Paulis and Secretary, Department of Social Services (Social services second review)
[2017] AATA 909
•2 May 2017
Paulis and Secretary, Department of Social Services (Social services second review) [2017] AATA 909 (2 May 2017)
Division
GENERAL DIVISION
File Number
2016/1942
Re
Luay Paulis
APPLICANT
And
Secretary, Department of Social Services
RESPONDENT
DECISION
Tribunal Mr D. J. Morris, Member
Date 2 May 2017 Place Melbourne The decision under review is affirmed.
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D. J. Morris, Member
SOCIAL SERVICES – NSA – whether qualified – whether applicant unemployed and satisfied activity test – definition of ‘unemployed’ – applicant has several unprofitable businesses – not qualified for allowance – decision affirmed
Legislation
Social Security Act 1991, ss 591(1), 593(1), 595, 601(1)
Social Security (Administration) Act 1999, ss 37, 41, 42, Sch 2: cls 3, 4
Cases
Brabenec and Director-General of Social Services [1981] AATA 41
Director-General of Social Services v Thomson [1981] FCA 209
Hine and Director-General of Social Services [1981] AATA 127
Malaj and Secretary, Department of Social Services [1988] AATA 127
Mcauliffe v Secretary, Department of Social Security [1991] FCA 268
Weekes and Director-General of Social Services [1981] AATA 117
REASONS FOR DECISION
D. J. Morris, Member
2 May 2017
BACKGROUND
The Applicant, Mr Luay Paulis, lodged a claim for Newstart Allowance (NSA) on 14 October 2015. On 5 November 2015 the Department of Human Services (the Department) rejected Mr Paulis’s claim for NSA on the grounds that he was not unemployed. This was the ‘original decision.’
Mr Paulis sought a review of the original decision and provided further documentation to the Department in support of his claim.
On 22 December 2015 an Authorised Review Officer (ARO), an officer of the Department not involved in the original decision, affirmed the original decision.
Dissatisfied with that decision, Mr Paulis requested a review by the Social Services and Child Support Division of this Tribunal (AAT1). On 17 March 2016, AAT1 affirmed the original decision.
The Applicant has now sought a review by the General Division of the Tribunal. The hearing was held on 28 February 2017. Mr Paulis represented himself, gave evidence and was cross-examined by Ms Vincci Chan, the representative of the Respondent.
Before the hearing, the Applicant made an inquiry to the Tribunal Registry which I interpreted as seeking an application for confidentiality orders under section 35(3) or section 35(4) of the Administrative Appeals Tribunal Act 1975 (AAT Act). At the commencement of the hearing, I heard submissions from the Applicant. The Respondent did not take a position on this matter. Mindful of the principles set out in section 35(5) of the AAT Act, the Tribunal did not make any orders under section 35(3) or 35(4) but in these reasons I have decided that it is not necessary for the names and locations of certain businesses to be disclosed, so they are generalised.
The Respondent tendered documents provided under section 37 of the AAT Act, which were taken into evidence.
During the course of the hearing, the Applicant raised a concern that the Tribunal may not have all the material considered by AAT1 and after the hearing he provided a bundle of documents, which I have read and which I have marked as MFI 1.
Qualification for NSA under the Act
The law applicable to the grant of NSA is the Social Security Act 1991 (the Act) and in particular section 593 of that Act, which relevantly states:
“Subject to section 596, 596A, 597 and 598, a person is qualified for newstart allowance in respect of a period if:
(a)the person satisfies the Secretary that:
(i)throughout the period the person is unemployed; or
(b)in the case of a person to whom paragraph (a)(i) applies-throughout the period, or for each period within the period, the person:
(i)satisfies the activity test…”
Section 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.”
Was the Applicant unemployed when he made his claim and did he satisfy the activity test?
Mr Paulis told the Tribunal that in 2013 he was working as a teacher. In 2013 he opened a café in a town near the town in which he was teaching. He acquired three other businesses, two hairdressing salons (‘salon 1’ and ‘salon 2’) in two other country centres and a kebab shop in a suburb of Melbourne. He said that he stopped working as a teacher in 2014 and concentrated on his businesses.
He told the Tribunal that, in respect of salon 1 he spent one hour per week undertaking book-keeping and 1 hour per week on discussions with staff. In respect of salon 2 he said he spent one hour per week undertaking book-keeping and one hour per week on discussions with staff. In respect of the kebab shop, he said that he spent two hours per week on book-keeping and another hour per week on discussions with staff. In respect of the café, Mr Paulis said he was working for 15 hours per week in October 2015 managing the café, serving coffee and cooking. He said he had one other person helping him in the café, a friend who he said he did not pay, and she helped him out whenever he needed assistance. In his claim for NSA, he said he spent 15 hours per week in the café business and, in answer to question 51 in the form which reads “Is anyone else helping you with running the business?” Mr Paulis responded “yes” and that a friend was helping him for 15 hours per week.
