Summers and Department of Agriculture, Fisheries and Forestry
[2002] AATA 1230
•28 November 2002
DECISION AND REASONS FOR DECISION [2002] AATA 1230
ADMINISTRATIVE APPEALS TRIBUNAL )
) No S2000/136
GENERAL ADMINISTRATIVE DIVISION )
Re Andrew Summers
Applicant
And Department of Agriculture, Fisheries and Forestry
Respondent
DECISION
Tribunal Senior Member J.A. Kiosoglous MBE Mr D.J. Trowse (Member)
Date28 November 2002
PlaceAdelaide
Decision The decision under review is set aside and remitted to the respondent with the direction that the applicant qualifies for the Re-establishment Grant.
(signed)
J.A.KIOSOGLOUS
Senior Member
CATCHWORDS
SOCIAL SECURITY –farm household support – restart re-establishment scheme – re-start re-establishment grant – whether applicant satisfies definition of farmer – whether applicant had effective control of farm enterprise – right or interest in land owned separately by a trust and a family company – receipt of newstart allowance and effect on entitlement – decision set aside
Farm Household Support Act 1992 ss3(2), 8B, 8C, 9, 12
Restart Re-establishment Grant Scheme ss2.1, 3.2
REASONS FOR DECISION
28 November 2002 Senior Member J.A. Kiosoglous MBE
Mr D.J. Trowse (Member)
This is an application for review of a decision of the Social Security Appeals Tribunal (SSAT) that Mr Andrew Summers (the applicant) did not come within the statutory definition of "farmer" and, thus, was not qualified to benefit from the Farm Family Restart Scheme (the Initiative) established under the Farm Household Support Act 1992 (the Act).
The initiative, which became operative on 1 December 1997, was the Government's key program for delivering improved welfare support to the farm sector, as well as providing adjustment assistance to farmers electing to leave the industry. Its intention was the provision of a welfare safety net for low income farmers experiencing financial hardship who could not borrow further against their assets and/or who were not ready to make a decision to place their farming assets on the market and access welfare support under the social security hardship provisions. It was also designed as an incentive for farmers to leave the industry before their assets were severely depleted. There are two parts of the initiative, the first providing restart income support during the period leading up to the disposal of the farm enterprise and, the second, a re-establishment grant of up to $45,000 upon the sale of the enterprise. Although the Initiative was part of a range of welfare and rural adjustment measures in the Department of Agriculture, Fisheries and Forestry portfolio, Centrelink was responsible for its administration. The Initiative came to an end on 30 November 1999.
The applicant lodged his claim for both limbs of the benefits being offered on 21 May 1998. On 14 December 1998, that is approximately 7 months after lodgement, a delegate of the respondent decided that, because the applicant had lost effective control of the farm enterprise as at the time of lodgement, he did not qualify for either benefit. Eleven months later the decision of the delegate was affirmed by an authorised review officer. Those delays are in no way supportive of an initiative established to deliver improved welfare assistance to farmers fighting for their financial survival. It is recorded that the deferment at the Tribunal level has to a large extent resulted from the protracted negotiations entered into by the parties in an effort to settle the matter.
The Tribunal received into evidence the documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975, together with twenty five exhibits. Additionally, the Tribunal heard evidence from:
· the applicant
· Mrs Donna Summers, wife of the applicant
· Mr George Summers, father of the applicant
· Mrs Lynda Giles, mother of Mrs Donna Summers
· Mr Daryl Warman, rural counsellor to the applicant and his wife
· Mr Frank Jongewaard, accountant for the parents of Mrs Donna Summers
At the hearing, the applicant was represented by Mr C. Roberts of the Welfare Rights Centre (SA) Inc, and the respondent by Ms L. Odgers, a departmental advocate.
Sections 8B and 8C of Division 1B of the Act, set out the factors needed to qualify for restart income support. Those sections state:
8B Qualification for restart income support
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.
Note: For the ending of restart income support, see section 6B.8C Persons not qualified if Secretary determines that they do not effectively control farm enterprises
A person is not qualified, or ceases to be qualified, for restart income support in respect of a period if the Secretary determines that:
(a) the person is not effectively in control of the farm enterprise for which the person claims restart income support; and
(b) restart income support should not be payable to the person in respect of the period.
