Pearse and Secretary, Department of Family and Community Services - [2001] AATA 58

DECISION AND REASONS FOR DECISION [2001] AATA 58

ADMINISTRATIVE APPEALS TRIBUNAL )

) No S1999/450

GENERAL ADMINISTRATIVE DIVISION       )
           Re      WARREN VICTOR PEARSE
  Applicant
           And    SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Respondent

DECISION

Tribunal Senior Member J.A. Kiosoglous MBE

Date1 February 2001
PlaceAdelaide

Decision       Pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.
  (Signed)
  J.A. KIOSOGLOUS
  (Senior Member)
CATCHWORDS
SOCIAL SECURITY – pensions, benefits and allowances – Newstart Allowance – whether applicant "employed" – whether genuinely and actively seeking employment – work with LETS Bartering company 60-80 hours per week – approved schemes considered – activity test requirements considered – administrative error – special circumstances
Social Security Act 1991 ss. 593, 595, 601, 606, 607B, 624, 1237
Social Security (1994 Budget and White Paper) Amendment Act 1994
Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26
Re Doyle and Secretary, Department of Social Security (1985) 26 SSR 313
Spencer v Secretary, Department of Social Security (1998) 83 FCR 306

REASONS FOR DECISION

1 February 2001 Senior Member J.A. Kiosoglous MBE

This is an application by Mr Warren Victor Pearse (the applicant) for review of a decision of the Social Security Appeals Tribunal (SSAT) dated 9 September 1999 (T2) which affirmed a decision of an authorised review officer (ARO) dated 29 October 1998 (T54) which had affirmed decisions of delegates of the respondent dated 15 November 1995 (T42) and 16 January 1996 (T46) to raise and recover debts of Newstart Allowance in the amounts of $8,619.95 and $3,248.14 respectively.
The Tribunal received into evidence the documents lodged pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (T1-T57), together with nine exhibits, four lodged by the applicant (Exhibits A1-A4) and five lodged by the respondent (Exhibits R1-R5). In addition, the Tribunal heard evidence from the applicant. The respondent called Mr Darryl Dyson, a departmental officer, as a witness. The applicant represented himself and the respondent was represented by Mr Ray Kilderry, a departmental advocate.
The central issues for the Tribunal in determining whether or not the applicant was overpaid Newstart Allowance are whether or not he was unemployed for the periods 16 June 1994 to 29 May 1995 and 17 July 1995 to 13 November 1995 (the relevant periods); whether or not he satisfied the activity test during the relevant periods; or, whether his activities for Let's Trade Incorporated (Let's Trade Inc) exempted him from the activity test.
history of the application
This matter has a long and convoluted history, which the Tribunal only summarises briefly for the purposes of this decision.
The applicant was in receipt of Jobsearch Allowance from 22 December 1992, and was subsequently paid Newstart Allowance as and from 4 January 1994. From 4 to 18 October 1994 the documents indicate that the applicant was apparently in gaol and did not receive Newstart Allowance (T4/48 & T57/203-4). The applicant lodged a series of fortnightly Newstart Allowance forms between 21 June 1994 and 17 November 1995 in which he declared the names of two employers that he had contacted in respect of a job, save and except for the form dated 18 October 1994, and those for the periods ending 28 July 1995, 11 August 1995 and 25 August 1995, in which only one employer is listed (T57).
The applicant commenced working with Let's Trade Inc on 14 June 1994 (T14/93) and ceased as General Manager with Let's Trade Inc on 13 November 1995 (T46/171). The applicant was in fact instrumental in the establishment of "Let's Trade" (as it was known prior to its incorporation) the constitution of which was drawn up in or about July 1993 (T12/85). The "aims" as expressed in the constitution of "Let's Trade" are as follows:
"…
3. AIMS
a)The primary aim of the Association is to assist Businesses groups, & Individuals working to relieve the effects of unemployment by providing the means towards increased self reliance and an increase in the distribution of goods and services – throughout AUSTRALASIA.
b)To achieve its primary aim the Association shall:-
i.promote, coordinate and assist the development of LETSystems.
ii.develop appropriate policies and agreements for the administration of LETSystems.
