QX01/2; Secretary, Department of Family and Community Services - [2001] AATA 1026

DECISION AND REASONS FOR DECISION [2001] AATA 1026

ADMINISTRATIVE APPEALS TRIBUNAL )

) No Q2001/98

GENERAL ADMINISTRATIVE DIVISION       )
           Re      SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES
  Applicant
           And    QX01/2
  Respondent

DECISION

Tribunal Dr EK Christie, Member

Date19 December 2001
PlaceBrisbane

Decision The Tribunal affirms the decision under review. This means that the application by the Department of Family and Community Services is unsuccessful.

(Sgd) EK CHRISTIE
MEMBER
CATCHWORDS
SOCIAL SECURITY - Restart Re-establishment Grant Scheme - restart income - definition of "farmer" - whether farmer for period of two years immediately prior to date of claim - meaning of "significant"

Farm Household Support Act 1942 ss 3(2), 8B
ACI PET Operations Pty Ltd v Comptroller-General of Customs (1990) 26 FCR 531
Catto and Secretary, Department of Family and Community Services [2001] AATA 354
Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634
Re Drinkwater and Secretary, Department of Family and Community Services (1999) 29 AAR 365
O'Reilly and Secretary, Department of Social Security (1999) 57 ALD 504
Parrett and Secretary, Department of Family and Community Services [2001] AATA 427
Re Vulcan Australia Pty Ltd and Comptroller-General of Customs & Anor (1994) 34 ALD 773

REASONS FOR DECISION

19 December 2001 Dr EK Christie, Member

This is an application for a review of a decision of the Social Security Appeals Tribunal ("the SSAT") made on 22 December 2000 that the respondent satisfied the statutory definition of "farmer" and was eligible for the Farm Family Restart Scheme. The SSAT decision set aside the decision of an Authorised Review Officer made on 31 July 2000 (T47).
In reaching its decision, the SSAT concluded:
"25. As to the matters set out in section 3(2)(c) that the farmer must 'derives a significant part of his or her income from the farm enterprise' the Tribunal accepts [the respondent's] submission that in accordance with the discussion set out in Drinkwater's case that he intended that the on-farm income be a significant source of income, whether or not such intention actually materialised by way of profits. And that his intention was that primary production be a significant source of his income." (T2 Folio 7)

The Department of Family and Community Services has brought this application for review because:
"The SSAT erred by deciding that for a continuous period of two years prior to his claim, [the respondent] was a 'farmer' for the purposes of section 3(2) of the Farm Household Support Act 1992 and thereby erred in deciding that [the respondent] was qualified for the farm family restart scheme." (T1)

The applicant was represented by Mr P Kanowski, a Departmental Advocate. The respondent represented himself.
At the hearing the Tribunal had in evidence before it documents lodged pursuant to Section 37 of the Administrative Appeals Tribunal Act 1975 – the "T" Documents (Exhibit 1) and the following documents:

Exhibit 2 Respondent's Income Tax Return for the year ending 30.6.90
Exhibit 3 Form P, 1999 Income Tax Return (respondent and wife)
Exhibit 4 Partnership Tax Return (respondent) for year ending 30.6.00
Exhibit 5 Individual Tax Return (respondent) for year ending 30.6.00
Exhibit 6 Extracts from Centrelink document "Farmers Assistance Guide"
Exhibit 7 FOI Document (letter from Centrelink to Department of
Agricultural, Fisheries & Forestry Australia, 29.2.00) released to respondent

Facts

The respondent claimed assistance under the farm family restart scheme in 1999 and was advised on 23 November 1999 that he "met the eligibility for the farm family restart scheme". On 9 June 2000 the respondent was advised that his claim under the farm family restart scheme for assistance was rejected. The respondent then sought a review of the decision by an authorised review officer.
Based on the evidence before it, the SSAT made the following findings of fact:
·     "[The respondent] owned a farm from August 1996.
·     On 23 November 1999 [the respondent] was granted entry into the farm family restart scheme.
·     On 7 January 2000 [the respondent] was granted restart income support.
·     On 9 June 2000 [the respondent's] claim was rejected.
·     [The respondent] satisfies the requirements of being a farmer." (T2 Folio 5)

The applicant now disputes that the respondent satisfies the requirements of being a "farmer".
Issues before the Tribunal
The only issues for the Tribunal to decide were:

(a)whether the respondent was a "farmer" in accordance with the statutory meaning of this term; and, if this were the case,
(b)whether the respondent had been a "farmer" for a continuous period of at least two years immediately before the period [that a person becomes qualified for restart income support in respect of a period].
Legal Framework (a) Statute

Section 8 of the Farm Household Support Act 1992 ("the Act") sets out the qualifications for restart income support:
"8B Subject to this Division, a person is qualified for restart income support in respect of a period if:
(a)the period begins on or after the restart scheme payment commencement day; and
(b)throughout the period, the person:
(i)is a farmer; and
(ii)is at least 18; and
(iii)is an Australian resident; and
(iv)is in Australia; and
(c)the person has been a farmer for a continuous period of at least 2 years immediately before the period; and
(d)a certificate of inability to obtain finance issued in respect of the person has effect throughout the period."

