Vadis on a full-time basis earning $2,600.00 per month.  Mr Iannella said that although he had provided this advice, he did so only in order to receive a loan and that the information he provided to Radio Rentals was false.  Mr Iannella said that he could not remember whether the information he provided on the loan application form concerning his expenses was true or not.  Mr Iannella also said that he had lied about his employment status in a loan application to Optus Communications so that he could obtain a mobile phone.

8.      It was suggested to Mr Iannella that his bank statements failed to indicate a consistent pattern of payment of rent from the Newstart Allowance he received from Centrelink.  It was also suggested to Mr Iannella that these statements indicated a number of cash deposits for sums approximating or less than $100.00.  Mr Iannella said that when he paid rent, he did so in cash.  He said that he had been in dispute with his landlord over a water leak and consequently did not pay rent for a time.  Mr Iannella said that any cash payments of rent he made were from monies received from family or friends.

9.      Particularly in reference to his activities at Quo Vadis, Mr Iannella denied receiving wages.  He said that he would, however, be given petrol money (presumably reflecting the use of his vehicle for pizza deliveries) and some food to take away.  He was also able to obtain free drinks from Quo Vadis.  Mr Iannella confirmed that he had told the Authorised Review Officer that his attendances at Quo Vadis had “snowballed”.  He denied indicating however that he had visited Quo Vadis every day.  Mr Iannella told the Tribunal that it was impossible for him to attend every day.  He said that he would usually attend Quo Vadis between 3.00 pm and 6.00 pm and sometimes until closing at 10.00 pm.  He said that he attended Quo Vadis between 15 and 20 hours a week.

10.     Mr Iannella said that following the cancellation of his Newstart Allowance, he was not advised that he could immediately re-apply for pension/allowance.  He did however confirm that on 20 September 2004 the Authorised Review Officer had told him that he could re-apply.  He said that he did not re-apply at this time as he had lost all faith with Centrelink.

11.     In answer to questions put in cross-examination, Mr Iannella said that he considered that his health would have allowed him to work part-time.  He said that the male proprietor of Quo Vadis, Mr Mario Giglio, would “fill my tank” with petrol once a week.  He said that he would sometimes give Mr Giglio receipts for the petrol.  He said that he would generally receive $20.00 to $30.00 worth of petrol or repayment for petrol, each week.

other witnesses

12.     Mr Mario Giglio, the proprietor of Quo Vadis, said that Mr Iannella simply “helps out and makes some deliveries”.  He said that the pizza bar opens from 4.30 pm until 10.00 pm each day and that when they were busy, Mr Iannella would help out.  He would perform such tasks as refilling, making an occasional pizza and delivering pizzas from time-to-time.  Mr Giglio said that he very rarely gave Mr Iannella money for petrol; he suggested perhaps this would occur one a month and that the payment would be between $5.00 and $10.00.  He said that he did not ask for receipts and definitely did not provide Mr Iannella with petrol money at a rate approximating $20.00 or $30.00 per week.  Mr Giglio said that Mr Iannella did not work unsupervised, however on some occasions he may have asked Mr Iannella to “go on ahead” in order to prepare for the day.  Mr Giglio said that he has lent Mr Iannella money.  He said that he did not keep a written record.  He said that at the moment it was likely that Mr Iannella would owe him a sum less than $1,000.00.  He said that Mr Iannella has been like a brother to him.

13.     Three other witnesses were called by Mr Iannella.  Mr George Awkar said that he had lent Mr Iannella “roughly $2,600.00”.  Mr Rosario (Ross) Barca said that he had known Mr Iannella for about 25 years.  He said that Mr Iannella had borrowed $1,500.00 to $1,600.00 from him personally at about Christmas 2004.  He said that he would like this money repaid however Mr Iannella has been a friend for a long time.  Mr Barca also said that he arranged for his brothers to lend Mr Iannella $3,000.00.  He said that Mr Iannella has probably repaid $1,000.00 to $1,200.00 to his brothers in “dribs and drabs”.

14.     Mr Kwan Sun (Clive) Wong said that he had known Mr Iannella for 20 years.  He said that Mr Iannella had borrowed a total of about $3,500.00 from him.  He said that he expects repayment although he does not have a written record of the loan or the outstanding balance from time-to-time.  Mr Wong said that Mr Iannella sometimes provided a reason for wishing to borrow monies.  He said that Mr Iannella has not repaid any monies to him, although he considers that when Mr Iannella receives an inheritance or in some other way receives money from his parents, Mr Wong will recover his money.

video evidence

15.     The respondent (the Department) provided video tape evidence taken by surveillance officers during a period from 2 October 2003 until 26 October 2003.  This video evidence indicated that over 11 days of surveillance Mr Iannella attended Quo Vadis on 7 occasions performing virtually all tasks necessarily required of workers at a pizzeria.

discussion of the evidence

16.     Mr Iannella suggested that at all relevant times he was qualified to receive Newstart Allowance in that he was unemployed and satisfied the activity test.  Mr Iannella said that his attendance at Quo Vadis was simply a form of socialising, necessary after the breakdown of his marriage and failure of a business.  This evidence was supported by a proprietor of Quo Vadis, Mr Maria Giglio.  Their evidence was, however, inconsistent in relation to benefits received by Mr Iannella.  Particularly Mr Iannella said that he may be paid $20.00 to $30.00 a week in recompense for petrol used in delivering pizzas.  Mr Giglio said that he would generally provide petrol money once a month and that it would only be $5.00 to $10.00.