iii.ensure that LETSystems keep such records as are required to maintain the LETSystems.
iv.represent members of LETSystems on issues which may be described as class issues arising from participation in the LETSystems.
v.provide opportunities for members of LETSystems to establish and participate in network resources.
vi.encourage the development and maintenance of skills in preparation for employment.
vii.support the provision of relevant educational programs.
viii.emphasise co-operative relationships at all levels with particular regard to the principles adopted by the International Co-operative Alliance.
…"
"Let's Trade" was initially registered as a business name in South Australia on 15 June 1993 with the applicant listed as the proprietor (Exhibit A3/79 & T13/89). The applicant was also involved in attempting to register "Let's Trade" as an incorporated association, and following litigation in the South Australian District Court on 6 October 1993, His Honour Judge Bowering ordered that the Corporate Affairs Commission (SA) grant such registration to "Let's Trade" (attachment 'A' to Exhibit A4).
The applicant signed an employment contract (as appears at T24/115) with Let's Trade Inc on 12 November 1994 (T27/128) which provides (inter alia):
"…
1.        Appointment of GENERAL MANAGER
          The Business does hereby appoint the GENERAL MANAGER as follows:-
(1)The GENERAL MANAGER shall commence working for the Business on the Date of Commencement (stipulated in the First Schedule) up to and including the Date of Expiration (stipulated in the First Schedule).
(2)The GENERAL MANAGER shall not be permitted to act or work for any third party (not being a party to this Indenture) during the Term of Appointment without first obtaining the written consent of the Business.
…
3.        Duties of GENERAL MANAGER
          The Duties of the GENERAL MANAGER are as follows:-
(1)       To manage the business affairs of the Business.
(2)       To manage the administration of the Business.
(3)      To report generally to the executive committee of the Business.
(4)       To promote the activities and the business of the Business.
(5)To keep all matters (including but not limited to trade secrets, patents and all other business matters) referred to him by the Business as confidential at all times.
(6)       To act honestly and diligently in the course of carrying out his duties.
(7)To use his best endeavours to carry out his duties in a reasonable manner.
(8)to conduct proper books of account of the Business.
(9)To act as the general manager of the Business.
(10)To act generally in a fit and proper manner in respect of all contacts with other persons, businesses and organisations.
(11)To keep the Business duly informed at all times of all material matters coming to his attention.
(12)To obey all the reasonable requests of the Business.
(13)To act in a full time capacity as the manager of the Business.
(14)To attend to all such matters and all such meetings as the Business may reasonably direct from time to time.
(15)To use his best endeavours at all times to effect a reasonable cash flow (in cash dollars) for the Business.
4.        Entitlements of the GENERAL MANAGER
The Business agrees to grant the following entitlements to the GENERAL MANAGER:-
(1)An Annual Salary (as stipulated in the Second Schedule).
(2)Fringe Benefits (as stipulated in the Second Schedule).
(3)Annual Holidays (as stipulated in the Second Schedule).
(4)Superannuation (as stipulated in the Second Schedule).
(5)Annual Leave (as stipulated in the Second Schedule).
(6)Long Service Leave (as stipulated in the Second Schedule).
(7)Sick Leave (as stipulated in the Second Schedule).
(8)Motor Vehicle Allowance (as stipulated in the Second Schedule).
(9)Telephone Allowance (as stipulated in the Second Schedule).
(10)Other Benefits (as stipulated in the Second Schedule).
…"
The Tribunal notes that the respondent sent a questionnaire dated 1 June 1995 (T14/90) to Mr R. Walsh, then Secretary of the Let's Trade Inc committee asking (inter alia) "Please provide a full account of all payments, credits, payments in lieu of and remuneration made to [the applicant] for his services?" to which Mr Walsh replied on 15 June 1995 (T14/93) "The contract has not been put into operation and no payments have been made".