Note: Some examples of cases in which the Secretary may consider that a person is not effectively in control of a farm enterprise are when a mortgagee has taken possession of a farm, when a person is a bankrupt or when an eviction notice has been served on a person in respect of a farm.
Farmer is defined in sub-section 3(2) to mean 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.
Also relevant to the matter under consideration are the provisions contained in subsections 9(1) and 12(1) of the Act and which are set out hereunder:
9 Overview of rules about non-payability
(1) Farm household support is not payable to a person for a period during which the person is qualified for farm household support if during that period:(aa) exceptional circumstances relief payment is payable to the person (see section 9A); or
(a) no determination by the Secretary that the value of the person's assets does not exceed the person's assets value limit has effect (see section 10); or
(b) the person is a full-time student (see section 11); or
(c) another support payment is being paid to the person (see section 12); or
(d) the person is receiving income that is paid by a community or group from funds provided under a Commonwealth funded employment program (see section 13).12 Multiple entitlement exclusion
(1) Farm household support, exceptional circumstances relief payment or restart income support is not payable to a person if the person is receiving a social security benefit, a social security pension or a service pension.Entitlement to the re-establishment grant is to be determined in accordance with the provisions of the Restart Re-establishment Grant Scheme 1997 (the Scheme) formulated by the Minister for Primary Industries and Energy under sub-section 52A(1) of the Act. The sections of the Scheme pertaining to eligibility are as follows:
2.1 Who can apply?
A person is eligible for a re-establishment grant only if he or she is qualified for restart income support under Division 1B of Part 2 of the Act.
…
3.2 Who is qualified for a re-establishment grant?
(1) A person is qualified to receive a re-establishment grant if:(a) the person was eligible to apply for the re-establishment grant when the person applied; and
(b) the person's farm enterprise has been sold (and completion of the sale has taken place) within 1 year after:(i) if the person has received restart income support – the person last received restart income support; or
(ii) in any other case – the person applied for the re-establishment grant; and(c) the Secretary is satisfied that the sale was on commercial terms and at arm's length; and
(d) the Secretary is satisfied that the person has disposed of all of the person's farm assets; and
(e) the person has complied with any direction under Division 2 of Part 2 of this Scheme or section 13A of the Act to obtain advice; and
(f) the person's net assets, plus the total of any restart income support the person has received, is less than $157,500; and
(g) the person has not previously received a grant under this scheme or under an agreement subject to the Rural Adjustment Act 1992; and
(h) if the person has applied for a grant under an agreement subject to the Rural Adjustment Act 1992 – he or she has withdrawn that application.(2) For paragraph (1)(c), a divestment under the Retiring Farmer Assistance Scheme is not a sale at arm's length.
In this reference, the respondent contends that the applicant does not meet all of the requirements stipulated in sub-section 3.2 of the Scheme in that he was not eligible to apply for the re-establishment grant when he applied. Bearing in mind the provisions of sub-section 2.1 of the Scheme, this means that, in order to be entitled to the grant, one must first qualify for restart income support. This, in turn, leads to a consideration of section 8B of Division 1B of the Act. The respondent submits that the applicant was not a "farmer" – as that term is defined in sub-section 3(2) of the Act - as of the 21 May 1998, and, furthermore, that he had not been a farmer for a continuous period of at least two years immediately before the time of his application. The latter view appears to stem from a conclusion that the applicant had, at an earlier stage, lost effective control over the farm enterprise. Although not forcefully put, the respondent also raised as an alternative the possible detrimental effect of the applicant having received newstart allowance.
There is little, if any, dispute as to the facts relevant to the applicant's interest in the cattle industry. Clearly, the applicant in partnership with his wife ran cattle purchased by them and their progeny on cattle stations under the control of their parents. What does require elaboration is the nature and tenure of the arrangements entered into by the parties. Before moving to a consideration of those issues, it is appropriate to provide a sketch of the applicant's background and, then, to examine the role of the witnesses called on the applicant's behalf.