17.     Mr Iannella’s credibility was contested.  In this regard I note that Mr Iannella’s evidence included a statement that he had lied in a loan application to Radio Rentals by telling that business that he was employed on a full-time basis at Quo Vadis achieving income at a rate of about $2,600.00 each month.  Whether this was true or not, it does indicate that Mr Iannella is prepared to lie about his employment status in order to obtain a benefit.  I had an opportunity of observing Mr Iannella provide his evidence on oath.  I found his evidence in relation to the management of his finances and the nature of his activities at Quo Vadis, unconvincing.  I have formed the view, on the evidence, including the video tape of the surveillance which occurred between 2 October 2003 and 26 October 2003, that Mr Iannella was employed at Quo Vadis for at least the period of the video surveillance.  I have also found that Mr Iannella was not actively seeking and willing to undertake paid work during this period.

finding of facts

18.     I make the following findings of fact.

·Mr Iannella suffers from medical conditions including diabetes, ischaemic heart disease, rotator cuff syndrome (left) and morbid obesity.

·Mr Iannella had been in receipt of Newstart Allowance from at least 31 December 1996 until that allowance was cancelled on 29 November 2003.

·Mr Iannella was sent a number of recipient notification notices from 24 February 2003 requiring advice to Centrelink if, amongst other things, he started paid or voluntary work, or started to receive any income.

·Mr Iannella did not respond to any of the recipient notification notices.

·On 11 March 2003 Centrelink received public information to the effect that Mr Iannella was working full-time at Quo Vadis.

·Mr Iannella signed a loan application form on 16 June 2003 advising Radio Rentals that he was employed at Quo Vadis on a full-time basis earning $2,600.00 a month.

·From 2 October 2003 until 26 October 2003 video surveillance was undertaken over 11 days.  During these 11 days, Mr Iannella attended Quo Vadis on 7 days performing virtually all tasks normally associated with a pizzeria, including making, delivery, and receiving payment for, pizzas.

·From at least 2 October 2003 until 28 November 2003 Mr Iannella worked at Quo Vadis earning sufficient income to preclude payment of Newstart Allowance.

·From at least 2 October 2003 until 28 November 2003 Mr Iannella was not actively seeking and willing to undertake suitable paid work within Australia.

·From 2 October 2003 until 28 November 2003 Mr Iannella was paid $1,956.05 in the form of Newstart Allowance.

legislation

19. I first considered whether Mr Iannella was qualified to receive Newstart Allowance from 2 October 2003 until 28 November 2003. Sections 593(1) and 601(1) of the Social Security Act 1991 (the Act) read as follows:

“593(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:

(i)        throughout the period the person is unemployed; or

(ii)the person is a CDEP Scheme participant in respect of the period; and

Note:   For CDEP Scheme participant see section 1188B.

(b)in the case of a person to whom subparagraph (a)(i) applies—throughout the period, or for each period within the period, the person:

(i)        satisfies the activity test; or

(ii)       is not required to satisfy the activity test; …

…

601(1) Subject to subsections (1A) and (3), a person satisfies the activity test in respect of a period if the person satisfies the Secretary that, throughout the period, the person is:

(a)actively seeking; and

(b)       willing to undertake;

paid work, other than paid work that is unsuitable to be undertaken by the person.”

20.     The effect of this legislation is that in order to qualify for Newstart Allowance a person must, amongst other things, be unemployed and unless exempted from the requirements of the activity test, satisfy that test.  This last-mentioned requirement means that a person must be actively seeking and willing to undertake paid employment in Australia.

21.     The concept of unemployment has been discussed in cases including Director-General of Social Services v Thomson (1981) 38 ALR 624. The Federal Court said at pages 626-7:

“The concept of ‘paid work’ provides a useful starting point.  At its broadest the description ‘unemployed’ encompasses those who are without paid work.  We appreciate that the statute itself, for example s 107(3) [now s 595], admits some limited extension of this but, subject to that qualification, the notion of ‘paid work’ as the antithesis of ‘unemployment’ seems to accord with common sense and with the statutory context. …

Some further limitation is, however, necessary to determine the true meaning of ‘unemployed’.  Neither in ordinary parlance nor in the context of the legislation is everyone who is without paid work ‘unemployed’; for example, neither the very young nor the very old and infirm would usually be so described.”

