Kambouris; Secretary, Department of Education, Employment and Workplace Relations and

[2008] AATA 221

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 221

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          Nos S 200500303 and

GENERAL ADMINISTRATIVE DIVISION		)                   S 200500304
Re		SECRETARY, DEPARTMENT OF EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS

Applicant

And

NICHOLAS KAMBOURIS

First Respondent

And

JANICE KAMBOURIS

Second Respondent

DECISION

Tribunal Deputy President D G Jarvis

Date20 March 2008

PlaceAdelaide

Decision

The tribunal sets aside the decisions under review, and in place of those decisions, decides that:

(a)      the first respondent was not entitled to receive Newstart allowance from 1 July 2001 to 7 June 2002;

(b)      the second respondent was not entitled to receive Disability Support Pension from 1 July 2003 to 22 January 2004;

(c)       the amount of the payments to which the respondents were not entitled is a debt due to the Commonwealth; and

the tribunal remits the matter to the applicant and directs the applicant to calculate the amount of benefits received by the respondents to which they were not entitled having regard to these reasons.

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

Deputy President

CATCHWORDS

SOCIAL SECURITY – Newstart allowance – disability support pension – overpayment – first respondent re-established business of dealing in opal – consideration of date when he ceased to be unemployed – consideration of rate of income of first respondent – conflicting accounting evidence – no onus of proof – consideration of Briginshaw test of quality of evidence adduced – failure by first respondent to keep proper business records – meaning of income “on a yearly basis” – second respondent advised by Centrelink to remain on benefits – overpayment in subsequent year not solely the result of administrative error – special circumstances – failure to notify changed circumstances is relevant to exercise of discretion to waive debt – decisions under review set aside.

PRACTICE AND PROCEDURE – Newstart allowance – disability support pension – overpayment – consideration of rate of income of first respondent – conflicting accounting evidence – no onus of proof – consideration of Bringshaw test of quality of evidence adduced – relevance of failure by first respondent to keep proper business records.

Social Security Act 1991 (Cth), ss 593(1), 1223(1), 1237A(1) and 1237AAD

Income Tax Assessment Act 1936 (Cth), s 262

Briginshaw v Briginshaw (1938) 60 CLR 336

Bushell v Repatriation Commission (1992) 175 CLR 408

Callaghan v William C Lynch Pty Ltd (1961) 79 WN (NSW) 830

Commonwealth of Australia v Ford (1986) 9 ALD 433

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Haidar v Secretary, Department of Social Security (1998) 52 ALD 255

Harris v Director-General of Social Security (1985) 7 ALD 177

McDonald v Director-General of Social Security (1984)1 FCR 354

Northern Territory of Australia v Mengel (1994) 95 NTR 8

Rana v University of South Australia [2007] FCAFC 188

Re ACT Department of Health and Nikolovski and Comcare (1996) 42 ALD 599

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Re Eckersley and Minister for Capital Territory (1979) 2 ALD 303

Re Goldthorpe and Secretary, Department of Employment and Workplace Relations [2007] AATA 1875

Re Secretary, Department of Family and Community Services and Rolley [1999] AATA 968

Riddell v Secretary, Department of Social Security (1993) 42 FCR 443

Secretary, Department of Employment and Workplace Relations v Joss (2006) 152 FCR 541

Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104

REASONS FOR DECISION

20 March 2008   Deputy President D G Jarvis

1.      For many years the respondents, Nicholas and Janice Kambouris, have lived in Coober Pedy, a remote opal mining town in the north of South Australia.  They commenced receiving Newstart allowance in 1997.  On 8 April 2002, Mrs Kambouris lodged a claim with Centrelink for Disability Support Pension (DSP).  Her Newstart allowance was cancelled from that date and she was granted DSP with effect from 8 April 2002.

2.      On 6 June 2002, Mr and Mrs Kambouris went to the Centrelink office at Coober Pedy with the intention of cancelling their pensions, because Mr Kambouris had received a loan of $50,000.00 which he intended to use to purchase opal for re-sale at a profit in the course of business as an opal dealer.  The Centrelink officer to whom they spoke suggested that Mrs Kambouris should continue to receive benefits until they were aware of how Mr Kambouris’ business fared.  However, Mr Kambouris’ Newstart allowance was cancelled at his request from that day.

3.      Mrs Kambouris continued to receive DSP until her pension was cancelled at her request on 22 January 2004.

4.      In the meantime, during 2003, Centrelink had initiated inquiries into whether various persons in Coober Pedy who were receiving social security benefits were eligible for those benefits.  These inquiries extended to whether Mr Kambouris had been eligible to have received Newstart allowance.  On 11 March 2004 Centrelink advised Mr Kambouris that a debt of $6,038.19 had been raised against him in respect of the period from 29 June 2001 to 5 June 2002 on the basis that he had failed to declare his income for the above period as required under the Social Security (Administration) Act 1999 (Cth) (“Administration Act”). Mr Kambouris requested a review of the above decision, and it was affirmed.

5.      At Mr Kambouris’ request, the decision was then reviewed by an Authorised Review Officer (ARO).  The ARO referred to Mr Kambouris’ interest in certain opal mining claims whereby he was required to work a minimum of twenty hours a week, and decided that he could not have been unemployed for the purposes of the Social Security Act 1991 (Cth) (SS Act) from 15 November 1999 to 5 June 2002. The debt previously raised was recalculated on the basis of this extended period, to a figure of $22,123.18.

6.      The inquiries that Centrelink had made into the affairs of Mr Kambouris led Centrelink, at various dates in February and March 2004, to raise debts against Mrs Kambouris on the basis that the income of her husband had not been taken into account when assessing her entitlement to Newstart allowance and subsequently DSP.  Mrs Kambouris requested a review of the decisions to raise the debts, but they were affirmed.  She then requested that the decisions be reviewed by an ARO.  The ARO varied the commencement date of the debts and recalculated the debts accordingly.  The period of her Newstart allowance debt was from 29 June 2001 to 7 April 2002, and the periods of her DSP debts were from 8 April 2002 to 28 May 2003, and 29 May 2003 to 21 January 2004.

7.      Mr and Mrs Kambouris applied to the SSAT to review the ARO decisions.  The SSAT decided to set aside those decisions.  It decided that Mr Kambouris had satisfied the qualification provisions for Newstart allowance in the relevant period, in that he was not unemployed and his income was not sufficient to preclude payment of Newstart allowance under the income test provision of the SS Act.  As to Mrs Kambouris, the SSAT decided that Mr Kambouris’ income was not sufficient to preclude payment of Newstart allowance and DSP under the income test provisions of the SS Act.

8.      The applicant has applied to this tribunal for review of the decisions of the SSAT.  The two applications were heard together.  They raise a number of complex issues, and a considerable volume of oral and documentary evidence was adduced in support of the applications.

Issues before the Tribunal

9.      The issues before the tribunal in relation to Mr Kambouris are as follows.

(a)Was Mr Kambouris “unemployed” within the meaning of s 593(1) of the SS Act during the period 15 November 1999 to 5 June 2002?

(b)If so, was his income such as to preclude payment of Newstart allowance in respect of the above period?

(c)If there has been an overpayment of Newstart allowance, and there is a debt due to the Commonwealth, should all or part of the debt be waived or written off?

10.     The issues in relation to Mrs Kambouris are as follows.

(a)Was the income of Mrs Kambouris such as to preclude payment of Newstart allowance in the period from 29 June 2001 to 7 April 2002, and DSP during the period from 8 April 2002 to 28 May 2003, and 28 May 2003 to 21 January 2004?

(b)If there has been an overpayment of Newstart allowance or DSP, and there is a debt due to the Commonwealth, should all or part of the debt be waived or written off?