Upon leaving school, the applicant, now aged 43, married and with a young family, worked on Murnpeowie Station, which is a cattle station situated in the far north of South Australia and operated by his parents. In lieu of wages he was provided with board and quarters and the payment of his motor vehicle expenses. In 1985, the applicant married Donna Giles whose parents, Mr E.C. Giles and Mrs L Giles, were also involved in the business of raising cattle. Their property is known as Wellbourn Hill Station which, again, is located in the far north of South Australia. Soon after the marriage, the applicant and his wife were granted the right by Mr E.C. Giles to run a limited number of cattle on Wellbourn Hill. In return the applicant undertook to render assistance to the management of the property. It seems that the respective cattle numbers were dependent upon seasonal conditions. The activities emerging from this agreement constituted the beginning of the business partnership between the applicant and his wife.
An arrangement similar to that applicable to Wellbourn Hill was organised by the applicant and his parents in respect of the Murnpeowie property. This arrangement started in 1985.
During the years 1991 to 1996 the applicant and his family relocated to Phillip Creek Station in the Northern Territory where he was engaged as manager. That employment was terminated in February 1996 when the applicant and his wife leased Old McDonald Station which is situated about 180 kilometres north east of Alice Springs. That enterprise was concluded in April 1997 when the applicant decided to return to Murnpeowie because of financial problems that had arisen between the stock firm of Elders Ltd and his father. While the main function on Old McDonald Station was the agistment of cattle, the partnership of the applicant and his wife ran cattle of its own on the property, and, in fact, 120 head on hand at the time of cessation were transported to Wellbourn Hill.
Notwithstanding his absences from Murnpeowie and Wellbourn Hill, the applicant did return to those properties from time to time in order to perform the types of station duties later described in these reasons.
The Tribunal sees no reason to doubt the veracity of the evidence tendered by the applicant and the witnesses appearing on his behalf. Mrs L Giles and Mr G Summers testified as to the arrangements made whereby the applicant and his wife were granted the right to graze their cattle on Wellbourn Hill and Murnpeowie respectively. They also gave an insight as to the ownership structure of the station properties. Mr F. Jongewaard, a chartered accountant who has acted for the Giles family for several years, was able to outline in more precise terms the manner in which Wellbourn Hill Station is held on behalf of that family. Mr D. Warman, an experienced rural counsellor who had assisted the applicant and his wife in their difficulties with Elders Ltd and Centrelink, detailed how those problems had impacted on the business and private lives of the applicant and his family. The material contained in the following seventeen paragraphs is an amalgam extracted from the testimonies of all witnesses and, by reason of the Tribunal's acceptance of that evidence, it represents the Tribunal's findings as to the relevant facts.
Murnpeowie, a cattle station of some 7500 square kilometres, was, until its forced sale in February 1998, registered in the company name of GVS Pty Ltd. The company, of which Mr and Mrs Summers were the sole directors and shareholders, acted as trustee of the George and Valda Summers Family Trust. The trust, settled on 1 July 1979, was of a discretionary nature. The trust deed states:
· that the income beneficiaries were to be selected from George and Valda Summers, their children and grandchildren and their spouses, and widows of any of the same; and
· that the capital beneficiaries were to be chosen from the children of George and Valda Summers
The cattle business conducted at Murnpeowie was also a function of the family trust. Since its establishment, the trust has not traded profitably and thus no distributions to beneficiaries had been made.
Not surprisingly, the arrangement made in 1987 permitting the applicant and his wife to run cattle on Murnpeowie lacked formality. Although stock numbers were reliant upon seasonal conditions, it appears that, at times, the number of cattle owned by the partnership of the applicant and his wife and running on Murnpeowie reached a figure between four and five thousand. All purchases were funded by Elders Ltd who held a stock mortgage over the partnership herd. Self-servingly, it was a requirement that all stock transactions be effected through the stock firm. The amount owing to the stock firm ranged between and $100,000 and $350,000.
The partnership cattle intermingled with those belonging to the family trust. The common herd was mustered and drafted twice a year. The partnership cattle were identified by means of the brand and ear marks registered in the applicant's name. Those cattle of sufficient quality were trucked to various markets with the proceeds being used to reduce the Elders debt.