On 11 May 1995 a delegate of the respondent recommended the cancellation of the applicant's Newstart Allowance on the basis of "whereabouts unknown" and suggesting that full details of the applicant's involvement with Let's Trade Inc be obtained (T6/51). Telephone contact between the applicant and respondent ensued (T8/56) resulting in a field assessor attending to interview the applicant. In the review form (T9) resulting from that contact, question 7 reads "Is there anything that would hinder or restrict your efforts to obtain work?" and the response is recorded as "bankruptcy. Also bankruptcy breaches pending". Question 8 reads "What efforts have you made to get work in the last 4 weeks?" and the response is recorded as "cannot recall". The applicant signed the declaration on page 12 of the review form (T9/68) to indicate that the information supplied is true and correct. In an accompanying statement dated 22 May 1995 (T10/73) the applicant stated (inter alia):
"…
… am the General Manager of Lets Trade which is a Barter Organisation The company is a non profit organisation controlled by a panel of managers. I am not a member of this management . … I work 60 to 80 hours a week for Lets Trade but will cease working for this organisation if I was offered another job within my capacity. I find it hard to obtain work due to my bankruptcy. …
…"
On 5 June 1995 a delegate of the respondent cancelled the applicant's Newstart Allowance on the basis that the applicant does not satisfy the "works test" (T16, T20 & T21) pursuant to sections 601 and 624 of the Social Security Act 1991 (the Act). The decision to cancel the applicant's Newstart Allowance was affirmed upon review by an ARO on 6 September 1995 (T40).
On 23 June 1995 the applicant reclaimed Newstart Allowance, however that claim was disallowed (T19-T20). On 17 July 1995 the applicant again reclaimed Newstart Allowance and that claim was granted with effect from the date of application (T38/145).
On 15 November 1995 a debt in the amount of $8,619.95 was raised against the applicant being Newstart Allowance paid for the period 14 June 1994 to 29 May 1995 on the basis that the applicant claimed "benefit when in fact he was employed as Manager of Lets Trade from 14/6/94" (T42/153). On 16 January 1996 a debt in the amount of $3,248.14 was raised for the period 17 July 1995 to 13 November 1995 for similar reasons "client was engaged as full time Manager of LETS TRADE and had no entitlement to payments. He has never advised of his employment on any of his 19 u's NOR on his claim form dated 18/7/95. This is not his first claim." (T46/168).
These decisions were affirmed by an ARO on 29 October 1998 (T54) and again by the SSAT on 9 September 1999 (T2). In its reasons for decision the SSAT stated (inter alia):
"…
In particular, Mr Owen-Pearse must show that he was actively seeking paid work and was willing to undertake paid work. He told the Tribunal that he was aware at all times that he needed to satisfy the activity test. He said he did this by listing details of the employers he had contacted on his fortnightly form which are set out in the discussion of evidence. While the Tribunal makes no finding about the genuineness of Mr Owen-Pearse's attempts to find work, his activities with Lets Trade Inc were so time consuming and he appeared such a central part of the scheme and totally committed to its success that the Tribunal finds it difficult to believe that he could have been willing to undertake alternate paid work.
As set out in the Discussion of Evidence, Mr Owen-Pearse acknowledged that despite all his attempts Lets Trade Inc was not given a status of an approved activity thereby exempting him from the activity test. Mr Owen-Pearse confirms that he was aware he was required to satisfy the activity test and that only his income derived from Lets Trade Inc was not considered income for the purposes of the Social Security legislation. Mr Owen-Pearse was not exempt from the activity test due to the status of Lets Trade Inc.
The Tribunal finds that Mr Owen-Pearse was not unemployed in the said period 1994 and 1995 due to his commitment and activities with Lets Trade Inc. The Tribunal finds his commitment to Lets Trade Inc casts doubt on his ability or willingness to undertake alternate paid work and therefore satisfy the activity test.
Therefore, as Mr Owen-Pearse was not unemployed within the meaning of the Social Security Act, nor exempt from the activity test, he is not entitled to newstart allowance in the said periods 1994 and 1995.
…"

