Mahmoud and Department of Family and Community Services - [2001] AATA 839

DECISION AND REASONS FOR DECISION [2001] AATA 839

ADMINISTRATIVE APPEALS TRIBUNAL )

) No N2000/1564

GENERAL ADMINISTRATIVE DIVISION          )
           Re      Tosson Mahmoud
  Applicant
           And    Secretary, Department of Family and Community Services
  Respondent

DECISION

Tribunal Dr J D Campbell, Member

Date8 October 2001
PlaceSydney
DecisionThe decision under review is affirmed

[Sgd] Dr JD Campbell
Member
CATCHWORDS
Social Security - newstart allowance - qualification - self employment - nature and scope of self employment activity - failure to advise of self employment - financial material - cancellation - debt - waiver - sole administrative error - special circumstances - write off
Social Security Act 1991, ss 8, 593, 658, 1075, 1224, 1236, 1237A, 1237AAD Director-General of Social Services v Thomson (1981) 38 ALR 624 Re McKenna and Director General of Social Services (1981) 3 ALD 219 McAuliffe v Department of Social Security (1991) 23 ALD 284 Re Beadle and Director-General of Social Security (1984) 6 ALD 1

REASONS FOR DECISION

Dr J D Campbell

In this matter Mr Mahmoud ("the Applicant") seeks a review of the decision of the Social Security Appeals Tribunal ("SSAT") dated 31 August 2000, which affirmed the decisions of Centrelink delegates of the Secretary, Department of Family and Community Services ("the Respondent") to cancel payment of newstart allowance (decision dated 25 February 1999) and to raise and recover a debt of $16,247 arising from overpayment of Newstart Allowance for the period 1 August 1999 to 25 February 1999 (decision dated 26 March 1999). Both decisions were subject to review by an authorised review officer and both were affirmed on 13 January 2000 and 26 April 2000 respectively.
A hearing was held before the Tribunal on 24 April 2001 at which the self represented Applicant presented oral evidence. The Respondent was represented by Ms Smith, an advocate from the Advocacy and Administrative Law Team at Centrelink.
The following material was placed into evidence before the Tribunal:
Documents prepared pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 T1- 71, pp1 - 758
Respondent's statement of facts and contentions, dated 19 March 2001 Exhibit R1

Issues

The relevant issues in this matter are:

(a)whether the Applicant's newstart allowance was correctly cancelled with effect from 25 February 1999;
(b)whether the Applicant owes a debt to the Commonwealth in the amount of $16,247 in respect of newstart allowance overpaid; and
(c)if a debt exists, whether there are any grounds for not recovering all or part of it.

Legislation

The relevant legislation in this matter is the Social Security Act 1991 ("the Act") and in particular sections 8, 593, 658, 1075, 1224, 1236, 1237A and 1237AAD.
Background
On 1 August 1997 the Applicant lodged with the Respondent an application for the payment of newstart allowance, in which the Applicant stated:

That he had looked for work during the period 9 May 1997 and 31 July 1997.
That he did not start a permanent full-time job in the same period.
That he was neither self-employed nor did he undertake any casual or part-time work during the nominated period.
He indicated yes to Question 9, but did not give any details. (T3)

On 23 October 1997 the Applicant lodged with the Respondent an application for payment of newstart allowance, in which he indicated:

That he was looking for work during the period 1 August 1997 to 23 October 1997.
That he was neither self-employed nor did he undertake any part-time or casual work during the nominated period.
That he did not receive any other money during the nominated period. (T4)

On 16 January 1998 the Applicant lodged with the Respondent an application for payment of newstart allowance, in which he indicated:

That he was looking for work during the period 24 October 1997 to 15 January 1998.
That he was neither self-employed nor did he undertake any part-time or casual work during the nominated period.
That he did not receive any other money during this nominated period. (T5)