By way of reciprocation, the applicant undertook to provide, when required, his services and his working plant to the good administration of the business being operated by the trust. The type of duties performed for the collective benefit of the trust and the partnership of applicant and his wife included assisting with mustering and drafting, attending to fencing repairs, inspection of the sixty eight watering points on Murnpeowie and the movement of cattle and plant to various parts of the property. Partnership plant made available in terms of the arrangement included such items as a prime mover and trailer, landcruiser, Toyota traytop, utility, works caravan, horse float, motor cycle, saddles, welder and sundry tools. The depreciation schedule attached to the partnership 1998 income tax return reveals that an amount of $183,873 had been expended on those capital acquisitions.
The trust was further advantaged when the partnership spent $10,000 to $12,000 on fodder for all the cattle on Murnpeowie. Also, the partnership made available to the trust the services of 12 Hereford bulls and 14 Charollais bulls in an effort to introduce a superior gene into the family's cattle breeding program.
The mode of operations on Murnpeowie changed dramatically in November 1997 when Elders Ltd, also a secured creditor of the trust, entered into possession of the station and the trust cattle. The applicant was instructed that the partnership cattle, said to then number 1792, were to be removed from the property by 30 November 1997. The station property was sold in February 1998 and GVS Pty Ltd was placed into receivership.
Upon the receipt of the above notice, some cattle were sold, 236 were transported to a feedlot in the Lower Light region of South Australia, 268 were sent on agistment to a South East property and 744 remained missing on Murnpeowie. The removal of the cattle from Murnpeowie brought to a close that part of the business operations then being conducted by the partnership.
The financial woes of the applicant further worsened when, on 4 December 1997, Elders Ltd, said to be acting in accordance with its rights under the existing stock mortgage and a strongly denied default, indicated their intention to take possession of the stock located in the feedlot and upon agistment. At that point in time, the debt to Elders stood at $147,013. As a result of subsequent representations, an agreement was entered into soon after 4 December 1997 whereby Elders allowed the partnership to continue the management and care of the cattle in the feedlot and upon agistment and to control their sell off within an agreed time frame of three months. In those endeavours, the applicant travelled to the feedlot and agistment property on a regular basis to assess the condition of the cattle, select and draft up the ones ready for sale and to arrange for their trucking to market.
Notwithstanding an extension of the time frame previously mentioned, it is accepted that most, if not all, of the cattle held in the feedlot had been sold prior to 21 May 1998, that is, the date upon which the applicant made application for the re-establishment grant. However, after considering all the material made available at the hearing, the Tribunal concludes that, as at 21 May 1998, there remained seventy five to one hundred head of cattle on the agistment property in the South East.
The property known as Wellbourn Hill is owned by Wintinna & Wellbourn Hill Pastoral Co Pty Ltd (the pastoral company). That company also owns the neighbouring Wintinna Station which is under control of a Mr P.C Giles, a cousin of Mr E.C Giles. Whereas the directors of the pastoral company are Mr E.C Giles and Mr P.C Giles, the shareholders include Barote Pty Ltd as trustee of the E.C Giles Family Trust (24.72%) and Mr E.C Giles (25.28%). The balance shareholding is held by Mr P.C Giles and an associated entity under his control. The cattle enterprise conducted on Wellbourn Hill is a function of a partnership called Wellbourn Hill Proprietors, the partners of which are Barote Pty Ltd as trustee of the E.C Giles Family Trust (75%) and the pastoral company (25%).
The E.C Giles Family Trust, which was settled on 1 December 1980, is again of a discretionary kind. Coming within the class of beneficiary is any child or any spouse of a child of the said E.C Giles.