11.     Mrs Kambouris has a number of health problems.  According to her witness statement (exhibit A5, paragraph 20) Mrs Kambouris suffered a mild stroke in 2000, and in the same year was diagnosed as suffering ischaemic heart disease, mitral regurgitations, hypercholesterolemia,  sjogrens syndrome and hiatus hernia, and in 2002 she was diagnosed with menieres syndrome, in 2004 with diabetes, and in 2005 with crest syndrome.  There was no dispute as to those matters, or that, leaving aside the issue of Mr Kambouris’ income, she was qualified to receive DSP because of her medical condition.  Further, it was not suggested that Mrs Kambouris had at any material time been physically able to engage in opal mining.  There was also no issue as to Mr and Mrs Kambouris satisfying the activity test for Newstart allowance, and it appears from exhibits R8 and R9 that they were granted an exemption from the activity test on medical grounds.

12.     I received very helpful oral and written submissions from each party, and I have carefully considered these, as well as all of the evidence before me.

Background

13.     The following background matters are derived primarily from Mr Kambouris’ witness statement (exhibit R2).

14.     Mr Kambouris is sixty-four years old.  He emigrated to Australia from Greece in 1960, and married Mrs Kambouris in 1967.  They first went to Coober Pedy in 1971.  In 1975, when Mr Kambouris was working underground in a shaft digging for opal in Coober Pedy, his left arm was severely injured when a piece of equipment fell down the shaft.  Mr Kambouris claims that following his injury he was unable to continue to do the physical work involved in opal mining.  This is disputed by the applicant, and I will refer further to this issue below.

15.     In the period after the accident Mr Kambouris used opal mining equipment that he owned at that time as his contribution to joint venture mining enterprises.  Then in 1986 or 1987, he sold his equipment and commenced work as an opal dealer.

16.     In the 1990’s, Mr Kambouris established a company called Nikki Mining Enterprises to mine chrysoprase (Australian jade) in the Pitjantjatjara lands.  He lived at the mine site coordinating the mining venture, but the venture failed, and in December 1996 the company went into receivership with debts of several hundred thousand dollars.

17.     Mr and Mrs Kambouris spent most of 1998 in a dispute with the company’s bank, Westpac.  They represented themselves because they could not afford legal representation.

18.     They returned to Coober Pedy to live in 1999, and at some time after that Mr Kambouris re-established himself in business as an opal dealer, and they also acquired interests in certain opal mining claims.  However, there is a dispute as to when Mr Kambouris ceased to be unemployed for the purposes of the SS Act, and I will refer later to evidence relevant to Mr Kambouris’ activities after 1998.

Legislative Scheme

19.     Section 593(1) of the SS Act provides relevantly in effect that 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 … .”

20.     Under s 1068(1) the rate of Newstart allowance is to be calculated in accordance with a Rate Calculator.  Subsequent sections of Part 3.6 provide for Modules that establish the overall rate calculation process and the calculation of component parts used in the overall calculation.

21.     Section 94(1) of the SS Act provides relevantly that a person is qualified for DSP if:

“(a)     the person has a physical, intellectual or psychiatric impairment; and

(b)the person’s impairment is of 20 points or more under the Impairment Tables; and

(c)one of the following applies:

(i)        the person has a continuing inability to work … .”

22.     Under s 1064(1), the rate of DSP is to be calculated in accordance with the relevant Rate Calculator, namely Module A, which is provided for in s 1064-A1.  Step 5 of the Rate Calculator imports Module E, which is provided for in s1064-E1 and provides for the method of working out the amount of a person’s ordinary income on a yearly basis.

23.     In the present matter, the applicant contends in effect that Mr and Mrs Kambouris were not qualified to receive all or part of the pensions they received, and in consequence there was an overpayment of benefits to them, and that the overpayment constituted a debt to the Commonwealth.  The applicant’s contentions are based on s 1223(1) of the SS Act, which provides as follows:

“1223(1)  Subject to this section, if:

(a)       a social security payment is made; and

(b)a person who obtains a 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.”

Consideration

24.     The respondents’ Statement of Facts, Issues and Contentions asserts that “(t)he applicant bears the onus of proving its case on the balance of probabilities, and in accordance with the principles enunciated in Briginshaw v Briginshaw & Anor (1938) 60 CLR 336.”

Onus of proof

25.     Where relevant legislation, expressly or by implication, imposes an onus of proof on either party, the tribunal’s determination must of course be made by reference to that onus.  However, s 1223(1) of the SS Act is not expressed in terms that impose an onus of proof on either party.

26.     In Bushell v Repatriation Commission (1992) 175 CLR 408, Brennan J discussed the nature of proceedings before this tribunal, and said in effect that the proceedings were not adversarial, and that the original decision-maker and this tribunal on review were administrative decision-makers, and this tribunal is under a duty to arrive at the correct or preferable decision in the case before it, according to the material before it.  His Honour added, at page 425:

“The notion of onus of proof, which plays so important a part in fact-finding in adversarial proceedings before judicial tribunals, has no part to play in these administrative proceedings.”

27.     In an earlier Full Federal Court case, namely McDonald v Director-General of Social Security (1984) 6 ALD 6, Woodward J said that he thought it was inappropriate to refer to the concept of onus of proof in proceedings in this tribunal. His Honour pointed out (at page 10) that by virtue of s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), this tribunal, in carrying out its review, is put in the position of the person who made the relevant decision; that this tribunal must make its own decision based on the material before it, and not the material before the person who made the decision under review; and that there is no presumption that the original decision-maker’s decision is correct. He went on to discuss situations where the relevant legislation was not expressed in terms that implied an onus of proof, and said (at page 11):

“If the AAT finds itself in a state of uncertainty after considering all the available material, unable to decide a question of fact either way on the balance of probabilities, it will be necessary for it to analyse carefully the decision it is reviewing.  If, for example, it is a decision whether or not to cancel a pension in the light of changed circumstances, then it has failed to achieve the statutory requirement of reaching a state of mind that the pension should be cancelled.  If, on the other hand, it is a decision, to be made in the light of fresh evidence, whether or not the pension should ever have been granted in the first place, then it has failed to be satisfied that the person ever was permanently incapacitated for work.”

28.     From a practical point of view, however, it will be necessary for the party before the tribunal who is asking the tribunal to exercise a statutory power or discretion to adduce evidence on which the tribunal is satisfied that it may act.  Further, if facts are peculiarly within the knowledge of a party to an issue, a failure by that party to produce evidence as to those facts may lead to an unfavourable inference being drawn: see McDonald (supra), at page 11, where Woodward J referred to this concept as a “common sense approach to evidence”; Re ACT Department of Health and Nikolovski and Comcare (1996) 42 ALD 599 at [12]; and Re Eckersley and Minister for Capital Territory (1979) 2 ALD 303, at [18].

29.     Having regard to the above authorities, I conclude that it is not correct to say in the present proceedings that the applicant bears an onus of proof.

Briginshaw test of quality of evidence adduced

30.     In Briginshaw (supra), Dixon J said, in effect, at 361 – 363, that when, in civil proceedings, a question arises whether a crime or fraudulent conduct has been committed, the standard of persuasion is the same as upon other civil issues, that is the balance of probabilities. His Honour also said:

“Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal.  But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved.  The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.  In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences.”

31.     As Branson, Sundeberg and Dowsett JJ explained in a recent Full Federal Court judgment, “(t)he seriousness of the matter in issue affects the process by which reasonable satisfaction is attained.” : see Rana v University of South Australia [2007] FCAFC 188, at [31].

32. In the present matter it is not necessarily incumbent on the applicant to establish fraud or improper conduct on the part of Mr or Mrs Kambouris in order to establish that an overpayment of pension has occurred in their case. I also observe that Mr Kambouris was under a duty under s 262 of the Income Tax Assessment Act 1936 (Cth) to keep records that recorded and explained transactions relevant for any purpose of that Act, and it appears likely, on the basis of certain evidence to which I will refer below, that he did not comply with this duty. In addition, the profitability or otherwise of his business, particularly insofar as it involved cash transactions, was a matter peculiarly within his knowledge. Those matters should, I think, be taken into account, using a common sense approach as Woodward J suggested in McDonald, in considering the adequacy or otherwise of the evidence adduced by the applicant, and might enable the tribunal to reach a position of reasonable satisfaction on evidence which might otherwise not satisfy the quality of evidence referred to in Briginshaw.  The respondents should not be able to use the dicta in Briginshaw to shelter behind any inadequacies in the evidence adduced by the applicant when those inadequacies arise from the respondents’ failure to keep adequate records of cash transactions or to produce evidence that was peculiarly within their own knowledge.