On 27 January 1998, the Respondent was advised by the Department of Employment, Education and Training that the Applicant was registered as an employer with the Commonwealth Employment Service and had employed someone under the Job Start Subsidy. A copy of the Applicant's letterhead was also forwarded, with this material being received by the Respondent's compliance section on 6 March 1998 (T6).
On 16 March 1998 the Respondent sought information from Department of Employment, Education and Training and in response were advised that the Applicant had received subsidy of $650 paid directly to his bank account on 28 October 1997 for a worker placement for the period 26 August 1997 to 8 September 1997 (T7).
The Applicant lodged an application for registration of a business, 'Tosson Hire a Worker' on 1 August 1997. Registration was granted by the administrator of the Business Names Act on 1 August 1997, with the person nominated to carry on the business being Tosson Hussein Mahmoud (T8).
On 27 March 1998 the Applicant was interviewed by the Respondent during which he stated that he was self employed in a registered business ('Tosson Hire a Worker') and that he had received no income from the business, since gaining the newstart allowance. The Applicant indicated that he would provide all relevant information to the Respondent in relation to his business within seven days. The Applicant also indicated that he had a passbook account at the National Australia Bank in Haymarket, with a current balance of $500. Further the Applicant indicated that he had not sought any payment from the Department of Employment, Education, Training and Youth Affairs, and that he did not own any properties from which he received rent or other income. Further he declared that he had no assets, including money invested or money in the bank apart from $2000 of household and other personal assets (T9).
On 9 April 1998 the Applicant lodged with the Respondent an application for payment of newstart allowance, in which he indicated that he had looked for work during the period 16 January 1998 and 9 April 1998.

He was self employed and had earned $840 gross during the same period.
He did receive other money arising from his rendering of services to people to generate some income. (T10)

On 12 May 1998 the Applicant lodged with the Respondent a copy of the Certificate of Registration of a business name ('Tosson Hire a Worker') (T11). On 1 May 1998 the Applicant indicated that he would provide all the documentation relating to his business by 5 May 1998 (T12).
On 14 May 1998 the Applicant was warned by the Respondent that his benefits would be cancelled unless he provided full details of income and expenses for the period 16 January 1998 to 7 May 1998 relating to his business, with details to be forwarded by 20 May 1998 (T14). The Applicant provided details of income and expenses for the nominated period, as follows (T15):
Income
$2458 (list of clients supplied)
Expenses
Advertisements       $2188 (details provided)
Telephone     $646.35         (details provided)
Stationery     $116.85         (details provided)
Rent of Flat   $2040 (75% of rent)
Electricity      $48.75           (75% of cost)
Other Expenses      $363.50         (details provided)
Total $5403.45
Total Loss    $2945.45

On 26 May 1998 the Applicant lodged with the Respondent an application for newstart allowance for the period 8 May 1998 to 21 May 1998 in which he indicated that he had been seeking work and that he had made a loss from his self employment and had received no other monies (T16).
On 26 May 1998 the Respondent requested the Applicant to provide similar details for the period 1 August 1997 to 15 January 1998 (T18). On 9 June 1998 the Respondent received from the Applicant a breakdown of income and expenses, which indicated income of $4,321.50 and expenses of $8926.26, making a business loss of $4,604.76 (T19).
A further two applications for newstart allowance were lodged by the Applicant on 19 June 1998 and 3 July 1998 indicating a similar situation to previous applications (T20-22).
On 6 July 1998 the Applicant completed a business and self employment form in which he nominated that he worked three hours per day seven days per week in a wholly owned business enterprise, 'Tosson Hire a Worker', whose business activity was described as rendering cleaning services and "general hands to clients". The Applicant also indicated that he continued to look for work (T23).
On 7 July 1998 the Applicant provided further financial details for his business for the period 8 May 1998 to 30 June 1998, nominating income as $2418.50, expenses as $2772.22 and a loss of $353.72 (T24).
A summary of business financial activity for the period 1 August 1997 to 30 June 1998 nominated income for the period as $9198, expenses $17101.93 and the net loss at $7903.93 (T25).
The Applicant lodged an application for payment of newstart allowance on 20 July 1998, 27 August 1998 (2), and 5 November 1998, in which he indicated that he was seeking work and was self-employed up to 13 August 1998, with his business continuing to make a loss; the Applicant working some 42 hours in the fortnight 31 July 1998 to 13 August 1998 (T27).
Thereafter the Applicant indicated that he did not do any part time casual or temporary work (T29, T30) and that throughout the period to 5 November 1998 he did not receive any money from investments or any other money (T30).
On 8 December 1998 the Applicant advised the Respondent of balances in his National Australia Bank account ($1,000) and his Commonwealth Bank business account ($4,000), of which $2,000 was owned by the Applicant (T31).
A request for the Applicant's income tax return for the financial year 1997/98 was made by the Respondent on 10 December 1998 (T32), which had been requested previously on 25 November 1998 (T31). The Applicant replied on 21 December 1998 stating that the return was yet to be completed (T33).