Later, at pages 628-629 the Court said:

“For all that, 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.  However, we anticipate that such a case would be exceptional.  In the usual case, of which we think this is an example, the solution will be arrived at by reference to all the circumstances, of which the activities being pursued for the time being by the applicant for benefit will be one.”

22.     I have found that Mr Iannella was receiving sufficient income to preclude payment of Newstart Allowance during the period under which surveillance occurred.  I also consider that the activities undertaken by Mr Iannella at Quo Vadis were, as expressed by the Court in Thomson (supra), “fundamentally incompatible” with Mr Iannella being regarded as being unemployed.  I have found that the activities undertaken by Mr Iannella, coupled with the limitations flowing from his significant medical conditions, prevented Mr Iannella satisfying the activity test, that is actively seeking and being willing to undertake, paid work in Australia.  In these circumstances Mr Iannella fails to satisfy the qualification provisions for Newstart Allowance in that he was not unemployed and did not satisfy the activity test at least during the period from 2 October 2003 to 28 November 2003.

23. Centrelink’s decision to cancel Mr Iannella’s payment of Newstart Allowance was made pursuant to s 80(1) of the Social Security (Administration) Act 1999:

“80(1) If the Secretary is satisfied that a social security payment is being, or has been, paid to a person:

(a)      who is not, or was not, qualified for the payment; or

(b)      to whom the payment is not, or was not, payable;

the Secretary is to determine that the payment is to be cancelled or suspended.”

In the circumstances of this case I consider that the Secretary, through his delegate, acted appropriately in cancelling payment of Mr Iannella’s benefit.

24. Flowing from Mr Iannella’s failure to qualify for Newstart Allowance during the period from 2 October 2003 until 28 November 2003 was Centrelink’s decision to raise and recover an over-payment of Newstart Allowance paid to Mr Iannella during this period in the sum of $1,956.05. A debt in this last-mentioned sum arises from the application of s 1223(1) of the Act:

“1223(1) Subject to this section, if:

(a)      a social security payment is made; and

(b)a person who obtains the benefit of the payment was not entitled for any reason to obtain that benefit;

the amount of the payment is a debt due to the Commonwealth by the person and the debt is taken to arise when the person obtains the benefit of the payment.”

This section creates a debt whenever a person receives a benefit to which he or she is not entitled.  It flows from my finding that Mr Iannella was not qualified to receive Newstart Allowance during the relevant period, that the payments made to him during this period comprise a debt recoverable by the Commonwealth.

25.     I have been asked to consider whether recovery of all or part of the debt should be written off or waived in the special circumstances of the case.    

26. Section 1237AAD of the Act reads as follows:

“1237AAD 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.”

It was submitted that Mr Iannella’s ill health, along with the other circumstances of this case comprise special circumstances, sufficient to warrant the favourable exercise of the discretion to waive recovery under s 1237AAD of the Act. I have considered all of the evidence and although Mr Iannella does suffer from poor health, nevertheless I am satisfied that special circumstances do not exist in this case.

27.     It was also contended that Centrelink had failed to advise Mr Iannella of his right to re-apply for Centrelink benefits as soon as his Newstart Allowance had been cancelled.  It seems to be common ground that the first time Mr Iannella was advised that he could again test his eligibility for a pension/allowance was the advice provided by an Authorised Review Officer on 20 September 2004.  Mr Iannella’s counsel referred me to Centrelink Guidelines relating to the imposition of penalties.  I do not consider that Centrelink are required at law to provide unsolicited information to potential Centrelink recipients of their entitlements.  Even if this were the case, Mr Iannella’s evidence at hearing was to the effect that he had lost faith in Centrelink and consequently delayed re-applying notwithstanding the advice provided on 20 September 2004.  In these circumstances it appears that the lack of advice provided by Centrelink, immediately after the cancellation of his Newstart Allowance, did not prevent or cause Mr Iannella to delay his application for another benefit or allowance.

decision

28.     In light of the above-mentioned circumstances the decisions made by Centrelink on 5 December 2003 to cancel payment of Newstart Allowance and on 8 December 2003 to raise and recover a debt in the sum of $1,956.05 are affirmed.

I certify that the 28 preceding paragraphs are a true copy of the reasons for the decision herein of Mr J G Short (Member)

Signed:         ............J Coulthard..........................................
  Associate

Dates of Hearing  27 February 2006 & 17 March 2006
Date of Decision  28 April 2006
Counsel for the Applicant         Ms R Lewis
Solicitor for the Applicant          Starke Lawyers
Counsel for the Respondent     Mr C Goldsworthy
Solicitor for the Respondent     Centrelink Legal Services Branch