Was Mr Kambouris “unemployed” prior to 5 June 2002? 

33.     I first consider whether Mr Kambouris was “unemployed” within the meaning of s 593(1) of the SS Act at some time prior to 5 June 2002, when he ceased receiving Newstart allowance.  I will then consider the further issue, which is relevant to the determination of the proceedings in relation to both Mr and Mrs Kambouris, of Mr Kambouris’ income during the relevant periods whilst they were receiving social security pensions.

34.     In Secretary, Department of Employment and Workplace Relations v Joss (2006) 152 FCR 541, Graham J considered the meaning of “unemployed” for the purposes of s 593(1) of the SS Act.  His Honour reviewed a number of earlier decisions of the Federal Court and of this tribunal.  The following principles that have relevance to the issues arising in the present proceedings are stated in effect in, or may be deduced from, Graham J’s judgment or the authorities to which he referred.

(a)The word “unemployed” bears its colloquial or popular meaning of not being engaged in work of a remunerative nature.

(b)This meaning must, however, be modified to some extent in that the income test provisions of the SS Act recognise that some income may be earned by a person in receipt of Newstart allowance resulting in the diminution of the allowance, but not rendering the person ineligible for it.

(c)Work of a remunerative nature encompasses not only the normal employer-employee relationship but also a person who is self-employed.

(d)A person may be employed even though his activities do not produce an income or profit.

(e)The question of whether a person is unemployed is a question of fact and degree, and regard should be had to the intensity with which the person applies himself or herself to particular work or a particular enterprise.

Re-establishment of opal dealing business

35.     Mr Kambouris’ evidence as to his activities prior to 5 June 2002 was as follows.  After he had resolved the dispute with Westpac he formed an intention to re-establish himself in business as an opal dealer.  However, he had been out of the industry for a long time and he had to acquire knowledge of prices, and selling for other people was good training.  He did not have enough money to buy opal himself.  However, people who had opal to sell began to approach him to sell their opal on their behalf, and on other occasions he approached other people to ask them to give him opal to see whether he could sell it on their behalf.  According to his answers in cross-examination, he was “thinking” about starting and getting back into opal dealing in 2001, and he slowly got started (transcript 10 August 2007, page 310, line 21).

36.     In describing the way in which he re-established himself in business as an opal dealer, Mr Kambouris differentiated between his activities before and after the time when he received a loan from another opal dealer, the witness Stafford Scott.  This was a loan of $50,000.00 at an interest rate of twenty per cent per annum, repayable on demand, and the loan was advanced in April 2002.  Mr Kambouris said that he did not cash the cheque until one or two months after he received it.  This loan, and another subsequent loan of $35,000.00 from a Chinese opal buyer, enabled him to purchase opal for resale.

37.     Mr Kambouris agreed that there were ways of dealing in opal without purchasing it, such as selling on consignment for other people, acquiring opal on credit, that is under an arrangement whereby he would not pay for the opal until he had sold it, or receiving opal on the basis that he would attempt to sell it for a price agreed with the owner, but if that were not possible the owner would take the opal back.

38.     I understand from the evidence of Messrs Kambouris and Scott that buyers from overseas, especially from China and America, go to Coober Pedy to buy opal.  Mr Kambouris said that when he had previously worked as a dealer in opal, from the late 1980’s until the mid 1990’s, he had made his living from dealing in opal rather than opal mining.  In response to questions as to when, after becoming interested in dealing in opal again, he first started meeting people again, he agreed that he met some of the people with whom he had dealt before.  With some reluctance he accepted that they were about ten in number, and he said there were also a “couple” of new people (transcript 10 August 2007, page 308, line 17).  He also said that he knew most of the people mining opal in Coober Pedy, and some of them had opal to sell.

39.     In the period before the loan from Mr Scott, Mr Kambouris did not keep records of the transactions where he sold opal for other people, and (as was commonplace in Coober Pedy) the transactions were conducted in cash.  He was asked for the names of persons with whom he dealt, and whilst he provided a few names, he claimed he could not remember the names of other persons.

40.     Mr Kambouris applied to register two business names, namely House of Opalios, and Opal Mines Online, with commencing dates of the business names stated to be 1 July 2002 and 1 September 2002 respectively (exhibit A56).  However, these dates are not determinative of the date when Mr Kambouris started in business again, since there was no requirement under the applicable State legislation to register a business conducted by a person in his or her own name.

41.     Mr Kambouris’ account of the extent of his business activities in the period prior to the loan from Mr Scott is inconsistent with the evidence of another opal dealer, the witness Trevor Berry, whom the applicant called.  In the year 2000, Mr Berry commenced an on-line opal selling business operated in the name of Berry D Opals.  This business involves miners or opal suppliers presenting opal for sale to Berry D Opals.  The price of the opal is discussed and agreed.  Once the opal is sold through his web-site and he has received the proceeds of sale, Mr Berry creates an invoice for the sale showing the name of the vendor and the date.  This invoice records the amount deducted for his commission.  He then presents the invoice to the supplier.

42.     Mr Berry said that during the period from 5 July 2001 to 1 October 2002, Mr Kambouris presented some twenty-nine parcels of opal to him for sale through his on-line business.  Mr Berry produced six books containing copies of invoices that he issued to his customers during this period.  These books (exhibit A43) include copies of invoices which he identified as being invoices handed to Mr Kambouris following the sale of parcels of opal that Mr Kambouris gave to Berry D Opals for sale on-line.  The total value of the opal entailed in the twenty-nine transactions was $164,242.42.  Mr Berry also said that Mr Kambouris was one of the suppliers who supplied the largest amount of opal to him during the relevant time (transcript 8 August 2007, page 104, line 32).  He said further that on some occasions the provision of opal to him occurred at Mr Kambouris’ home, and he observed large tubs of opal on a bench, and there was also a large safe that contained parcels of rough opal in bags, although he was unable to estimate the quantity or value of the opal.

43.     Mr Kambouris disputed Mr Berry’s evidence.  He acknowledged that he had given some parcels of opal to Mr Berry for sale on line during the period to which Mr Berry referred, but only to a value of approximately $61,500.00, made up of some seven parcels.  He denied that Mr Berry had given him any invoices in respect of his dealings with him.  He also said that his cash profit from the transactions was approximately $800.00, and in addition, in some cases he received potch and colour (being parcels of opal of little value) by way of payment.

44.     Counsel for Mr Kambouris, Mr Amey, attacked the veracity of Mr Berry’s evidence and contended that I should accept Mr Kambouris’ version of events.  Amongst other matters, counsel referred to the fact that the copy invoices which Mr Berry attributed to Mr Kambouris were in many cases addressed to persons other than Mr Kambouris, and Mr Berry had at a later date written Mr Kambouris’ name on them, and in some (but not all) cases in conjunction with signing his name above his stamp as a Justice of the Peace.  Counsel also referred to an invoice for “internet lessons” between June and October 2002 (exhibit R1) which Mr Berry issued to Mr Kambouris after Mr Kambouris had established his own on-line opal selling business; he submitted that the reference to “internet lessons” was untrue and a fabrication by Mr Berry, and showed resentment and vindictiveness towards Mr Kambouris.

45.     Mr Berry acknowledged that he had in a number of cases supplemented the copy invoices by adding Mr Kambouris’ name or the word “Nick”.  He said he did this because he had been asked by Centrelink to identify copies of the invoices that related to Mr Kambouris.  Having regard to exhibit A55 it is likely that he did this early in 2004, when he prepared for Centrelink a summary of the opal sales he had made on behalf of all of his customers, including Mr Kambouris.  It appears that he attached his Justice of the Peace stamp later still, on 18 December 2006, after he had been asked to provide information to the Australian Government Solicitor, who was by then acting for the applicant.  Mr Berry gave evidence that in cases where he had shown a different name on an invoice attributed to Mr Kambouris he had done so because Mr Kambouris had said in effect that the sale was “for” the other person.  Mr Berry said that he did not find this to be unusual because he understood that Mr Kambouris was a dealer in opals, and Mr Kambouris was “dealing in a lot of opal” (transcript 8 August 2007, page 110, line 13).