The Respondent requested details of the Applicant's business account from the Commonwealth Bank on 19 May 1999 and statements covering the period 5 August 1997 to 21 May 1999 were provided (T37). An analysis of bank deposits on this account are provided at T38 and indicate the following:
(a) for the period 1 August 1997 to 30 June 1998 deposits amounted to $39,926.65 and debits amounted to $35,645.87; and
(b) for the period 1 July 1998 to 31 December 1998 deposits amounted to $44,126.43 and debits amounted to $46,171.37.
On 5 March 1999 the Respondent advised the Applicant that his newstart allowance had been cancelled from 26 February 1999, because he had failed to declare income from employment (T42). A debt was raised on 26 March 1999 for $16,247.70 relating to overpayment of newstart allowance for the period 14 August 1997 to 25 February 1999 (T46, 47).
On 9 November 1999 HSBC forwarded a response to the Respondent in which they enclosed a completed loan form in relation to the purchase of a property at Ashfield. The form was signed by the Applicant on 14 November 1998 and his signature verified on these occasions. Within the document it is indicated that the Applicant was self employed, had uncommitted monthly income of $1,005, cash deposits (other) of $30,000, furniture assets of $50,000 and stock of $100,000 (T49).
Interviews were held with the Applicant by an authorised review officer on 23 November 1999 (T51) and 23 December 1999 (T53), who reviewed the matter and affirmed the decision to cancel the Applicant's newstart allowance from 6 February 1999 (T55).
A review of the decision to raise a debt for overpayment of newstart allowance for the period 1 August 1997 to 25 February 1999 was undertaken by a different authorised review officer and the decision affirmed on 26 April 2000 (T58).
Copies of the Applicant's tax return for financial year 1997/1998 and the assessment dated 26 June 2000 indicate that the Applicant's net business loss was adjusted by an amount of $10,679 as a result of audit or investigation (T60).
Copies of the Applicant's tax return for financial year 1998/99 and the assessment dated 26 June 2000 indicate that the Applicant's net business loss for the year was adjusted as a result of audit or investigation (T61).
The decisions were both reviewed by the Social Security Appeals Tribunal and affirmed in a decision dated 31 August 2000.
Applicant's Evidence
The Applicant informed the Tribunal that he was born in Egypt in 1942, and received 12 years of formal school education prior to graduating in 1964 with a Bachelor of Arts in French Literature, and in 1966 with a Master degree in Tourism. After university the Applicant worked in translation and in a private school in Egypt. In March 1970 he migrated to Australia where he taught French in a high school in Victoria until 1979.
In 1979 the Applicant returned to Cairo where he taught French and English for six to seven years, prior to moving to Holland where he commenced an import/export business in copper antiques and leather goods. Some five to six years later and after significant disagreement with the police, as a consequence of which he was twice deported and lost some US$250,000, he returned to Australia in 1994 and in Sydney went looking for work as a French teacher. Following difficulties with an assessment process at the University of New South Wales, the Applicant was advised by his case manager to look for other work, and in August 1997, he commenced a business agency in cleaning services on his own from rented premises, with one phone available in 1997 and two in 1998 (mobile). He commenced casual teaching as a French teacher in January / February 2000.
The Applicant indicated that he had transported $100,000 worth of his copper art and leather goods from Holland to Sydney in February 1995 and that he had sold these goods gradually over time, by way of limited advertising and word of mouth.
In relation to his business the Applicant explained that the activities involved finding individuals to undertake cleaning and general labouring duties for clients. Initially he charged labour out at $12 an hour, $9 of which would be paid to the worker, and towards the end of 1998 increased the hourly charge to $14, with $10 an hour being paid to the worker. At this stage the client was paying workers compensation, payroll tax and superannuation. In mid 1999 a further change was made in his business practice, whereby he became the employer and as such was responsible for workers compensation etc. He increased the hourly charge out rate to $18 an hour.
The Applicant indicated that he purchased a unit in Ashfield in October/November 1998, with the purchase price of $109,000 being met by way of a $20,000 deposit and borrowing $87,000 from the Hong Kong and Shanghai Banking Corporation (HSBC). The Applicant stated that the deposit money came from the sale of antiques, and that he did not inform the bank that he was receiving newstart allowance from Centrelink.
In response to questions from the Respondent, the Applicant stated that he provided details to Centrelink every three months, but that he did not inform the Respondent until 27 March 1998 when at interview that he was self employed in a registered business. Further the Applicant acknowledged that he did receive a $650 payment from the Department of Education, Employment and Training in October 1997, as a personal assistance subsidy payment for a placed worker.
In relation to the business, the Applicant indicated that he did most of the work in the evening, while going out to look for work, and undertook interviews on some days in relation to individuals seeking work. He indicated that he averaged some five to six individuals on his books at any one time, which reduced down to three to four over time.