The Tribunal asked Mr Paulis why he had acquired these four businesses, given their geographic spread and diversity. He said that he decided to buy “run-down small businesses and hope they would make a profit.” He said that he found “workers won’t look after businesses when the boss isn’t there.”
In cross-examination, Mr Paulis said that the café was open from 9 a.m. to 1 p.m. and closed on Tuesdays and Wednesdays so he said he had ample time to look for work. Sometimes he closed the café earlier, if it was quiet. As background in relation to his employment skills, he told the Tribunal that he had trained as a music teacher, finishing his degree in 1998 at Southern Cross University. Before coming to Australia he had studied civil engineering in Iraq but had been conscripted into the army there. He said he also studied at the University of Western Sydney and obtained a diploma to teach.
The Respondent contended that Mr Paulis was not qualified to receive NSA when he applied on 14 October 2015 as he was not unemployed. In terms of salon 1, that business was still operating in October 2015 and closed ‘sometime in February 2016.’ In terms of salon 2, that business was also still operating in October 2015 and also closed ‘early in 2016’ – the Applicant could not recall the precise date. The fourth business, the kebab shop, also was operating in October 2015 and closed ‘early in 2016.’ The first business, the café Mr Paulis operated for 15 hours per week, was operating in October 2015 and closed in May 2016.
The Respondent contended that the Applicant was not unemployed, he was self-employed. The Respondent further submitted that Mr Paulis did not satisfy the activity test because he was “fully committed” to continuing the businesses at the time he lodged his application for NSA.
In reply, Mr Paulis said that if he only worked two hours per week in relation to each of the two hairdressing salons, and three hours per week in relation to the kebab shop, it proves that he was only working part-time and supports his contention that he was available to look for work, as does the fact that his hours at the café allowed him a substantial part of each day to look for other employment. He said he made clear in his claim form that he was “urgently” trying to sell his café.
Consideration
There are a number of judicial decisions which have considered what is meant by the term “unemployed”. In Director-General of Social Services v Thomson [1981] FCA 209, the Court held:
“The concept of “paid work” provides a useful starting point. At its broadest the description “unemployed” encompasses those who are without paid work…the notion of ‘paid work’ as the antithesis of ‘unemployment’ seems to accord with common sense and with the statutory context…Some further limitation is, however, necessary to determine the true meaning of ‘unemployed’. Neither in ordinary parlance nor in the context of the legislation is everyone who is without work ‘unemployed’…”
Later, the Court said, in regard to the (then) Director-General’s discretion to assess whether a person is unemployed:
“For all that, the possibility must be recognized that activities being pursued by a person without paid work may be so fundamentally incompatible with the person’s being regarded as unemployed that no further inquiry is necessary. However we anticipate that such a case would be exceptional. In the usual case, of which we think this is an example, the solution will be arrived at by reference to all the circumstances, of which the activities being pursued for the time being by the applicant for benefit will be one.”
Mr Paulis provided 2015 Business Worksheets for the four businesses which showed a loss, that year, for the café in the order of $28,747 and for the kebab shop, of $41,894, and profits for the two hairdressing salons: salon 1 in the amount of $2,931 and salon 2 in the amount of $9,616.
The Tribunal considered that these Business Worksheets were significantly lacking because they did not detail any staff costs – even taking into account Mr Paulis’s evidence that the businesses other than the café he himself worked in were operated by contractors who ‘took home what they made’, there was no information in these documents explaining the nature of the income, and how the contractors were paid for their endeavour.
From the evidence of the Applicant, at the time he made his claim for NSA he was working some 22 hours per week. He contended that his businesses were not profitable so therefore he should be entitled to NSA because he fulfilled the definition of being unemployed.
In Malaj and Secretary, Department of Social Security [1988] AATA 127 (quoted with approval by von Doussa J in Mcauliffe v Secretary, Department of Social Security [1991] FCA 268), the Applicant was an upholsterer who worked varying hours each day for little return, sometimes upholstering furniture himself and sometimes sub-contracting others to do the work and retaining a small payment. The Tribunal found that Mr Malaj was not “unemployed”. Similarly, in Brabenec and Director-General of Social Services [1981] AATA 41, Mr Brabenec was a self-employed opal miner engaged unsuccessfully in full-time prospecting for opals. In that case, the Tribunal found the Applicant was not ‘unemployed’ any more than a person who might be setting himself up on his own in a profession, trade or business.