46.     Mr Berry said that when he came to write out the invoices, he could recall that the parcels in question had come from Mr Kambouris.  He also said, referring to those invoices, that they are addressed to third parties, that Mr Kambouris was the only one of his customers who requested transactions to be recorded in the names of third parties, and the names on the invoices were not the names of people with whom he had dealt directly (transcript 8 August 2007, pages 110 – 111).

47.     Quite apart from the above matters, Mr Berry said that whilst the additions to the various copy invoices were made later, he made a contemporaneous endorsement in his invoice book at the time when he issued invoices to Mr Kambouris so that he would know that the transaction involved Mr Kambouris.  This contemporaneous endorsement comprised the inclusion of the letter “N” either as part of the name he wrote on the invoice (such as “Bill N” in exhibit A43, Miners 3, Invoice 12) or by including the letter “N” in the index to the invoices (as for example in the index to Miners 3).  He said that the letter “N” signified “Nick”, being Mr Kambouris’ first name.

48.     The letter “N” appears in each case to have been written in the same pen as the other writing on the invoice, in contradistinction to the additions acknowledged to have been made some time later.  The letter “N” was included either in the indices or on the invoices in all but two cases where invoices were made out to persons other than Mr Kambouris or “Nick”.

49.     I prefer the evidence of Mr Berry to that of Mr Kambouris.  I accept that the letter “N” was written contemporaneously, and that the invoices related to transactions with Mr Kambouris.  The evidence of Mr Kambouris as to his dealings with Mr Berry was based on his recollection, and he had no records of the relevant transactions.  Of the seven transactions to which Mr Kambouris referred in his response to Centrelink’s inquiries, one was for a parcel of opal with a price of approximately $37,000.00.  However, Mr Kambouris was unable when giving evidence to recall this particular parcel; this seems inconsistent with his claim that during this period he was only starting up a business venture and was only conducting a few transactions.

50.     In other respects, I found Mr Kambouris’ evidence as to the level of his opal dealing activities to be unsatisfactory, either because his memory is deficient, or perhaps because he was being deliberately evasive.  I refer in particular to the varying estimates of the years when he became interested in dealing in opal again, and his responses to cross-examination as to persons whom he met or who provided opal to him for sale.  Further, in response to a letter from Centrelink requesting comments on the information provided by Mr Berry as to sales amounting to the above figure of $164,242.42, Mr Kambouris signed a letter prepared by his wife that included the statement:

“We will supply you with the documents we have when you have supplied us with the copy of the receipts that Mr Trevor Berry has.”

This was a misleading statement; Mr and Mrs Kambouris had no documents to record their transactions with Mr Berry, and they must have known this when they signed the letter.

51.     Nevertheless, I accept that there was undoubtedly some lead time before Mr Kambouris established himself in business again to a point where it could be said, consistently with the authorities to which I have referred above, that he had ceased to be unemployed.  I find that by 1 July 2001, being shortly before the first of the transactions with Mr Berry, Mr Kambouris had ceased to be unemployed within the meaning of s 593(1) of the SS Act.

52.     I think it likely that before 1 July 2001 Mr Kambouris was engaging in some opal dealing, and in addition, that he had some involvement in opal mining (to which I will now refer).  However, I further find that these two activities, either separately or in combination, were not such as to amount to Mr Kambouris having ceased to be unemployed and so not qualified for Newstart allowance.  I have reached this conclusion because I do not think that the level or intensity of Mr Kambouris’ activities prior to 1 July 2001 were sufficient to constitute his having ceased to be unemployed; he had registered and renewed various opal mining claims, but had only a limited role in certain opal mining ventures, and I accept that prior to 1 July 2001 he was still in the process of learning about the opal market and of commencing to re-establish his opal dealing business.

The respondents’ interests in opal mining claims

53.     The applicant called Deana Trenham to give evidence relevant to the interests of the respondents in opal mining claims.  Ms Trenham has been employed by the Department of Primary Industry & Resources SA (PIRSA) and the Department of Minerals & Energy Resources since May 1987, and is located in Coober Pedy.  She has held her current position of Opal Mining Registrar for more than five years.  She has extensive knowledge of opal mining legislation and practices.

54.     Ms Trenham gave evidence that within the Major Working Area (MWA) of the proclaimed opal fields in Coober Pedy, only one claim per person could be held, and the person holding the claim was required to work it for twenty hours per week.  Outside the MWA, up to three claims could be held, and the claims did not need to be worked personally, as long as they were worked for a minimum of twenty hours per week.  This was also the position with claims held in other areas, including in particular opal mining claims held at Lambina, which was not within a proclaimed field.  Once a claim was pegged, the miner had an option to renew the claim for a further twelve months.  Generally miners would do this if the claim was viable.

55.     Ms Trenham recounted the claims that Mr Kambouris held from 1999 to 2004.  These were as follows:

(a)      a claim at Shell Patch from 15 November 1999 to 8 September 2000;

(b)      a claim at Brown’s Folly from 3 July 2000 until 2 October 2000;

(c)       a claim at Olympic from 5 February 2001 to 30 October 2001;

(d)      a claim at Ryan’s Hill from 30 May 2002 to 29 August 2002;

(e)a second claim at Ryan’s Hill from 12 September 2002 to 8 October 2002; and

(f)       a claim at Larkin’s Folly from 11 October 2002 to 10 January 2004.

The claim at Brown’s Folly was outside the MWA, but the other claims were within the MWA.  With the exception of the claim at Brown’s Folly and the two claims at Ryan’s Hill the above claims were extended beyond their initial three months’ term.

56.     Ms Trenham recounted the claims that Mrs Kambouris held from 1999 to 2004.  These were as follows:

(a)      a claim at Brown’s Folly from 3 July 2000 to 2 October 2000;

(b)      a second claim at Brown’s Folly from 3 October 2000 to 2 January 2001;

(c)       a claim at Lambina from 16 May 2001 to 28 August 2001;

(d)      a claim at Zorba from 31 October 2001 to 30 January 2002;

(e)      a claim at Ryan’s Hill from 31 May 2002 to 30 August 2002;

(f)       a second claim at Ryan’s Hill from 12 September 2002 to 20 May 2003; and

(g)a claim at Greek Gully from 20 May 2003 to (according to the attachment to exhibit A29) 19 May 2003.

With the exception of the two claims at Brown’s Folly, and the claim at Lambina, all of the above claims were inside the MWA.

57.     Ms Trenham gave evidence as to the steps taken by PIRSA to police and enforce compliance with the labour requirements of opal mining claims.  She said that a miner would be “lucky” to get away with not working a claim for any more than a month without it coming to somebody’s attention (transcript 6 August 2007, page 37, lines 36 – 37).  In cross-examination she acknowledged that prior to an increase in the number of compliance officers in about 2001, an unworked claim was less likely to be detected, and a period of non-compliance could occur for a couple of months (transcript 6 August 2007, page 54).  She further acknowledged that if PIRSA officers observed that a claim was being worked, they would not necessarily investigate whether or not the work was being done personally by the registered holder of the claim.

58.     Mr and Mrs Kambouris did not dispute Ms Trenham’s evidence as to their interests in the various opal mining claims.  However, it is apparent that Mrs Kambouris’ medical condition is such that she was unable to personally carry out any mining work.  Further, Mr Kambouris maintained that he was also unable to carry out mining work because of the injury to his arm in 1975.  The applicant disputed this.  It relied on certain information in a medical report dated 15 August 1977 to Mr Kambouris’ general practitioner, Dr M G Cacas, from a general surgeon (see exhibit A1, T13, page 212).

59.     The respondents called Dr Cacas.  He gave evidence of subsequent consultations in 2001 when Mr Kambouris was complaining of right shoulder pain, which the doctor diagnosed as right shoulder capsulitis consistent with over-use of the right shoulder in consequence of not using his left arm.  Dr Cacas also assessed Mr Kambouris’ capacity for work, at the request of Centrelink, in February 2002.