Applicant's Submissions
The Applicant submitted that despite registering his business on 1 August 1997, his activities and involvement in that business have involved him in a time commitment of three hours per day, seven days per week, mainly after hours, thereby leaving the remainder of the working day in which he sought work from various schools. In support of his position, the Applicant stated that during the period in question his business ran at a loss. In essence it is the Applicant's contention that he fulfilled his job search activities and as a consequence of his negative business income, he was entitled to newstart allowance for the period in question, and his newstart allowance should not have been cancelled on 5 February 1999.
Respondent's Submissions
The Respondent contends that the Applicant ceased to qualify for newstart allowance from 1 August 1997 because he was substantially involved in running a business and thereby fails to satisfy subsection 593(a) of the Act. The Respondent contends that the Applicant's portrayal of the financial affairs of his business are not reflected in the deposit activity in his Commonwealth Bank Statements over time, and further the particulars of his time commitments were incongruent with the financial activity statements.
The Respondent contends that the Applicant's financial position is curious in that he was able to fund $20,000 from his own resources for the purchase of the unit in November 1998, with the source of these funds appearing to vary over time.
The Respondent also contends that there is evidence to support the position that the Applicant was involved in the sale of antiques, which were forwarded to Australia in February 1995, and that he was advertising a removals business from October 1998.
The Respondent told the Tribunal that the Applicant failed to advise of his self employment status until March 1998, and thereafter continued to receive payment of newstart allowance until 25 February 1999 while the matter was being investigated and at which time his allowance was cancelled. As a consequence he failed to comply with section 958 of the Act and accordingly any overpayment which has arisen becomes a debt due and payable by the Applicant pursuant to section 1224(1) of the Act.
The Respondent further contends that the debt should not be written off pursuant to section 1236 of the Act, or waived pursuant to either section 1237A or section 1237AAD of the Act, as there is neither sole administrative error or special circumstances.
Consideration and Findings
In this matter the Tribunal notes that both parties have expended considerable effort in trying to understand and isolate the particular factors which are important to the resolution of this matter. Nevertheless the Tribunal concludes that some of the matters in contention remained clouded as a consequence of prolonged enquiry by the Respondent and a failure by the Applicant to be both timely and explicit as well as consistent in the provision of nominated information.
In considering all the material placed before it and the evidence of the Applicant, the Tribunal makes the following findings of fact:
(a)      the Applicant did register and commence a business named 'Tosson Hire a Worker' on 1 August 1997, with the business being operated from rented accommodation occupied by the Applicant;
(b)      the Applicant failed to declare that he was self-employed in applications for Newstart Allowance on 1 August 1997, 23 October 1997, and 16 January 1998, nor did he declare any earnings from the business in these three applications;
(c)       the Applicant was registered as an employer with the Commonwealth Employment Service and on 28 October 1997 did receive a Job Start Subsidy of $650 for a worker placement for the period of 26 August 1997 to 8 September 1997, from the Department of Employment, Education and Training. The Applicant did not declare such a receipt of subsidy at the time of occurrence.;
(d)      the Applicant did notify the Respondent at interview on 27 March 1998 that he was self-employed in a registered business, but that he had received no income from the business while receiving newstart allowance; that he had not sought any payments from Department of Employment, Education and Training and that he had no assets, including money invested or money in the bank, apart from $2000 of household and other personal assets. The Applicant also indicated that he would provide all relevant information in relation to his business within seven days;
(e)      information in relation to financial aspects of the business were received by the Respondent on 21 May 1998 for the period covering 16 January 1998 to 7 May 1998, and there detailed an income of $2,458, expenses of $5,403.45 and a net loss of $2,945.45;
(f)       information was sought and received by the Respondent from the Applicant on 9 June 1998 in relation to the financial aspects of the business for the period 1 August 1997 to 15 January 1998, which detailed income of $43,321.50, expenses of $8,926.26 with a net loss of $4,604.76;
(g)      on 7 July 1998 the Applicant provided further financial details for the period 8 May 1998 to 30 June 1998, nominating income as $2,418.50 expenses of $2,772.22 and a loss of $353.72;
(h)      a summary of business financial activities for 'Tosson Hire a Worker' as detailed by the Applicant for the period 1 August 1997 to 30 June 1998 nominates income as $9,198, expenses as $17,101.93 with a net loss of $7,903.93;

