Khan and Secretary, Department of Education, Employment and Workplace Relations

[2012] AATA 641

[2012] AATA 641 

Division	GENERAL ADMINISTRATIVE DIVISION
File Number(s)	2012/2176
Re	Ovais Khan
APPLICANT
And	Secretary, Department of Education, Employment and Workplace Relations
RESPONDENT

DECISION

Tribunal	M D Allen, Senior Member
Date	24 September 2012
Place	Sydney

The decision under review is set aside and this matter remitted to the Respondent with the direction that the Applicant is entitled to the payment of Newstart Allowance as and from the 1^st day of March 2012.

.......................[Sgd]..........................

M D Allen, Senior Member

Catchwords

SOCIAL SECURITY – Entitlement to Newstart Allowance - Was Applicant unemployed or underemployed – Was Applicant actively seeking and willing to engage in paid work.

Legislation

Social Security Act 1991 sections 593, 601
Social Security (Administration) Act 1999 section 13

Cases

Secretary, Department of Employment and Workplace Relations v Joss (2006) 152 FCR 541
Re Te Velde and Director-General of Social Services (1981) 3 ALN N111
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Jebb v Repatriation Commission (1988) 80 ALR 329

Secondary Materials

Centrelink’s Procedure Manual

REASONS FOR DECISION

M D Allen, Senior Member

24 September 2012

1. By application made the 29^th day of May 2012, the Applicant sought review of the decision of the Social Security Appeals Tribunal to affirm a prior determination that he was not entitled to the payment of Newstart Allowance on the ground that he was self-employed not unemployed.

2. Section 593 of the Social Security Act 1991 (the Act) states:

   (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…

   Whereas subsection 601(1) of the Act states:

   Subject to subsections (1A) and (5), 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 in Australia, other than paid work that is unsuitable to be undertaken by the person.

3. The Applicant in May 1997 commenced a business of purchasing wholesale and selling retail communications packages. Originally, the business was conducted in partnership with his wife but in 2004 was incorporated under the name of Eztel Communications Pty Limited.

4. Apparently, the business prospered until the Global Financial Crisis. By 2010, the business had lost several important accounts and had reached the stage whereby, although it could pay its supplies, it was not generating enough income to pay the Applicant a wage.

5. As the Applicant’s business could not provide a wage he began to look for employment. By profession he is a civil engineer specialising in airport construction, but he has not worked in his profession since 1997.

6. The Applicant gave evidence of several and various applications he has made to obtain full-time employment, all without success.

7. The Applicant originally approached Centrelink regarding an intention to claim Newstart Allowance on 12 September 2011. On 29 September 2011 he lodged a claim. Pursuant to subsection 13(1) of the Social Security (Administration) Act 1999, the Applicant’s claim for Newstart Allowance is deemed to have been made on 12 September 2011.

8. By letter dated 29 November 2011, and in answer to a query by Centrelink, the Applicant stated that he was working 60 hours per week in his company. As a result of this information, the Applicant’s claim for Newstart Allowance was denied on the basis that he was self-employed.

9. On 24 January 2011, the Applicant was interviewed by an Authorised Review Officer. In her notes of that interview, the Authorised Review Officer states:

   [He has] … been actively seeking work elsewhere, one of the jobs applied was at Caltex and got short listed for interview, was told got 3rd, so is hoping something will come of this. Is prepared to take any work offered as needs to support his family.

   I asked if he was still working in his business, he advised yes as he has not yet got other work he is still trying to build his business. If he gets work he will sell his data base and close his business, but does not want to be left with nothing.

   He looks for work during the day and works on his business at night. Stated his business has been good in the past and he enjoyed working for himself, but he has a family to support and his business is not a living thing, if it cannot support his family there is not [sic] point in holding on for emotion. Prepared to take any work and close business if can get other work.

   Registered with Job provider but was advised that as he is only stream 1 they could not help him, come back in 6 months and they may be able to assist.

10. Before me the Applicant stated that an officer of Centrelink had told him to answer the question of how many hours he worked in his business by reference to how many hours he had worked in the preceding week. In the week preceding his 29 November letter to Centrelink, he had worked 60 hours in his business as he had been closing his rented office and moving files and equipment to a room in his flat where he resided with his wife and children. Currently, he estimates that his business occupies him for some 15 to 20 hours a week.

11. The Applicant was questioned regarding his business activity. I accept his evidence that he is maintaining his business because he obtains certain advantages by writing off some expenses to the business but also because it is the only activity available to him. I see no reason to doubt his evidence that were he to obtain full time employment he would either close the business or run it as a part time activity.

12. Cross-examined the Applicant conceded that as late as February 2012 he still had hopes he could turn the business around. However, currently he is not in a position to write new business. He is looking for work but the business occupies him while “he is sitting at home”.

13. Currently the Applicant main business activity is sending out Accounts. This occupies about 20 hours spread over two to three days, but could be staggered over a number of days.