60.     There is no medical evidence before me as to the condition of Mr Kambouris’ left arm or right shoulder during the period from 1997, when he commenced to receive Newstart allowance, and 29 August 2001, when he consulted Dr Cacas in connection with his right shoulder pain.  I am not satisfied that Mr Kambouris was unable to work as an opal miner during the period in which he received Newstart allowance, but I find that he had restrictions on undertaking heavy work, and that his left arm injury prevented him from operating most forms of mining machinery, and he only had some limited capacity to work as an opal miner.

61.     Mr Kambouris gave evidence that his interest in the mining claims was pursuant to a joint venture agreement with two other persons, namely the witness Andreas Skarmoutsos and the witness Dimitrios Nikolau.  Mr Kambouris said that his two co-joint venturers provided the mining equipment and labour required, and his role was to provide the diesel fuel used by the machinery.  The witness Peter Simitos confirms that Mr Kambouris purchased diesel fuel from his Mobil service station at Coober Pedy.  According to exhibit A3, invoices were issued to Mr Kambouris for purchases of diesel fuel totally approximately $53,000.00 over the period from 5 June 2002 to 23 July 2003.  Mr Kambouris subsequently received a rebate of $9,879.04 pursuant to the Diesel Rebate Scheme (see exhibit A1, T43, page 441).  He used this amount to reduce his indebtedness to the Mobil service station, (transcript, 9 August 2007, page 268), but still owes Mr Simitos approximately $23,000.00 (transcript 6 August 2007, page 81).

62.     The evidence of Mr Kambouris’ interest in the opal mining claims with the attendant requirement that they be worked for a minimum of twenty hours per week, and evidence that any breaches of this requirement were not detected, must be assessed in the light of the further evidence to which I have referred above, and does not constitute proof that Mr or Mrs Kambouris were personally working the claims.  I find that they were only involved in the opal mining joint ventures to the limited extent described by Mr Kambouris, and that Mr Kambouris’ involvement did not mean that he had ceased to be unemployed for the purposes of s 593(1) of the SS Act.

Effect of Mr Kambouris’ income on respondents’ entitlement to pension

63.     In view of my finding that Mr Kambouris had ceased to be unemployed by 1 July 2001, he was not entitled to Newstart allowance after that date, and the level of his income after that is not relevant in his case.  However, it remains necessary to consider whether his income was such as to disqualify him from receiving Newstart allowance prior to that date.

64.     I have referred above to the interests of Mr and Mrs Kambouris in opal mining claims.  Mr Kambouris said that whilst some small pieces of opal were discovered, there was never any economic find of opal from the mining claims.  He said that the small amount that was found was used by Mr Skarmoutsos for repairs to his machinery.  Mr Skarmoutsos, and the other participant in the joint venture, namely the witness Mr Nikolou, also confirmed that the joint venture was unsuccessful.

65.     I find that the interests of Mr and Mrs Kambouris in their mining claims did not at any time prior to 1 July 2001 result in their receiving income at a level that would prevent them from receiving Newstart allowance or reduce their entitlement to that pension.

66.     The level of Mr Kambouris’ income is also relevant to the entitlement of Mrs Kambouris first to Newstart allowance, and then from 8 April 2002 to DSP.  Having regard to my above findings, I now turn to the issue of whether Mr Kambouris’ income between 1 July 2001 and 22 January 2004 was such as to preclude Mrs Kambouris from entitlement to DSP, or alternatively, to reduce any such entitlement.

67.     As mentioned above, the rate of Newstart allowance is provided for in Part 3.6 of the SS Act.  Section 1068-G1 provides for the method of working out the effect of a person’s ordinary income, and of the ordinary income of a partner of the person, on the person’s maximum payment rate.  The first step in the method statement is to work out the person’s ordinary income on a fortnightly basis.  Provision is made in s 1068-G2 for the deemed ordinary income of members of couples where the person’s partner is receiving a social security pension.

68.     Provision is made for the rate of DSP in Part 3.2 of the SS Act. Section 1064-E1 provides for the method of working out the effect of a person’s ordinary income on the person’s maximum payment rate.  The first step of the method statement is to work out the amount of the person’s ordinary income “on a yearly basis”.  Provision is made in s 1064-E2 for determining the ordinary income of members of couples.

69.     The word “income” is defined relevantly in s 8(1) to mean:

“… in relation to a person …

(a)an income amount earned, derived or received by the person for the person’s own use or benefit; … .”

The expression “earned, derived or received” used in this definition is defined in s 8(2) in broad terms.

Meaning of income on a yearly basis

70.     By virtue of s 1064-E1 it is necessary to determine the amount of Mr Kambouris’ income “on a yearly basis” between 8 April 2002 and 22 January 2004.

71.     In Harris v Director-General of Social Security (1985) 7 ALD 277 the High Court of Australia considered the meaning of the expression “annual rate of … income” in s 28(2) of the Social Services Act 1947 (Cth) (the “1947 Act”), which preceded the SS Act. The majority of the High Court discussed how the section should be applied where a pensioner received irregular or intermittent amounts of income from different sources. Their Honours said, at 282:

“If a pensioner is in casual employment earning different amounts each week, as Mrs Harris was, it may be appropriate – it is a question of fact – to determine the annual rate of income attributable to casual employment by striking an average of earnings over a period … the circumstances of the case must determine what is a fair method of ascertaining the current rate of income at a particular time.”

72.     In a helpful decision in Re Secretary, Department of Family and Community Services and Rolley [1999] AATA 968 Deputy President Forgie reviewed a number of authorities and said (at [42]) that the current SS Act “did not intend to effect any changes in the Ordinary Income Test as it had operated under the 1947 Act”, and therefore the High Court decision in Harris should be followed.  The Full Federal Court dismissed an appeal from the Deputy President’s decision, and also adopted the interpretation of the judgment of the majority of the Court in Harris.  The Court went on to discuss various situations where income might be derived from different sources, and to explain the method of determining a yearly rate of income in those situations.

73.     The present case differs from Rolley because in that case the pensioner received income from casual employment over a closed period of time.  Mr Kambouris was self-employed during the relevant period, and no doubt his income fluctuated according to the sales that he made and the resulting profitability of those sales.  I therefore consider that the correct approach in the present matter in order to determine Mr Kambouris’ income “on a yearly basis” at any particular point in time is to strike an average of his earnings over an appropriate period.

74.     There are some references in the authorities to the proposition that the yearly rate of income should be calculated by projecting anticipated future income on the assumption that the relevant source(s) of income continue to provide income at the same rate in the future.  This would no doubt be appropriate at the time when an administrator is considering whether an applicant for a pension is qualified under the relevant income test.  In other cases, such as the present, the question will be whether there has been an overpayment of pension in respect of a past period, and this should be determined by reference to the rate of income over that period.  In either case, the decision-maker should consider all of the information available at the time of making a decision.  When matters come to be determined in this tribunal, the tribunal often has the benefit of information that has arisen since the date of the original determination, and it is of course appropriate for the tribunal to use the benefit of hindsight and to take into account all of the information available to it up to the time when it makes its decision (see Commonwealth of Australia v Ford (1986) 9 ALD 433 at 437).

Income of Mr Kambouris from 1 July 2003 to 22 January 2004

75.     In the present matter, having regard to the focus of the presentation of the accounting evidence, I will first consider Mr Kambouris’ income on a yearly basis as at 22 January 2004, when Mrs Kambouris ceased to receive DSP.  I consider that this should be done by striking an average of Mr Kambouris’ income over the period from 1 July 2003 to 22 January 2004.  This period is a little over half a year.  The commencement of the period corresponds with the commencement of the financial year, and Mr Kambouris’ accountant, Ms Cook, prepared his accounts on a financial year basis.

76.     Ms Cook gave evidence that she has acted for Mr Kambouris since about December 2003 and that she prepared the first accounts of his business, which were the accounts for the financial year ended 30 June 2003.  She also prepared the accounts for subsequent years, including in particular the accounts for the financial year ended 30 June 2004.