in the Applicant's tax return for the financial year 1997/98, the Applicant details business income as $9,198, business expenses as $19,877 and a net loss of $10,679;
(j)        in a notice of assessment dated 26 June 2000, the Australian Taxation Office advised the Applicant that as a result of audit or investigation his net business loss had been adjusted by $10,679; in effect only $9,198 of the business expenses were considered to be allowable deductions;
(k)       an analysis of the Applicant's Commonwealth Bank account statements reveal:
(i)        for the period 1 August 1997 to 30 June 1998, deposits of $39,926.65 and debits of $35,645.87;
(ii)       for the period 1 July 1998 to 31 December 1998, deposits of $44,126.43 and debits of $46,171.37;

(l)        the Applicant did apply for and receive a loan of some $87,000 from HSBC, knowing that details in the application were not true, he having not provided such details, but having signed the application form on 14 November 1998. The loan was used to purchase a house with a further $20-22,000 being funded by the Applicant; the source of funds being variably described by the Applicant as being derived from sales of antiques, transferred from overseas funds to an ANZ bank account or residual funds within his keeping;
(m)     the Applicant's tax return for the financial year 1998/99 and an assessment notice dated 26 June 2000 indicate that the Applicant's net business loss was adjusted by $3,263.00 as a result of audit or investigation, thereby denying the Applicant any deduction for business expenses in that year beyond the level of revenue declared, namely $19,988; and
(n)      in all of his applications for newstart allowance the Applicant has documented his continued efforts to find a job as a French teacher. Further the Tribunal notes that despite initial difficulties associated with the proposed assessment at the University of New South Wales, the Applicant did commence casual teaching in French in the early months of year 2000.
Statutory Framework

The following details the legislative framework in which this matter is to be considered:
Qualification for Newstart Allowance
"593(1) Subject to sections 596, 596A, 597 and 598, a person is qualified for a newstart allowance in respect of a period if:
(a) the person satisfies the Secretary that throughout the period the person is unemployed; and
(b) throughout the period, for each period within the period, the person either:
(i) satisfies the activity test; or
(ii) is not required to satisfy the activity test; and
(c) if subsection 604(1) applies the person, at all times (if any) during the period when the person is not a party to a Newstart Activity Agreement, the person is prepared to enter into such an agreement; and
(d) if subsection 604(1) applies to the person, at all times during the period when the person is a party to a Newstart Activity Agreement, the person is prepared to enter into another such agreement instead of the existing agreement; and
(e) if the person is required by the Secretary to enter into a Newstart Activity Agreement in relation to the period, the person enters into that agreement; and
(f) while the agreement is in force, the person satisfies the Secretary that the person is taking reasonable steps to comply with the terms of the agreement; and
(g) throughout the period the person:
(i) subject to subsection (2B), is at least 21 years of age and has not reached the pensioner age; and
(ii) is an Australian resident; and
(iii) subject to subsection (1A), is in Australia; and
(i) the person was not in receipt of a youth allowance during the period."
Secretary may require recipient to give particular information relevant to payment of Newstart allowance.
"658(1) The Secretary may give a person to whom a Newstart allowance is being paid a notice that requires the person to give the Department a statement about a matter that might affect the payment of the allowance to the person.
658.(2) Subject to subsection (2A), a notice under subsection (1):
(a) must be in writing; and
(b) may be given personally or by post; and
(c) must specify how the statement is to be given to the Department; and
(d) must specify the period within which the person is to give the statement to the Department; and
(e) must specify that the notice is a recipient statement notice given under this Act.
658.(2A) A notice under subsection (1) is not invalid merely because it fails to comply with paragraph (2) (c) or (e).
658.(3) The period specified under paragraph (2)(d) must end at least 7 days after the day on which the notice is given.
658.(4) A statement given in response to a notice under subsection (1) must be in writing and in accordance with a form approved by the Secretary."
Debts arising from recipients contravention of the Act
"1224.(1) If:
(a) an amount has been paid to a recipient by way of social security payment; and
(b) the amount was paid because the recipient or another person:
(i) made a false statement or a false representation; or
(ii) failed or omitted to comply with a provision of this Act or the 1947 Act;
the amount so paid is a debt due by the recipient to the Commonwealth."
Secretary may write off debt
"1236 (1A) The Secretary may decide to write off a debt under subsection (1) if, and only if:
(a) the debt is irrecoverable at law; or
(b) the debtor has no capacity to repay the debt; or
(c) the debtor's whereabouts are unknown after all reasonable efforts have been made to locate the debtor; or
(d) the debtor is not receiving a social security payment under this Act and it is not cost effective for the Commonwealth to take action to recover the debt."
Waiver of debt arising from administrative error
"1237A(1) Subject to subsection (1A), 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."
Waiver in Special Circumstances
"1237AAD. The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:
(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i) making false statement or 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."