Subsections 8(b)(i) and 8(c) of the Act are in dispute in this application for review.
The Act, at subsection 3(2) [Interpretation] defines the term "farmer" as follows:
"farmer means a person who:
(a)has a right or interest in the land used for the purposes of a farm enterprise; and
(b) contributes a significant part of his or her labour and capital to the farm enterprise; and
(c)derives a significant part of his or her income from the farm enterprise."

At the commencement of the hearing, the parties agreed that, based on this definition, the following issues were in dispute:

whether the respondent contributed a significant part of his labour to the farm enterprise; and
whether the respondent derived a significant part of his income from the farm enterprise.

Legal Framework (b) Common Law

A review and analysis of case law provides the reasoning that has been applied in deciding applications for review before the Tribunal:

Statutory construction of the meaning of "farmer"

O'Reilly and Secretary, Department of Social Security (1999) 57 ALD 504 [Section 3(2)(b) of the Act]
"(22) The wording of the definition in s 8A makes it clear that the decision-maker must look at the circumstances of the particular farmer and assess what farm and non farm labour was occurring and what farm and non farm income was being received. Was the farm labour and the farm derived income a significant part of that applicant's labour and income. In other words it is implied that the inquiry must consider the degree to which the applicant is 'tied to the farm enterprise for economic survival'."

Re Drinkwater and Secretary, Department of Family and Community Services (1999) 29 AAR 365 [Section 3(2)(c) of the Act]
"Held:
(i) In deciding whether a person's on-farm income was a significant part of that person's income for the purposes of the Act, it was appropriate to take account of the person's intention as to their principal source of income, as evidenced by their labour contribution or effort in the farm business."

The reasoning in Drinkwater's case can be distinguished in Parrett v Secretary, Department of Family and Community Services [2001] AATA 427 [Section 3(2)(c) of the Act]:
"33(d) The Tribunal also notes the submission presented by the Applicant, that the issue of income is best addressed by studying the intentions of the Applicant in relation to the activities undertaken in pursuit of income as opposed to the actual results of those endeavours. In this regard, the Applicant relied upon the findings in the matter of Re Drinkwater and Secretary, Department of Family and Community Services (1999) 58 ALD 243. The Tribunal notes the submission and recognises that the major objective of the Act was to provide income support to low income farmers who could not borrow further against their assets. However, the Tribunal concludes that in the circumstances of this matter, the Applicant did not derive a significant part of his income from the farm enterprise. More particularly, the Tribunal concludes, that where the Applicant's submission conceded that the Applicant did not derive any actual income from the farm enterprise in 1996 or 1997 that the concept of an applicant's intention as to his principal source of income is incongruent with the concept of drawing a significant part of his income from the farming enterprise, the latter in the Tribunal's view defining an actual as opposed to theoretical circumstance."

Meaning of "significant":

Foster FCJ in ACI PET Operations Pty Ltd v Comptroller-General of Customs (1990) 26 FCR 531 examined the word "significant" in the context of Section 269C of the Customs Act 1901. His Honour said at 551-2:
"The word 'significant' has acquired a number of shades of meaning in common parlance. For instance, it is not infrequently used as a substitute for 'substantial'. It is, however, clearly important that it be given as precise a meaning as possible in this legislative provision, as its use imports a major guiding consideration into the determination by the comptroller of whether goods serve 'similar functions'. I turn, therefore, to the dictionaries for guidance and find that the Oxford English Dictionary (2nd ed) defines the word (where relevant) as 'full of meaning or import; important, notable; and having or conveying a meaning', and that the Macquarie Dictionary defines it as 'important; of consequence; expressing a meaning; indicative'.
'I derive assistance also from considering that the word is the opposite of 'insignificant' which word is defined in the Macquarie Dictionary as meaning 'unimportant, trifling or petty' and as 'too small to be important'. Looked at from this point of view 'significant' may be regarded as meaning 'not unimportant or trivial' or as 'sufficiently large to be important'."