legislation

Sub-section 593(1) of the Act provides:
"Subject to sections 594 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, or for each period within the period, the person satisfies the activity test; and
(c) 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)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)when 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)is at least 18 and has not reached the pension age; and
(ii)is an Australian resident; and
(iii)is in Australia; and
(iv)is registered by the CES in an allowance category as being unemployed; and
(h)throughout the period the person has been registered as required by subparagraph (g)(iv) for longer than 12 months; and
(i)the person was not in receipt of a job search allowance or a youth training allowance during the period."

applicant's evidence and submissions

The applicant centred his submissions and evidence around a voluminous set of documents which he had complied chronologically (and which comprises Exhibit A4). As it is the interpretation of this documentary evidence which forms the most substantive aspect of the applicant's case, the Tribunal summarises his oral evidence and submissions only briefly, referring to the documentary evidence as appropriate. The Tribunal has considered the documentary evidence in depth for the purposes of the discussion and findings herein.
The applicant was born on 26 May 1950 in Clare, South Australia. He worked as an insurance broker for about eighteen years, ceasing in that field in or about 1988-89. He is currently self-employed in the marketing field, trading as Owen-Pearse and Associates, and is completing a Masters Degree in Business Administration (MBA) with an institute affiliated with Adelaide University.
The applicant told the Tribunal that Let's Trade Inc was a community organisation set up to challenge unemployment. At the time of its creation and incorporation, the applicant was an undischarged bankrupt, and given the resultant restrictions that placed upon him personally, he acted to bring together the necessary people to create the organisation. Initially the organisation was registered as a business name with the applicant listed as proprietor, but it was subsequently deregistered prior to the registration of incorporation.
The applicant stated that he was initially employed as a Senior Coordinator and reported to the Let's Trade Inc Board. He further stated that he only received trade dollars for the work he performed for Let's Trade Inc and that his only conventional income for the period he was involved with Let's Trade Inc was the unemployment benefit.
The applicant stated that he worked with Let's Trade to set up an approved training course, with the idea that unemployed people could get hands on experience whilst giving employers the chance to filter out people who were not prepared to work. On that basis the organisation applied to become a Jobskills provider (Exhibit A3/72) and became involved in the Jobskills Programme associated with the Offenders Aid and Rehabilitation Service (OARS), an arrangement which was terminated in or about August 1993 (Exhibit A3/100-103). He stated that whilst monies received from OARS were paid into his account, it was money held on trust for the organisation.
The applicant referred to the District Court (SA) decision referred to above (attachment 'A' to Exhibit A4) and correspondence from the Hon Trish Worth MP in support of his contention that Let's Trade Inc was not a commercial venture.
In relation to the employment agreement (T24/115) that he signed as "General Manager" on 12 November 1995 (T27/128), the applicant stated that it was not a traditional employment contract but was designed to deter competitors from trying to takeover Let's Trade Inc. He told the Tribunal that the document was intended to invest a degree of power in the General Manager and provide substantial financial penalties to any potential competitor taking over the business. He further stated that the contract had a "political aim" to prevent stacking of the Let's Trade Inc Board. In support of his contention that a competitor would suffer serious financial penalties, he referred to Schedule 3 of the contract, which in his interpretation would result in a potential penalty payment of between $100,000 to $3 million. He also referred to the fact that he would be able to take the organisation's software if terminated unreasonably. Whilst he conceded that he was "employed" on paper, he considered that he remained unemployed as the contract was only intended to safeguard his position. He stated that the fact that the contract does not specify his hours gave him complete discretion. He conceded, in response to cross-examination however, that he did fulfil the duties of General Manager as outlined. He further stated that he believed at the time of entering into the contract that the organisation would end up with a JobSeeker contract, and that his contract could then "come into reality". He "took a gamble" to enter the contract, hoping it would lead to full time work as a General Manager of Let's Trade Inc.
The applicant disputed that the answers recorded on the field assessor's report (T9) were necessarily his, and stated that the Field Officer was particularly hostile. He conceded, in response to questions asked in cross-examination, however, that he was the "General Manager" of Let's Trade Inc at the time, and was working 60-80 hours per week in that capacity. He further stated that he honoured his contract with Let's Trade Inc up until November 1995.