46. In turning to a consideration of whether the Applicant was qualified for newstart allowance for the period 1 August 1997 to 25 February 1999, the Tribunal must be satisfied that the Applicant was unemployed throughout the period.
47. The meaning of the term 'unemployed' was considered by Von Doussa J in McAuliffe v Department of Social Security (1991) 23 ALD 284.

"The principles referred to in the decisions cited by the Tribunal were not in dispute. Re McKenna and Director-General of Social Services (1981) 3 ALD 219 concerned the entitlement to unemployment benefit of a person who had voluntarily given up salaried employment and joined a workers co-operative in which he was fully engaged, although receiving minimal return. The Tribunal (Morling J, the Hon. JBK Williams and Dr JG Billings) said, at pp.221-222:
The apparent legislative intent of the provisions of the Act concerned with eligibility for and payment of unemployment benefit is to provide those people who are not engaged in work of a remunerative nature with the means of subsistence in circumstances where, despite capacity, willingness and effort on their part, they have been unable to find paid work to maintain themselves. It is in this context that the word "unemployed" is used, coupled with the other words in sub-s (c)(1) "and was capable of undertaking and was willing to undertake paid work and that in the opinion of the Director-General was suitable to be undertaken by the person". Subsection (2) requires satisfaction on the part of the Director-General that reasonable efforts have been made to obtain paid work. When regarded in the context of the apparent legislative intent and the other terms and expressions used in the subsection, it seems to us that the word "unemployed" bears its colloquial or popular meaning of not being engaged in work of a remunerative nature. The meaning must, however, be modified some extent in that the means test provisions of the Act recognise that some income may be earned by a grantee of an unemployment benefit resulting in the diminution of the grant but without destroying eligibility for it. It must also be modified to allow for those special cases where a person is not engaged in work of a remunerative nature but whose commitment to some activity, eg study or domestic duties demonstrates a preference for that activity rather than employment. Cf Re Thomson and Director General of Social Services (1981) 3 ALN N86.

The decision in Thomson referred to in McKenna, above, was considered on appeal by the Full Court of the Federal Court: see Director-General of Social Services v Thomson (1981) 38 ALR 624. The Tribunal's decision was upheld. The Court said, at pp.626-627:
The concept of 'paid work' provides a useful starting point. At its broadest the description 'unemployed' encompasses those who are without paid work. We appreciate that the statute itself, for example s 107(3), [now s 516] admits some limited extension of this, but, subject to accord with common sense and with the statutory context …
Some further limitation is, however, necessary to determine the true meaning of 'unemployed'. Neither in ordinary parlance nor in the context of the legislation is everyone who is without paid work 'unemployed'; for example, neither the very young nor the very old and infirm would usually be so described.

Later, at pp.628-629 the Court said:
But it must be kept in mind that the material part of the legislation treats questions such as the present as matters of fact and degree. Terms are undefined and detailed tests are not prescribed. Matters are left to the decision of the Director-General, subject to review by the Tribunal. Such a legislative scheme seems to us to accept the operational burden of numerous individual decisions, and at the same time to provide by way of safeguard a need for the applicant for benefit to satisfy those administering the schemes that he or she qualifies for entitlement.
For all that, the possibility must be recognised that activities being pursued by a person without paid work may be so fundamentally incompatible with the person's being regarded as unemployed that no further inquiry is necessary. However, we anticipate that such a case would be exceptional. In the usual case, of which we think this is an example, the solution will be arrived at by reference to all the circumstances, of which the activities being pursued for the time being by the applicant for benefit will be one.

In Re Te Velde and Director-General of Social Services (1981) 3 ALN N111, the observations of the Tribunal in Re McKenna were followed. In Re Te Velde the Tribunal said at N114:
There may, however, be further modifications necessary to the meaning suggested in Re McKenna supra, in relation to self-employed persons. Whilst the concept of 'work' normally connotates 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 in full time 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 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 (cf s 130A of the Act [later s133 of the 1947 Act]).

In Re Weekes and Director-General of Social Services (1981) 3 ALN N141 the Tribunal followed McKenna, Te Velde and Brabenec. It added at N141-142:
… we would agree with the view put by Mr Douglas that work of a remunerative nature encompasses not only the normal employer-employee relationship but also a person who is self-employed. And we agree that a person who is self-employed need not be profitably employed in the sense that the income from his activities exceeds his outgoings. There are many self-employed businesses, including professional businesses, which would not be 'profitable' in this sense in the early stages of their establishment. But it could be said, in our view, that it followed that the persons involved were 'unemployed' within the meaning of s.107 [now ss 513 & 593]).