The arrangement made in 1985 to allow the partnership to run cattle on Wellbourn Hill was not expressed in written form. While it may be concluded that the duties required of the applicant in return for the right so granted are a carbon copy of those rendered on Murnpeowie, the one difference of any significance was the scale of the operations. The available number of partnership stock held on Wellbourn Hill was in the vicinity of three to four hundred. The existence of near drought conditions in the early part of the 1998 year caused the partnership of Wellbourn Hill Proprietors to implement a de-stocking program which also applied to the cattle owned by the partnership of the applicant and his wife. In that regard, the applicant in April/May 1998 commenced the task of mustering and preparing his cattle for sale. Notwithstanding the prevailing seasonal conditions, it appears that the process of preparation and disposal of the stock extended over a period of about twelve months and that, based on account sales tendered to the Tribunal, there were still a minimum of 200 head on Wellbourn Hill when the applicant lodged his application for a grant under the Scheme. With the exception of the occasional stray, all of the partnership cattle had been sold by May 1999 with the proceeds having been offset against the Elders debt.
The accumulation of set backs suffered by the applicant and his wife finally lead to their decision to quit the cattle business. That decision coincided with the need to remove their cattle from Wellbourn Hill. Prior to then they possessed an expectation of being able to trade out of their indebtedness.
Needless to say, the applicant and his family found themselves in dire financial circumstances in and since December 1997. They had moved to the Clare area in the Barossa Valley where, after a time, Mrs Summers had obtained temporary employment as a housemaid at a local motel. In the meantime, the applicant sought contract farm work to be undertaken on those occasions when he was not involved in matters pertaining to the partnership cattle situated in the feedlot, on Wellbourn Hill and on the property in the South East. In an effort to alleviate their financial need, they consulted Mr D. Warman in December 1997 concerning the possibility of gaining some kind of welfare support. At that point in time, the only inflow of funds was a parenting allowance being paid to Mrs Summers.
Mr Warman told the Tribunal that, in October/November 1997, he had attended a regional seminar organised by Centrelink for the specific purpose of instructing interested parties on the new farmers assistance scheme. According to Mr Warman, the Centrelink representatives in attendance had little knowledge of the scheme and, generally were unhelpful in explaining the required qualifying criteria. He went on to say that those same shortcomings persisted throughout the period of the Department's consideration of the application made by the applicant.
At the suggestion of Mr Warman, the applicant in January 1998 lodged with Centrelink a claim for Newstart Allowance. That action was driven by the acute need to fund the day to day necessities of life for the applicant and his family. In completing the claim form, Mrs Summers, acting on her husband's behalf, responded to the question "Are you currently employed" by ticking the "no" box. Mrs Summers told the Tribunal that, in her understanding, the question being asked was whether the claimant was currently in the employ of another. Irrespective of the answer supplied, the employment status of the applicant was clarified when he provided Centrelink with a notification which contained the following statement:
"We continue to conduct a cattle trading business. Our financiers Elders Limited though have recently advised that they will no longer provide us with any further borrowing facilities and require us to clear our debt with them promptly. We believe that if we are allowed to dispose of our cattle in an orderly and reasonable manner we will be able to meet our debt. At present the cattle are in feedlots and on agistment.
I am seeking work. Presently, I also have to supervise the cattle and prepare them for sale. This means that I will need casual work until their sale is complete and the debt repaid. Once the cattle are sold I will then be free to undertake a more permanent position."
Rightly or wrongly, and after much procrastination, the newstart allowance was granted to the applicant after a meeting of the applicant, his wife and Mr Warman with a senior review officer of Centrelink. That meeting took place on 26 May 1998. Meanwhile, the applicant found it necessary to realise upon the greater part of his station plant and equipment so that he could maintain himself and his family.
Finally, and in order to address the issue of whether the applicant derived a significant part of his income from a farm enterprise, the following represents the amounts of gross income received by the partnership from the sale of livestock in the stated financial years:
1997 $250,209
1998 $286,676
The income tax returns of the applicant prepared for the years 1997 and 1998 show the receipt of comparatively small amounts of income from non primary production sources.
Before moving to the issue of whether or not the applicant comes within the definition of farmer, the Tribunal has had cause to examine a document prepared by Centrelink as a guide for departmental officers regarding the Initiative and said to represent an indication of the policies to be applied. After due consideration of its contents, the Tribunal, in recognition of the intent and beneficial nature of the legislation accepts that the document reflects a correct explanation and expansion of both the Act and the Scheme. Those parts of the document which are of particular relevance to the current matter are set out below:
"3.1 Who is a Farmer?