The applicant stated that he had fulfilled the requirements of the activities test. He referred to the minutes of Let's Trade Inc meetings where his leave of absence is approved (Exhibit A3/19 & 21) as evidence of his availability to take up employment. He further stated that whilst he worked 60-80 hours a week for Let's Trade Inc, he was a single man with no other obligations, who only requires 4-5 hours sleep per night. As the Act only requires 20 hours per week spent looking for work, he considered that he was still able to look for work and work 80 hours per week for Let's Trade Inc.
In relation to the issue of whether or not Let's Trade was an approved activity, the applicant stated that he never received notification that the organisation was not approved. He considered that the system is not designed to notify if an organisation is approved, and that in the absence of a rejection, one can assume that approval has been given. He referred to an information update leaflet issued by the Department in March 1995 (Exhibit A3/77) which states (inter alia):
"…
Another great way of learning new skills is to become part of a co-operative enterprise.
There is a growing network of cooperative enterprises, for example, "Local Exchange and Trading Schemes" known as LETS. People involved with LETS trade their services with other members in the co-operative. These schemes are generally highly organised and work well. You can build up 'credits' and use them to 'purchase' goods or services offered by others such as child care, home maintenance, cleaning, gardening, clothes, plants and trade and professional services.
Such goods or services received through a co-operative enterprise are not taken into account when we work out your benefit payments.
Organisers from co-operative groups already set up in your community will be able to help you with information about the requirements for setting up or joining a co-operative.
…"
He considered this to be an indication that the Department approved of LETS schemes for social security purposes. He also referred to the District Court (SA) judgement (attachment 'A' to Exhibit A4) and extracts from Section 7 of the CES Manual Volume 5 (Exhibit A3/141-169) (the Manual) in support of his contention that Let's Trade Inc was an approved activity. He also referred to a Ministerial submission by Kerry Flanagan, Assistant Secretary, Retirement Programs Branch of the Department dated 22 August 1995 (attachment 'B' to Exhibit A4) recommending that "…you agree that credits earned through Let's Trade Inc be exempt from the income test and that you sign the attached letter to Mr Warren Pearse reflecting this arrangement" as evidence that Let's Trade Inc was an approved activity. The Tribunal notes the "Discussion" in that document states (inter alia):
"…
… Only JSA/NSA customers with Case Management or other Activity Agreements (those with more than 6 months CES registration) would be able to participate in LETS full-time and then only if approved by the CES…
JSA/NSA customers without Case Management or other Activity Agreements (registered as unemployed for less than 6 months) would continue to be subject to the Activity Test thus preventing them from participating in LETS on a full-time basis.
…"
The accompanying letter signed by the Hon Peter Baldwin, then Minister for Social Security, dated 25 August 1995 (part of attachment 'B' to Exhibit A4) states (inter alia):
"…
… I am happy to advise you that it has been decided that Let's Trade Inc is an approved LETS scheme for social security purposes.
…"
The applicant considered that the notation by a delegate on the review officer referral dated 16 August 1995 (T32) "Decision under review to cancel allowance while undertaking a C.E.S approved activity" illustrated that his involvement was approved. He considered that Let's Trade Inc had "blanket exemption" in respect to the Act, as evidenced by the notation in an internal departmental memorandum dated 10 August 1995 (T30) "Let's Trade Inc organisation is an exempt LETS organisation."
In relation to the activity agreements he signed, he stated that he was still able to fulfil the requirements that he looked for work whilst continuing to work for Let's Trade Inc, which was, in his submission, an approved activity in any event.
mr darryl dyson
Mr Dyson has worked for Centrelink since 1997, was a former officer of the Department of Employment, Education, Training and Youth Affairs and also of the Commonwealth Employment Services (CES). His current position involves policy advice on JobNetwork Services and Approved Activities.
Mr Dyson interpreted the JobSeeker Activity Referral List (JARL) (Exhibit R5) for the Tribunal, and stated that there was only one "approved activity" recorded for the applicant between 1990 and 2000, which was a short course in September 1995.
Mr Dyson referred to the Manual and stated that the fact that the applicant did not receive a letter advising that Let's Trade Inc was not an approved activity does not mean that it was approved. He considered that if the applicant did not receive either a rejection or acceptance letter, he should have chased it up, as it was not safe to assume that it had been accepted.
Mr Dyson stated that, in order for a customer of the respondent to undertake an approved activity, there must be an activity agreement which includes reference to the community cooperative enterprise. Where someone has a case manager, the case manager must agree to the proposed enterprise and include it in the individual agreement. In relation to the activity agreement dated 5 September 1995 (T39) he stated that the agreement would remain in place until confirmation was gained from the CES that the Let's Trade activity was approved.
Mr Dyson stated that the notation on the review officer referral (T32) is in no way implying that the applicant was on a CES approved activity, and merely states the question that needs to be decided. The actual conclusion of the ARO appears at the bottom of the referral form.
Mr Dyson told the Tribunal that no person working 60-80 hours per week would have approved status, and would be declared not eligible for full-time work. He stated that a person with an employment contract may or may not be regarded as employed depending upon the hours that they worked. He further stated that departmental protocol is that the 20 hours per week a person is expected to look for employment is during normal business hours. He gave evidence that approval is required for a person to do any activity over 20 hours per week, except paid employment, referring to page 3 of Section 7 of the Manual (Exhibit A3/143), where full-time activity is noted as a minimum of 20 hours per week. He also stated that it does not matter if the person does 40 hours voluntary work on a weekend, as the Department would still consider that to be "a problem" in terms of their ability to actively seek employment.