14. I find that the Applicant’s situation is that he has a business which, to all intents and purposes, is moribund. He is reluctant to wind it up as it provides certain benefits to him and he feels obligations to continuing customers. He has taken positive steps to look for employment, but to date he has been unsuccessful. Were he to obtain full time employment, he would engage in that employment, but continue to run his business as a part time activity.

15. In Secretary, Department of Employment and Workplace Relations v Joss (2006) 152 FCR 541, Graham J extensively canvassed various decisions of both this Tribunal and the Federal Court regarding the distinction between unemployed and underemployed. The effect of His Honour’s reasoning is succinctly summarised at page 547 paragraph 35 namely:

    It may well be that viewed as a question of fact and degree and having regard to the intensity with which a person applies him or herself to a particular enterprise, one may conclude that a person is not self-employed at all. But, once it be found that the person is self-employed it seems to me impossible to conclude that such a person was, at the same time, unemployed.

    Compare the quotation from Re Te Velde and Director-General of Social Services (1981) 3 ALN N111 at N114 quoted by His Honour at 152 FCR 544 namely:

    Whilst the concept of ‘work’ normally connotes some activity pursued as a means of earning one’s livelihood, the absence of evidence that the activity is effective in producing a livelihood may not be critical in deciding whether the activity qualifies as ‘work’:  see Clear v Smith [1981] 1 WLR 399. A self-employed person, in particular, may be engaged full-time in activities intended to earn him a living, but which, despite his diligent efforts, fail to do so. Thus in Re Brabenec and Director–General of Social Services (1981) 3 ALN No 39, a self-employed miner engaged unsuccessfully in full-time prospecting for opals was held not to be ‘unemployed’ within the meaning of the Act.  As the Tribunal commented in that case, the opal miner was no more ‘unemployed’ than any person setting himself up on his own in a profession, trade or business …

16. Subsection 601(1) of the Act sets out an activity test namely:

    Subject to subsections (1A) and (5), 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 in Australia, other than paid work that is unsuitable to be undertaken by the person.

17. E-reference 001.03630 of Centrelink’s Procedure Manual states regarding self-employment:

    Self- employed – a person engaged in self-employment may be regarded as unemployed if:

    §The activity is on a small scale and designed to supplement income, rather than as an alternative to wages

    …

    If net income received from the business does not preclude payment and the customer is able to satisfy Activity Test requirements based on their income and hours worked, then a self-employed customer may receive payment and be considered unemployed. Job seekers who have an Australian Business Number (ABN) are not automatically assumed to be self-employed. There is no requirement for customers with an ABN to have this cancelled to qualify for NSA or YA.

18. Perhaps another way of approaching the question of whether the Applicant was employed or unemployed is to adopt the reasoning of the Authorised Review Officer as quoted in her decision of 31 January 2012 namely:

    Section 601 of the Act sets out the activity test requirements. A person satisfies the activity test in respect of a period if, amongst other things, the person satisfies the Secretary that, throughout the period, the person is actively seeking and willing to undertake paid work in Australia, other than paid work that is unsuitable to be undertaken by the person.

19. Applying the above tests, I find that as at February 2012 the Applicant was still applying himself to his business, as he said in evidence “as at February 2012 I still had hopes I could turn it around”.

20. Following that the Applicant realised that the business was, as he put it, “a non-living thing”. He was, from August 2011, looking for full time employment and I accept his evidence that had it been offered he would have accepted that offer. I therefore find that as and from 1 March 2012 the Applicant was unemployed and actively seeking and willing to undertake paid work.

21. As was pointed out in Shi v Migration Agents Registration Authority (2008) 235 CLR 286, this Tribunal must make its decision having regard to the state of affairs existing at the time the Tribunal makes its decision.

22. In his judgment in Shi supra, Kirby J refers with approval to the judgment of Davies J in Jebb v Repatriation Commission (1988) 8 AAR 285 at 289 namely:

    … the general approach of the Administrative Appeals Tribunal has been to regard the administrative decision-making process as a continuum and to look upon the tribunal's function as a part of that continuum so that, within the limits of a reconsideration of the decision under review, the tribunal considers the applicant's entitlement from the date of application, or other proper commencing date, to the date of the tribunal's decision. That function was enunciated in Re Tiknaz and Director-General of Social Services (1981) 4 ALN N44. The approach there taken has since been generally adopted. …

23. To suggest, as submitted by the Respondent, that in this matter the Applicant although he has a review in place cannot qualify for Newstart Allowance until a fresh application has been received is to my mind simply bureaucracy run mad.

24. The decision under review is set aside and this matter remitted to the Respondent with the direction that the Applicant is entitled to the payment of Newstart Allowance as and from the 1^st day of March 2012.

25.       I certify that the preceding 24 (twenty-four) paragraphs are a true copy of the reasons for the decision herein of Mr M D Allen, Senior Member.

........................[Sgd]............................

Associate

Dated   24 September 2012

Date of hearing	13 September 2012
Applicant	In person
Solicitor for the Respondent	Ms J Maclean, DHS Program Litigation & Review Branch