The above analysis was followed by the Tribunal in Re Vulcan Australia Pty Ltd and Comptroller-General of Customs & Anor (1994) 34 ALD 773.

In its findings in Catto and Secretary, Department of Family and Community Services [2001] AATA 354, the Tribunal made the following reference to the Centrelink Manual:
"38. It should be recorded that in relation to the issue of whether or not Mr Catto derived a significant part of his income from the farm enterprise, the Tribunal notes that the Centrelink Manual states at paragraph 3.1.5 as follows:
(a) When determining an application gross income figures should be used; and
(b)Where the farm is not generating a sufficient level of income to meet the living costs of the farm family, the labour contribution or effort becomes paramount."

Evidence of the Respondent

The respondent had left school in 1984 and had been engaged in farming from 1984 to 1990. The respondent commenced full-time employment with Centrelink (formerly DSS) in November 1991. He had purchased a farm in August 1996, in the same locality of his full-time employment with Centrelink, and commenced residence on the farm on 12 January 1998.
The respondent's farm was 205 acres in area (including an 80 acre lease). Sixty-five acres were cultivated for a range of seasonal crops and the balance of the farm was used for livestock grazing.
In response to a Tribunal question, the respondent stated that his farm was average size for farm enterprises in the area and was not a "hobby farm".
Because of significant problems associated with working in the Centrelink regional office, the respondent had accepted an interstate transfer with Centrelink in 1998. However, he had ended this position after four months and returned to full-time employment in his original regional Centrelink office in September 1998. During his absence interstate, the respondent said that he had returned to the farm on two to three occasions using flex or annual leave entitlements (see T3 Folio 25).
The respondent ceased full-time work with Centrelink in November 1999.
During cross-examination by Mr Kanowski, the respondent would not concede that his estimates of time for labour (T3 Folios 9 to 11) were over-estimates.
Contentions of the Applicant
The applicant's advocate stated that the respondent's income from Centrelink in 1997/98 was $36,199 and in 1998/99, $39,238 (T27 Folio 142). In contrast, the respondent's income for the 1997/98 tax year for the farm partnership with his wife was a net loss of $42,094 (T7 Folio 93).
The applicant contended that the respondent was not a "farmer" for the purposes of the Farm Household Support Act 1992 (the Act) and was ineligible for assistance under the Farm Family Restart Scheme (FFRS). Mr Kanowski contended that the Act's definition of a "farmer" required, among other things, that significant labour be contributed to and significant income be derived from the farm enterprise. To quality for FFRS, under Section 8B(c) of the Act, a person must also be a farmer for a continuous period of two years. It was Mr Kanowski's contention that on any reasonable interpretation of the word "significant" a person in full-time off-farm employment could not also be considered a farmer. The respondent had been a full-time Centrelink employee up until four days prior to the lodgement of his claim under the FFRS. It was Mr Kanowski's contention that the respondent's estimates of labour inputs to his form (T3 Folios 9-11) were inflated values and unreliable in terms of the amount of labour devoted to his farm enterprise.
Mr Kanowski submitted that for the respondent to be able to devote "significant" labour to a farm enterprise, the off-farm employment activity of the respondent would need to be regarded as minor or insignificant in order to satisfy the definition of "farmer". Mr Kanowski contended that with full-time, continuous employment, the respondent was clearly not in this situation and his circumstances were plainly outside what the scheme envisaged. Furthermore, he submitted that non-farm activities would have to be regarded as minor or insignificant before the Tribunal could be satisfied that there was a significant part of the labour devoted to farming.
Mr Kanowski submitted that the approach taken in Drinkwater's case to the statutory meaning of "farmer" was too broad. Specifically, that intention as to the principal source of income was determinative. The applicant's contention was that some flexibility in this context might arguably be justified where considering a claimant who had traditionally derived their livelihood from farming but who had more recently fallen on hard times. The respondent's case was materially different, as he had not gained his livelihood from farming.
Mr Kanowski made the further submission that the qualification for FFRS in Section 8B of the Act required a person to meet the definition of a farmer for a continuous period of at least two years. However, the respondent was absent for four months in Canberra in 1998 and such absence was inconsistent with the "continuous" requirement provided for in the Act.
Mr Kanowski concluded by referring to the respondent's situation as being "a most surprising case where a person who is in full-time employment for wages could be regarded as devoting a significant part of their labour to a farm enterprise". It was Mr Kanowski's submission that the FFRS was designed for farmers who had relied on their property for their livelihood and were now facing severe financial difficulties. This category of farmers, he contended, may need assistance to consider their future, sell their properties and to obtain alternative employment. However, he contended that a person who was already in full-time work clearly could not also be a farmer for the purposes of the scheme.
Mr Kanowski referred to the Second Reading Speech introducing the Farm Household Support Amendment (Restart and Exceptional Circumstances) Bill 1997 (2 October 1997) where the Minister for Primary Industries and Energy stated:
"The new farm family restart scheme is the government's key program for delivering income support to the farm sector. It also provides adjustment assistance to farmers who wish to leave the industry." (Hansard # 15, 1997 at 9024)
Mr Kanowski contended that the respondent appeared to be in the reverse situation to that envisaged when the program was established. In the period before the respondent submitted his application, the respondent was already in full-time paid employment which he chose to leave and to then immediately claim welfare assistance under the FFRS. Mr Kanowski submitted that the respondent was not tied to the farm for his economic survival and was in effect a public servant in the relevant period. He contended that a person who is already in full-time work is not part of the target group and could not be a farmer for the purposes of the Act.
Contentions of the Respondent
The respondent stated that his labour contributions to the farm enterprise for the two year period prior to making his claim on 23 November 1999 totalled approximately 4380 hours (T3 Folios 9-12). In contrast the time spent in full-time employment with Centrelink was 3078 hours. On this basis, around 58% of his overall labour time was associated with his farm enterprise.
The respondent stated that his gross income from his farm enterprise for the 1998 and 1999 calendar years were approximately $80,000 (T7 Folios 89-102, Exhibits 3 and 5).
The respondent submitted that during the four month period he was employed by Centrelink interstate he continued to contribute labour to the farm enterprise; for example "Business Labour" (T3 Folio 11); in addition, a wheat crop planted, prior to moving interstate, continued to grow on his farm and his cattle continue to graze. Both these farming pursuits would eventually earn income for his farm – notwithstanding that he did not reside on the farm for that four month period.
It was the respondent's contention that during this four month period interstate, he continued to contribute labour to the farm enterprise because –
(a) he was still controlling the farm in that period; and