Similarly, in Hine and Director-General of Social Services [1981] AATA 123, Senior Member Todd considered the case of a person who had claimed Unemployment Benefit (as the benefit was then titled) and also disclosed his earnings from casual work as a taxi driver. The applicant was seeking other employment because taxi driving required long hours of work for inadequate reward, but the Tribunal made it clear that the Unemployment Benefit was not a support scheme for inadequately remunerated employment.
In Weekes and Director-General of Social Services [1981] AATA 117, the Tribunal said:
“…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 not be said, in our view, that it followed that the persons involved were ‘unemployed’…”
On the evidence of Mr Paulis, I cannot conclude that he was unemployed when he made his claim for NSA. He was directly involved in the running of four businesses and was working regularly at these enterprises for some 22 hours a week at that time. Taking into account all the circumstances, I find that at the time of his claim he was working each day for perhaps little return but, adopting the phrase used by von Doussa J in Mcauliffe, he was “seriously engaged in economic enterprise.” His Honour said, in discussing coming to a conclusion that a person is not unemployed:
“A similar test was posed in McKenna v Secretary, Department of Social Security (Decision No. 1914, 2 May 1989) where it was said “the proper question is whether a person has so organised his affairs…that a Tribunal may conclude that he is seriously engaged in the conduct of a business”.”
Mr Paulis told the Tribunal he had given up teaching to purchase the businesses. He was clearly self-employed and personally engaged in operating his café and in his regular weekly hours spent managing his three other businesses located in other parts of Victoria in October 2015. On these facts, I therefore find he did not satisfy the mandatory requirement for eligibility for NSA in section 593(1) that he was at that time ‘unemployed.’
There are provisions in the Act, at section 595, for the Secretary to treat a person as being ‘unemployed’ in certain specified circumstances. I find that the Applicant’s job circumstances at the time of his claim did not enliven the discretion that may be exercised under this section.
For completeness, because Mr Paulis was substantially involved operating his café and, albeit to a lesser extent, running three other businesses at the time of his claim, I am also not satisfied that, on the facts, he was available at that time to take up alternative work. I accept the Applicant’s evidence that he wanted to return to his former profession of teaching, but a mere desire does not change his factual circumstances. The work he was doing when he made his claim for NSA was not short-term or sporadic or unpredictable: on his own evidence he worked in his café from 9 a.m. to 1 p.m., not every day but most days, a total of some 15 hours each week. In addition to these hours, he was also working for a total of some seven hours a week undertaking bookkeeping and associated tasks for his three other businesses. Section 601 of the Act states that a person satisfies the activity test if he or she is actively seeking and willing to undertake paid work in Australia other than paid work that is unsuitable to be undertaken by the person. While there was some evidence he was seeking to close down his businesses, he was at that time committed to them and I am not satisfied, on balance, that Mr Paulis met the requirement set out in section 601 at the time of his claim. He was operating four businesses. He may have been, as he said in his NSA claim form “urgently” trying to sell his café, but he was still operating it.
Conclusion
Mr Paulis clearly has both professional skills and job experience that will assist him to obtain employment. It is unfortunate that his business decisions seem not to have worked out, in fact on the evidence they have gone quite badly. But Mr Paulis seems to be under some misapprehension about the purposes of NSA. The purpose of this allowance is not to provide supplementary income to someone operating an unprofitable business, or businesses. It is an allowance to provide a modest income for a person who, unlike him, does not have regular or predictable work, who is looking for work, and who may also be undertaking training or study to increase their chances of finding a job. In my mind, the purpose of the allowance, in interpreting section 601(1)(b) of the Act, that a person is “willing to undertake” paid work, necessarily includes the element that a person must be ready to be employed. This means the person is actively seeking and, logically, available for, employment – not any employment, but employment that is suitable for the person to undertake. The Applicant was plainly not ready to be employed at the time of his claim, because of the regular duties he had, and the hours he spent, running his other businesses.
I note that Mr Paulis gave evidence that he has now sold or closed his four businesses. Consequently, if he has not yet found employment, he may be eligible to make a fresh claim for NSA. However, at the time of the claim which is the subject of this review, the Tribunal finds that the Department correctly rejected Mr Paulis’s claim for NSA as he did not satisfy the requirements of section 591(1)(a) and (b) of the Act when he lodged his claim. The consequence is that the Tribunal finds that the original decision that Mr Paulis was not qualified for NSA when he lodged his claim was the correct decision.
DECISION
The decision under review is affirmed.
33. I certify that the preceding 32 (thirty-two) paragraphs are a true copy of the reasons for the decision herein of Member D. J. Morris.
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Associate
Dated 2 May 2017
Date of hearing 28 February 2017 Applicant In person
Advocate for Respondent Vincci Chan, Department of Human Services
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