Mr Dyson stated that a NEIS management agent determines whether or not a "community enterprise" is approved. He told the Tribunal that even when such approval is given, a person still needs an individual agreement.
Mr Dyson explained the difference between "LETS Scheme approval" and "community enterprise approval", stating that LETS Scheme approval only gives exemption from the income requirements of the Act, and does not give approval for individuals to circumvent the activity test requirements of Newstart Allowance.
respondent's submissions
Mr Kilderry submitted, on behalf of the respondent, that the applicant was not "unemployed", as he did not satisfy the requirements of section 593 of the Act. He referred in particular to the acknowledgment by the applicant that he was working 60-80 hours per week for Let's Trade Inc, and to the employment contract between the applicant and Let's Trade Inc. He further submitted that the applicant was remunerated for his work and engaged for a significant period of time in any given week in that work. He also submitted that the discretion in section 595 of the Act to treat a person as unemployed if they are undertaking paid work is intended to cover people who pick up work on a short-term basis and that the section was not intended to extend to people in the applicant's situation, where the work extends for some 18 months (Re Waller and Secretary, Department of Social Security (1985) 8 ALD 26).
Mr Kilderry submitted that the applicant did not satisfy the activity test in that he was not actively looking for work, and that his hours with Let's Trade Inc precluded him from being able to look for work (Re Waller and Re Doyle and Secretary, Department of Social Security (1985) 26 SSR 313).
Mr Kilderry submitted that the applicant was not exempt from the activity test as there is no evidence that Let's Trade Inc was an approved activity, nor that the applicant had an approved activity agreement authorising his involvement with Let's Trade for the purposes of the activity test.
discussion and findings
The two debts in question in these proceedings were raised as a result of a decision by delegates of the respondent that the applicant was not qualified for Newstart Allowance in the relevant period. Qualification for Newstart Allowance depends upon the satisfaction of all of the requirements of sub-section 593(1) of the Act. The Tribunal first turns to consider sub-paragraph 593(1)(b), which concerns the activity test requirements.
The activity test provisions of the Act of relevance to this matter appear in section 601. Sub-section 601(1) provides that a person satisfies the test if the respondent is satisfied that throughout the relevant period the person is actively seeking and willing to undertake suitable paid work. There are two relevant provisions which need to be read in conjunction with sub-section 601(1) in relation to the present matter, being sub-section 601(2) and sub-section 606(1) of the Act.
Sub-section 601(2) of the Act as at the relevant time provided:
"601(2) A person also satisfies the activity test in respect of a period if:
(a)       the Secretary is of the opinion that, throughout the period, the person:
(i)should undertake particular paid work, other than paid work that is unsuitable to be done by the person; or
(ii)      should:
  (A)      undertake a course of vocational training; or
  (B)      participate in a labour market program; or
  (BA)    participate in a rehabilitation program; or
  (C)       participate in another course;
approved by the Employment Secretary which is likely to:
(D) improve the person's prospects of obtaining suitable paid work; or
(E)      assist the person in seeking suitable paid work; or
(iii)       in a case where the person lives in an area where:
  (A)      there is no locally accessible labour market; and
(B) there is no locally accessible vocational training course or labour market program;
should participate in an activity suggested by the person and approved by the Employment Secretary; and
(b) the Secretary notifies the person that the person is required to act in accordance with the opinion; and
(c)the person takes reasonable steps to comply, throughout the period, with the Secretary's requirement."
On 5 September 1995 the applicant entered into an activity agreement (T39). As and from that date, sub-section 606(1) of the Act is relevant and provided at that time (inter alia):
"606(1) A Newstart Activity Agreement with a person is to require the person to undertake one or more of the following activities approved by the Secretary:
(a) a job search;
…
(eb) subject to section 607B, development of and/or participation in group enterprises or co-operative enterprises;
…"
The Tribunal notes that sub-paragraphs 606(1)(ea) and (eb) were inserted by the Social Security (1994 Budget and White Paper) Amendment Act 1994.
Section 607B of the Act requires the Secretary of the respondent to be satisfied that the activity will be viable for 12 months and is likely to provide the person skills and training that will help obtain paid employment. It is notable that the agreement entered into by the applicant on 5 September 1995 (T39) does not require him to participate in Let's Trade Inc but requires him to "apply to CES for approval of volunteer work".
Either through the activity agreement or by notice given pursuant to sub-paragraph 601(2)(b) of the Act, a person is only approved to participate in one of the various schemes if a person receives notification from the respondent of the requirement to participate. Whilst the applicant asserted that he never received notification that his involvement in Let's Trade Inc was not approved, he was unable to establish that he ever received notification, pursuant to sub-paragraph 601(2)(b), or that his activity agreements required participation in Let's Trade Inc.
The applicant does not assert that his work with Let's Trade Inc was "paid work" for the purposes of sub-paragraph 601(2)(a)(i) of the Act. In any event, there is no evidence of the respondent requiring him to work for Let's Trade Inc in paid work as is necessary to satisfy sub-paragraph 601(2)(a)(i) of the Act. The question arises as to which (if any) of the categories listed in sub-paragraph 601(2)(a)(ii) of the Act as at the relevant period Let's Trade Inc could fit into. Even if it was able to fit into any of the listed categories, it still required the approval of the Employment Secretary for the purposes of the sub-paragraph. The Tribunal cannot find any evidence in the documents before it that such approval was ever given.