…
3.1.2 Points to Consider
Farmer is defined in the definition section above. When deciding whether an applicant is a farmer, the following factors should be considered in making such a discretionary determination:· A person must meet all the requirements included in the definition.
…
· You should not only take into account the person's current situation. The farmer may only be working off-farm at present to provide an income to support the farm enterprise which is experiencing financial difficulty.
3.1.3 A Right or Interest in the Land
You might consider the following points when trying to decide whether a person has a right or interest in the land· A right or interest in the land used for the purposes of the farm enterprise can be established by ownership of the land, or a right to use the land under an agreement with the owner.
· Where a person's right or interest in the land is by virtue of a lease or sharefarming agreement it will normally be in the form of a written agreement. Intra-family arrangements often only involve verbal agreements which are acceptable, as long as you are satisfied that the person has a right or interest in the farm.
· A lessee has an 'interest' in the land used for the purposes of a farm enterprise which can usually be supported through a formal contract (which may need to be tested in law). The actual land owner in these situations will not usually be able to demonstrate that they contribute a significant labour contribution.
· For the purpose of the RRG [Restart Re-establishment Grant] the lessee would not be able to prove the sale of the farm but would be able to demonstrate that the plant, machinery and livestock were sold. The capital contribution to the farm enterprise becomes a major factor when considering whether a RRG is appropriate because of capital fixity (or ownership of farm assets). For farmers who are in effect contractors or workers there is no capital fixity and, therefore, no eligibility for RRG.
· Sharefarmers, as with other farmers, must still be in effective control of the farming operation. They should be involved in a long term contract and have contributed significant capital to the farm enterprise for a distinction to be made between sharefarmers and farm contractors.
…
· In the case where the farm is owned by a company, trust or partnership a farmer will only be able to demonstrate a right or interest in the land if they are a shareholder of the company, a beneficiary of the trust or a member of the partnership unless there is a lease or sharefarming agreement.
3.1.4 Significant Labour and Capital Contribution
You might consider the following points when trying to decide whether a person has contributed a significant part of their labour and capital to the farm enterprise:· A farmer does not have to live on the farm but is required to contribute labour and capital to the farm enterprise.
· The term 'labour' with regards to a farm enterprise is not limited to milking the cows or driving the tractor (ie. more recognisable roles). It also includes farm management and bookkeeping but does not include domestic duties.
· A farmer must contribute a significant part of their labour to the farm which would include examining the time physically spent working the farm enterprise as compared with the farmer's other labours.
…
Where the partners are jointly responsible for debt, partners could be considered to be active and have contributed significant capital. This would also meet the significant labour and capital contribution tests.
A person must contribute a significant part of their capital to the farm. As in the above point, a person who has farm liabilities has contributed capital to the enterprise through their borrowings.
…
You should always consider the person's historical involvement in the farm enterprise. Their current involvement in another business may only be to support the farm while it is experiencing a downturn.
…
3.1.5 Derives Significant Income
You might consider the following points when trying to decide whether a person derives a significant part of their income from the farm enterprise: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.
Significant income is not defined in the Farm Household Support Act 1992 and each case should be treated individually when determining what is significant income for a particular farmer. The basis of deriving the income needs to be considered. An absolute level of income or proportion of income can not be prescribed.
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3.5.2 Mortgagee in Possession
A bank or financial institution will usually lend money to a farmer with the debt secured against the farm property. If the farmer is in financial hardship and unable to meet the requirements of the loan contract, the financial institution may foreclose on the loan and take possession of the mortgaged property to recover its loan.
It is at the point where the financial institution takes control and/or the farmer is evicted that the farmer becomes ineligible for FFRS. This is called a mortgagee in possession.
…"
It is convenient that the Tribunal first disposes of the respondent's submission that, as of 21 May 1998, the partnership of which the applicant was a member had lost effective control of the farm enterprise. In the Tribunal's understanding, the term farming enterprise encompassed the cattle rearing operations then being undertaken at Wellbourn Hill, the feedlots and the agistment property in the South East. In the opinion of the Tribunal, the word control appearing in section 8C of the Act means no more than the dictionary definition of "the act or power of directing or regulating command or influence."