77.     The applicant engaged another accountant, namely the witness Trevor Clark, initially to advise on the accounts of the business for the year ended 30 June 2004.  He arrived at a net profit for that year that was substantially greater than the net profit arrived at by Ms Cook.  In those circumstances I directed that the two accountants should meet and then prepare a joint report in respect of the financial year ended 30 June 2003 and the period 1 July 2003 to 22 January 2004, with a view to their giving concurrent evidence.  However, in the event, they did not give their evidence concurrently.

78.     By the time of the hearing, the accountants had prepared various reports which are included in exhibit A51.  They later also prepared a joint report dated 4 December 2007 (exhibit A52).  This joint report sets out the areas of agreement between them, as well as the areas of disagreement.

79.     Ms Cook explained that the accounts she had originally prepared for Mr and Mrs Kambouris were based on information provided to her by them.  This included information provided by Mrs Kambouris in order to prepare quarterly business activity statements for the business.  However, when Ms Cook and Mr Clark examined the period from 1 July 2003 to 22 January 2004 in order to prepare their joint report, they each prepared income and expenditure statements for that period using source materials, comprising bank statements, cheque butts and deposit records.  When Mr Clark prepared his accounts for the year ended 30 June 2003, he also used the source material approach, although he said that in the early stages of trading Mr Kambouris rarely used the Westpac Bank account for his business.

80.     The joint report for the period 1 July 2003 to 22 January 2004 shows that the gross profit from trading arrived at by Ms Cook was in round figures about $30,000.00 less than the gross trading profit arrived at by Mr Clark.  It was agreed that this difference was the result of their differing treatment of two cheques dated 19 December 2003 for $15,000.00 each (plus GST) made out to Mr Scott’s company, S W Scott Enterprises Pty Ltd.  When the joint report was prepared, Ms Cook treated these cheques as payment for stock, so that her figure for purchases was in round figures $30,000.00 more than the purchases determined by Mr Clark.  Whilst Ms Cook treated the two cheques in this way, Mr Clark understood that the cheques should not be taken into account as they had not been presented by 22 January 2004.  In fact, the cheques were presented on 12 February 2004 and 10 March 2004, as appears from the Westpac Bank statements, exhibit A11.  Quite apart from this, Mr Clark said that if the cheques were for consignment stock, neither the value of the opal on consignment nor the cheques should be taken into account at all, and the only accounting relevance of the transaction would be to take into account as income any commission earned for selling the consignment stock.

81.     In his evidence Mr Clark adhered to the opinion he expressed in the joint report.  Ms Cook said that she had had further discussions with Mrs Kambouris the night before giving evidence.  Ms Cook said that she was then informed that certain sales of opal effected by Mr Kambouris for Mr Scott, which she had understood to be consignment sales, were not reflected at all in Mr Kambouris’ bank account.  This was because in the case of those sales, once Mr Kambouris found a purchaser, he would arrange for Mr Scott to invoice that purchaser direct, and the purchaser would then pay Mr Scott the invoiced amount.

82.     Ms Cook acknowledged, however, that the two cheques totalling $30,000.00 were not banked until after 22 January 2004, and further agreed that if the two cheques related to sales which took place after that date, then the two cheques should not be brought into account if Mr Kambouris had taken delivery of the opal on the day the cheques were written out, namely 19 December 2003.  However, Ms Cook said that she considered, apparently as a result of her discussion with Mrs Kambouris, that Mr Kambouris had received the opal some time before 19 December 2003 and that he may have sold some of the opal before that, but it was not clear what parts of the parcel had been sold, or when it had been sold.

83.     At my request, Mr and Mrs Kambouris were recalled to provide further evidence in relation to the two cheques.  Mr Kambouris confirmed that the cheques related to a parcel of opal that he had received on consignment from Mr Scott some time before the date when the cheques were written out.  He said that he could not remember the particular parcel in question or details of the transaction, but could say confidently what would have happened as a result of the usual course of his dealings with Mr Scott.  He said that before the date when the cheques were written out, he would have had the parcel of opal on consignment possibly for some time and would have sold some of the parcel (by mixing it with other opal), but not all of it; and as a result, on 19 December 2003 Mr Scott agreed to sell the parcel to him for a reduced price of $30,000.00 in order to dispose of the opal.  Mr Kambouris explained that he had agreed that Mr Scott would not present the cheques until Mr Kambouris advised him that there were funds in his account to meet the cheques.  Mr Kambouris also explained that two cheques for $15,000.00 each were issued, instead of one cheque for $30,000.00, since it was easier for him to have his account in funds to the extent of two smaller amounts of $15,000.00, rather than for the full amount of $30,000.00.

84.     Whilst Mr Kambouris was unable to recall how much of the parcel in question had been sold before the date when the cheques were written out, he agreed in cross-examination that it was likely that he had held the parcel for some time, and that not much of the parcel had been sold by the time the cheques were written out.

85.     Mrs Kambouris gave further evidence as to her understanding of the transactions involving the two cheques.  This was consistent with Mr Kambouris’s explanation, although she said that she was not present at conversations between her husband and Mr Scott, and was unaware of the value of the parcel of opal or what part of it might have been sold.

86.     The cashbook kept by Mrs Kambouris and the Westpac Bank statements indicated that the sales of opal between 19 December 2003 and 22 January 2004 amounted to only to $2,700.00 (see exhibit A53 and transcript, 4 December 2007, page 28, line 32), but that there were significant sales in February and March 2004.  Having regard to this material and to Mr Kambouris’s concession in cross-examination, I find that it would be reasonable to treat the major portion of the parcel in question as unsold as at 22 January 2004, but to treat part of the parcel as having been sold earlier.

87.     As at 22 January 2004 Mr Kambouris had not paid for the portion of the parcel sold earlier.  The evidence before me does not enable me to quantify the proportion of the parcel of opal that had been sold before 22 January 2004.  In these circumstances, I think it appropriate to do the best I can on the evidence before me, and to use a “broad axe” approach in order to quantify the value of the stock sold prior to 22 January 2004, and to add the resulting figure to the cost of purchases made prior to that date.  Proceeding in this way would, I think, be consistent with the approach of courts in quantifying damages in cases where there are difficulties in quantifying losses from the limited evidence before the court: see for example Northern Territory of Australia v Mengel (1994) 95 NTR 8, at paragraph 272; Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, at 118 per Lord Show; and Callaghan v William C Lynch Pty Ltd (1961) 79 WN (NSW) 830, at 834. I think it appropriate to add a sum of say $7,500.00 (being 25% of the agreed price of $30,000.00 for the parcel of opal in question) to the amount of opal purchases for the period up to 22 January 2004.

88.     There are certain other differences in the figures referred to in the accountants’ joint report.  In arriving at his figure for sales, Mr Clark deducted GST, but Ms Cook pointed out that no GST was payable on overseas sales, and I accept that the amount of GST, $2,657.00, should be deducted.  There was a further difference in that Ms Cook had treated a bank deposit of $4,000.00 on 7 October 2003 as a redeposit and not a sale, but I prefer the evidence of Mr Clark who considered, based on his analysis of the cashbook, that this amount constituted sales.

89.     Having regard to Mr Kambouris’ evidence, but using a broad axe approach as mentioned above, I consider that the trading profit should be calculated as follows.

Sales (being Ms Cook’s figure
increased by $4,000.00)   $128,071.00
Opening Stock  86,800.00
Purchases (Mr Clark’s figure plus
$7,500.00 referred to in para 87 above)       67,125.00
  153,925.00
Deduct Closing stock (being the
figure used by both accountants)                   86,800.00              67,125.00

Gross trading profit  $60,946.00

90.     This gross trading profit should then be reduced by expenses.  If Ms Cook’s figure for expenses is used, namely $35,949.00, the net profit for the above period would be $24,997.00, which would equate to a yearly rate of income of $42,240.30.