In that regard, the applicant referred to a number of sources of "approval". When one considers the documents however, there is no single document which gives the particular type of approval required by the legislative provisions set out above. The Ministerial letter dated 25 August 1995 (part of attachment 'B' to Exhibit A4) informs the applicant that Let's Trade Inc is an approved LETS Scheme for social security purposes. Approval in that sense only applies to the income test provisions of the Act, and does not satisfy the requirements of the activity test legislative provisions. Such is made clear in the Ministerial Media Release dated 2 December 1993 (T12):
"…
"I want to make it clear to LETS type groups, and to the community at large, that the activity test for participants of such schemes will continue to be applied," said Mr Baldwin.
…"
The applicant considered that the notation by a delegate on the review officer referral dated 16 August 1995 (T32) was a sign of approval, however it is no more than a notation of the type of decision being referred for review. It has no standing in so far as the legislation is concerned. This is also the case for the other documents to which the applicant referred.
It is clear to the Tribunal that the applicant proceeded on a number of assumptions in this case, without first checking his exact personal status with the Department. This may well have been done in complete innocence. The Tribunal notes correspondence dated 1 October 1993 sent to the applicant by the Hon Trish Worth, Federal Member for Adelaide in 1993 (Exhibit A3/60) however which stated (inter alia):
"…
I have been told that voluntary work under the definition of income types is considered valuable consideration and therefore subject to income testing.
However, in most cases volunteer work is acceptable providing it leaves the person free to look for work. There are a number of considerations to be investigated and the DSS investigates each person on a case-by-case basis.
These considerations include
  *         the nature of the work
  *         the number of hours worked on a weekly basis
  *         efforts to obtain work
  *         how it affects their ability to seek work.
As the matter is considered on a case-by-case or individual basis, the department cannot give any "blanket rule" for LETS Bartering. Instead, it has suggested that individuals in receipt of unemployment benefits working for LETS Bartering be assessed as and if they wish.
…"
Clearly, as early as 1993 the applicant was aware that there is no "blanket rule" for LETS Schemes, and each case requires an individual assessment. On the evidence before the Tribunal, it is not satisfied that the applicant has met the requirements of sub-paragraph 601(2)(b) or section 606 of the Act and so finds. There is no evidence of the type of individual approval necessary to enable him to satisfy the activity test by virtue of his work with Let's Trade Inc. Accordingly, during the relevant periods, the applicant is required to satisfy the activity test by demonstrating that he was actively seeking and willing to undertake paid work.
Pursuant to sub-paragraph 593(1)(a) of the Act, the applicant is also required to demonstrate that he was unemployed during the relevant periods. This Tribunal has considered the issues of whether a person is "unemployed" and whether they are "actively seeking and willing to undertake paid work" (or similar expressions in previous versions of the Act and its predecessor) in many previous decisions, and it is unnecessary in the present case to canvas the case law on either issue at great length.
The applicant's evidence to the Tribunal was that he honoured his employment contract up until November 1995, and that he was working 60-80 hours a week for Let's Trade Inc. Of itself, the number of hours worked by the applicant for Let's Trade Inc would suggest that the applicant was "employed" by Let's Trade Inc. That number of hours would also suggest that he would not have had time to actively and genuinely seek paid work during the relevant periods. The Tribunal found Mr Dyson to be a highly impressive witness. It notes with approval his evaluation that the respondent would be concerned with anyone working on any activity over and above 20 hours per week, which is the number of hours per week at which something becomes a "full time activity" according to the Manual (Exhibit A3/143).
As a general proposition, there is a legitimate expectation that people actively look for work during business hours, as it is during these hours that people would be contacting prospective employers and attending the various employment offices to see what work is available. The Tribunal does not accept the applicant's contention that he could work 60-80 hours for Let's Trade Inc and look for other work for 20 hours per week. Even if one slept for only 4-5 hours per night, doing both would require between 10-12 hours solid work 7 days per week for the entire period during which the applicant worked for Let's Trade Inc. Perhaps an individual with super human instincts could sustain such a level of work for over 18 months. This is not the case here and so the Tribunal does not accept that the applicant seriously devoted 20 hours per week to job seeking over and above his work with Let's Trade Inc.
Further to the number of hours the applicant worked, the Tribunal has the employment contract he signed, in which he commits to acting "in a full time capacity" (T24/117). His evidence was that he fulfilled this role until late 1995. On reading the employment contract, the Tribunal does not consider that the applicant had a realistic appreciation of its terms and conditions. The "substantial penalties" referred to by the applicant rely upon the somewhat ambiguous wording of the second and third schedules of the contract, and despite whatever "political" purpose the applicant believed was being served by signing the document, the effect of his signing was to bind him into a legally enforceable employment agreement. The fact of this contract, coupled with the fact that by his own evidence the applicant worked 60-80 hours per week for Let's Trade Inc during the relevant periods, lead the Tribunal to find that he was not unemployed for the relevant periods as required by sub-paragraph 593(1)(a) of the Act as it was in 1994-95.