In Re Malaj and Secretary, Department of Social Security (1988) 15 ALD 333, which is the latest of the decisions referred to by the Tribunal in para.20 of its reasons, the above decisions were again followed. The Tribunal held that a self-employed upholsterer who worked varying hours each day for little return was not "unemployed". In Malaj the Tribunal referred to a number of other decisions including Re Vavaris and Director-General of Social Security (1982) 5 ALN N16 where the Tribunal posed the question whether the claimant for unemployment benefit was so "seriously engaged in economic enterprise" as to lead to the conclusion that he is not unemployed. A similar test was posed in McKenna v Department of Social Security (Decision No.1914, 2 May 1989) where it was said "the proper question whether a person has so organised his affairs … that Tribunal may conclude that he is seriously engaged in the conduct of a business ..."
Other decisions cited by the Tribunal are further examples of the principles expressed in the passages set out above, save for Re Whyte and Director-General of Social Services (Decision No.506 dated 4 August 1981) which concerns the obligation of an applicant for unemployment benefits to take reasonable steps to obtain suitable employment.
The question whether the appellant was "unemployed" during the whole or part of the period when benefit was paid was essentially a question of fact and degree to be decided having regard to the above principles."

In turning to a consideration of the facts in this matter, the Tribunal first notes the comment of the Full Court in Director-General of Social Services v Thompson (1981) 38 ALR 624 at p628:
"Such a legislative scheme seems to us to accept the operational burden of numerous individual decisions, and at the same time to provide by way of safeguard a need for the Applicant to satisfy those administering the schemes that he or she qualifies for entitlement."
In this matter the Applicant commenced a business on 1 August 1997; he was a sole proprietor of the business, which provided individuals for cleaning and general labouring services to clients. The Tribunal notes the Applicant's description of how he worked in the business over the period in question and the average time commitment per day given to the activity. The Tribunal also notes that the Applicant did not inform the Respondent of his business activity until 27 March 1997 and that particular details of his business, including financial details for financial year 1997/98 were not provided in full until 9 July 1998. The Tribunal notes that the Respondent was in effect still trying to gain a full appreciation of the Applicant's business activities during interviews conducted in late November and late December 1998.
The Tribunal, in considering all the issues placed before it, nominates the following circumstances which continue to raise particular concerns for the Tribunal in its efforts to fully appreciate the nature of the Applicant's business:
(a)      It is clear to the Tribunal that the Applicant commenced the 'Tosson Hire a Worker' business on 1 August 1997 and continued to work in the business during the period in question. What is not clear to the Tribunal is what other activities the Applicant was also involved in. There is evidence from the Applicant that he was selling antiques and there is evidence from particular advertisements that he had considered operating in the removals business;
(b)      While the Applicant has described the particulars of his time commitment to the business, being some 21 hours per week and mainly in the evening, the Tribunal has some difficulty in accepting such particularity in view of the nature of the business, the administrative aspects of the business and the fact that the advertisements for the business indicated a seven-day 24 hour a day service;
(c)       The Tribunal, while noting the Applicant's failure to disclose the business activity until 27 March 1998 and his difficulty in providing timely and consistent information, observes that the Applicant's revenue figures for the period 1 August 1997 to 30 June 1998 are inconsistent with his business banking account at the Commonwealth Bank, where deposits amounted to $39,926.65 and withdrawals to $36,645.87. Similar figures, namely deposits of $44,126.43 and withdrawals of $46,171.37 for the period 1 July 1998 to 31 December 1998 raises the inference in the Tribunal's mind of a business in growth phase, and not as the Applicant has indicated in interviews with the Respondent, of his actions of consistently overdrawing and rebanking the surplus;
(d)      Similarly, the Tribunal notes that the Applicant states that the business never ran at a profit and that for financial year 1997/98 the business ran at a net loss of $10,679. Despite the Taxation Office not allowing this amount as an allowable deduction, the Tribunal is unable to understand as from what source funds were derived for this amount to be expended. Similar comments apply to the financial year 1998/99, with the Tribunal sensing that perhaps the source and flow of funds in both years is consistent with the overall flow of funds through the Applicant's business banking account at the Commonwealth Bank;
(e)      In considering the issue of the bank loan from the HSBC, the Tribunal, while considering the Applicant's comments that the contents of the application form were constructed by others, notes that he did sign the document having knowledge of the content. The Tribunal views such activity with opprobrium;
(f)       Further, in considering the source of the Applicant's $22,000 contribution to the purchase of the property in October/November 1998, the Tribunal notes the variable stories as to the source of funds over time, and is unable to definitively state what is the most likely source of funds; and
(g)      The Tribunal is unable to satisfy itself that the Applicant's failure to disclose controllable assets in the various applications for newstart allowance are congruent with other statements that he transferred antiques and leather ware from Holland to Australia in 1995 and sold such goods over the ensuing years, with $22,000 being made available for the purchase of his property in Ashfield in October/November 1998.
As a consequence of these issues, the Tribunal concludes that during the period in question, namely 1 August 1997 to 25 February 1999, the Applicant was self-employed. Further, because of the issues nominated in paragraph 50, the Tribunal finds that it is not satisfied by the responses received from the Applicant and as such the Tribunal is unable to conclude that the Applicant satisfies section 593(1)(a) of the Act, namely that he was unemployed throughout the period in question. In so stating the Tribunal concludes that the activities, actions and words of the Applicant are often inconsistent, often associated with delay in presentation of material, often incongruent with other records such as bank and tax statements, often fail to disclose material which should be disclosed and often where disclosure does occur, a full understanding of the circumstances remains distant.