91.     I am mindful that the above figure substantially exceeds the original net profit of $13,848.00 shown in Ms Cook’s original accounts for the whole of the financial year in question, namely the year ended 30 June 2004 (see exhibit A51, Tab 1, letter dated 20 June 2007 from Clark & Associates, Schedule 1).  However, the following aspects of the original full year’s accounts, compared with the figures used by Ms Cook when the joint report was prepared, suggest that the original accounts were deficient.

(a)Ms Cook’s sales to 22 January 2004 were $124,071.00 and only $129,393.00, or a little over $5,000.00 more, for the full year.

(b)Ms Cook’s expenses for the period to 22 January 2004 were $35,949.00, compared with $21,714.00 for the full year, being a substantially lower figure than for the part year.

92.     I am also mindful that the accountants did not prepare a joint report for the full year, and were not asked to do so, because Mrs Kambouris did not receive a pension after 22 January 2004.  There is some reference in the accountants’ earlier reports to the full year accounts initially prepared by Mr Clark, but the differences were not explored in evidence, and I consider that the period relevant to the determination of the proceedings is the period prior to 22 January 2004, when Mrs Kambouris ceased to receive DSP.

93.     The business comprised the sale of opal via the internet, and also personal sales which according to Mr Kambouris’s evidence were frequently cash transactions.  Mrs Kambouris kept records of the internet sales and payments received from e-bay, and I was satisfied with her evidence as to those sales.  However, she was not otherwise involved in the sales or trading activities of the business.  It follows from the evidence of Mr Kambouris that the Westpac Bank account was used for the deposit and withdrawal of the cash involved in selling and buying opal.  For this reason, I find that accounts prepared using the source materials are likely to be more accurate than the original accounts prepared by Ms Cook, and I do not accept that those original accounts for the year ended 30 June 2004 accurately reflect the trading position of the business in that year.  I think it likely that the original accounts did not correctly reflect the cash transactions conducted by the business, and that would explain the disparity between the joint accounts and Ms Cook’s original accounts.

94.     The yearly rate of income which I have arrived at in paragraph 90 above makes no allowance for any profit or loss derived from cash sales which Mr Kambouris also made during the above period.  There is no evidence before me of the volume of such sales, or any profit (or loss) resulting from such sales.  It is not possible, on the state of the evidence before me, to quantify the profit from the cash transactions during the period from 1 July 2003 to 22 January 2004.

95.     However, on my above findings as to when Mr Kambouris had ceased to be unemployed, I think it reasonable to conclude that by 1 July 2003 Mr Kambouris had become well aware of the market for opal and the prices for which opal could be sold.  He had access to funds which could be used for the purpose of buying opal, and it is likely that he had established or re-established contacts amongst miners at Coober Pedy and other potential buyers and sellers of opal.  Clearly his purpose in conducting the cash sales involved in his business was to trade at a profit.  The difference between the level of income referred to in paragraph 90 and the yearly rate of income at which Mrs Kambouris ceased to be entitled to DSP was less than $9,000.00 per year (see exhibit A57(b)).  I am satisfied that Mr Kambouris’ income from his cash transactions would at least have exceeded this figure.  I accordingly conclude that the level of Mr Kambouris’ income during the period from 1 July 2003 to 22 January 2004 was such as to preclude Mrs Kambouris from entitlement to receive DSP.

Income of Mr Kambouris from 1 July 2001 to 30 June 2003

96.     No accounts were tendered for the year ended 30 June 2002.  That was before Mr Kambouris engaged Ms Cook to prepare his accounts.  On Mr Kambouris’ evidence, he did not recommence business as an opal dealer until June of 2002, being after the loan of $50,000.00 from Mr Scott.  However, I have found above that Mr Kambouris had ceased to be unemployed and commenced his business as from 1 July 2001.

97.     Ms Cook produced accounts for the business for the financial year ended 30 June 2003.  They showed a profit of $7,593.00, derived from sales of $78,600.00 (see exhibit A51, Tab 8, Schedule 2).  Ms Cook said she prepared the accounts from instructions probably provided by Mrs Kambouris, and that the figure for sales included cash sales of which there were no separate bank account or other records.  She said that the total figure for sales would have included any money received by Mr Kambouris for selling opal on consignment.

98.     Mr Clark produced a profit and loss statement for the year ended 30 June 2003 based on available business records.  This showed sales of only $8,636.00 and a net profit of only $2,192.00.  Mr Clark was unable to include any allowance for cash sales, and prepared his accounts without any discussion with Mr or Mrs Kambouris.

99.     Counsel for the applicant, Ms Bean, pointed out that the gross sales figure used by Ms Cook for the following year (i.e. financial year ended 30 June 2004) was demonstrably too low, having regard to the figures later derived by both Ms Cook and Mr Clark from the records of the business, which themselves did not include cash sales.  Counsel submitted that I should therefore infer that the gross sales for the financial year ended 30 June 2003 were likely to have been of the order of about double the figure of $78,600.00.  Counsel further submitted that Mr Clark had derived a percentage rate of profit from the accounts that he had arrived at by reference to the records of the business, and that I should apply this same percentage rate of profit to an estimate of the gross sales for the year in question.

100.   I do not think that it would be appropriate to infer that the rate of profit deduced by Mr Clark would have applied during the year ended 30 June 2003.  That rate of profit took into account a significant level of on-line sales which did not occur in the preceding year.  Further, whilst I have decided that Mr Kambouris had ceased to be unemployed from 1 July 2001, I accept that he had to go through a period of learning the state of the market and the prevailing level of prices.  It is further likely, and I find, that the volume of his sales would have gradually increased, but would have also been adversely affected by such things as the September 11 terrorists’ attacks in the United States of America and the SARS outbreak.  According to Mrs Kambouris’ witness statement (exhibit R6) the opal industry declined as a result of the SARS outbreak for over six months from January 2003, as Chinese buyers did not come back to Australia during that period.

101.   I have already found above that Mr and Mrs Kambouris’ interests in mining claims did not produce income of a level that would disentitle them to Newstart allowance.

102.   The applicant conducted extensive investigations into the financial affairs of Mr and Mrs Kambouris.  In addition to copies of bank statements and other records relating to Mr Kambouris’ business, copies of statements showing bankcard transactions, the operation of personal bank or building society accounts, and GIRO deposits were tendered.  Mr and Mrs Kambouris were cross-examined at length about various entries in those records.  However, the records did not suggest that during the period to 30 June 2003 their income must have exceeded the level that would have resulted in a reduction in their entitlement to Newstart allowance or DSP.

103.   One potential indicator of the level of income prior to 30 June 2003 is to examine whether Mr Kambouris made repayments of any loans in the period prior to that date.  According to Mr Scott, Mr Kambouris paid interest of $2,055.00 on 6 August 2002 in respect to the period from 15 April to 30 June 2002.  The next payment was not until 28 August 2003, when Mr Kambouris paid $10,000.00, being interest from 1 July 2002 to 30 June 2003.  He then made no further payments to Mr Scott until 20 July 2004, when he paid a further $30,000.00, being partly for interest and a part repayment.

104.   Mr Kambouris also referred to a further loan of $100,000.00 that he obtained from a Mr Li for the purpose of his chrysoprase mining venture in the 1990’s.  He said that after this venture collapsed he could have petitioned for his bankruptcy, but did not want to do this, as he wanted to repay his debts.  He gave evidence that he commenced repaying the loan from Mr Li in August 2005, at the rate of $833.00 per month, and he did not have the funds to commence repayments before then (see exhibit R2, paragraph 27).  In her evidence, Mrs Kambouris seemed unclear as to when the repayments of $833.00 per month commenced, although she was clear that the payments were being made through a bank account on the first of each month.  Mr Kambouris’ evidence is supported by the copy bank statements for the period from 21 May 2004 to 22 January 2008 (exhibit R10).  This shows periodical payment debits on the first day of each month, commencing on 1 August 2005.  There is accordingly no evidence of loan repayments that would indicate that Mr Kambouris had a significant level of income in the year ended 30 June 2003.

Should the debts be waived or written off? 