It is true that, for a brief period, the partnership lost the power of command over the cattle situated in the feedlot and on agistment. However, that power was quickly restored to the partnership when Elders Ltd accepted the proposition that the management and selling of those cattle be handed back to the partnership. In any event, the previously described activities applied in connection with the preparation and selling of the stock held on Wellbourn Hill leads to the irrefutable conclusion that the applicant, through the partnership, controlled that part of the farm enterprise at the time of his application for the re-establishment grant.
The Tribunal now turns its attention to the first of the three elements needed to come within the definition of farmer as set out in subsection 3(2) of the Act. In doing so, the Tribunal notes the alleged deficiencies suggested by the respondent: foremost, that the ownership structures of Murnpeowie and Wellbourn Hill did not bestow on the applicant any right or interest in those station properties and, next, that, because the arrangements to run cattle on Murnpeowie and Wellbourn Hill were not legally enforceable, those arrangements did not constitute a right or interest in those properties.
The Tribunal finds that the applicant and his wife did have a right to use both named properties under verbal agreements with the owners and that, in terms of those agreements:
the partnership had the authority to run cattle on those properties;
the income generated from the combined activities conducted on each of the properties was shared between the respective parties; and
the applicant rendered service and used partnership plant and equipment for the general benefit of all the parties to the separate agreements and, in that respect, incurred expenditure that advantaged all those same participants.
The Tribunal is satisfied that the attributes described above are sufficient to warrant a conclusion that the agreements entered into by the applicant and his wife and the proprietors of Murnpeowie and Wellbourn Hill fall under the broad heading of being sharefarming agreements. The suggestion that the arrangements under discussion should be put to one side because of the absence of legal enforceability is rejected. Not only does such a notion lack statutory support, but it flies in the face of the tenor of the legislation. It also overlooks the reality that, between family members, sharefarming agreements in written form are something of a rarity.
The significance of the applicant being a possible beneficiary in the George and Valda Summers Family Trust and the E.C Giles Family Trust was discussed at length. Although acknowledging that being a contingent beneficiary in a discretionary trust owning land would normally be enough to satisfy the provisions of subsection 3(2)(a) of the Act, the respondent claimed that the current matter was an exception. That attitude appears to be based on the concept that only discretionary trusts which have in the past demonstrated a distribution pattern are capable of providing the type of advantage being sought by the applicant. The incurring of trading losses by the trusts effectively prevented any distributions and thus no pattern. In the opinion of the Tribunal, a restriction of this kind is – illogical in as much as it hurts those primary producers likely to be suffering the greatest financial stress – lacking statutory support – and, again, it goes against the tenor of the legislation.
As previously indicated, the ownership structure of Wellbourn Hill varies from that of Murnpeowie. In the case of Murnpeowie the property was held directly by the family trust. The configuration of Wellbourn Hill has the property being owned by a company in which the E.C Giles Family Trust holds 24.72% of the issued capital. Irrespective of that difference, the final outcome is the same. By being a contingent beneficiary in the George and Valda Summers Trust, the applicant has demonstrated a right or interest in Murnpeowie up until the time of its disposal. Likewise, the applicant, a contingent beneficiary in the E.C Giles Family Trust which is the registered owner of 24.72% of the shares issued by the landholding company, has demonstrated to the Tribunal's satisfaction that he has a right or interest in Wellbourn Hill Station and that the right or interest existed at the time of the lodgement of his application for the re-establishment grant. In arriving at these conclusions, the Tribunal has had regard to the context of the legislation and the material comprised in the departmental guide which, as previously stated, represents a correct construction of the legislation to be applied.
An arrangement where a stockowner agists his stock on the property of another is not covered in the guide. However, the Tribunal takes the view that the position of a lessee is closely correlated to that of a person who agists his stock. If a lessee has a right or interest in the land – see 3.1.3 of the guide – then, in the Tribunal's opinion, so does a stock owner who agists his stock. For that reason, the Tribunal concludes that the applicant had a right or interest in the South East land on which the partnership was agisting some of its cattle.