The applicant's evidence was equivocal at best and at times his answers bordered on the evasive. Mr Kilderry did not seek to make an issue of the applicant's credit however, and the Tribunal makes no particular finding on this point. In respect of the question of whether he was actively and genuinely seeking employment during the relevant period the Tribunal must reconcile the applicant's evidence with the statement recorded by the Field Officer review form that he "could not recall" efforts made to get work in the preceding four week period. The Tribunal did not find the applicant's evidence about the circumstances of the meeting with the Field Officer to be compelling in his favour. The requirement of sub-paragraph 601(1)(a) of the Act is that a person be actively seeking paid work, and as noted by the Full Federal Court in Spencer v Secretary, Department of Social Security (1998) 83 FCR 306 it is a test of the genuineness of the job search activity. On the totality of the material before it, including an assessment of the applicant as a witness, his declarations of 60-80 hours a week spent with Let's Trade Inc and conflicting material arising from the encounter with the field assessor, the Tribunal finds that the applicant was not genuinely seeking work during the relevant period. It is not satisfied that the applicant was taking sufficient steps, given his other commitments, to the serious business of trying to find employment, and finds that he does not satisfy the activity test for the periods under review.
Accordingly, the applicant does not satisfy either sub-paragraph 593(1)(a) or 593(1)(b) of the Act and was not qualified to receive Newstart Allowance during the periods under review. Debts were properly raised for these periods and the Tribunal so finds.
In respect of the issue of waiver, there is clearly no sole departmental error resulting in the debts. The applicant chose to interpret certain statements in Ministerial and departmental correspondence in a manner most beneficial to himself, without having an appreciation of the reality of the information being conveyed. He proceeded to undertake work with Let's Trade Inc on the basis of certain assumptions about his social security entitlements which were not rightly made in the circumstances. The Tribunal agrees with Mr Dyson that in the absence of a letter accepting the Let's Trade Inc scheme as an approved activity it was not safe to assume such acceptance. It also concurs with Mr Dyson that if such a letter was not received, the applicant should have chased that up. Whether or not the Department could have responded in a more timely fashion does not absolve the applicant of his responsibilities.
On the same basis, the Tribunal does not consider that it is appropriate in this case to exercise the special circumstances discretion contained in section 1237AAD of the Act. Taking into account all the circumstances of this case, there is nothing to indicate that it would be unfair, unjust or otherwise unreasonable to effect recovery of the debt in the present matter.
decision
For the above reasons, and pursuant to section 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the decision under review.

I certify that the 61 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE
Signed:         .....................................................................................
  Personal Assistant
Date/s of Hearing  10 January 2001
Date of Decision  1 February 2001
Counsel for the Applicant        In person
Solicitor for the Applicant         -
Counsel for the Respondent    Mr R. Kilderry
Solicitor for the Respondent    Centrelink