105.   Section 1237A(1) of the SS Act provides in effect that the Secretary must waive the right to recover the proportion of a debt that is attributable solely to an administrative error made by the Commonwealth if the debtor received in good faith the payment or payments that gave rise to that proportion of the debt.

106.   It was common ground that Mrs Kambouris was advised by a Centrelink officer in June 2002 to stay on benefits until Mr and Mrs Kambouris’ business faired.  The respondents contended that this constituted an administrative error, and that the debt should be waived pursuant to s 1237A(1).

107.   During the period when they were on benefits, Centrelink periodically sent notices to Mr and Mrs Kambouris advising them of their obligation to notify Centrelink if either of them started any paid work or any form of business or self-employment or if their income changed from the rate last notified to Centrelink (see the various letters from Centrelink reproduced in exhibit A1, at T6 and T7).  On my above findings, the income of Mr Kambouris increased during the period from 1 July 2003 to 22 January 2004 to a level such that Mrs Kambouris ceased to be entitled to DSP.  Mrs Kambouris did not notify Centrelink of this.  I therefore find that even if I accepted the contention that the Centrelink officer’s advice constituted an administrative error (and on the facts before me I doubt that this was so), the overpayments to Mrs Kambouris did not result solely from any such error.  In any event, I further find that it was not reasonable for Mrs Kambouris to continue to rely on the advice provided by the Centrelink officer without checking her position again before 1 July 2003, and so once again the overpayment did not result solely from an administrative error.

108.   Section 1237AAD of the SS Act gives the Secretary a discretion (which this tribunal standing in the shoes of the Secretary may also exercise) to waive a debt in special circumstances.  It provides as follows:

“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.”

109.   The concept of what constitutes “special circumstances” has been discussed in many cases in the Federal Court and in this tribunal.  In Re Beadle and Director-General of Social Security (1984) 6 ALD 1 the tribunal was dealing with an application under a different section of the Act which also, however, involved a consideration of whether special circumstances existed. Toohey J said (at page 3):

“An expression such as ‘special circumstances’ is by its very nature incapable of precise or exhaustive definition.  The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional.  Whether circumstances answer any of these descriptions must depend upon the context in which they occur.  For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases.  This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special.”

110. In the same case on appeal ((1985) 7 ALD 670 at 674), the Full Federal Court reiterated the need to avoid limiting the scope of what might constitute special circumstances when it explained:

“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.”

The Full Court also said, at page 675, that they did not consider that any error of law had been made by the tribunal, but continued:

“While we would place less emphasis on one dictionary definition of “special”, we are in broad agreement with the approach of the Tribunal and are in agreement with its conclusion.”

111.   In a later case, Groth v Secretary, Department of Social Security (1995) 40 ALD 541, at page 545, Kiefel J, after referring to the Federal Court’s decision in Beadle, observed that special circumstances:

“… would require something to distinguish Mr Groth’s case from others, to take it out of the usual or ordinary 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.”

112.   The flexibility of the concept of special circumstances was also referred to in Riddell v Secretary, Department of Social Security (1993) 42 FCR 443, where the Full Court of the Federal Court said, at page 450:

“Each particular case must be considered on its merits.  It is the essential nature of the provision to create a broad discretion to meet the great variety of circumstances which must occur, raising considerations of individual hardship, need, fairness, reasonableness, and whatever else may move an administrator, keeping in mind the scope and purposes of the Act, to make a decision one way or the other.”

113.   Finally, I refer to Haidar v Secretary, Department of Social Security (1998) 52 ALD 255, at 263, where Hill J discussed another section in the SS Act that in effect permitted the abbreviation of a preclusion period in special circumstances. His Honour referred, at 263, to the proposition that the legislature ‘was conscious of the possible harshness of a rule structured in an arbitrary way” and therefore provided the means for administrators to alleviate this harshness in an appropriate case but only where there were special circumstances.

114.   Counsel for Mr and Mrs Kambouris contended that there were special circumstances in their case, and he referred to the following matters.

(a)Mr and Mrs Kambouris had undergone a lengthy period of financial hardship during which they had been battling their bank and lost significant property, which brought them to the verge of bankruptcy, which they were determined to avoid.

(b)      Both have serious health problems.

(c)       Mr Kambouris went off benefits as soon as his business was established.

(d)Mrs Kambouris remained on benefits at the suggestion of Centrelink pending ascertaining whether or not the business would succeed.

(e)When both Mr and Mrs Kambouris went off benefits it was of their own volition.

(f)They sought guidance from Centrelink and made it quite clear to Centrelink what their position was in mid 2002 following the obtaining of various loans to set themselves up in business.

(g)      There was no absence of good faith on the part of Mr or Mrs Kambouris.

115.   The contention in paragraph (c) above is inconsistent with my finding as to the date when Mr Kambouris ceased to be unemployed.  Further, Centrelink’s understanding of the position of Mr and Mrs Kambouris in June 2002 was not fully explored, and so the submission in paragraph (f) above might overstate the position.  However, the other matters referred to in the preceding paragraph are consistent with the evidence before me.

116.   I have carefully considered the matters to which counsel referred.  Whilst they are matters that may properly be taken into account in considering whether special circumstances exist, they are not in my judgment unusual or uncommon in cases that arise under the SS Act and come before this tribunal.  In particular, neither the financial position nor the health problems of the respondents are as difficult as is often the case.  I do not think that the matters referred to by counsel, either separately or in combination, constitute special circumstances for the purposes of s 1237AAD(b).  Further, I do not think that they demonstrate, or have resulted in, such hardship that it would be appropriate to exercise a discretion to waive any part of the debts arising from overpayments of pension.

117.   Apart from the foregoing matters, Mr and Mrs Kambouris were, as I have mentioned above, notified of their obligation to inform Centrelink of a change in their circumstances, but they failed to inform Centrelink of what, on my above finding, was of their changed level of income in the period 1 July 2003 to 22 January 2004.  This did not constitute a failure to comply with the SS Act for the purposes of s 1237AAD(a)(ii), but is a matter that would be relevant to the exercise of discretion under that section if I had found (contrary to my above conclusion) that special circumstances existed.  As to this aspect, I repeat my remarks in Re Goldthorpe and Secretary, Department of Employment and Workplace Relations [2007] AATA 1875, where I said, at [58]:

“The failure to give requisite information to Centrelink in response to a requisition is not a breach of the SS Act, but rather, a breach of s 63 of the Social Security (Administration) Act 1999 (Cth) (Administration Act) which (among other things) in effect authorises the Secretary to notify a benefits recipient that he or she is required, within a specified time, to give specified information to the Secretary. Under s 63(4), if the person does not comply with the requirement, the payment that the person is receiving is not payable. It is curious that s 1237AAD(a)(ii) does not refer to a breach of the Administration Act, as well as the SS Act itself. Perhaps this was an inadvertent omission when the SS Act was amended. However, I consider that a breach of this aspect of the Administration Act is a matter that can be taken into account in the exercise of the discretion conferred by s 1237AAD.”

Decision

118.   The tribunal sets aside the decisions under review, and in place of those decisions, decides that:

(a)the first respondent was not entitled to receive Newstart allowance from 1 July 2001 to 7 June 2002;

(b)the second respondent was not entitled to receive Disability Support Pension from 1 July 2003 to 22 January 2004;

(c)the amount of the payments to which the respondents were not entitled is a debt due to the Commonwealth; and

the tribunal remits the matter to the applicant and directs the applicant to calculate the amount of benefits received by the respondents to which they were not entitled having regard to these reasons.

I certify that the 118 preceding paragraphs are a
true copy of the reasons for the decision
herein of Deputy President D G Jarvis

Signed:         .....................................................................................
           L. Wunderer  Associate

Date/s of Hearing  6 and 8 to 10 August , 10, 13 and 14 September, 3, 4 and 5 December 2007 and 30 January 2008

Date of receipt of final

submission20 February 2008

Date of Decision  20 March 2008
Counsel for the Applicant         Ms K Bean
Solicitor for the Applicant          Australian Government Solicitor
Counsel for the Respondent     Mr P Amey
Solicitor for the Respondent     Tindall Gask Bentley