It is for these reasons that the Tribunal, having found the Applicant to be self-employed, concludes that the scope, ambit and nature of this self-employment constitutes remunerative work undertaken by the Applicant throughout the period in question. Further on analysis of the various financial documents and explanations available, the Tribunal concludes that the Applicant has failed to satisfy the Tribunal that the source of funds to conduct the business was not the business itself, even though such a business may have run at a loss. In short the Tribunal concludes that the Applicant was not unemployed at any time during the period August 1997 to 25 February 1999.
Debt
It is clear to the Tribunal that as a consequence of the finding that the Applicant was not unemployed during the period 1 August 1997 to 25 February 1999, he was not qualified for payment of newstart allowance, and thus any payment during this period constitutes an overpayment. The Tribunal notes the working documents contained within the T documents where this amount is calculated as $16,247. The Tribunal concludes that this amount of $16,247 is the correct amount of overpayment. Further the Tribunal notes that the Applicant failed to advise the Respondent of his business activities until 27 March 1998, despite being requested on a number of occasions to do so and answering in the negative. The Tribunal concludes that this is a breach of section 658 of the Act, as a consequence the overpayment of $16,247, pursuant to subsection 1224(1), becomes a debt due and payable by the Applicant to the Commonwealth.
Write Off
Subsection 1236(1A) of the Act details the circumstances in which a debt may be written off. It is clear to the Tribunal that none of the four circumstances nominated in the subsections are operative in this matter and accordingly concludes that this is not a matter in which the debt can be written off.
Sole Admininstrative Error
subsection 1237A(1) details the circumstances in which the debt may be waived because of a sole administrative error made by the Commonwealth. In this matter there is no evidence before the Tribunal that the Respondent has made an administrative error in relation to the period in question. Indeed error, if error has occurred, has been the result of the Applicant failing to declare his self-employment in a business for some eight months, with an ensuing investigation arising out of the Applicant's various difficulties in being able to respond in a timely fashion to matters requested of him. The Tribunal concludes that waiver of the debt due to sole administrative error by the Commonwealth is not available in this matter.
Special Circumstances
Waiver of the debt due to special circumstances pursuant to section 1237AAD of the Act is available where the debt did not arise wholly or partly from the debtor makiing a false representation or where there has been a failure by the debtor to comply with a provision of the Act (by failing or omitting to comply), and where special circumstances exist.
The term "special circumstances" has been examined by the AAT and the Federal Court. In Re Beadle and Director General of Social Security (1984) 6 ALD 1, Toohey J stated:
"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 of 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."
In this matter no circumstances have been drawn to the Tribunal's attention which would allow the Tribunal to consider them unusual, uncommon or exceptional. Further the Tribunal has already found that the Applicant failed to comply with the provision of the Act as well as failing to disclose his business self-employment and activities (false statement). The Tribunal therefore finds that the debt cannot be waived under section 1237 of the Act.
In summary the Tribunal finds that the Applicant was not unemployed during the period 1 August 1997 to 25 February 1999; that as a consequence he was not qualified for newstart allowance during this period; that overpayment of $16,247 of newstart allowance did occur; that such overpayment is a debt due and payable by the Applicant to the Commonwealth; and that there are no grounds sustainable for write off or waiver of the debt.
Determination
60. The Tribunal determines that the decision under review is affirmed.
I certify that the 60 preceding paragraphs are a true copy of the reasons for the decision herein of Dr J D Campbell
Signed:         .....................................................................................
  Associate
Date/s of Hearing  24 April 2001
Date of Decision  8 October 2001
Solicitor for the Applicant         Self-represented
Solicitor for the Respondent    Angela Smith