(b)he continued to derive income during that period that his wheat crop grew and his livestock grazed in readiness for harvest or turn-off and subsequent sale.

The respondent submitted that although the term "significant" was not defined in the Act, any reasonable interpretation of the term would regard his contribution of approximately 4380 hours (or an average 42 hours a week of farm labour) as significant. Moreover, the time spent on farm labour exceeded the time spent whilst employed with Centrelink.
The respondent further submitted that the fact that he had full-time employment with Centrelink whilst operating his farm was not a relevant consideration in this application for review, as the legislation did not require a claimant to contribute their labour exclusively to the farm enterprise.
It was the respondent's contention that his gross on-farm income was a significant part of his total income (on-farm plus off-farm) relative to his gross income from Centrelink for the equivalent period. The respondent referred to Catto's case where at paragraph 38 the Tribunal noted that the Centrelink Manual stated that, when determining an application, gross income figures should be used. Consequently, the respondent submitted that any approach relying on net income was incorrect.

By reference to Parrett's case, the respondent contended that his intention and actual circumstances with respect to the principal source of income were totally congruent.
Consideration of the Issues
The objective of the Tribunal is to review administrative decisions, not only on their merits, but in accordance with the law at all times.
The Tribunal makes the following findings of fact in relation to the relevant two year period for the respondent's claim under the Act:

The Tribunal accepts the respondent's evidence that his farm enterprise was not a "hobby farm" but an average sized farm for the district;
The Tribunal concludes that, on the balance of probabilities, the estimates of time for the respondent's farm-related labour contributions: cattle, crops, other tasks, business (T3 Folios 9 – 11) are plausible and represent reasonable estimates for carrying out activities associated with his mixed farm enterprise;
That the hours spent in farm-related labour activities by the respondent exceeded the time spent in full-time employment with Centrelink (paragraph 29);
That the predominant reason the respondent incurred a net loss for his farm enterprise over the relevant period were predominantly climatic factors and prevailing market prices for livestock rather than any failure on the respondent's part to invest labour and capital into crop and livestock production (T3 Folio 22). An analysis of deductions in Income Tax Returns over the relevant period indicates a positive intention of the respondent directed towards crop and livestock production to generate cash flow. Moreover, given this fact situation, such intention on the respondent's part could not be described as "theoretical" (but see Parrett's case);
That the gross primary production income for the respondent for the 1997/98 taxation year was $26,665 (T7 Folio 90), the 1998/99 taxation year was $15,496 (Exhibit 3) and the 1999/2000 taxation year was $21,953 (Exhibit 5). Income Tax Returns for 1997/98 (T7 Folio 90) and 1998/99 (Exhibit 3) were partnership returns whereas the 1999/2000 return (Exhibit 5) was an individual return; and
That the respondent's income from full-time employment with Centrelink was $36,199 (1997/98) and $39,238 (1998/99) [T7 Folios 93, 142].