Having been satisfied that the applicant had a right or interest in the land being used for the purpose of conducting his sharefarming enterprise, the Tribunal finds that he has fulfilled the requirements of part (a) of the definition of farmer.
On the question of whether or not the applicant has contributed a significant part of his labour and capital to the farm enterprise, the following observations are highlighted:
based on the extent of the work performed outside the partnership operations, the applicant's contribution to the activities associated with the sharefarming enterprise represented a major part of his total workload;
with the exception of some personal items, all of the applicant's assets were invested in the sharefarming operation;
both the applicant and his wife were jointly responsible for the substantial debt to Elders Ltd and that, as such, they meet the circumstances outlined in dot point four of 3.1.4 of the guide.
In relation to part (c) of the definition, the Tribunal is left in no doubt that the amounts of income derived by the applicant from sources external to the farm enterprise were inconsequential.
In all the circumstances, the Tribunal accepts that the applicant satisfies the requirements of parts (b) and (c) of the definition. Having complied with all three limbs of the definition, the Tribunal finds that during the period after the commencement of the scheme and prior to the date of the application the applicant was a 'farmer' and, furthermore, that this occupational classification existed for a continuous period of at least 2 years prior to the previously mentioned period. This finding impacts favourably upon the tests prescribed in subsection 8B(b)(i) and 8B(c) of the Act. As the other requirements of section 8B are not in dispute, the Tribunal concludes that the applicant was qualified for restart income support as at 21 May 1998. Indeed, the Tribunal is of the opinion that this qualification was present when the applicant first sought welfare support back in January 1998 and that this entitlement should have been communicated to him by Centrelink.
The Tribunal turns to a consideration of the respondent's submission that the subsequent receipt of Newstart Allowance by the applicant results in his failure to qualify for Restart Income Support. This assertion is based on provisions contained in sections 9 and 12 of the Act and which, for present purposes, can be condensed to the statement that Restart Income Support is not 'payable' to a person if that person 'is receiving' a social security benefit. The first point to be noted is that the applicant was not in receipt of the newstart allowance at the time of the application for the Restart Income Support. The evidence tendered on this issue, and which is accepted, was that the applicant's newstart application was still under consideration. More importantly, the Tribunal believes that a person remains qualified for Restart Income Support notwithstanding that he may not receive it for reasons not specifically referred to in section 8.
The legislative journey ends at section 3.2 of the Scheme which lists the elements necessary to qualify for the re-establishment grant. It is the understanding of the Tribunal that all of the requirements set out in subsection 3(1)(b) to (1)(h) inclusive are not in dispute and, thus, having already held in favour of the applicant in respect of (1)(a) of the subsection, the Tribunal finds that he did qualify for the grant at the time of his application.
Notwithstanding the respondent's concession that the applicant complied with the remainder of the factors comprised in section 3.2, the Tribunal feels obliged to offer the following comments concerning parts (b) and (d). The Tribunal is satisfied that the farm enterprise conducted by the applicant and his wife had ceased its business operations by 21 May 1999 and, furthermore, that all assets of the enterprise capable of disposal had been dealt with within the 1 year limit. The intent of the legislation and the relative smallness of the amounts involved are sufficient reason to conclude that the sale of the odd stray beast located after the expiry of the one year limit does not offend the criteria referred to in those parts of the subsection.
For the reasons enunciated, the Tribunal sets aside the decision under review and remits the matter to the respondent with the direction that the applicant satisfies all of the requirements set forth in section 3.2 of the Scheme and, therefore qualifies for the re-establishment grant.
I certify that the 48 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member J.A. Kiosoglous MBE and Mr D.J. Trowse (Member)
Signed: (signed)
John Howell, AssociateDate/s of Hearing 18-19 July 2001, 4 October 2001,
8 October 2002
Date of Decision 28 November 2002
Counsel for the Applicant Mr C. Roberts
Solicitor for the Applicant Welfare Rights Centre
Counsel for the Respondent Ms L. Odgers
Solicitor for the Respondent Advocacy and Administrative Law Team
Centrelink
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