The Tribunal agrees with the approach taken in Catto's case (see paragraph 14 of these reasons) in applying the Department's Policy Guidelines by using "gross income" as the basis for deciding whether the respondent derived a significant part of his income from the farm enterprise. In the respondent's situation, the Departmental Guidelines state:

"When determining whether a FFRS applicant derives a significant part of their income from the farm enterprise, gross income figures should be used. In some instances net farm income is nil (or a loss) and to use this figure when determining eligibility for FFRS would clearly disadvantage genuine farmers in this situation." (Exhibit 6)

The Tribunal concludes that the Departmental Policy Guidelines addressing the statutory meaning of "farmer" (Section 3.1) are consistent with the object of the Farm Household Support Act 1992, as they take into account relevant circumstances, do not take into account irrelevant circumstances and do not serve a purpose foreign to the purpose for which the discretionary power was created: see the observations of Brennan J (as he then was) in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 642.
Based on:

(a)the gross income of the respondent's farm income relative to the off-farm income (paragraph 38);
(b)applying Drinkwater's case and so take into account the respondent's intention as to their principle source of income as evidenced by effort in the farm business (paragraph 38);
(c)applying the reasoning of Foster FCJ in ACI PET Operations Pty Ltd v Comptroller-General of Customs that "significant may be regarded as meaning sufficiently large to be important";

the Tribunal concludes that the respondent derived a significant part of his income from the farm enterprise.

By applying the same meaning for "significant" and applying it to the Tribunal findings of the time spent by the respondent in farm-related labour activities relative to off-farm activities (paragraphs 29, 38), the Tribunal further concludes that the respondent contributed a significant part of his labour to the farm enterprise.
The Shorter Oxford Dictionary defines "continuous" as:
"Characterized by continuity; connected; unbroken."
Notwithstanding that the respondent was absent interstate for four months, the Tribunal concludes that the respondent satisfies the statutory requirement that he had been a farmer for a continuous period of at least two years immediately before the period because:

various farm-related labour activities continued (see T3 Folio 11 "Business Labour") over the entire year;
prior to the interstate transfer, crops were planted, and livestock grazed, for the purpose of sale later in the year (see paragraph 31); and
that he had returned to the farm on a number of occasions (see paragraph 18).

Accordingly, the Tribunal concludes that during the period interstate the respondent maintained a degree of control over his farm enterprise by remaining "connected" to his enterprise. It was not the case that all links with the farm enterprise were non-existent over this period.
For all of the above reasons the Tribunal concludes that the respondent was eligible for the Farm Family Restart Scheme.
The applicant described the respondent's situation as unusual contending that the respondent could not be a "farmer" for the purposes of the Act given that he was in full-time employment in off-farm work. However, the statutory requirements for the meaning of "farmer", as prescribed by the Act, set the boundaries for the Tribunal's reasoning and have been applied in the decision end-point.
The Tribunal makes the observation that participation in off-farm employment by Australian farmers, today, is not unusual. For example, a survey in 1996/1997 of broadacre and dairy farmers revealed that 18% of all male farmers worked in off-farm wage and salary employment in addition to their on-farm work. Around 5% of these farmers worked 31-40 hours per week in off-farm work: See Garnaut J, Rasheed C and Rodriquez G (1999) Farmers at Work, ABARE and RIDRC (Commonwealth of Australia, Canberra). Whilst this observation does not form any part of the Tribunal's reasons for decision, it does highlight the fact that it is not necessarily an unusual situation for Australian farmers, today, to work in on-farm and off-farm activities.
The Tribunal decides to affirm the decision under review.
I certify that the 49 preceding paragraphs are a true copy of the reasons for the decision herein of Dr EK Christie, Member
Signed:         Denise Burton
  Secretary
Date/s of Hearing  13.6.01
Date of Decision  19.12.01
Solicitor for the Applicant         Mr P Kanowski, Departmental Advocate
Rep. for the Respondent         Respondent appeared in person